2. The sum of P90,000.

00 for the transportation expenses, as well as moral

THIRD DIVISION damages;

3. The sum of P10,000.00 by way of exemplary damages;

[G.R. No. 108897. October 2, 1997] 4. The sum of P5,000.00 as attorneys fees; and

5. The sum of P5,000.00 as litigation expenses or a total of One Hundred

Forty Thousand (P140,000.00) Pesos.
SARKIES TOURS PHILIPPINES, INC. petitioner vs. HONORABLE
COURT OF APPEALS (TENTH DIVISION), DR. ELINO G.
to be paid by herein defendant Sarkies Tours Philippines, Inc. to the herein
FORTADES, MARISOL A. FORTADES and FATIMA A.
plaintiffs within 30 days from receipt of this Decision.
FORTADES., respondent.

SO ORDERED.
DECISION

ROMERO, J.: On appeal, the appellate court affirmed the trial courts judgment, but
deleted the award of moral and exemplary damages. Thus,
This petition for review is seeking the reversal of the decision of the
Court of Appeals in CA-G.R. CV No. 18979 promulgated on January 13, 1993, WHEREFORE, premises considered, except as above modified, fixing the
as well as its resolution of February 19, 1993, denying petitioners motion for award for transportation expenses at P30,000.00 and the deletion of the
reconsideration for being a mere rehash of the arguments raised in the award for moral and exemplary damages, the decision appealed from is
appellants brief. AFFIRMED, with costs against defendant-appellant.
The case arose from a damage suit filed by private respondents Elino,
Marisol, and Fatima Minerva, all surnamed Fortades, against petitioner for SO ORDERED."
breach of contract of carriage allegedly attended by bad faith.

On August 31, 1984, Fatima boarded petitioners De Luxe Bus No. 5 in Its motion for reconsideration having was likewise rejected by the Court
Manila on her way to Legazpi City.Her brother Raul helped her load three of Appeals, so petitioner elevated its case to this Court for a review.
pieces of luggage containing all of her optometry review books, materials and After a careful scrutiny of the records of this case, we are convinced
equipment, trial lenses, trial contact lenses, passport and visa, as well as her that the trial and appellate courts resolved the issues judiciously based on the
mother Marisols U.S. immigration (green) card, among other important evidence at hand.
documents and personal belongings. Her belongings was kept in the baggage
compartment of the bus, but during a stopover at Daet, it was discovered that Petitioner claims that Fatima did not bring any piece of luggage with
all but one bag remained in the open compartment. The others, including her, and even if she did, none was declared at the start of the trip. The
Fatimas things, were missing and could have dropped along the way. Some documentary and testimonial evidence presented at the trial, however,
of the passengers suggested retracing the route to try to recover the lost established that Fatima indeed boarded petitioners De Luxe Bus No. 5 in the
items, but the driver ignored them and proceeded to Legazpi City. evening of August 31, 1984, and she brought three pieces of luggage with
her, as testified by her brother Raul, [2] who helped her pack her things and
Fatima immediately reported the loss to her mother who, in turn, went load them on said bus. One of the bags was even recovered with the help of
to petitioners office in Legazpi City and later at its head office in Manila. The a Philtranco bus driver. In its letter dated October 1, 1984, petitioner tacitly
latter, however, merely offered her P1,000.00 for each piece of luggage lost, admitted its liability by apologizing to respondents and assuring them that
which she turned down. After returning to Bicol disappointed but not defeated, efforts were being made to recover the lost items.
they asked assistance from the radio stations and even from Philtranco bus
drivers who plied the same route on August 31st. The effort paid off when one The records also reveal that respondents went to great lengths just to
of Fatimas bags was recovered. Marisol also reported the incident to the salvage their loss. The incident was reported to the police, the NBI, and the
National Bureau of Investigations field office in Legazpi City, and to the local regional and head offices of petitioner. Marisol even sought the assistance of
police. Philtranco bus drivers and the radio stations. To expedite the replacement of
her mothers lost U.S. immigration documents, Fatima also had to execute an
On September 20, 1984, respondents, through counsel, formally affidavit of loss.[3] Clearly, they would not have gone through all that trouble in
demanded satisfaction of their complaint from petitioner. In a letter dated pursuit of a fancied loss.
October 1, 1984, the latter apologized for the delay and said that (a) team has
been sent out to Bicol for the purpose of recovering or at least getting the full Fatima was not the only one who lost her luggage. Other passengers
detail[1] of the incident. suffered a similar fate: Dr. Lita Samarista testified that petitioner offered
her P1,000.00 for her lost baggage and she accepted it;[4] Carleen Carullo-
After more than nine months of fruitless waiting, respondents decided Magno also lost her chemical engineering review materials, while her brother
to file the case below to recover the value of the remaining lost items, as well lost abaca products he was transporting to Bicol. [5]
as moral and exemplary damages, attorneys fees and expenses of
litigation. They claimed that the loss was due to petitioners failure to observe Petitioners receipt of Fatimas personal luggage having been thus
extraordinary diligence in the care of Fatimas luggage and that petitioner dealt established, it must now be determined if, as a common carrier, it is
with them in bad faith from the start. Petitioner, on the other hand, disowned responsible for their loss. Under the Civil Code, (c)ommon carriers, from the
any liability for the loss on the ground that Fatima allegedly did not declare nature of their business and for reasons of public policy, are bound to observe
any excess baggage upon boarding its bus. extraordinary diligence in the vigilance over the goods x x x transported by
them,[6] and this liability lasts from the time the goods are unconditionally
On June 15, 1988, after trial on the merits, the court a quo adjudged the placed in the possession of, and received by the carrier for transportation until
case in favor of herein respondents, viz: the same are delivered, actually or constructively, by the carrier for
transportation until the same are delivered, actually or constructively, by the
PREMISES CONSIDERED, judgment is hereby rendered in favor of the carrier to x x x the person who has a right to receive them, [7] unless the loss
plaintiffs (herein respondents) and against the herein defendant Sarkies is due to any of the excepted causes under Article 1734 thereof.[8]
Tours Philippines, Inc., ordering the latter to pay to the former the following
sums of money, to wit: The cause of the loss in the case at bar was petitioners negligence in
not ensuring that the doors of the baggage compartment of its bus were
securely fastened. As a result of this lack of care, almost all of the luggage
1. The sum of P30,000.00 equivalent to the value of the personal belongings was lost, to the prejudice of the paying passengers. As the Court of Appeals
of plaintiff Fatima Minerva Fortades, etc. less the value of one luggage correctly observed:
recovered;
x x x. Where the common carrier accepted its passengers baggage for
transportation and even had it placed in the vehicle by its own employee, its
failure to collect the freight charge is the common carriers own lookout. It is
responsible for the consequent loss of the baggage. In the instant case,
defendant appellants employee even helped Fatima Minerva Fortades and
her brother load the luggages/baggages in the bus baggage compartment,
without asking that they be weighed, declared, receipted or paid for (TSN,
August 4, 1986, pp. 29, 34, 54, 57, 70; December 23, 1987, p. 35). Neither
was this required of the other passengers (TSN, August 4, 1986, p. 104;
February 5, 1988, p. 13).

Finally, petitioner questions the award of actual damages to

respondents. On this point, we likewise agree with the trial and appellate
courts conclusions. There is no dispute that of the three pieces of luggage of
Fatima, only one was recovered. The other two contained optometry books,
materials, equipment, as well as vital documents and personal
belongings. Respondents had to shuttle between Bicol and Manila in their
efforts to be compensated for the loss. During the trial, Fatima and Marisol
had to travel from the United States just to be able to testify. Expenses were
also incurred in reconstituting their lost documents. Under these
circumstances, the Court agrees with the Court of Appeals in
awarding P30,000.00 for the lost items and P30,000.00 for the transportation
expenses, but disagrees with the deletion of the award of moral and
exemplary damages which, in view of the foregoing proven facts, with
negligence and bad faith on the fault of petitioner having been duly
established, should be granted to respondents in the amount of P20,000.00
and P5,000.00, respectively.

WHEREFORE, the assailed decision of the Court of Appeals dated

January 13, 1993, and its resolution dated February 19, 1993, are hereby
AFFIRMED with the MODIFICATION that petitioner is ordered to pay
respondent an additional P20,000.00 as moral damages and P5,000.00 as
exemplary damages. Costs against petitioner.

SO ORDERED.
 THIRD DIVISION On 30 January 1984, a check for P5,625.00 (Exh. E) to cover payment of
the premium and documentary stamps due on the policy was tendered due
to the insurer but was not accepted. Instead, the South Sea Surety and
Insurance Co., Inc. cancelled the insurance policy it issued as of the date of
the inception for non-payment of the premium due in accordance with
[G.R. No. 102316. June 30, 1997] Section 77 of the Insurance Code.

On 2 February 1984, plaintiff demanded from defendant South Sea Surety

and Insurance Co., Inc. the payment of the proceeds of the policy but the
VALENZUELA HARDWOOD AND INDUSTRIAL SUPPLY, latter denied liability under the policy. Plaintiff likewise filed a formal claim
INC., petitioner, vs. COURT OF APPEALS AND SEVEN with defendant Seven Brothers Shipping Corporation for the value of the lost
BROTHERS SHIPPING CORPORATION, respondents. logs but the latter denied the claim.

DECISION After due hearing and trial, the court a quo rendered judgment in favor of
plaintiff and against defendants. Both defendants shipping corporation and
PANGANIBAN, J.: the surety company appealed.

Is a stipulation in a charter party that the (o)wners shall not be Defendant-appellant Seven Brothers Shipping Corporation impute (sic) to
responsible for loss, split, short-landing, breakages and any kind of damages the court a quo the following assignment of errors, to wit:
to the cargo[1] valid? This is the main question raised in this petition for review
assailing the Decision of Respondent Court of Appeals[2] in CA-G.R. No. CV- A. The lower court erred in holding that the proximate cause of the sinking of
20156 promulgated on October 15, 1991. The Court of Appeals modified the the vessel Seven Ambassadors, was not due to fortuitous event but to the
judgment of the Regional Trial Court of Valenzuela, Metro Manila, Branch negligence of the captain in stowing and securing the logs on board, causing
171, the dispositive portion of which reads: the iron chains to snap and the logs to roll to the portside.

WHEREFORE, Judgment is hereby rendered ordering South Sea Surety B. The lower court erred in declaring that the non-liability clause of the
and Insurance Co., Inc. to pay plaintiff the sum of TWO MILLION PESOS Seven Brothers Shipping Corporation from logs (sic) of the cargo stipulated
(P2,000,000.00) representing the value of the policy of the lost logs with in the charter party is void for being contrary to public policy invoking article
legal interest thereon from the date of demand on February 2, 1984 until the 1745 of the New Civil Code.
amount is fully paid or in the alternative, defendant Seven Brothers Shipping
Corporation to pay plaintiff the amount of TWO MILLION PESOS
(P2,000,000.00) representing the value of lost logs plus legal interest from C. The lower court erred in holding defendant-appellant Seven Brothers
the date of demand on April 24, 1984 until full payment thereof; the Shipping Corporation liable in the alternative and ordering/directing it to pay
reasonable attorneys fees in the amount equivalent to five (5) percent of the plaintiff-appellee the amount of two million (P2,000,000.00) pesos
amount of the claim and the costs of the suit. representing the value of the logs plus legal interest from date of demand
until fully paid.
Plaintiff is hereby ordered to pay defendant Seven Brothers Shipping
Corporation the sum of TWO HUNDRED THIRTY THOUSAND PESOS D. The lower court erred in ordering defendant-appellant Seven Brothers
(P230,000.00) representing the balance of the stipulated freight charges. Shipping Corporation to pay appellee reasonable attorneys fees in the
amount equivalent to 5% of the amount of the claim and the costs of the
suit.
Defendant South Sea Surety and Insurance Companys counterclaim is
hereby dismissed.
E. The lower court erred in not awarding defendant-appellant Seven
Brothers Corporation its counter-claim for attorneys fees.
In its assailed Decision, Respondent Court of Appeals held:

F. The lower court erred in not dismissing the complaint against Seven
WHEREFORE, the appealed judgment is hereby AFFIRMED except in so Brothers Shipping Corporation.
far (sic) as the liability of the Seven Brothers Shipping Corporation to the
plaintiff is concerned which is hereby REVERSED and SET ASIDE.[3]
Defendant-appellant South Sea Surety and Insurance Co., Inc. assigns the
following errors:

The Facts A. The trial court erred in holding that Victorio Chua was an agent of
defendant-appellant South Sea Surety and Insurance Company, Inc. and
likewise erred in not holding that he was the representative of the insurance
The factual antecedents of this case as narrated in the Court of Appeals broker Columbia Insurance Brokers, Ltd.
Decision are as follows:
B. The trial court erred in holding that Victorio Chua received
It appears that on 16 January 1984, plaintiff (Valenzuela Hardwood and compensation/commission on the premiums paid on the policies issued by
Industrial Supply, Inc.) entered into an agreement with the defendant Seven the defendant-appellant South Sea Surety and Insurance Company, Inc.
Brothers (Shipping Corporation) whereby the latter undertook to load on
board its vessel M/V Seven Ambassador the formers lauan round logs C. The trial court erred in not applying Section 77 of the Insurance Code.
numbering 940 at the port of Maconacon, Isabela for shipment to Manila.

D. The trial court erred in disregarding the receipt of payment clause

On 20 January 1984, plaintiff insured the logs against loss and/or damage attached to and forming part of the Marine Cargo Insurance Policy No.
with defendant South Sea Surety and Insurance Co., Inc. for P2,000,000.00
84/24229.
and the latter issued its Marine Cargo Insurance Policy No. 84/24229
for P2,000,000.00 on said date.
E. The trial court in disregarding the statement of account or bill stating the
amount of premium and documentary stamps to be paid on the policy by the
On 24 January 1984, the plaintiff gave the check in payment of the premium plaintiff-appellee.
on the insurance policy to Mr. Victorio Chua.

F. The trial court erred in disregarding the indorsement of cancellation of the

In the meantime, the said vessel M/V Seven Ambassador sank on 25 policy due to non-payment of premium and documentary stamps.
January 1984 resulting in the loss of the plaintiffs insured logs.
G. The trial court erred in ordering defendant-appellant South Sea Surety landing, breakages and any kind of damages to the cargo.[10] The validity of
and Insurance Company, Inc. to pay plaintiff-appellee P2,000,000.00 thisstipulation is the lis mota of this case.
representing value of the policy with legal interest from 2 February 1984 until
the amount is fully paid, It should be noted at the outset that there is no dispute between the
parties that the proximate cause of the sinking of M/V Seven
Ambassadors resulting in the loss of its cargo was the snapping of the iron
H. The trial court erred in not awarding to the defendant-appellant the chains and the subsequent rolling of the logs to the portside due to the
attorneys fees alleged and proven in its counterclaim. negligence of the captain in stowing and securing the logs on board the vessel
and not due to fortuitous event.[11] Likewise undisputed is the status of Private
The primary issue to be resolved before us is whether defendants shipping Respondent Seven Brothers as a private carrier when it contracted to
corporation and the surety company are liable to the plaintiff for the latters transport the cargo of Petitioner Valenzuela. Even the latter admits this in its
lost logs.[4] petition.[12]

The trial court deemed the charter party stipulation void for being
The Court of Appeals affirmed in part the RTC judgment by sustaining contrary to public policy,[13] citing Article 1745 of the Civil Code which
the liability of South Sea Surety and Insurance Company (South Sea), but provides:
modified it by holding that Seven Brothers Shipping Corporation (Seven
Brothers) was not liable for the lost cargo.[5] In modifying the RTC judgment,
Art. 1745. Any of the following or similar stipulations shall be considered
the respondent appellate court ratiocinated thus:
unreasonable, unjust and contrary to public policy:

It appears that there is a stipulation in the charter party that the ship owner
(1) That the goods are transported at the risk of the owner or shipper;
would be exempted from liability in case of loss.

(2) That the common carrier will not be liable for any loss, destruction, or
The court a quo erred in applying the provisions of the Civil Code on
deterioration of the goods;
common carriers to establish the liability of the shipping corporation. The
provisions on common carriers should not be applied where the carrier is not
acting as such but as a private carrier. (3) That the common carrier need not observe any diligence in the custody
of the goods;
Under American jurisprudence, a common carrier undertaking to carry a
special cargo or chartered to a special person only, becomes a private (4) That the common carrier shall exercise a degree of diligence less than
carrier. that of a good father of a family, or of a man of ordinary prudence in the
vigilance over the movables transported;
As a private carrier, a stipulation exempting the owner from liability even for
the negligence of its agent is valid (Home Insurance Company, Inc. vs. (5) That the common carrier shall not be responsible for the acts or
American Steamship Agencies, Inc., 23 SCRA 24). omissions of his or its employees;

The shipping corporation should not therefore be held liable for the loss of (6) That the common carriers liability for acts committed by thieves, or of
the logs.[6] robbers who do not act with grave or irresistible threat, violence or force, is
dispensed with or diminished;
South Sea and herein Petitioner Valenzuela Hardwood and Industrial
Supply, Inc. (Valenzuela) filed separate petitions for review before this (7) That the common carrier is not responsible for the loss, destruction, or
Court. In a Resolution dated June 2, 1995, this Court denied the petition of deterioration of goods on account of the defective condition of the car,
South Sea.[7] There the Court found no reason to reverse the factual findings vehicle, ship, airplane or other equipment used in the contract of carriage.
of the trial court and the Court of Appeals that Chua was indeed an authorized
agent of South Sea when he received Valenzuelas premium payment for the
marine cargo insurance policy which was thus binding on the insurer. [8] Petitioner Valenzuela adds that the stipulation is void for being contrary
to Articles 586 and 587 of the Code of Commerce[14] and Articles 1170 and
The Court is now called upon to resolve the petition for review filed by 1173 of the Civil Code. Citing Article 1306 and paragraph 1, Article 1409 of
Valenzuela assailing the CA Decision which exempted Seven Brothers from the Civil Code,[15] petitioner further contends that said stipulation gives no duty
any liability for the lost cargo. or obligation to the private respondent to observe the diligence of a good
father of a family in the custody and transportation of the cargo."

The Court is not persuaded. As adverted to earlier, it is undisputed that

private respondent had acted as a private carrier in transporting petitioners
The Issue
lauan logs. Thus, Article 1745 and other Civil Code provisions on common
carriers which were cited by petitioner may not be applied unless expressly
stipulated by the parties in their charter party.[16]
Petitioner Valenzuelas arguments revolve around a single issue:
whether or not respondent Court (of Appeals) committed a reversible error in In a contract of private carriage, the parties may validly stipulate that
upholding the validity of the stipulation in the charter party executed between responsibility for the cargo rests solely on the charterer, exempting the
the petitioner and the private respondent exempting the latter from liability for shipowner from liability for loss of or damage to the cargo caused even by the
the loss of petitioners logs arising from the negligence of its (Seven Brothers) negligence of the ship captain. Pursuant to Article 1306[17] of the Civil
captain.[9] Code, such stipulation is valid because it is freely entered into by the parties
and the same is not contrary to law, morals, good customs, public order, or
public policy. Indeed, their contract of private carriage is not even a contract
of adhesion. We stress that in a contract of private carriage, the parties may
The Courts Ruling freely stipulate their duties and obligations which perforce would be binding
on them. Unlike in a contract involving a common carrier, private carriage
does not involve the general public. Hence, the stringent provisions of the
Civil Code on common carriers protecting the general public cannot justifiably
The petition is not meritorious. be applied to a ship transporting commercial goods as a private
carrier. Consequently, the public policy embodied therein is not contravened
by stipulations in a charter party that lessen or remove the protection given
by law in contracts involving common carriers.
Validity of Stipulation is Lis Mota
The issue posed in this case and the arguments raised by petitioner are
not novel; they were resolved long ago by this Court in Home Insurance Co.
The charter party between the petitioner and private respondent vs. American Steamship Agencies, Inc.[18] In that case, the trial court similarly
stipulated that the (o)wners shall not be responsible for loss, split, short- nullified a stipulation identical to that involved in the present case for being
contrary to public policy based on Article 1744 of the Civil Code and Article Articles 586 and 587, Code of Commerce
587 of the Code of Commerce. Consequently, the trial court held the
shipowner liable for damages resulting from the partial loss of the cargo. This
Court reversed the trial court and laid down, through Mr. Justice Jose P. Petitioner Valenzuela insists that the charter party stipulation is contrary
Bengzon, the following well-settled observation and doctrine: to Articles 586 and 587 of the Code of Commerce which confer on petitioner
the right to recover damages from the shipowner and ship agent for the acts
The provisions of our Civil Code on common carriers were taken from or conduct of the captain.[25] We are not persuaded. Whatever rights petitioner
Anglo-American law. Under American jurisprudence, a common carrier may have under the aforementioned statutory provisions were waived when
undertaking to carry a special cargo or chartered to a special person only, it entered into the charter party.
becomes a private carrier. As a private carrier, a stipulation exempting the
owner from liability for the negligence of its agent is not against public policy, Article 6 of the Civil Code provides that (r)ights may be waived, unless
and is deemed valid. the waiver is contrary to law, public order, public policy, morals, or good
customs, or prejudicial to a person with a right recognized by law. As a
general rule patrimonial rights may be waived as opposed to rights to
Such doctrine We find reasonable. The Civil Code provisions on common personality and family rights which may not be made the subject of
carriers should not be applied where the carrier is not acting as such but as waiver.[26] Being patently and undoubtedly patrimonial, petitioners right
a private carrier. The stipulation in the charter party absolving the owner conferred under said articles may be waived. This, the petitioner did by
from liability for loss due to the negligence of its agent would be void only if acceding to the contractual stipulation that it is solely responsible for any
the strict public policy governing common carriers is applied. Such policy damage to the cargo, thereby exempting the private carrier from any
has no force where the public at large is not involved, as in this case of a responsibility for loss or damage thereto. Furthermore, as discussed above,
ship totally chartered for the use of a single party.[19] (Underscoring the contract of private carriage binds petitioner and private respondent
supplied.) alone; it is not imbued with public policy considerations for the general public
or third persons are not affected thereby.
Indeed, where the reason for the rule ceases, the rule itself does not
apply. The general public enters into a contract of transportation with common
carriers without a hand or a voice in the preparation thereof. The riding public
merely adheres to the contract; even if the public wants to, it cannot submit Articles 1170 and 1173, Civil Code
its own stipulations for the approval of the common carrier. Thus, the law on
common carriers extends its protective mantle against one-sided stipulations
inserted in tickets, invoices or other documents over which the riding public Petitioner likewise argues that the stipulation subject of this controversy
has no understanding or, worse, no choice. Compared to the general public, is void for being contrary to Articles 1170 and 1173 of the Civil Code[27] which
a charterer in a contract of private carriage is not similarly situated. It can -- read:
and in fact it usually does -- enter into a free and voluntary agreement. In
practice, the parties in a contract of private carriage can stipulate the carriers
obligations and liabilities over the shipment which, in turn, determine the price Art. 1170. Those who in the performance of their obligations are guilty of
or consideration of the charter. Thus, a charterer, in exchange for fraud, negligence, or delay, and those who in any manner contravene the
convenience and economy, may opt to set aside the protection of the law on tenor thereof, are liable for damages
common carriers. When the charterer decides to exercise this option, he
takes a normal business risk. Art. 1173. The fault or negligence of the obligor consists in the omission of
that diligence which is required by the nature of the obligation and
Petitioner contends that the rule in Home Insurance is not applicable to corresponds with the circumstances of the persons, of the time and of the
the present case because it covers only a stipulation exempting a private place. When negligence shows bad faith, the provisions of articles 1171 and
carrier from liability for the negligence of his agent, but it does not apply to a 2201, shall apply.
stipulation exempting a private carrier like private respondent from the
negligence of his employee or servant which is the situation in this
case.[20] This contention of petitioner is bereft of merit, for it raises a distinction If the law does not state the diligence which is to be observed in the
without any substantive difference. The case of Home Insurance specifically performance, that which is expected of a good father of a family shall be
dealt with the liability of the shipowner for acts or negligence of its captain and required.
crew[21] and a charter party stipulation which exempts the owner of the vessel
from any loss or damage or delay arising from any other source, even from The Court notes that the foregoing articles are applicable only to the
the neglect or fault of the captain or crew or some other person employed by obligor or the one with an obligation to perform. In the instant case, Private
the owner on board, for whose acts the owner would ordinarily be liable except Respondent Seven Brothers is not an obligor in respect of the cargo, for this
for said paragraph.[22] Undoubtedly, Home Insurance is applicable to the case obligation to bear the loss was shifted to petitioner by virtue of the charter
at bar. party. This shifting of responsibility, as earlier observed, is not void. The
The naked assertion of petitioner that the American rule enunciated provisions cited by petitioner are, therefore, inapplicable to the present case.
in Home Insurance is not the rule in the Philippines[23] deserves scant Moreover, the factual milieu of this case does not justify the application
consideration. The Court there categorically held that said rule was of the second paragraph of Article 1173 of the Civil Code which prescribes
reasonable and proceeded to apply it in the resolution of that case. Petitioner the standard of diligence to be observed in the event the law or the contract
miserably failed to show such circumstances or arguments which would is silent. In the instant case, Article 362 of the Code of Commerce[28] provides
necessitate a departure from a well-settled rule. Consequently, our ruling in the standard of ordinary diligence for the carriage of goods by a carrier. The
said case remains a binding judicial precedent based on the doctrine of stare standard of diligence under this statutory provision may, however, be modified
decisis and Article 8 of the Civil Code which provides that (j)udicial decisions in a contract of private carriage as the petitioner and private respondent had
applying or interpreting the laws or the Constitution shall form part of the legal done in their charter party.
system of the Philippines.

In fine, the respondent appellate court aptly stated that [in the case of]
a private carrier, a stipulation exempting the owner from liability even for the
negligence of its agent is valid.[24] Cases Cited by Petitioner Inapplicable

Petitioner cites Shewaram vs. Philippine Airlines, Inc.[29] which, in turn,

Other Arguments quoted Juan Ysmael & Co. vs. Gabino Barreto & Co.[30] and argues that the
public policy considerations stated there vis--vis contractual stipulations
limiting the carriers liability be applied with equal force to this case. [31] It also
cites Manila Railroad Co. vs. Compaia Transatlantica[32] and contends that
On the basis of the foregoing alone, the present petition may already
be denied; the Court, however, will discuss the other arguments of petitioner stipulations exempting a party from liability for damages due to negligence
for the benefit and satisfaction of all concerned. should not be countenanced and should be strictly construed against the party
claiming its benefit.[33]We disagree.
 The cases of Shewaram and Ysmael both involve a common carrier;
thus, they necessarily justify the application of such policy considerations and
concomitantly stricter rules. As already discussed above, the public policy
considerations behind the rigorous treatment of common carriers are absent
in the case of private carriers.Hence, the stringent laws applicable to common
carriers are not applied to private carriers. The case of Manila Railroad is also
inapplicable because the action for damages there does not involve a contract
for transportation.Furthermore, the defendant therein made a promise to use
due care in the lifting operations and, consequently, it was bound by its
undertaking; besides, the exemption was intended to cover accidents due to
hidden defects in the apparatus or other unforseeable occurrences not
caused by its personal negligence. This promise was thus construed to make
sense together with the stipulation against liability for damages.[34] In the
present case, we stress that the private respondent made no such
promise. The agreement of the parties to exempt the shipowner from
responsibility for any damage to the cargo and place responsibility over the
same to petitioner is the lone stipulation considered now by this Court.

Finally, petitioner points to Standard Oil Co. of New York vs. Lopez
Costelo,[35] Walter A. Smith & Co. vs. Cadwallader Gibson Lumber Co.,[36] N.
T. Hashim and Co. vs. Rocha and Co.,[37] Ohta Development Co. vs.
SteamshipPompey[38] and Limpangco Sons vs. Yangco Steamship Co.[39] in
support of its contention that the shipowner be held liable for
damages.[40] These however are not on all fours with the present case
because they do not involve a similar factual milieu or an identical stipulation
in the charter party expressly exempting the shipowner from responsibility for
any damage to the cargo.

Effect of the South Sea Resolution

In its memorandum, Seven Brothers argues that petitioner has no

cause of action against it because this Court has earlier affirmed the liability
of South Sea for the loss suffered by petitioner. Private respondent submits
that petitioner is not legally entitled to collect twice for a single loss.[41] In view
of the above disquisition upholding the validity of the questioned charter party
stipulation and holding that petitioner may not recover from private
respondent, the present issue is moot and academic. It suffices to state that
the Resolution of this Court dated June 2, 1995[42] affirming the liability of
South Sea does not, by itself, necessarily preclude the petitioner from
proceeding against private respondent. An aggrieved party may still recover
the deficiency from the person causing the loss in the event the amount paid
by the insurance company does not fully cover the loss. Article 2207 of the
Civil Code provides:

ART. 2207. If the plaintiffs property has been insured, and he has received
indemnity from the insurance company for the injury or loss arising out of the
wrong or breach of contract complained of, the insurance company shall be
subrogated to the rights of the insured against the wrongdoer or the person
who has violated the contract. If the amount paid by the insurance company
does not fully cover the injury or loss, the aggrieved party shall be entitled to
recover the deficiency from the person causing the loss or injury.

WHEREFORE, premises considered, the petition is hereby DENIED for

its utter failure to show any reversible error on the part of Respondent
Court. The assailed Decision is AFFIRMED.

SO ORDERED.
 FIRST DIVISION But appellant now contends that he is not suing on a
breach of contract but on a tort as provided for in Art.
1902 of the Civil Code. We are a little perplexed as to
G.R. No. 75118 August 31, 1987
this new theory of the appellant. First, he insists that the
articles of the Code of Commerce should be applied:
SEA-LAND SERVICE, INC., petitioner, that he invokes the provisions of aid Code governing
vs. the obligations of a common carrier to make prompt
INTERMEDIATE APPELLATE COURT and PAULINO CUE, doing delivery of goods given to it under a contract of
business under the name and style of "SEN HIAP HING," respondents. transportation. Later, as already said, he says that he
was never a party to the contract of transportation and
was a complete stranger to it, and that he is now suing
on a tort or a violation of his rights as a stranger (culpa
aquiliana) If he does not invoke the contract of carriage
NARVASA, J.: entered into with the defendant company, then he would
hardly have any leg to stand on. His right to prompt
delivery of the can of film at the Phil. Air Port stems and
The main issue here is whether or not the consignee of seaborne freight is is derived from the contract of carriage under which
bound by stipulations in the covering bill of lading limiting to a fixed amount contract, the PAL undertook to carry the can of film
the liability of the carrier for loss or damage to the cargo where its value is safely and to deliver it to him promptly. Take away or
not declared in the bill. ignore that contract and the obligation to carry and to
deliver and right to prompt delivery disappear. Common
The factual antecedents, for the most part, are not in dispute. carriers are not obligated by law to carry and to deliver
merchandise, and persons are not vested with the right
to prompt delivery, unless such common carriers
On or about January 8, 1981, Sea-Land Service, Inc. (Sea-Land for brevity), previously assume the obligation. Said rights and
a foreign shipping and forwarding company licensed to do business in the obligations are created by a specific contract entered
Philippines, received from Seaborne Trading Company in Oakland, into by the parties. In the present case, the findings of
California a shipment consigned to Sen Hiap Hing the business name used the trial court which as already stated, are accepted by
by Paulino Cue in the wholesale and retail trade which he operated out of an the parties and which we must accept are to the effect
establishment located on Borromeo and Plaridel Streets, Cebu City. that the LVN Pictures Inc. and Jose Mendoza on one
side, and the defendant company on the other, entered
The shipper not having declared the value of the shipment, no value was into a contract of transportation (p. 29, Rec. on Appeal).
indicated in the bill of lading. The bill described the shipment only as "8 One interpretation of said finding is that the LVN
CTNS on 2 SKIDS-FILES. 1 Based on volume measurements Sea-land Pictures Inc. through previous agreement with Mendoza
charged the shipper the total amount of US$209.28 2 for freight age and acted as the latter's agent. When he negotiated with the
other charges. The shipment was loaded on board the MS Patriot, a vessel LVN Pictures Inc. to rent the film "Himala ng Birhen"
owned and operated by Sea-Land, for discharge at the Port Of Cebu. and show it during the Naga town fiesta, he most
probably authorized and enjoined the Picture Company
to ship the film for him on the PAL on September 17th.
The shipment arrived in Manila on February 12, 1981, and there discharged Another interpretation is that even if the LVN Pictures
in Container No. 310996 into the custody of the arrastre contractor and the Inc. as consignor of its own initiative, and acting
customs and port authorities. 3 Sometime between February 13 and 16, independently of Mendoza for the time being, made
1981, after the shipment had been transferred, along with other cargoes to Mendoza as consignee, a stranger to the contract if that
Container No. 40158 near Warehouse 3 at Pier 3 in South Harbor, Manila, is possible, nevertheless when he, Mendoza appeared
awaiting trans-shipment to Cebu, it was stolen by pilferers and has never at the Phil Air Port armed with the copy of the Air Way
been recovered. 4 Bill (Exh. 1) demanding the delivery of the shipment to
him, he thereby made himself a party to the contract of
On March 10, 1981, Paulino Cue, the consignee, made formal claim upon transportation. The very citation made by appellant in
Sea-Land for the value of the lost shipment allegedly amounting to his memorandum supports this view. Speaking of the
P179,643.48. 5 Sea-Land offered to settle for US$4,000.00, or its then possibility of a conflict between the order of the shipper
Philippine peso equivalent of P30,600.00. asserting that said amount on the one hand and the order of the consignee on the
represented its maximum liability for the loss of the shipment under the other, as when the shipper orders the shipping
package limitation clause in the covering bill of lading.6 Cue rejected the company to return or retain the goods shipped while the
offer and thereafter brought suit for damages against Sea-Land in the then consignee demands their delivery, Malagarriga in his
Court of First Instance of Cebu, Branch X.7 Said Court, after trial, rendered book Codigo de Comercio Comentado, Vol. 1, p. 400,
judgment in favor of Cue, sentencing Sea-Land to pay him P186,048.00 citing a decision of the Argentina Court of Appeals on
representing the Philippine currency value of the lost cargo, P55,814.00 for commercial matters, cited by Tolentino in Vol. II of his
unrealized profit with one (1%) percent monthly interest from the filing of the book entitled "Commentaries and Jurisprudence on the
complaint until fully paid, P25,000.00 for attorney's fees and P2,000.00 as Commercial Laws of the Philippines" p. 209, says that
litigation expenses.8 the right of the shipper to countermand the shipment
terminates when the consignee or legitimate holder of
the bill of lading appears with such big of lading before
Sea-Land appealed to the Intermediate Appellate Court.9 That Court the carrier and makes himself a party to the contract.
however affirmed the decision of the Trial Court xxx in all its parts ... Prior to that time he is a stranger to the contract.
. 10 Sea-Land thereupon filed the present petition for review which, as
already stated, poses the question of whether, upon the facts above set
forth, it can be held liable for the loss of the shipment in any amount beyond Still another view of this phase of the case is that
the limit of US$600.00 per package stipulated in the bill of lading. contemplated in Art. 1257, paragraph 2, of the old Civil
Code (now Art, 1311, second paragraph) which reads
thus:
To begin with, there is no question of the right, in principle, of a consignee in
a bill of lading to recover from the carrier or shipper for loss of, or damage
to, goods being transported under said bill ,although that document may Should the contract contain any
have been — as in practice it oftentimes is — drawn up only by stipulation in favor of a third person,
the consignor and the carrier without the intervention of he may demand its fulfillment
the consignee. In Mendoza vs. Philippine Air Lines, Inc. 11 the Court delved provided he has given notice of his
at some length into the reasons behind this when, upon a claim made by acceptance to the person bound
the consignee of a motion picture film shipped by air that he was never a before the stipulation has been
party to the contract of transportation and was a complete stranger revoked.
thereto, it said:
 Here, the contract of carriage between the LVN Pictures Since, as already pointed out, Article 1766 of the Civil Code expressly
Inc. and the defendant carrier contains the stipulations subjects the rights and obligations of common carriers to the provisions of
of delivery to Mendoza as consignee. His demand for the Code of Commerce and of special laws in matters not regulated by said
the delivery of the can of film to him at the Phil Air Port (Civil) Code, the Court fails to fathom the reason or justification for the
may be regarded as a notice of his acceptance of the Appellate Court's pronouncement in its appealed Decision that the Carriage
stipulation of the delivery in his favor contained in the of Goods by Sea Act " ... has no application whatsoever in this case. 15 Not
contract of carriage and delivery. In this case he also only is there nothing in the Civil Code which absolutely prohibits agreements
made himself a party to the contract, or at least has between shipper and carrier limiting the latter's liability for loss of or damage
come to court to enforce it. His cause of action must to cargo shipped under contracts of carriage; it is also quite clear that said
necessarily be founded on its breach. Code in fact has agreements of such character in contemplation in
providing, in its Articles 1749 and 1750, that:
Since the liability of a common carrier for loss of or damage to goods
transported by it under a contract of carriage is governed by the laws of the ART. 1749 A stipulation that the common carrier's
country of destination 12 and the goods in question were shipped from the liability is limited to the value of the goods appearing in
United States to the Philippines, the liability of petitioner Sea-Land to the the bill of lading, unless the shipper or owner declares a
respondent consignee is governed primarily by the Civil Code, and as greater value, is binding.
ordained by the said Code, suppletorily, in all matters not determined
thereby, by the Code of Commerce and special laws. 13 One of these
ART. 1750. A contract fixing the sum that may be
suppletory special laws is the Carriage of Goods by Sea Act, U.S. Public Act
recovered by the owner or shipper for the loss,
No. 521 which was made applicable to all contracts for the carriage of goods
destruction, or deterioration of the goods is valid, if it is
by sea to and from Philippine ports in foreign trade by Commonwealth Act
reasonable and just under the circumstances, and has
No. 65, approved on October 22, 1936. Sec. 4(5) of said Act in part reads:
been fairly and freely agreed upon.

(5) Neither the carrier nor the ship shall in any event be
Nothing contained in section 4(5) of the Carriage of Goods by Sea Act
or become liable for any loss or damage to or in
already quoted is repugnant to or inconsistent with any of the just-cited
connection with the transportation of goods in an
provisions of the Civil Code. Said section merely gives more flesh and
amount exceeding $500 per package lawful money of
greater specificity to the rather general terms of Article 1749 (without doing
the United States, or in case of goods not shipped in
any violence to the plain intent thereof) and of Article 1750, to give effect to
packages, per customary freight unit, or the equivalent
just agreements limiting carriers' liability for loss or damage which are freely
of that sum in other currency, unless the nature and
and fairly entered into.
value of such goods have been declared by the shipper
before shipment and inserted in the bill of lading. This
declaration, if embodied in the bill of lading, shall be It seems clear that even if said section 4(5) of the Carriage of Goods by Sea
prima facie evidence, but shall not be conclusive on the Act did not exist, the validity and binding effect of the liability limitation
carrier. clause in the bill of lading here are nevertheless fully sustainable on the
basis alone of the cited Civil Code provisions. That said stipulation is just
and reasonable is arguable from the fact that it echoes Art. 1750 itself in
By agreement between the carrier, master, or agent of
providing a limit to liability only if a greater value is not declared for the
the carrier, and the shipper another maximum amount
shipment in the bill of lading. To hold otherwise would amount to questioning
than that mentioned in this paragraph may be fixed:
the justice and fairness of that law itself, and this the private respondent
Provided, That such maximum shall not be less than the
does not pretend to do. But over and above that consideration, the lust and
figure above named. In no event shall the carrier be
reasonable character of such stipulation is implicit in it giving the shipper or
liable for more than the amount of damage actually
owner the option of avoiding acrrual of liability limitation by the simple and
sustained.
surely far from onerous expedient of declaring the nature and value of the
shipment in the bill of lading. And since the shipper here has not been heard
xxx xxx xxx to complaint of having been "rushed," imposed upon or deceived in any
significant way into agreeing to ship the cargo under a bill of lading carrying
such a stipulation — in fact, it does not appear that said party has been
Clause 22, first paragraph, of the long form bill of lading customarily issued
heard from at all insofar as this dispute is concerned — there is simply no
by Sea-Land to its shipping clients 14 is a virtual copy of the first paragraph
ground for assuming that its agreement thereto was not as the law would
of the foregoing provision. It says:
require, freely and fairly sought and given.

22. VALUATION. In the event of any loss, damage or

The private respondent had no direct part or intervention in the execution of
delay to or in connection with goods exceeding in actual
the contract of carriage between the shipper and the carrier as set forth in
value $500 per package, lawful money of the United
the bill of lading in question. As pointed out in Mendoza vs. PAL, supra, the
States, or in case of goods not shipped in packages,
right of a party in the same situation as respondent here, to recover for loss
per customary freight unit, the value of the goods shall
of a shipment consigned to him under a bill of lading drawn up only by and
be deemed to be $500 per package or per customary
between the shipper and the carrier, springs from either a relation of agency
freight unit, as the case may be, and the carrier's
that may exist between him and the shipper or consignor, or his status as a
liability, if any, shall be determined on the basis of a
stranger in whose favor some stipulation is made in said contract, and who
value of $500 per package or customary freight unit,
becomes a party thereto when he demands fulfillment of that stipulation, in
unless the nature and a higher value shall be declared
this case the delivery of the goods or cargo shipped. In neither capacity can
by the shipper in writing before shipment and inserted in
he assert personally, in bar to any provision of the bill of lading, the alleged
this Bill of Lading.
circumstance that fair and free agreement to such provision was vitiated by
its being in such fine print as to be hardly readable. Parenthetically, it may
And in its second paragraph, the bill states: be observed that in one comparatively recent case 16where this Court found
that a similar package limitation clause was "(printed in the smallest type on
the back of the bill of lading, it nonetheless ruled that the consignee was
If a value higher than $500 shag have been declared in bound thereby on the strength of authority holding that such provisions on
writing by the shipper upon delivery to the carrier and liability limitation are as much a part of a bill of lading as though physically in
inserted in this bill of lading and extra freight paid, if
it and as though placed therein by agreement of the parties.
required and in such case if the actual value of the
goods per package or per customary freight unit shall
exceed such declared value, the value shall There can, therefore, be no doubt or equivocation about the validity and
nevertheless be deemed to be declared value and the enforceability of freely-agreed-upon stipulations in a contract of carriage or
carrier's liability, if any, shall not exceed the declared bill of lading limiting the liability of the carrier to an agreed valuation unless
value and any partial loss or damage shall be adjusted the shipper declares a higher value and inserts it into said contract or bill.
pro rata on the basis of such declared value. This pro position, moreover, rests upon an almost uniform weight of
authority. 17
The issue of alleged deviation is also settled by Clause 13 of the bill of awarding the private respondent P186,048.00 as the peso value of the lost
lading which expressly authorizes trans-shipment of the goods at any point shipment is clearly based on a conversion rate of P8.00 to US$1.00, said
in the voyage in these terms: respondent having claimed a dollar value of $23,256.00 for said
shipment.24 All circumstances considered, it is just and fair that Sea-Land's
dollar obligation be convertible at the same rate.
13. THROUGH CARGO AND TRANSSHIPMENT. The
carrier or master, in the exercise of its or his discretion
and although transshipment or forwarding of the goods WHEREFORE, the Decision of the Intermediate Appellate Court complained
may not have been contemplated or provided for herein, of is reversed and set aside. The stipulation in the questioned bill of lading
may at port of discharge or any other place whatsoever limiting Sea-Land's liability for loss of or damage to the shipment covered by
transship or forward the goods or any part thereof by said bill to US$500.00 per package is held valid and binding on private
any means at the risk and expense of the goods and at respondent. There being no question of the fact that said shipment
any time, whether before or after loading on the ship consisted of eight (8) cartons or packages, for the loss of which Sea-Land is
named herein and by any route, whether within or therefore liable in the aggregate amount of US$4,000.00, it is the judgment
outside the scope of the voyage or beyond the port of of the Court that said petitioner discharge that obligation by paying private
discharge or destination of the goods and without notice respondent the sum of P32,000.00, the equivalent in Philippine currency of
to the shipper or consignee. The carrier or master may US$4,000.00 at the conversion rate of P8.00 to $1.00. Costs against private
delay such transshipping or forwarding for any reason, respondent.
including but not limited to awaiting a vessel or other
means of transportation whether by the carrier or
SO ORDERED.
others.

Said provision obviates the necessity to offer any other justification for
offloading the shipment in question in Manila for transshipment to Cebu City,
the port of destination stipulated in the bill of lading. Nonetheless, the Court
takes note of Sea-Land's explanation that it only directly serves the Port of
Manila from abroad in the usual course of voyage of its carriers, hence its
maintenance of arrangements with a local forwarder. Aboitiz and Company,
for delivery of its imported cargo to the agreed final point of destination
within the Philippines, such arrangements not being prohibited, but in fact
recognized, by law. 18

Furthermore, this Court has also ruled 19 that the Carriage of Goods by Sea
Act is applicable up to the final port of destination and that the fact that
transshipment was made on an interisland vessel did not remove the
contract of carriage of goods from the operation of said Act.

Private respondent also contends that the aforecited Clauses 22 and 13 of

the bill of lading relied upon by petitioner Sea Land form no part of the short-
form bill of lading attached to his complaint before the Trial Court and
appear only in the long form of that document which, he claims. SeaLand
offered (as its Exhibit 2) as an unused blank form with no entries or
signatures therein. He, however, admitted in the Trial Court that several
times in the past shipments had been delivered to him through Sea-
Land, 20 from which the assumption may fairly follow that by the time of the
consignment now in question, he was already reasonably apprised of the
usual terms covering contracts of carriage with said petitioner.

At any rate, as observed earlier, it has already been held that the provisions
of the Carriage of Goods by Sea Act on package limitation [sec 4(5) of the
Act hereinabove referred to] are as much a part of a bill of lading as though
actually placed therein by agreement of the parties. 21

Private respondent, by making claim for loss on the basis of the bill of
lading, to all intents and purposes accepted said bill. Having done so, he —

... becomes bound by all stipulations contained therein

whether on the front or the back thereof. Respondent
cannot elude its provisions simply because they
prejudice him and take advantage of those that are
beneficial. Secondly, the fact that respondent shipped
his goods on board the ship of petitioner and paid the
corresponding freight thereon shows that he impliedly
accepted the bill of lading which was issued in
connection with the shipment in question, and so it may
be said that the same is finding upon him as if it had
been actually signed by him or by any other person in
his behalf. ... 22.

There is one final consideration. The private respondent admits 23 that as

early as on April 22, 1981, Sea-Land had offered to settle his claim for
US$4,000.00, the limit of said carrier's liability for loss of the shipment under
the bill of lading. This Court having reached the conclusion that said sum is
all that is justly due said respondent, it does not appear just or equitable that
Sea-Land, which offered that amount in good faith as early as six years ago,
should, by being made to pay at the current conversion rate of the dollar to
the peso, bear for its own account all of the increase in said rate since the
time of the offer of settlement. The decision of the Regional Trial Court
 Republic of the Philippines CARRIER, in its reply letter dated May 23, 1979, 8 admitted the loss but
SUPREME COURT alleged that the same occurred at Pier 13, an area absolutely under the
Manila control of the ARRASTRE. In view thereof, the CONSIGNEE filed a formal
claim, dated June 4, 1979, 9 with the ARRASTRE, demanding payment of
the value of the goods but said claim was denied.
SECOND DIVISION

After trial, the lower court rendered a decision on August 30, 1985,
G.R. No. 88092 April 25, 1990
exonerating the ARRASTRE of any liability on the ground that the subject
container van was not formally turned over to its custody, and adjudging the
CITADEL LINES, INC., petitioner, CARRIER liable for the principal amount of P312,480.00 representing the
vs. market value of the lost shipment, and the sum of P30,000.00 as and for
COURT OF APPEALS* and MANILA WINE MERCHANTS, attorney's fees and the costs of suit.
INC., respondents.
As earlier stated, the court of Appeals affirmed the decision of the court a
Del Rosario & Del Rosario Law Offices for petitioner. quo but deleted the award of attorney's fees and costs of suit.
Limqueco and Macaraeg Law Office for private respondent.
The two main issues for resolution are:

1. Whether the loss occurred while the cargo in question was in the custody
of E. Razon, Inc. or of Citadel Lines, Inc; and
REGALADO, J.:
2. Whether the stipulation limiting the liability of the carrier contained in the
Through this petition, we are asked to review the decision of the Court of bill of lading is binding on the consignee.
Appeals dated December 20, 1988, in CA-G.R. No. CV-10070, 1 which
affirmed the August 30, 1985 decision of the Regional Trial Court of Manila,
The first issue is factual in nature. The Court of Appeals declared in no
Branch 27, in Civil Case No. 126415, entitled Manila Wine Merchants, Inc.
uncertain terms that, on the basis of the evidence presented, the subject
vs. Citadel Lines, Inc. and E. Razon, Inc., with a modification by deleting the
cargo which was placed in a container van, padlocked and sealed by the
award of attorney's fees and costs of suit.
representative of the CARRIER was still in its possession and control when
the loss occurred, there having been no formal turnover of the cargo to the
The following recital of the factual background of this case is culled from the ARRASTRE. Besides, there is the categorical admission made by two
findings in the decision of the court a quo and adopted by respondent court witnesses, namely, Atty. Lope M. Velasco and Ruben Ignacio, Claims
based on the evidence of record. Manager and Head Checker, respectively, of the CARRIER, 10 that for lack
of space the containers were not turned over to and as the responsibility of
E. Razon Inc. The CARRIER is now estopped from claiming otherwise.
Petitioner Citadel Lines, Inc. (hereafter referred to as the CARRIER) is the
general agent of the vessel "Cardigan Bay/Strait Enterprise," while
respondent Manila Wine Merchants, Inc. (hereafter, the CONSIGNEE) is the Common carriers, from the nature of their business and for reasons of public
importer of the subject shipment of Dunhill cigarettes from England. policy, are bound to observe extraordinary 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. 11 If the goods are lost, destroyed or
On or about March 17, 1979, the vessel "Cardigan Bay/Strait Enterprise"
deteriorated, common carriers are presumed to have been at fault or to have
loaded on board at Southampton, England, for carriage to Manila, 180 acted negligently, unless they prove that they observed extra ordinary
Filbrite cartons of mixed British manufactured cigarettes called "Dunhill diligence as required in Article 1733 of the Civil Code. 12 The duty of the
International Filter" and "Dunhill International Menthol," as evidenced by Bill
consignee is to prove merely that the goods were lost. Thereafter, the
of Lading No. 70621374 2 and Bill of Lading No. 70608680 3 of the Ben Line burden is shifted to the carrier to prove that it has exercised the
Containers Ltd. The shipment arrived at the Port of Manila Pier 13, on April extraordinary diligence required by law. And, its extraordinary responsibility
18, 1979 in container van No. BENU 204850-9. The said container was
lasts from the time the goods are unconditionally placed in the possession
received by E. Razon, Inc. (later known as Metro Port Service, Inc. and of, and received by the carrier for transportation until the same are
referred to herein as the ARRASTRE) under Cargo Receipt No. 71923 delivered, actually or constructively, by the carrier to the consignee or to the
dated April 18, 1979. 4
person who has the right to receive them. 13

On April 30, 1979, the container van, which contained two shipments was Considering, therefore, that the subject shipment was lost while it was still in
stripped. One shipment was delivered and the other shipment consisting of
the custody of herein petitioner CARRIER, and considering further that it
the imported British manufactured cigarettes was palletized. Due to lack of failed to prove that the loss was occasioned by an excepted cause, the
space at the Special Cargo Coral, the aforesaid cigarettes were placed in inescapable conclusion is that the CARRIER was negligent and should be
two containers with two pallets in container No. BENU 204850-9, the original
held liable therefor.
container, and four pallets in container No. BENU 201009-9, with both
containers duly padlocked and sealed by the representative of the
CARRIER. The cases cited by petitioner in support of its allegations to the contrary do
not find proper application in the case at bar simply because those cases
involve a situation wherein the shipment was turned over to the custody and
In the morning of May 1, 1979, the CARRIER'S headchecker discovered possession of the arrastre operator.
that container van No. BENU 201009-9 had a different padlock and the seal
was tampered with. The matter was reported to Jose G. Sibucao, Pier
Superintendent, Pier 13, and upon verification, it was found that 90 cases of We, however, find the award of damages in the amount of P312,800.00 for
imported British manufactured cigarettes were missing. This was confirmed the value of the goods lost, based on the alleged market value thereof, to be
in the report of said Superintendent Sibucao to Ricardo Cosme, Assistant erroneous. It is clearly and expressly provided under Clause 6 of the
Operations Manager, dated May 1, 1979 5 and the Official Report/Notice of aforementioned bills of lading issued by the CARRIER that its liability is
Claim of Citadel Lines, Inc. to E. Razon, Inc. dated May 8, 1979. 6 Per limited to $2.00 per kilo. Basic is the rule, long since enshrined as a
investigation conducted by the ARRASTRE, it was revealed that the cargo in statutory provision, that a stipulation limiting the liability of the carrier to the
question was not formally turned over to it by the CARRIER but was kept value of the goods appearing in the bill of lading, unless the shipper or
inside container van No. BENU 201009-9 which was padlocked and sealed owner declares a greater value, is binding. 14 Further, a contract fixing the
by the representatives of the CARRIER without any participation of the sum that may be recovered by the owner or shipper for the loss, destruction
ARRASTRE. or deterioration of the goods is valid, if it is reasonable and just under the
circumstances, and has been fairly and freely agreed upon. 15
When the CONSIGNEE learned that 90 cases were missing, it filed a formal
claim dated May 21, 1979, 7 with the CARRIER, demanding the payment of The CONSIGNEE itself admits in its memorandum that the value of the
P315,000.00 representing the market value of the missing cargoes. The goods shipped does not appear in the bills of lading. 16 Hence, the
stipulation on the carrier's limited liability applies. There is no question that
the stipulation is just and reasonable under the circumstances and have
been fairly and freely agreed upon. In Sea-land Service, Inc.vs. Intermediate
Appellate Court, et al. 17 we there explained what is a just and reasonable,
and a fair and free, stipulation, in this wise:

. . . That said stipulation is just and reasonable arguable from the

fact that it echoes Art. 1750 itself in providing a limit to liability only
if a greater value is not declared for the shipment in the bill of
lading. To hold otherwise would amount to questioning the justice
and fairness of that law itself, and this the private respondent does
not pretend to do. But over and above that consideration the just
and reasonable character of such stipulation is implicit in it giving
the shipper or owner the option of avoiding accrual of liability
limitation by the simple and surely far from onerous expedient of
declaring the nature and value of the shipment in the bill of lading.
And since the shipper here has not been heard to complain of
having been "rushed," imposed upon or deceived in any
significant way into agreeing to ship the cargo under a bill of
lading carrying such a stipulation — in fact, it does not appear,
that said party has been heard from at all insofar as this dispute is
concerned — there is simply no ground for assuming that its
agreement thereto was not as the law would require, freely and
fairly sought and well.

The bill of lading shows that 120 cartons weigh 2,978 kilos or 24.82 kilos per
carton. Since 90 cartons were lost and the weight of said cartons is 2,233.80
kilos, at $2.00 per kilo the CARRIER's liability amounts to only US$4,467.60.

WHEREFORE, the judgment of respondent court is hereby MODIFIED and

petitioner Citadel Lines, Inc. is ordered to pay private respondent Manila
Wine Merchants, Inc. the sum of US$4,465.60. or its equivalent in Philippine
currency at the exchange rate obtaining at the time of payment thereof. In all
other respects, said judgment of respondent Court is AFFIRMED.

SO ORDERED.
 SECOND DIVISION It is required, however, that the contract must be reasonable and
just under the circumstances and has been fairly and freely
agreed upon. The requirements provided in Art. 1750 of the New
Civil Code must be complied with before a common carrier can
claim a limitation of its pecuniary liability in case of loss,
[G.R. No. 122494. October 8, 1998] destruction or deterioration of the goods it has undertaken to
transport.

In the case at bar, the Court is of the view that the requirements
of said article have not been met. The fact that those conditions
EVERETT STEAMSHIP CORPORATION, petitioner, vs. COURT OF are printed at the back of the bill of lading in letters so small that
APPEALS and HERNANDEZ TRADING CO. INC., respondents. they are hard to read would not warrant the presumption that the
plaintiff or its supplier was aware of these conditions such that
he had fairly and freely agreed to these conditions. It can not be
DECISION said that the plaintiff had actually entered into a contract with the
MARTINEZ, J.: defendant, embodying the conditions as printed at the back of
the bill of lading that was issued by the defendant to plaintiff.

Petitioner Everett Steamship Corporation, through this petition for On appeal, the Court of Appeals deleted the award of attorneys fees
review, seeks the reversal of the decision[1] of the Court of Appeals, dated but affirmed the trial courts findings with the additional observation that private
June 14, 1995, in CA-G.R. No. 428093, which affirmed the decision of the respondent can not be bound by the terms and conditions of the bill of lading
Regional Trial Court of Kalookan City, Branch 126, in Civil Case No. C-15532, because it was not privy to the contract of carriage. It said:
finding petitioner liable to private respondent Hernandez Trading Co., Inc. for
the value of the lost cargo. As to the amount of liability, no evidence appears on record to
show that the appellee (Hernandez Trading Co.) consented to
Private respondent imported three crates of bus spare parts marked as the terms of the Bill of Lading. The shipper named in the Bill of
MARCO C/No. 12, MARCO C/No. 13 andMARCO C/No. 14, from its supplier, Lading is Maruman Trading Co., Ltd. whom the appellant
Maruman Trading Company, Ltd. (Maruman Trading), a foreign corporation (Everett Steamship Corp.) contracted with for the transportation
based in Inazawa, Aichi, Japan. The crates were shipped from Nagoya, of the lost goods.
Japan to Manila on board ADELFAEVERETTE, a vesselowned by petitioners
principal, Everett Orient Lines. The said crates were covered by Bill of Lading Even assuming arguendo that the shipper Maruman Trading
No. NGO53MN. Co., Ltd. accepted the terms of the bill of lading when it delivered
the cargo to the appellant, still it does not necessarily follow that
Upon arrival at the port of Manila, it was discovered that the crate appellee Hernandez Trading Company as consignee is bound
marked MARCO C/No. 14 was missing. This was confirmed and admitted by thereby considering that the latter was never privy to the
petitioner in its letter of January 13, 1992 addressed to private respondent, shipping contract.
which thereafter made a formal claim upon petitioner for the value of the lost
cargo amounting to One Million Five Hundred Fifty Two Thousand Five xxxxxxxxx
Hundred (Y1,552,500.00) Yen, the amount shown in an Invoice No. MTM- Never having entered into a contract with the appellant, appellee
941, dated November 14, 1991. However, petitioner offered to pay only One should therefore not be bound by any of the terms and
Hundred Thousand (Y100,000.00) Yen, the maximum amount stipulated conditions in the bill of lading.
under Clause 18 of the covering bill of lading which limits the liability of
petitioner. Hence, it follows that the appellee may recover the full value of
the shipment lost, the basis of which is not the breach of contract
Private respondent rejected the offer and thereafter instituted a suit for as appellee was never a privy to the any contract with the
collection docketed as Civil Case No. C-15532, against petitioner before the appellant, but is based on Article 1735 of the New Civil Code,
Regional Trial Court of Caloocan City, Branch 126. there being no evidence to prove satisfactorily that the appellant
At the pre-trial conference, both parties manifested that they have no has overcome the presumption of negligence provided for in the
testimonial evidence to offer and agreed instead to file their respective law.
memoranda. Petitioner now comes to us arguing that the Court of Appeals erred
On July 16, 1993, the trial court rendered judgment[2] in favor of private (1) in ruling that the consent of the consignee to the terms and conditions of
respondent, ordering petitioner to pay: (a) Y1,552,500.00; (b) Y20,000.00 or the bill of lading is necessary to make such stipulations binding upon it; (2) in
its peso equivalent representing the actual value of the lost cargo and the holding that the carriers limited package liability as stipulated in the bill of
material and packaging cost; (c) 10% of the total amount as an award for and lading does not apply in the instant case; and (3) in allowing private
as contingent attorneys fees; and (d) to pay the cost of the suit. The trial court respondent to fully recover the full alleged value of its lost cargo.
ruled: We shall first resolve the validity of the limited liability clause in the bill
Considering defendants categorical admission of loss and its of lading.
failure to overcome the presumption of negligence and fault, the A stipulation in the bill of lading limiting the common carriers liability for
Court conclusively finds defendant liable to the plaintiff. The next loss or destruction of a cargo to a certain sum, unless the shipper or owner
point of inquiry the Court wants to resolve is the extent of the declares a greater value, is sanctioned by law, particularly Articles 1749 and
liability of the defendant. As stated earlier, plaintiff contends that 1750 of the Civil Code which provide:
defendant should be held liable for the whole value for the loss
of the goods in the amount of Y1,552,500.00 because the terms ART. 1749. A stipulation that the common carriers liability is
appearing at the back of the bill of lading was so written in fine limited to the value of the goods appearing in the bill of lading,
prints and that the same was not signed by plaintiff or shipper unless the shipper or owner declares a greater value, is binding.
thus, they are not bound by the clause stated in paragraph 18 of
the bill of lading. On the other hand, defendant merely admitted ART. 1750. A contract fixing the sum that may be recovered by
that it lost the shipment but shall be liable only up to the amount the owner or shipper for the loss, destruction, or deterioration of
of Y100,000.00. the goods is valid, if it is reasonable and just under the
circumstances, and has been freely and fairly agreed upon.
The Court subscribes to the provisions of Article 1750 of the
New Civil Code - Such limited-liability clause has also been consistently upheld by this
Court in a number of cases.[3] Thus, in Sea Land Service, Inc. vs
Art. 1750. A contract fixing the sum that may be Intermediate Appellate Court[4], we ruled:
recovered by the owner or shipper for the loss,
destruction or deterioration of the goods is valid, if it is
reasonable and just under the circumstances, and has It seems clear that even if said section 4 (5) of the Carriage of Goods by
been fairly and freely agreed upon. Sea Act did not exist, the validity and binding effect of the liability limitation
clause in the bill of lading here are nevertheless fully sustainable on the
basis alone of the cited Civil Code Provisions. That said stipulation is just
and reasonable is arguable from the fact that it echoes Art. 1750 itself in one from contracting against his own negligence. (Emphasis
providing a limit to liability only if a greater value is not declared for the supplied)
shipment in the bill of lading. To hold otherwise would amount to questioning
the justness and fairness of the law itself, and this the private respondent Greater vigilance, however, is required of the courts when dealing with
does not pretend to do. But over and above that consideration, the just and contracts of adhesion in that the said contracts must be carefully scrutinized
reasonable character of such stipulation is implicit in it giving the shipper or in order to shield the unwary (or weaker party) from deceptive schemes
owner the option of avoiding accrual of liability limitation by the simple and contained in ready-made covenants,[8] such as the bill of lading in
surely far from onerous expedient of declaring the nature and value of the question. The stringent requirement which the courts are enjoined to observe
shipment in the bill of lading.. is in recognition of Article 24 of the Civil Code which mandates that (i)n all
contractual, property or other relations, when one of the parties is at a
disadvantage on account of his moral dependence, ignorance,
Pursuant to the afore-quoted provisions of law, it is required that the indigence, mental weakness, tender age or other handicap, the courts
stipulation limiting the common carriers liability for loss must be reasonable must be vigilant for his protection.
and just under the circumstances, and has been freely and fairly agreed upon.
The shipper, Maruman Trading, we assume, has been extensively
The bill of lading subject of the present controversy specifically engaged in the trading business. It can not be said to be ignorant of the
provides, among others: business transactions it entered into involving the shipment of its goods to its
customers. The shipper could not have known, or should know the
18. All claims for which the carrier may be liable shall be
stipulations in the bill of lading and there it should have declared a higher
adjusted and settled on the basis of the shippers net invoice cost
valuation of the goods shipped. Moreover, Maruman Trading has not been
plus freight and insurance premiums, if paid, and in no event
heard to complain that it has been deceived or rushed into agreeing to ship
shall the carrier be liable for any loss of possible profits or any
the cargo in petitioners vessel. In fact, it was not even impleaded in this case.
consequential loss.
The next issue to be resolved is whether or not private respondent, as
The carrier shall not be liable for any loss of or any damage to or
consignee, who is not a signatory to the bill of lading is bound by the
in any connection with, goods in an amount exceeding One
stipulations thereof.
Hundred Thousand Yen in Japanese Currency (Y100,000.00) or
its equivalent in any other currency per package or customary Again, in Sea-Land Service, Inc. vs. Intermediate Appellate
freight unit (whichever is least) unless the value of the goods Court (supra), we held that even if the consignee was not a signatory to the
higher than this amount is declared in writing by the shipper contract of carriage between the shipper and the carrier, the consignee can
before receipt of the goods by the carrier and inserted in the Bill still be bound by the contract.Speaking through Mr. Chief Justice Narvasa,
of Lading and extra freight is paid as required. (Emphasis we ruled:
supplied)
To begin with, there is no question of the right, in principle, of
The above stipulations are, to our mind, reasonable and just. In the bill a consignee in a bill of lading to recover from the carrier or
of lading, the carrier made it clear that its liability would only be up to One shipper for loss of, or damage to goods being transported under
Hundred Thousand (Y100,000.00) Yen. However, the shipper, Maruman said bill, although that document may have been- as in
Trading, had the option to declare a higher valuation if the value of its practice it oftentimes is-drawn up only by the consignor and
cargo was higher than the limited liability of the carrier. Considering that the carrier without the intervention of the consignee. x x x.
the shipper did not declare a higher valuation, it had itself to blame for
not complying with the stipulations. x x x the right of a party in the same situation as respondent
here, to recover for loss of a shipment consigned to him
The trial courts ratiocination that private respondent could not have under a bill of lading drawn up only by and between the
fairly and freely agreed to the limited liability clause in the bill of lading shipper and the carrier, springs from either a relation of
because the said conditions were printed in small letters does not make the agency that may exist between him and the shipper or
bill of lading invalid. consignor, or his status as stranger in whose favor some
stipulation is made in said contract, and who becomes a
We ruled in PAL, Inc. vs. Court of Appeals[5] that the jurisprudence on
party thereto when he demands fulfillment of that
the matter reveals the consistent holding of the court that contracts of
stipulation, in this case the delivery of the goods or cargo
adhesion are not invalid per se and that it has on numerous occasions upheld
shipped. In neither capacity can he assert personally, in bar
the binding effect thereof. Also, in Philippine American General Insurance
to any provision of the bill of lading, the alleged
Co., Inc. vs. Sweet Lines , Inc.[6] this Court , speaking through the learned
circumstance that fair and free agreement to such provision
Justice Florenz D. Regalado, held:
was vitiated by its being in such fine print as to be hardly
x x x Ong Yiu vs. Court of Appeals, et.al., instructs us readable.Parenthetically, it may be observed that in one
that contracts of adhesion wherein one party imposes a ready- comparatively recent case (Phoenix Assurance Company vs.
made form of contract on the other x x x are contracts not Macondray & Co., Inc., 64 SCRA 15) where this Court found
entirely prohibited. The one who adheres to the contract is in that a similar package limitation clause was printed in the
reality free to reject it entirely; if he adheres he gives his smallest type on the back of the bill of lading, it nonetheless
consent. In the present case, not even an allegation of ignorance ruled that the consignee was bound thereby on the strength
of a party excuses non-compliance with the contractual of authority holding that such provisions on liability
stipulations since the responsibility for ensuring full limitation are as much a part of a bill of lading as though
comprehension of the provisions of a contract of carriage physically in it and as though placed therein by agreement
devolves not on the carrier but on the owner, shipper, or of the parties.
consignee as the case may be. (Emphasis supplied)
There can, therefore, be no doubt or equivocation about the
It was further explained in Ong Yiu vs Court of Appeals[7] that validity and enforceability of freely-agreed-upon stipulations in a
stipulations in contracts of adhesion are valid and binding. contract of carriage or bill of lading limiting the liability of the
carrier to an agreed valuation unless the shipper declares a
While it may be true that petitioner had not signed the plane higher value and inserts it into said contract or bill. This
ticket x x, he is nevertheless bound by the provisions proposition, moreover, rests upon an almost uniform weight of
thereof. Such provisions have been held to be a part of the authority. (Underscoring supplied)
contract of carriage, and valid and binding upon the passenger
regardless of the latters lack of knowledge or assent to the When private respondent formally claimed reimbursement for the
regulation. It is what is known as a contract of adhesion, in missing goods from petitioner and subsequently filed a case against the latter
regards which it has been said that contracts of adhesion based on the very same bill of lading, it (private respondent) accepted the
wherein one party imposes a ready-made form of contract on the provisions of the contract and thereby made itself a party thereto, or at least
other, as the plane ticket in the case at bar, are contracts not has come to court to enforce it.[9] Thus, private respondent cannot now reject
entirely prohibited. The one who adheres to the contract is in or disregard the carriers limited liability stipulation in the bill of lading. In other
reality free to reject it entirely; if he adheres, he gives his words, private respondent is bound by the whole stipulations in the bill of
consent. x x x , a contract limiting liability upon an agreed lading and must respect the same.
valuation does not offend against the policy of the law forbidding
Private respondent, however, insists that the carrier should be liable for
the full value of the lost cargo in the amount of Y1,552,500.00, considering
that the shipper, Maruman Trading, had "fully declared the shipment x x x, the
contents of each crate, the dimensions, weight and value of the
contents,"[10] as shown in the commercial Invoice No. MTM-941.

This claim was denied by petitioner, contending that it did not know of
the contents, quantity and value of "the shipment which consisted of three
pre-packed crates described in Bill of Lading No. NGO-53MN merely as 3
CASES SPARE PARTS.[11]

The bill of lading in question confirms petitioners contention. To defeat

the carriers limited liability, the aforecited Clause 18 of the bill of lading
requires that the shipper should have declared in writing a higher
valuation of its goods before receipt thereof by the carrier and insert the
said declaration in the bill of lading, with the extra freight paid. These
requirements in the bill of lading were never complied with by the shipper,
hence, the liability of the carrier under the limited liability clause stands. The
commercial Invoice No. MTM-941 does not in itself sufficiently and
convincingly show that petitioner has knowledge of the value of the cargo as
contended by private respondent. No other evidence was proffered by private
respondent to support is contention. Thus, we are convinced that petitioner
should be liable for the full value of the lost cargo.

In fine, the liability of petitioner for the loss of the cargo is limited to One
Hundred Thousand (Y100,000.00) Yen, pursuant to Clause 18 of the bill of
lading.

WHEREFORE, the decision of the Court of Appeals dated June 14,

1995 in C.A.-G.R. CV No. 42803 is hereby REVERSED and SET ASIDE.

SO ORDERED.
 THIRD DIVISION plaintiffs luggage; Fifty Thousand (P50,000.00) Pesos for moral
and actual damages and twenty percent (20%) of the total
amount imposed against the defendant for attorneys fees and
costs of this action.

[G.R. No. 121824. January 29, 1998] The Third-Party Complaint against third-party defendant
Philippine Airlines is DISMISSED for lack of cause of action.

SO ORDERED.
BRITISH AIRWAYS, petitioner, vs. COURT OF APPEALS, GOP
MAHTANI, and PHILIPPINE AIRLINES, respondents. Dissatisfied, BA appealed to the Court of Appeals, which however,
affirmed the trial courts findings. Thus:
DECISION WHEREFORE, in view of all the foregoing considerations,
finding the Decision appealed from to be in accordance with law
ROMERO, J.:
and evidence, the same is hereby AFFIRMED in toto, with costs
against defendant-appellant.
In this appeal by certiorari, petitioner British Airways (BA) seeks to set
aside the decision of respondent Court of Appeals [1] promulgated on SO ORDERED.[10]
September 7, 1995, which affirmed the award of damages and attorneys fees
BA is now before us seeking the reversal of the Court of Appeals
made by the Regional Trial Court of Cebu, 7th Judicial Region, Branch 17, in decision.
favor of private respondent GOP Mahtani as well as the dismissal of its third-
party complaint against Philippine Airlines (PAL).[2] In essence, BA assails the award of compensatory damages and
attorneys fees, as well as the dismissal of its third-party complaint against
The material and relevant facts are as follows: PAL. [11]

On April 16, 1989, Mahtani decided to visit his relatives in Bombay, India. In Regarding the first assigned issue, BA asserts that the award of
anticipation of his visit, he obtained the services of a certain Mr. Gumar to compensatory damages in the separate sum of P7,000.00 for the loss of
prepare his travel plans. The latter, in turn, purchased a ticket from BA Mahtanis two pieces of luggage was without basis since Mahtani in his
where the following itinerary was indicated:[3] complaint[12]stated the following as the value of his personal belongings:

8. On said travel, plaintiff took with him the following items and
CARRIER FLIGHT DATE TIME STATUS its corresponding value, to wit:

1. personal belonging - - - - - - - - - - - - - - P10,000.00

MANILA MNL PR 310Y 16 APR 1730 OK 2. gifts for his parents and relatives - - - - - $5,000.00
HONGKONG HKG BA 20 M 16 APR 2100 OK
BOMBAY BOM BA 19 M 23 APR 0840 OK Moreover, he failed to declare a higher valuation with respect to his
MANILA MNL" luggage, a condition provided for in the ticket, which reads:[13]

Liability for loss, delay, or damage to baggage is limited unless a

Since BA had no direct flights from Manila to Bombay, Mahtani had to higher value is declared in advance and additional charges are
take a flight to Hongkong via PAL, and upon arrival in Hongkong he had to paid:
take a connecting flight to Bombay on board BA.
1. For most international travel (including domestic corporations
Prior to his departure, Mahtani checked in at the PAL counter in Manila of international journeys) the liability limit is approximately U.S.
his two pieces of luggage containing his clothings and personal effects, $9.07 per pound (U.S. $20.00) per kilo for checked baggage and
confident that upon reaching Hongkong, the same would be transferred to the U.S. $400 per passenger for unchecked baggage.
BA flight bound for Bombay.
Before we resolve the issues raised by BA, it is needful to state that the
Unfortunately, when Mahtani arrived in Bombay he discovered that his nature of an airlines contract of carriage partakes of two types, namely: a
luggage was missing and that upon inquiry from the BA representatives, he contract to deliver a cargo or merchandise to its destination and a contract to
was told that the same might have been diverted to London. After patiently transport passengers to their destination. A business intended to serve the
waiting for his luggage for one week, BA finally advised him to file a claim by travelling public primarily, it is imbued with public interest, hence, the law
accomplishing the Property Irregularity Report.[4] governing common carriers imposes an exacting standard.[14]Neglect or
malfeasance by the carriers employees could predictably furnish bases for an
Back in the Philippines, specifically on June 11, 1990, Mahtani filed his
action for damages.[15]
complaint for damages and attorneys fees[5] against BA and Mr. Gumar before
the trial court, docketed as Civil Case No. CEB-9076. In the instant case, it is apparent that the contract of carriage was
[6] between Mahtani and BA. Moreover, it is indubitable that his luggage never
On September 4, 1990, BA filed its answer with counter claim to the
arrived in Bombay on time. Therefore, as in a number of cases[16] we have
complaint raising, as special and affirmative defenses, that Mahtani did not
assessed the airlines culpability in the form of damages for breach of contract
have a cause of action against it. Likewise, on November 9, 1990, BA filed a
involving misplaced luggage.
third-party complaint[7] against PAL alleging that the reason for the non-
transfer of the luggage was due to the latters late arrival in Hongkong, thus In determining the amount of compensatory damages in this kind of
leaving hardly any time for the proper transfer of Mahtanis luggage to the BA cases, it is vital that the claimant satisfactorily prove during the trial the
aircraft bound for Bombay. existence of the factual basis of the damages and its causal connection to
defendants acts.[17]
On February 25, 1991, PAL filed its answer to the third-party complaint,
wherein it disclaimed any liability, arguing that there was, in fact, adequate In this regard, the trial court granted the following award as
time to transfer the luggage to BA facilities in Hongkong. Furthermore, the compensatory damages:
transfer of the luggage to Hongkong authorities should be considered as
transfer to BA.[8] Since plaintiff did not declare the value of the contents in his
luggage and even failed to show receipts of the alleged gifts for
After appropriate proceedings and trial, on March 4, 1993, the trial court the members of his family in Bombay, the most that can be
rendered its decision in favor of Mahtani,[9] the dispositive portion of which expected for compensation of his lost luggage (2 suit cases) is
reads as follows: Twenty U.S. Dollars ($20.00) per kilo, or a combined value of
Four Hundred ($400.00) U.S. Dollars for Twenty kilos
WHEREFORE, premises considered, judgment is rendered for
representing the contents plus Seven Thousand (P7,000.00)
the plaintiff and against the defendant for which defendant is
Pesos representing the purchase price of the two (2) suit cases.
ordered to pay plaintiff the sum of Seven Thousand (P7,000.00)
Pesos for the value of the two (2) suit cases; Four Hundred U.S. However, as earlier stated, it is the position of BA that there should have
($400.00) Dollars representing the value of the contents of been no separate award for the luggage and the contents thereof since
Mahtani failed to declare a separate higher valuation for the luggage, [18]and Needless to say, factual findings of the trial court, as affirmed by the
therefore, its liability is limited, at most, only to the amount stated in the ticket. Court of Appeals, are entitled to great respect.[28] Since the actual value of the
luggage involved appreciation of evidence, a task within the competence of
Considering the facts of the case, we cannot assent to such specious the Court of Appeals, its ruling regarding the amount is assuredly a question
argument. of fact, thus, a finding not reviewable by this Court.[29]
Admittedly, in a contract of air carriage a declaration by the passenger As to the issue of the dismissal of BAs third-party complaint against
of a higher value is needed to recover a greater amount. Article 22(1) of the PAL, the Court of Appeals justified its ruling in this wise, and we quote: [30]
Warsaw Convention,[19] provides as follows:
Lastly, we sustain the trial courts ruling dismissing appellants
third-party complaint against PAL.
xxxxxxxxx
The contract of air transportation in this case pursuant to the
(2) In the transportation of checked baggage and goods, the ticket issued by appellant to plaintiff-appellee was exclusively
liability of the carrier shall be limited to a sum of 250 francs per between the plaintiff Mahtani and defendant-appellant BA. When
kilogram, unless the consignor has made, at the time the plaintiff boarded the PAL plane from Manila to Hongkong, PAL
package was handed over to the carrier, a special declaration of was merely acting as a subcontractor or agent of BA. This is
the value at delivery and has paid a supplementary sum if the shown by the fact that in the ticket issued by appellant to
case so requires. In that case the carrier will be liable to pay a plaintiff-appellee, it is specifically provided on the Conditions of
sum not exceeding the declared sum, unless he proves that the Contract, paragraph 4 thereof that:
sum is greater than the actual value to the consignor at delivery.
4. x x x carriage to be performed hereunder by
American jurisprudence provides that an air carrier is not liable for the several successive carriers is regarded as a single
loss of baggage in an amount in excess of the limits specified in the tariff operation.
which was filed with the proper authorities, such tariff being binding on the
The rule that carriage by plane although performed by
passenger regardless of the passengers lack of knowledge thereof or assent
successive carriers is regarded as a single operation and that
thereto.[20] This doctrine is recognized in this jurisdiction. [21]
the carrier issuing the passengers ticket is considered the
Notwithstanding the foregoing, we have, nevertheless, ruled against principal party and the other carrier merely subcontractors or
blind reliance on adhesion contracts where the facts and circumstances justify agent, is a settled issue.
that they should be disregarded.[22]
We cannot agree with the dismissal of the third-complaint.
In addition, we have held that benefits of limited liability are subject to
In Firestone Tire and Rubber Company of the
waiver such as when the air carrier failed to raise timely objections during the
Philippines v. Tempengko,[31] we expounded on the nature of a third-party
trial when questions and answers regarding the actual claims and damages
complaint thus:
sustained by the passenger were asked.[23]
The third-party complaint is, therefore, a procedural device
Given the foregoing postulates, the inescapable conclusion is that BA
whereby a third party who is neither a party nor privy to the act
had waived the defense of limited liability when it allowed Mahtani to testify
or deed complained of by the plaintiff, may be brought into the
as to the actual damages he incurred due to the misplacement of his luggage,
case with leave of court, by the defendant, who acts as third-
without any objection. In this regard, we quote the pertinent transcript of
party plaintiff to enforce against such third-party defendant a
stenographic notes of Mahtanis direct testimony:[24]
right for contribution, indemnity, subrogation or any other relief,
Q - How much are you going to ask from this court? in respect of the plaintiffs claim. The third-party complaint is
actually independent of and separate and distinct from the
A - P100,000.00. plaintiffs complaint. Were it not for this provision of the Rules of
Court, it would have to be filed independently and separately
Q - What else? from the original complaint by the defendant against the third-
party. But the Rules permit defendant to bring in a third-party
A - Exemplary damages. defendant or so to speak, to litigate his separate cause of action
Q - How much? in respect of plaintiffs claim against a third-party in the original
and principal case with the object of avoiding circuitry of action
A - P100,000.00. and unnecessary proliferation of law suits and of disposing
expeditiously in one litigation the entire subject matter arising
Q - What else? from one particular set of facts.
A - The things I lost, $5,000.00 for the gifts I lost and my Undeniably, for the loss of his luggage, Mahtani is entitled to damages
from BA, in view of their contract of carriage. Yet, BA adamantly disclaimed
personal belongings, P10,000.00. its liability and instead imputed it to PAL which the latter naturally denies.In
other words, BA and PAL are blaming each other for the incident.
Q - What about the filing of this case?
In resolving this issue, it is worth observing that the contract of air
A - The court expenses and attorneys fees is 30%.
transportation was exclusively between Mahtani and BA, the latter merely
Indeed, it is a well-settled doctrine that where the proponent offers endorsing the Manila to Hongkong leg of the formers journey to PAL, as its
evidence deemed by counsel of the adverse party to be inadmissible for any subcontractor or agent. In fact, the fourth paragraph of the Conditions of
reason, the latter has the right to object. However, such right is a mere Contracts of the ticket[32] issued by BA to Mahtani confirms that the contract
privilege which can be waived. Necessarily, the objection must be made at was one of continuous air transportation from Manila to Bombay.
the earliest opportunity, lest silence when there is opportunity to speak may
4. x x x carriage to be performed hereunder by several successive
operate as a waiver of objections.[25] BA has precisely failed in this regard.
carriers is regarded as a single operation.
To compound matters for BA, its counsel failed, not only to interpose a
Prescinding from the above discussion, it is undisputed that PAL, in
timely objection, but even conducted his own cross-examination as well.[26] In
transporting Mahtani from Manila to Hongkong acted as the agent of BA.
the early case of Abrenica v. Gonda,[27] we ruled that:
Parenthetically, the Court of Appeals should have been cognizant of the
x x x (I)t has been repeatedly laid down as a rule of evidence
well-settled rule that an agent is alsoresponsible for any negligence in the
that a protest or objection against the admission of any evidence
performance of its function[33] and is liable for damages which the principal
must be made at the proper time, and that if not so made it will
may suffer by reason of its negligent act.[34] Hence, the Court of Appeals erred
be understood to have been waived. The proper time to make a
when it opined that BA, being theprincipal, had no cause of action against
protest or objection is when, from the question addressed to the
PAL, its agent or sub-contractor.
witness, or from the answer thereto, or from the presentation of
proof, the inadmissibility of evidence is, or may be inferred. Also, it is worth mentioning that both BA and PAL are members of the
International Air Transport Association (IATA), wherein member airlines are
regarded as agents of each other in the issuance of the tickets and other
matters pertaining to their relationship.[35] Therefore, in the instant case, the
contractual relationship between BA and PAL is one of agency, the former
being the principal, since it was the one which issued the confirmed ticket,
and the latter the agent.

Our pronouncement that BA is the principal is consistent with our ruling

in Lufthansa German Airlines v. Court of Appeals.[36] In that case, Lufthansa
issued a confirmed ticket to Tirso Antiporda covering five-leg trip aboard
different airlines. Unfortunately, Air Kenya, one of the airlines which was to
carry Antiporda to a specific destination bumped him off.

An action for damages was filed against Lufthansa which, however,

denied any liability, contending that its responsibility towards its passenger is
limited to the occurrence of a mishap on its own line. Consequently, when
Antiporda transferred to Air Kenya, its obligation as a principal in the contract
of carriage ceased; from there on, it merely acted as a ticketing agent for Air
Kenya.

In rejecting Lufthansas argument, we ruled:

In the very nature of their contract, Lufthansa is clearly the

principal in the contract of carriage with Antiporda and remains
to be so, regardless of those instances when actual carriage was
to be performed by various carriers. The issuance of confirmed
Lufthansa ticket in favor of Antiporda covering his entire five-leg
trip aboard successive carriers concretely attest to this.

Since the instant petition was based on breach of contract of carriage,

Mahtani can only sue BA alone, and not PAL, since the latter was not a party
to the contract. However, this is not to say that PAL is relieved from any
liability due to any of its negligent acts. In China Air Lines, Ltd. v. Court of
Appeals,[37] while not exactly in point, the case, however, illustrates the
principle which governs this particular situation. In that case, we recognized
that a carrier (PAL), acting as an agent of another carrier, is also liable for its
own negligent acts or omission in the performance of its duties.

Accordingly, to deny BA the procedural remedy of filing a third-party

complaint against PAL for the purpose of ultimately determining who was
primarily at fault as between them, is without legal basis. After all, such
proceeding is in accord with the doctrine against multiplicity of cases which
would entail receiving the same or similar evidence for both cases and
enforcing separate judgments therefor. It must be borne in mind that the
purpose of a third-party complaint is precisely to avoid delay and circuity of
action and to enable the controversy to be disposed of in one suit.[38] It is but
logical, fair and equitable to allow BA to sue PAL for indemnification, if it is
proven that the latters negligence was the proximate cause of Mahtanis
unfortunate experience, instead of totally absolving PAL from any liability.

WHEREFORE, in view of the foregoing, the decision of the Court of

Appeals in CA-G.R. CV No. 43309 dated September 7, 1995 is hereby
MODIFIED, reinstating the third-party complaint filed by British Airways dated
November 9, 1990 against Philippine Airlines. No costs.

SO ORDERED.
 SECOND DIVISION that any and all actions arising out of the ocntract of carriage should be filed
only in a particular province or city, in this case the City of Cebu, to the
exclusion of all others?
G.R. No. L-37750 May 19, 1978

Petitioner contends thaty Condition No. 14 is valid and enforceable, since

SWEET LINES, INC., petitioner,
private respndents acceded to tit when they purchased passage tickets at its
vs.
Cagayan de Oro branch office and took its vessel M/S "Sweet Town" for
HON. BERNARDO TEVES, Presiding Judge, CFI of Misamis Oriental
passage to Tagbilaran, Bohol — that the condition of the venue of actions in
Branch VII, LEOVIGILDO TANDOG, JR., and ROGELIO
the City of Cebu is proper since venue may be validly waived, citing
TIRO, respondents.
cases; 10 that is an effective waiver of venue, valid and binding as such,
since it is printed in bold and capital letters and not in fine print and merely
Filiberto Leonardo, Abelardo C. Almario & Samuel B. Abadiano for assigns the place where the action sing from the contract is institution
petitioner. likewise citing cases; 11 and that condition No. 14 is unequivocal and
mandatory, the words and phrases "any and all", "irrespective of where it is
issued," and "shag" leave no doubt that the intention of Condition No. 14 is
Leovigildo Vallar for private respondents. to fix the venue in the City of Cebu, to the exclusion of other places; that the
orders of the respondent Judge are an unwarranted departure from
established jurisprudence governing the case; and that he acted without or
in excess of his jurisdiction in is the orders complained of. 12
SANTOS, J.:
On the other hand, private respondents claim that Condition No. 14 is not
valid, that the same is not an essential element of the contract of carriage,
This is an original action for Prohibition with Pre Injunction filed October 3, being in itself a different agreement which requires the mutual consent of the
1973 to restrain respondent Judge from proceeding further with Civil Case parties to it; that they had no say in its preparation, the existence of which
No. 4091, entitled Leovigildo D. Tandog, Jr. and Rogelio Tiro v. Sweet they could not refuse, hence, they had no choice but to pay for the tickets
Lines, Inc." after he denied petitioner's Motion to Dismiss the complaint, and and to avail of petitioner's shipping facilities out of necessity; that the carrier
the Motion for Reconsideration of said order. 1 "has been exacting too much from the public by inserting impositions in the
passage tickets too burdensome to bear," that the condition which was
Briefly, the facts of record follow. Private respondents Atty. Leovigildo printed in fine letters is an imposition on the riding public and does not bind
Tandog and Rogelio Tiro, a contractor by professions, bought tickets Nos. respondents, citing cases; 13 that while venue 6f actions may be transferred
0011736 and 011737 for Voyage 90 on December 31, 1971 at the branch from one province to another, such arrangement requires the "written
office of petitioner, a shipping company transporting inter-island passengers agreement of the parties", not to be imposed unilaterally; and that assuming
and cargoes, at Cagayan de Oro City. Respondents were to board that the condition is valid, it is not exclusive and does not, therefore, exclude
petitioner's vessel, M/S "Sweet Hope" bound for Tagbilaran City via the port the filing of the action in Misamis Oriental, 14
of Cebu. Upon learning that the vessel was not proceeding to Bohol, since
many passengers were bound for Surigao, private respondents per advice, There is no question that there was a valid contract of carriage entered into
went to the branch office for proper relocation to M/S "Sweet Town". by petitioner and private respondents and that the passage tickets, upon
Because the said vessel was already filled to capacity, they were forced to which the latter based their complaint, are the best evidence thereof. All the
agree "to hide at the cargo section to avoid inspection of the officers of the essential elements of a valid contract, i.e., consent, cause or consideration
Philippine Coastguard." Private respondents alleged that they were, during and object, are present. As held in Peralta de Guerrero, et al. v. Madrigal
the trip," "exposed to the scorching heat of the sun and the dust coming Shipping Co., Inc., 15
from the ship's cargo of corn grits," and that the tickets they bought at
Cagayan de Oro City for Tagbilaran were not honored and they were
constrained to pay for other tickets. In view thereof, private respondents It is a matter of common knowledge that whenever a
sued petitioner for damages and for breach of contract of carriage in the passenger boards a ship for transportation from one
alleged sum of P10,000.00 before respondents Court of First Instance of place to another he is issued a ticket by the shipper
Misamis Oriental. 2 which has all the elements of a written contract,
Namely: (1) the consent of the contracting parties
manifested by the fact that the passenger boards the
Petitioner moved to dismiss the complaint on the ground of improper venue. ship and the shipper consents or accepts him in the
This motion was premised on the condition printed at the back of the tickets, ship for transportation; (2) cause or consideration which
i.e., Condition No. 14, which reads: is the fare paid by the passenger as stated in the ticket;
(3) object, which is the transportation of the passenger
14. It is hereby agreed and understood that any and all from the place of departure to the place of destination
actions arising out of the conditions and provisions of which are stated in the ticket.
this ticket, irrespective of where it is issued, shall be
filed in the competent courts in the City of Cebu. 3 It should be borne in mind, however, that with respect to the fourteen (14)
conditions — one of which is "Condition No. 14" which is in issue in this
The motion was denied by the trial court. 4 Petitioner moved to reconnsider case — printed at the back of the passage tickets, these are commonly
the order of denial, but no avail. 5 Hence, this instant petition for prohibition known as "contracts of adhesion," the validity and/or enforceability of which
for preliminary injunction, 'alleging that the respondent judge has departed will have to be determined by the peculiar circumstances obtaining in each
from the accepted and usual course of judicial preoceeding" and "had acted case and the nature of the conditions or terms sought to be enforced. For,
without or in excess or in error of his jurisdicton or in gross abuse of "(W)hile generally, stipulations in a contract come about after deliberate
discretion. 6 drafting by the parties thereto, ... there are certain contracts almost all the
provisions of which have been drafted only by one party, usually a
corporation. Such contracts are called contracts of adhesion, because the
In Our resolution of November 20, 1973, We restrained respondent Judge only participation of the party is the signing of his signature or his 'adhesion'
from proceeding further with the case and required respondent to thereto. Insurance contracts, bills of lading, contracts of make of lots on the
comment. 7 On January 18, 1974, We gave due course to the petition and installment plan fall into this category" 16
required respondent to answer. 8 Thereafter, the parties submitted their
respesctive memoranda in support of their respective contentions. 9
By the peculiar circumstances under which contracts of adhesion are
entered into — namely, that it is drafted only by one party, usually the
Presented thus for Our resolution is a question is aquestion which, to all corporation, and is sought to be accepted or adhered to by the other party,
appearances, is one of first impression, to wit — Is Condition No. 14 printed in this instance the passengers, private respondents, who cannot change
at the back of the petitioner's passage tickets purchased by private the same and who are thus made to adhere thereto on the "take it or leave
respondents, which limits the venue of actions arising from the contract of it" basis — certain guidelines in the determination of their validity and/or
carriage to theCourt of First Instance of Cebu, valid and enforceable? enforceability have been formulated in order to that justice and fan play
Otherwise stated, may a common carrier engaged in inter-island shipping characterize the relationship of the contracting parties. Thus, this Court
stipulate thru condition printed at the back of passage tickets to its vessels speaking through Justice J.B.L. Reyes in Qua Chee Gan v. Law Union and
Rock Insurance Co., 17 and later through Justice Fernando in Fieldman It should also be stressed that slapping companies are franchise holders of
Insurance v. Vargas, 18 held — certificates of public convenience and therefore, posses a virtual monopoly
over the business of transporting passengers between the ports covered by
their franchise. This being so, shipping companies, like petitioner, engaged
The courts cannot ignore that nowadays, monopolies,
in inter-island shipping, have a virtual monopoly of the business of
cartels and concentration of capital endowed with
transporting passengers and may thus dictate their terms of passage,
overwhelm economic power, manage to impose upon
leaving passengers with no choice but to buy their tickets and avail of their
parties d with them y prepared 'agreements' that the
vessels and facilities. Finally, judicial notice may be taken of the fact that the
weaker party may not change one whit his participation
bulk of those who board these inter-island vested come from the low-income
in the 'agreement' being reduced to the alternative 'to
groups and are less literate, and who have little or no choice but to avail of
take it or leave it,' labelled since Raymond Saleilles
petitioner's vessels.
'contracts by adherence' (contracts d' adhesion) in
contrast to those entered into by parties bargaining on
an equal footing. Such contracts (of which policies of 2. Condition No. 14 is subversive of public policy on transfers of venue of
insurance and international bill of lading are prime actions. For, although venue may be changed or transferred from one
examples) obviously cap for greater strictness and province to another by agreement of the parties in writing t to Rule 4,
vigilance on the part of the courts of justice with a view Section 3, of the Rules of Court, such an agreement will not be held valid
to protecting the weaker party from abuses and where it practically negates the action of the claimants, such as the private
imposition, and prevent their becoming traps for the respondents herein. The philosophy underlying the provisions on transfer of
unwary. venue of actions is the convenience of the plaintiffs as well as his witnesses
and to promote 21 the ends of justice. Considering the expense and trouble a
passenger residing outside of Cebu City would incur to prosecute a claim in
To the same effect and import, and, in recognition of the character of
the City of Cebu, he would most probably decide not to file the action at all.
contracts of this kind, the protection of the disadvantaged is expressly
The condition will thus defeat, instead of enhance, the ends of justice. Upon
enjoined by the New Civil Code —
the other hand, petitioner has branches or offices in the respective ports of
call of its vessels and can afford to litigate in any of these places. Hence, the
In all contractual property or other relations, when one filing of the suit in the CFI of Misamis Oriental, as was done in the instant
of the parties is at a disadvantage on account of his case, will not cause inconvenience to, much less prejudice, petitioner.
moral dependence, ignorance indigence, mental
weakness, tender age and other handicap, the courts
Public policy is ". . . that principle of the law which holds that no subject or
must be vigilant for his
citizen can lawfully do that which has a tendency to be injurious to the public
protection. 19
or against the public good ... 22 Under this principle" ... freedom of contract
or private dealing is restricted by law for the good of the public. 23 Clearly,
Considered in the light Of the foregoing norms and in the context Of Condition No. 14, if enforced, will be subversive of the public good or
circumstances Prevailing in the inter-island ship. ping industry in the country interest, since it will frustrate in meritorious cases, actions of passenger
today, We find and hold that Condition No. 14 printed at the back of the cants outside of Cebu City, thus placing petitioner company at a decided
passage tickets should be held as void and unenforceable for the following advantage over said persons, who may have perfectly legitimate claims
reasons first, under circumstances obligation in the inter-island ship. ping against it. The said condition should, therefore, be declared void and
industry, it is not just and fair to bind passengers to the terms of the unenforceable, as contrary to public policy — to make the courts accessible
conditions printed at the back of the passage tickets, on which Condition No. to all who may have need of their services.
14 is Printed in fine letters, and second, Condition No. 14 subverts the public
policy on transfer of venue of proceedings of this nature, since the same will
WHEREFORE, the petition for prohibition is DISMISS. ED. The restraining
prejudice rights and interests of innumerable passengers in different s of the
order issued on November 20, 1973, is hereby LIFTED and SET ASIDE.
country who, under Condition No. 14, will have to file suits against petitioner
Costs against petitioner.
only in the City of Cebu.

1. It is a matter of public knowledge, of which We can take judicial notice,

that there is a dearth of and acute shortage in inter- island vessels plying
between the country's several islands, and the facilities they offer leave
much to be desired. Thus, even under ordinary circumstances, the piers are
congested with passengers and their cargo waiting to be transported. The
conditions are even worse at peak and/or the rainy seasons, when
Passengers literally scramble to whatever accommodations may be availed
of, even through circuitous routes, and/or at the risk of their safety — their
immediate concern, for the moment, being to be able to board vessels with
the hope of reaching their destinations. The schedules are — as often as not
if not more so — delayed or altered. This was precisely the experience of
private respondents when they were relocated to M/S "Sweet Town" from
M/S "Sweet Hope" and then any to the scorching heat of the sun and the
dust coming from the ship's cargo of corn grits, " because even the latter
was filed to capacity.

Under these circumstances, it is hardly just and proper to expect the

passengers to examine their tickets received from crowded/congested
counters, more often than not during rush hours, for conditions that may be
printed much charge them with having consented to the conditions, so
printed, especially if there are a number of such conditions m fine print, as in
this case. 20

Again, it should be noted that Condition No. 14 was prepared solely at the
ms of the petitioner, respondents had no say in its preparation. Neither did
the latter have the opportunity to take the into account prior to the purpose
chase of their tickets. For, unlike the small print provisions of contracts —
the common example of contracts of adherence — which are entered into by
the insured in his awareness of said conditions, since the insured is afforded
the op to and co the same, passengers of inter-island v do not have the
same chance, since their alleged adhesion is presumed only from the fact
that they purpose chased the tickets.
 EN BANC delivery which he refused to take delivery belonged to a certain
Del Rosario who was bound for Iligan in the same flight with Mr.
Shewaram; that when the plaintiff's suitcase arrived in Manila as
G.R. No. L-20099 July 7, 1966
stated above on November 24, 1959, he was informed by Mr.
Tomas Blanco, Jr., the acting station agent of the Manila airport of
PARMANAND SHEWARAM, plaintiff and appellee, the arrival of his suitcase but of course minus his Transistor Radio
vs. 7 and the Rollflex Camera; that Shewaram made demand for
PHILIPPINE AIR LINES, INC., defendant and appellant. these two (2) items or for the value thereof but the same was not
complied with by defendant.
Ponce Enrile, Siguion Reyna, Montecillo and Belo for defendant and
appellant. xxx xxx xxx
Climaco and Associates for plaintiff and appellee.
It is admitted by defendant that there was mistake in tagging the
ZALDIVAR, J.: suitcase of plaintiff as IGN. The tampering of the suitcase is more
apparent when on November 24, 1959, when the suitcase arrived
in Manila, defendant's personnel could open the same in spite of
Before the municipal court of Zamboanga City, plaintiff-appellee Parmanand
the fact that plaintiff had it under key when he delivered the
Shewaram instituted an action to recover damages suffered by him due to suitcase to defendant's personnel in Zamboanga City. Moreover,
the alleged failure of defendant-appellant Philippines Air Lines, Inc. to it was established during the hearing that there was space in the
observe extraordinary diligence in the vigilance and carriage of his luggage.
suitcase where the two items in question could have been placed.
After trial the municipal court of Zamboanga City rendered judgment It was also shown that as early as November 24, 1959, when
ordering the appellant to pay appellee P373.00 as actual damages, P100.00 plaintiff was notified by phone of the arrival of the suitcase, plaintiff
as exemplary damages, P150.00 as attorney's fees, and the costs of the
asked that check of the things inside his suitcase be made and
action. defendant admitted that the two items could not be found inside
the suitcase. There was no evidence on record sufficient to show
Appellant Philippine Air Lines appealed to the Court of First Instance of that plaintiff's suitcase was never opened during the time it was
Zamboanga City. After hearing the Court of First Instance of Zamboanga placed in defendant's possession and prior to its recovery by the
City modified the judgment of the inferior court by ordering the appellant to plaintiff. However, defendant had presented evidence that it had
pay the appellee only the sum of P373.00 as actual damages, with legal authority to open passengers' baggage to verify and find its
interest from May 6, 1960 and the sum of P150.00 as attorney's fees, ownership or identity. Exhibit "1" of the defendant would show that
eliminating the award of exemplary damages. the baggage that was offered to plaintiff as his own was opened
and the plaintiff denied ownership of the contents of the baggage.
This proven fact that baggage may and could be opened without
From the decision of the Court of First Instance of Zamboanga City, the necessary authorization and presence of its owner, applied
appellant appeals to this Court on a question of law, assigning two errors too, to the suitcase of plaintiff which was mis-sent to Iligan City
allegedly committed by the lower court a quo, to wit: because of mistagging. The possibility of what happened in the
baggage of Mr. Del Rosario at the Manila Airport in his absence
1. The lower court erred in not holding that plaintiff-appellee was could have also happened to plaintiffs suitcase at Iligan City in the
bound by the provisions of the tariff regulations filed by defendant- absence of plaintiff. Hence, the Court believes that these two
appellant with the civil aeronautics board and the conditions of items were really in plaintiff's suitcase and defendant should be
carriage printed at the back of the plane ticket stub. held liable for the same by virtue of its contract of carriage.

2. The lower court erred in not dismissing this case or limiting the It is clear from the above-quoted portions of the decision of the trial court
liability of the defendant-appellant to P100.00. that said court had found that the suitcase of the appellee was tampered,
and the transistor radio and the camera contained therein were lost, and that
the loss of those articles was due to the negligence of the employees of the
The facts of this case, as found by the trial court, quoted from the decision appellant. The evidence shows that the transistor radio cost P197.00 and
appealed from, are as follows: the camera cost P176.00, so the total value of the two articles was P373.00.

That Parmanand Shewaram, the plaintiff herein, was on There is no question that the appellant is a common carrier. 1 As such
November 23, 1959, a paying passenger with ticket No. 4-30976, common carrier the appellant, from the nature of its business and for
on defendant's aircraft flight No. 976/910 from Zamboanga City reasons of public policy, is bound to observe extraordinary diligence in the
bound for Manila; that defendant is a common carrier engaged in vigilance over the goods and for the safety of the passengers transported by
air line transportation in the Philippines, offering its services to the it according to the circumstances of each case. 2 It having been shown that
public to carry and transport passengers and cargoes from and to the loss of the transistor radio and the camera of the appellee, costing
different points in the Philippines; that on the above-mentioned P373.00, was due to the negligence of the employees of the appellant, it is
date of November 23, 1959, he checked in three (3) pieces of clear that the appellant should be held liable for the payment of said loss. 3
baggages — a suitcase and two (2) other pieces; that the suitcase
was mistagged by defendant's personnel in Zamboanga City, as
I.G.N. (for Iligan) with claim check No. B-3883, instead of MNL (for It is, however, contended by the appellant that its liability should be limited to
Manila). When plaintiff Parmanand Shewaram arrived in Manila the amount stated in the conditions of carriage printed at the back of the
on the date of November 23, 1959, his suitcase did not arrive with plane ticket stub which was issued to the appellee, which conditions are
his flight because it was sent to Iligan. So, he made a claim with embodied in Domestic Tariff Regulations No. 2 which was filed with the Civil
defendant's personnel in Manila airport and another suitcase Aeronautics Board. One of those conditions, which is pertinent to the issue
similar to his own which was the only baggage left for that flight, raised by the appellant in this case provides as follows:
the rest having been claimed and released to the other
passengers of said flight, was given to the plaintiff for him to take The liability, if any, for loss or damage to checked baggage or for
delivery but he did not and refused to take delivery of the same on delay in the delivery thereof is limited to its value and, unless the
the ground that it was not his, alleging that all his clothes were passenger declares in advance a higher valuation and pay an
white and the National transistor 7 and a Rollflex camera were not additional charge therefor, the value shall be conclusively deemed
found inside the suitcase, and moreover, it contained a pistol not to exceed P100.00 for each ticket.
which he did not have nor placed inside his suitcase; that after
inquiries made by defendant's personnel in Manila from different
airports where the suitcase in question must have been sent, it The appellant maintains that in view of the failure of the appellee to declare
was found to have reached Iligan and the station agent of the PAL a higher value for his luggage, and pay the freight on the basis of said
in Iligan caused the same to be sent to Manila for delivery to Mr. declared value when he checked such luggage at the Zamboanga City
Shewaram and which suitcase belonging to the plaintiff herein airport, pursuant to the abovequoted condition, appellee can not demand
arrived in Manila airport on November 24, 1959; that it was also payment from the appellant of an amount in excess of P100.00.
found out that the suitcase shown to and given to the plaintiff for
The law that may be invoked, in this connection is Article 1750 of the New the public are settled. It cannot lawfully stipulate for exemption
Civil Code which provides as follows: from liability, unless such exemption is just and reasonable, and
unless the contract is freely and fairly made. No contractual
limitation is reasonable which is subversive of public policy.
A contract fixing the sum that may be recovered by the owner or
shipper for the loss, destruction, or deterioration of the goods is
valid, if it is reasonable and just under the circumstances, and has "Par. 195. 7. What Limitations of Liability Permissible. — a.
been fairly and freely agreed upon. Negligence — (1) Rule in America — (a) In Absence of Organic or
Statutory Provisions Regulating Subject — aa. Majority Rule. — In
the absence of statute, it is settled by the weight of authority in the
In accordance with the above-quoted provision of Article 1750 of the New
United States, that whatever limitations against its common-law
Civil Code, the pecuniary liability of a common carrier may, by contract, be
liability are permissible to a carrier, it cannot limit its liability for
limited to a fixed amount. It is required, however, that the contract must be
injury to or loss of goods shipped, where such injury or loss is
"reasonable and just under the circumstances and has been fairly and freely
caused by its own negligence. This is the common law doctrine
agreed upon."
and it makes no difference that there is no statutory prohibition
against contracts of this character.
The requirements provided in Article 1750 of the New Civil Code must be
complied with before a common carrier can claim a limitation of its pecuniary
"Par. 196. bb. Considerations on which Rule Based. — The rule, it
liability in case of loss, destruction or deterioration of the goods it has
is said, rests on considerations of public policy. The undertaking is
undertaken to transport. In the case before us We believe that the
to carry the goods, and to relieve the shipper from all liability for
requirements of said article have not been met. It can not be said that the
loss or damage arising from negligence in performing its contract
appellee had actually entered into a contract with the appellant, embodying
is to ignore the contract itself. The natural effect of a limitation of
the conditions as printed at the back of the ticket stub that was issued by the
liability against negligence is to induce want of care on the part of
appellant to the appellee. The fact that those conditions are printed at the
the carrier in the performance of its duty. The shipper and the
back of the ticket stub in letters so small that they are hard to read would not
common carrier are not on equal terms; the shipper must send his
warrant the presumption that the appellee was aware of those conditions
freight by the common carrier, or not at all; he is therefore entirely
such that he had "fairly and freely agreed" to those conditions. The trial court
at the mercy of the carrier unless protected by the higher power of
has categorically stated in its decision that the "Defendant admits that
the law against being forced into contracts limiting the carrier's
passengers do not sign the ticket, much less did plaintiff herein sign his
liability. Such contracts are wanting in the element of voluntary
ticket when he made the flight on November 23, 1959." We hold, therefore,
assent.
that the appellee is not, and can not be, bound by the conditions of carriage
found at the back of the ticket stub issued to him when he made the flight on
appellant's plane on November 23, 1959. "Par. 197. cc. Application and Extent of Rule — (aa) Negligence
of Servants. — The rule prohibiting limitation of liability for
negligence is often stated as a prohibition of any contract relieving
The liability of the appellant in the present case should be governed by the
the carrier from loss or damage caused by its own negligence or
provisions of Articles 1734 and 1735 of the New Civil Code, which We quote
misfeasance, or that of its servants; and it has been specifically
as follows:
decided in many cases that no contract limitation will relieve the
carrier from responsibility for the negligence, unskillfulness, or
ART. 1734. Common carries are responsible for the loss, carelessness of its employer." (Cited in Ysmael and Co. vs.
destruction, or deterioration of the goods, unless the same is due Barreto, 51 Phil. 90, 98, 99).
to any of the following causes only:
In view of the foregoing, the decision appealed from is affirmed, with costs
(1) Flood, storm, earthquake, or other natural disaster or calamity; against the appellant.

(2) Act of the public enemy in war, whether international or civil;

(3) Act or omission of the shipper or owner of the goods;

(4) The character of the goods or defects in the packing or in the

containers;

(5) Order or act of competent public authority.1äwphï1.ñët

ART. 1735. In all cases other than those mentioned in Nos. 1, 2,

3, 4 and 5 of the preceding article, if the goods are lost, destroyed
or deteriorated, common carriers are presumed to have been at
fault or to have acted negligently, unless they prove that they
observed extraordinary diligence as required in Article 1733.

It having been clearly found by the trial court that the transistor radio and the
camera of the appellee were lost as a result of the negligence of the
appellant as a common carrier, the liability of the appellant is clear — it must
pay the appellee the value of those two articles.

In the case of Ysmael and Co. vs. Barreto, 51 Phil. 90, cited by the trial court
in support of its decision, this Court had laid down the rule that the carrier
can not limit its liability for injury to or loss of goods shipped where such
injury or loss was caused by its own negligence.

Corpus Juris, volume 10, p. 154, says:

"Par. 194, 6. Reasonableness of Limitations. — The validity of

stipulations limiting the carrier's liability is to be determined by
their reasonableness and their conformity to the sound public
policy, in accordance with which the obligations of the carrier to
 EN BANC child and P400.00 as compensatory damages representing burial expenses
and costs.
G.R. No. L-20761 July 27, 1966
On appeal to the Court of Appeals, La Mallorca claimed that there could not
be a breach of contract in the case, for the reason that when the child met
LA MALLORCA, petitioner,
her death, she was no longer a passenger of the bus involved in the incident
vs.
and, therefore, the contract of carriage had already terminated. Although the
HONORABLE COURT OF APPEALS, MARIANO BELTRAN, ET
Court of Appeals sustained this theory, it nevertheless found the defendant-
AL., respondents.
appellant guilty of quasi-delict and held the latter liable for damages, for the
negligence of its driver, in accordance with Article 2180 of the Civil Code.
G. E. Yabut, R. Monterey and M.C. Lagman for petitioner. And, the Court of Appeals did not only find the petitioner liable, but
Ahmed Garcia for respondents. increased the damages awarded the plaintiffs-appellees to P6,000.00,
instead of P3,000.00 granted by the trial court.
BARRERA, J.:
In its brief before us, La Mallorca contends that the Court of Appeals erred
(1) in holding it liable for quasi-delict, considering that respondents
La Mallorca seeks the review of the decision of the Court of Appeals in CA-
complaint was one for breach of contract, and (2) in raising the award of
G.R. No. 23267-R, holding it liable for quasi-delict and ordering it to pay to damages from P3,000.00 to P6,000.00 although respondents did not appeal
respondents Mariano Beltran, et al., P6,000.00 for the death of his minor from the decision of the lower court.
daughter Raquel Beltran, plus P400.00 as actual damages.

Under the facts as found by the Court of Appeals, we have to sustain the
The facts of the case as found by the Court of Appeals, briefly are: judgement holding petitioner liable for damages for the death of the child,
Raquel Beltran. It may be pointed out that although it is true that respondent
On December 20, 1953, at about noontime, plaintiffs, husband Mariano Beltran, his wife, and their children (including the deceased child)
and wife, together with their minor daughters, namely, Milagros, had alighted from the bus at a place designated for disembarking or
13 years old, Raquel, about 4½ years old, and Fe, over 2 years unloading of passengers, it was also established that the father had to return
old, boarded the Pambusco Bus No. 352, bearing plate TPU No. to the vehicle (which was still at a stop) to get one of his bags or bayong that
757 (1953 Pampanga), owned and operated by the defendant, at was left under one of the seats of the bus. There can be no controversy that
San Fernando, Pampanga, bound for Anao, Mexico, Pampanga. as far as the father is concerned, when he returned to the bus for
At the time, they were carrying with them four pieces of baggages his bayongwhich was not unloaded, the relation of passenger and carrier
containing their personal belonging. The conductor of the bus, between him and the petitioner remained subsisting. For, the relation of
who happened to be a half-brother of plaintiff Mariano Beltran, carrier and passenger does not necessarily cease where the latter, after
issued three tickets (Exhs. A, B, & C) covering the full fares of the alighting from the car, aids the carrier's servant or employee in removing his
plaintiff and their eldest child, Milagros. No fare was charged on baggage from the car.1 The issue to be determined here is whether as to the
Raquel and Fe, since both were below the height at which fare is child, who was already led by the father to a place about 5 meters away
charged in accordance with the appellant's rules and regulations. from the bus, the liability of the carrier for her safety under the contract of
carriage also persisted.
After about an hour's trip, the bus reached Anao whereat it
stopped to allow the passengers bound therefor, among whom It has been recognized as a rule that the relation of carrier and passenger
were the plaintiffs and their children to get off. With respect to the does not cease at the moment the passenger alights from the carrier's
group of the plaintiffs, Mariano Beltran, then carrying some of their vehicle at a place selected by the carrier at the point of destination, but
baggages, was the first to get down the bus, followed by his wife continues until the passenger has had a reasonable time or a reasonable
and his children. Mariano led his companions to a shaded spot on opportunity to leave the carrier's premises. And, what is a reasonable time
the left pedestrians side of the road about four or five meters away or a reasonable delay within this rule is to be determined from all the
from the vehicle. Afterwards, he returned to the bus in controversy circumstances. Thus, a person who, after alighting from a train, walks along
to get his other bayong, which he had left behind, but in so doing, the station platform is considered still a passenger.2 So also, where a
his daughter Raquel followed him, unnoticed by her father. While passenger has alighted at his destination and is proceeding by the usual
said Mariano Beltran was on the running board of the bus waiting way to leave the company's premises, but before actually doing so is halted
for the conductor to hand him his bayong which he left under one by the report that his brother, a fellow passenger, has been shot, and he in
of its seats near the door, the bus, whose motor was not shut off good faith and without intent of engaging in the difficulty, returns to relieve
while unloading, suddenly started moving forward, evidently to his brother, he is deemed reasonably and necessarily delayed and thus
resume its trip, notwithstanding the fact that the conductor has not continues to be a passenger entitled as such to the protection of the railroad
given the driver the customary signal to start, since said conductor and company and its agents.3
was still attending to the baggage left behind by Mariano Beltran.
Incidentally, when the bus was again placed into a complete stop,
In the present case, the father returned to the bus to get one of his
it had travelled about ten meters from the point where the plaintiffs baggages which was not unloaded when they alighted from the bus. Raquel,
had gotten off. the child that she was, must have followed the father. However, although the
father was still on the running board of the bus awaiting for the conductor to
Sensing that the bus was again in motion, Mariano Beltran hand him the bag or bayong, the bus started to run, so that even he (the
immediately jumped from the running board without getting father) had to jump down from the moving vehicle. It was at this instance
his bayong from the conductor. He landed on the side of the road that the child, who must be near the bus, was run over and killed. In the
almost in front of the shaded place where he left his wife and circumstances, it cannot be claimed that the carrier's agent had exercised
children. At that precise time, he saw people beginning to gather the "utmost diligence" of a "very cautions person" required by Article 1755 of
around the body of a child lying prostrate on the ground, her skull the Civil Code to be observed by a common carrier in the discharge of its
crushed, and without life. The child was none other than his obligation to transport safely its passengers. In the first place, the driver,
daughter Raquel, who was run over by the bus in which she rode although stopping the bus, nevertheless did not put off the engine.
earlier together with her parents. Secondly, he started to run the bus even before the bus conductor gave him
the signal to go and while the latter was still unloading part of the baggages
of the passengers Mariano Beltran and family. The presence of said
For the death of their said child, the plaintiffs commenced the passengers near the bus was not unreasonable and they are, therefore, to
present suit against the defendant seeking to recover from the be considered still as passengers of the carrier, entitled to the protection
latter an aggregate amount of P16,000 to cover moral damages under their contract of carriage.
and actual damages sustained as a result thereof and attorney's
fees. After trial on the merits, the court below rendered the
judgment in question. But even assuming arguendo that the contract of carriage has already
terminated, herein petitioner can be held liable for the negligence of its
driver, as ruled by the Court of Appeals, pursuant to Article 2180 of the Civil
On the basis of these facts, the trial court found defendant liable for breach Code. Paragraph 7 of the complaint, which reads —
of contract of carriage and sentenced it to pay P3,000.00 for the death of the
 That aside from the aforesaid breach of contract, the death of
Raquel Beltran, plaintiffs' daughter, was caused by the negligence
and want of exercise of the utmost diligence of a very cautious
person on the part of the defendants and their agent, necessary to
transport plaintiffs and their daughter safely as far as human care
and foresight can provide in the operation of their vehicle.

is clearly an allegation for quasi-delict. The inclusion of this averment

for quasi-delict, while incompatible with the other claim under the contract of
carriage, is permissible under Section 2 of Rule 8 of the New Rules of Court,
which allows a plaintiff to allege causes of action in the alternative, be they
compatible with each other or not, to the end that the real matter in
controversy may be resolved and determined.4

The plaintiffs sufficiently pleaded the culpa or negligence upon which the
claim was predicated when it was alleged in the complaint that "the death of
Raquel Beltran, plaintiffs' daughter, was caused by the negligence and want
of exercise of the utmost diligence of a very cautious person on the part of
the defendants and their agent." This allegation was also proved when it
was established during the trial that the driver, even before receiving the
proper signal from the conductor, and while there were still persons on the
running board of the bus and near it, started to run off the vehicle. The
presentation of proof of the negligence of its employee gave rise to the
presumption that the defendant employer did not exercise the diligence of a
good father of the family in the selection and supervision of its employees.
And this presumption, as the Court of Appeals found, petitioner had failed to
overcome. Consequently, petitioner must be adjudged peculiarily liable for
the death of the child Raquel Beltran.

The increase of the award of damages from P3,000.00 to P6,000.00 by the

Court of Appeals, however, cannot be sustained. Generally, the appellate
court can only pass upon and consider questions or issues raised and
argued in appellant's brief. Plaintiffs did not appeal from that portion of the
judgment of the trial court awarding them on P3,000.00 damages for the
death of their daughter. Neither does it appear that, as appellees in the
Court of Appeals, plaintiffs have pointed out in their brief the inadequacy of
the award, or that the inclusion of the figure P3,000.00 was merely a clerical
error, in order that the matter may be treated as an exception to the general
rule.5Herein petitioner's contention, therefore, that the Court of Appeals
committed error in raising the amount of the award for damages is,
evidently, meritorious.1äwphï1.ñët

Wherefore, the decision of the Court of Appeals is hereby modified by

sentencing, the petitioner to pay to the respondents Mariano Beltran, et al.,
the sum of P3,000.00 for the death of the child, Raquel Beltran, and the
amount of P400.00 as actual damages. No costs in this instance. So
ordered.
 SECOND DIVISION years old when he met said fateful accident (Exh. 'E')
was in good health. His average annual income as a
farmer or a farm supervisor was 400 cavans of palay
G.R. No. 84458 November 6, 1989
annually. His parents, herein plaintiffs Antonio and
Gorgonia Viana, prior to his death had been recipient of
ABOITIZ SHIPPING CORPORATION, petitioner, twenty (20) cavans of palay as support or P120.00
vs. monthly. Because of Anacleto's death, plaintiffs suffered
HON. COURT OF APPEALS, ELEVENTH DIVISION, LUCILA C. VIANA, mental anguish and extreme worry or moral damages.
SPS. ANTONIO VIANA and GORGONIA VIANA, and PIONEER For the filing of the instant case, they had to hire a
STEVEDORING CORPORATION, respondents. lawyer for an agreed fee of ten thousand (P10,000.00)
pesos. 2
Herenio E. Martinez for petitioner.
Private respondents Vianas filed a complaint 3 for damages against
petitioner corporation (Aboitiz, for brevity) for breach of contract of carriage.
M.R. Villaluz Law Office for private respondent.

In its answer. 4 Aboitiz denied responsibility contending that at the time of

the accident, the vessel was completely under the control of respondent
Pioneer Stevedoring Corporation (Pioneer, for short) as the exclusive
REGALADO, J.: stevedoring contractor of Aboitiz, which handled the unloading of cargoes
from the vessel of Aboitiz. It is also averred that since the crane operator
was not an employee of Aboitiz, the latter cannot be held liable under the
In this appeal by certiorari, petitioner Aboitiz Shipping Corporation seeks a fellow-servant rule.
review of the decision 1 of respondent Court of Appeals, dated July 29,
1988, the decretal portion of which reads:
Thereafter, Aboitiz, as third-party plaintiff, filed a third-party
complaint 5 against Pioneer imputing liability thereto for Anacleto Viana's
WHEREFORE, the judgment appealed from as death as having been allegedly caused by the negligence of the crane
modified by the order of October 27, 1982, is hereby operator who was an employee of Pioneer under its exclusive control and
affirmed with the modification that appellant Aboitiz supervision.
Shipping is hereby ordered to pay plaintiff-appellees the
amount of P30,000.00 for the death of Anacleto Viana;
actual damages of P9,800.00; P150,000.00 for Pioneer, in its answer to the third-party complaint, 6 raised the defenses that
unearned income; P7,200.00 as support for deceased's Aboitiz had no cause of action against Pioneer considering that Aboitiz is
parents; P20,000.00 as moral damages; P10,000.00 as being sued by the Vianas for breach of contract of carriage to which Pioneer
attorney's fees; and to pay the costs. is not a party; that Pioneer had observed the diligence of a good father of a
family both in the selection and supervision of its employees as well as in
the prevention of damage or injury to anyone including the victim Anacleto
The undisputed facts of the case, as found by the court a quo and adopted Viana; that Anacleto Viana's gross negligence was the direct and proximate
by respondent court, are as follows: . cause of his death; and that the filing of the third-party complaint was
premature by reason of the pendency of the criminal case for homicide
The evidence disclosed that on May 11, 1975, Anacleto through reckless imprudence filed against the crane operator, Alejo
Viana boarded the vessel M/V Antonia, owned by Figueroa.
defendant, at the port at San Jose, Occidental Mindoro,
bound for Manila, having purchased a ticket (No. In a decision rendered on April 17, 1980 by the trial court, 7 Aboitiz was
117392) in the sum of P23.10 (Exh. 'B'). On May 12, ordered to pay the Vianas for damages incurred, and Pioneer was ordered
1975, said vessel arrived at Pier 4, North Harbor, to reimburse Aboitiz for whatever amount the latter paid the Vianas. The
Manila, and the passengers therein disembarked, a dispositive portion of said decision provides:
gangplank having been provided connecting the side of
the vessel to the pier. Instead of using said gangplank
Anacleto Viana disembarked on the third deck which WHEREFORE, judgment is hereby rendered in favor of
was on the level with the pier. After said vessel had the plantiffs:
landed, the Pioneer Stevedoring Corporation took over
the exclusive control of the cargoes loaded on said (1) ordering defendant Aboitiz Shipping Corporation to
vessel pursuant to the Memorandum of Agreement pay to plaintiffs the sum of P12,000.00 for the death of
dated July 26, 1975 (Exh. '2') between the third party
Anacleto Viana P9,800.00 as actual damages;
defendant Pioneer Stevedoring Corporation and P533,200.00 value of the 10,664 cavans of palay
defendant Aboitiz Shipping Corporation. computed at P50.00 per cavan; P10,000.00 as
attorney's fees; F 5,000.00, value of the 100 cavans of
The crane owned by the third party defendant and palay as support for five (5) years for deceased (sic)
operated by its crane operator Alejo Figueroa was parents, herein plaintiffs Antonio and Gorgonia Viana
placed alongside the vessel and one (1) hour after the computed at P50.00 per cavan; P7,200.00 as support
passengers of said vessel had disembarked, it started for deceased's parents computed at P120.00 a month
operation by unloading the cargoes from said vessel. for five years pursuant to Art. 2206, Par. 2, of the Civil
While the crane was being operated, Anacleto Viana Code; P20,000.00 as moral damages, and costs; and
who had already disembarked from said vessel
obviously remembering that some of his cargoes were (2) ordering the third party defendant Pioneer
still loaded in the vessel, went back to the vessel, and it
Stevedoring Corporation to reimburse defendant and
was while he was pointing to the crew of the said vessel third party plaintiff Aboitiz Shipping Corporation the said
to the place where his cargoes were loaded that the amounts that it is ordered to pay to herein plaintiffs.
crane hit him, pinning him between the side of the
vessel and the crane. He was thereafter brought to the
hospital where he later expired three (3) days Both Aboitiz and Pioneer filed separate motions for reconsideration wherein
thereafter, on May 15, 1975, the cause of his death they similarly raised the trial court's failure to declare that Anacleto Viana
according to the Death Certificate (Exh. "C") being acted with gross negligence despite the overwhelming evidence presented
"hypostatic pneumonia secondary to traumatic fracture in support thereof. In addition, Aboitiz alleged, in opposition to Pioneer's
of the pubic bone lacerating the urinary bladder" (See motion, that under the memorandum of agreement the liability of Pioneer as
also Exh. "B"). For his hospitalization, medical, burial contractor is automatic for any damages or losses whatsoever occasioned
and other miscellaneous expenses, Anacleto's wife, by and arising from the operation of its arrastre and stevedoring service.
herein plaintiff, spent a total of P9,800.00 (Exhibits "E",
"E-1", to "E-5"). Anacleto Viana who was only forty (40)
In an order dated October 27, 1982, 8 the trial court absolved Pioneer from I. Petitioner contends that since one (1) hour had already elapsed from the
liability for failure of the Vianas and Aboitiz to preponderantly establish a time Anacleto Viana disembarked from the vessel and that he was given
case of negligence against the crane operator which the court a quo ruled is more than ample opportunity to unload his cargoes prior to the operation of
never presumed, aside from the fact that the memorandum of agreement the crane, his presence on the vessel was no longer reasonable e and he
supposedly refers only to Pioneer's liability in case of loss or damage to consequently ceased to be a passenger. Corollarily, it insists that the
goods handled by it but not in the case of personal injuries, and, finally that doctrine in La Mallorca vs. Court of Appeals, et al. 10 is not applicable to the
Aboitiz cannot properly invoke the fellow-servant rule simply because its case at bar.
liability stems from a breach of contract of carriage. The dispositive portion
of said order reads:
The rule is that the relation of carrier and passenger continues until the
passenger has been landed at the port of destination and has left the vessel
WHEREFORE, judgment is hereby modified insofar as owner's dock or premises. 11 Once created, the relationship will not ordinarily
third party defendant Pioneer Stevedoring Corporation terminate until the passenger has, after reaching his destination, safely
is concerned rendered in favor of the plaintiffs-,: alighted from the carrier's conveyance or had a reasonable opportunity to
leave the carrier's premises. All persons who remain on the premises a
reasonable time after leaving the conveyance are to be deemed
(1) Ordering defendant Aboitiz Shipping Corporation to
passengers, and what is a reasonable time or a reasonable delay within this
pay the plaintiffs the sum of P12,000.00 for the death of
rule is to be determined from all the circumstances, and includes a
Anacleto Viana; P9,000.00 (sic) as actual damages;
reasonable time to see after his baggage and prepare for his
P533,200.00 value of the 10,664 cavans of palay
departure.12 The carrier-passenger relationship is not terminated merely by
computed at P50.00 per cavan; P10,000.00 as
the fact that the person transported has been carried to his destination if, for
attorney's fees; P5,000.00 value of the 100 cavans of
example, such person remains in the carrier's premises to claim his
palay as support for five (5) years for deceased's
baggage.13
parents, herein plaintiffs Antonio and Gorgonia
Viana,computed at P50.00 per cavan; P7,200.00 as
support for deceased's parents computed at P120.00 a It was in accordance with this rationale that the doctrine in the aforesaid
month for five years pursuant to Art. 2206, Par. 2, of the case of La Mallorca was enunciated, to wit:
Civil Code; P20,000.00 as moral damages, and costs;
and
It has been recognized as a rule that the relation of
carrier and passenger does not cease at the moment
(2) Absolving third-party defendant Pioneer Stevedoring the passenger alights from the carrier's vehicle at a
Corporation for (sic) any liability for the death of place selected by the carrier at the point of destination,
Anacleto Viana the passenger of M/V Antonia owned by but continues until the passenger has had a reasonable
defendant third party plaintiff Aboitiz Shipping time or a reasonable opportunity to leave the carrier's
Corporation it appearing that the negligence of its crane premises. And, what is a reasonable time or a
operator has not been established therein. reasonable delay within this rule is to be determined
from all the circumstances. Thus, a person who, after
alighting from a train, walks along the station platform is
Not satisfied with the modified judgment of the trial court, Aboitiz appealed
considered still a passenger. So also, where a
the same to respondent Court of Appeals which affirmed the findings of of
passenger has alighted at his destination and is
the trial court except as to the amount of damages awarded to the Vianas.
proceeding by the usual way to leave the company's
premises, but before actually doing so is halted by the
Hence, this petition wherein petitioner Aboitiz postulates that respondent report that his brother, a fellow passenger, has been
court erred: shot, and he in good faith and without intent of engaging
in the difficulty, returns to relieve his brother, he is
deemed reasonably and necessarily delayed and thus
(A) In holding that the doctrine laid down by this continues to be a passenger entitled as such to the
honorable Court in La Mallorca vs. Court of Appeals, et
protection of the railroad company and its agents.
al. (17 SCRA 739, July 27, 1966) is applicable to the
case in the face of the undisputable fact that the factual
situation under the La Mallorca case is radically In the present case, the father returned to the bus to get
different from the facts obtaining in this case; one of his baggages which was not unloaded when they
alighted from the bus. Racquel, the child that she was,
must have followed the father. However, although the
(B) In holding petitioner liable for damages in the face of
father was still on the running board of the bus waiting
the finding of the court a quo and confirmed by the for the conductor to hand him the bag or bayong, the
Honorable respondent court of Appeals that the bus started to run, so that even he (the father) had to
deceased, Anacleto Viana was guilty of contributory
jump down from the moving vehicle. It was at this
negligence, which, We respectfully submit contributory instance that the child, who must be near the bus, was
negligence was the proximate cause of his death; run over and killed. In the circumstances, it cannot be
specifically the honorable respondent Court of Appeals
claimed that the carrier's agent had exercised the
failed to apply Art. 1762 of the New Civil Code; 'utmost diligence' of a 'very cautious person' required by
Article 1755 of the Civil Code to be observed by a
(C) In the alternative assuming the holding of the common carrier in the discharge of its obligation to
Honorable respondent Court of Appears that petitioner transport safely its passengers. ... The presence of said
may be legally condemned to pay damages to the passengers near the bus was not unreasonable and
private respondents we respectfully submit that it they are, therefore, to be considered still as passengers
committed a reversible error when it dismissed of the carrier, entitled to the protection under their
petitioner's third party complaint against private contract of carriage. 14
respondent Pioneer Stevedoring Corporation instead of
compelling the latter to reimburse the petitioner for It is apparent from the foregoing that what prompted the Court to rule as it
whatever damages it may be compelled to pay to the did in said case is the fact of the passenger's reasonable presence within
private respondents Vianas. 9
the carrier's premises. That reasonableness of time should be made to
depend on the attending circumstances of the case, such as the kind of
At threshold, it is to be observed that both the trial court and respondent common carrier, the nature of its business, the customs of the place, and so
Court of Appeals found the victim Anacleto Viana guilty of contributory forth, and therefore precludes a consideration of the time element per
negligence, but holding that it was the negligence of Aboitiz in prematurely se without taking into account such other factors. It is thus of no moment
turning over the vessel to the arrastre operator for the unloading of cargoes whether in the cited case of La Mallorca there was no appreciable
which was the direct, immediate and proximate cause of the victim's death. interregnum for the passenger therein to leave the carrier's premises
whereas in the case at bar, an interval of one (1) hour had elapsed before
the victim met the accident. The primary factor to be considered is the
existence of a reasonable cause as will justify the presence of the victim on unloading area and the guard's admonitions against entry therein, these
or near the petitioner's vessel. We believe there exists such a justifiable were at most insufficient precautions which pale into insignificance if
cause. considered vis-a-vis the gravity of the danger to which the deceased was
exposed. There is no showing that petitioner was extraordinarily diligent in
requiring or seeing to it that said precautionary measures were strictly and
It is of common knowledge that, by the very nature of petitioner's business
actually enforced to subserve their purpose of preventing entry into the
as a shipper, the passengers of vessels are allotted a longer period of time
forbidden area. By no stretch of liberal evaluation can such perfunctory acts
to disembark from the ship than other common carriers such as a passenger
approximate the "utmost diligence of very cautious persons" to be exercised
bus. With respect to the bulk of cargoes and the number of passengers it
"as far as human care and foresight can provide" which is required by law of
can load, such vessels are capable of accommodating a bigger volume of
common carriers with respect to their passengers.
both as compared to the capacity of a regular commuter bus. Consequently,
a ship passenger will need at least an hour as is the usual practice, to
disembark from the vessel and claim his baggage whereas a bus passenger While the victim was admittedly contributorily negligent, still petitioner's
can easily get off the bus and retrieve his luggage in a very short period of aforesaid failure to exercise extraordinary diligence was the proximate and
time. Verily, petitioner cannot categorically claim, through the bare expedient direct cause of, because it could definitely have prevented, the former's
of comparing the period of time entailed in getting the passenger's cargoes, death. Moreover, in paragraph 5.6 of its petition, at bar, 19 petitioner has
that the ruling in La Mallorca is inapplicable to the case at bar. On the expressly conceded the factual finding of respondent Court of Appeals that
contrary, if we are to apply the doctrine enunciated therein to the instant petitioner did not present sufficient evidence in support of its submission that
petition, we cannot in reason doubt that the victim Anacleto Viana was still a the deceased Anacleto Viana was guilty of gross negligence. Petitioner
passenger at the time of the incident. When the accident occurred, the cannot now be heard to claim otherwise.
victim was in the act of unloading his cargoes, which he had every right to
do, from petitioner's vessel. As earlier stated, a carrier is duty bound not
No excepting circumstance being present, we are likewise bound by
only to bring its passengers safely to their destination but also to afford them
respondent court's declaration that there was no negligence on the part of
a reasonable time to claim their baggage.
Pioneer Stevedoring Corporation, a confirmation of the trial court's finding to
that effect, hence our conformity to Pioneer's being absolved of any liability.
It is not definitely shown that one (1) hour prior to the incident, the victim had
already disembarked from the vessel. Petitioner failed to prove this. What is
As correctly observed by both courts, Aboitiz joined Pioneer in proving the
clear to us is that at the time the victim was taking his cargoes, the vessel
alleged gross negligence of the victim, hence its present contention that the
had already docked an hour earlier. In consonance with common shipping
death of the passenger was due to the negligence of the crane operator
procedure as to the minimum time of one (1) hour allowed for the
cannot be sustained both on grounds, of estoppel and for lack of evidence
passengers to disembark, it may be presumed that the victim had just gotten
on its present theory. Even in its answer filed in the court below it readily
off the vessel when he went to retrieve his baggage. Yet, even if he had
alleged that Pioneer had taken the necessary safeguards insofar as its
already disembarked an hour earlier, his presence in petitioner's premises
unloading operations were concerned, a fact which appears to have been
was not without cause. The victim had to claim his baggage which was
accepted by the plaintiff therein by not impleading Pioneer as a defendant,
possible only one (1) hour after the vessel arrived since it was admittedly
and likewise inceptively by Aboitiz by filing its third-party complaint only after
standard procedure in the case of petitioner's vessels that the unloading
ten (10) months from the institution of the suit against it. Parenthetically,
operations shall start only after that time. Consequently, under the foregoing
Pioneer is not within the ambit of the rule on extraordinary diligence required
circumstances, the victim Anacleto Viana is still deemed a passenger of said
of, and the corresponding presumption of negligence foisted on, common
carrier at the time of his tragic death.
carriers like Aboitiz. This, of course, does not detract from what we have
said that no negligence can be imputed to Pioneer but, that on the contrary,
II. Under the law, common carriers are, from the nature of their business and the failure of Aboitiz to exercise extraordinary diligence for the safety of its
for reasons of public policy, bound to observe extraordinary diligence in the passenger is the rationale for our finding on its liability.
vigilance over the goods and for the safety of the passengers transported by
them, according to all the circumstances of each case. 15 More particularly, a
WHEREFORE, the petition is DENIED and the judgment appealed from is
common carrier is bound to carry the passengers safely as far as human
hereby AFFIRMED in toto.
care and foresight can provide, using the utmost diligence of very cautious
persons, with a due regard for all the circumstances. 16 Thus, where a
passenger dies or is injured, the common carrier is presumed to have been SO ORDERED.
at fault or to have acted negligently. 17 This gives rise to an action for breach
of contract of carriage where all that is required of plaintiff is to prove the
existence of the contract of carriage and its non-performance by the carrier,
that is, the failure of the carrier to carry the passenger safely to his
destination, 18which, in the instant case, necessarily includes its failure to
safeguard its passenger with extraordinary diligence while such relation
subsists.

The presumption is, therefore, established by law that in case of a

passenger's death or injury the operator of the vessel was at fault or
negligent, having failed to exercise extraordinary diligence, and it is
incumbent upon it to rebut the same. This is in consonance with the avowed
policy of the State to afford full protection to the passengers of common
carriers which can be carried out only by imposing a stringent statutory
obligation upon the latter. Concomitantly, this Court has likewise adopted a
rigid posture in the application of the law by exacting the highest degree of
care and diligence from common carriers, bearing utmost in mind the
welfare of the passengers who often become hapless victims of indifferent
and profit-oriented carriers. We cannot in reason deny that petitioner failed
to rebut the presumption against it. Under the facts obtaining in the present
case, it cannot be gainsaid that petitioner had inadequately complied with
the required degree of diligence to prevent the accident from happening.

As found by the Court of Appeals, the evidence does not show that there
was a cordon of drums around the perimeter of the crane, as claimed by
petitioner. It also adverted to the fact that the alleged presence of visible
warning signs in the vicinity was disputable and not indubitably established.
Thus, we are not inclined to accept petitioner's explanation that the victim
and other passengers were sufficiently warned that merely venturing into the
area in question was fraught with serious peril. Definitely, even assuming
the existence of the supposed cordon of drums loosely placed around the
 FIRST DIVISION Prudent appealed to the Court of Appeals. On 27 August 2000, the appellate
court promulgated its now assailed decision exonerating Prudent from any
liability for the death of Nicanor Navidad and, instead, holding the LRTA and
G.R. No. 145804 February 6, 2003
Roman jointly and severally liable thusly:

LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, petitioners,

"WHEREFORE, the assailed judgment is hereby MODIFIED, by exonerating
vs.
the appellants from any liability for the death of Nicanor Navidad, Jr. Instead,
MARJORIE NAVIDAD, Heirs of the Late NICANOR NAVIDAD &
appellees Rodolfo Roman and the Light Rail Transit Authority (LRTA) are
PRUDENT SECURITY AGENCY, respondents.
held liable for his death and are hereby directed to pay jointly and severally
to the plaintiffs-appellees, the following amounts:
DECISION a) P44,830.00 as actual damages;
b) P50,000.00 as nominal damages;
c) P50,000.00 as moral damages;
VITUG, J.:
d) P50,000.00 as indemnity for the death of the
deceased; and
The case before the Court is an appeal from the decision and resolution of e) P20,000.00 as and for attorney’s fees."2
the Court of Appeals, promulgated on 27 April 2000 and 10 October 2000, The appellate court ratiocinated that while the deceased might not have then
respectively, in CA-G.R. CV No. 60720, entitled "Marjorie Navidad and Heirs as yet boarded the train, a contract of carriage theretofore had already
of the Late Nicanor Navidad vs. Rodolfo Roman, et. al.," which has modified existed when the victim entered the place where passengers were supposed
the decision of 11 August 1998 of the Regional Trial Court, Branch 266, to be after paying the fare and getting the corresponding token therefor. In
Pasig City, exonerating Prudent Security Agency (Prudent) from liability and exempting Prudent from liability, the court stressed that there was nothing to
finding Light Rail Transit Authority (LRTA) and Rodolfo Roman liable for link the security agency to the death of Navidad. It said that Navidad failed
damages on account of the death of Nicanor Navidad. to show that Escartin inflicted fist blows upon the victim and the evidence
merely established the fact of death of Navidad by reason of his having
been hit by the train owned and managed by the LRTA and operated at the
On 14 October 1993, about half an hour past seven o’clock in the evening, time by Roman. The appellate court faulted petitioners for their failure to
Nicanor Navidad, then drunk, entered the EDSA LRT station after present expert evidence to establish the fact that the application of
purchasing a "token" (representing payment of the fare). While Navidad was emergency brakes could not have stopped the train.
standing on the platform near the LRT tracks, Junelito Escartin, the security
guard assigned to the area approached Navidad. A misunderstanding or an
altercation between the two apparently ensued that led to a fist fight. No The appellate court denied petitioners’ motion for reconsideration in its
evidence, however, was adduced to indicate how the fight started or who, resolution of 10 October 2000.
between the two, delivered the first blow or how Navidad later fell on the
LRT tracks. At the exact moment that Navidad fell, an LRT train, operated In their present recourse, petitioners recite alleged errors on the part of the
by petitioner Rodolfo Roman, was coming in. Navidad was struck by the appellate court; viz:
moving train, and he was killed instantaneously. "I.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED BY
On 08 December 1994, the widow of Nicanor, herein respondent Marjorie DISREGARDING THE FINDINGS OF FACTS BY THE TRIAL COURT
Navidad, along with her children, filed a complaint for damages against "II.
Junelito Escartin, Rodolfo Roman, the LRTA, the Metro Transit THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING
Organization, Inc. (Metro Transit), and Prudent for the death of her husband. THAT PETITIONERS ARE LIABLE FOR THE DEATH OF NICANOR
LRTA and Roman filed a counterclaim against Navidad and a cross-claim NAVIDAD, JR.
against Escartin and Prudent. Prudent, in its answer, denied liability and "III.
averred that it had exercised due diligence in the selection and supervision THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING
of its security guards. THAT RODOLFO ROMAN IS AN EMPLOYEE OF LRTA."3
Petitioners would contend that the appellate court ignored the evidence and
the factual findings of the trial court by holding them liable on the basis of a
The LRTA and Roman presented their evidence while Prudent and Escartin, sweeping conclusion that the presumption of negligence on the part of a
instead of presenting evidence, filed a demurrer contending that Navidad common carrier was not overcome. Petitioners would insist that Escartin’s
had failed to prove that Escartin was negligent in his assigned task. On 11 assault upon Navidad, which caused the latter to fall on the tracks, was an
August 1998, the trial court rendered its decision; it adjudged: act of a stranger that could not have been foreseen or prevented. The LRTA
would add that the appellate court’s conclusion on the existence of an
"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and employer-employee relationship between Roman and LRTA lacked basis
against the defendants Prudent Security and Junelito Escartin ordering the because Roman himself had testified being an employee of Metro Transit
latter to pay jointly and severally the plaintiffs the following: and not of the LRTA.

"a) 1) Actual damages of P44,830.00; Respondents, supporting the decision of the appellate court, contended that
a contract of carriage was deemed created from the moment Navidad paid
the fare at the LRT station and entered the premises of the latter, entitling
2) Compensatory damages of P443,520.00; Navidad to all the rights and protection under a contractual relation, and that
the appellate court had correctly held LRTA and Roman liable for the death
3) Indemnity for the death of Nicanor Navidad in the sum of of Navidad in failing to exercise extraordinary diligence imposed upon a
P50,000.00; common carrier.

"b) Moral damages of P50,000.00; Law and jurisprudence dictate that a common carrier, both from the nature
of its business and for reasons of public policy, is burdened with the duty of
exercising utmost diligence in ensuring the safety of passengers. 4 The Civil
"c) Attorney’s fees of P20,000; Code, governing the liability of a common carrier for death of or injury to its
passengers, provides:
"d) Costs of suit.
"Article 1755. A common carrier is bound to carry the passengers safely as
"The complaint against defendants LRTA and Rodolfo Roman are dismissed far as human care and foresight can provide, using the utmost diligence of
for lack of merit. very cautious persons, with a due regard for all the circumstances.

"The compulsory counterclaim of LRTA and Roman are likewise "Article 1756. In case of death of or injuries to passengers, common carriers
dismissed."1 are presumed to have been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence as prescribed in articles
1733 and 1755."
"Article 1759. Common carriers are liable for the death of or injuries to is not itself a juridical relation between the latter and Roman; thus, Roman
passengers through the negligence or willful acts of the former’s employees, can be made liable only for his own fault or negligence.
although such employees may have acted beyond the scope of their
authority or in violation of the orders of the common carriers.
The award of nominal damages in addition to actual damages is untenable.
Nominal damages are adjudicated in order that a right of the plaintiff, which
"This liability of the common carriers does not cease upon proof that they has been violated or invaded by the defendant, may be vindicated or
exercised all the diligence of a good father of a family in the selection and recognized, and not for the purpose of indemnifying the plaintiff for any loss
supervision of their employees." suffered by him.18 It is an established rule that nominal damages cannot co-
exist with compensatory damages.19
"Article 1763. A common carrier is responsible for injuries suffered by a
passenger on account of the willful acts or negligence of other passengers WHEREFORE, the assailed decision of the appellate court is AFFIRMED
or of strangers, if the common carrier’s employees through the exercise of with MODIFICATION but only in that (a) the award of nominal damages is
the diligence of a good father of a family could have prevented or stopped DELETED and (b) petitioner Rodolfo Roman is absolved from liability. No
the act or omission." costs.

The law requires common carriers to carry passengers safely using the SO ORDERED.
utmost diligence of very cautious persons with due regard for all
circumstances.5 Such duty of a common carrier to provide safety to its
passengers so obligates it not only during the course of the trip but for so
long as the passengers are within its premises and where they ought to be
in pursuance to the contract of carriage.6 The statutory provisions render a
common carrier liable for death of or injury to passengers (a) through the
negligence or wilful acts of its employees or b) on account of wilful acts or
negligence of other passengers or of strangers if the common carrier’s
employees through the exercise of due diligence could have prevented or
stopped the act or omission.7 In case of such death or injury, a carrier is
presumed to have been at fault or been negligent, and8 by simple proof of
injury, the passenger is relieved of the duty to still establish the fault or
negligence of the carrier or of its employees and the burden shifts upon the
carrier to prove that the injury is due to an unforeseen event or to force
majeure.9 In the absence of satisfactory explanation by the carrier on how
the accident occurred, which petitioners, according to the appellate court,
have failed to show, the presumption would be that it has been at fault, 10 an
exception from the general rule that negligence must be proved. 11

The foundation of LRTA’s liability is the contract of carriage and its

obligation to indemnify the victim arises from the breach of that contract by
reason of its failure to exercise the high diligence required of the common
carrier. In the discharge of its commitment to ensure the safety of
passengers, a carrier may choose to hire its own employees or avail itself of
the services of an outsider or an independent firm to undertake the task. In
either case, the common carrier is not relieved of its responsibilities under
the contract of carriage.

Should Prudent be made likewise liable? If at all, that liability could only be
for tort under the provisions of Article 217612 and related provisions, in
conjunction with Article 2180,13 of the Civil Code. The premise, however, for
the employer’s liability is negligence or fault on the part of the employee.
Once such fault is established, the employer can then be made liable on the
basis of the presumption juris tantum that the employer failed to exercise
diligentissimi patris families in the selection and supervision of its
employees. The liability is primary and can only be negated by showing due
diligence in the selection and supervision of the employee, a factual matter
that has not been shown. Absent such a showing, one might ask further,
how then must the liability of the common carrier, on the one hand, and an
independent contractor, on the other hand, be described? It would be
solidary. A contractual obligation can be breached by tort and when the
same act or omission causes the injury, one resulting in culpa contractual
and the other in culpa aquiliana, Article 219414 of the Civil Code can well
apply.15 In fine, a liability for tort may arise even under a contract, where tort
is that which breaches the contract.16 Stated differently, when an act which
constitutes a breach of contract would have itself constituted the source of a
quasi-delictual liability had no contract existed between the parties, the
contract can be said to have been breached by tort, thereby allowing the
rules on tort to apply.17

Regrettably for LRT, as well as perhaps the surviving spouse and heirs of
the late Nicanor Navidad, this Court is concluded by the factual finding of the
Court of Appeals that "there is nothing to link (Prudent) to the death of
Nicanor (Navidad), for the reason that the negligence of its employee,
Escartin, has not been duly proven x x x." This finding of the appellate court
is not without substantial justification in our own review of the records of the
case.

There being, similarly, no showing that petitioner Rodolfo Roman himself is

guilty of any culpable act or omission, he must also be absolved from
liability. Needless to say, the contractual tie between the LRT and Navidad
 Manila that they observed all the diligence of the good father of a family to prevent
THIRD DIVISION damage.
G.R. No. 211424 November 26, 2014
DAVAO HOLIDAY TRANSPORT SERVICES CORPORATION, Petitioner,
The CA correctly held that the petitioner, being Tungal’s employer, was
vs.
presumed liable to the heirs of Christian after a finding that it was Tungal
SPOUSES EULOGIO and CARMELITA EMPHASIS, Respondents.
who should be faulted for the accident that caused the death of the child. In
RESOLUTION
Cang v. Cullen,6 the Court emphasized that when an employee causes
REYES, J.:
damage due to his own negligence while performing his own duties, there
arises the juris tantum presumption that his employer is negligent, rebuttable
This resolves the Petition for Review1 filed under Rule 45 of the Rules of only by proof of observance of the diligence of a good father of a family. In
Court by Davao Holiday Transport Services Corporation (petitioner) to assail the selection of prospective employees, employers are required to examine
the Decision2 dated November 20, 2012 and Resolution3 dated January 22, them as to their qualifications, experience and service records. With respect
2014 of the Court of Appeals (CA) in CA-G.R. CV No. 01632-MIN in favor of to the supervision of employees, employers must formulate standard
Spouses Eulogio and Carmelita Emphasis (spouses Emphasis). The operating procedures, monitor their implementation and impose disciplinary
petitioner was the owner and operator of Holiday Tax.i No. 177 bearing measures for breaches thereof. These facts must be shown by concrete
Plate No. LVX-171, which figured in an accident on October 18, 2003, at proof, including documentary evidence.7
around 12:45 p.m., that caused the death of a 12-year-old boy, Christian
Emphasis (Christian). The taxicab was then being driven by Orlando Tungal
The petitioner failed in this aspect. There then appears no cogent reason for
(Tungal) along Airport Road in Davao City when it bumped Christian, who
the Court to depart from the RTC’s and CA’s observation that the petitioner
was then riding a bicycle.
failed to establish the modes and measures it adopted to ensure the proper
selection and supervision of Tungal. This makes proper the order upon the
On October 23, 2003, an information for reckless imprudence resulting in petitioner to compensate the spouses Emphasis for damages. As the CA
homicide was filed against Tungal. Meanwhile, on March 1, 2004, the pointed out:
parents of Christian, the spouses Emphasis, filed a separate action for
damages and attorney’s fees arising from the vehicular accident against
In the instant case, save for the self-serving testimony of witness Romero,
both petitioner and Tungal. Upon the parties’ agreement, the two cases
Holiday did not present documentary proof of Tungal’s qualification,
were jointly tried by the Regional Trial Court (RTC) of Davao City, Branch
experience and service records. Even the result of the actual driving tests
12.
was not presented to be examined by the court a quo. The claim of trainings
and constant monitoring of all their drivers including Tungal are
On June 17, 2008, the RTC rendered its Judgment/Decision. 4 In the criminal unsubstantiated.
case, Tungal was found guilty beyond reasonable doubt of the crime of
reckless imprudence resulting inhomicide. He was then sentenced to suffer
In addition, Holiday presented no record of Tungal attending those trainings.
the indeterminate penalty of two (2) years and four (4) months of prision
There was also no record of their so-called constant monitoring of their
correccional in its minimum period as minimum, to four (4) years, nine (9)
drivers. They claimed having installed radios on every cab they operate for
months and ten (10) days of prision correccional in its medium period as
the purpose of reminding their drivers to drive safely but, no recordings were
maximum. In the civil case, the petitioner and Tungal were ordered to pay
ever made to prove such call every now and then. Holiday also failed to
the spouses Emphasis, jointly and severally, the following sums: (1)
establish that they also monitor speed of its taxi during its daily trips,
₱75,000.00 as civil indemnity; (2) ₱800,000.00 as moral damages; (3)
considering that it is engaged in transportation business, particularly
₱550,000.00 as actual damages; (4) ₱150,000.00 as exemplary damages;
delivering people to and from places. For these, We uphold the court a quo’s
(5) ₱50,000.00 as attorney’s fees; (6) ₱33,455.00 as litigation expenses;
finding that Holiday had been negligent in the selection and supervision of
and (7) interest on the foregoing amounts at the rate of 12% per annum
its driver Tungal.8
counted from the date of the decision until full payment.

In light of prevailing rules and jurisprudence, the reckoning date of the 6%

Feeling aggrieved by the RTC decision, the petitioner appealed the
per annum interest on the monetary awardsmust, however, be modified. It
disposition of the civil case to the CA. It argued that it should be absolved of
bears emphasis that the damages imposed upon the petitioner, as Tungal’s
any liability for damages, as it exercised extraordinary diligence in the
employer, were the result of a separate complaint for damages based on a
selection and supervision of its drivers, including Tungal.
quasi-delict under Article 2176, in relation to Article 2180, of the New Civil
Code. Consistent with pertinent jurisprudence, the interest on these awards
On November 20, 2012, the CA rendered its Decision5 affirming the RTC’s must be computed from the date whenthe RTC rendered its decision in the
ruling that the petitioner was liable for damages. It, however, modified the civil case, or on June 17, 2008, as it was at this timethat a quantification of
amounts of civil indemnity, moral damages and actual damages, resulting in the damages may be deemed to have been reasonably ascertained.9 The
the following monetary awards: (1) ₱50,000.00 as civil indemnity; (2) CA’s increase of the rate of interest to 12% per annum from the date of
₱200,000.00 as moral damages; (3) ₱365,696.02 as actual damages; (4) finality of judgment must also be rectified. Under Circular No. 799 issued by
₱150,000.00 as exemplary damages; (5) ₱50,000.00 as attorney’s fees; and the Bangko Sentral ng Pilipinas on June 21, 2013,"[t]he rate of interest for
(6) ₱33,455.00 as litigation expenses. The reduction in the awards was the loan or forbearance of any money, goodsor credits and the rate allowed
deemed proper, in view of attending circumstances and prevailing in judgments, in the absence of an express contract as to such rate of
jurisprudence. The petitioner was also ordered to pay interest at the rate of interest, shall be six percent (6%) per annum." From the finality of a
six percent (6%) from the time of the offense’s commission, then 12% from judgment awarding a sum of money until it is satisfied, the award shall be
the date of finality ofdecision until full payment. considered a forbearance of credit, regardless of whether the award in fact
pertained to one.10 To be consistent with the foregoing, the interest on the
monetary awards shall then be fixed at 6% per annum, until the damages
The CA explained that given Tungal’s failure to appeal his conviction, the
are fully paid.
decision finding that he caused the accident had become final and
executory. The petitioner was equally liable for damages given its failure to
present sufficient evidence of Tungal’s qualifications, experience, training WHEREFORE, the petition is DENIED. The Decision dated November 20,
and service records as a driver. The self-serving testimony in court of an 2012 and Resolution dated January 22, 2014 of the Court of Appeals in CA-
employee of the petitioner failed to establish the company’s due diligence in G.R. CV No. 01632-MIN are AFFIRMED with MODIFICATION in that
the selection and supervision of its employees. petitioner Davao Holiday Transport Services Corporation is ordered to pay
interest on the monetaryawards in favor of the respondents, Spouses
Eulogio and Carmelita Emphasis, at the rate of 6% per annum, to be
The petitioner’s motion for reconsideration was denied by the CA. Hence,
computed from June 17, 2008 until full satisfaction.
this petition for review.1âwphi1 The Court finds the petition devoid of merit.

SO ORDERED.
Article 2180 of the New Civil Code provides that an obligation for damages
is demandable not only for one’s own acts or omissions, but also for those of
persons for whom he is responsible. Employers, in particular, shall be liable
for the damages caused by their employees acting within the scope of their
assigned tasks. The responsibility of employers shall only cease upon proof
 FIRST DIVISION 3. Costs of suit.

G.R. No. 172682, July 27, 2016 SO ORDERED.10chanroblesvirtuallawlibrary

The RTC observed that the petitioner, being negligent, was liable to Sesante
SULPICIO LINES, INC., Petitioner, v. NAPOLEON SESANTE, NOW pursuant to Articles 1739 and 1759 of the Civil Code; that the petitioner had
SUBSTITUTED BY MARIBEL ATILANO, KRISTEN MARIE, CHRISTIAN not established its due diligence in the selection and supervision of the
IONE, KENNETH KERRN AND KARISNA KATE, ALL SURNAMED vessel crew; that the ship officers had failed to inspect the stowage of
SESANTE, Respondent. cargoes despite being aware of the storm signal; that the officers and crew
of the vessel had not immediately sent a distress signal to the Philippine
Coast Guard; that the ship captain had not called for then "abandon ship"
DECISION
protocol; and that based on the report of the Board of Marine Inquiry (BMI),
the erroneous maneuvering of the vessel by the captain during the extreme
BERSAMIN, J.: weather condition had been the immediate and proximate cause of the
sinking.
Moral damages are meant to enable the injured party to obtain the means,
The petitioner sought reconsideration, but the RTC only partly granted its
diversions or amusements in order to alleviate the moral suffering.
motion by reducing the temperate damages from P500,000.00 to
Exemplary damages are designed to permit the courts to reshape behavior
P300,000.00.11chanrobleslaw
that is socially deleterious in its consequence by creating negative
incentives or deterrents against such behavior.
Dissatisfied, the petitioner appealed.12 It was pending the appeal in the CA
when Sesante passed away. He was substituted by his
The Case heirs.13chanrobleslaw

This appeal seeks to undo and reverse the adverse decision promulgated
Judgment of the CA
on June 27, 2005,1 whereby the Court of Appeals (CA) affirmed with
modification the judgment of the Regional Trial Court (RTC), Branch 91, in
On June 27, 2005, the CA promulgated its assailed decision. It lowered the
Quezon City holding the petitioner liable to pay temperate and moral
temperate damages to P120,000.00, which approximated the cost of
damages due to breach of contract of carriage.2chanrobleslaw
Sesante's lost personal belongings; and held that despite the seaworthiness
of the vessel, the petitioner remained civilly liable because its officers and
Antecedents crew had been negligent in performing their duties. 14chanrobleslaw

On September 18, 1998, at around 12:55 p.m., the M/V Princess of the Sttill aggrieved, Sulpicio Lines moved for reconsideration, but the CA denied
Orient, a passenger vessel owned and operated by the petitioner, sank near the motion.15chanrobleslaw
Fortune Island in Batangas. Of the 388 recorded passengers, 150 were
lost.3 Napoleon Sesante, then a member of the Philippine National Police Hence, this appeal.
(PNP) and a lawyer, was one of the passengers who survived the sinking.
He sued the petitioner for breach of contract and damages.4chanrobleslaw
Issues
Sesante alleged in his complaint that the M/V Princess of the Orient left the
The petitioner attributes the following errors to the CA, to
Port of Manila while Metro Manila was experiencing stormy weather; that at
wit:ChanRoblesVirtualawlibrary
around 11:00 p.m., he had noticed the vessel listing starboard, so he had
I
gone to the uppermost deck where he witnessed the strong winds and big
waves pounding the vessel; that at the same time, he had seen how the
THE ASSAILED DECISION ERRED IN SUSTAINING THE AWARD OF
passengers had been panicking, crying for help and frantically scrambling
MORAL DAMAGES, AS THE INSTANT CASE IS FOR ALLEGED
for life jackets in the absence of the vessel's officers and crew; that sensing
PERSONAL INJURIES PREDICATED ON BREACH OF CONTRACT OF
danger, he had called a certain Vency Ceballos through his cellphone to
CARRIAGE, AND THERE BEING NO PROOF OF BAD FAITH ON THE
request him to inform the proper authorities of the situation; that thereafter,
PART OF SULPICIO
big waves had rocked the vessel, tossing him to the floor where he was
pinned by a long steel bar; that he had freed himself only after another wave
had hit the vessel;5 that he had managed to stay afloat after the vessel had II
sunk, and had been carried by the waves to the coastline of Cavite and
Batangas until he had been rescued; that he had suffered tremendous THE ASSAILED DECISION ERRED IN SUSTAINING THE AMOUNT OF
hunger, thirst, pain, fear, shock, serious anxiety and mental anguish; that he MORAL DAMAGES AWARDED, THE SAME BEING UNREASONABLE,
had sustained injuries,6 and had lost money, jewelry, important documents, EXCESSIVE AND UNCONSCIONABLE, AND TRANSLATES TO UNJUST
police uniforms and the .45 caliber pistol issued to him by the PNP; and that ENRICHMENT AGAINST SULPICIO
because it had committed bad faith in allowing the vessel to sail despite the
storm signal, the petitioner should pay him actual and moral damages of III
P500,000.00 and P1,000,000.00, respectively.7chanrobleslaw
THE ASSAILED DECISION ERRED IN SUSTAINING THE AWARD OF
In its defense, the petitioner insisted on the seaworthiness of the M/V TEMPERATE DAMAGES AS THE SAME CANNOT SUBSTITUTE FOR A
Princess of the Orient due to its having been cleared to sail from the Port of FAILED CLAIM FOR ACTUAL DAMAGES, THERE BEING NO
Manila by the proper authorities; that the sinking had been due to force COMPETENT PROOF TO WARRANT SAID AWARD
majeure; that it had not been negligent; and that its officers and crew had
also not been negligent because they had made preparations to abandon IV
the vessel because they had launched life rafts and had provided the
passengers assistance in that regard.8chanrobleslaw THE AWARD OF TEMPERATE DAMAGES IS UNTENABLE AS THE
REQUISITE NOTICE UNDER THE LAW WAS NOT GIVEN TO SULPICIO
Decision of the RTC IN ORDER TO HOLD IT LIABLE FOR THE ALLEGED LOSS OF
SESANTE'S PERSONAL BELONGINGS
On October 12, 2001, the RTC rendered its judgment in favor of the
respondent,9 holding as follows:ChanRoblesVirtualawlibrary V
WHEREFORE, judgment is hereby rendered in favor of plaintiff Napoleon
Sesante and against defendant Sulpicio Lines, Inc., ordering said defendant THE ASSAILED DECISION ERRED IN SUBSTITUTING THE HEIRS OF
to pay plaintiff: RESPONDENT SESANTE IN THE INSTANT CASE, THE SAME BEING A
PERSONAL ACTION WHICH DOES NOT SURVIVE
1. Temperate damages in the amount of P400,000.00;
VI
2. Moral damages in the amount of One Million Pesos
(P1,000,000.00); THE ASSAILED DECISION ERRED IN APPLYING ARTICLE 1759 OF THE
NEW CIVIL CODE AGAINST SULPICIO SANS A CLEAR-CUT FINDING event of death or injury to passengers due to the negligence or fault of the
OF SULPICIO'S BAD FAITH IN THE INCIDENT16chanroblesvirtuallawlibrary common carrier's employees. It reads:ChanRoblesVirtualawlibrary
Article 1759. Common carriers are liable for the death or injuries to
In other words, to be resolved are the following, namely: (1) Is the complaint
passengers through the negligence or willful acts of the former's
for breach of contract and damages a personal action that does not survive
employees, although such employees may have acted beyond the scope of
the death of the plaintiff?; (2) Is the petitioner liable for damages under
their authority or in violation of the orders of the common carriers.
Article 1759 of the Civil Code?; and (3) Is there sufficient basis for awarding
moral and temperate damages?
This liability of the common carriers does not cease upon proof that they
exercised all the diligence of a good father of a family in the selection and
Ruling of the Court supervision of their employees.

The appeal lacks merit. The liability of common carriers under Article 1759 is demanded by the duty
of extraordinary diligence required of common carriers in safely carrying
their passengers.20chanrobleslaw
I
On the other hand, Article 1756 of the Civil Code lays down the presumption
An action for breach of contract of carriage survives the death of the of negligence against the common carrier in the event of death or injury of
plaintiff its passenger, viz.:ChanRoblesVirtualawlibrary
Article 1756. In case of death of or injuries to passengers, common carriers
The petitioner urges that Sesante's complaint for damages was purely are presumed to have been at fault or to have acted negligently, unless they
personal and cannot be transferred to his heirs upon his death. Hence, the prove that they observed extraordinary diligence as prescribed in Articles
complaint should be dismissed because the death of the plaintiff abates a 1733 and 1755.
personal action.
Clearly, the trial court is not required to make an express finding of the
The petitioner's urging is unwarranted. common carrier's fault or negligence.21 Even the mere proof of injury
relieves the passengers from establishing the fault or negligence of the
Section 16, Rule 3 of the Rules of Court lays down the proper procedure in carrier or its employees.22 The presumption of negligence applies so long as
the event of the death of a litigant, viz.:ChanRoblesVirtualawlibrary there is evidence showing that: (a) a contract exists between the passenger
Section 16. Death of party; duty of counsel. - Whenever a party to a and the common carrier; and (b) the injury or death took place during the
pending action dies, and the claim is not thereby extinguished, it shall existence of such contract.23 In such event, the burden shifts to the common
be the duty of his counsel to inform the court within thirty (30) days after carrier to prove its observance of extraordinary diligence, and that an
such death of the fact thereof, and to give the name and address of his legal unforeseen event or force majeure had caused the injury.24chanrobleslaw
representative or representatives. Failure of counsel to comply with his duty
shall be a ground for disciplinary action. Sesante sustained injuries due to the buffeting by the waves and
consequent sinking of M/V Princess of the Orient where he was a
The heirs of the deceased may be allowed to be substituted for the passenger. To exculpate itself from liability, the common carrier vouched for
deceased, without requiring the appointment of an executor or administrator the seaworthiness of M/V Princess of the Orient, and referred to the BMI
and the court may appoint a guardian ad litem for the minor heirs. report to the effect that the severe weather condition - a force majeure - had
brought about the sinking of the vessel.
xxxx
The petitioner was directly liable to Sesante and his heirs.
Substitution by the heirs is not a matter of jurisdiction, but a requirement of
due process.17 It protects the right of due process belonging to any party, A common carrier may be relieved of any liability arising from a fortuitous
that in the event of death the deceased litigant continues to be protected event pursuant to Article 117425cralawred of the Civil Code. But while it may
and properly represented in the suit through the duly appointed legal free a common carrier from liability, the provision still requires exclusion of
representative of his estate.18chanrobleslaw human agency from the cause of injury or loss.26 Else stated, for a common
carrier to be absolved from liability in case of force majeure, it is not enough
The application of the rule on substitution depends on whether or not the that the accident was caused by a fortuitous event. The common carrier
action survives the death of the litigant. Section 1, Rule 87 of the Rules of must still prove that it did not contribute to the occurrence of the incident due
Court enumerates the following actions that survive the death of a party, to its own or its employees' negligence.27 We explained in Schmitz Transport
namely: (1) recovery of real or personal property, or an interest from the & Brokerage Corporation v. Transport Venture, Inc.,28 as
estate; (2) enforcement of liens on the estate; and (3) recovery of damages follows:ChanRoblesVirtualawlibrary
for an injury to person or property. On the one hand, Section 5, Rule 86 of In order to be considered a fortuitous event, however, (1) the cause of the
the Rules of Court lists the actions abated by death as including: (1) claims unforeseen and unexpected occurrence, or the failure of the debtor to
for funeral expenses and those for the last sickness of the decedent; (2) comply with his obligation, must be independent of human will; (2) it must be
judgments for money; and (3) all claims for money against the deceased, impossible to foresee the event which constitute the caso fortuito, or if it can
arising from contract, express or implied. be foreseen it must be impossible to avoid; (3) the occurrence must be such
as to render it impossible for the debtor to fulfill his obligation in any manner;
A contract of carriage generates a relation attended with public duty, neglect and (4) the obligor must be free from any participation in the aggravation of
or malfeasance of the carrier's employees and gives ground for an action for the injury resulting to the creditor.
damages.19 Sesante's claim against the petitioner involved his personal [T]he principle embodied in the act of God doctrine strictly requires that the
injury caused by the breach of the contract of carriage. Pursuant to the act must be occasioned solely by the violence of nature. Human
aforecited rules, the complaint survived his death, and could be continued intervention is to be excluded from creating or entering into the cause
by his heirs following the rule on substitution. of the mischief. When the effect is found to be in part the result of the
participation of man, whether due to his active intervention or neglect
II or failure to act, the whole occurrence is then humanized and removed
from the rules applicable to the acts of God.29 (bold underscoring
The petitioner is liable for breach of contract of carriage supplied for emphasis)

The petitioner submits that an action for damages based on breach of The petitioner has attributed the sinking of the vessel to the storm
contract of carriage under Article 1759 of the Civil Code should be read in notwithstanding its position on the seaworthiness of M/V Princess of the
conjunction with Article 2201 of the same code; that although Article 1759 Orient. Yet, the findings of the BMI directly contradicted the petitioner's
only provides for a presumption of negligence, it does not envision attribution, as follows:ChanRoblesVirtualawlibrary
automatic liability; and that it was not guilty of bad faith considering that the 7. The Immediate and the Proximate Cause of the Sinking
sinking of M/V Princess of the Orient had been due to a fortuitous event, an
exempting circumstance under Article 1174 of the Civil Code. The Captain's erroneous maneuvers of the M/V Princess of the
Orient minutes before she sunk [sic] had caused the accident. It should be
The submission has no substance. noted that during the first two hours when the ship left North Harbor, she
was navigating smoothly towards Limbones Point. During the same period,
Article 1759 of the Civil Code does not establish a presumption of the ship was only subjected to the normal weather stress prevailing at the
negligence because it explicitly makes the common carrier liable in the time. She was then inside Manila Bar. The waves were observed to be
relatively small to endanger the safety of the ship. It was only when the MV
Princess of the Orient had cleared Limbones Pt. while navigating towards were only the basic and minimal safety standards which would qualify the
the direction of the Fortune Island when this agonizing misfortune struck the vessel as seaworthy. In the same report however it also revealed that the
ship. immediate and proximate cause of the sinking of the M/V Princess of the
Orient was brought by the following: erroneous maneuvering command of
Initially, a list of three degrees was observed. The listing of the ship to her Captain Esrum Mahilum and due to the weather condition prevailing at the
portside had continuously increased. It was at this point that the captain had time of the tragedy. There is no doubt that under the circumstances the crew
misjudged the situation. While the ship continuously listed to her portside of the vessel were negligent in manning it. In fact this was clearly
and was battered by big waves, strong southwesterly winds, prudent established by the investigation of the Board of Marine Inquiry where it was
judgement [sic] would dictate that the Captain should have considerably found that:ChanRoblesVirtualawlibrary
reduced the ship's speed. He could have immediately ordered the Chief The Chief Mate, when interviewed under oath, had attested that he was not
Engineer to slacken down the speed. Meanwhile, the winds and waves able to make stability calculation of the ship vis-a-vis her cargo. He did not
continuously hit the ship on her starboard side. The waves were at least even know the metacentric height (GM) of the ship whether it be positive or
seven to eight meters in height and the wind velocity was a[t] 25 knots. negative.
The MV Princess of the Orient being a close-type ship (seven decks, wide
and high superstructure) was vulnerable and exposed to the howling winds As cargo officer of the ship, he failed to prepare a detailed report of the
and ravaging seas. Because of the excessive movement, the solid and liquid ship's cargo stowage plan.
cargo below the decks must have shifted its weight to port, which could have
He likewise failed to conduct the soundings (measurement) of the ballast
contributed to the tilted position of the ship.
tanks before the ship departed from port. He readily presumed that the ship
was full of ballast since the ship was fully ballasted when she left Cebu for
Minutes later, the Captain finally ordered to reduce the speed of the ship to
Manila on 16 September 1998 and had never discharge[d] its contents since
14 knots. At the same time, he ordered to put ballast water to the starboard-
that time.
heeling tank to arrest the continuous listing of the ship. This was an exercise
in futility because the ship was already listing between 15 to 20 degrees to
Being the officer-in-charge for emergency situation (sic) like this, he failed to
her portside. The ship had almost reached the maximum angle of her loll. At
execute and supervise the actual abandonship (sic) procedure. There was
this stage, she was about to lose her stability.
no announcement at the public address system of abandonship (sic), no
orderly distribution of life jackets and no orderly launching of life rafts. The
Despite this critical situation, the Captain executed several starboard
witnesses have confirmed this finding on their sworn statements.
maneuvers. Steering the course of the Princess to starboard had greatly
added to her tilting. In the open seas, with a fast speed of 14 knots, advance
There was miscalculation in judgment on the part of the Captain when he
maneuvers such as this would tend to bring the body of the ship in the
erroneously navigated the ship at her last crucial moment. x x x
opposite side. In navigational terms, this movement is described as the
centripetal force. This force is produced by the water acting on the side of
To aggravate his case, the Captain, having full command and responsibility
the ship away from the center of the turn. The force is considered to act at
of the MV Princess of the Orient, had failed to ensure the proper execution
the center of lateral resistance which, in this case, is the centroid of the
of the actual abandoning of the ship.
underwater area of the ship's side away from the center of the turn. In the
case of the Princess, when the Captain maneuvered her to starboard, her
The deck and engine officers (Second Mate, Third Mate, Chief Engineers,
body shifted its weight to port. Being already inclined to an angle of 15
Second Engineer, Third Engineer and Fourth Engineer), being in charge of
degrees, coupled with the instantaneous movement of the ship, the cargoes
their respective abandonship (sic) post, failed to supervise the crew and
below deck could have completely shifted its position and weight towards
passengers in the proper execution of abandonship (sic) procedure.
portside. By this time, the ship being ravaged simultaneously by ravaging
waves and howling winds on her starboard side, finally lost her
The Radio Officer (spark) failed to send the SOS message in the
grip.30chanroblesvirtuallawlibrary
internationally accepted communication network (VHF Channel 16). Instead,
Even assuming the seaworthiness of the MA/ Princess of the Orient, the he used the Single Side Band (SSB) radio in informing the company about
petitioner could not escape liability considering that, as borne out by the the emergency situation. x x x x35chanroblesvirtuallawlibrary
aforequoted findings of the BMI, the immediate and proximate cause of the
The aforestated negligent acts of the officers and crew of M/V Princess of
sinking of the vessel had been the gross negligence of its captain in
the Orient could not be ignored in view of the extraordinary duty of the
maneuvering the vessel.
common carrier to ensure the safety of the passengers. The totality of the
negligence by the officers and crew of M/V Princess of the Orient, coupled
The Court also notes that Metro Manila was experiencing Storm Signal No.
with the seeming indifference of the petitioner to render assistance to
1 during the time of the sinking.31 The BMI observed that a vessel like the
Sesante,36 warranted the award of moral damages.
M/V Princess of the Orient, which had a volume of 13.734 gross tons,
should have been capable of withstanding a Storm Signal No. 1 considering
While there is no hard-and-fast rule in determining what is a fair and
that the responding fishing boats of less than 500 gross tons had been able
reasonable amount of moral damages, the discretion to make the
to weather through the same waves and winds to go to the succor of the
determination is lodged in the trial court with the limitation that the amount
sinking vessel and had actually rescued several of the latter's distressed
should not be palpably and scandalously excessive. The trial court then
passengers.32chanrobleslaw
bears in mind that moral damages are not intended to impose a penalty on
the wrongdoer, or to enrich the plaintiff at the expense of the
III defendant.37 The amount of the moral damages must always reasonably
approximate the extent of injury and be proportional to the wrong
The award of moral damages and temperate damages is proper committed.38chanrobleslaw

The petitioner argues that moral damages could be meted against a The Court recognizes the mental anguish, agony and pain suffered by
common carrier only in the following instances, to wit: (1) in the situations Sesante who fought to survive in the midst of the raging waves of the sea
enumerated by Article 2201 of the Civil Code; (2) in cases of the death of a while facing the immediate prospect of losing his life. His claim for moral and
passenger; or (3)where there was bad faith on the part of the common economic vindication is a bitter remnant of that most infamous tragedy that
carrier. It contends that none of these instances obtained herein; hence, the left hundreds of families broken in its wake. The anguish and moral
award should be deleted. sufferings he sustained after surviving the tragedy would always include the
memory of facing the prospect of his death from drowning, or dehydration,
We agree with the petitioner that moral damages may be recovered in an or being preyed upon by sharks. Based on the established circumstances,
action upon breach of contract of carriage only when: (a) death of a his survival could only have been a miracle wrought by God's grace, by
passenger results, or (b) it is proved that the carrier was guilty of fraud and which he was guided in his desperate swim for the safety of the shore. But
bad faith, even if death does not result.33 However, moral damages may be even with the glory of survival, he still had to grapple with not just the
awarded if the contractual breach is found to be wanton and deliberately memory of having come face to face with almost certain death, but also with
injurious, or if the one responsible acted fraudulently or with malice or bad having to answer to the instinctive guilt for the rest of his days of being
faith.34chanrobleslaw chosen to live among the many who perished in the tragedy.39chanrobleslaw

The CA enumerated the negligent acts committed by the officers and crew While the anguish, anxiety, pain and stress experienced by Sesante during
of M/V Princess of the Orient, viz.:ChanRoblesVirtualawlibrary and after the sinking cannot be quantified, the moral damages to be
x x x. [W]hile this Court yields to the findings of the said investigation report, awarded should at least approximate the reparation of all the consequences
yet it should be observed that what was complied with by Sulpicio Lines of the petitioner's negligence. With moral damages being meant to enable
the injured party to obtain the means, diversions or amusements in order to during the voyage. Applying Article 2000 of the Civil Code, the petitioner
alleviate his moral and physical sufferings,40 the Court is called upon to assumed the liability for loss of the belongings caused by the negligence of
ensure that proper recompense be allowed to him, through his heirs. For this its officers or crew. In view of our finding that the negligence of the officers
purpose, the amount of P1,000,000.00, as granted by the RTC and affirmed and crew of the petitioner was the immediate and proximate cause of the
by the CA, is maintained. sinking of the M/V Princess of the Orient, its liability for Sesante's lost
personal belongings was beyond question.
The petitioner contends that its liability for the loss of Sesante's personal
belongings should conform with Article 1754, in relation to Articles 1998, The petitioner claims that temperate damages were erroneously awarded
2000 to 2003 of the Civil Code, which provide:ChanRoblesVirtualawlibrary because Sesante had not proved pecuniary loss; and that the CA merely
Article 1754. The provisions of Articles 1733 to 1753 shall apply to the relied on his self-serving testimony.
passenger's baggage which is not in his personal custody or in that of his
employees. As to other baggage, the rules in Articles 1998 and 2000 to The award of temperate damages was proper.
2003 concerning the responsibility of hotel-keepers shall be applicable.
Temperate damages may be recovered when some pecuniary loss has
xxxx been suffered but the amount cannot, from the nature of the case, be proven
with certainty.45 Article 222446 of the Civil Code expressly authorizes the
Article 1998. The deposit of effects made by travellers in hotels or inns shall courts to award temperate damages despite the lack of certain proof of
also be regarded as necessary. The keepers of hotels or inns shall be actual damages.47chanrobleslaw
responsible for them as depositaries, provided that notice was given to
them, or to their employees, of the effects brought by the guests and that, on Indubitably, Sesante suffered some pecuniary loss from the sinking of the
the part of the latter, they take the precautions which said hotel-keepers or vessel, but the value of the loss could not be established with certainty. The
their substitutes advised relative to the care and vigilance of their effects. CA, which can try facts and appreciate evidence, pegged the value of the
lost belongings as itemized in the police report at P120,000.00. The
xxxx valuation approximated the costs of the lost belongings. In that context, the
valuation of P120,000.00 is correct, but to be regarded as temperate
Article 2000. The responsibility referred to in the two preceding articles shall damages.
include the loss of, or injury to the personal property of the guests caused by
the servants or employees of the keepers of hotels or inns as well as by In fine, the petitioner, as a common carrier, was required to observe
strangers; but not that which may proceed from any force majeure. The fact extraordinary diligence in ensuring the safety of its passengers and their
that travellers are constrained to rely on the vigilance of the keeper of the personal belongings. It being found herein short of the required diligence
hotel or inn shall be considered in determining the degree of care required of rendered it liable for the resulting injuries and damages sustained by
him. Sesante as one of its passengers.

Article 2001. The act of a thief or robber, who has entered the hotel is not Should the petitioner be further held liable for exemplary damages?
deemed force majeure, unless it is done with the use of arms or through an
irresistible force. In contracts and quasi-contracts, the Court has the discretion to award
exemplary damages if the defendant acted in a wanton, fraudulent, reckless,
Article 2002. The hotel-keeper is not liable for compensation if the loss is oppressive, or malevolent manner.48 Indeed, exemplary damages cannot be
due to the acts of the guest, his family, servants or visitors, or if the loss recovered as a matter of right, and it is left to the court to decide whether or
arises from the character of the things brought into the hotel. not to award them.49 In consideration of these legal premises for the
exercise of the judicial discretion to grant or deny exemplary damages in
Article 2003. The hotel-keeper cannot free himself from responsibility by contracts and quasi-contracts against a defendant who acted in a wanton,
posting notices to the effect that he is not liable for the articles brought by fraudulent,' reckless, oppressive, or malevolent manner, the Court hereby
the guest. Any stipulation to the contrary between the hotel-keeper and the awards exemplary damages to Sesante.
guest whereby the responsibility of the former as set forth in Articles 1998 to
2001 is suppressed or diminished shall be void. First of all, exemplary damages did not have to be specifically pleaded or
proved, because the courts had the discretion to award them for as long as
The petitioner denies liability because Sesante's belongings had remained
the evidence so warranted. In Marchan v. Mendoza,50 the Court has
in his custody all throughout the voyage until the sinking, and he had not
relevantly discoursed:ChanRoblesVirtualawlibrary
notified the petitioner or its employees about such belongings. Hence,
x x x. It is argued that this Court is without jurisdiction to adjudicate
absent such notice, liability did not attach to the petitioner.
this exemplary damages since there was no allegation nor prayer, nor
proof, nor counterclaim of error for the same by the appellees. It is to
Is notification required before the common carrier becomes liable for lost
be observed however, that in the complaint, plaintiffs "prayed for such
belongings that remained in the custody of the passenger?
other and further relief as this Court may deem just and equitable."
Now, since the body of the complaint sought to recover damages
We answer in the negative.
against the defendant-carrier wherein plaintiffs prayed for
indemnification for the damages they suffered as a result of the
The rule that the common carrier is always responsible for the passenger's
negligence of said Silverio Marchan who is appellant's employee; and
baggage during the voyage needs to be emphasized. Article 1754 of
since exemplary damages is intimately connected with general
the Civil Code does not exempt the common carrier from liability in case of
damages, plaintiffs may not be expected to single out by express term
loss, but only highlights the degree of care required of it depending on who
the kind of damages they are trying to recover against the defendant's
has the custody of the belongings. Hence, the law requires the common
carrier. Suffice it to state that when plaintiffs prayed in their complaint
carrier to observe the same diligence as the hotel keepers in case the
for such other relief and remedies that may be availed of under the
baggage remains with the passenger; otherwise, extraordinary diligence
premises, in effect, therefore, the court is called upon to exercise and
must be exercised.41 Furthermore, the liability of the common carrier
use its discretion whether the imposition of punitive or exemplary
attaches even if the loss or damage to the belongings resulted from the acts
damages even though not expressly prayed or pleaded in the plaintiffs'
of the common carrier's employees, the only exception being where such
complaint.
loss or damages is due to force majeure.42chanrobleslaw
x x x It further appears that the amount of exemplary damages need not
In YHT Realty Corporation v. Court of Appeals,43 we declared the actual
be proved, because its determination depends upon the amount of
delivery of the goods to the innkeepers or their employees as unnecessary
compensatory damages that may be awarded to the claimant. If the
before liability could attach to the hotelkeepers in the event of loss of
amount of exemplary damages need not be proved, it need not also be
personal belongings of their guests considering that the personal effects
alleged, and the reason is obvious because it is merely incidental or
were inside the hotel or inn because the hotelkeeper shall remain
dependent upon what the court may award as compensatory damages.
accountable.44 Accordingly, actual notification was not necessary to render
Unless and until this premise is determined and established, what may
the petitioner as the common carrier liable for the lost personal belongings
be claimed as exemplary damages would amount to a mere surmise or
of Sesante. By allowing him to board the vessel with his belongings without
speculation. It follows as a necessary consequence that the amount of
any protest, the petitioner became sufficiently notified of such belongings.
exemplary damages need not be pleaded in the complaint because the
So long as the belongings were brought inside the premises of the vessel,
same cannot be predetermined. One can merely ask that it be
the petitioner was thereby effectively notified and consequently duty-bound
determined by the court if in the use of its discretion the same is
to observe the required diligence in ensuring the safety of the belongings
warranted by the evidence, and this is just what appellee has standard of care and circumspection that the law on common carriers
done. (Bold underscoring supplied for emphasis) demanded. Accordingly, we hereby fix the sum of P1,000,000.00 in order to
serve fully the objective of exemplarity among those engaged in the
And, secondly, exemplary damages are designed by our civil law to "permit
business of transporting passengers and cargo by sea. The amount would
the courts to reshape behavior that is socially deleterious in its consequence
not be excessive, but proper. As the Court put it in Pereña v. Zarate:57
by creating negative incentives or deterrents against such behavior."51 The
Anent the P1,000,000.00 allowed as exemplary damages, we should not
nature and purpose for this kind of damages have been well-stated
reduce the amount if only to render effective the desired example for the
in People v. Dalisay,52 to wit:ChanRoblesVirtualawlibrary
public good. As a common carrier, the Perenas needed to be vigorously
Also known as 'punitive' or 'vindictive' damages, exemplary or corrective
reminded to observe their duty to exercise extraordinary diligence to prevent
damages are intended to serve as a deterrent to serious wrong doings,
a similarly senseless accident from happening again. Only by an award of
and as a vindication of undue sufferings and wanton invasion of the
exemplary damages in that amount would suffice to instill in them and others
rights of an injured or a punishment for those guilty of outrageous
similarly situated like them the ever-present need for greater and constant
conduct. These terms are generally, but not always, used interchangeably.
vigilance in the conduct of a business imbued with public interest.58 (Bold
In common law, there is preference in the use of exemplary damages when
underscoring supplied for emphasis)
the award is to account for injury to feelings and for the sense of indignity
and humiliation suffered by a person as a result of an injury that has been WHEREFORE, the Court AFFIRMS the decision promulgated on June 27,
maliciously and wantonly inflicted, the theory being that there should be 2005 with the MODIFICATIONS that: (a) the amount of moral damages is
compensation for the hurt caused by the highly reprehensible conduct of the fixed at P1,000,000.00; (b) the amount of P1,000,000.00 is granted as
defendant - associated with such circumstances as willfulness, wantonness, exemplary damages; and (c) the sum of P120,000.00 is allowed as
malice, gross negligence or recklessness, oppression, insult or fraud or temperate damages, all to be paid to the heirs of the late Napoleon Sesante.
gross fraud - that intensifies the injury. The terms punitive or vindictive In addition, all the amounts hereby awarded shall earn interest of 6% per
damages are often used to refer to those species of damages that may be annum from the finality of this decision until fully paid. Costs of suit to be
awarded against a person to punish him for his outrageous conduct. In paid by the petitioner.
either case, these damages are intended in good measure to deter the
wrongdoer and others like him from similar conduct in the future. (Bold SO ORDERED.chanRoblesvirtualLawlibrary
underscoring supplied for emphasis)
The BMI found that the "erroneous maneuvers" during the ill-fated voyage
by the captain of the petitioner's vessel had caused the sinking. After the
vessel had cleared Limbones Point while navigating towards the direction of
Fortune Island, the captain already noticed the listing of the vessel by three
degrees to the portside of the vessel, but, according to the BMI, he did not
exercise prudence as required by the situation in which his vessel was
suffering the battering on the starboard side by big waves of seven to eight
meters high and strong southwesterly winds of 25 knots. The BMI pointed
out that he should have considerably reduced the speed of the vessel based
on his experience about the vessel - a close-type ship of seven decks, and
of a wide and high superstructure - being vulnerable if exposed to strong
winds and high waves. He ought to have also known that maintaining a high
speed under such circumstances would have shifted the solid and liquid
cargo of the vessel to port, worsening the tilted position of the vessel. It was
only after a few minutes thereafter that he finally ordered the speed to go
down to 14 knots, and to put ballast water to the starboard-heeling tank to
arrest the continuous listing at portside. By then, his moves became an
exercise in futility because, according to the BMI, the vessel was already
listing to her portside between 15 to 20 degrees, which was almost the
maximum angle of the vessel's loll. It then became inevitable for the vessel
to lose her stability.

The BMI concluded that the captain had executed several starboard
maneuvers despite the critical situation of the vessel, and that the
maneuvers had greatly added to the tilting of the vessel. It
observed:ChanRoblesVirtualawlibrary
x x x In the open seas, with a fast speed of 14 knots, advance
maneuvers such as this would tend to bring the body of the ship in the
opposite side. In navigational terms, this movement is described as
the centripetal force. This force is produced by the water acting on the
side of the ship away from the center of the turn. The force is
considered to act at the center of lateral resistance which, in this case,
is the centroid of the underwater area of the ship's side away from the
center of the turn. In the case of the Princess, when the Captain
maneuvered her to starboard, her body shifted its weight to port. Being
already inclined to an angle of 15 degrees, coupled with the
instantaneous movement of the ship, the cargoes below deck could
have completely shifted its position and weight towards portside. By
this time, the ship being ravaged simultaneously by ravaging waves
and howling winds on her starboard side, finally lost her
grip.53chanroblesvirtuallawlibrary
Clearly, the petitioner and its agents on the scene acted wantonly and
recklessly. Wanton and recklessare virtually synonymous in meaning as
respects liability for conduct towards others.54Wanton means characterized
by extreme recklessness and utter disregard for the rights of others; or
marked by or manifesting arrogant recklessness of justice or of rights or
feelings of others.55 Conduct is reckless when it is an extreme departure
from ordinary care, in a situation in which a high degree of danger is
apparent. It must be more than any mere mistake resulting from
inexperience, excitement, or confusion, and more than mere
thoughtlessness or inadvertence, or simple inattention.56chanrobleslaw

The actuations of the petitioner and its agents during the incident attending
the unfortunate sinking of the M/V Princess of the Orient were far below the
 FIRST DIVISION
7) P30,000.00 as attorney's fees
G.R. No. 167797, June 15, 2015
8) to pay the cost of the suit.3
In its answer with compulsory counterclaim and cross-claim,4 MMTC denied
METRO MANILA TRANSIT CORPORATION, Petitioner, v. REYNALDO
liability, and averred that although it retained the ownership of the bus, the
CUEVAS AND JUNNEL CUEVAS, REPRESENTED BY REYNALDO
actual operator and employer of the bus driver was Mina's Transit; and that,
CUEVAS, Respondents.
in support of its cross-claim against Mina's Transit, a provision in the
agreement to sell mandated Mina's Transport to hold it free from liability
DECISION arising from the use and operation of the bus units.5chanrobleslaw

On its part, Mina's Transit contended that it was not liable because: (a) it
BERSAMIN, J.:
exercised due diligence in the selection and supervision of its employees;
(b) its bus driver exercised due diligence; and (c) Junnel's negligence was
The registered owner of a motor vehicle whose operation causes injury to the cause of the accident.
another is legally liable to the latter. But it is error not to allow the registered
owner to recover reimbursement from the actual and present owner by way Meanwhile, Mina's Transit filed a third-party complaint against its insurer,
of its cross-claim. Perla Compania de Seguros, Inc. (Perla), seeking reimbursement should it
be adjudged liable, pursuant to its insurance policy issued by Perla with the
Antecedents following coverage: (a) third-party liability of P50,000.00 as the maximum
amount; and (b) third-party damage to property of P20,000.00 as the
Metro Manila Transit Corporation (MMTC) and Mina's Transit Corporation maximum amount.6chanrobleslaw
(Mina's Transit) entered into an agreement to sell dated August 31,
1990,1 whereby the latter bought several bus units from the former at a In its answer to the third-party complaint, Perla denied liability as insurer
stipulated price. They agreed that MMTC would retain the ownership of the because Mina's Transit had waived its recourse by failing to notify Perla of
buses until certain conditions were met, but in the meantime Mina's Transit the incident within one year from its occurrence, as required by Section 384
could operate the buses within Metro Manila. of the Insurance Code.7 It submitted that even assuming that the claim had
not yet prescribed, its liability should be limited to the maximum of
On October 14, 1994, one of the buses subject of the agreement to sell, P50,000.00 for third-party liability and P20,000.00 for third-party
bearing plate number NXM-449-TB-pil 94, hit and damaged a Honda damage.8chanrobleslaw
Motorcycle owned by Reynaldo and driven by Junnel. Reynaldo and Junnel
sued MMTC and Mina's Transit for damages in the Regional Trial Court After trial, the RTC rendered judgment in favor of the respondents on
(RTC) in Cavite, docketed as Civil Case No. N-6127, pertinently alleging and September 17, 19999 ordering petitioner Metro Manila Transit Corporation
praying as follows:chanRoblesvirtualLawlibrary (MMTC) and its co-defendant Mina's Transit Corporation (Mina's Transit) to
5. Defendants Metro Manila Transit Corporation and Mina's Transit are pay damages in favor of respondents Reynaldo Cuevas and Junnel Cuevas
registered joint-owners or operators of an MMTC/Minas Transit passenger to wit:chanRoblesvirtualLawlibrary
bus with Plate No. NXM-449-TB-pil 94, and is the employers (sic) of the WHEREFORE, premises considered, defendants Metro Manila Transit
driver Jessie Rillera y Gaceta. Corporation and Mina's Transit Corporation are hereby held solidarity liable
for the payment to the plaintiffs of the following:ChanRoblesVirtualawlibrary
6. On October 14, 1994, at around 7:45 P.M., while Plaintiff was riding on a
Honda Motocycle, with a companion at the back, along South a. P115,436.50 as actual damages;
Superhighway, in front of Magallanes Supermarket in Makati, Metro Manila,
a few meters away from the approaches of Magallanes Overpass complex, b. P100,000.00 as moral damages
coming from the South and heading toward the North, the defendants' driver
Jessie Rillera Y Gaceta, driving the MMTC/Mina's Transit Passenger bus c. P50,000.00 as exemplary damages; and
with Plate No. NXM-449-TB-pil 94, heading in the same direction and
following Plaintiffs motorcycle, recklessly and carelessly attempted to d. P20,000.00 as attorney's fees.
overtake Plaintiffs Motorcycle on the right side of the lane, in the course of
which the said Jessie Rillera side swiped the Plaintiff as the said Jessie Costs are also adjudged against defendants.
Rillera accelerated speed;
SO ORDERED.10
7. As a result, plaintiff Junnel Cuevas and his companion were thrown to the The RTC concluded that the proximate cause of the mishap was the
road and Plaintiffs right leg was severely fractured, and the Honda negligence of the bus driver; that following Article 2180 of the Civil Code, his
Motorcycle owned by plaintiff Reynaldo Cuevas was extensively damaged; employers should be solidarity liable; that MMTC and Mina's Transit, being
the joint owners of the bus, were liable; and that the third-party complaint
8. Plaintiff Junnel Cuevas and his companion were then brought to the was dismissed because no evidence was presented to prove it. The RTC,
Philippine General Hospital along Taft Avenue in Manila, where the said however, did not rule on the propriety of the cross-claim.
Plaintiff had to undergo several operations on his right leg; but in spite of the
several operations which he had undergone, Plaintiff Junnel Cuevas, even On appeal, the CA affirmed the RTC's decision.11chanrobleslaw
up to now, is unable to walk on his own without the aid of crutches and is
still scheduled for more operations; a xerox copy of his medical certificate is
Issue
hereto attached as Annex A hereof;2chanrobleslaw
Hence, this appeal, in which MMTC posits the sole issue of whether or not it
xxxx
was liable for the injuries sustained by the respondents despite the provision
in the agreement to sell that shielded it from liability.
WHEREFORE, it is most respectfully prayed that after notice and hearing a
judgment be rendered ordering the defendants jointly and severally to pay
Plaintiffs the following sums of money:ChanRoblesVirtualawlibrary Ruling of the Court

1) P200,000.00 more or less, representing actual medical expenses; The appeal is partly meritorious.

2) P18,940.00 representing the cost of repair of the damaged motorcycle MMTC urges the revisit of the registered-owner rule in order to gain
absolution from liability. It contends that although it retained ownership of
3) P300,000.00 as moral damage(s) the bus at the time of the vehicular accident, the actual operation was
transferred to Mina's Transit; that for it to be held liable for the acts of the
4) P100,000.00 as exemplary damage(s) bus driver, the existence of an employer-employee relationship between
them must be established; and that because the bus driver was not its
5) P50,000.00 as nominal damage(s) employee, it was not liable for his negligent act.

6) P15,000.00 as litigation expenses The contentions of MMTC cannot persuade.

 motor vehicle causing damage in order that it may be held vicariously liable
In view of MMTC's admission in its pleadings that it had remained the under Article 2180 of the Civil Code. (Citations Omitted)
registered owner of the bus at the time of the incident, it could not escape
Indeed, MMTC could not evade liability by passing the buck to Mina's
liability for the personal injuries and property damage suffered by the
Transit. The stipulation in the agreement to sell did not bind third parties like
Cuevases. This is because of the registered-owner rule, whereby the
the Cuevases, who were expected to simply rely on the data contained in
registered owner of the motor vehicle involved in a vehicular accident could
the registration certificate of the erring bus.
be held liable for the consequences. The registered-owner rule has
remained good law in this jurisdiction considering its impeccable and
Although the registered-owner rule might seem to be unjust towards MMTC,
timeless rationale, as enunciated in the 1957 ruling in Erezo, et al. v.
the law did not leave it without any remedy or recourse. According to Filcar
Jepte,12 where the Court pronounced:chanRoblesvirtualLawlibrary
Transport Services v. Espinas,14 MMTC could recover from Mina's Transit,
Registration is required not to make said registration the operative act by
the actual employer of the negligent driver, under the principle of unjust
which ownership in vehicles is transferred, as in land registration cases,
enrichment, by means of a cross-claim seeking reimbursement of all the
because the administrative proceeding of registration does not bear any
amounts that it could be required to pay as damages arising from the
essential relation to the contract of sale between the parties (Chinchilla vs.
driver's negligence. A cross-claim is a claim by one party against a co-party
Rafael and Verdaguer, 39 Phil. 888), but to permit the use and operation of
arising out of the transaction or occurrence that is the subject matter either
the vehicle upon any public highway (section 5 [a], Act No. 3992, as
of the original action or of a counterclaim therein, and may include a claim
amended.) The main aim of motor vehicle registration is to identify the
that the party against whom it is asserted is or may be liable to the cross-
owner so that if any accident happens, or that any damage or injury is
claimant for all or part of a claim asserted in the action against the cross-
caused by the vehicle on the public highways, responsibility therefor can be
claimant.15chanrobleslaw
fixed on a definite individual, the registered owner. Instances are numerous
where vehicles running on public highways caused accidents or injuries to
MMTC set up its cross-claim against Mina's Transit precisely to ensure that
pedestrians or other vehicles without positive identification of the owner or
Mina's Transit would reimburse whatever liability would be adjudged against
drivers, or with very scant means of identification. It is to forestall these
MMTC. Yet, it is a cause of concern for the Court that the RTC ignored to
circumstances, so inconvenient or prejudicial to the public, that the motor
rule on the propriety of MMTC's cross-claim. Such omission was
vehicle registration is primarily ordained, in the interest of the determination
unwarranted, inasmuch as Mina's Transit did not dispute the cross-claim, or
of persons responsible for damages or injuries caused on public highways.
did not specifically deny the agreement to sell with MMTC, the actionable
"'One of the principal purposes of motor vehicles legislation is identification
document on which the cross-claim was based. Even more telling was the
of the vehicle and of the operator, in case of accident; and another is that
fact that Mina's Transit did not present controverting evidence to disprove
the knowledge that means of detection are always available may act as a
the cross-claim as a matter of course if it was warranted for it to do so.
deterrent from lax observance of the law and of the rules of conservative
Under the circumstances, the RTC should have granted the cross-claim to
and safe operation. Whatever purpose there may be in these statutes, it is
prevent the possibility of a multiplicity of suits, and to spare not only the
subordinate at the last to the primary purpose of rendering it certain that the
MMTC but also the other parties in the case from further expense and
violator of the law or of the rules of safety shall not escape because of lack
bother. Compounding the RTC's uncharacteristic omission was the CA's
of means to discover him.' The purpose of the statute is thwarted, and the
oversight in similarly ignoring the cross-claim. The trial and the appellate
displayed number becomes a 'snare and delusion,' if courts would entertain
courts should not forget that a cross-claim is like the complaint and the
such defenses as that put forward by appellee in this case. No responsible
counterclaim that the court must rule upon.
person or corporation could be held liable for the most outrageous acts of
negligence, if they should be allowed to place a 'middleman' between them
WHEREFORE, the Court AFFIRMS the decision promulgated on June 28,
and the public, and escape liability by the manner in which they recompense
2004 subject to the MODIFICATION that the cross-claim of Metro Manila
their servants." (King vs. Brenham Automobile Co., 145 S.W. 278, 279.)
Transit Corporation against Mina's Transit Corporation is GRANTED,
The Court has reiterated the registered-owner rule in other rulings, like and, ACCORDINGLY, Mina's Transit Corporation is ORDERED to
in Filcar Transport Services v. Espinas,13 to wit:chanRoblesvirtualLawlibrary reimburse to Metro Manila Transit Corporation whatever amounts the latter
x x x It is well settled that in case of motor vehicle mishaps, the registered shall pay to the respondents pursuant to the judgment of the Regional Trial
owner of the motor vehicle is considered as the employer of the Court in Civil Case No. N-6127.
tortfeasor-driver, and is made primarily liable for the tort committed by the
latter under Article 2176, in relation with Article 2180, of the Civil Code. No pronouncement on costs of suit.

In Equitable Leasing Corporation v. Suyom, we ruled that in so far as third SO ORDERED.cralawl

persons are concerned, the registered owner of the motor vehicle is the
employer of the negligent driver, and the actual employer is
considered merely as an agent of such owner.

In that case, a tractor registered in the name of Equitable Leasing

Corporation (Equitable) figured in an accident, killing and seriously injuring
several persons. As part of its defense, Equitable claimed that the tractor
was initially leased to Mr. Edwin Lim under a Lease Agreement, which
agreement has been overtaken by a Deed of Sale entered into by Equitable
and Ecatine Corporation (Ecatine). Equitable argued that it cannot be held
liable for damages because the tractor had already been sold to Ecatine at
the time of the accident and the negligent driver was not its employee but of
Ecatine.

In upholding the liability of Equitable, as registered owner of the tractor, this

Court said that "regardless of sales made of a motor vehicle, the registered
owner is the lawful operator insofar as the public and third persons are
concerned; consequently, it is directly and primarily responsible for the
consequences of its operation." The Court further stated that "[i]n
contemplation of law, the owner/operator of record is the employer of
the driver, the actual operator and employer being considered as
merely its agent." Thus, Equitable, as the registered owner of the tractor,
was considered under the law on quasi delict to be the employer of the
driver, Raul Tutor; Ecatine, Tutor's actual employer, was deemed merely as
an agent of Equitable.

Thus, it is clear that for the purpose of holding the registered owner of the
motor vehicle primarily and directly liable for damages under Article 2176, in
relation with Article 2180, of the Civil Code, the existence of an employer-
employee relationship, as it is understood in labor relations law, is not
required. It is sufficient to establish that Filcar is the registered owner of the
 SECOND DIVISION dated December 28, 1990, the trial court dismissed the complaint, holding as
follows:

The fact that defendant, through Operations Manager Diosdado Bravo, was
[G.R. No. 119756. March 18, 1999] informed of the rumors that the Moslems intended to take revenge by
burning five buses of defendant is established since the latter also utilized
Crisanto Generalaos as a witness. Yet despite this information, the plaintiffs
charge, defendant did not take proper precautions. . . . Consequently,
plaintiffs now fault the defendant for ignoring the report. Their position is that
FORTUNE EXPRESS, INC., petitioner, vs. COURT OF APPEALS, PAULIE the defendant should have provided its buses with security guards. Does the
U. CAORONG, and minor children YASSER KING CAORONG, law require common carriers to install security guards in its buses for the
ROSE HEINNI and PRINCE ALEXANDER, all surnamed protection and safety of its passengers? Is the failure to post guards an
CAORONG, and represented by their mother PAULIE U. omission of the duty to exercise the diligence of a good father of the family
CAORONG, respondents. which could have prevented the killing of Atty. Caorong? To our mind, the
diligence demanded by law does not include the posting of security guards
in buses. It is an obligation that properly belongs to the State. Besides, will
DECISION the presence of one or two security guards suffice to deter a determined
assault of the lawless and thus prevent the injury complained of? Maybe so,
MENDOZA, J.: but again, perhaps not. In other words, the presence of a security guard is
not a guarantee that the killing of Atty. Caorong would have been definitely
This is an appeal by petition for review on certiorari of the decision, avoided.
dated July 29, 1994, of the Court of Appeals, which reversed the decision of
the Regional Trial Court, Branch VI, Iligan City. The aforesaid decision of the .
trial court dismissed the complaint of private respondents against petitioner
for damages for breach of contract of carriage filed on the ground that
petitioner had not exercised the required degree of diligence in the operation Accordingly, the failure of defendant to accord faith and credit to the report
of one of its buses. Atty. Talib Caorong, whose heirs are private respondents of Mr. Generalao and the fact that it did not provide security to its buses
herein, was a passenger of the bus and was killed in the ambush involving cannot, in the light of the circumstances, be characterized as negligence.
said bus.

The facts of the instant case are as follows: Finally, the evidence clearly shows that the assailants did not have the least
intention of harming any of the passengers. They ordered all the passengers
Petitioner is a bus company in northern Mindanao. Private respondent to alight and set fire on the bus only after all the passengers were out of
Paulie Caorong is the widow of Atty. Caorong, while private respondents danger. The death of Atty. Caorong was an unexpected and unforseen
Yasser King, Rose Heinni, and Prince Alexander are their minor children. occurrence over which defendant had no control. Atty. Caorong performed
an act of charity and heroism in coming to the succor of the driver even in
On November 18, 1989, a bus of petitioner figured in an accident with the face of danger. He deserves the undying gratitude of the driver whose
a jeepney in Kauswagan, Lanao del Norte, resulting in the death of several life he saved. No one should blame him for an act of extraordinary charity
passengers of the jeepney, including two Maranaos. Crisanto Generalao, a and altruism which cost his life.But neither should any blame be laid on the
volunteer field agent of the Constabulary Regional Security Unit No. X, doorstep of defendant. His death was solely due to the willful acts of the
conducted an investigation of the accident. He found that the owner of the lawless which defendant could neither prevent nor stop.
jeepney was a Maranao residing in Delabayan, Lanao del Norte and that
certain Maranaos were planning to take revenge on the petitioner by burning
.
some of its buses. Generalao rendered a report on his findings to Sgt.
Reynaldo Bastasa of the Philippine Constabulary Regional Hearquarters at
Cagayan de Oro. Upon the instruction of Sgt. Bastasa, he went to see WHEREFORE, in view of the foregoing, the complaint is hereby
Diosdado Bravo, operations manager of petitioner, at its main office in dismissed. For lack of merit, the counter-claim is likewise dismissed. No
Cagayan de Oro City. Bravo assured him that the necessary precautions to cost.[4]
insure the safety of lives and property would be taken.[1]

At about 6:45 P.M. on November 22, 1989, three armed Maranaos who On appeal, however, the Court of Appeals reversed. It held:
pretended to be passengers, seized a bus of petitioner at Linamon, Lanao del
Norte while on its way to Iligan City. Among the passengers of the bus was In the case at bench, how did defendant-appellee react to the tip or
Atty. Caorong.The leader of the Maranaos, identified as one Bashier information that certain Maranao hotheads were planning to burn five of its
Mananggolo, ordered the driver, Godofredo Cabatuan, to stop the bus on the buses out of revenge for the deaths of two Maranaos in an earlier collision
side of the highway. Mananggolo then shot Cabatuan on the arm, which involving appellees bus? Except for the remarks of appellees operations
caused him to slump on the steering wheel.Then one of the companions of manager that we will have our action . . . . and Ill be the one to settle it
Mananggolo started pouring gasoline inside the bus, as the other held the personally, nothing concrete whatsoever was taken by appellee or its
passengers at bay with a handgun. Mananggolo then ordered the passengers employees to prevent the execution of the threat. Defendant-appellee never
to get off the bus. The passengers, including Atty. Caorong, stepped out of adopted even a single safety measure for the protection of its paying
the bus and went behind the bushes in a field some distance from the passengers. Were there available safeguards? Of course, there were: one
highway.[2] was frisking passengers particularly those en route to the area where the
threats were likely to be carried out such as where the earlier accident
However, Atty. Caorong returned to the bus to retrieve something from
occurred or the place of influence of the victims or their locality. If frisking
the overhead rack. At that time, one of the armed men was pouring gasoline
was resorted to, even temporarily, . . . . appellee might be legally excused
on the head of the driver. Cabatuan, who had meantime regained
from liability. Frisking of passengers picked up along the route could have
consciousness, heard Atty. Caorong pleading with the armed men to spare
been implemented by the bus conductor; for those boarding at the bus
the driver as he was innocent of any wrong doing and was only trying to make
terminal, frisking could have been conducted by him and perhaps by
a living. The armed men were, however, adamant as they repeated their
additional personnel of defendant-appellee. On hindsight, the handguns and
warning that they were going to burn the bus along with its driver. During this
especially the gallon of gasoline used by the felons all of which were brought
exchange between Atty. Caorong and the assailants, Cabatuan climbed out
inside the bus would have been discovered, thus preventing the burning of
of the left window of the bus and crawled to the canal on the opposite side of
the bus and the fatal shooting of the victim.
the highway. He heard shots from inside the bus. Larry de la Cruz, one of the
passengers, saw that Atty. Caorong was hit. Then the bus was set on
fire. Some of the passengers were able to pull Atty. Caorong out of the Appellees argument that there is no law requiring it to provide guards on its
burning bus and rush him to the Mercy Community Hospital in Iligan City, but buses and that the safety of citizens is the duty of the government, is not
he died while undergoing operation.[3] well taken. To be sure, appellee is not expected to assign security guards on
all of its buses; if at all, it has the duty to post guards only on its buses plying
The private respondents brought this suit for breach of contract of predominantly Maranao areas. As discussed in the next preceding
carriage in the Regional Trial Court, Branch VI, Iligan City. In his decision, paragraph, the least appellee could have done in response to the report was
to adopt a system of verification such as frisking of passengers boarding its
buses. Nothing, and to repeat, nothing at all, was done by defendant- Despite warning by the Philippine Constabulary at Cagayan de Oro that
appellee to protect its innocent passengers from the danger arising from the the Maranaos were planning to take revenge on the petitioner by burning
Maranao threats. It must be observed that frisking is not a novelty as a some of its buses and the assurance of petitioners operation manager,
safety measure in our society. Sensitive places in fact, nearly all important Diosdado Bravo, that the necessary precautions would be taken, petitioner
places have applied this method of security enhancement.Gadgets and did nothing to protect the safety of its passengers.
devices are available in the market for this purpose. It would not have
weighed much against the budget of the bus company if such items were Had petitioner and its employees been vigilant they would not have
made available to its personnel to cope up with situations such as the failed to see that the malefactors had a large quantity of gasoline with
Maranao threats. them. Under the circumstances, simple precautionary measures to protect the
safety of passengers, such as frisking passengers and inspecting their
baggages, preferably with non-intrusive gadgets such as metal detectors,
In view of the constitutional right to personal privacy, our pronouncement in before allowing them on board could have been employed without violating
this decision should not be construed as an advocacy of mandatory frisking the passengers constitutional rights. As this Court intimated in Gacal v.
in all public conveyances. What we are saying is that given the Philippine Air Lines, Inc.,[6] a common carrier can be held liable for failing to
circumstances obtaining in the case at bench that: (a) two Maranaos died prevent a hijacking by frisking passengers and inspecting their baggages.
because of a vehicular collision involving one of appellees vehicles; (b)
appellee received a written report from a member of the Regional Security From the foregoing, it is evident that petitioners employees failed to
Unit, Constabulary Security Group, that the tribal/ethnic group of the two prevent the attack on one of petitioners buses because they did not exercise
deceased were planning to burn five buses of appellee out of revenge; and the diligence of a good father of a family. Hence, petitioner should be held
(c) appellee did nothing absolutely nothing for the safety of its passengers liable for the death of Atty. Caorong.
travelling in the area of influence of the victims, appellee has failed to
exercise the degree of diligence required of common carriers. Hence,
appellee must be adjudged liable.
Second. Seizure of Petitioners Bus not a Case of Force Majeure

The petitioner contends that the seizure of its bus by the armed
WHEREFORE, the decision appealed from is hereby REVERSED and
assailants was a fortuitous event for which it could not be held liable.
another rendered ordering defendant-appellee to pay plaintiffs-appellants
the following: Art. 1174 of the Civil Code defines a fortuitous even as an occurrence
which could not be foreseen or which though foreseen, is inevitable. In Yobido
1) P3,399,649.20 as death indemnity; v. Court of Appeals,[7] we held that to be considered as force majeure, it is
necessary that: (1) the cause of the breach of the obligation must be
independent of the human will; (2) the event must be either unforeseeable or
2) P50,000.00 and P500.00 per appearance as attorneys fees; and unavoidable; (3) the occurrence must be such as to render it impossible for
the debtor to fulfill the obligation in a normal manner; and (4) the obligor must
Costs against defendant-appellee.[5] be free of participation in, or aggravation of, the injury to the creditor. The
absence of any of the requisites mentioned above would prevent the obligor
from being excused from liability.
Hence, this appeal. Petitioner contends:
Thus, in Vasquez v. Court of Appeals,[8] it was held that the common
(A) THAT PUBLIC RESPONDENT ERRED IN REVERSING THE carrier was liable for its failure to take the necessary precautions against an
DECISION OF THE REGIONAL TRIAL COURT DATED approaching typhoon, of which it was warned, resulting in the loss of the lives
DECEMBER 28, 1990 DISMISSING THE COMPLAINT of several passengers.The event was foreseeable, and, thus, the second
AS WELL AS THE COUNTERCLAIM, AND FINDING FOR requisite mentioned above was not fulfilled. This ruling applies by analogy to
PRIVATE RESPONDENTS BY ORDERING PETITIONER the present case. Despite the report of PC agent Generalao that the
TO PAY THE GARGANTUAN SUM OF P3,449,649.20 Maranaos were going to attack its buses, petitioner took no steps to safeguard
PLUS P500.00 PER APPEARANCE AS ATTORNEYS the lives and properties of its passengers. The seizure of the bus of the
FEES, AS WELL AS DENYING PETITIONERS MOTION petitioner was foreseeable and, therefore, was not a fortuitous event which
FOR RECONSIDERATION AND THE SUPPLEMENT TO would exempt petitioner from liability.
SAID MOTION, WHILE HOLDING, AMONG OTHERS,
THAT PETITIONER BREACHED THE CONTRACT OF Petitioner invokes the ruling in Pilapil v. Court of Appeals[9] and De
CARIAGE BY ITS FAILURE TO EXERCISE THE Guzman v. Court of Appeals[10] in support of its contention that the seizure of
REQUIRED DEGREE OF DILIGENCE; its bus by the assailants constitutes force majeure. In Pilapil v. Court of
Appeals,[11] it was held that a common carrier is not liable for failing to install
(B) THAT THE ACTS OF THE MARANAO OUTLAWS WERE SO window grills on its buses to protect passengers from injuries caused by rocks
GRAVE, IRRESISTIBLE, VIOLENT, AND FORCEFUL, hurled at the bus by lawless elements. On the other hand, in De Guzman v.
AS TO BE REGARDED AS CASO FORTUITO; AND Court of Appeals,[12] it was ruled that a common carrier is not responsible for
goods lost as a result of a robbery which is attended by grave or irresistible
(C) THAT PUBLIC RESPONDENT COURT OF APPEALS threat, violence, or force.
SERIOUSLY ERRED IN HOLDING THAT PETITIONER
COULD HAVE PROVIDED ADEQUATE SECURITY IN It is clear that the cases of Pilapil and De Guzman do not apply to the
PREDOMINANTLY MUSLIM AREAS AS PART OF ITS present case. Art. 1755 of the Civil Code provides that a common carrier is
DUTY TO OBSERVE EXTRA-ORDINARY DILIGENCE AS bound to carry the passengers as far as human care and foresight can
A COMMON CARRIER. provide, using the utmost diligence of very cautious person, with due regard
for all the circumstances. Thus, we held in Pilapil and De Guzman that the
The instant petition has no merit. respondents therein were not negligent in failing to take special precautions
against threats to the safety of passengers which could not be foreseen, such
as tortious or criminal acts of third persons. In the present case, this factor of
First. Petitioners Breach of the Contract of Carriage
unforeseeablility (the second requisite for an event to be considered force
majeure) is lacking. As already stated, despite the report of PC agent
Generalao that the Maranaos were planning to burn some of petitioners buses
and the assurance of petitioners operations manager (Diosdado Bravo) that
Art. 1763 of the Civil Code provides that a common carrier is the necessary precautions would be taken, nothing was really done by
responsible for injuries suffered by a passenger on account of the wilful acts petitioner to protect the safety of passengers.
of other passengers, if the employees of the common carrier could have
prevented the act the exercise of the diligence of a good father of a family. In
the present case, it is clear that because of the negligence of petitioners
Third. Deceased not Guilty of Contributory Negligence
employees, the seizure of the bus by Mananggolo and his men was made
possible.
 The petitioner contends that Atty. Caorong was guilty of contributory his monthly salary of P11,385.00[23] as a lawyer in the Department of Agrarian
negligence in returning to the bus to retrieve something. But Atty. Caorong Reform at the time of his death, was P148,005.00.[24] allowing for necessary
did not act recklessly. It should be pointed out that the intended targets of the living expenses of fifty percent (50%)[25]of his projected gross annual income,
violence were petitioner and its employees, not its passengers. The his total earning capacity amounts to P2,121,404.90.[26] Hence, the petitioner
assailants motive was to retaliate for the loss of life of two Maranaos as a is liable to the private respondents in the said amount as compensation for
result of the collision between petitioners bus and the jeepney in which the loss of earning capacity.
two Maranaos were riding. Mananggolo, the leader of the group which had
hijacked the bus, ordered the passengers to get off the bus as they intended WHEREFORE, the decision, dated July 29, 1994, of the Court of
to burn it and its driver.The armed men actually allowed Atty. Caorong to Appeals is hereby AFFIRMED with the MODIFICATION that petitioner
retrieve something from the bus. What apparently angered them was his Fortune Express, Inc. is ordered to pay the following amounts to private
attempt to help the driver of the bus by pleading for his life. He was playing respondents Paulie, Yasser King, Rose Heinni, and Prince Alexander
the role of the good Samaritan. Certainly, this act cannot be considered an Caorong:
act of negligence, let alone recklessness.
1. death indemnity in the amount of fifty thousand pesos
(P50,000.00);

2. actual damages in the amount of thirty thousand pesos

Fourth. Petitioner Liable to Private Respondents for Damages
(P30,000.00);

3. moral damages in the amount of one hundred thousand

We now consider the question of damages that the heirs of Atty. pesos(P100,000.00);
Caorong, private respondents herein, are entitled to recover from the 4. exemplary damages in the amount of one hundred thousand
petitioner. pesos (P100,000.00);
Indemnity for Death. Art. 1764 of the Civil Code, in relation to Art. 2206
5. attorneys fees in the amount of fifty thousand pesos
thereof, provides for the payment of indemnity for the death of passengers (P50,000.00);
caused by the breached of contract of carriage by a common carrier. Initially
fixed in Art. 2206 at P3,000.00, the amount of the said indemnity for death 6. compensation for loss of earning capacity in the amount of two
has through the years been gradually increased in view of the declining value million one hundred twenty-one thousand four hundred four pesos and
of the peso. It is presently fixed at P50,000.00.[13] Private respondents are ninety centavos (P2,121,404.90); and
entitled to this amount.
7) costs of suits.
Actual damages. Art. 2199 provides that Except as provided by law or
by stipulation, one is entitled to an adequate compensation only for such SO ORDERED.
pecuniary loss suffered by him as he has duly proved. The trial court found
that the private respondents spent P30,000.00 for the wake and burial of Atty.
Caorong.[14] Since petitioner does not question this finding of the trial court, it
is liable to private respondents in the said amount as actual damages.

Moral Damages. Under Art. 2206, the spouse, legitimate and

illegitimate descendants and ascendants of the deceased may demand moral
damages for mental anguish by reason of the death of the deceased. The trial
court found that private respondent Paulie Caorong suffered pain from the
death of her husband and worry on how to provide support for their minor
children, private respondents Yasser King, Rose Heinni, and Prince
Alexander.[15] The petitioner likewise does not question this finding of the trial
court. Thus, in accordance with recent decisions of this Court,[16] we hold that
the petitioner is liable to the private respondents in the amount
of P100,000.00 as moral damages for the death of Atty. Caorong.

Exemplary Damages. Art. 2232 provides that in contracts and quasi-

contracts, the court may award exemplary damages if the defendant acted in
a wanton, fraudulent, reckless, oppressive, or malevolent manner. In the
present case, the petitioner acted in a wanton and reckless manner. Despite
warning that the Maranaos were planning to take revenge against the
petitioner by burning some of its buses, and contrary to the assurance made
by its operations manager that the necessary precautions would be taken, the
petitioner and its employees did nothing to protect the safety of
passengers. Under the circumstances, we deem it reasonable to award
private respondents exemplary damages in the amount of P100,000.00.[17]

Attorneys Fees. Pursuant to Art. 2208, attorneys fees may be

recovered when, as in the instant case, exemplary damages are awarded. In
the recent case of Sulpicio Lines, Inc. v. Court of Appeals,[18] we held an
award of P50,000.00 as attorneys fees to be reasonable. Hence, the private
respondents are entitled to attorneys fees in that amount.

Compensation for Loss of Earning Capacity. Art. 1764 of the Civil Code,
in relation to Art. 2206 thereof, provides that in addition to the indemnity for
death arising from the breach of contract of carriage by a common carrier, the
defendant shall be liable for the loss of the earning capacity of the deceased,
and the indemnity shall be paid to the heirs of the latter. The formula
established in decided cases for computing net earning capacity is as
follows:[19]

Gross Necessary
Net earning = Life x Annual - Living
Capacity Expectancy Income Expenses

Life expectancy is equivalent to two thirds (2/3) multiplied by the

difference of eighty (80) and the age of the deceased.[20] Since Atty. Caorong
was 37 years old at the time of his death,[21] he had a life expectancy of 28
2/3 more years.[22] His projected gross annual income, computed based on
 FIRST DIVISION fractures were produced as a result of the hitting of the
G.R. Nos. 66102-04 August 30, 1990 victim by a strong force. The abrasions could be
PHILIPPINE RABBIT BUS LINES, INC., petitioner, produced when a person falls from a moving vehicles
vs. (sic) and rubs parts of her body against a cement road
THE HONORABLE INTERMEDIATE APPELLATE COURT AND pavement. . . .
CASIANO PASCUA, ET AL., respondents.
Santiago & Santiago for petitioner.
Erlinda Mariles (sic) sustained external lesions such as
Federico R. Vinluan for private respondents.
contusion on the left parietal region of the skull;
hematoma on the right upper lid; and abrasions (sic) on
MEDIALDEA, J.:
the left knee. Her internal lesions were: hematoma on
the left thorax; multiple lacerations of the left lower lobe
This is a petition for review on certiorari of the decision of the Intermediate of the lungs; contusions on the left lower lobe of the
Appellate Court (now Court of Appeals) dated July 29, 1983 in AC-G.R. Nos. lungs; and simple fractures of the 2nd, 3rd, 4th, 5th, 6th,
CV-65885, CV-65886 and CV-65887 which reversed the decision of the 7th, and 8th ribs, left. The forcible impact of the jeep
Court of First Instance (now Regional Trial Court) of Pangasinan dated caused the above injuries which resulted in her death. .
December 27, 1978; and its resolution dated November 28, 1983 denying ..
the motion for reconsideration.
The cause of death of Erlinda or Florida Estomo (also
It is an established principle that the factual findings of the Court of Appeals called as per autopsy of Dr. Panlasiqui was due to
are final and may not be reviewed by this Court on appeal. However, this shock due to internal hemorrhage, ruptured spleen and
principle is subject to certain exceptions. One of these is when the findings trauma. . . .
of the appellate court are contrary to those of the trial court (see Sabinosa v.
The Honorable Court of Appeals, et al., G.R. No. L-47981, July 24, 1989) in
Caridad Pascua suffered physical injuries as follows (p. 101, Record on
which case, a re-examination of the facts and evidence may be undertaken.
Appeal):
This is Our task now.

. . . lacerated wound on the forehead and occipital

The antecedent facts are as follows:
region, hematoma on the forehead, multiple abrasions
on the forearm, right upper arm, back and right leg. . . .
About 11:00 o'clock in the morning on December 24, 1966, Catalina
Pascua, Caridad Pascua, Adelaida Estomo, Erlinda Meriales, Mercedes
The police investigators of Tacpal and policemen of San Manuel, Tarlac,
Lorenzo, Alejandro Morales and Zenaida Parejas boarded the jeepney
Tarlac, upon arrival at the scene of the mishap, prepared a sketch (common
owned by spouses Isidro Mangune and Guillerma Carreon and driven by
exhibit "K" for private respondents "19" for Rabbit) showing the relative
Tranquilino Manalo at Dau, Mabalacat, Pampanga bound for Carmen,
positions of the two vehicles as well as the alleged point of impact (p. 100,
Rosales, Pangasinan to spend Christmas at their respective homes.
Record on Appeal):
Although they usually ride in buses, they had to ride in a jeepney that day
because the buses were full. Their contract with Manalo was for them to pay
P24.00 for the trip. The private respondents' testimonial evidence on this . . . The point of collision was a cement pave-portion of the
contractual relationship was not controverted by Mangune, Carreon and Highway, about six (6) meters wide, with narrow shoulders with
Manalo, nor by Filriters Guaranty Assurance Corporation, Inc., the insurer of grasses beyond which are canals on both sides. The road was
the jeepney, with contrary evidence. Purportedly riding on the front seat with straight and points 200 meters north and south of the point of
Manalo was Mercedes Lorenzo. On the left rear passenger seat were collision are visible and unobstructed. Purportedly, the point of
Caridad Pascua, Alejandro Morales and Zenaida Parejas. On the right rear impact or collision (Exh. "K-4", Pascua on the sketch Exh. "K"-
passenger seat were Catalina Pascua, Adelaida Estomo, and Erlinda Pascua) was on the western lane of the highway about 3 feet (or
Meriales. After a brief stopover at Moncada, Tarlac for refreshment, the one yard) from the center line as shown by the bedris (sic), dirt
jeepney proceeded towards Carmen, Rosales, Pangasinan. and soil (obviously from the undercarriage of both vehicles) as
well as paint, marron (sic) from the Rabbit bus and greenish from
the jeepney. The point of impact encircled and marked with the
Upon reaching barrio Sinayoan, San Manuel, Tarlac, the right rear wheel of
letter "X" in Exh. "K"-4 Pascua, had a diameter of two meters, the
the jeepney was detached, so it was running in an unbalanced position.
center of which was about two meters from the western edge of
Manalo stepped on the brake, as a result of which, the jeepney which was
cement pavement of the roadway. Pictures taken by witness
then running on the eastern lane (its right of way) made a U-turn, invading
Bisquera in the course of the investigation showed the relative
and eventually stopping on the western lane of the road in such a manner
positions of the point of impact and center line (Exh. "P"-Pascua)
that the jeepney's front faced the south (from where it came) and its rear
the back of the Rabbit bus (Exh. "P"-1-Pascua"), the lifeless body
faced the north (towards where it was going). The jeepney practically
of Catalina Pascua (Exh. "P-2 Pascua"), and the damaged front
occupied and blocked the greater portion of the western lane, which is the
part of the Rabbit bus (Exh. "P-3 Pascua"). No skid marks of the
right of way of vehicles coming from the north, among which was Bus No.
Rabbit bus was found in the vicinity of the collision, before or after
753 of petitioner Philippine Rabbit Bus Lines, Inc. (Rabbit) driven by Tomas
the point of impact. On the other hand, there was a skid mark
delos Reyes. Almost at the time when the jeepney made a sudden U-turn
about 45 meters long purportedly of the jeepney from the eastern
and encroached on the western lane of the highway as claimed by Rabbit
shoulder of the road south of, and extending up to the point of
and delos Reyes, or after stopping for a couple of minutes as claimed by
impact.
Mangune, Carreon and Manalo, the bus bumped from behind the right rear
portion of the jeepney. As a result of the collision, three passengers of the
jeepney (Catalina Pascua, Erlinda Meriales and Adelaida Estomo) died At the time and in the vicinity of the accident, there were no vehicles
while the other jeepney passengers sustained physical injuries. What could following the jeepney, neither were there oncoming vehicles except the bus.
have been a festive Christmas turned out to be tragic. The weather condition of that day was fair.

The causes of the death of the three jeepney passengers were as follows (p. After conducting the investigation, the police filed with the Municipal Court of
101, Record on Appeal): San Manuel, Tarlac, a criminal complaint against the two drivers for Multiple
Homicide. At the preliminary investigation, a probable cause was found with
respect to the case of Manalo, thus, his case was elevated to the Court of
The deceased Catalina Pascua suffered the following
First Instance. However, finding no sufficiency of evidence as regards the
injuries, to wit: fracture of the left parietal and temporal
case of delos Reyes, the Court dismissed it. Manalo was convicted and
regions of the skull; fracture of the left mandible;
sentenced to suffer imprisonment. Not having appealed, he served his
fracture of the right humenous; compound fracture of
sentence.
the left radious and ullma middle third and lower third;
fracture of the upper third of the right tibia and fillnea;
avulsion of the head, left internal; and multiple Complaints for recovery of damages were then filed before the Court of First
abrasions. The cause of her death was shock, Instance of Pangasinan. In Civil Case No. 1136, spouses Casiano Pascua
secondary to fracture and multiple hemorrhage. The and Juana Valdez sued as heirs of Catalina Pascua while Caridad Pascua
sued in her behalf. In Civil Case No. 1139, spouses Manuel Millares and Guaranty Insurance Co., jointly and severally with said defendants
Fidencia Arcica sued as heirs of Erlinda Meriales. In Civil Case No. 1140, (Mangune and Carreon) to pay the plaintiffs the amount herein
spouses Mariano Estomo and Dionisia Sarmiento also sued as heirs of above adjudicated in their favor in Civil Case No. 1136 only. All
Adelaida Estomo. the amounts awarded said plaintiff, as set forth in paragraph one
(1) hereinabove;
In all three cases, spouses Mangune and Carreon, Manalo, Rabbit and
delos Reyes were all impleaded as defendants. Plaintiffs anchored their 3) On the cross claim of Phil. Rabbit Bus Lines, Inc. ordering the
suits against spouses Mangune and Carreon and Manalo on their defendant, Isidro Mangune, Guillerma Carreon and Tranquilino
contractual liability. As against Rabbit and delos Reyes, plaintiffs based their Manalo, to pay jointly and severally, cross-claimant Phil. Rabbit
suits on their culpability for a quasi-delict. Filriters Guaranty Assurance Bus Lines, Inc., the amounts of P216.27 as actual damages to its
Corporation, Inc. was also impleaded as additional defendant in Civil Case Bus No. 753 and P2,173.60 for loss of its earning.
No. 1136 only.
All of the above amount, shall bear legal interest from the filing of
For the death of Catalina Pascua, plaintiffs in Civil Case No. 1136 sought to the complaints.
collect the aggregate amount of P70,060.00 in damages, itemized as
follows: P500.00 for burial expenses; P12,000.00 for loss of wages for 24
Costs are adjudged against defendants Mangune, Carreon and
years; P10,000.00 for exemplary damages; P10,000.00 for moral damages;
Manalo and Filriters Guaranty.
and P3,000.00 for attorney's fees. In the same case, plaintiff Caridad
Pascua claimed P550.00 for medical expenses; P240.00 for loss of wages
for two months; P2,000.00 for disfigurement of her face; P3,000.00 for SO ORDERED
physical pain and suffering; P2,500.00 as exemplary damages and
P2,000.00 for attorney's fees and expenses of litigation.
On appeal, the Intermediate Appellate Court reversed the above-quoted
decision by finding delos Reyes negligent, the dispositive portion of which
In Civil Case No. 1139, plaintiffs demanded P500.00 for burial expenses; reads (pp. 55-57, Rollo):
P6,000.00 for the death of Erlinda, P63,000.00 for loss of income;
P10,000.00 for moral damages and P3,000.00 for attorney's fees or total of
P80,000.00. WHEREFORE, PREMISES CONSIDERED, the lower
court's decision is hereby REVERSED as to item No. 3
of the decision which reads:
In Civil Case No. 1140, plaintiffs claimed P500.00 for burial expenses;
P6,000.00 for the death of Adelaide, P56,160.00 for loss of her income or
earning capacity; P10,000.00 for moral damages; and P3,000.00 for 3) On the cross claim of Philippine Rabbit Bus Lines,
attorney's fees. Inc. ordering the defendants Isidro Mangune, Guillerma
Carreon and Tranquilino Manalo, to pay jointly and
severally, the amounts of P216.27 as actual damages
Rabbit filed a cross-claim in the amount of P15,000.00 for attorney's fees to its Bus No. 753 and P2,173.60 for loss of its
and expenses of litigation. On the other hand, spouses Mangune and earnings.
Carreon filed a cross-claim in the amount of P6,168.00 for the repair of the
jeepney and P3,000.00 for its non-use during the period of repairs.
and another judgment is hereby rendered in favor of
plaintiffs-appellants Casiana Pascua, Juan Valdez and
On December 27, 1978, the trial court rendered its decision finding Manalo Caridad Pascua, ordering the Philippine Rabbit Bus
negligent, the dispositive portion of which reads (pp. 113-114, Record on Lines, Inc. and its driver Tomas delos Reyes to pay the
Appeal): former jointly and severally damages in amounts
awarded as follows:
PREMISES CONSIDERED, this Court is of the opinion and so holds:
For the death of Catalina Pascua, the parents and/or
heirs are awarded
1) That defendants Isidro Mangune, Guillerma Carreon and
Civil Case No. 1136 —
Tranquilino Manalo thru their negligence, breached contract of
a) Indemnity for the loss of life — P12,000.00
carriage with their passengers the plaintiffs' and/or their heirs, and
b) Loss of Salaries or earning capacity —
this Court renders judgment ordering said defendants, jointly and
14,000.00
severally, to pay the plaintiffs —
c) Actual damages (burial expenses) —
800.00
a) In Civil Case No. 1136, for the death of Catalina Pascua, to pay d) For moral damages — 10,000.00
her heirs the amounts of P12,000.00 for indemnity for loss of her e) Exemplary damages — 3,000.00
life; P41,760.00 for loss of earnings; P324.40 for actual expenses f) For attorney's fees — 3,000.00
and P2,000.00 for moral damages; —————
Total — P38,200.00 (sic)
For the physical injuries suffered by Caridad Pascua:
b) In the same Civil Case No.1136 for the injuries of Caridad
Civil Case No. 1136
Pascua, to pay her the amounts of P240.00 for loss of wages,
a) Actual damages (hospitalization expenses)
P328.20 for actual expenses and P500.00 for moral damages;
— P550.00
b) Moral damages (disfigurement of the
c) In Civil Case No.1139 for the death of Erlinda Meriales, to pay face and physical suffering — 8,000.00
her heirs (the plaintiffs) the amount of P12,000.00 — for indemnity c) Exemplary damages — 2,000.00
for loss of her life; P622.00 for actual expenses, P60,480.00 for —————
loss of wages or income and P2,000.00 for moral damages; Total — P10,550.00
For the death of Erlinda Arcega Meriales. the parents
and/or heirs:
d) In Civil Case No. 1140, for the death of Erlinda (also called
Civil Case No. 1139
Florida or Adelaida Estomo), to pay her heirs (the plaintiff the a) Indemnity for loss of life — P12,000.00
amount of P12,000.00 for indemnity for the loss of her life; b) Loss of Salary or Earning Capacity —
P580.00 for actual expenses; P53,160.00 for loss of wages or
20,000.00
income and P2,000.00 for moral damages. c) Actual damages (burial expenses) —
500.00
2) The defendant Filriters Guaranty Insurance Co., having d) Moral damages — 15,000.00
contracted to ensure and answer for the obligations of defendants e) Exemplary damages — 15,000.00
Mangune and Carreon for damages due their passengers, this f) Attorney's fees — 3,000.00
Court renders judgment against the said defendants Filriters —————
 Total — P65,500.00 contradicted by other evidence, and (3) the substantial factor test. concluded
For the death of Florida Sarmiento Estomo: that delos Reyes was negligent.
Civil Case No. 1140
a) Indemnity for loss of life — P12,000.00
The misappreciation of the facts and evidence and the misapplication of the
b) Loss of Salary or Earning capacity — 20,000.00
laws by the respondent court warrant a reversal of its questioned decision
c) Actual damages (burial expenses) — 500.00
and resolution.
d) Moral damages — 3,000.00
e) Exemplary damages — 3,000.00
f) Attorney's fees — 3,000.00 We reiterate that "[t]he principle about "the last clear" chance, would call for
————— application in a suit between the owners and drivers of the two colliding
Total — P41,500.00 vehicles. It does not arise where a passenger demands responsibility from
With costs against the Philippine Rabbit Bus Lines, Inc. the carrier to enforce its contractual obligations. For it would be inequitable
SO ORDERED. to exempt the negligent driver of the jeepney and its owners on the ground
that the other driver was likewise guilty of negligence." This was Our ruling
in Anuran, et al. v. Buño et al., G.R. Nos. L-21353 and L-21354, May 20,
The motion for reconsideration was denied. Hence, the present
1966, 17 SCRA 224. 1 Thus, the respondent court erred in applying said
petition.
doctrine.

The issue is who is liable for the death and physical injuries suffered by the
On the presumption that drivers who bump the rear of another vehicle guilty
passengers of the jeepney?
and the cause of the accident, unless contradicted by other evidence, the
respondent court said (p. 49, Rollo):
The trial court, in declaring that Manalo was negligent, considered the
following (p. 106, Record on Appeal):
. . . the jeepney had already executed a complete
turnabout and at the time of impact was already facing
(1) That the unrebutted testimony of his passenger the western side of the road. Thus the jeepney
plaintiff Caridad Pascua that a long ways (sic) before assumed a new frontal position vis a vis, the bus, and
reaching the point of collision, the Mangune jeepney the bus assumed a new role of defensive driving. The
was "running fast" that his passengers cautioned driver spirit behind the presumption of guilt on one who bumps
Manalo to slow down but did not heed the warning: that the rear end of another vehicle is for the driver following
the right rear wheel was detached causing the jeepney a vehicle to be at all times prepared of a pending
to run to the eastern shoulder of the road then back to accident should the driver in front suddenly come to a
the concrete pavement; that driver Manalo applied the full stop, or change its course either through change of
brakes after which the jeepney made a U-turn (half-turn) mind of the front driver, mechanical trouble, or to avoid
in such a manner that it inverted its direction making it an accident. The rear vehicle is given the responsibility
face South instead of north; that the jeepney stopped on of avoiding a collision with the front vehicle for it is the
the western lane of the road on the right of way of the rear vehicle who has full control of the situation as it is
oncoming Phil. Rabbit Bus where it was bumped by the in a position to observe the vehicle in front of it.
latter;
The above discussion would have been correct were it not for the
(2) The likewise unrebutted testimony of Police undisputed fact that the U-turn made by the jeepney was abrupt (Exhibit "K,"
Investigator Tacpal of the San Manuel (Tarlac) Police Pascua). The jeepney, which was then traveling on the eastern shoulder,
who, upon responding to the reported collission, found making a straight, skid mark of approximately 35 meters, crossed the
the real evidence thereat indicate in his sketch (Exh. K, eastern lane at a sharp angle, making a skid mark of approximately 15
Pascua ), the tracks of the jeepney of defendant meters from the eastern shoulder to the point of impact (Exhibit "K" Pascua).
Mangune and Carreon running on the Eastern shoulder Hence, delos Reyes could not have anticipated the sudden U-turn executed
(outside the concrete paved road) until it returned to the by Manalo. The respondent court did not realize that the presumption was
concrete road at a sharp angle, crossing the Eastern rebutted by this piece of evidence.
lane and the (imaginary) center line and encroaching
fully into the western lane where the collision took place
With regard to the substantial factor test, it was the opinion of the
as evidenced by the point of impact;
respondent court that (p. 52, Rollo):

(3) The observation of witness Police Corporal Cacalda

. . . It is the rule under the substantial factor test that if
also of the San Manuel Police that the path of the
the actor's conduct is a substantial factor in bringing
jeepney they found on the road and indicated in the
about harm to another, the fact that the actor neither
sketch (Exh. K-Pascua) was shown by skid marks
foresaw nor should have foreseen the extent of the
which he described as "scratches on the road caused
harm or the manner in which it occurred does not
by the iron of the jeep, after its wheel was removed;"
prevent him from being liable (Restatement, Torts, 2d).
Here, We find defendant bus running at a fast speed
(4) His conviction for the crime of Multiple Homicide and when the accident occurred and did not even make the
Multiple Serious Physical Injuries with Damage to slightest effort to avoid the accident, . . . . The bus
Property thru Reckless Imprudence by the Court of First driver's conduct is thus a substantial factor in bringing
Instance of Tarlac (Exh. 24-Rabbit) upon the criminal about harm to the passengers of the jeepney, not only
Information by the Provincial Fiscal of Tarlac (Exh. 23- because he was driving fast and did not even attempt to
Rabbit), as a result of the collision, and his commitment avoid the mishap but also because it was the bus which
to prison and service of his sentence (Exh. 25-Rabbit) was the physical force which brought about the injury
upon the finality of the decision and his failure to appeal and death to the passengers of the jeepney.
therefrom; and
The speed of the bus was calculated by respondent court as follows (pp. 54-
(5) The application of the doctrine of res-ipsa 55, Rollo):
loquitar (sic) attesting to the circumstance that the
collision occured (sic) on the right of way of the Phil.
According to the record of the case, the bus departed
Rabbit Bus.
from Laoag, Ilocos Norte, at 4:00 o'clock A.M. and the
accident took place at approximately around 12:30
The respondent court had a contrary opinion. Applying primarily (1) the P.M., after travelling roughly for 8 hours and 30
doctrine of last clear chance, (2) the presumption that drivers who bump the minutes. Deduct from this the actual stopover time of
rear of another vehicle guilty and the cause of the accident unless two Hours (computed from the testimony of the driver
 that he made three 40-minute stop-overs), We will have After a minute scrutiny of the factual matters and duly proven evidence, We
an actual travelling time of 6 hours and 30 minutes. find that the proximate cause of the accident was the negligence of Manalo
and spouses Mangune and Carreon. They all failed to exercise the
precautions that are needed precisely pro hac vice.
Under the circumstances, We calculate that the Laoag-
Tarlac route (365 kms.) driving at an average of 56 km.
per hour would take 6 hours and 30 minutes. Therefore, In culpa contractual, the moment a passenger dies or is injured, the carrier
the average speed of the bus, give and take 10 is presumed to have been at fault or to have acted negligently, and this
minutes, from the point of impact on the highway with disputable presumption may only be overcome by evidence that he had
excellent visibility factor would be 80 to 90 kms. per observed extra-ordinary diligence as prescribed in Articles 1733, 1755 and
hour, as this is the place where buses would make up 1756 of the New Civil Code 2 or that the death or injury of the passenger
for lost time in traversing busy city streets. was due to a fortuitous event 3 (Lasam v. Smith, Jr., 45 Phil. 657).

Still, We are not convinced. It cannot be said that the bus was travelling at a The negligence of Manalo was proven during the trial by the unrebutted
fast speed when the accident occurred because the speed of 80 to 90 testimonies of Caridad Pascua, Police Investigator Tacpal, Police Corporal
kilometers per hour, assuming such calculation to be correct, is yet within Cacalda, his (Manalo's) conviction for the crime of Multiple Homicide and
the speed limit allowed in highways. We cannot even fault delos Reyes for Multiple Serious Injuries with Damage to Property thru Reckless
not having avoided the collision. As aforestated, the jeepney left a skid mark Imprudence, and the application of the doctrine ofres ipsa loquitur
of about 45 meters, measured from the time its right rear wheel was supra. The negligence of spouses Mangune and Carreon was likewise
detached up to the point of collision. Delos Reyes must have noticed the proven during the trial (p. 110, Record on Appeal):
perilous condition of the jeepney from the time its right rear wheel was
detached or some 90 meters away, considering that the road was straight
To escape liability, defendants Mangune and Carreon
and points 200 meters north and south of the point of collision, visible and
offered to show thru their witness Natalio Navarro, an
unobstructed. Delos Reyes admitted that he was running more or less 50
alleged mechanic, that he periodically checks and
kilometers per hour at the time of the accident. Using this speed, delos
maintains the jeepney of said defendants, the last on
Reyes covered the distance of 45 meters in 3.24 seconds. If We adopt the
Dec. 23, the day before the collision, which included the
speed of 80 kilometers per hour, delos Reyes would have covered that
tightening of the bolts. This notwithstanding the right
distance in only 2.025 seconds. Verily, he had little time to react to the
rear wheel of the vehicle was detached while in transit.
situation. To require delos Reyes to avoid the collision is to ask too much
As to the cause thereof no evidence was offered. Said
from him. Aside from the time element involved, there were no options
defendant did not even attempt to explain, much less
available to him. As the trial court remarked (pp. 107-108, Record on
establish, it to be one caused by a caso fortuito. . . .
Appeal):

In any event, "[i]n an action for damages against the carrier for his
. . . They (plaintiffs) tried to impress this Court that
failure to safely carry his passenger to his destination, an accident
defendant de los Reyes, could have taken either of two
caused either by defects in the automobile or through the
options: (1) to swerve to its right (western shoulder) or
negligence of its driver, is not a caso fortuito which would avoid
(2) to swerve to its left (eastern lane), and thus steer
the carriers liability for damages (Son v. Cebu Autobus Company,
clear of the Mangune jeepney. This Court does not so
94 Phil. 892 citing Lasam, et al. v. Smith, Jr., 45 Phil. 657;
believe, considering the existing exigencies of space
Necesito, etc. v. Paras, et al., 104 Phil. 75).
and time.

The trial court was therefore right in finding that Manalo and spouses
As to the first option, Phil. Rabbit's evidence is
Mangune and Carreon were negligent. However, its ruling that spouses
convincing and unrebutted that the Western shoulder of
Mangune and Carreon are jointly and severally liable with Manalo is
the road was narrow and had tall grasses which would
erroneous The driver cannot be held jointly and severally liable with the
indicate that it was not passable. Even plaintiffs own
carrier in case of breach of the contract of carriage. The rationale behind this
evidence, the pictures (Exhs. P and P-2, Pascua) are
is readily discernible. Firstly, the contract of carriage is between the carrier
mute confirmation of such fact. Indeed, it can be noticed
and the passenger, and in the event of contractual liability, the carrier is
in the picture (Exh. P-2, Pascua) after the Rabbit bus
exclusively responsible therefore to the passenger, even if such breach be
came to a full stop, it was tilted to right front side, its
due to the negligence of his driver (see Viluan v. The Court of Appeals, et
front wheels resting most probably on a canal on a
al., G.R. Nos. L-21477-81, April 29, 1966, 16 SCRA 742). In other words,
much lower elevation that of the shoulder or paved
the carrier can neither shift his liability on the contract to his driver nor share
road. It too shows that all of the wheels of the Rabbit
it with him, for his driver's negligence is his. 4 Secondly, if We make the
bus were clear of the roadway except the outer left rear
driver jointly and severally liable with the carrier, that would make the
wheel. These observation appearing in said picture
carrier's liability personal instead of merely vicarious and consequently,
(Exh P-2, Pascua) clearly shows coupled with the
entitled to recover only the share which corresponds to the
finding the Rabbit bus came to a full stop only five
driver, 5 contradictory to the explicit provision of Article 2181 of the New Civil
meters from the point of impact (see sketch, Exh. K-
Code. 6
Pascua) clearly show that driver de los Reyes veered
his Rabbit bus to the right attempt to avoid hitting the
Mangune's jeepney. That it was not successful in fully We affirm the amount of damages adjudged by the trial court, except with
clearing the Mangune jeepney as its (Rabbit's) left front respect to the indemnity for loss of life. Under Article 1764 in relation to
hit said jeepney (see picture Exh. 10-A-Rabbit) must Article 2206 of the New Civil Code, the amount of damages for the death of
have been due to limitations of space and time. a passenger is at least three thousand pesos (P3,000.00). The prevailing
jurisprudence has increased the amount of P3,000.00 to P30,000.00 (see
Heirs of Amparo delos Santos, et al. v. Honorable Court of Appeals, et al.,
Plaintiffs alternatively claim that defendant delos Reyes
G.R. No. 51165, June 21, 1990 citing De Lima v. Laguna Tayabas Co., G.R.
of the Rabbit bus could also have swerved to its left
Nos. L-35697-99, April 15, 1988, 160 SCRA 70).
(eastern lane) to avoid bumping the Mangune jeepney
which was then on the western lane. Such a claim is
premised on the hypothesis (sic) that the eastern lane ACCORDINGLY, the petition is hereby GRANTED. The decision of the
was then empty. This claim would appear to be good Intermediate Appellate Court dated July 29, 1983 and its resolution dated
copy of it were based alone on the sketch November 28, 1983 are SET ASIDE. The decision of the Court of First
made after the collision. Nonetheless, it loses force it Instance dated December 27, 1978 is REINSTATED MODIFICATION that
one were to consider the time element involved, for only Isidro Mangune, Guillerma Carreon and Filriters Guaranty Assurance
moments before that, the Mangune jeepney was Corporation, Inc. are liable to the victims or their heirs and that the amount
crossing that very eastern lane at a sharp angle. Under of indemnity for loss of life is increased to thirty thousand pesos
such a situation then, for driver delos Reyes to swerve (P30,000.00).
to the eastern lane, he would run the greater risk of
running smack in the Mangune jeepney either head on
or broadside. SO ORDERED.
 EN BANC authorities. An investigation was made regarding the circumstances
surrounding the death of Lara but no criminal action was taken against
defendant.
G.R. No. L-9907 June 30, 1958

It should be noted that the deceased went to the lumber concession of

LOURDES J. LARA, ET AL., plaintiffs-appellants,
defendant in Parang, Cotabato upon instructions of his chief in order to
vs.
classify the logs of defendant which were then ready to be exported and to
BRIGIDO R. VALENCIA, defendant-appellant.
be loaded on a ship anchored in the port of Parang. It took Lara six days to
do his work during which he contracted malaria fever and for that reason he
Castillo, Cervantes, Occeña, Lozano, Montana, Cunanan, Sison and Castillo evinced a desire to return immediately to Davao. At that time, there was no
and Eligio G. Lagman for defendant-appellant. available bus that could take him back to Davao and so he requested the
Donato C. Endriga and Emigdio Dakanay for plaintiffs-appellants. defendant if he could take him in his own pick-up. Defendant agreed and,
together with Lara, other passengers tagged along, most of them were
employees of the Government. Defendant merely accommodated them and
BAUTISTA ANGELO, J.:
did not charge them any fee for the service. It was also their understanding
that upon reaching barrio Samoay, the passengers would alight and transfer
This is an action for damages brought by plaintiffs against defendant in the to a bus that regularly makes the trip to Davao but unfortunately there was
Court of First Instance of Davao for the death of one Demetrio Lara, Sr. none available at the time and so the same passengers, including Lara,
allegedly caused by the negligent act of defendant. Defendant denied the again requested the defendant to drive them to Davao. Defendant again
charge of negligence and set up certain affirmative defenses and a accommodated them and upon reaching Km. 96, Lara accidentally fell
counterclaim. suffering fatal injuries.

The court after hearing rendered judgment ordering defendant to pay the It therefore appears that the deceased, as well his companions who rode in
plaintiffs the following amount: (a) P10,000 as moral damages; (b) P3,000 the pick-up of defendant, were merely accommodation passengers who paid
as exemplary damages; and (c) P1,000 as attorney's fees, in addition to the nothing for the service and so they can be considered as invited guests
costs of action. Both parties appealed to this Court because the damages within the meaning of the law. As accommodation passengers or invited
claimed in the complaint exceed the sum of P50,000. guests, defendant as owner and driver of the pick-up owes to them merely
the duty to exercise reasonable care so that they may be transported safely
to their destination. Thus, "The rule is established by the weight of authority
In their appeal, plaintiffs claim that the court a quo erred in disregarding their that the owner or operator of an automobile owes the duty to an invited
claim of P41,400 as actual or compensatory damages and in awarding as guest to exercise reasonable care in its operation, and not unreasonably to
attorneys' fees only the sum of P1,000 instead of P3,000 as agreed upon expose him to danger and injury by increasing the hazard of travel. This
between plaintiffs and their counsel. Defendant, on the other hand, disputes rule, as frequently stated by the courts, is that an owner of an automobile
the finding of the court a quo that the oath of Demetrio Lara, Sr. was due to owes a guest the duty to exercise ordinary or reasonable care to avoid
the negligence of defendant and the portion of the judgment which orders injuring him. Since one riding in an automobile is no less a guest because
dependant to pay to plaintiffs moral and exemplary damages as well as he asked for the privilege of doing so, the same obligation of care is
attorneys' fees, said defendant contending that the court should have imposed upon the driver as in the case of one expressly invited to ride" (5
declared that the death of Lara was due to unavoidable accident. Am. Jur., 626-627). Defendant, therefore, is only required to observe
ordinary care, and is not in duty bound to exercise extraordinary diligence as
The deceased was an inspector of the Bureau of Forestry stationed in required of a common carrier by our law (Articles 1755 and 1756, new Civil
Davao with an annual salary of P1,800. The defendant is engaged in the Code).
business of exporting logs from his lumber concession in Cotabato. Lara
went to said concession upon instructions of his chief to classify the logs of The question that now arises is: Is there enough evidence to show that
defendant which were about to be loaded on a ship anchored in the port of defendant failed to observe ordinary care or diligence in transporting the
Parang. The work Lara of lasted for six days during which he contracted deceased from Parang to Davao on the date in question?
malaria fever. In the morning of January 9, 1954, Lara who then in a hurry to
return to Davao asked defendant if he could take him in his pick-up as there
was then no other means of transportation, to which defendant agreed, and The trial court answered the question in the affirmative but in so doing it took
in that same morning the pick-up left Parang bound for Davao taking along into account only the following facts:
six passengers, including Lara.
No debe perderse de vista el hecho, que los negocios de
The pick-up has a front seat where the driver and two passengers can be exportacion de trozos del demandado tiene un volumen de
accommodated and the back has a steel flooring enclosed with a steel P1,200. Lara era empleado de la Oficina de Montes, asalariado
walling of 16 to 17 inches tall on the sides and with a 19 inches tall walling at por el gobierno, no pagado por el demandado para classificar los
the back. Before leaving Parang, the sitting arrangement was as follows: trozos exportados; debido a los trabajos de classificacion que
defendant was at the wheel and seated with him in the front seat were Mrs. duro 6 dias, en su ultimo dia Lara no durmio toda la noche, al dia
Valencia and Nicanor Quinain; on the back of the pick-up were two siguiente, Lara fue atacado de malaria, tenia inflamada la cara y
improvised benches placed on each side, and seated on the right bench cuerpo, sufria dolores de cabeza con erupciones en la cara y
were Ricardo Alojipan and Antonio Lagahit, and on the left one Bernardo cuerpo; que en la manana, del dia 2 de enero de 1954, fecha en
and Pastor Geronimo. A person by the name of Leoning was seated on a que Lara salio de Davao para Parang, en aeroplano para
box located on the left side while in the middle Lara sat on a bag. Before clasificar los trozos del demandado, el automobil de este condujo
leaving Parang, defendant invited Lara to sit with him on the front seat but a aquel al aerodromo de Davao.
Lara declined. It was their understanding that upon reaching barrio Samoay,
Cotabato, the passengers were to alight and take a bus bound for Davao, xxx xxx xxx
but when they arrived at that place, only Bernardo alighted and the other
passengers requested defendant to allow them to ride with him up to Davao
because there was then no available bus that they could take in going to El viaje de Cotabato a Davao no es menos de 8 horas, su
that place. Defendant again accommodated the passengers. carretera esta en malas condiciones, desnivelada, con piedras
salientes y baches, que hacen del vehiculo no estable en su
marcha. Lara estaba enfermo de cierta gravedad, tenia el cuerpo
When they continued their trip, the sitting arrangement of the passengers y cara inflamados, atacado de malaria, con dolores de cabeza y
remained the same, Lara being seated on a bag in the middle with his arms
con erupciones en la cara y cuerpo.
on a suitcase and his head cove red by a jacket. Upon reaching Km. 96,
barrio Catidtuan, Lara accidentally fell from the pick-up and as a result he
suffered serious injuries. Valencia stopped the pick-up to see what A la vista de estos hechos, el demandado debia de saber que era
happened to Lara. He sought the help of the residents of that place and sumamente peligroso llevar 5 pasajeros en la parte trasera del
applied water to Lara but to no avail. They brought Lara to the nearest place pick-up; particularmente, para la salud de Lara; el permitirlo, el
where they could find a doctor and not having found any they took him to St. demandado no ha tomado las precausiones, para evitar un
Joseph's Clinic of Kidapawan. But when Lara arrived he was already dead. posible accidente fatal. La negative de Lara de ocupar el asiento
From there they proceeded to Davao City and immediately notified the local delantero del pick-up no constituye a juicio del Juzgado una
 defensa, pues el demendado conociendo el estado delicado de
salud de Lara, no debio de haber permitido que aquel regrese a
Davao en su pick-up; si querria prestar a aquel un favor, debio de
haver provisto a Lara de un automobil para su regrese a Davao,
ya que el demendado es un millionario; si no podia prestar a
aquel este favor, debio de haver dejado a Lara en Samuay para
coger aquel un camion de pasajero de Cotabato a Davao.

Even if we admit as true the facts found by the trial court, still we find that
the same are not sufficient to show that defendant has failed to take the
precaution necessary to conduct his passengers safely to their place of
destination for there is nothing there to indicate that defendant has acted
with negligence or without taking the precaution that an ordinary prudent
man would have taken under similar circumstances. It should be noted that
Lara went to the lumber concession of defendant in answer to a call of duty
which he was bound to perform because of the requirement of his office and
he contracted the malaria fever in the course of the performance of that
duty. It should also be noted that defendant was not in duty bound to take
the deceased in his own pick-up to Davao because from Parang to Cotabato
there was a line of transportation that regularly makes trips for the public,
and if defendant agreed to take the deceased in his own car, it was only to
accommodate him considering his feverish condition and his request that he
be so accommodated. It should also be noted that the passengers who rode
in the pick-up of defendant took their respective seats therein at their own
choice and not upon indication of defendant with the particularity that
defendant invited the deceased to sit with him in the front seat but which
invitation the deceased declined. The reason for this can only be attributed
to his desire to be at the back so that he could sit on a bag and travel in a
reclining position because such was more convenient for him due to his
feverish condition. All the circumstances therefore clearly indicate that
defendant had done what a reasonable prudent man would have done
under the circumstances.

There is every reason to believe that the unfortunate happening was only
due to an unforeseen accident accused by the fact that at the time the
deceased was half asleep and must have fallen from the pick-up when it ran
into some stones causing it to jerk considering that the road was then
bumpy, rough and full of stones.

The finding of the trial court that the pick-up was running at more than 40
kilometers per hour is not supported by the evidence. This is a mere surmise
made by the trial court considering the time the pick-up left barrio Samoay
and the time the accident occured in relation to the distance covered by the
pick-up. And even if this is correct, still we say that such speed is not
unreasonable considering that they were traveling on a national road and
the traffic then was not heavy. We may rather attribute the incident to lack of
care on the part of the deceased considering that the pick-up was open and
he was then in a crouching position. Indeed, the law provides that "A
passenger must observe the diligence of a good father of a family to avoid
injury to himself" (Article 1761, new Civil Code), which means that if the
injury to the passenger has been proximately caused by his own negligence,
the carrier cannot be held liable.

All things considered, we are persuaded to conclude that the accident

occurred not due to the negligence of defendant but to circumstances
beyond his control and so he should be exempt from liability.

Wherefore, the decision appealed from is reversed, without pronouncement

as to costs.