G.R. No.

186312               June 29, 2010 Petitioners, by letter of October 26, 2000,4 demanded indemnification from respondent for the death
of their son in the amount of at least ₱4,000,000.
SPOUSES DANTE CRUZ and LEONORA CRUZ, Petitioners,
vs. Replying, respondent, by letter dated November 7, 2000,5 denied any responsibility for the incident
SUN HOLIDAYS, INC., Respondent. which it considered to be a fortuitous event. It nevertheless offered, as an act of commiseration, the
amount of ₱10,000 to petitioners upon their signing of a waiver.
DECISION
As petitioners declined respondent’s offer, they filed the Complaint, as earlier reflected, alleging that
respondent, as a common carrier, was guilty of negligence in allowing M/B Coco Beach III to sail
CARPIO MORALES, J.:
notwithstanding storm warning bulletins issued by the Philippine Atmospheric, Geophysical and
Astronomical Services Administration (PAGASA) as early as 5:00 a.m. of September 11, 2000.6
Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on January 25, 20011 against
Sun Holidays, Inc. (respondent) with the Regional Trial Court (RTC) of Pasig City for damages
In its Answer,7 respondent denied being a common carrier, alleging that its boats are not available to
arising from the death of their son Ruelito C. Cruz (Ruelito) who perished with his wife on
the general public as they only ferry Resort guests and crew members. Nonetheless, it claimed that
September 11, 2000 on board the boat M/B Coco Beach III that capsized en route to Batangas from
it exercised the utmost diligence in ensuring the safety of its passengers; contrary to petitioners’
Puerto Galera, Oriental Mindoro where the couple had stayed at Coco Beach Island Resort (Resort)
allegation, there was no storm on September 11, 2000 as the Coast Guard in fact cleared the
owned and operated by respondent.
voyage; and M/B Coco Beach III was not filled to capacity and had sufficient life jackets for its
passengers. By way of Counterclaim, respondent alleged that it is entitled to an award for attorney’s
The stay of the newly wed Ruelito and his wife at the Resort from September 9 to 11, 2000 was by fees and litigation expenses amounting to not less than ₱300,000.
virtue of a tour package-contract with respondent that included transportation to and from the Resort
and the point of departure in Batangas.
Carlos Bonquin, captain of M/B Coco Beach III, averred that the Resort customarily requires four
conditions to be met before a boat is allowed to sail, to wit: (1) the sea is calm, (2) there is clearance
Miguel C. Matute (Matute),2 a scuba diving instructor and one of the survivors, gave his account of from the Coast Guard, (3) there is clearance from the captain and (4) there is clearance from the
the incident that led to the filing of the complaint as follows: Resort’s assistant manager.8 He added that M/B Coco Beach III met all four conditions on
September 11, 2000,9 but a subasco or squall, characterized by strong winds and big waves,
suddenly occurred, causing the boat to capsize.10
Matute stayed at the Resort from September 8 to 11, 2000. He was originally scheduled to leave the
Resort in the afternoon of September 10, 2000, but was advised to stay for another night because of
strong winds and heavy rains. By Decision of February 16, 2005,11 Branch 267 of the Pasig RTC dismissed petitioners’ Complaint
and respondent’s Counterclaim.
On September 11, 2000, as it was still windy, Matute and 25 other Resort guests including
petitioners’ son and his wife trekked to the other side of the Coco Beach mountain that was Petitioners’ Motion for Reconsideration having been denied by Order dated September 2,
sheltered from the wind where they boarded M/B Coco Beach III, which was to ferry them to 2005,12 they appealed to the Court of Appeals.
Batangas.
By Decision of August 19, 2008,13 the appellate court denied petitioners’ appeal, holding, among
Shortly after the boat sailed, it started to rain. As it moved farther away from Puerto Galera and into other things, that the trial court correctly ruled that respondent is a private carrier which is only
the open seas, the rain and wind got stronger, causing the boat to tilt from side to side and the required to observe ordinary diligence; that respondent in fact observed extraordinary diligence in
captain to step forward to the front, leaving the wheel to one of the crew members. transporting its guests on board M/B Coco Beach III; and that the proximate cause of the incident
was a squall, a fortuitous event.
The waves got more unwieldy. After getting hit by two big waves which came one after the other,
M/B Coco Beach III capsized putting all passengers underwater. Petitioners’ Motion for Reconsideration having been denied by Resolution dated January 16,
2009,14 they filed the present Petition for Review.15
The passengers, who had put on their life jackets, struggled to get out of the boat. Upon seeing the
captain, Matute and the other passengers who reached the surface asked him what they could do to Petitioners maintain the position they took before the trial court, adding that respondent is a common
save the people who were still trapped under the boat. The captain replied "Iligtas niyo na lang ang carrier since by its tour package, the transporting of its guests is an integral part of its resort
sarili niyo" (Just save yourselves). business. They inform that another division of the appellate court in fact held respondent liable for
damages to the other survivors of the incident.
Help came after about 45 minutes when two boats owned by Asia Divers in Sabang, Puerto Galera
passed by the capsized M/B Coco Beach III. Boarded on those two boats were 22 persons, Upon the other hand, respondent contends that petitioners failed to present evidence to prove that it
consisting of 18 passengers and four crew members, who were brought to Pisa Island. Eight is a common carrier; that the Resort’s ferry services for guests cannot be considered as ancillary to
passengers, including petitioners’ son and his wife, died during the incident. its business as no income is derived therefrom; that it exercised extraordinary diligence as shown by
the conditions it had imposed before allowing M/B Coco Beach III to sail; that the incident was
caused by a fortuitous event without any contributory negligence on its part; and that the other case
At the time of Ruelito’s death, he was 28 years old and employed as a contractual worker for Mitsui wherein the appellate court held it liable for damages involved different plaintiffs, issues and
Engineering & Shipbuilding Arabia, Ltd. in Saudi Arabia, with a basic monthly salary of $900.3 evidence.16

1
The petition is impressed with merit. Under the Civil Code, common carriers, from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence for the safety of the passengers transported by
them, according to all the circumstances of each case.19 They are bound to carry the passengers
Petitioners correctly rely on De Guzman v. Court of Appeals17 in characterizing respondent as a
safely as far as human care and foresight can provide, using the utmost diligence of very cautious
common carrier.
persons, with due regard for all the circumstances.20

The Civil Code defines "common carriers" in the following terms:

When a passenger dies or is injured in the discharge of a contract of carriage, it is presumed that
the common carrier is at fault or negligent. In fact, there is even no need for the court to make an
Article 1732. Common carriers are persons, corporations, firms or associations engaged in the express finding of fault or negligence on the part of the common carrier. This statutory presumption
business of carrying or transporting passengers or goods or both, by land, water, or air for may only be overcome by evidence that the carrier exercised extraordinary diligence.21
compensation, offering their services to the public.
Respondent nevertheless harps on its strict compliance with the earlier mentioned conditions of
The above article makes no distinction between one whose principal business activity is the carrying voyage before it allowed M/B Coco Beach III to sail on September 11, 2000. Respondent’s position
of persons or goods or both, and one who does such carrying only as an ancillary activity (in local does not impress.
idiom, as "a sideline"). Article 1732 also carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled basis and one offering such
The evidence shows that PAGASA issued 24-hour public weather forecasts and tropical cyclone
service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish
warnings for shipping on September 10 and 11, 2000 advising of tropical depressions in Northern
between a carrier offering its services to the "general public," i.e., the general community or
Luzon which would also affect the province of Mindoro.22 By the testimony of Dr. Frisco Nilo,
population, and one who offers services or solicits business only from a narrow segment of the
supervising weather specialist of PAGASA, squalls are to be expected under such weather
general population. We think that Article 1733 deliberately refrained from making such distinctions.
condition.23

So understood, the concept of "common carrier" under Article 1732 may be seen to coincide neatly
A very cautious person exercising the utmost diligence would thus not brave such stormy weather
with the notion of "public service," under the Public Service Act (Commonwealth Act No. 1416, as
and put other people’s lives at risk. The extraordinary diligence required of common carriers
amended) which at least partially supplements the law on common carriers set forth in the Civil
demands that they take care of the goods or lives entrusted to their hands as if they were their own.
Code. Under Section 13, paragraph (b) of the Public Service Act, "public service" includes:
This respondent failed to do.

. . . every person that now or hereafter may own, operate, manage, or control in the Philippines, for
Respondent’s insistence that the incident was caused by a fortuitous event does not impress either.
hire or compensation, with general or limited clientele, whether permanent, occasional or accidental,
and done for general business purposes, any common carrier, railroad, street railway, traction
railway, subway motor vehicle, either for freight or passenger, or both, with or without fixed route The elements of a "fortuitous event" are: (a) the cause of the unforeseen and unexpected
and whatever may be its classification, freight or carrier service of any class, express service, occurrence, or the failure of the debtors to comply with their obligations, must have been
steamboat, or steamship line, pontines, ferries and water craft, engaged in the transportation of independent of human will; (b) the event that constituted the caso fortuito must have been
passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration impossible to foresee or, if foreseeable, impossible to avoid; (c) the occurrence must have been
plant, canal, irrigation system, gas, electric light, heat and power, water supply and power such as to render it impossible for the debtors to fulfill their obligation in a normal manner; and (d)
petroleum, sewerage system, wire or wireless communications systems, wire or wireless the obligor must have been free from any participation in the aggravation of the resulting injury to the
broadcasting stations and other similar public services . . .18 (emphasis and underscoring supplied.) creditor.24

Indeed, respondent is a common carrier. Its ferry services are so intertwined with its main business To fully free a common carrier from any liability, the fortuitous event must have been the proximate
as to be properly considered ancillary thereto. The constancy of respondent’s ferry services in its and only cause of the loss. And it should have exercised due diligence to prevent or minimize the
resort operations is underscored by its having its own Coco Beach boats. And the tour packages it loss before, during and after the occurrence of the fortuitous event.25
offers, which include the ferry services, may be availed of by anyone who can afford to pay the
same. These services are thus available to the public.
Respondent cites the squall that occurred during the voyage as the fortuitous event that overturned
M/B Coco Beach III. As reflected above, however, the occurrence of squalls was expected under the
That respondent does not charge a separate fee or fare for its ferry services is of no moment. It weather condition of September 11, 2000. Moreover, evidence shows that M/B Coco Beach III
would be imprudent to suppose that it provides said services at a loss. The Court is aware of the suffered engine trouble before it capsized and sank.26 The incident was, therefore, not completely
practice of beach resort operators offering tour packages to factor the transportation fee in arriving free from human intervention.
at the tour package price. That guests who opt not to avail of respondent’s ferry services pay the
same amount is likewise inconsequential. These guests may only be deemed to have overpaid.
The Court need not belabor how respondent’s evidence likewise fails to demonstrate that it
exercised due diligence to prevent or minimize the loss before, during and after the occurrence of
As De Guzman instructs, Article 1732 of the Civil Code defining "common carriers" has deliberately the squall.
refrained from making distinctions on whether the carrying of persons or goods is the carrier’s
principal business, whether it is offered on a regular basis, or whether it is offered to the general
Article 176427 vis-à-vis Article 220628 of the Civil Code holds the common carrier in breach of its
public. The intent of the law is thus to not consider such distinctions. Otherwise, there is no telling
contract of carriage that results in the death of a passenger liable to pay the following: (1) indemnity
how many other distinctions may be concocted by unscrupulous businessmen engaged in the
for death, (2) indemnity for loss of earning capacity and (3) moral damages.
carrying of persons or goods in order to avoid the legal obligations and liabilities of common carriers.

Petitioners are entitled to indemnity for the death of Ruelito which is fixed at ₱50,000.29

2
As for damages representing unearned income, the formula for its computation is: Under the circumstances, it is reasonable to award petitioners the amount of ₱100,000 as moral
damages and ₱100,000 as exemplary damages.381avvphi1
Net Earning Capacity = life expectancy x (gross annual income - reasonable and necessary living
expenses). Pursuant to Article 220839 of the Civil Code, attorney's fees may also be awarded where exemplary
damages are awarded. The Court finds that 10% of the total amount adjudged against respondent is
reasonable for the purpose.
Life expectancy is determined in accordance with the formula:

Finally, Eastern Shipping Lines, Inc. v. Court of Appeals40 teaches that when an obligation,
2 / 3 x [80 — age of deceased at the time of death]30
regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the
contravenor can be held liable for payment of interest in the concept of actual and compensatory
The first factor, i.e., life expectancy, is computed by applying the formula (2/3 x [80 — age at death]) damages, subject to the following rules, to wit —
adopted in the American Expectancy Table of Mortality or the Actuarial of Combined Experience
Table of Mortality.31
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e.,
a loan or forbearance of money, the interest due should be that which may have been
The second factor is computed by multiplying the life expectancy by the net earnings of the stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the
deceased, i.e., the total earnings less expenses necessary in the creation of such earnings or time it is judicially demanded. In the absence of stipulation, the rate of interest shall be
income and less living and other incidental expenses.32 The loss is not equivalent to the entire 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand
earnings of the deceased, but only such portion as he would have used to support his dependents under and subject to the provisions of Article 1169 of the Civil Code.
or heirs. Hence, to be deducted from his gross earnings are the necessary expenses supposed to
be used by the deceased for his own needs.33
2. When an obligation, not constituting a loan or forbearance of money, is breached, an
interest on the amount of damages awarded may be imposed at the discretion of the court
In computing the third factor – necessary living expense, Smith Bell Dodwell Shipping Agency Corp. at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated
v. Borja34 teaches that when, as in this case, there is no showing that the living expenses constituted claims or damages except when or until the demand can be established with reasonable
the smaller percentage of the gross income, the living expenses are fixed at half of the gross certainty. Accordingly, where the demand is established with reasonable certainty, the
income. interest shall begin to run from the time the claim is made judicially or extrajudicially (Art.
1169, Civil Code) but when such certainty cannot be so reasonably established at the time
the demand is made, the interest shall begin to run only from the date the judgment of the
Applying the above guidelines, the Court determines Ruelito's life expectancy as follows: court is made (at which time the quantification of damages may be deemed to have been
reasonably ascertained). The actual base for the computation of legal interest shall, in any
case, be on the amount finally adjudged.
Life expectancy = 2/3 x [80 - age of deceased at the time of death]
2/3 x [80 - 28]
2/3 x [52] 3. When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph 1 or
Life expectancy = 35 paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this
interim period being deemed to be by then an equivalent to a forbearance of credit.
(emphasis supplied).
Documentary evidence shows that Ruelito was earning a basic monthly salary of $90035 which,
when converted to Philippine peso applying the annual average exchange rate of $1 = ₱44 in
2000,36 amounts to ₱39,600. Ruelito’s net earning capacity is thus computed as follows: Since the amounts payable by respondent have been determined with certainty only in the present
petition, the interest due shall be computed upon the finality of this decision at the rate of 12% per
annum until satisfaction, in accordance with paragraph number 3 of the immediately cited guideline
Net Earning = life expectancy x (gross annual income - reasonable and necessary in Easter Shipping Lines, Inc.
Capacity living expenses).
= 35 x (₱475,200 - ₱237,600) WHEREFORE, the Court of Appeals Decision of August 19, 2008 is REVERSED and SET ASIDE.
= 35 x (₱237,600) Judgment is rendered in favor of petitioners ordering respondent to pay petitioners the following: (1)
Net Earning ₱50,000 as indemnity for the death of Ruelito Cruz; (2) ₱8,316,000 as indemnity for Ruelito’s loss of
= ₱8,316,000 earning capacity; (3) ₱100,000 as moral damages; (4) ₱100,000 as exemplary damages; (5) 10% of
Capacity
the total amount adjudged against respondent as attorneys fees; and (6) the costs of suit.

Respecting the award of moral damages, since respondent common carrier’s breach of contract of The total amount adjudged against respondent shall earn interest at the rate of 12% per annum
carriage resulted in the death of petitioners’ son, following Article 1764 vis-à-vis Article 2206 of the computed from the finality of this decision until full payment.
Civil Code, petitioners are entitled to moral damages.
SO ORDERED.
Since respondent failed to prove that it exercised the extraordinary diligence required of common
carriers, it is presumed to have acted recklessly, thus warranting the award too of exemplary
damages, which are granted in contractual obligations if the defendant acted in a wanton, G.R. No. 131166 September 30, 1999
fraudulent, reckless, oppressive or malevolent manner.37

3
CALTEX (PHILIPPINES), INC., petitioner, On February 13, 1989, Teresita Cañezal and Sotera E. Cañezal, Sebastian Cañezal's wife and
vs. mother respectively, filed with the Regional Trial Court, Branch 8, Manila, a complaint for "Damages
SULPICIO LINES, INC., GO SIOC SO, ENRIQUE S. GO, EUSEBIO S. GO, CARLOS S. GO, Arising from Breach of Contract of Carriage" against Sulpicio Lines, Inc. (hereafter Sulpicio).
VICTORIANO S. GO, DOMINADOR S. GO, RICARDO S. GO, EDWARD S. GO, ARTURO S. GO, Sulpicio, in turn, filed a third party complaint against Francisco Soriano, Vector Shipping Corporation
EDGAR S. GO, EDMUND S. GO, FRANCISCO SORIANO, VECTOR SHIPPING CORPORATION, and Caltex (Philippines), Inc. Sulpicio alleged that Caltex chartered MT Vector with gross and
TERESITA G. CAÑEZAL, AND SOTERA E. CAÑEZAL, respondents. evident bad faith knowing fully well that MT Vector was improperly manned, ill-equipped,
unseaworthy and a hazard to safe navigation; as a result, it rammed against MV Doña Paz in the
open sea setting MT Vector's highly flammable cargo ablaze.
 

On September 15, 1992, the trial court rendered decision dismissing, the third party complaint
PARDO, J.:
against petitioner. The dispositive portion reads:

Is the charterer of a sea vessel liable for damages resulting from a collision between the chartered
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against
vessel and a passenger ship?
defendant-3rd party plaintiff Sulpicio Lines, Inc., to wit:

When MT Vector left the port of Limay, Bataan, on December 19, 1987 carrying petroleum products
1. For the death of Sebastian E. Cañezal and his 11-year old daughter Corazon
of Caltex (Philippines), Inc. (hereinafter Caltex) no one could have guessed that it would collide with
G. Cañezal, including loss of future earnings of said Sebastian, moral and
MV Doña Paz, killing almost all the passengers and crew members of both ships, and thus resulting
exemplary damages, attorney's fees, in the total amount of P 1,241,287.44 and
in one of the country's worst maritime disasters.
finally;

The petition before us seeks to reverse the Court of Appeals decision 1 holding petitioner jointly
2. The statutory costs of the proceedings.
liable with the operator of MT Vector for damages when the latter collided with Sulpicio Lines, Inc.'s
passenger ship MV Doña Paz.
Likewise, the 3rd party complaint is hereby DISMISSED for want of
substantiation and with costs against the 3rd party plaintiff.
The facts are as follows:

IT IS SO ORDERED.
On December 19, 1987, motor tanker MT Vector left Limay, Bataan, at about 8:00 p.m., enroute to
Masbate, loaded with 8,800 barrels of petroleum products shipped by petitioner Caltex. 2 MT Vector
is a tramping motor tanker owned and operated by Vector Shipping Corporation, engaged in the DONE IN MANILA, this 15th day of September 1992.
business of transporting fuel products such as gasoline, kerosene, diesel and crude oil. During that
particular voyage, the MT Vector carried on board gasoline and other oil products owned by Caltex
On appeal to the Court of Appeals interposed by Sulpicio Lines, Inc., on April 15, 1997, the Court of
by virtue of a charter contract between
Appeal modified the trial court's ruling and included petitioner Caltex as one of the those liable for
them. 3
damages. Thus:

On December 20, 1987, at about 6:30 a.m., the passenger ship MV Doña Paz left the port of
WHEREFORE, in view of all the foregoing, the judgment rendered by the
Tacloban headed for Manila with a complement of 59 crew members including the master and his
Regional Trial Court is hereby MODIFIED as follows:
officers, and passengers totaling 1,493 as indicated in the Coast Guard Clearance. 4 The MV Doña
Paz is a passenger and cargo vessel owned and operated by Sulpicio Lines, Inc. plying the route of
Manila/ Tacloban/ Catbalogan/ Manila/ Catbalogan/ Tacloban/ Manila, making trips twice a week. WHEREFORE, defendant Sulpicio Lines, Inc., is ordered to pay the heirs of
Sebastian E. Cañezal and Corazon Cañezal:
At about 10:30 p.m. of December 20, 1987, the two vessels collided in the open sea within the
vicinity of Dumali Point between Marinduque and Oriental Mindoro. All the crewmembers of MV 1. Compensatory damages for the death of Sebastian E. Cañezal and Corazon
Doña Paz died, while the two survivors from MT Vector claimed that they were sleeping at the time Cañezal the total amount of ONE HUNDRED THOUSAND PESOS (P100,000);
of the incident.1âwphi1.nêt
2. Compensatory damages representing the unearned income of Sebastian E.
The MV Doña Paz carried an estimated 4,000 passengers; many indeed, were not in the passenger Cañezal, in the total amount of THREE HUNDRED SIX THOUSAND FOUR
manifest. Only 24 survived the tragedy after having been rescued from the burning waters by HUNDRED EIGHTY (P306,480.00) PESOS;
vessels that responded to distress calls. 5 Among those who perished were public school teacher
Sebastian Cañezal (47 years old) and his daughter Corazon Cañezal (11 years old), both
3. Moral damages in the amount of THREE HUNDRED THOUSAND PESOS
unmanifested passengers but proved to be on board the vessel.
(P300,000.00);

On March 22, 1988, the board of marine inquiry in BMI Case No. 659-87 after investigation found
4. Attorney's fees in the concept of actual damages in the amount of FIFTY
that the MT Vector, its registered operator Francisco Soriano, and its owner and actual operator
THOUSAND PESOS (P50,000.00);
Vector Shipping Corporation, were at fault and responsible for its collision with MV Doña Paz. 6

5. Costs of the suit.

4
 Third party defendants Vector Shipping Co. and Caltex (Phils.), Inc. are held It is therefore imperative that a public carrier shall remain as such,
equally liable under the third party complaint to reimburse/indemnify defendant notwithstanding the charter of the whole portion of a vessel of one or more
Sulpicio Lines, Inc. of the above-mentioned damages, attorney's fees and costs persons, provided the charter is limited to the ship only, as in the case of a time-
which the latter is adjudged to pay plaintiffs, the same to be shared half by charter or the voyage charter. It is only when the charter includes both the
Vector Shipping Co. (being the vessel at fault for the collision) and the other half vessel and its crew, as in a bareboat or demise that a common carrier becomes
by Caltex (Phils.), Inc. (being the charterer that negligently caused the shipping private, at least insofar as the particular voyage covering the charter-party is
of combustible cargo aboard an unseaworthy vessel). concerned. Indubitably, a ship-owner in a time or voyage charter retains
possession and control of the ship, although her holds may, for the moment, be
the property of the charterer.
SO ORDERED.

Later, we ruled in Coastwise Lighterage Corporation vs. Court of Appeals: 15

Hence, this petition.

Although a charter party may transform a common carrier into a private one, the
We find the petition meritorious.
same however is not true in a contract of affreightment . . .

First: The charterer has no liability for damages under Philippine Maritime laws.
A common carrier is a person or corporation whose regular business is to carry passengers or
property for all persons who may choose to employ and to remunerate him. 16 MT Vector fits the
The respective rights and duties of a shipper and the carrier depends not on whether the carrier is definition of a common carrier under Article 1732 of the Civil Code. In Guzman vs. Court of
public or private, but on whether the contract of carriage is a bill of lading or equivalent shipping Appeals, 17 we ruled:
documents on the one hand, or a charter party or similar contract on the other. 9
The Civil Code defines "common carriers" in the following terms:
Petitioner and Vector entered into a contract of affreightment, also known as a voyage charter. 10
Art. 1732. Common carriers are persons, corporations, firms or associations
A charter party is a contract by which an entire ship, or some principal part thereof, is let by the engaged in the business of carrying or transporting passengers for passengers
owner to another person for a specified time or use; a contract of affreightment is one by which the or goods or both, by land, water, or air for compensation, offering their services
owner of a ship or other vessel lets the whole or part of her to a merchant or other person for the to the public.
conveyance of goods, on a particular voyage, in consideration of the payment of freight. 11
The above article makes no distinction between one whose principal business
A contract of affreightment may be either time charter, wherein the leased vessel is leased to the activity is the carrying of persons or goods or both, and one who does such
charterer for a fixed period of time, or voyage charter, wherein the ship is leased for a single voyage. carrying only as an ancillary activity (in local idiom, as "a sideline"). Article 1732
In both cases, the charter-party provides for the hire of the vessel only, either for a determinate also carefully avoids making any distinction between a person or enterprise
period of time or for a single or consecutive voyage, the ship owner to supply the ship's store, pay offering transportation service on a regular or scheduled basis and one offering
for the wages of the master of the crew, and defray the expenses for the maintenance of the ship. 12 such services on an occasional, episodic or unscheduled basis. Neither does
Article 1732 distinguish between a carrier offering its services to the "general
public," i.e., the general community or population, and one who offers services
Under a demise or bareboat charter on the other hand, the charterer mans the vessel with his own or solicits business only from a narrow segment of the general population. We
people and becomes, in effect, the owner for the voyage or service stipulated, subject to liability for think that Article 1733 deliberately refrained from making such distinctions.
damages caused by negligence.

It appears to the Court that private respondent is properly characterized as a

If the charter is a contract of affreightment, which leaves the general owner in possession of the ship common carrier even though he merely "back-hauled" goods for other
as owner for the voyage, the rights and the responsibilities of ownership rest on the owner. The merchants from Manila to Pangasinan, although such backhauling was done on
charterer is free from liability to third persons in respect of the ship. 13 a periodic, occasional rather than regular or scheduled manner, and even
though respondent's principal occupation was not the carriage of goods for
Second: MT Vector is a common carrier others. There is no dispute that private respondent charged his customers a fee
for hauling their goods; that the fee frequently fell below commercial freight
rates is not relevant here.
Charter parties fall into three main categories: (1) Demise or bareboat, (2) time charter, (3) voyage
charter. Does a charter party agreement turn the common carrier into a private one? We need to
answer this question in order to shed light on the responsibilities of the parties.

In this case, the charter party agreement did not convert the common carrier into a private carrier. Under the Carriage of Goods by Sea Act :
The parties entered into a voyage charter, which retains the character of the vessel as a common
carrier. Sec. 3. (1) The carrier shall be bound before and at the beginning of the voyage
to exercise due diligence to —
In Planters Products, Inc. vs. Court of Appeals, 14 we said:
(a) Make the ship seaworthy;

5
 (b) Properly man, equip, and supply the ship; Art. 20. — Every person who contrary to law, willfully or negligently causes
damage to another, shall indemnify the latter for the same.
x x x           x x x          x x x
Art. 2176. — Whoever by act or omission causes damage to another, there
being fault or negligence, is obliged to pay for the damage done. Such fault or
Thus, the carriers are deemed to warrant impliedly the seaworthiness of the ship. For a vessel to be
negligence, if there is no pre-existing contractual relation between the parties, is
seaworthy, it must be adequately equipped for the voyage and manned with a sufficient number of
called a quasi-delict and is governed by the provisions of this Chapter.
competent officers and crew. The failure of a common carrier to maintain in seaworthy condition the
vessel involved in its contract of carriage is a clear breach of its duty prescribed in Article 1755 of
the Civil Code. 18 And what is negligence?

The provisions owed their conception to the nature of the business of common carriers. This The Civil Code provides:
business is impressed with a special public duty. The public must of necessity rely on the care and
skill of common carriers in the vigilance over the goods and safety of the passengers, especially
Art. 1173. The fault or negligence of the obligor consists in the omission of that
because with the modern development of science and invention, transportation has become more
diligence which is required by the nature of the obligation and corresponds with
rapid, more complicated and somehow more hazardous. 19 For these reasons, a passenger or a
the circumstances of the persons, of the time and of the place. When
shipper of goods is under no obligation to conduct an inspection of the ship and its crew, the carrier
negligence shows bad faith, the provisions of Article 1171 and 2201 paragraph
being obliged by law to impliedly warrant its seaworthiness.
2, shall apply.

This aside, we now rule on whether Caltex is liable for damages under the Civil Code.
If the law does not state the diligence which is to be observed in the
performance, that which is expected of a good father of a family shall be
Third: Is Caltex liable for damages under the Civil Code? required.

We rule that it is not. In Southeastern College, Inc. vs. Court of Appeals, 21 we said that negligence, as commonly
understood, is conduct which naturally or reasonably creates undue risk or harm to others. It may be
the failure to observe that degree of care, precaution, and vigilance, which the circumstances justly
Sulpicio argues that Caltex negligently shipped its highly combustible fuel cargo aboard an
demand, or the omission to do something which ordinarily regulate the conduct of human affairs,
unseaworthy vessel such as the MT Vector when Caltex:
would do.

1. Did not take steps to have M/T Vector's certificate of inspection and coastwise license renewed;
The charterer of a vessel has no obligation before transporting its cargo to ensure that the vessel it
chartered complied with all legal requirements. The duty rests upon the common carrier simply for
2. Proceeded to ship its cargo despite defects found by Mr. Carlos Tan of Bataan Refinery being engaged in "public service." 22 The Civil Code demands diligence which is required by the
Corporation; nature of the obligation and that which corresponds with the circumstances of the persons, the time
and the place. Hence, considering the nature of the obligation between Caltex and MT Vector,
liability as found by the Court of Appeals is without basis.1âwphi1.nêt
3. Witnessed M/T Vector submitting fake documents and certificates to the Philippine Coast Guard.

The relationship between the parties in this case is governed by special laws. Because of the
Sulpicio further argues that Caltex chose MT Vector transport its cargo despite these deficiencies. implied warranty of seaworthiness, 23 shippers of goods, when transacting with common carriers, are
not expected to inquire into the vessel's seaworthiness, genuineness of its licenses and compliance
1. The master of M/T Vector did not posses the required Chief Mate license to command and with all maritime laws. To demand more from shippers and hold them liable in case of failure exhibits
navigate the vessel; nothing but the futility of our maritime laws insofar as the protection of the public in general is
concerned. By the same token, we cannot expect passengers to inquire every time they board a
common carrier, whether the carrier possesses the necessary papers or that all the carrier's
2. The second mate, Ronaldo Tarife, had the license of a Minor Patron, authorized to navigate only employees are qualified. Such a practice would be an absurdity in a business where time is always
in bays and rivers when the subject collision occurred in the open sea; of the essence. Considering the nature of transportation business, passengers and shippers alike
customarily presume that common carriers possess all the legal requisites in its operation.
3. The Chief Engineer, Filoteo Aguas, had no license to operate the engine of the vessel;
Thus, the nature of the obligation of Caltex demands ordinary diligence like any other shipper in
4. The vessel did not have a Third Mate, a radio operator and lookout; and shipping his cargoes.

5. The vessel had a defective main engine. 20 A cursory reading of the records convinces us that Caltex had reasons to believe that MT Vector
could legally transport cargo that time of the year.
As basis for the liability of Caltex, the Court of Appeals relied on Articles 20 and 2176 of the Civil
Code, which provide: Atty. Poblador: Mr. Witness, I direct your attention to this portion here containing the entries here
under "VESSEL'S DOCUMENTS

6
1. Certificate of Inspection No. 1290-85, issued December 21, 1986, and Expires December 7, Coast Guard, it means that it has Certificate of Inspection extended as assured to this witness by
1987", Mr. Witness, what steps did you take regarding the impending expiry of the C.I. or the Restituto Abalos. That in no case MV Vector will be allowed to sail if the Certificate of inspection is,
Certificate of Inspection No. 1290-85 during the hiring of MT Vector? indeed, not to be extended. That was his repeated explanation to the cross-examination. So, there is
no need to clarify the same in the re-direct examination. 27
Apolinario Ng: At the time when I extended the Contract, I did nothing because the tanker has a
valid C.I. which will expire on December 7, 1987 but on the last week of November, I called the Caltex and Vector Shipping Corporation had been doing business since 1985, or for about two years
attention of Mr. Abalos to ensure that the C.I. be renewed and Mr. Abalos, in turn, assured me they before the tragic incident occurred in 1987. Past services rendered showed no reason for Caltex to
will renew the same. observe a higher degree of diligence.

Q: What happened after that? Clearly, as a mere voyage charterer, Caltex had the right to presume that the ship was seaworthy as
even the Philippine Coast Guard itself was convinced of its seaworthiness. All things considered, we
find no legal basis to hold petitioner liable for damages.
A: On the first week of December, I again made a follow-up from Mr. Abalos, and said they were
going to send me a copy as soon as possible, sir. 24
As Vector Shipping Corporation did not appeal from the Court of Appeals' decision, we limit our
ruling to the liability of Caltex alone. However, we maintain the Court of Appeals' ruling insofar as
x x x           x x x          x x x
Vector is concerned.

Q: What did you do with the C.I.?

WHEREFORE, the Court hereby GRANTS the petition and SETS ASIDE the decision of the Court
of Appeals in CA-G.R. CV No. 39626, promulgated on April 15, 1997, insofar as it held Caltex liable
A: We did not insist on getting a copy of the C.I. from Mr. Abalos on the first place, because of our under the third party complaint to reimburse/indemnify defendant Sulpicio Lines, Inc. the damages
long business relation, we trust Mr. Abalos and the fact that the vessel was able to sail indicates that the latter is adjudged to pay plaintiffs-appellees. The Court AFFIRMS the decision of the Court of
the documents are in order. . . . 25 Appeals insofar as it orders Sulpicio Lines, Inc. to pay the heirs of Sebastian E. Cañezal and
Corazon Cañezal damages as set forth therein. Third-party defendant-appellee Vector Shipping
Corporation and Francisco Soriano are held liable to reimburse/indemnify defendant Sulpicio Lines,
On cross examination — Inc. whatever damages, attorneys' fees and costs the latter is adjudged to pay plaintiffs-appellees in
the case.1âwphi1.nêt
Atty. Sarenas: This being the case, and this being an admission by you, this Certificate of Inspection
has expired on December 7. Did it occur to you not to let the vessel sail on that day because of the No costs in this instance.
very approaching date of expiration?

SO ORDERED.
Apolinar Ng: No sir, because as I said before, the operation Manager assured us that they were able
to secure a renewal of the Certificate of Inspection and that they will in time submit us a
copy. 26

Finally, on Mr. Ng's redirect examination:

Atty. Poblador: Mr. Witness, were you aware of the pending expiry of the Certificate of Inspection in
the coastwise license on December 7, 1987. What was your assurance for the record that this
document was renewed by the MT Vector?

Atty. Sarenas: . . .

Atty. Poblador: The certificate of Inspection?

A: As I said, firstly, we trusted Mr. Abalos as he is a long time business partner; secondly, those
three years; they were allowed to sail by the Coast Guard. That are some that make me believe that G.R. No. 125948 December 29, 1998
they in fact were able to secure the necessary renewal.
FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner,
Q: If the Coast Guard clears a vessel to sail, what would that mean? vs.
COURT OF APPEALS, HONORABLE PATERNO V. TAC-AN, BATANGAS CITY and ADORACION
C. ARELLANO, in her official capacity as City Treasurer of Batangas, respondents.
Atty. Sarenas: Objection.

Court: He already answered that in the cross examination to the effect that if it was allowed,
referring to MV Vector, to sail, where it is loaded and that it was scheduled for a destination by the
7
MARTINEZ, J.: the authority to collect such taxes on transportation contractors for, as defined under Sec. 131 (h),
the term "contractors" excludes transportation contractors; and, (3) the City Treasurer illegally and
erroneously imposed and collected the said tax, thus meriting the immediate refund of the tax paid.7
This petition for review on certiorari assails the Decision of the Court of Appeals dated November
29, 1995, in CA-G.R. SP No. 36801, affirming the decision of the Regional Trial Court of Batangas
City, Branch 84, in Civil Case No. 4293, which dismissed petitioners' complaint for a business tax Traversing the complaint, the respondents argued that petitioner cannot be exempt from taxes under
refund imposed by the City of Batangas. Section 133 (j) of the Local Government Code as said exemption applies only to "transportation
contractors and persons engaged in the transportation by hire and common carriers by air, land and
water." Respondents assert that pipelines are not included in the term "common carrier" which refers
Petitioner is a grantee of a pipeline concession under Republic Act No. 387, as amended, to
solely to ordinary carriers such as trucks, trains, ships and the like. Respondents further posit that
contract, install and operate oil pipelines. The original pipeline concession was granted in 19671 and
the term "common carrier" under the said code pertains to the mode or manner by which a product
renewed by the Energy Regulatory Board in 1992. 2
is delivered to its destination.8

Sometime in January 1995, petitioner applied for a mayor's permit with the Office of the Mayor of
On October 3, 1994, the trial court rendered a decision dismissing the complaint, ruling in this wise:
Batangas City. However, before the mayor's permit could be issued, the respondent City Treasurer
required petitioner to pay a local tax based on its gross receipts for the fiscal year 1993 pursuant to
the Local Government Code3. The respondent City Treasurer assessed a business tax on the . . . Plaintiff is either a contractor or other independent contractor.
petitioner amounting to P956,076.04 payable in four installments based on the gross receipts for
products pumped at GPS-1 for the fiscal year 1993 which amounted to P181,681,151.00. In order
. . . the exemption to tax claimed by the plaintiff has become unclear. It is a rule
not to hamper its operations, petitioner paid the tax under protest in the amount of P239,019.01 for
that tax exemptions are to be strictly construed against the taxpayer, taxes
the first quarter of 1993.
being the lifeblood of the government. Exemption may therefore be granted only
by clear and unequivocal provisions of law.
On January 20, 1994, petitioner filed a letter-protest addressed to the respondent City Treasurer, the
pertinent portion of which reads:
Plaintiff claims that it is a grantee of a pipeline concession under Republic Act
387. (Exhibit A) whose concession was lately renewed by the Energy
Please note that our Company (FPIC) is a pipeline operator with a government Regulatory Board (Exhibit B). Yet neither said law nor the deed of concession
concession granted under the Petroleum Act. It is engaged in the business of grant any tax exemption upon the plaintiff.
transporting petroleum products from the Batangas refineries, via pipeline, to
Sucat and JTF Pandacan Terminals. As such, our Company is exempt from
Even the Local Government Code imposes a tax on franchise holders under
paying tax on gross receipts under Section 133 of the Local Government Code
Sec. 137 of the Local Tax Code. Such being the situation obtained in this case
of 1991 . . . .
(exemption being unclear and equivocal) resort to distinctions or other
considerations may be of help:
Moreover, Transportation contractors are not included in the enumeration of
contractors under Section 131, Paragraph (h) of the Local Government Code.
1. That the exemption granted under Sec. 133 (j) encompasses only common carriers so as not to
Therefore, the authority to impose tax "on contractors and other independent
overburden the riding public or commuters with taxes. Plaintiff is not a common carrier, but a special
contractors" under Section 143, Paragraph (e) of the Local Government Code
carrier extending its services and facilities to a single specific or "special customer" under a "special
does not include the power to levy on transportation contractors.
contract."

The imposition and assessment cannot be categorized as a mere fee

2. The Local Tax Code of 1992 was basically enacted to give more and effective local autonomy to
authorized under Section 147 of the Local Government Code. The said section
local governments than the previous enactments, to make them economically and financially viable
limits the imposition of fees and charges on business to such amounts as may
to serve the people and discharge their functions with a concomitant obligation to accept certain
be commensurate to the cost of regulation, inspection, and licensing. Hence,
devolution of powers, . . . So, consistent with this policy even franchise grantees are taxed (Sec.
assuming arguendo that FPIC is liable for the license fee, the imposition thereof
137) and contractors are also taxed under Sec. 143 (e) and 151 of the Code.9
based on gross receipts is violative of the aforecited provision. The amount of
P956,076.04 (P239,019.01 per quarter) is not commensurate to the cost of
regulation, inspection and licensing. The fee is already a revenue raising Petitioner assailed the aforesaid decision before this Court via a petition for review. On February 27,
measure, and not a mere regulatory imposition.4 1995, we referred the case to the respondent Court of Appeals for consideration and
adjudication. 10 On November 29, 1995, the respondent court rendered a decision 11 affirming the
trial court's dismissal of petitioner's complaint. Petitioner's motion for reconsideration was denied on
On March 8, 1994, the respondent City Treasurer denied the protest contending that petitioner
July 18, 1996. 12
cannot be considered engaged in transportation business, thus it cannot claim exemption under
Section 133 (j) of the Local Government Code.5
Hence, this petition. At first, the petition was denied due course in a Resolution dated November 11,
6 1996. 13 Petitioner moved for a reconsideration which was granted by this Court in a Resolution 14 of
On June 15, 1994, petitioner filed with the Regional Trial Court of Batangas City a complaint  for tax
January 22, 1997. Thus, the petition was reinstated.
refund with prayer for writ of preliminary injunction against respondents City of Batangas and
Adoracion Arellano in her capacity as City Treasurer. In its complaint, petitioner alleged, inter alia,
that: (1) the imposition and collection of the business tax on its gross receipts violates Section 133 of Petitioner claims that the respondent Court of Appeals erred in holding that (1) the petitioner is not a
the Local Government Code; (2) the authority of cities to impose and collect a tax on the gross common carrier or a transportation contractor, and (2) the exemption sought for by petitioner is not
receipts of "contractors and independent contractors" under Sec. 141 (e) and 151 does not include clear under the law.

8
There is merit in the petition. Also, respondent's argument that the term "common carrier" as used in Section 133 (j) of the Local
Government Code refers only to common carriers transporting goods and passengers through
moving vehicles or vessels either by land, sea or water, is erroneous.
A "common carrier" may be defined, broadly, as one who holds himself out to the public as engaged
in the business of transporting persons or property from place to place, for compensation, offering
his services to the public generally. As correctly pointed out by petitioner, the definition of "common carriers" in the Civil Code makes no
distinction as to the means of transporting, as long as it is by land, water or air. It does not provide
that the transportation of the passengers or goods should be by motor vehicle. In fact, in the United
Art. 1732 of the Civil Code defines a "common carrier" as "any person, corporation, firm or
States, oil pipe line operators are considered common carriers. 17
association engaged in the business of carrying or transporting passengers or goods or both, by
land, water, or air, for compensation, offering their services to the public."
Under the Petroleum Act of the Philippines (Republic Act 387), petitioner is considered a "common
carrier." Thus, Article 86 thereof provides that:
The test for determining whether a party is a common carrier of goods is:

Art. 86. Pipe line concessionaire as common carrier. — A pipe line shall have the preferential right to
1. He must be engaged in the business of carrying goods for others as a public employment, and
utilize installations for the transportation of petroleum owned by him, but is obligated to utilize the
must hold himself out as ready to engage in the transportation of goods for person generally as a
remaining transportation capacity pro rata for the transportation of such other petroleum as may be
business and not as a casual occupation;
offered by others for transport, and to charge without discrimination such rates as may have been
approved by the Secretary of Agriculture and Natural Resources.
2. He must undertake to carry goods of the kind to which his business is confined;
Republic Act 387 also regards petroleum operation as a public utility. Pertinent portion of Article 7
3. He must undertake to carry by the method by which his business is conducted and over his thereof provides:
established roads; and
that everything relating to the exploration for and exploitation of petroleum . . . and everything
4. The transportation must be for hire. 15 relating to the manufacture, refining, storage, or transportation by special methods of petroleum, is
hereby declared to be a public utility. (Emphasis Supplied)
Based on the above definitions and requirements, there is no doubt that petitioner is a common
carrier. It is engaged in the business of transporting or carrying goods, i.e. petroleum products, for The Bureau of Internal Revenue likewise considers the petitioner a "common carrier." In BIR Ruling
hire as a public employment. It undertakes to carry for all persons indifferently, that is, to all persons No. 069-83, it declared:
who choose to employ its services, and transports the goods by land and for compensation. The fact
that petitioner has a limited clientele does not exclude it from the definition of a common carrier.
. . . since [petitioner] is a pipeline concessionaire that is engaged only in transporting petroleum
In De Guzman vs. Court of Appeals  16 we ruled that:
products, it is considered a common carrier under Republic Act No. 387 . . . . Such being the case, it
is not subject to withholding tax prescribed by Revenue Regulations No. 13-78, as amended.
The above article (Art. 1732, Civil Code) makes no distinction between one whose principal
business activity is the carrying of persons or goods or both, and one who does such carrying only
From the foregoing disquisition, there is no doubt that petitioner is a "common carrier" and,
as an ancillary activity (in local idiom, as a "sideline"). Article 1732 . . . avoids making any distinction
therefore, exempt from the business tax as provided for in Section 133 (j), of the Local Government
between a person or enterprise offering transportation service on a regular or scheduled basis and
Code, to wit:
one offering such service on an occasional, episodic or unscheduled basis. Neither does Article
1732 distinguish between a carrier offering its services to the "general public," i.e., the general
community or population, and one who offers services or solicits business only from a narrow Sec. 133. Common Limitations on the Taxing Powers of Local Government Units. — Unless
segment of the general population. We think that Article 1877 deliberately refrained from making otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and
such distinctions. barangays shall not extend to the levy of the following:

So understood, the concept of "common carrier" under Article 1732 may be seen to coincide neatly x x x           x x x          x x x
with the notion of "public service," under the Public Service Act (Commonwealth Act No. 1416, as
amended) which at least partially supplements the law on common carriers set forth in the Civil
(j) Taxes on the gross receipts of transportation contractors and persons engaged in the
Code. Under Section 13, paragraph (b) of the Public Service Act, "public service" includes:
transportation of passengers or freight by hire and common carriers by air, land or water, except as
provided in this Code.
every person that now or hereafter may own, operate. manage, or control in the Philippines, for hire
or compensation, with general or limited clientele, whether permanent, occasional or accidental, and
The deliberations conducted in the House of Representatives on the Local Government Code of
done for general business purposes, any common carrier, railroad, street railway, traction railway,
1991 are illuminating:
subway motor vehicle, either for freight or passenger, or both, with or without fixed route and
whatever may be its classification, freight or carrier service of any class, express service,
steamboat, or steamship line, pontines, ferries and water craft, engaged in the transportation MR. AQUINO (A). Thank you, Mr. Speaker.
of passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice plant, ice-
refrigeration plant, canal, irrigation system gas, electric light heat and power, water supply
Mr. Speaker, we would like to proceed to page 95, line 1. It states: "SEC. 121 [now Sec. 131].
and power petroleum, sewerage system, wire or wireless communications systems, wire or wireless
Common Limitations on the Taxing Powers of Local Government Units." . . .
broadcasting stations and other similar public services. (Emphasis Supplied)

9
MR. AQUINO (A.). Thank you Mr. Speaker. that service, respondent charged freight rates which were commonly lower than regular commercial
rates.
Still on page 95, subparagraph 5, on taxes on the business of transportation. This appears to be one
of those being deemed to be exempted from the taxing powers of the local government units. May Sometime in November 1970, petitioner Pedro de Guzman a merchant and authorized dealer of
we know the reason why the transportation business is being excluded from the taxing powers of the General Milk Company (Philippines), Inc. in Urdaneta, Pangasinan, contracted with respondent for
local government units? the hauling of 750 cartons of Liberty filled milk from a warehouse of General Milk in Makati, Rizal, to
petitioner's establishment in Urdaneta on or before 4 December 1970. Accordingly, on 1 December
1970, respondent loaded in Makati the merchandise on to his trucks: 150 cartons were loaded on a
MR. JAVIER (E.). Mr. Speaker, there is an exception contained in Section 121 (now Sec. 131), line
truck driven by respondent himself, while 600 cartons were placed on board the other truck which
16, paragraph 5. It states that local government units may not impose taxes on the business of
was driven by Manuel Estrada, respondent's driver and employee.
transportation, except as otherwise provided in this code.

Only 150 boxes of Liberty filled milk were delivered to petitioner. The other 600 boxes never reached
Now, Mr. Speaker, if the Gentleman would care to go to page 98 of Book II, one can see there that
petitioner, since the truck which carried these boxes was hijacked somewhere along the MacArthur
provinces have the power to impose a tax on business enjoying a franchise at the rate of not more
Highway in Paniqui, Tarlac, by armed men who took with them the truck, its driver, his helper and
than one-half of 1 percent of the gross annual receipts. So, transportation contractors who are
the cargo.
enjoying a franchise would be subject to tax by the province. That is the exception, Mr. Speaker.

On 6 January 1971, petitioner commenced action against private respondent in the Court of First
What we want to guard against here, Mr. Speaker, is the imposition of taxes by local government
Instance of Pangasinan, demanding payment of P 22,150.00, the claimed value of the lost
units on the carrier business. Local government units may impose taxes on top of what is already
merchandise, plus damages and attorney's fees. Petitioner argued that private respondent, being a
being imposed by the National Internal Revenue Code which is the so-called "common carriers tax."
common carrier, and having failed to exercise the extraordinary diligence required of him by the law,
We do not want a duplication of this tax, so we just provided for an exception under Section 125
should be held liable for the value of the undelivered goods.
[now Sec. 137] that a province may impose this tax at a specific rate.

In his Answer, private respondent denied that he was a common carrier and argued that he could
MR. AQUINO (A.). Thank you for that clarification, Mr. Speaker. . . . 18
not be held responsible for the value of the lost goods, such loss having been due to force majeure.

It is clear that the legislative intent in excluding from the taxing power of the local government unit
On 10 December 1975, the trial court rendered a Decision 1 finding private respondent to be a
the imposition of business tax against common carriers is to prevent a duplication of the so-called
common carrier and holding him liable for the value of the undelivered goods (P 22,150.00) as well
"common carrier's tax."
as for P 4,000.00 as damages and P 2,000.00 as attorney's fees.

Petitioner is already paying three (3%) percent common carrier's tax on its gross sales/earnings
On appeal before the Court of Appeals, respondent urged that the trial court had erred in
under the National Internal Revenue Code. 19 To tax petitioner again on its gross receipts in its
considering him a common carrier; in finding that he had habitually offered trucking services to the
transportation of petroleum business would defeat the purpose of the Local Government Code.
public; in not exempting him from liability on the ground of force majeure; and in ordering him to pay
damages and attorney's fees.
WHEREFORE, the petition is hereby GRANTED. The decision of the respondent Court of Appeals
dated November 29, 1995 in CA-G.R. SP No. 36801 is REVERSED and SET ASIDE.
The Court of Appeals reversed the judgment of the trial court and held that respondent had been
engaged in transporting return loads of freight "as a casual
SO ORDERED. occupation — a sideline to his scrap iron business" and not as a common carrier. Petitioner came to
this Court by way of a Petition for Review assigning as errors the following conclusions of the Court
of Appeals:

1. that private respondent was not a common carrier;

G.R. No. L-47822 December 22, 1988

2. that the hijacking of respondent's truck was force majeure; and

PEDRO DE GUZMAN, petitioner,
vs.
COURT OF APPEALS and ERNESTO CENDANA, respondents. 3. that respondent was not liable for the value of the undelivered cargo. (Rollo,
p. 111)
FELICIANO, J.:
We consider first the issue of whether or not private respondent Ernesto Cendana may, under the
facts earlier set forth, be properly characterized as a common carrier.
Respondent Ernesto Cendana, a junk dealer, was engaged in buying up used bottles and scrap
metal in Pangasinan. Upon gathering sufficient quantities of such scrap material, respondent would
bring such material to Manila for resale. He utilized two (2) six-wheeler trucks which he owned for The Civil Code defines "common carriers" in the following terms:
hauling the material to Manila. On the return trip to Pangasinan, respondent would load his vehicles
with cargo which various merchants wanted delivered to differing establishments in Pangasinan. For
Article 1732. Common carriers are persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods or
10
 both, by land, water, or air for compensation, offering their services to the Common carriers, "by the nature of their business and for reasons of public policy" 2 are held to a
public. very high degree of care and diligence ("extraordinary diligence") in the carriage of goods as well as
of passengers. The specific import of extraordinary diligence in the care of goods transported by a
common carrier is, according to Article 1733, "further expressed in Articles 1734,1735 and 1745,
The above article makes no distinction between one whose principal business activity is the carrying
numbers 5, 6 and 7" of the Civil Code.
of persons or goods or both, and one who does such carrying only as an ancillary activity (in local
Idiom as "a sideline"). Article 1732 also carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled basis and one offering such Article 1734 establishes the general rule that common carriers are responsible for the loss,
service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish destruction or deterioration of the goods which they carry, "unless the same is due to any of the
between a carrier offering its services to the "general public," i.e., the general community or following causes only:
population, and one who offers services or solicits business only from a narrow segment of the
general population. We think that Article 1733 deliberaom making such distinctions.
(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
So understood, the concept of "common carrier" under Article 1732 may be seen to coincide neatly (3) Act or omission of the shipper or owner of the goods;
with the notion of "public service," under the Public Service Act (Commonwealth Act No. 1416, as (4) The character-of the goods or defects in the packing or-in the containers; and
amended) which at least partially supplements the law on common carriers set forth in the Civil (5) Order or act of competent public authority.
Code. Under Section 13, paragraph (b) of the Public Service Act, "public service" includes:
It is important to point out that the above list of causes of loss, destruction or deterioration which
... every person that now or hereafter may own, operate, manage, or control in exempt the common carrier for responsibility therefor, is a closed list. Causes falling outside the
the Philippines, for hire or compensation, with general or limited clientele, foregoing list, even if they appear to constitute a species of force majeure fall within the scope of
whether permanent, occasional or accidental, and done for general business Article 1735, which provides as follows:
purposes, any common carrier, railroad, street railway, traction railway, subway
motor vehicle, either for freight or passenger, or both, with or without fixed route
In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5 of the
and whatever may be its classification, freight or carrier service of any class,
preceding article, if the goods are lost, destroyed or deteriorated, common
express service, steamboat, or steamship line, pontines, ferries and water craft,
carriers are presumed to have been at fault or to have acted negligently, unless
engaged in the transportation of passengers or freight or both, shipyard, marine
they prove that they observed extraordinary diligence as required in Article
repair shop, wharf or dock, ice plant,
1733. (Emphasis supplied)
ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and
power, water supply and power petroleum, sewerage system, wire or wireless
communications systems, wire or wireless broadcasting stations and other Applying the above-quoted Articles 1734 and 1735, we note firstly that the specific cause alleged in
similar public services. ... (Emphasis supplied) the instant case — the hijacking of the carrier's truck — does not fall within any of the five (5)
categories of exempting causes listed in Article 1734. It would follow, therefore, that the hijacking of
the carrier's vehicle must be dealt with under the provisions of Article 1735, in other words, that the
It appears to the Court that private respondent is properly characterized as a common carrier even
private respondent as common carrier is presumed to have been at fault or to have acted
though he merely "back-hauled" goods for other merchants from Manila to Pangasinan, although
negligently. This presumption, however, may be overthrown by proof of extraordinary diligence on
such back-hauling was done on a periodic or occasional rather than regular or scheduled manner,
the part of private respondent.
and even though private respondent's principal occupation was not the carriage of goods for others.
There is no dispute that private respondent charged his customers a fee for hauling their goods; that
fee frequently fell below commercial freight rates is not relevant here. Petitioner insists that private respondent had not observed extraordinary diligence in the care of
petitioner's goods. Petitioner argues that in the circumstances of this case, private respondent
should have hired a security guard presumably to ride with the truck carrying the 600 cartons of
The Court of Appeals referred to the fact that private respondent held no certificate of public
Liberty filled milk. We do not believe, however, that in the instant case, the standard of extraordinary
convenience, and concluded he was not a common carrier. This is palpable error. A certificate of
diligence required private respondent to retain a security guard to ride with the truck and to engage
public convenience is not a requisite for the incurring of liability under the Civil Code provisions
brigands in a firelight at the risk of his own life and the lives of the driver and his helper.
governing common carriers. That liability arises the moment a person or firm acts as a common
carrier, without regard to whether or not such carrier has also complied with the requirements of the
applicable regulatory statute and implementing regulations and has been granted a certificate of The precise issue that we address here relates to the specific requirements of the duty of
public convenience or other franchise. To exempt private respondent from the liabilities of a extraordinary diligence in the vigilance over the goods carried in the specific context of hijacking or
common carrier because he has not secured the necessary certificate of public convenience, would armed robbery.
be offensive to sound public policy; that would be to reward private respondent precisely for failing to
comply with applicable statutory requirements. The business of a common carrier impinges directly
As noted earlier, the duty of extraordinary diligence in the vigilance over goods is, under Article
and intimately upon the safety and well being and property of those members of the general
1733, given additional specification not only by Articles 1734 and 1735 but also by Article 1745,
community who happen to deal with such carrier. The law imposes duties and liabilities upon
numbers 4, 5 and 6, Article 1745 provides in relevant part:
common carriers for the safety and protection of those who utilize their services and the law cannot
allow a common carrier to render such duties and liabilities merely facultative by simply failing to
obtain the necessary permits and authorizations. Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to
public policy:
We turn then to the liability of private respondent as a common carrier.
xxx xxx xxx

11
(5) that the common carrier shall not be responsible for the acts or omissions of his or its LOADSTAR SHIPPING CO., INC., petitioner,
employees; vs.
COURT OF APPEALS and THE MANILA INSURANCE CO., INC., respondents.
(6) that the common carrier's liability for acts committed by thieves, or of robbers who do not act
with grave or irresistible threat, violence or force, is dispensed with or diminished; and DAVIDE, JR., C.J.:

(7) that the common carrier shall not responsible for the loss, destruction or deterioration of goods Petitioner Loadstar Shipping Co., Inc. (hereafter LOADSTAR), in this petition for review
on account of the defective condition of the car vehicle, ship, airplane or other equipment used in the on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, seeks to reverse and set aside the
contract of carriage. (Emphasis supplied) following: (a) the 30 January 1997 decision 1 of the Court of Appeals in CA-G.R. CV No. 36401,
which affirmed the decision of 4 October 1991 2 of the Regional Trial Court of Manila, Branch 16, in
Civil Case No. 85-29110, ordering LOADSTAR to pay private respondent Manila Insurance Co.
Under Article 1745 (6) above, a common carrier is held responsible — and will not be allowed to
(hereafter MIC) the amount of P6,067,178, with legal interest from the filing of the compliant until
divest or to diminish such responsibility — even for acts of strangers like thieves or
fully paid, P8,000 as attorney's fees, and the costs of the suit; and (b) its resolution of 19 November
robbers, except where such thieves or robbers in fact acted "with grave or irresistible threat,
1997, 3 denying LOADSTAR's motion for reconsideration of said decision.
violence or force." We believe and so hold that the limits of the duty of extraordinary diligence in the
vigilance over the goods carried are reached where the goods are lost as a result of a robbery which
is attended by "grave or irresistible threat, violence or force." The facts are undisputed.1âwphi1.nêt

In the instant case, armed men held up the second truck owned by private respondent which carried On 19 November 1984, LOADSTAR received on board its M/V "Cherokee" (hereafter, the vessel)
petitioner's cargo. The record shows that an information for robbery in band was filed in the Court of the following goods for shipment:
First Instance of Tarlac, Branch 2, in Criminal Case No. 198 entitled "People of the Philippines v.
Felipe Boncorno, Napoleon Presno, Armando Mesina, Oscar Oria and one John Doe." There, the
a) 705 bales of lawanit hardwood;
accused were charged with willfully and unlawfully taking and carrying away with them the second
truck, driven by Manuel Estrada and loaded with the 600 cartons of Liberty filled milk destined for
delivery at petitioner's store in Urdaneta, Pangasinan. The decision of the trial court shows that the b) 27 boxes and crates of tilewood assemblies and the others ;and
accused acted with grave, if not irresistible, threat, violence or force.3 Three (3) of the five (5) hold-
uppers were armed with firearms. The robbers not only took away the truck and its cargo but also
c) 49 bundles of mouldings R & W (3) Apitong Bolidenized.
kidnapped the driver and his helper, detaining them for several days and later releasing them in
another province (in Zambales). The hijacked truck was subsequently found by the police in Quezon
City. The Court of First Instance convicted all the accused of robbery, though not of robbery in The goods, amounting to P6,067,178, were insured for the same amount with MIC against various
band.  4 risks including "TOTAL LOSS BY TOTAL OF THE LOSS THE VESSEL." The vessel, in turn, was
insured by Prudential Guarantee & Assurance, Inc. (hereafter PGAI) for P4 million. On 20 November
1984, on its way to Manila from the port of Nasipit, Agusan del Norte, the vessel, along with its
In these circumstances, we hold that the occurrence of the loss must reasonably be regarded as
cargo, sank off Limasawa Island. As a result of the total loss of its shipment, the consignee made a
quite beyond the control of the common carrier and properly regarded as a fortuitous event. It is
claim with LOADSTAR which, however, ignored the same. As the insurer, MIC paid P6,075,000 to
necessary to recall that even common carriers are not made absolute insurers against all risks of
the insured in full settlement of its claim, and the latter executed a subrogation receipt therefor.
travel and of transport of goods, and are not held liable for acts or events which cannot be foreseen
or are inevitable, provided that they shall have complied with the rigorous standard of extraordinary
diligence. On 4 February 1985, MIC filed a complaint against LOADSTAR and PGAI, alleging that the sinking
of the vessel was due to the fault and negligence of LOADSTAR and its employees. It also prayed
that PGAI be ordered to pay the insurance proceeds from the loss the vessel directly to MIC, said
We, therefore, agree with the result reached by the Court of Appeals that private respondent
amount to be deducted from MIC's claim from LOADSTAR.
Cendana is not liable for the value of the undelivered merchandise which was lost because of an
event entirely beyond private respondent's control.
In its answer, LOADSTAR denied any liability for the loss of the shipper's goods and claimed that
sinking of its vessel was due to force majeure. PGAI, on the other hand, averred that MIC had no
ACCORDINGLY, the Petition for Review on certiorari is hereby DENIED and the Decision of the
cause of action against it, LOADSTAR being the party insured. In any event, PGAI was later
Court of Appeals dated 3 August 1977 is AFFIRMED. No pronouncement as to costs.
dropped as a party defendant after it paid the insurance proceeds to LOADSTAR.

SO ORDERED.
As stated at the outset, the court a quo rendered judgment in favor of MIC, prompting LOADSTAR to
elevate the matter to the court of Appeals, which, however, agreed with the trial court and affirmed
its decision in toto.

In dismissing LOADSTAR's appeal, the appellate court made the following observations:

G.R. No. 131621 September 28, 1999 1) LOADSTAR cannot be considered a private carrier on the sole ground that there was a single
shipper on that fateful voyage. The court noted that the charter of the vessel was limited to the ship,
but LOADSTAR retained control over its crew. 4

12
2) As a common carrier, it is the Code of Commerce, not the Civil Code, which should be applied in competent. With all these precautions, there could be no other conclusion except that LOADSTAR
determining the rights and liabilities of the parties. exercised the diligence of a good father of a family in ensuring the vessel's seaworthiness.

3) The vessel was not seaworthy because it was undermanned on the day of the voyage. If it had LOADSTAR further claims that it was not responsible for the loss of the cargo, such loss being due
been seaworthy, it could have withstood the "natural and inevitable action of the sea" on 20 to force majeure. It points out that when the vessel left Nasipit, Agusan del Norte, on 19 November
November 1984, when the condition of the sea was moderate. The vessel sank, not because 1984, the weather was fine until the next day when the vessel sank due to strong waves. MCI's
of force majeure, but because it was not seaworthy. LOADSTAR'S allegation that the sinking was witness, Gracelia Tapel, fully established the existence of two typhoons, "WELFRING" and
probably due to the "convergence of the winds," as stated by a PAGASA expert, was not duly "YOLING," inside the Philippine area of responsibility. In fact, on 20 November 1984, signal no. 1
proven at the trial. The "limited liability" rule, therefore, is not applicable considering that, in this was declared over Eastern Visayas, which includes Limasawa Island. Tapel also testified that the
case, there was an actual finding of negligence on the part of the carrier.5 convergence of winds brought about by these two typhoons strengthened wind velocity in the area,
naturally producing strong waves and winds, in turn, causing the vessel to list and eventually sink.
4) Between MIC and LOADSTAR, the provisions of the Bill of Lading do not apply because said
provisions bind only the shipper/consignee and the carrier. When MIC paid the shipper for the goods LOADSTAR goes on to argue that, being a private carrier, any agreement limiting its liability, such
insured, it was subrogated to the latter's rights as against the carrier, LOADSTAR. 6 as what transpired in this case, is valid. Since the cargo was being shipped at "owner's risk,"
LOADSTAR was not liable for any loss or damage to the same. Therefore, the Court of Appeals
erred in holding that the provisions of the bills of lading apply only to the shipper and the carrier, and
5) There was a clear breach of the contract of carriage when the shipper's goods never reached
not to the insurer of the goods, which conclusion runs counter to the Supreme Court's ruling in the
their destination. LOADSTAR's defense of "diligence of a good father of a family" in the training and
case of St. Paul Fire & Marine Co. v. Macondray & Co., Inc., 9 and National Union Fire Insurance
selection of its crew is unavailing because this is not a proper or complete defense in culpa
Company of Pittsburgh v. Stolt-Nielsen Phils., Inc. 10
contractual.

Finally, LOADSTAR avers that MIC's claim had already prescribed, the case having been instituted
6) "Art. 361 (of the Code of Commerce) has been judicially construed to mean that when goods are
beyond the period stated in the bills of lading for instituting the same — suits based upon claims
delivered on board a ship in good order and condition, and the shipowner delivers them to the
arising from shortage, damage, or non-delivery of shipment shall be instituted within sixty days from
shipper in bad order and condition, it then devolves upon the shipowner to both allege and prove
the accrual of the right of action. The vessel sank on 20 November 1984; yet, the case for recovery
that the goods were damaged by reason of some fact which legally exempts him from liability."
was filed only on 4 February 1985.
Transportation of the merchandise at the risk and venture of the shipper means that the latter bears
the risk of loss or deterioration of his goods arising from fortuitous events, force majeure, or the
inherent nature and defects of the goods, but not those caused by the presumed negligence or fault MIC, on the other hand, claims that LOADSTAR was liable, notwithstanding that the loss of the
of the carrier, unless otherwise proved. 7 cargo was due to force majeure, because the same concurred with LOADSTAR's fault or
negligence.
The errors assigned by LOADSTAR boil down to a determination of the following issues:
Secondly, LOADSTAR did not raise the issue of prescription in the court below; hence, the same
must be deemed waived.
(1) Is the M/V "Cherokee" a private or a common carrier?

Thirdly, the " limited liability " theory is not applicable in the case at bar because LOADSTAR was at
(2) Did LOADSTAR observe due and/or ordinary diligence in these premises.
fault or negligent, and because it failed to maintain a seaworthy vessel. Authorizing the voyage
notwithstanding its knowledge of a typhoon is tantamount to negligence.
Regarding the first issue, LOADSTAR submits that the vessel was a private carrier because it was
not issued certificate of public convenience, it did not have a regular trip or schedule nor a fixed
We find no merit in this petition.
route, and there was only "one shipper, one consignee for a special cargo."

Anent the first assigned error, we hold that LOADSTAR is a common carrier. It is not necessary that
In refutation, MIC argues that the issue as to the classification of the M/V "Cherokee" was not timely
the carrier be issued a certificate of public convenience, and this public character is not altered by
raised below; hence, it is barred by estoppel. While it is true that the vessel had on board only the
the fact that the carriage of the goods in question was periodic, occasional, episodic or unscheduled.
cargo of wood products for delivery to one consignee, it was also carrying passengers as part of its
regular business. Moreover, the bills of lading in this case made no mention of any charter party but
only a statement that the vessel was a "general cargo carrier." Neither was there any "special In support of its position, LOADSTAR relied on the 1968 case of Home Insurance Co. v. American
arrangement" between LOADSTAR and the shipper regarding the shipment of the cargo. The Steamship Agencies, Inc., 11 where this Court held that a common carrier transporting special cargo
singular fact that the vessel was carrying a particular type of cargo for one shipper is not sufficient to or chartering the vessel to a special person becomes a private carrier that is not subject to the
convert the vessel into a private carrier. provisions of the Civil Code. Any stipulation in the charter party absolving the owner from liability for
loss due to the negligence of its agent is void only if the strict policy governing common carriers is
upheld. Such policy has no force where the public at is not involved, as in the case of a ship totally
As regards the second error, LOADSTAR argues that as a private carrier, it cannot be presumed to
chartered for the use of a single party. LOADSTAR also cited Valenzuela Hardwood and Industrial
have been negligent, and the burden of proving otherwise devolved upon MIC. 8
Supply, Inc. v. Court of Appeals  12 and National Steel Corp. v. Court of Appeals, 13 both of which
upheld the Home Insurance doctrine.
LOADSTAR also maintains that the vessel was seaworthy. Before the fateful voyage on 19
November 1984, the vessel was allegedly dry docked at Keppel Philippines Shipyard and was duly
These cases invoked by LOADSTAR are not applicable in the case at bar for the simple reason that
inspected by the maritime safety engineers of the Philippine Coast Guard, who certified that the ship
the factual settings are different. The records do not disclose that the M/V "Cherokee," on the date in
was fit to undertake a voyage. Its crew at the time was experienced, licensed and unquestionably

13
question, undertook to carry a special cargo or was chartered to a special person only. There was Moving on to the second assigned error, we find that the M/V "Cherokee" was not seaworthy when it
no charter party. The bills of lading failed to show any special arrangement, but only a general embarked on its voyage on 19 November 1984. The vessel was not even sufficiently manned at the
provision to the effect that the M/V"Cherokee" was a "general cargo carrier." 14 Further, the bare fact time. "For a vessel to be seaworthy, it must be adequately equipped for the voyage and manned
that the vessel was carrying a particular type of cargo for one shipper, which appears to be purely with a sufficient number of competent officers and crew. The failure of a common carrier to maintain
coincidental, is not reason enough to convert the vessel from a common to a private carrier, in seaworthy condition its vessel involved in a contract of carriage is a clear breach of its duty
especially where, as in this case, it was shown that the vessel was also carrying passengers. prescribed in Article 1755 of the Civil Code." 16

Under the facts and circumstances obtaining in this case, LOADSTAR fits the definition of a Neither do we agree with LOADSTAR's argument that the "limited liability" theory should be applied
common carrier under Article 1732 of the Civil Code. In the case of De Guzman v. Court of in this case. The doctrine of limited liability does not apply where there was negligence on the part of
Appeals,15 the Court juxtaposed the statutory definition of "common carriers" with the peculiar the vessel owner or agent. 17 LOADSTAR was at fault or negligent in not maintaining a seaworthy
circumstances of that case, viz.: vessel and in having allowed its vessel to sail despite knowledge of an approaching typhoon. In any
event, it did not sink because of any storm that may be deemed as force majeure, inasmuch as the
wind condition in the performance of its duties, LOADSTAR cannot hide behind the "limited liability"
The Civil Code defines "common carriers" in the following terms:
doctrine to escape responsibility for the loss of the vessel and its cargo.

Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the
LOADSTAR also claims that the Court of Appeals erred in holding it liable for the loss of the goods,
business of carrying or transporting passengers or goods or both, by land, water, or air for
in utter disregard of this Court's pronouncements in St. Paul Fire & Marine Ins. Co. v. Macondray &
compensation, offering their services to the public.
Co., Inc., 18 and National Union Fire Insurance v. Stolt-Nielsen Phils., Inc. 19 It was ruled in these two
cases that after paying the claim of the insured for damages under the insurance policy, the insurer
The above article makes no distinction between one whose principal business activity is the carrying is subrogated merely to the rights of the assured, that is, it can recover only the amount that may, in
of persons or goods or both, and one who does such carrying only as ancillary activity (in local turn, be recovered by the latter. Since the right of the assured in case of loss or damage to the
idiom, as "a sideline". Article 1732 also carefully avoids making any distinction between a person or goods is limited or restricted by the provisions in the bills of lading, a suit by the insurer as subrogee
enterprise offering transportation service on a regular or scheduled basis and one offering such is necessarily subject to the same limitations and restrictions. We do not agree. In the first place, the
service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish cases relied on by LOADSTAR involved a limitation on the carrier's liability to an amount fixed in the
between a carrier offering its services to the "general public," i.e., the general community or bill of lading which the parties may enter into, provided that the same was freely and fairly agreed
population, and one who offers services or solicits business only from a narrow segment of the upon (Articles 1749-1750). On the other hand, the stipulation in the case at bar effectively reduces
general population. We think that Article 1733 deliberately refrained from making such distinctions. the common carrier's liability for the loss or destruction of the goods to a degree less than
extraordinary (Articles 1744 and 1745), that is, the carrier is not liable for any loss or damage to
shipments made at "owner's risk." Such stipulation is obviously null and void for being contrary to
xxx xxx xxx public policy." 20 It has been said:

It appears to the Court that private respondent is properly characterized as a Three kinds of stipulations have often been made in a bill of lading.
common carrier even though he merely "back-hauled" goods for other The first one exempting the carrier from any and all liability for loss or damage
merchants from Manila to Pangasinan, although such backhauling was done on occasioned by its own negligence. The second is one providing for an
a periodic or occasional rather than regular or scheduled manner, and unqualified limitation of such liability to an agreed valuation. And the third is one
eventhough private respondent's principal occupation was not the carriage of limiting the liability of the carrier to an agreed valuation unless the shipper
goods for others. There is no dispute that private respondent charged his declares a higher value and pays a higher rate of. freight. According to an
customers a fee for hauling their goods; that fee frequently fell below almost uniform weight of authority, the first and second kinds of stipulations are
commercial freight rates is not relevant here. invalid as being contrary to public policy, but the third is valid and enforceable. 21

The Court of Appeals referred to the fact that private respondent held no Since the stipulation in question is null and void, it follows that when MIC paid the shipper,
certificate of public convenience, and concluded he was not a common carrier. it was subrogated to all the rights which the latter has against the common carrier,
This is palpable error. A certificate of public convenience is not a requisite for LOADSTAR.
the incurring of liability under the Civil Code provisions governing common
carriers. That liability arises the moment a person or firm acts as a common
carrier, without regard to whether or not such carrier has also complied with the Neither is there merit to the contention that the claim in this case was barred by prescription. MIC's
requirements of the applicable regulatory statute and implementing regulations cause of action had not yet prescribed at the time it was concerned. Inasmuch as neither the Civil
and has been granted a certificate of public convenience or other franchise. To Code nor the Code of Commerce states a specific prescriptive period on the matter, the Carriage of
exempt private respondent from the liabilities of a common carrier because he Goods by Sea Act (COGSA) — which provides for a one-year period of limitation on claims for loss
has not secured the necessary certificate of public convenience, would be of, or damage to, cargoes sustained during transit — may be applied suppletorily to the case at bar.
offensive to sound public policy; that would be to reward private respondent This one-year prescriptive period also applies to the insurer of the goods. 22 In this case, the period
precisely for failing to comply with applicable statutory requirements The for filing the action for recovery has not yet elapsed. Moreover, a stipulation reducing the one-year
business of a common carrier impinges directly and intimately upon the safety period is null and void; 23 it must, accordingly, be struck down.
and well being and property of those members of the general community who
happen to deal with such carrier. The law imposes duties and liabilities upon
WHEREFORE, the instant petition is DENIED and the challenged decision of 30 January 1997 of
common carriers for the safety and protection of those who utilize their services
the Court of Appeals in CA-G.R. CV No. 36401 is AFFIRMED. Costs against petitioner.1âwphi1.nêt
and the law cannot allow a common carrier to render such duties and liabilities
merely facultative by simply failing to obtain the necessary permits and
authorizations. SO ORDERED.

14
 occasionally while the discharge was in progress.8 The petitioner's warehouse was made of
corrugated galvanized iron (GI) sheets, with an opening at the front where the dump trucks entered
and unloaded the fertilizer on the warehouse floor. Tarpaulins and GI sheets were placed in-
G.R. No. 101503 September 15, 1993
between and alongside the trucks to contain spillages of the ferilizer.9

PLANTERS PRODUCTS, INC., petitioner,

It took eleven (11) days for PPI to unload the cargo, from 5 July to 18 July 1974 (except July 12th,
vs.
14th and 18th).10 A private marine and cargo surveyor, Cargo Superintendents Company Inc.
COURT OF APPEALS, SORIAMONT STEAMSHIP AGENCIES AND KYOSEI KISEN KABUSHIKI
(CSCI), was hired by PPI to determine the "outturn" of the cargo shipped, by taking draft readings of
KAISHA, respondents.
the vessel prior to and after discharge. 11 The survey report submitted by CSCI to the consignee
(PPI) dated 19 July 1974 revealed a shortage in the cargo of 106.726 M/T and that a portion of the
BELLOSILLO, J.: Urea fertilizer approximating 18 M/T was contaminated with dirt. The same results were contained in
a Certificate of Shortage/Damaged Cargo dated 18 July 1974 prepared by PPI which showed that
the cargo delivered was indeed short of 94.839 M/T and about 23 M/T were rendered unfit for
Does a charter-party1 between a shipowner and a charterer transform a common carrier into a commerce, having been polluted with sand, rust and
private one as to negate the civil law presumption of negligence in case of loss or damage to its dirt. 12
cargo?

Consequently, PPI sent a claim letter dated 18 December 1974 to Soriamont Steamship Agencies
Planters Products, Inc. (PPI), purchased from Mitsubishi International Corporation (MITSUBISHI) of (SSA), the resident agent of the carrier, KKKK, for P245,969.31 representing the cost of the alleged
New York, U.S.A., 9,329.7069 metric tons (M/T) of Urea 46% fertilizer which the latter shipped in shortage in the goods shipped and the diminution in value of that portion said to have been
bulk on 16 June 1974 aboard the cargo vessel M/V "Sun Plum" owned by private respondent Kyosei contaminated with dirt. 13
Kisen Kabushiki Kaisha (KKKK) from Kenai, Alaska, U.S.A., to Poro Point, San Fernando, La Union,
Philippines, as evidenced by Bill of Lading No. KP-1 signed by the master of the vessel and issued
on the date of departure. Respondent SSA explained that they were not able to respond to the consignee's claim for payment
because, according to them, what they received was just a request for shortlanded certificate and
not a formal claim, and that this "request" was denied by them because they "had nothing to do with
On 17 May 1974, or prior to its voyage, a time charter-party on the vessel M/V "Sun Plum" pursuant the discharge of the shipment." 14 Hence, on 18 July 1975, PPI filed an action for damages with the
to the Uniform General Charter2 was entered into between Mitsubishi as shipper/charterer and Court of First Instance of Manila. The defendant carrier argued that the strict public policy governing
KKKK as shipowner, in Tokyo, Japan.3 Riders to the aforesaid charter-party starting from par. 16 to common carriers does not apply to them because they have become private carriers by reason of
40 were attached to the pre-printed agreement. Addenda Nos. 1, 2, 3 and 4 to the charter-party the provisions of the charter-party. The court a quo however sustained the claim of the plaintiff
were also subsequently entered into on the 18th, 20th, 21st and 27th of May 1974, respectively. against the defendant carrier for the value of the goods lost or damaged when it ruled thus: 15

Before loading the fertilizer aboard the vessel, four (4) of her holds4 were all presumably inspected . . . Prescinding from the provision of the law that a common carrier is presumed
by the charterer's representative and found fit to take a load of urea in bulk pursuant to par. 16 of the negligent in case of loss or damage of the goods it contracts to transport, all
charter-party which reads: that a shipper has to do in a suit to recover for loss or damage is to show
receipt by the carrier of the goods and to delivery by it of less than what it
16. . . . At loading port, notice of readiness to be accomplished by certificate received. After that, the burden of proving that the loss or damage was due to
from National Cargo Bureau inspector or substitute appointed by charterers for any of the causes which exempt him from liability is shipted to the carrier,
his account certifying the vessel's readiness to receive cargo spaces. The common or private he may be. Even if the provisions of the charter-party
vessel's hold to be properly swept, cleaned and dried at the vessel's expense aforequoted are deemed valid, and the defendants considered private
and the vessel to be presented clean for use in bulk to the satisfaction of the carriers, it was still incumbent upon them to prove that the shortage or
inspector before daytime commences. (emphasis supplied) contamination sustained by the cargo is attributable to the fault or negligence
on the part of the shipper or consignee in the loading, stowing, trimming and
discharge of the cargo. This they failed to do. By this omission, coupled with
After the Urea fertilizer was loaded in bulk by stevedores hired by and under the supervision of the their failure to destroy the presumption of negligence against them, the
shipper, the steel hatches were closed with heavy iron lids, covered with three (3) layers of tarpaulin, defendants are liable (emphasis supplied).
then tied with steel bonds. The hatches remained closed and tightly sealed throughout the entire
voyage.5
On appeal, respondent Court of Appeals reversed the lower court and absolved the carrier from
liability for the value of the cargo that was lost or damaged. 16 Relying on the 1968 case of Home
Upon arrival of the vessel at her port of call on 3 July 1974, the steel pontoon hatches were opened Insurance Co. v. American Steamship Agencies, Inc.,17 the appellate court ruled that the cargo
with the use of the vessel's boom. Petitioner unloaded the cargo from the holds into its steelbodied vessel M/V "Sun Plum" owned by private respondent KKKK was a private carrier and not a common
dump trucks which were parked alongside the berth, using metal scoops attached to the ship, carrier by reason of the time charterer-party. Accordingly, the Civil Code provisions on common
pursuant to the terms and conditions of the charter-partly (which provided for an F.I.O.S. carriers which set forth a presumption of negligence do not find application in the case at bar. Thus
clause).6 The hatches remained open throughout the duration of the discharge.7 —

Each time a dump truck was filled up, its load of Urea was covered with tarpaulin before it was . . . In the absence of such presumption, it was incumbent upon the plaintiff-
transported to the consignee's warehouse located some fifty (50) meters from the wharf. Midway to appellee to adduce sufficient evidence to prove the negligence of the defendant
the warehouse, the trucks were made to pass through a weighing scale where they were individually carrier as alleged in its complaint. It is an old and well settled rule that if the
weighed for the purpose of ascertaining the net weight of the cargo. The port area was windy, plaintiff, upon whom rests the burden of proving his cause of action, fails to
certain portions of the route to the warehouse were sandy and the weather was variable, raining show in a satisfactory manner the facts upon which he bases his claim, the
15
 defendant is under no obligation to prove his exception or defense case of private carriers, however, the exercise of ordinary diligence in the carriage of goods will
(Moran, Commentaries on the Rules of Court, Volume 6, p. 2, citing Belen v. suffice. Moreover, in the case of loss, destruction or deterioration of the goods, common carriers are
Belen, 13 Phil. 202). presumed to have been at fault or to have acted negligently, and the burden of proving otherwise
rests on them.26 On the contrary, no such presumption applies to private carriers, for whosoever
alleges damage to or deterioration of the goods carried has the onus of proving that the cause was
But, the record shows that the plaintiff-appellee dismally failed to prove the
the negligence of the carrier.
basis of its cause of action, i.e. the alleged negligence of defendant carrier. It
appears that the plaintiff was under the impression that it did not have to
establish defendant's negligence. Be that as it may, contrary to the trial court's It is not disputed that respondent carrier, in the ordinary course of business, operates as a common
finding, the record of the instant case discloses ample evidence showing that carrier, transporting goods indiscriminately for all persons. When petitioner chartered the vessel M/V
defendant carrier was not negligent in performing its obligation . . . 18 (emphasis "Sun Plum", the ship captain, its officers and compliment were under the employ of the shipowner
supplied). and therefore continued to be under its direct supervision and control. Hardly then can we charge
the charterer, a stranger to the crew and to the ship, with the duty of caring for his cargo when the
charterer did not have any control of the means in doing so. This is evident in the present case
Petitioner PPI appeals to us by way of a petition for review assailing the decision of the Court of
considering that the steering of the ship, the manning of the decks, the determination of the course
Appeals. Petitioner theorizes that the Home Insurance case has no bearing on the present
of the voyage and other technical incidents of maritime navigation were all consigned to the officers
controversy because the issue raised therein is the validity of a stipulation in the charter-party
and crew who were screened, chosen and hired by the shipowner. 27
delimiting the liability of the shipowner for loss or damage to goods cause by want of due deligence
on its part or that of its manager to make the vessel seaworthy in all respects, and not whether the
presumption of negligence provided under the Civil Code applies only to common carriers and not to It is therefore imperative that a public carrier shall remain as such, notwithstanding the charter of the
private carriers. 19 Petitioner further argues that since the possession and control of the vessel whole or portion of a vessel by one or more persons, provided the charter is limited to the ship only,
remain with the shipowner, absent any stipulation to the contrary, such shipowner should made as in the case of a time-charter or voyage-charter. It is only when the charter includes both the
liable for the negligence of the captain and crew. In fine, PPI faults the appellate court in not vessel and its crew, as in a bareboat or demise that a common carrier becomes private, at least
applying the presumption of negligence against respondent carrier, and instead shifting the onus insofar as the particular voyage covering the charter-party is concerned. Indubitably, a shipowner in
probandi on the shipper to show want of due deligence on the part of the carrier, when he was not a time or voyage charter retains possession and control of the ship, although her holds may, for the
even at hand to witness what transpired during the entire voyage. moment, be the property of the charterer. 28

As earlier stated, the primordial issue here is whether a common carrier becomes a private carrier Respondent carrier's heavy reliance on the case of Home Insurance Co. v. American Steamship
by reason of a charter-party; in the negative, whether the shipowner in the instant case was able to Agencies, supra, is misplaced for the reason that the meat of the controversy therein was the validity
prove that he had exercised that degree of diligence required of him under the law. of a stipulation in the charter-party exempting the shipowners from liability for loss due to the
negligence of its agent, and not the effects of a special charter on common carriers. At any rate, the
rule in the United States that a ship chartered by a single shipper to carry special cargo is not a
It is said that etymology is the basis of reliable judicial decisions in commercial cases. This being so,
common carrier, 29 does not find application in our jurisdiction, for we have observed that the
we find it fitting to first define important terms which are relevant to our discussion.
growing concern for safety in the transportation of passengers and /or carriage of goods by sea
requires a more exacting interpretation of admiralty laws, more particularly, the rules governing
A "charter-party" is defined as a contract by which an entire ship, or some principal part thereof, is common carriers.
let by the owner to another person for a specified time or use; 20 a contract of affreightment by which
the owner of a ship or other vessel lets the whole or a part of her to a merchant or other person for
We quote with approval the observations of Raoul Colinvaux, the learned barrister-at-law 30 —
the conveyance of goods, on a particular voyage, in consideration of the payment of
freight; 21 Charter parties are of two types: (a) contract of affreightment which involves the use of
shipping space on vessels leased by the owner in part or as a whole, to carry goods for others; and, As a matter of principle, it is difficult to find a valid distinction between cases in
(b) charter by demise or bareboat charter, by the terms of which the whole vessel is let to the which a ship is used to convey the goods of one and of several persons. Where
charterer with a transfer to him of its entire command and possession and consequent control over the ship herself is let to a charterer, so that he takes over the charge and control
its navigation, including the master and the crew, who are his servants. Contract of affreightment of her, the case is different; the shipowner is not then a carrier. But where her
may either be time charter, wherein the vessel is leased to the charterer for a fixed period of time, or services only are let, the same grounds for imposing a strict responsibility exist,
voyage charter, wherein the ship is leased for a single voyage. 22 In both cases, the charter-party whether he is employed by one or many. The master and the crew are in each
provides for the hire of vessel only, either for a determinate period of time or for a single or case his servants, the freighter in each case is usually without any
consecutive voyage, the shipowner to supply the ship's stores, pay for the wages of the master and representative on board the ship; the same opportunities for fraud or collusion
the crew, and defray the expenses for the maintenance of the ship. occur; and the same difficulty in discovering the truth as to what has taken place
arises . . .
Upon the other hand, the term "common or public carrier" is defined in Art. 1732 of the Civil
Code. 23 The definition extends to carriers either by land, air or water which hold themselves out as In an action for recovery of damages against a common carrier on the goods shipped, the shipper or
ready to engage in carrying goods or transporting passengers or both for compensation as a public consignee should first prove the fact of shipment and its consequent loss or damage while the same
employment and not as a casual occupation. The distinction between a "common or public carrier" was in the possession, actual or constructive, of the carrier. Thereafter, the burden of proof shifts to
and a "private or special carrier" lies in the character of the business, such that if the undertaking is respondent to prove that he has exercised extraordinary diligence required by law or that the loss,
a single transaction, not a part of the general business or occupation, although involving the carriage damage or deterioration of the cargo was due to fortuitous event, or some other circumstances
of goods for a fee, the person or corporation offering such service is a private carrier. 24 inconsistent with its liability. 31

Article 1733 of the New Civil Code mandates that common carriers, by reason of the nature of their To our mind, respondent carrier has sufficiently overcome, by clear and convincing proof, the prima
business, should observe extraordinary diligence in the vigilance over the goods they carry.25 In the facie presumption of negligence.

16
The master of the carrying vessel, Captain Lee Tae Bo, in his deposition taken on 19 April 1977 with Atlas Fertilizer, described Urea as a chemical compound consisting mostly of ammonia and
before the Philippine Consul and Legal Attache in the Philippine Embassy in Tokyo, Japan, testified carbon monoxide compounds which are used as fertilizer. Urea also contains 46% nitrogen and is
that before the fertilizer was loaded, the four (4) hatches of the vessel were cleaned, dried and highly soluble in water. However, during storage, nitrogen and ammonia do not normally evaporate
fumigated. After completing the loading of the cargo in bulk in the ship's holds, the steel pontoon even on a long voyage, provided that the temperature inside the hull does not exceed eighty (80)
hatches were closed and sealed with iron lids, then covered with three (3) layers of serviceable degrees centigrade. Mr. Chupungco further added that in unloading fertilizer in bulk with the use of a
tarpaulins which were tied with steel bonds. The hatches remained close and tightly sealed while the clamped shell, losses due to spillage during such operation amounting to one percent (1%) against
ship was in transit as the weight of the steel covers made it impossible for a person to open without the bill of lading is deemed "normal" or "tolerable." The primary cause of these spillages is the
the use of the ship's boom. 32 clamped shell which does not seal very tightly. Also, the wind tends to blow away some of the
materials during the unloading process.
It was also shown during the trial that the hull of the vessel was in good condition, foreclosing the
possibility of spillage of the cargo into the sea or seepage of water inside the hull of the The dissipation of quantities of fertilizer, or its daterioration in value, is caused either by an
vessel. 33 When M/V "Sun Plum" docked at its berthing place, representatives of the consignee extremely high temperature in its place of storage, or when it comes in contact with water. When
boarded, and in the presence of a representative of the shipowner, the foreman, the stevedores, and Urea is drenched in water, either fresh or saline, some of its particles dissolve. But the salvaged
a cargo surveyor representing CSCI, opened the hatches and inspected the condition of the hull of portion which is in liquid form still remains potent and usable although no longer saleable in its
the vessel. The stevedores unloaded the cargo under the watchful eyes of the shipmates who were original market value.
overseeing the whole operation on rotation basis. 34
The probability of the cargo being damaged or getting mixed or contaminated with foreign particles
Verily, the presumption of negligence on the part of the respondent carrier has been efficaciously was made greater by the fact that the fertilizer was transported in "bulk," thereby exposing it to the
overcome by the showing of extraordinary zeal and assiduity exercised by the carrier in the care of inimical effects of the elements and the grimy condition of the various pieces of equipment used in
the cargo. This was confirmed by respondent appellate court thus — transporting and hauling it.

. . . Be that as it may, contrary to the trial court's finding, the record of the The evidence of respondent carrier also showed that it was highly improbable for sea water to seep
instant case discloses ample evidence showing that defendant carrier was not into the vessel's holds during the voyage since the hull of the vessel was in good condition and her
negligent in performing its obligations. Particularly, the following testimonies of hatches were tightly closed and firmly sealed, making the M/V "Sun Plum" in all respects seaworthy
plaintiff-appellee's own witnesses clearly show absence of negligence by the to carry the cargo she was chartered for. If there was loss or contamination of the cargo, it was more
defendant carrier; that the hull of the vessel at the time of the discharge of the likely to have occurred while the same was being transported from the ship to the dump trucks and
cargo was sealed and nobody could open the same except in the presence of finally to the consignee's warehouse. This may be gleaned from the testimony of the marine and
the owner of the cargo and the representatives of the vessel (TSN, 20 July cargo surveyor of CSCI who supervised the unloading. He explained that the 18 M/T of alleged "bar
1977, p. 14); that the cover of the hatches was made of steel and it was overlaid order cargo" as contained in their report to PPI was just an approximation or estimate made by
with tarpaulins, three layers of tarpaulins and therefore their contents were them after the fertilizer was discharged from the vessel and segregated from the rest of the cargo.
protected from the weather (TSN, 5 April 1978, p. 24); and, that to open these
hatches, the seals would have to be broken, all the seals were found to be
The Court notes that it was in the month of July when the vessel arrived port and unloaded her
intact (TSN, 20 July 1977, pp. 15-16) (emphasis supplied).
cargo. It rained from time to time at the harbor area while the cargo was being discharged according
to the supply officer of PPI, who also testified that it was windy at the waterfront and along the
The period during which private respondent was to observe the degree of diligence required of it as shoreline where the dump trucks passed enroute to the consignee's warehouse.
a public carrier began from the time the cargo was unconditionally placed in its charge after the
vessel's holds were duly inspected and passed scrutiny by the shipper, up to and until the vessel
Indeed, we agree with respondent carrier that bulk shipment of highly soluble goods like fertilizer
reached its destination and its hull was reexamined by the consignee, but prior to unloading. This is
carries with it the risk of loss or damage. More so, with a variable weather condition prevalent during
clear from the limitation clause agreed upon by the parties in the Addendum to the standard
its unloading, as was the case at bar. This is a risk the shipper or the owner of the goods has to
"GENCON" time charter-party which provided for an F.I.O.S., meaning, that the loading, stowing,
face. Clearly, respondent carrier has sufficiently proved the inherent character of the goods which
trimming and discharge of the cargo was to be done by the charterer, free from all risk and expense
makes it highly vulnerable to deterioration; as well as the inadequacy of its packaging which further
to the carrier. 35 Moreover, a shipowner is liable for damage to the cargo resulting from improper
contributed to the loss. On the other hand, no proof was adduced by the petitioner showing that the
stowage only when the stowing is done by stevedores employed by him, and therefore under his
carrier was remise in the exercise of due diligence in order to minimize the loss or damage to the
control and supervision, not when the same is done by the consignee or stevedores under the
goods it carried.
employ of the latter. 36

WHEREFORE, the petition is DISMISSED. The assailed decision of the Court of Appeals, which
Article 1734 of the New Civil Code provides that common carriers are not responsible for the loss,
reversed the trial court, is AFFIRMED. Consequently, Civil Case No. 98623 of the then Court of the
destruction or deterioration of the goods if caused by the charterer of the goods or defects in the
First Instance, now Regional Trial Court, of Manila should be, as it is hereby DISMISSED.
packaging or in the containers. The Code of Commerce also provides that all losses and
deterioration which the goods may suffer during the transportation by reason of fortuitous
event, force majeure, or the inherent defect of the goods, shall be for the account and risk of the Costs against petitioner.
shipper, and that proof of these accidents is incumbent upon the carrier. 37 The carrier, nonetheless,
shall be liable for the loss and damage resulting from the preceding causes if it is proved, as against
SO ORDERED.
him, that they arose through his negligence or by reason of his having failed to take the precautions
which usage has established among careful persons. 38

G.R. No. 112287 December 12, 1997

Respondent carrier presented a witness who testified on the characteristics of the fertilizer shipped
and the expected risks of bulk shipping. Mr. Estanislao Chupungco, a chemical engineer working
17
NATIONAL STEEL CORPORATION, petitioner, The facts as found by Respondent Court of Appeals are as follows:
vs.
COURT OF APPEALS AND VLASONS SHIPPING, INC., respondents.
(1) On July 17, 1974, plaintiff National Steel Corporation (NSC) as Charterer and
G.R. No. 112350 December 12, 1997
defendant Vlasons Shipping, Inc. (VSI) as Owner, entered into a Contract of Voyage
VLASONS SHIPPING, INC., petitioner,
Charter Hire (Exhibit "B"; also Exhibit "1") whereby NSC hired VSI's vessel, the MV
vs.
"VLASONS I" to make one (1) voyage to load steel products at Iligan City and discharge
COURT OF APPEALS AND NATIONAL STEEL CORPORATION, respondents.
them at North Harbor, Manila, under the following terms and conditions, viz:

1. . . .
PANGANIBAN, J.:

2. Cargo: Full cargo of steel products of not less than 2,500 MT, 10% more or less at
The Court finds occasion to apply the rules on the seaworthiness of private carrier, its owner's
Master's option.
responsibility for damage to the cargo and its liability for demurrage and attorney's fees. The Court
also reiterates the well-known rule that findings of facts of trial courts, when affirmed by the Court of
Appeals, are binding on this Court. 3. . . .

The Case 4. Freight/Payment: P30.00/metric ton, FIOST basis. Payment upon presentation of Bill of
Lading within fifteen (15) days.
Before us are two separate petitions for review filed by National Steel Corporation (NSC) and
Vlasons Shipping, Inc. (VSI), both of which assail the August 12, 1993 Decision of the Court of 5. Laydays/Cancelling: July 26, 1974/Aug. 5, 1974.
Appeals.1 The Court of Appeals modified the decision of the Regional Trial Court of Pasig, Metro
Manila, Branch 163 in Civil Case No. 23317. The RTC disposed as follows:
6. Loading/Discharging Rate: 750 tons per WWDSHINC. (Weather Working Day of 24
consecutive hours, Sundays and Holidays Included).
WHEREFORE, judgment is hereby rendered in favor of defendant and against the plaintiff
dismissing the complaint with cost against plaintiff, and ordering plaintiff to pay the
7. Demurrage/Dispatch: P8,000.00/P4,000.00 per day.
defendant on the counterclaim as follows:

8. . . .
1. The sum of P75,000.00 as unpaid freight and P88,000.00 as demurrage with interest at
the legal rate on both amounts from April 7, 1976 until the same shall have been fully
paid; 9. Cargo Insurance: Charterer's and/or Shipper's must insure the cargoes. Shipowners not
responsible for losses/damages except on proven willful negligence of the officers of the
vessel.
2. Attorney's fees and expenses of litigation in the sum of P100,000.00; and

10. Other terms: (a) All terms/conditions of NONYAZAI C/P [sic] or other internationally
3. Costs of suit.
recognized Charter Party Agreement shall form part of this Contract.

SO ORDERED.2
xxx xxx xxx

On the other hand, the Court of Appeals ruled:

The terms "F.I.O.S.T." which is used in the shipping business is a standard provision in
the NANYOZAI Charter Party which stands for "Freight In and Out including Stevedoring
WHEREFORE, premises considered, the decision appealed from is modified by reducing and Trading", which means that the handling, loading and unloading of the cargoes are
the award for demurrage to P44,000.00 and deleting the award for attorney's fees and the responsibility of the Charterer. Under Paragraph 5 of the NANYOZAI Charter Party, it
expenses of litigation. Except as thus modified, the decision is AFFIRMED. There is no states, "Charterers to load, stow and discharge the cargo free of risk and expenses to
pronouncement as to costs. owners. . . . (Emphasis supplied).

SO ORDERED.3 Under paragraph 10 thereof, it is provided that "(o)wners shall, before and at the
beginning of the voyage, exercise due diligence to make the vessel seaworthy and
properly manned, equipped and supplied and to make the holds and all other parts of the
The Facts
vessel in which cargo is carried, fit and safe for its reception, carriage and preservation.
Owners shall not be liable for loss of or damage of the cargo arising or resulting from:
The MV Vlasons I is a vessel which renders tramping service and, as such, does not transport cargo unseaworthiness unless caused by want of due diligence on the part of the owners to
or shipment for the general public. Its services are available only to specific persons who enter into a make the vessel seaworthy, and to secure that the vessel is properly manned, equipped
special contract of charter party with its owner. It is undisputed that the ship is a private carrier. And and supplied and to make the holds and all other parts of the vessel in which cargo is
it is in the capacity that its owner, Vlasons Shipping, Inc., entered into a contract of affreightment or carried, fit and safe for its reception, carriage and preservation; . . . ; perils, dangers and
contract of voyage charter hire with National Steel Corporation. accidents of the sea or other navigable waters; . . . ; wastage in bulk or weight or any

18
other loss or damage arising from inherent defect, quality or vice of the cargo; (7) In its answer, defendant denied liability for the alleged damage claiming that the MV
insufficiency of packing; . . . ; latent defects not discoverable by due diligence; any other "VLASONS I" was seaworthy in all respects for the carriage of plaintiff's cargo; that said
cause arising without the actual fault or privity of Owners or without the fault of the agents vessel was not a "common carrier" inasmuch as she was under voyage charter contract
or servants of owners." with the plaintiff as charterer under the charter party; that in the course of the voyage from
Iligan City to Manila, the MV "VLASONS I" encountered very rough seas, strong winds
and adverse weather condition, causing strong winds and big waves to continuously
Paragraph 12 of said NANYOZAI Charter Party also provides that "(o)wners shall not be
pound against the vessel and seawater to overflow on its deck and hatch covers, that
responsible for split, chafing and/or any damage unless caused by the negligence or
under the Contract of Voyage Charter Hire, defendant shall not be responsible for
default of the master and crew."
losses/damages except on proven willful negligence of the officers of the vessel, that the
officers of said MV "VLASONS I" exercised due diligence and proper seamanship and
(2) On August 6, 7 and 8, 1974, in accordance with the Contract of Voyage Charter Hire, were not willfully negligent; that furthermore the Voyage Charter Party provides that
the MV "VLASONS I" loaded at plaintiffs pier at Iligan City, the NSC's shipment of 1,677 loading and discharging of the cargo was on FIOST terms which means that the vessel
skids of tinplates and 92 packages of hot rolled sheets or a total of 1,769 packages with a was free of risk and expense in connection with the loading and discharging of the cargo;
total weight of about 2,481.19 metric tons for carriage to Manila. The shipment was placed that the damage, if any, was due to the inherent defect, quality or vice of the cargo or to
in the three (3) hatches of the ship. Chief Mate Gonzalo Sabando, acting as agent of the the insufficient packing thereof or to latent defect of the cargo not discoverable by due
vessel[,] acknowledged receipt of the cargo on board and signed the corresponding bill of diligence or to any other cause arising without the actual fault or privity of defendant and
lading, B.L.P.P. No. 0233 (Exhibit "D") on August 8, 1974. without the fault of the agents or servants of defendant; consequently, defendant is not
liable; that the stevedores of plaintiff who discharged the cargo in Manila were negligent
and did not exercise due care in the discharge of the cargo; land that the cargo was
(3) The vessel arrived with the cargo at Pier 12, North Harbor, Manila, on August 12, exposed to rain and seawater spray while on the pier or in transit from the pier to plaintiff's
1974. The following day, August 13, 1974, when the vessel's three (3) hatches containing warehouse after discharge from the vessel; and that plaintiff's claim was highly
the shipment were opened by plaintiff's agents, nearly all the skids of tinplates and hot speculative and grossly exaggerated and that the small stain marks or sweat marks on the
rolled sheets were allegedly found to be wet and rusty. The cargo was discharged and edges of the tinplates were magnified and considered total loss of the cargo. Finally,
unloaded by stevedores hired by the Charterer. Unloading was completed only on August defendant claimed that it had complied with all its duties and obligations under the Voyage
24, 1974 after incurring a delay of eleven (11) days due to the heavy rain which Charter Hire Contract and had no responsibility whatsoever to plaintiff. In turn, it alleged
interrupted the unloading operations. (Exhibit "E") the following counterclaim:

(4) To determine the nature and extent of the wetting and rusting, NSC called for a survey (a) That despite the full and proper performance by defendant of its
of the shipment by the Manila Adjusters and Surveyors Company (MASCO). In a letter to obligations under the Voyage Charter Hire Contract, plaintiff failed
the NSC dated March 17, 1975 (Exhibit "G"), MASCO made a report of its ocular and refused to pay the agreed charter hire of P75,000.00 despite
inspection conducted on the cargo, both while it was still on board the vessel and later at demands made by defendant;
the NDC warehouse in Pureza St., Sta. Mesa, Manila where the cargo was taken and
stored. MASCO reported that it found wetting and rusting of the packages of hot rolled
sheets and metal covers of the tinplates; that tarpaulin hatch covers were noted torn at (b) That under their Voyage Charter Hire Contract, plaintiff had
various extents; that container/metal casings of the skids were rusting all over. MASCO agreed to pay defendant the sum of P8,000.00 per day for
ventured the opinion that "rusting of the tinplates was caused by contact with SEA demurrage. The vessel was on demurrage for eleven (11) days in
WATER sustained while still on board the vessel as a consequence of the heavy weather Manila waiting for plaintiff to discharge its cargo from the vessel.
and rough seas encountered while en route to destination (Exhibit "F"). It was also Thus, plaintiff was liable to pay defendant demurrage in the total
reported that MASCO's surveyors drew at random samples of bad order packing materials amount of P88,000.00.
of the tinplates and delivered the same to the M.I.T. Testing Laboratories for analysis. On
August 31, 1974, the M.I.T. Testing Laboratories issued Report No. 1770 (Exhibit "I")
(c) For filing a clearly unfounded civil action against defendant,
which in part, states, "The analysis of bad order samples of packing materials . . . shows
plaintiff should be ordered to pay defendant attorney's fees and all
that wetting was caused by contact with SEA WATER".
expenses of litigation in the amount of not less than P100,000.00.

(5) On September 6, 1974, on the basis of the aforesaid Report No. 1770, plaintiff filed
(8) From the evidence presented by both parties, the trial court came out with the
with the defendant its claim for damages suffered due to the downgrading of the damaged
following findings which were set forth in its decision:
tinplates in the amount of P941,145.18. Then on October 3, 1974, plaintiff formally
demanded payment of said claim but defendant VSI refused and failed to pay. Plaintiff
filed its complaint against defendant on April 21, 1976 which was docketed as Civil Case (a) The MV "VLASONS I" is a vessel of Philippine registry engaged in
No. 23317, CFI, Rizal. the tramping service and is available for hire only under special
contracts of charter party as in this particular case.
(6) In its complaint, plaintiff claimed that it sustained losses in the aforesaid amount of
P941,145.18 as a result of the act, neglect and default of the master and crew in the (b) That for purposes of the voyage covered by the Contract of
management of the vessel as well as the want of due diligence on the part of the Voyage Charter Hire (Exh. "1"), the MV VLASONS I" was covered by
defendant to make the vessel seaworthy and to make the holds and all other parts of the the required seaworthiness certificates including the Certification of
vessel in which the cargo was carried, fit and safe for its reception, carriage and Classification issued by an international classification society, the
preservation — all in violation of defendant's undertaking under their Contract of Voyage NIPPON KAIJI KYOKAI (Exh. "4"); Coastwise License from the Board
Charter Hire. of Transportation (Exh. "5"); International Loadline Certificate from the
Philippine Coast Guard (Exh. "6"); Cargo Ship Safety Equipment
Certificate also from the Philippine Coast Guard (Exh. "7"); Ship
19
Radio Station License (Exh. "8"); Certificate of Inspection by the (g) It was also established that the vessel encountered rough seas
Philippine Coast Guard (Exh. "12"); and Certificate of Approval for and bad weather while en route from Iligan City to Manila causing sea
Conversion issued by the Bureau of Customs (Exh. "9"). That being a water to splash on the ship's deck on account of which the master of
vessel engaged in both overseas and coastwise trade, the MV the vessel (Mr. Antonio C. Dumlao) filed a "Marine Protest" on August
"VLASONS I" has a higher degree of seaworthiness and safety. 13, 1974 (Exh. "15"); which can be invoked by defendant as a force
majeure that would exempt the defendant from liability.
(c) Before it proceeded to Iligan City to perform the voyage called for
by the Contract of Voyage Charter Hire, the MV "VLASONS I" (h) Plaintiff did not comply with the requirement prescribed in
underwent drydocking in Cebu and was thoroughly inspected by the paragraph 9 of the Voyage Charter Hire contract that it was to insure
Philippine Coast Guard. In fact, subject voyage was the vessel's first the cargo because it did not. Had plaintiff complied with the
voyage after the drydocking. The evidence shows that the MV requirement, then it could have recovered its loss or damage from the
"VLASONS I" was seaworthy and properly manned, equipped and insurer. Plaintiff also violated the charter party contract when it loaded
supplied when it undertook the voyage. It has all the required not only "steel products", i.e. steel bars, angular bars and the like but
certificates of seaworthiness. also tinplates and hot rolled sheets which are high grade cargo
commanding a higher freight. Thus plaintiff was able to ship grade
cargo at a lower freight rate.
(d) The cargo/shipment was securely stowed in three (3) hatches of
the ship. The hatch openings were covered by hatchboards which
were in turn covered by two or double tarpaulins. The hatch covers (i) As regards defendant's counterclaim, the contract of voyage
were water tight. Furthermore, under the hatchboards were steel charter hire under Paragraph 4 thereof, fixed the freight at P30.00 per
beams to give support. metric ton payable to defendant carrier upon presentation of the bill of
lading within fifteen (15) days. Plaintiff has not paid the total freight
due of P75,000.00 despite demands. The evidence also showed that
(e) The claim of the plaintiff that defendant violated the contract of
the plaintiff was required and bound under paragraph 7 of the same
carriage is not supported by evidence. The provisions of the Civil
Voyage Charter Hire contract to pay demurrage of P8,000.00 per day
Code on common carriers pursuant to which there exists a
of delay in the unloading of the cargoes. The delay amounted to
presumption of negligence in case of loss or damage to the cargo are
eleven (11) days thereby making plaintiff liable to pay defendant for
not applicable. As to the damage to the tinplates which was allegedly
demurrage in the amount of P88,000.00.
due to the wetting and rusting thereof, there is unrebutted testimony
of witness Vicente Angliongto that tinplates "sweat" by themselves
when packed even without being in contract (sic) with water from Appealing the RTC decision to the Court of Appeals, NSC alleged six errors:
outside especially when the weather is bad or raining. The trust
caused by sweat or moisture on the tinplates may be considered as a
I
loss or damage but then, defendant cannot be held liable for it
pursuant to Article 1734 of the Civil Case which exempts the carrier
from responsibility for loss or damage arising from the "character of The trial court erred in finding that the MV "VLASONS I" was seaworthy, properly manned,
the goods . . ." All the 1,769 skids of the tinplates could not have been equipped and supplied, and that there is no proof of willful negligence of the vessel's
damaged by water as claimed by plaintiff. It was shown as claimed by officers.
plaintiff that the tinplates themselves were wrapped in kraft paper
lining and corrugated cardboards could not be affected by water from
II
outside.

The trial court erred in finding that the rusting of NSC's tinplates was due to the inherent
(f) The stevedores hired by the plaintiff to discharge the cargo of
nature or character of the goods and not due to contact with seawater.
tinplates were negligent in not closing the hatch openings of the MV
"VLASONS I" when rains occurred during the discharging of the
cargo thus allowing rainwater to enter the hatches. It was proven that III
the stevedores merely set up temporary tents to cover the hatch
openings in case of rain so that it would be easy for them to resume
work when the rains stopped by just removing the tent or canvas. The trial court erred in finding that the stevedores hired by NSC were negligent in the
Because of this improper covering of the hatches by the stevedores unloading of NSC's shipment.
during the discharging and unloading operations which were
interrupted by rains, rainwater drifted into the cargo through the hatch IV
openings. Pursuant to paragraph 5 of the NANYOSAI [sic] Charter
Party which was expressly made part of the Contract of Voyage
Charter Hire, the loading, stowing and discharging of the cargo is the The trial court erred in exempting VSI from liability on the ground of force majeure.
sole responsibility of the plaintiff charterer and defendant carrier has
no liability for whatever damage may occur or maybe [sic] caused to V
the cargo in the process.
The trial court erred in finding that NSC violated the contract of voyage charter hire.

20
 VI I. Whether or not the provisions of the Civil Code of the Philippines on common carriers
pursuant to which there exist[s] a presumption of negligence against the common carrier
in case of loss or damage to the cargo are applicable to a private carrier.
The trial court erred in ordering NSC to pay freight, demurrage and attorney's fees, to
VSI.4
II. Whether or not the terms and conditions of the Contract of Voyage Charter Hire,
including the Nanyozai Charter, are valid and binding on both contracting parties.
As earlier stated, the Court of Appeals modified the decision of the trial court by reducing the
demurrage from P88,000.00 to P44,000.00 and deleting the award of attorneys fees and expenses
of litigation. NSC and VSI filed separate motions for reconsideration. In a Resolution5 dated October The foregoing issues raised by the parties will be discussed under the following headings:
20, 1993, the appellate court denied both motions. Undaunted, NSC and VSI filed their respective
petitions for review before this Court. On motion of VSI, the Court ordered on February 14, 1994 the
1. Questions of Fact
consolidation of these petitions.6

2. Effect of NSC's Failure to Insure the Cargo

The Issues

3. Admissibility of Certificates Proving Seaworthiness

In its petition7 and memorandum,8 NSC raises the following questions of law and fact:

4. Demurrage and Attorney's Fees.

Questions of Law

The Court's Ruling

1. Whether or not a charterer of a vessel is liable for demurrage due to cargo unloading
delays caused by weather interruption;
The Court affirms the assailed Decision of the Court of Appeals, except in respect of the demurrage.
2. Whether or not the alleged "seaworthiness certificates" (Exhibits "3", "4", "5", "6", "7",
"8", "9", "11" and "12") were admissible in evidence and constituted evidence of the Preliminary Matter: Common Carrier or Private Carrier?
vessel's seaworthiness at the beginning of the voyages; and
At the outset, it is essential to establish whether VSI contracted with NSC as a common carrier or as
3. Whether or not a charterer's failure to insure its cargo exempts the shipowner from a private carrier. The resolution of this preliminary question determines the law, standard of
liability for cargo damage. diligence and burden of proof applicable to the present case.

Questions of Fact Article 1732 of the Civil Code defines a common carrier as "persons, corporations, firms or
associations engaged in the business of carrying or transporting passengers or goods or both, by
land, water, or air, for compensation, offering their services to the public." It has been held that the
1. Whether or not the vessel was seaworthy and cargo-worthy;
true test of a common carrier is the carriage of passengers or goods, provided it has space,
for all who opt to avail themselves of its transportation service for a fee.11 A carrier which does not
2. Whether or not vessel's officers and crew were negligent in handling and caring for qualify under the above test is deemed a private carrier. "Generally, private carriage is undertaken
NSC's cargo; by special agreement and the carrier does not hold himself out to carry goods for the general public.
The most typical, although not the only form of private carriage, is the charter party, a maritime
contract by which the charterer, a party other than the shipowner, obtains the use and service of all
3. Whether or not NSC's cargo of tinplates did sweat during the voyage and, hence,
or some part of a ship for a period of time or a voyage or voyages."12
rusted on their own; and

In the instant case, it is undisputed that VSI did not offer its services to the general public. As found
4. Whether or not NSC's stevedores were negligent and caused the wetting[/]rusting of
by the Regional Trial Court, it carried passengers or goods only for those it chose under a "special
NSC's tinplates.
contract of charter party." 13 As correctly concluded by the Court of Appeals, the MV Vlasons I "was
not a common but a private carrier."14 Consequently, the rights and obligations of VSI and NSC,
In its separate petition,9 VSI submits for the consideration of this Court the following alleged errors of including their respective liability for damage to the cargo, are determined primarily by stipulations in
the CA: their contract of private carriage or charter party.15 Recently, in Valenzuela Hardwood and Industrial
Supply, Inc., vs. Court of Appeals and Seven Brothers Shipping Corporation,16 the Court ruled:
A. The respondent Court of Appeals committed an error of law in reducing the award of
demurrage from P88,000.00 to P44,000.00. . . . in a contract of private carriage, the parties may 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
B. The respondent Court of Appeals committed an error of law in deleting the award of provisions of the Civil Code on common carriers protecting the general public cannot
P100,000 for attorney's fees and expenses of litigation. justifiably 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
Amplifying the foregoing, VSI raises the following issues in its memorandum:10 charter party that lessen or remove the protection given by law in contracts involving
common carriers.17
21
Extent of VSI's Responsibility and and since the carrier is in a better position to know the cause of the loss and that it was
Liability Over NSC's Cargo not one involving its liability, the law requires that it come forward with the information
available to it, and its failure to do so warrants an inference or presumption of its liability.
However, such inferences and presumptions, while they may affect the burden of coming
It is clear from the parties' Contract of Voyage Charter Hire, dated July 17, 1974, that VSI "shall not
forward with evidence, do not alter the burden of proof which remains on plaintiff, and,
be responsible for losses except on proven willful negligence of the officers of the vessel." The
where the carrier comes forward with evidence explaining the loss or damage, the burden
NANYOZAI Charter Party, which was incorporated in the parties' contract of transportation further
of going forward with the evidence is again on plaintiff.
provided that the shipowner shall not be liable for loss of or a damage to the cargo arising or
resulting from unseaworthiness, unless the same was caused by its lack of due diligence to make
the vessel seaworthy or to ensure that the same was "properly manned, equipped and supplied," Where the action is based on the shipowner's warranty of seaworthiness, the burden of
and to "make the holds and all other parts of the vessel in which cargo [was] carried, fit and safe for proving a breach thereof and that such breach was the proximate cause of the damage
its reception, carriage and preservation."18 The NANYOZAI Charter Party also provided that rests on plaintiff, and proof that the goods were lost or damaged while in the carrier's
"[o]wners shall not be responsible for split, chafing and/or any damage unless caused by the possession does not cast on it the burden of proving seaworthiness. . . . Where the
negligence or default of the master or crew."19 contract of carriage exempts the carrier from liability for unseaworthiness not discoverable
by due diligence, the carrier has the preliminary burden of proving the exercise of due
diligence to make the vessel seaworthy.20
Burden of Proof

In the instant case, the Court of Appeals correctly found the NSC "has not taken the correct position
In view of the aforementioned contractual stipulations, NSC must prove that the damage to its
in relation to the question of who has the burden of proof. Thus, in its brief (pp. 10-11), after citing
shipment was caused by VSI's willful negligence or failure to exercise due diligence in making MV
Clause 10 and Clause 12 of the NANYOZAI Charter Party (incidentally plaintiff-appellant's [NSC's]
Vlasons I seaworthy and fit for holding, carrying and safekeeping the cargo. Ineluctably, the burden
interpretation of Clause 12 is not even correct), it argues that 'a careful examination of the evidence
of proof was placed on NSC by the parties' agreement.
will show that VSI miserably failed to comply with any of these obligation's as if defendant-appellee
[VSI] had the burden of
This view finds further support in the Code of Commerce which pertinently provides: proof."21

Art. 361. Merchandise shall be transported at the risk and venture of the shipper, if the First Issue: Questions of Fact
contrary has not been expressly stipulated.
Based on the foregoing, the determination of the following factual questions is manifestly relevant:
Therefore, the damage and impairment suffered by the goods during the transportation, (1) whether VSI exercised due diligence in making MV Vlasons I seaworthy for the intended purpose
due to fortuitous event, force majeure, or the nature and inherent defect of the things, under the charter party; (2) whether the damage to the cargo should be attributed to the willful
shall be for the account and risk of the shipper. negligence of the officers and crew of the vessel or of the stevedores hired by NSC; and (3) whether
the rusting of the tinplates was caused by its own "sweat" or by contact with seawater.
The burden of proof of these accidents is on the carrier.
These questions of fact were threshed out and decided by the trial court, which had the firsthand
opportunity to hear the parties' conflicting claims and to carefully weigh their respective evidence.
Art. 362. The carrier, however, shall be liable for damages arising from the cause The findings of the trial court were subsequently affirmed by the Court of Appeals. Where the factual
mentioned in the preceding article if proofs against him show that they occurred on findings of both the trial court and the Court of Appeals coincide, the same are binding on this
account of his negligence or his omission to take the precautions usually adopted by Court.22 We stress that, subject to some exceptional instances,23 only questions of law — not
careful persons, unless the shipper committed fraud in the bill of lading, making him to questions of fact — may be raised before this Court in a petition for review under Rule 45 of the
believe that the goods were of a class or quality different from what they really were. Rules of Court. After a thorough review of the case at bar, we find no reason to disturb the lower
court's factual findings, as indeed NSC has not successfully proven the application of any of the
Because the MV Vlasons I was a private carrier, the shipowner's obligations are governed by the aforecited exceptions.
foregoing provisions of the Code of Commerce and not by the Civil Code which, as a general rule,
places the prima facie presumption of negligence on a common carrier. It is a hornbook doctrine Was MV Vlasons I Seaworthy?
that:

In any event, the records reveal that VSI exercised due diligence to make the ship seaworthy and fit
In an action against a private carrier for loss of, or injury to, cargo, the burden is on the for the carriage of NSC's cargo of steel and tinplates. This is shown by the fact that it was drylocked
plaintiff to prove that the carrier was negligent or unseaworthy, and the fact that the goods and inspected by the Philippine Coast Guard before it proceeded to Iligan City for its voyage to
were lost or damaged while in the carrier's custody does not put the burden of proof on Manila under the contract of voyage charter hire.24 The vessel's voyage from Iligan to Manila was
the carrier. the vessel's first voyage after drydocking. The Philippine Coast Guard Station in Cebu cleared it
as seaworthy, fitted and equipped; it met all requirements for trading as cargo vessel.25 The Court of
Since . . . a private carrier is not an insurer but undertakes only to exercise due care in the Appeals itself sustained the conclusion of the trial court that MV Vlasons I was seaworthy. We find
protection of the goods committed to its care, the burden of proving negligence or a no reason to modify or reverse this finding of both the trial and the appellate courts.
breach of that duty rests on plaintiff and proof of loss of, or damage to, cargo while in the
carrier's possession does not cast on it the burden of proving proper care and diligence on Who Were Negligent:
its part or that the loss occurred from an excepted cause in the contract or bill of lading. Seamen or Stevedores?
However, in discharging the burden of proof, plaintiff is entitled to the benefit of the
presumptions and inferences by which the law aids the bailor in an action against a bailee,

22
As noted earlier, the NSC had the burden of proving that the damage to the cargo was caused by a Forty-five feet by thirty-five feet, sir.
the negligence of the officers and the crew of MV Vlasons I in making their vessel seaworthy and fit
for the carriage of tinplates. NSC failed to discharge this burden.
x x x           x x x          x x x

Before us, NSC relies heavily on its claim that MV Vlasons I had used an old and torn tarpaulin or
q How was the canvas supported in the middle of the hatch opening?
canvas to cover the hatches through which the cargo was loaded into the cargo hold of the ship. It
faults the Court of Appeals for failing to consider such claim as an "uncontroverted fact"26 and denies
that MV Vlasons I "was equipped with new canvas covers in tandem with the old ones as indicated a There is a hatch board.
in the Marine Protest . . ."27 We disagree.
ATTY DEL ROSARIO
The records sufficiently support VSI's contention that the ship used the old tarpaulin, only in addition
to the new one used primarily to make the ship's hatches watertight. The foregoing are clear from
q What is the hatch board made of?
the marine protest of the master of the MV Vlasons I, Antonio C. Dumlao, and the deposition of the
ship's boatswain, Jose Pascua. The salient portions of said marine protest read:
a It is made of wood, with a handle.
. . . That the M/V "VLASONS I" departed Iligan City or about 0730 hours of August 8,
1974, loaded with approximately 2,487.9 tons of steel plates and tin plates consigned to q And aside from the hatch board, is there any other material there to cover the hatch?
National Steel Corporation; that before departure, the vessel was rigged, fully equipped
and cleared by the authorities; that on or about August 9, 1974, while in the vicinity of the
western part of Negros and Panay, we encountered very rough seas and strong winds a There is a beam supporting the hatch board.
and Manila office was advised by telegram of the adverse weather conditions
encountered; that in the morning of August 10, 1974, the weather condition changed to q What is this beam made of?
worse and strong winds and big waves continued pounding the vessel at her port side
causing sea water to overflow on deck andhatch (sic) covers and which caused the first
layer of the canvass covering to give way while the new canvass covering still holding on; a It is made of steel, sir.

That the weather condition improved when we reached Dumali Point protected by q Is the beam that was placed in the hatch opening covering the whole hatch opening?
Mindoro; that we re-secured the canvass covering back to position; that in the afternoon of
August 10, 1974, while entering Maricaban Passage, we were again exposed to moderate a No, sir.
seas and heavy rains; that while approaching Fortune Island, we encountered again rough
seas, strong winds and big waves which caused the same canvass to give way and
leaving the new canvass holding on; q How many hatch beams were there placed across the opening?

xxx xxx xxx 28 a There are five beams in one hatch opening.

And the relevant portions of Jose Pascua's deposition are as follows: ATTY DEL ROSARIO

q What is the purpose of the canvas cover? q And on top of the beams you said there is a hatch board. How many pieces of wood are put on
top?

a So that the cargo would not be soaked with water.

a Plenty, sir, because there are several pieces on top of the hatch beam.

q And will you describe how the canvas cover was secured on the hatch opening?
q And is there a space between the hatch boards?

WITNESS
a There is none, sir.

a It was placed flat on top of the hatch cover, with a little canvas flowing over the sides and we
place[d] a flat bar over the canvas on the side of the hatches and then we place[d] a stopper so that q They are tight together?
the canvas could not be removed.
a Yes, sir.
ATTY DEL ROSARIO
q How tight?
q And will you tell us the size of the hatch opening? The length and the width of the hatch opening.
a Very tight, sir.

23
q Now, on top of the hatch boards, according to you, is the canvass cover. How many canvas ATTY LOPEZ:
covers?
Q What was used in order to protect the cargo from the weather?
a Two, sir.29
A A base of canvas was used as cover on top of the tin plates, and tents were built at the opening of
That due diligence was exercised by the officers and the crew of the MV Vlasons I was further the hatches.
demonstrated by the fact that, despite encountering rough weather twice, the new tarpaulin did not
give way and the ship's hatches and cargo holds remained waterproof. As aptly stated by the Court
Q You also stated that the hatches were already opened and that there were tents constructed at
of Appeals, ". . . we find no reason not to sustain the conclusion of the lower court based on
the opening of the hatches to protect the cargo from the rain. Now, will you describe [to] the Court
overwhelming evidence, that the MV 'VLASONS I' was seaworthy when it undertook the voyage on
the tents constructed.
August 8, 1974 carrying on board thereof plaintiff-appellant's shipment of 1,677 skids of tinplates
and 92 packages of hot rolled sheets or a total of 1,769 packages from NSC's pier in Iligan City
arriving safely at North Harbor, Port Area, Manila, on August 12, 1974; . . .30 A The tents are just a base of canvas which look like a tent of an Indian camp raise[d] high at the
middle with the whole side separated down to the hatch, the size of the hatch and it is soaks [sic] at
the middle because of those weather and this can be used only to temporarily protect the cargo from
Indeed, NSC failed to discharge its burden to show negligence on the part of the officers and the
getting wet by rains.
crew of MV Vlasons I. On the contrary, the records reveal that it was the stevedores of NSC who
were negligent in unloading the cargo from the ship.
Q Now, is this procedure adopted by the stevedores of covering tents proper?
The stevedores employed only a tent-like material to cover the hatches when strong rains
occasioned by a passing typhoon disrupted the unloading of the cargo. This tent-like covering, A No, sir, at the time they were discharging the cargo, there was a typhoon passing by and the
however, was clearly inadequate for keeping rain and seawater away from the hatches of the ship. hatch tent was not good enough to hold all of it to prevent the water soaking through the canvass
Vicente Angliongto, an officer of VSI, testified thus: and enter the cargo.

ATTY ZAMORA: Q In the course of your inspection, Mr. Anglingto [sic], did you see in fact the water enter and soak
into the canvass and tinplates.
Q Now, during your testimony on November 5, 1979, you stated on August 14 you went on board
the vessel upon notice from the National Steel Corporation in order to conduct the inspection of the A Yes, sir, the second time I went there, I saw it.
cargo. During the course of the investigation, did you chance to see the discharging operation?
Q As owner of the vessel, did you not advise the National Steel Corporation [of] the procedure
WITNESS: adopted by its stevedores in discharging the cargo particularly in this tent covering of the hatches?

A Yes, sir, upon my arrival at the vessel, I saw some of the tinplates already discharged on the pier A Yes, sir, I did the first time I saw it, I called the attention of the stevedores but the stevedores did
but majority of the tinplates were inside the hall, all the hatches were opened. not mind at all, so, called the attention of the representative of the National Steel but nothing was
done, just the same. Finally, I wrote a letter to them.31
Q In connection with these cargoes which were unloaded, where is the place.
NSC attempts to discredit the testimony of Angliongto by questioning his failure to complain
immediately about the stevedores' negligence on the first day of unloading, pointing out that he
A At the Pier.
wrote his letter to petitioner only seven days later.32 The Court is not persuaded. Angliongto's candid
answer in his aforequoted testimony satisfactorily explained the delay. Seven days lapsed because
Q What was used to protect the same from weather? he first called the attention of the stevedores, then the NSC's representative, about the negligent
and defective procedure adopted in unloading the cargo. This series of actions constitutes a
reasonable response in accord with common sense and ordinary human experience. Vicente
ATTY LOPEZ:
Angliongto could not be blamed for calling the stevedores' attention first and then the NSC's
representative on location before formally informing NSC of the negligence he had observed,
We object, your Honor, this question was already asked. This particular matter . . . the transcript of because he was not responsible for the stevedores or the unloading operations. In fact, he was
stenographic notes shows the same was covered in the direct examination. merely expressing concern for NSC which was ultimately responsible for the stevedores it had hired
and the performance of their task to unload the cargo.
ATTY ZAMORA:
We see no reason to reverse the trial and the appellate courts' findings and conclusions on this
point, viz:
Precisely, your Honor, we would like to go on detail, this is the serious part of the testimony.

In the THIRD assigned error, [NSC] claims that the trial court erred in finding that the
COURT: stevedores hired by NSC were negligent in the unloading of NSC's shipment. We do not
think so. Such negligence according to the trial court is evident in the stevedores hired by
All right, witness may answer. [NSC], not closing the hatch of MV 'VLASONS I' when rains occurred during the
24
 discharging of the cargo thus allowing rain water and seawater spray to enter the hatches 3. International Load Line Certificate from the Philippine Coast Guard
and to drift to and fall on the cargo. It was proven that the stevedores merely set up
temporary tents or canvas to cover the hatch openings when it rained during the
4. Coastwise License from the Board of Transportation
unloading operations so that it would be easier for them to resume work after the rains
stopped by just removing said tents or canvass. It has also been shown that on August
20, 1974, VSI President Vicente Angliongto wrote [NSC] calling attention to the manner 5. Certificate of Approval for Conversion issued by the Bureau of Customs36
the stevedores hired by [NSC] were discharging the cargo on rainy days and the improper
closing of the hatches which allowed continuous heavy rain water to leak through and drip
NSC argues that the certificates are hearsay for not having been presented in accordance with the
to the tinplates' covers and [Vicente Angliongto] also suggesting that due to four (4) days
Rules of Court. It points out that Exhibits 3, 4 and 11 allegedly are "not written records or acts of
continuos rains with strong winds that the hatches be totally closed down and covered
public officers"; while Exhibits 5, 6, 7, 8, 9, 11 and 12 are not "evidenced by official publications or
with canvas and the hatch tents lowered. (Exh. "13"). This letter was received by [NSC] on
certified true copies" as required by Sections 25 and 26, Rule 132, of the Rules of Court.37
22 August 1974 while discharging operations were still going on (Exhibit "13-A").33

After a careful examination of these exhibits, the Court rules that Exhibits 3, 4, 5, 6, 7, 8, 9 and 12
The fact that NSC actually accepted and proceeded to remove the cargo from the ship during
are inadmissible, for they have not been properly offered as evidence. Exhibits 3 and 4 are
unfavorable weather will not make VSI liable for any damage caused thereby. In passing, it may be
certificates issued by private parties, but they have not been proven by one who saw the writing
noted that the NSC may seek indemnification, subject to the laws on prescription, from the
executed, or by evidence of the genuineness of the handwriting of the maker, or by a subscribing
stevedoring company at fault in the discharge operations. "A stevedore company engaged in
witness. Exhibits, 5, 6, 7, 8, 9, and 12 are photocopies, but their admission under the best evidence
discharging cargo . . . has the duty to load the cargo . . . in a prudent manner, and it is liable for
rule have not been demonstrated.
injury to, or loss of, cargo caused by its negligence . . . and where the officers and members and
crew of the vessel do nothing and have no responsibility in the discharge of cargo by stevedores . . .
the vessel is not liable for loss of, or damage to, the cargo caused by the negligence of the We find, however, that Exhibit 11 is admissible under a well-settled exception to the hearsay rule per
stevedores . . ."34 as in the instant case. Section 44 of Rule 130 of the Rules of Court, which provides that "(e)ntries in official records made
in the performance of a duty by a public officer of the Philippines, or by a person in the performance
of a duty specially enjoined by law, are prima facie evidence of the facts therein stated."38 Exhibit 11
Do Tinplates "Sweat"?
is an original certificate of the Philippine Coast Guard in Cebu issued by Lieutenant Junior Grade
Noli C. Flores to the effect that "the vessel 'VLASONS I' was drydocked . . . and PCG Inspectors
The trial court relied on the testimony of Vicente Angliongto in finding that ". . . tinplates 'sweat' by were sent on board for inspection . . . After completion of drydocking and duly inspected by PCG
themselves when packed even without being in contact with water from outside especially when the Inspectors, the vessel 'VLASONS I', a cargo vessel, is in seaworthy condition, meets all
weather is bad or requirements, fitted and equipped for trading as a cargo vessel was cleared by the Philippine Coast
raining . . ."35 The Court of Appeals affirmed the trial court's finding. Guard and sailed for Cebu Port on July 10, 1974." (sic) NSC's claim, therefore, is obviously
misleading and erroneous.
A discussion of this issue appears inconsequential and unnecessary. As previously discussed, the
damage to the tinplates was occasioned not by airborne moisture but by contact with rain and At any rate, it should be stressed that NSC has the burden of proving that MV Vlasons I was not
seawater which the stevedores negligently allowed to seep in during the unloading. seaworthy. As observed earlier, the vessel was a private carrier and, as such, it did not have the
obligation of a common carrier to show that it was seaworthy. Indeed, NSC glaringly failed to
discharge its duty of proving the willful negligence of VSI in making the ship seaworthy resulting in
Second Issue: Effect of NSC's Failure to
damage to its cargo. Assailing the genuineness of the certificate of seaworthiness is not sufficient
Insure the Cargo
proof that the vessel was not seaworthy.

The obligation of NSC to insure the cargo stipulated in the Contract of Voyage Charter Hire is totally
Fourth Issue: Demurrage and Attorney's Fees
separate and distinct from the contractual or statutory responsibility that may be incurred by VSI for
damage to the cargo caused by the willful negligence of the officers and the crew of MV Vlasons I.
Clearly, therefore, NSC's failure to insure the cargo will not affect its right, as owner and real party in The contract of voyage charter hire provides inter alia:
interest, to file an action against VSI for damages caused by the latter's willful negligence. We do not
find anything in the charter party that would make the liability of VSI for damage to the cargo
xxx xxx xxx
contingent on or affected in any manner by NSC's obtaining an insurance over the cargo.

2. Cargo: Full cargo of steel products of not less than 2,500 MT, 10% more or less at
Third Issue: Admissibility of Certificates
Master's option.
Proving Seaworthiness

xxx xxx xxx

NSC's contention that MV Vlasons I was not seaworthy is anchored on the alleged inadmissibility of
the certificates of seaworthiness offered in evidence by VSI. The said certificates include the
following: 6. Loading/Discharging Rate: 750 tons per WWDSHINC.

1. Certificate of Inspection of the Philippines Coast Guard at Cebu 7. Demurrage/Dispatch: P8,000.00/P4,000.00 per day.39

2. Certificate of Inspection from the Philippine Coast Guard

25
The Court defined demurrage in its strict sense as the compensation provided for in the contract of WHEREFORE, premises considered, the instant consolidated petitions are hereby DENIED. The
affreightment for the detention of the vessel beyond the laytime or that period of time agreed on for questioned Decision of the Court of Appeals is AFFIRMED with the MODIFICATION that the
loading and unloading of cargo.40 It is given to compensate the shipowner for the nonuse of the demurrage awarded to VSI is deleted. No pronouncement as to costs.
vessel. On the other hand, the following is well-settled:
SO ORDERED.
Laytime runs according to the particular clause of the charter party. . . . If laytime is
expressed in "running days," this means days when the ship would be run continuously,
and holidays are not excepted. A qualification of "weather permitting" excepts only those
days when bad weather reasonably prevents the work contemplated.41
G.R. No. 111127 July 26, 1996
In this case, the contract of voyage charter hire provided for a four-day laytime; it also qualified
laytime as WWDSHINC or weather working days Sundays and holidays included.42 The running of MR. & MRS. ENGRACIO FABRE, JR. and PORFIRIO CABIL, petitioners,
laytime was thus made subject to the weather, and would cease to run in the event unfavorable vs.
weather interfered with the unloading of cargo.43 Consequently, NSC may not be held liable for COURT OF APPEALS, THE WORD FOR THE WORLD CHRISTIAN FELLOWSHIP, INC.,
demurrage as the four-day laytime allowed it did not lapse, having been tolled by unfavorable AMYLINE ANTONIO, JOHN RICHARDS, GONZALO GONZALES, VICENTE V. QUE, JR., ICLI
weather condition in view of the WWDSHINC qualification agreed upon by the parties. Clearly, it CORDOVA, ARLENE GOJOCCO, ALBERTO ROXAS CORDERO, RICHARD BAUTISTA,
was error for the trial court and the Court of Appeals to have found and affirmed respectively that JOCELYN GARCIA, YOLANDA CORDOVA, NOEL ROQUE, EDWARD TAN, ERNESTO
NSC incurred eleven days of delay in unloading the cargo. The trial court arrived at this erroneous NARCISO, ENRIQUETA LOCSIN, FRANCIS NORMAN O. LOPES, JULIUS CAESAR, GARCIA,
finding by subtracting from the twelve days, specifically August 13, 1974 to August 24, 1974, the ROSARIO MA. V. ORTIZ, MARIETTA C. CLAVO, ELVIE SENIEL, ROSARIO MARA-MARA,
only day of unloading unhampered by unfavorable weather or rain, which was August 22, 1974. TERESITA REGALA, MELINDA TORRES, MARELLA MIJARES, JOSEFA CABATINGAN, MARA
Based on our previous discussion, such finding is a reversible error. As mentioned, the respondent NADOC, DIANE MAYO, TESS PLATA, MAYETTE JOCSON, ARLENE Y. MORTIZ, LIZA MAYO,
appellate court also erred in ruling that NSC was liable to VSI for demurrage, even if it reduced the CARLOS RANARIO, ROSAMARIA T. RADOC and BERNADETTE FERRER, respondents.
amount by half.
MENDOZA, J.:p
Attorney's Fees
This is a petition for review on certiorari of the decision of the Court of Appeals1 in CA-GR No.
VSI assigns as error of law the Court of Appeals' deletion of the award of attorney's fees. We 28245, dated September 30, 1992, which affirmed with modification the decision of the Regional
disagree. While VSI was compelled to litigate to protect its rights, such fact by itself will not justify an Trial Court of Makati, Branch 58, ordering petitioners jointly and severally to pay damages to private
award of attorney's fees under Article 2208 of the Civil Code when ". . . no sufficient showing of bad respondent Amyline Antonio, and its resolution which denied petitioners' motion for reconsideration
faith would be reflected in a party's persistence in a case other than an erroneous conviction of the for lack of merit.
righteousness of his cause . . ."44 Moreover, attorney's fees may not be awarded to a party for the
reason alone that the judgment rendered was favorable to the latter, as this is tantamount to
Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model Mazda minibus. They
imposing a premium on one's right to litigate or seek judicial redress of legitimate grievances.45
used the bus principally in connection with a bus service for school children which they operated in
Manila. The couple had a driver, Porfirio J. Cabil, whom they hired in 1981, after trying him out for
Epilogue two weeks, His job was to take school children to and from the St. Scholastica's College in Malate,
Manila.
At bottom, this appeal really hinges on a factual issue: when, how and who caused the damage to
the cargo? Ranged against NSC are two formidable truths. First, both lower courts found that such On November 2, 1984 private respondent Word for the World Christian Fellowship Inc. (WWCF)
damage was brought about during the unloading process when rain and seawater seeped through arranged with petitioners for the transportation of 33 members of its Young Adults Ministry from
the cargo due to the fault or negligence of the stevedores employed by it. Basic is the rule that Manila to La Union and back in consideration of which private respondent paid petitioners the
factual findings of the trial court, when affirmed by the Court of Appeals, are binding on the Supreme amount of P3,000.00.
Court. Although there are settled exceptions, NSC has not satisfactorily shown that this case is one
of them. Second, the agreement between the parties — the Contract of Voyage Charter Hire —
The group was scheduled to leave on November 2, 1984, at 5:00 o'clock in the afternoon. However,
placed the burden of proof for such loss or damage upon the shipper, not upon the shipowner. Such
as several members of the party were late, the bus did not leave the Tropical Hut at the corner of
stipulation, while disadvantageous to NSC, is valid because the parties entered into a contract of
Ortigas Avenue and EDSA until 8:00 o'clock in the evening. Petitioner Porfirio Cabil drove the
private charter, not one of common carriage. Basic too is the doctrine that courts cannot relieve a
minibus.
parry from the effects of a private contract freely entered into, on the ground that it is allegedly one-
sided or unfair to the plaintiff. The charter party is a normal commercial contract and its stipulations
are agreed upon in consideration of many factors, not the least of which is the transport price which The usual route to Caba, La Union was through Carmen, Pangasinan. However, the bridge at
is determined not only by the actual costs but also by the risks and burdens assumed by the shipper Carmen was under repair, sot hat petitioner Cabil, who was unfamiliar with the area (it being his first
in regard to possible loss or damage to the cargo. In recognition of such factors, the parties even trip to La Union), was forced to take a detour through the town of Baay in Lingayen, Pangasinan. At
stipulated that the shipper should insure the cargo to protect itself from the risks it undertook under 11:30 that night, petitioner Cabil came upon a sharp curve on the highway, running on a south to
the charter party. That NSC failed or neglected to protect itself with such insurance should not east direction, which he described as "siete." The road was slippery because it was raining, causing
adversely affect VSI, which had nothing to do with such failure or neglect. the bus, which was running at the speed of 50 kilometers per hour, to skid to the left road shoulder.
The bus hit the left traffic steel brace and sign along the road and rammed the fence of one Jesus
Escano, then turned over and landed on its left side, coming to a full stop only after a series of

26
impacts. The bus came to rest off the road. A coconut tree which it had hit fell on it and smashed its 4) P20,000.00 as exemplary damages; and
front portion.
5) 25% of the recoverable amount as attorney's fees;
Several passengers were injured. Private respondent Amyline Antonio was thrown on the floor of the
bus and pinned down by a wooden seat which came down by a wooden seat which came off after
6) Costs of suit.
being unscrewed. It took three persons to safely remove her from this portion. She was in great pain
and could not move.
SO ORDERED.
The driver, petitioner Cabil, claimed he did not see the curve until it was too late. He said he was not
familiar with the area and he could not have seen the curve despite the care he took in driving the The Court of Appeals affirmed the decision of the trial court with respect to Amyline Antonio but
bus, because it was dark and there was no sign on the road. He said that he saw the curve when he dismissed it with respect to the other plaintiffs on the ground that they failed to prove their respective
was already within 15 to 30 meters of it. He allegedly slowed down to 30 kilometers per hour, but it claims. The Court of Appeals modified the award of damages as follows:
was too late.
1) P93,657.11 as actual damages;
The Lingayen police investigated the incident the next day, November 3, 1984. On the basis of their
finding they filed a criminal complaint against the driver, Porfirio Cabil. The case was later filed with
2) P600,000.00 as compensatory damages;
the Lingayen Regional Trial Court. Petitioners Fabre paid Jesus Escano P1,500.00 for the damage
to the latter's fence. On the basis of Escano's affidavit of desistance the case against petitioners
Fabre was dismissed. 3) P50,000.00 as moral damages;

Amyline Antonio, who was seriously injured, brought this case in the RTC of Makati, Metro Manila. 4) P20,000.00 as exemplary damages;
As a result of the accident, she is now suffering from paraplegia and is permanently paralyzed from
the waist down. During the trial she described the operations she underwent and adduced evidence
regarding the cost of her treatment and therapy. Immediately after the accident, she was taken to 5) P10,000.00 as attorney's fees; and
the Nazareth Hospital in Baay, Lingayen. As this hospital was not adequately equipped, she was
transferred to the Sto. Niño Hospital, also in the town of Ba-ay, where she was given sedatives. An 6) Costs of suit.
x-ray was taken and the damage to her spine was determined to be too severe to be treated there.
She was therefore brought to Manila, first to the Philippine General Hospital and later to the Makati
Medical Center where she underwent an operation to correct the dislocation of her spine. The Court of Appeals sustained the trial court's finding that petitioner Cabil failed to exercise due
care and precaution in the operation of his vehicle considering the time and the place of the
accident. The Court of Appeals held that the Fabres were themselves presumptively negligent.
In its decision dated April 17, 1989, the trial court found that: Hence, this petition. Petitioners raise the following issues:

No convincing evidence was shown that the minibus was properly checked for travel to a long I. WHETHER OR NOT PETITIONERS WERE NEGLIGENT.
distance trip and that the driver was properly screened and tested before being admitted for
employment. Indeed, all the evidence presented have shown the negligent act of the defendants
which ultimately resulted to the accident subject of this case. II. WHETHER OF NOT PETITIONERS WERE LIABLE FOR THE INJURIES SUFFERED BY
PRIVATE RESPONDENTS.

Accordingly, it gave judgment for private respondents holding:

III WHETHER OR NOT DAMAGES CAN BE AWARDED AND IN THE POSITIVE, UP TO WHAT
EXTENT.
Considering that plaintiffs Word for the World Christian Fellowship, Inc. and Ms. Amyline Antonio
were the only ones who adduced evidence in support of their claim for damages, the Court is
therefore not in a position to award damages to the other plaintiffs. Petitioners challenge the propriety of the award of compensatory damages in the amount of
P600,000.00. It is insisted that, on the assumption that petitioners are liable an award of
P600,000.00 is unconscionable and highly speculative. Amyline Antonio testified that she was a
WHEREFORE, premises considered, the Court hereby renders judgment against defendants Mr. & casual employee of a company called "Suaco," earning P1,650.00 a month, and a dealer of Avon
Mrs. Engracio Fabre, Jr. and Porfirio Cabil y Jamil pursuant to articles 2176 and 2180 of the Civil products, earning an average of P1,000.00 monthly. Petitioners contend that as casual employees
Code of the Philippines and said defendants are ordered to pay jointly and severally to the plaintiffs do not have security of tenure, the award of P600,000.00, considering Amyline Antonio's earnings, is
the following amount: without factual basis as there is no assurance that she would be regularly earning these amounts.

1) P93,657.11 as compensatory and actual damages; With the exception of the award of damages, the petition is devoid of merit.

2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff First, it is unnecessary for our purpose to determine whether to decide this case on the theory that
Amyline Antonio; petitioners are liable for breach of contract of carriage or culpa contractual or on the theory of quasi
delict or culpa aquiliana as both the Regional Trial Court and the Court of Appeals held, for although
3) P20,000.00 as moral damages; the relation of passenger and carrier is "contractual both in origin and nature," nevertheless "the act

27
that breaks the contract may be also a tort." 2 In either case, the question is whether the bus driver, Art. 1732. Common carriers are persons, corporations, firms or associations
petitioner Porfirio Cabil, was negligent. engaged in the business of carrying or transporting passengers or goods or
both, by land, water, or air for compensation, offering their services to the
public.
The finding that Cabil drove his bus negligently, while his employer, the Fabres, who owned the bus,
failed to exercise the diligence of a good father of the family in the selection and supervision of their
employee is fully supported by the evidence on record. These factual findings of the two courts we The above article makes no distinction between one whose principal business
regard as final and conclusive, supported as they are by the evidence. Indeed, it was admitted by activity is the carrying of persons or goods or both, and one who does such
Cabil that on the night in question, it was raining, and as a consequence, the road was slippery, and carrying only as an ancillary activity (in local idiom, as "a sideline"). Article 1732
it was dark. He averred these facts to justify his failure to see that there lay a sharp curve ahead. also carefully avoids making any distinction between a person or enterprise
However, it is undisputed that Cabil drove his bus at the speed of 50 kilometers per hour and only offering transportation service on a regular or scheduled basis and one offering
slowed down when he noticed the curve some 15 to 30 meters ahead. 3 By then it was too late for such service on an occasional, episodic or unscheduled basis. Neither does
him to avoid falling off the road. Given the conditions of the road and considering that the trip was Article 1732 distinguish between a carrier offering its services to the "general
Cabil's first one outside of Manila, Cabil should have driven his vehicle at a moderate speed. There public," i.e., the general community or population, and one who offers services
is testimony 4 that the vehicles passing on that portion of the road should only be running 20 or solicits business only from a narrow segment of the general population. We
kilometers per hour, so that at 50 kilometers per hour, Cabil was running at a very high speed. think that Article 1732 deliberately refrained from making such distinctions.

Considering the foregoing — the fact that it was raining and the road was slippery, that it was dark, As common carriers, the Fabres were found to exercise "extraordinary
that he drove his bus at 50 kilometers an hour when even on a good day the normal speed was only diligence" for the safe transportation of the passengers to their destination. This
20 kilometers an hour, and that he was unfamiliar with the terrain, Cabil was grossly negligent and duty of care is not excused by proof that they exercise the diligence of a good
should be held liable for the injuries suffered by private respondent Amyline Antonio. father of the family in the selection and supervision of their employee. As Art.
1759 of the Code provides:
Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise to the presumption that
his employers, the Fabres, were themselves negligent in the selection and supervisions of their Common carriers are liable for the death of or injuries to passengers through
employee. the negligence or willful acts of the former's employees although such
employees may have acted beyond the scope of their authority or in violation of
the orders of the common carriers.
Due diligence in selection of employees is not satisfied by finding that the applicant possessed a
professional driver's license. The employer should also examine the applicant for his qualifications,
experience and record of service. 5 Due diligence in supervision, on the other hand, requires the This liability of the common carriers does not cease upon proof that they
formulation of rules and regulations for the guidance of employees and issuance of proper exercised all the diligence of a good father of a family in the selection and
instructions as well as actual implementation and monitoring of consistent compliance with the supervision of their employees.
rules.6
The same circumstances detailed above, supporting the finding of the trial court and of the appellate
In the case at bar, the Fabres, in allowing Cabil to drive the bus to La Union, apparently did not court that petitioners are liable under Arts. 2176 and 2180 for quasi delict, fully justify findings them
consider the fact that Cabil had been driving for school children only, from their homes to the St. guilty of breach of contract of carriage under Arts. 1733, 1755 and 1759 of the Civil Code.
Scholastica's College in Metro Manila. 7 They had hired him only after a two-week apprenticeship.
They had hired him only after a two-week apprenticeship. They had tested him for certain matters,
Secondly, we sustain the award of damages in favor of Amyline Antonio. However, we think the
such as whether he could remember the names of the children he would be taking to school, which
Court of Appeals erred in increasing the amount of compensatory damages because private
were irrelevant to his qualification to drive on a long distance travel, especially considering that the
respondents did not question this award as inadequate. 11 To the contrary, the award of
trip to La Union was his first. The existence of hiring procedures and supervisory policies cannot be
P500,000.00 for compensatory damages which the Regional Trial Court made is reasonable
casually invoked to overturn the presumption of negligence on the part of an employer. 8
considering the contingent nature of her income as a casual employee of a company and as
distributor of beauty products and the fact that the possibility that she might be able to work again
Petitioners argue that they are not liable because (1) an earlier departure (made impossible by the has not been foreclosed. In fact she testified that one of her previous employers had expressed
congregation's delayed meeting) could have a averted the mishap and (2) under the contract, the willingness to employ her again.
WWCF was directly responsible for the conduct of the trip. Neither of these contentions hold water.
The hour of departure had not been fixed. Even if it had been, the delay did not bear directly on the
With respect to the other awards, while the decisions of the trial court and the Court of Appeals do
cause of the accident. With respect to the second contention, it was held in an early case that:
not sufficiently indicate the factual and legal basis for them, we find that they are nevertheless
supported by evidence in the records of this case. Viewed as an action for quasi delict, this case
[A] person who hires a public automobile and gives the driver directions as to the place to which he falls squarely within the purview of Art. 2219(2) providing for the payment of moral damages in
wishes to be conveyed, but exercises no other control over the conduct of the driver, is not cases of quasi delict. On the theory that petitioners are liable for breach of contract of carriage, the
responsible for acts of negligence of the latter or prevented from recovering for injuries suffered from award of moral damages is authorized by Art. 1764, in relation to Art. 2220, since Cabil's gross
a collision between the automobile and a train, caused by the negligence or the automobile driver. 9 negligence amounted to bad faith.12 Amyline Antonio's testimony, as well as the testimonies of her
father and copassengers, fully establish the physical suffering and mental anguish she endured as a
result of the injuries caused by petitioners' negligence.
As already stated, this case actually involves a contract of carriage. Petitioners, the Fabres, did not
have to be engaged in the business of public transportation for the provisions of the Civil Code on
common carriers to apply to them. As this Court has held: 10 The award of exemplary damages and attorney's fees was also properly made. However, for the
same reason that it was error for the appellate court to increase the award of compensatory

28
damages, we hold that it was also error for it to increase the award of moral damages and reduce WHEREFORE, the decision of the Court of Appeals is AFFIRMED with MODIFICATION as to award
the award of attorney's fees, inasmuch as private respondents, in whose favor the awards were of damages. Petitioners are ORDERED to PAY jointly and severally the private respondent Amyline
made, have not appealed. 13 Antonio the following amounts:

As above stated, the decision of the Court of Appeals can be sustained either on the theory of quasi 1) P93,657.11 as actual damages;
delict or on that of breach of contract. The question is whether, as the two courts below held,
petitioners, who are the owners and driver of the bus, may be made to respond jointly and severally
2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff Amyline Antonio;
to private respondent. We hold that they may be. In Dangwa Trans. Co. Inc. v. Court of
Appeals, 14 on facts similar to those in this case, this Court held the bus company and the driver
jointly and severally liable for damages for injuries suffered by a passenger. Again, in Bachelor 3) P20,000.00 as moral damages;
Express, Inc. v. Court of
Appeals 15 a driver found negligent in failing to stop the bus in order to let off passengers when a
4) P20,000.00 as exemplary damages;
fellow passenger ran amuck, as a result of which the passengers jumped out of the speeding bus
and suffered injuries, was held also jointly and severally liable with the bus company to the injured
passengers. 5) 25% of the recoverable amount as attorney's fees; and

The same rule of liability was applied in situations where the negligence of the driver of the bus on 6) costs of suit.
which plaintiff was riding concurred with the negligence of a third party who was the driver of another
vehicle, thus causing an accident. In Anuran v. Buño, 16 Batangas Laguna Tayabas Bus
Co. v. Intermediate Appellate Court, 17 and Metro Manila Transit Corporation v. Court of SO ORDERED.
Appeals, 18 the bus company, its driver, the operator of the other vehicle and the driver of the vehicle
were jointly and severally held liable to the injured passenger or the latters' heirs. The basis of this
allocation of liability was explained in Viluan v. Court of Appeals, 19 thus:

Nor should it make any difference that the liability of petitioner [bus owner]
springs from contract while that of respondents [owner and driver of other
vehicle] arises from quasi-delict. As early as 1913, we already ruled in Gutierrez
vs. Gutierrez, 56 Phil. 177, that in case of injury to a passenger due to the
negligence of the driver of the bus on which he was riding and of the driver of
another vehicle, the drivers as well as the owners of the two vehicles are jointly
and severally liable for damages. Some members of the Court, though, are of
the view that under the circumstances they are liable on quasi-delict. 20

It is true that in Philippine Rabbit Bus Lines, Inc. v. Court of Appeals 21 this Court exonerated the
jeepney driver from liability to the injured passengers and their families while holding the owners of
the jeepney jointly and severally liable, but that is because that case was expressly tried and
decided exclusively on the theory of culpa contractual. As this Court there explained:

The trial court was therefore right in finding that Manalo (the driver) and spouses Mangune and
Carreon (the jeepney owners) were negligent. However, its ruling that spouses Mangune and
Carreon are jointly and severally liable with Manalo is erroneous. The driver cannot be held jointly G.R. No. 127897      November 15, 2001
and severally liable with carrier in case of breach of the contract of carriage. The rationale behind
this is readily discernible. Firstly, the contract of carriage is between the carrier is exclusively DELSAN TRANSPORT LINES, INC., petitioner,
responsible therefore to the passenger, even if such breach be due to the negligence of his driver vs.
(see Viluan v. The Court of Appeals, et al., G.R. Nos. L-21477-81, April 29, 1966, 16 SCRA 742). 22 THE HON. COURT OF APPEALS and AMERICAN HOME ASSURANCE
CORPORATION, respondents.
As in the case of BLTB, private respondents in this case and her coplaintiffs did not stake out their
claim against the carrier and the driver exclusively on one theory, much less on that of breach of DE LEON, JR., J.:
contract alone. After all, it was permitted for them to allege alternative causes of action and join as
many parties as may be liable on such causes of action 23 so long as private respondent and her
coplaintiffs do not recover twice for the same injury. What is clear from the cases is the intent of the Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals in CA-G.R. CV
plaintiff there to recover from both the carrier and the driver, thus, justifying the holding that the No. 39836 promulgated on June 17, 1996, reversing the decision of the Regional Trial Court of
carrier and the driver were jointly and severally liable because their separate and distinct acts Makati City, Branch 137, ordering petitioner to pay private respondent the sum of Five Million
concurred to produce the same injury. Ninety-Six Thousand Six Hundred Thirty-Five Pesos and Fifty-Seven Centavos (P5,096,635.57) and
costs and the Resolution2 dated January 21, 1997 which denied the subsequent motion for
reconsideration.

29
The facts show that Caltex Philippines (Caltex for brevity) entered into a contract of affreightment Petitioner Delsan Transport Lines, Inc. invokes the provision of Section 113 of the Insurance Code
with the petitioner, Delsan Transport Lines, Inc., for a period of one year whereby the said common of the Philippines, which states that in every marine insurance upon a ship or freight, or freightage,
carrier agreed to transport Caltex’s industrial fuel oil from the Batangas-Bataan Refinery to different or upon any thin which is the subject of marine insurance there is an implied warranty by the shipper
parts of the country. Under the contract, petitioner took on board its vessel, MT Maysun 2,277.314 that the ship is seaworthy. Consequently, the insurer will not be liable to the assured for any loss
kiloliters of industrial fuel oil of Caltex to be delivered to the Caltex Oil Terminal in Zamboanga City. under the policy in case the vessel would later on be found as not seaworthy at the inception of the
The shipment was insured with the private respondent, American Home Assurance Corporation. insurance. It theorized that when private respondent paid Caltex the value of its lost cargo, the act of
the private respondent is equivalent to a tacit recognition that the ill-fated vessel was seaworthy;
otherwise, private respondent was not legally liable to Caltex due to the latter’s breach of implied
On August 14, 1986, MT Maysum set sail from Batangas for Zamboanga City. Unfortunately, the
warranty under the marine insurance policy that the vessel was seaworthy.
vessel sank in the early morning of August 16, 1986 near Panay Gulf in the Visayas taking with it the
entire cargo of fuel oil.
The petitioner also alleges that the Court of Appeals erred in ruling that MT Maysun was not
seaworthy on the ground that the marine officer who served as the chief mate of the vessel,
Subsequently, private respondent paid Caltex the sum of Five Million Ninety-Six Thousand Six
Francisco Berina, was allegedly not qualified. Under Section 116 of the Insurance Code of the
Hundred Thirty-Five Pesos and Fifty-Seven Centavos (P5,096,635.67) representing the insured
Philippines, the implied warranty of seaworthiness of the vessel, which the private respondent
value of the lost cargo. Exercising its right of subrogation under Article 2207 of the New Civil Code,
admitted as having been fulfilled by its payment of the insurance proceeds to Caltex of its lost cargo,
the private respondent demanded of the petitioner the same amount it paid to Caltex.1âwphi1.nêt
extends to the vessel’s complement. Besides, petitioner avers that although Berina had merely a
2nd officer’s license, he was qualified to act as the vessel’s chief officer under Chapter IV(403),
Due to its failure to collect from the petitioner despite prior demand, private respondent filed a Category III(a)(3)(ii)(aa) of the Philippine Merchant Marine Rules and Regulations. In fact, all the
complaint with the Regional Trial Court of Makati City, Branch 137, for collection of a sum of money. crew and officers of MT Maysun were exonerated in the administrative investigation conducted by
After the trial and upon analyzing the evidence adduced, the trial court rendered a decision on the Board of Marine Inquiry after the subject accident.6
November 29, 1990 dismissing the complaint against herein petitioner without pronouncement as to
cost. The trial court found that the vessel, MT Maysum, was seaworthy to undertake the voyage as
In any event, petitioner further avers that private respondent failed, for unknown reason, to present
determined by the Philippine Coast Guard per Survey Certificate Report No. M5-016-MH upon
in evidence during the trial of the instant case the subject marine cargo insurance policy it entered
inspection during its annual dry-docking and that the incident was caused by unexpected inclement
into with Caltex. By virtue of the doctrine laid down in the case of Home Insurance Corporation vs.
weather condition or force majeure, thus exempting the common carrier (herein petitioner) from
CA,7 the failure of the private respondent to present the insurance policy in evidence is allegedly
liability for the loss of its cargo.3
fatal to its claim inasmuch as there is no way to determine the rights of the parties thereto.

The decision of the trial court, however, was reversed, on appeal, by the Court of Appeals. The
Hence, the legal issues posed before the Court are:
appellate court gave credence to the weather report issued by the Philippine Atmospheric,
Geophysical and Astronomical Services Administration (PAGASA for brevity) which showed that
from 2:00 o’clock to 8:oo o’clock in the morning on August 16, 1986, the wind speed remained at 10 I
to 20 knots per hour while the waves measured from .7 to two (2) meters in height only in the vicinity
of the Panay Gulf where the subject vessel sank, in contrast to herein petitioner’s allegation that the
Whether or not the payment made by the private respondent to Caltex for the insured
waves were twenty (20) feet high. In the absence of any explanation as to what may have caused
value of the lost cargo amounted to an admission that the vessel was seaworthy, thus
the sinking of the vessel coupled with the finding that the same was improperly manned, the
precluding any action for recovery against the petitioner.
appellate court ruled that the petitioner is liable on its obligation as common carrier4 to herein private
respondent insurance company as subrogee of Caltex. The subsequent motion for reconsideration
of herein petitioner was denied by the appellate court. II

Petitioner raised the following assignments of error in support of the instant petition,5 to wit: Whether or not the non-presentation of the marine insurance policy bars the complaint for
recovery of sum of money for lack of cause of action.
I
We rule in the negative on both issues.
THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE
REGIONAL TRIAL COURT. The payment made by the private respondent for the insured value of the lost cargo operates as
waiver of its (private respondent) right to enforce the term of the implied warranty against Caltex
under the marine insurance policy. However, the same cannot be validly interpreted as an automatic
II
admission of the vessel’s seaworthiness by the private respondent as to foreclose recourse against
the petitioner for any liability under its contractual obligation as a common carrier. The fact of
THE COURT OF APPEALS ERRED AND WAS NOT JUSTIFIED IN REBUTTING THE payment grants the private respondent subrogatory right which enables it to exercise legal remedies
LEGAL PRESUMPTION THAT THE VESSEL MT "MAYSUN" WAS SEAWORTHY. that would otherwise be available to Caltex as owner of the lost cargo against the petitioner common
carrier.8 Article 2207 of the New civil Code provides that:
III
Art. 2207. If the plaintiff’s 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
THE COURT OF APPEALS ERRED IN NOT APPLYING THE DOCTRINE OF THE
complained of, the insurance company shall be subrogated to the rights of the insured
SUPREME COURT IN THE CASE OF HOME INSURANCE CORPORATION V. COURT
against the wrongdoer or the person who has violated the contract. If the amount paid by
OF APPEALS.

30
 the insurance company does not fully cover the injury or loss, the aggrieved party shall be And also:
entitled to recover the deficiency from the person causing the loss or injury.
Authorities are clear that diligence in securing certificates of seaworthiness
The right of subrogation has its roots in equity. It is designed to promote and to accomplish justice does not satisfy the vessel owner’s obligation. Also securing the approval of the
and is the mode which equity adopts to compel the ultimate payment of a debt by one who in justice shipper of the cargo, or his surveyor, of the condition of the vessel or her
and good conscience ought to pay.9 It is not dependent upon, nor does it grow out of, any privity of stowage does not establish due diligence if the vessel was in fact unseaworthy,
contract or upon written assignment of claim. It accrues simply upon payment by the insurance for the cargo owner has no obligation in relation to seaworthiness. (Ibid.)17
company of the insurance claim.10 Consequently, the payment made by the private respondent
(insurer) to Caltex (assured) operates as an equitable assignment to the former of all the remedies
Additionally, the exoneration of MT Maysun’s officers and crew by the Board of Marine Inquiry
which the latter may have against the petitioner.
merely concerns their respective administrative liabilities. It does not in any way operate to absolve
the petitioner common carrier from its civil liabilities. It does not in any way operate to absolve the
From the nature of their business and for reasons of public policy, common carriers are bound to petitioner common carrier from its civil liability arising from its failure to observe extraordinary
observe extraordinary diligence in the vigilance over the goods and for the safety of passengers diligence in the vigilance over the goods it was transporting and for the negligent acts or omissions
transported by them, according to all the circumstance of each case.11 In the event of loss, of its employees, the determination of which properly belongs to the courts.18 In the case at bar,
destruction or deterioration of the insured goods, common carriers shall be responsible unless the petitioner is liable for the insured value of the lost cargo of industrial fuel oil belonging to Caltex for
same is brought about, among others, by flood, storm, earthquake, lightning or other natural disaster its failure to rebut the presumption of fault or negligence as common carrier19 occasioned by the
or calamity.12 In all other cases, if the goods are lost, destroyed or deteriorated, common carriers are unexplained sinking of its vessel, MT Maysun, while in transit.
presumed to have been at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence.13
Anent the second issue, it is our view and so hold that the presentation in evidence of the marine
insurance policy is not indispensable in this case before the insurer may recover from the common
In order to escape liability for the loss of its cargo of industrial fuel oil belonging to Caltex, petitioner carrier the insured value of the lost cargo in the exercise of its subrogatory right. The subrogation
attributes the sinking of MT Maysun to fortuitous even or force majeure. From the testimonies of receipt, by itself, is sufficient to establish not only the relationship of herein private respondent as
Jaime Jarabe and Francisco Berina, captain and chief mate, respectively of the ill-fated vessel, it insurer and Caltex, as the assured shipper of the lost cargo of industrial fuel oil, but also the amount
appears that a sudden and unexpected change of weather condition occurred in the early morning paid to settle the insurance claim. The right of subrogation accrues simply upon payment by the
of August 16, 1986; that at around 3:15 o’clock in the morning a squall ("unos") carrying strong insurance company of the insurance claim.20
winds with an approximate velocity of 30 knots per hour and big waves averaging eighteen (18) to
twenty (20) feet high, repeatedly buffeted MT Maysun causing it to tilt, take in water and eventually
The presentation of the insurance policy was necessary in the case of Home Insurance Corporation
sink with its cargo.14 This tale of strong winds and big waves by the said officers of the petitioner
v. CA21 (a case cited by petitioner) because the shipment therein (hydraulic engines) passed through
however, was effectively rebutted and belied by the weather report15 from the Philippine
several stages with different parties involved in each stage. First, from the shipper to the port of
Atmospheric, Geophysical and Astronomical Services Administration (PAGASA), the independent
departure; second, from the port of departure to the M/S Oriental Statesman; third, from the M/S
government agency charged with monitoring weather and sea conditions, showing that from 2:00
Oriental Statesman to the M/S Pacific Conveyor; fourth, from the M/S Pacific Conveyor to the port or
o’clock to 8:00 o’clock in the morning on August 16, 1986, the wind speed remained at ten (10) to
arrival; fifth, from the port of arrival to the arrastre operator; sixth, from the arrastre operator to the
twenty (20) knots per hour while the height of the waves ranged from .7 to two (2) meters in the
hauler, Mabuhay Brokerage Co., Inc. (private respondent therein); and lastly, from the hauler to the
vicinity of Cuyo East Pass and Panay Gulf where the subject vessel sank. Thus, as the appellate
consignee. We emphasized in that case that in the absence of proof of stipulations to the contrary,
court correctly ruled, petitioner’s vessel, MT Maysun, sank with its entire cargo for the reason that it
the hauler can be liable only for any damage that occurred from the time it received the cargo until it
was not seaworthy. There was no squall or bad weather or extremely poor sea condition in the
finally delivered it to the consignee. Ordinarily, it cannot be held responsible for the handling of the
vicinity when the said vessel sank.
cargo before it actually received it. The insurance contract, which was not presented in evidence in
that case would have indicated the scope of the insurer’s liability, if any, since no evidence was
The appellate court also correctly opined that the petitioner’s witnesses, Jaime Jarabe and adduced indicating at what stage in the handling process the damage to the cargo was sustained.
Francisco Berina, ship captain and chief mate, respectively, of the said vessel, could not be
expected to testify against the interest of their employer, the herein petitioner common carrier.
Hence, our ruling on the presentation of the insurance policy in the said case of Home Insurance
Corporation is not applicable to the case at bar. In contrast, there is no doubt that the cargo of
Neither may petitioner escape liability by presenting in evidence certificates16 that tend to show that industrial fuel oil belonging to Caltex, in the case at bar, was lost while on board petitioner’s vessel,
at the time of dry-docking and inspection by the Philippine Coast Guard, the vessel MT Maysun, was MT Maysun, which sank while in transit in the vicinity of Panay Gulf and Cuyo East Pass in the early
fit for voyage. These pieces of evidence do not necessarily take into account the actual condition of morning of August 16, 1986.
the vessel at the time of the commencement of the voyage. As correctly observed by the Court of
appeals:
WHEREFORE, the instant petition is DENIED. The Decision dated June 17, 1996 of the Court of
Appeals in CA-G.R. CV No. 39836 is AFFIRMED. Costs against the petitioner.
At the time of dry-docking and inspection, the ship may have appeared fit. The certificates
issued, however, do not negate the presumption of unseaworthiness triggered by an
SO ORDERED.
unexplained sinking. Of certificates issued in this regard, authorities are likewise clear as
to their probative value, (thus):

Seaworthiness relates to a vessel’s actual condition. Neither the granting of

classification or the issuance of certificates established seaworthiness. (2-A G.R. No. L-49407 August 19, 1988
Benedict on Admiralty, 7-3, Sec. 62).

31
NATIONAL DEVELOPMENT COMPANY, petitioner-appellant, of sodium lauryl sulfate and 10 cases of aluminum foil (Exhs. M & M-1). En
vs. route to Manila the vessel Dofia Nati figured in a collision at 6:04 a.m. on April
THE COURT OF APPEALS and DEVELOPMENT INSURANCE & SURETY 15, 1964 at Ise Bay, Japan with a Japanese vessel 'SS Yasushima Maru' as a
CORPORATION, respondents-appellees. result of which 550 bales of aforesaid cargo of American raw cotton were lost
and/or destroyed, of which 535 bales as damaged were landed and sold on the
authority of the General Average Surveyor for Yen 6,045,-500 and 15 bales
No. L-49469 August 19, 1988
were not landed and deemed lost (Exh. G). The damaged and lost cargoes was
worth P344,977.86 which amount, the plaintiff as insurer, paid to the Riverside
MARITIME COMPANY OF THE PHILIPPINES, petitioner-appellant, Mills Corporation as holder of the negotiable bills of lading duly endorsed (Exhs.
vs. L-7-A, K-8-A, K-2-A, K-3-A, K-4-A, K-5-A, A- 2, N-3 and R-3}. Also considered
THE COURT OF APPEALS and DEVELOPMENT INSURANCE & SURETY totally lost were the aforesaid shipment of Kyokuto, Boekui Kaisa Ltd.,
CORPORATION, respondents- appellees. consigned to the order of Manila Banking Corporation, Manila, acting for
Guilcon, Manila, The total loss was P19,938.00 which the plaintiff as insurer
paid to Guilcon as holder of the duly endorsed bill of lading (Exhibits M-1 and S-
PARAS, J.: 3). Thus, the plaintiff had paid as insurer the total amount of P364,915.86 to the
consignees or their successors-in-interest, for the said lost or damaged
These are appeals by certiorari from the decision * of the Court of Appeals in CA G.R. No: L- 46513- cargoes. Hence, plaintiff filed this complaint to recover said amount from the
R entitled "Development Insurance and Surety Corporation plaintiff-appellee vs. Maritime Company defendants-NDC and MCP as owner and ship agent respectively, of the said
of the Philippines and National Development Company defendant-appellants," affirming in toto the 'Dofia Nati' vessel. (Rollo, L-49469, p.38)
decision ** in Civil Case No. 60641 of the then Court of First Instance of Manila, Sixth Judicial
District, the dispositive portion of which reads: On April 22, 1965, the Development Insurance and Surety Corporation filed before the then Court of
First Instance of Manila an action for the recovery of the sum of P364,915.86 plus attorney's fees of
WHEREFORE, judgment is hereby rendered ordering the defendants National P10,000.00 against NDC and MCP (Record on Appeal), pp. 1-6).
Development Company and Maritime Company of the Philippines, to pay jointly
and severally, to the plaintiff Development Insurance and Surety Corp., the sum Interposing the defense that the complaint states no cause of action and even if it does, the action
of THREE HUNDRED SIXTY FOUR THOUSAND AND NINE HUNDRED has prescribed, MCP filed on May 12, 1965 a motion to dismiss (Record on Appeal, pp. 7-14). DISC
FIFTEEN PESOS AND EIGHTY SIX CENTAVOS (364,915.86) with the legal filed an Opposition on May 21, 1965 to which MCP filed a reply on May 27, 1965 (Record on
interest thereon from the filing of plaintiffs complaint on April 22, 1965 until fully Appeal, pp. 14-24). On June 29, 1965, the trial court deferred the resolution of the motion to dismiss
paid, plus TEN THOUSAND PESOS (Pl0,000.00) by way of damages as and till after the trial on the merits (Record on Appeal, p. 32). On June 8, 1965, MCP filed its answer with
for attorney's fee. counterclaim and cross-claim against NDC.

On defendant Maritime Company of the Philippines' cross-claim against the NDC, for its part, filed its answer to DISC's complaint on May 27, 1965 (Record on Appeal, pp. 22-
defendant National Development Company, judgment is hereby rendered, 24). It also filed an answer to MCP's cross-claim on July 16, 1965 (Record on Appeal, pp. 39-40).
ordering the National Development Company to pay the cross-claimant However, on October 16, 1965, NDC's answer to DISC's complaint was stricken off from the record
Maritime Company of the Philippines the total amount that the Maritime for its failure to answer DISC's written interrogatories and to comply with the trial court's order dated
Company of the Philippines may voluntarily or by compliance to a writ of August 14, 1965 allowing the inspection or photographing of the memorandum of agreement it
execution pay to the plaintiff pursuant to the judgment rendered in this case. executed with MCP. Said order of October 16, 1965 likewise declared NDC in default (Record on
Appeal, p. 44). On August 31, 1966, NDC filed a motion to set aside the order of October 16, 1965,
With costs against the defendant Maritime Company of the Philippines. but the trial court denied it in its order dated September 21, 1966.

(pp. 34-35, Rollo, GR No. L-49469) On November 12, 1969, after DISC and MCP presented their respective evidence, the trial court
rendered a decision ordering the defendants MCP and NDC to pay jointly and solidarity to DISC the
sum of P364,915.86 plus the legal rate of interest to be computed from the filing of the complaint on
The facts of these cases as found by the Court of Appeals, are as follows: April 22, 1965, until fully paid and attorney's fees of P10,000.00. Likewise, in said decision, the trial
court granted MCP's crossclaim against NDC.
The evidence before us shows that in accordance with a memorandum
agreement entered into between defendants NDC and MCP on September 13, MCP interposed its appeal on December 20, 1969, while NDC filed its appeal on February 17, 1970
1962, defendant NDC as the first preferred mortgagee of three ocean going after its motion to set aside the decision was denied by the trial court in its order dated February
vessels including one with the name 'Dona Nati' appointed defendant MCP as 13,1970.
its agent to manage and operate said vessel for and in its behalf and account
(Exh. A). Thus, on February 28, 1964 the E. Philipp Corporation of New York
loaded on board the vessel "Dona Nati" at San Francisco, California, a total of On November 17,1978, the Court of Appeals promulgated its decision affirming in toto the decision
1,200 bales of American raw cotton consigned to the order of Manila Banking of the trial court.
Corporation, Manila and the People's Bank and Trust Company acting for and in
behalf of the Pan Asiatic Commercial Company, Inc., who represents Riverside Hence these appeals by certiorari.
Mills Corporation (Exhs. K-2 to K7-A & L-2 to L-7-A). Also loaded on the same
vessel at Tokyo, Japan, were the cargo of Kyokuto Boekui, Kaisa, Ltd.,
consigned to the order of Manila Banking Corporation consisting of 200 cartons

32
NDC's appeal was docketed as G.R. No. 49407, while that of MCP was docketed as G.R. No. AGENT OR NAVIERO OF SS DONA NATI OWNED BY CO-PETITIONER APPELLANT NATIONAL
49469. On July 25,1979, this Court ordered the consolidation of the above cases (Rollo, p. 103). On DEVELOPMENT COMPANY AND THAT SAID PETITIONER-APPELLANT IS SOLIDARILY LIABLE
August 27,1979, these consolidated cases were given due course (Rollo, p. 108) and submitted for WITH SAID CO-PETITIONER FOR LOSS OF OR DAMAGES TO CARGO RESULTING IN THE
decision on February 29, 1980 (Rollo, p. 136). COLLISION OF SAID VESSEL, WITH THE JAPANESE YASUSHIMA MARU.

In its brief, NDC cited the following assignments of error: V

I THE RESPONDENT COURT OF APPEALS ERRED IN FINDING THAT THE LOSS OF OR

DAMAGES TO THE CARGO OF 550 BALES OF AMERICAN RAW COTTON, DAMAGES WERE
CAUSED IN THE AMOUNT OF P344,977.86 INSTEAD OF ONLY P110,000 AT P200.00 PER
THE COURT OF APPEALS ERRED IN APPLYING ARTICLE 827 OF THE CODE OF COMMERCE
BALE AS ESTABLISHED IN THE BILLS OF LADING AND ALSO IN HOLDING THAT PARAGRAPH
AND NOT SECTION 4(2a) OF COMMONWEALTH ACT NO. 65, OTHERWISE KNOWN AS THE
1O OF THE BILLS OF LADING HAS NO APPLICATION IN THE INSTANT CASE THERE BEING
CARRIAGE OF GOODS BY SEA ACT IN DETERMINING THE LIABILITY FOR LOSS OF
NO GENERAL AVERAGE TO SPEAK OF.
CARGOES RESULTING FROM THE COLLISION OF ITS VESSEL "DONA NATI" WITH THE
YASUSHIMA MARU"OCCURRED AT ISE BAY, JAPAN OR OUTSIDE THE TERRITORIAL
JURISDICTION OF THE PHILIPPINES. VI

II THE RESPONDENT COURT OF APPEALS ERRED IN HOLDING THE PETITIONERS NATIONAL

DEVELOPMENT COMPANY AND COMPANY OF THE PHILIPPINES TO PAY JOINTLY AND
SEVERALLY TO HEREIN RESPONDENT DEVELOPMENT INSURANCE AND SURETY
THE COURT OF APPEALS ERRED IN NOT DISMISSING THE C0MPLAINT FOR
CORPORATION THE SUM OF P364,915.86 WITH LEGAL INTEREST FROM THE FILING OF THE
REIMBURSEMENT FILED BY THE INSURER, HEREIN PRIVATE RESPONDENT-APPELLEE,
COMPLAINT UNTIL FULLY PAID PLUS P10,000.00 AS AND FOR ATTORNEYS FEES INSTEAD
AGAINST THE CARRIER, HEREIN PETITIONER-APPELLANT. (pp. 1-2, Brief for Petitioner-
OF SENTENCING SAID PRIVATE RESPONDENT TO PAY HEREIN PETITIONERS ITS
Appellant National Development Company; p. 96, Rollo).
COUNTERCLAIM IN THE AMOUNT OF P10,000.00 BY WAY OF ATTORNEY'S FEES AND THE
COSTS. (pp. 1-4, Brief for the Maritime Company of the Philippines; p. 121, Rollo)
On its part, MCP assigned the following alleged errors:
The pivotal issue in these consolidated cases is the determination of which laws govern loss or
I destruction of goods due to collision of vessels outside Philippine waters, and the extent of liability
as well as the rules of prescription provided thereunder.
THE RESPONDENT COURT OF APPEALS ERRED IN NOT HOLDING THAT RESPONDENT
DEVELOPMENT INSURANCE AND SURETY CORPORATION HAS NO CAUSE OF ACTION AS The main thrust of NDC's argument is to the effect that the Carriage of Goods by Sea Act should
AGAINST PETITIONER MARITIME COMPANY OF THE PHILIPPINES AND IN NOT DISMISSING apply to the case at bar and not the Civil Code or the Code of Commerce. Under Section 4 (2) of
THE COMPLAINT. said Act, the carrier is not responsible for the loss or damage resulting from the "act, neglect or
default of the master, mariner, pilot or the servants of the carrier in the navigation or in the
management of the ship." Thus, NDC insists that based on the findings of the trial court which were
II adopted by the Court of Appeals, both pilots of the colliding vessels were at fault and negligent,
NDC would have been relieved of liability under the Carriage of Goods by Sea Act. Instead, Article
THE RESPONDENT COURT OF APPEALS ERRED IN NOT HOLDING THAT THE CAUSE OF 287 of the Code of Commerce was applied and both NDC and MCP were ordered to reimburse the
ACTION OF RESPONDENT DEVELOPMENT INSURANCE AND SURETY CORPORATION IF insurance company for the amount the latter paid to the consignee as earlier stated.
ANY EXISTS AS AGAINST HEREIN PETITIONER MARITIME COMPANY OF THE PHILIPPINES
IS BARRED BY THE STATUTE OF LIMITATION AND HAS ALREADY PRESCRIBED. This issue has already been laid to rest by this Court of Eastern Shipping Lines Inc. v. IAC (1 50
SCRA 469-470 [1987]) where it was held under similar circumstance "that the law of the country to
III which the goods are to be transported governs the liability of the common carrier in case of their
loss, destruction or deterioration" (Article 1753, Civil Code). Thus, the rule was specifically laid down
that for cargoes transported from Japan to the Philippines, the liability of the carrier is governed
THE RESPONDENT COURT OF APPEALS ERRED IN ADMITTING IN EVIDENCE PRIVATE primarily by the Civil Code and in all matters not regulated by said Code, the rights and obligations
RESPONDENTS EXHIBIT "H" AND IN FINDING ON THE BASIS THEREOF THAT THE of common carrier shall be governed by the Code of commerce and by laws (Article 1766, Civil
COLLISION OF THE SS DONA NATI AND THE YASUSHIMA MARU WAS DUE TO THE FAULT Code). Hence, the Carriage of Goods by Sea Act, a special law, is merely suppletory to the
OF BOTH VESSELS INSTEAD OF FINDING THAT THE COLLISION WAS CAUSED BY THE provision of the Civil Code.
FAULT, NEGLIGENCE AND LACK OF SKILL OF THE COMPLEMENTS OF THE YASUSHIMA
MARU WITHOUT THE FAULT OR NEGLIGENCE OF THE COMPLEMENT OF THE SS DONA
NATI In the case at bar, it has been established that the goods in question are transported from San
Francisco, California and Tokyo, Japan to the Philippines and that they were lost or due to a
collision which was found to have been caused by the negligence or fault of both captains of the
IV colliding vessels. Under the above ruling, it is evident that the laws of the Philippines will apply, and
it is immaterial that the collision actually occurred in foreign waters, such as Ise Bay, Japan.
THE RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT UNDER THE CODE OF
COMMERCE PETITIONER APPELLANT MARITIME COMPANY OF THE PHILIPPINES IS A SHIP

33
Under Article 1733 of the Civil Code, common carriers from the nature of their business and for As found by the trial court and by the Court of Appeals, the Memorandum Agreement of September
reasons of public policy are bound to observe extraordinary diligence in the vigilance over the goods 13, 1962 (Exhibit 6, Maritime) shows that NDC appointed MCP as Agent, a term broad enough to
and for the safety of the passengers transported by them according to all circumstances of each include the concept of Ship-agent in Maritime Law. In fact, MCP was even conferred all the powers
case. Accordingly, under Article 1735 of the same Code, in all other than those mentioned is Article of the owner of the vessel, including the power to contract in the name of the NDC (Decision, CA
1734 thereof, the common carrier shall be presumed to have been at fault or to have acted G.R. No. 46513, p. 12; Rollo, p. 40). Consequently, under the circumstances, MCP cannot escape
negigently, unless it proves that it has observed the extraordinary diligence required by law. liability.

It appears, however, that collision falls among matters not specifically regulated by the Civil Code, It is well settled that both the owner and agent of the offending vessel are liable for the damage
so that no reversible error can be found in respondent courses application to the case at bar of done where both are impleaded (Philippine Shipping Co. v. Garcia Vergara, 96 Phil. 281 [1906]);
Articles 826 to 839, Book Three of the Code of Commerce, which deal exclusively with collision of that in case of collision, both the owner and the agent are civilly responsible for the acts of the
vessels. captain (Yueng Sheng Exchange and Trading Co. v. Urrutia & Co., supra citing Article 586 of the
Code of Commerce; Standard Oil Co. of New York v. Lopez Castelo, 42 Phil. 256, 262 [1921]); that
while it is true that the liability of the naviero in the sense of charterer or agent, is not expressly
More specifically, Article 826 of the Code of Commerce provides that where collision is imputable to
provided in Article 826 of the Code of Commerce, it is clearly deducible from the general doctrine of
the personnel of a vessel, the owner of the vessel at fault, shall indemnify the losses and damages
jurisprudence under the Civil Code but more specially as regards contractual obligations in Article
incurred after an expert appraisal. But more in point to the instant case is Article 827 of the same
586 of the Code of Commerce. Moreover, the Court held that both the owner and agent (Naviero)
Code, which provides that if the collision is imputable to both vessels, each one shall suffer its own
should be declared jointly and severally liable, since the obligation which is the subject of the action
damages and both shall be solidarily responsible for the losses and damages suffered by their
had its origin in a tortious act and did not arise from contract (Verzosa and Ruiz, Rementeria y Cia v.
cargoes.
Lim, 45 Phil. 423 [1923]). Consequently, the agent, even though he may not be the owner of the
vessel, is liable to the shippers and owners of the cargo transported by it, for losses and damages
Significantly, under the provisions of the Code of Commerce, particularly Articles 826 to 839, the occasioned to such cargo, without prejudice, however, to his rights against the owner of the ship, to
shipowner or carrier, is not exempt from liability for damages arising from collision due to the fault or the extent of the value of the vessel, its equipment, and the freight (Behn Meyer Y Co. v. McMicking
negligence of the captain. Primary liability is imposed on the shipowner or carrier in recognition of et al. 11 Phil. 276 [1908]).
the universally accepted doctrine that the shipmaster or captain is merely the representative of the
owner who has the actual or constructive control over the conduct of the voyage (Y'eung Sheng
As to the extent of their liability, MCP insists that their liability should be limited to P200.00 per
Exchange and Trading Co. v. Urrutia & Co., 12 Phil. 751 [1909]).
package or per bale of raw cotton as stated in paragraph 17 of the bills of lading. Also the MCP
argues that the law on averages should be applied in determining their liability.
There is, therefore, no room for NDC's interpretation that the Code of Commerce should apply only
to domestic trade and not to foreign trade. Aside from the fact that the Carriage of Goods by Sea Act
MCP's contention is devoid of merit. The declared value of the goods was stated in the bills of lading
(Com. Act No. 65) does not specifically provide for the subject of collision, said Act in no uncertain
and corroborated no less by invoices offered as evidence ' during the trial. Besides, common
terms, restricts its application "to all contracts for the carriage of goods by sea to and from Philippine
carriers, in the language of the court in Juan Ysmael & Co., Inc. v. Barrette et al., (51 Phil. 90 [1927])
ports in foreign trade." Under Section I thereof, it is explicitly provided that "nothing in this Act shall
"cannot limit its liability for injury to a loss of goods where such injury or loss was caused by its own
be construed as repealing any existing provision of the Code of Commerce which is now in force, or
negligence." Negligence of the captains of the colliding vessel being the cause of the collision, and
as limiting its application." By such incorporation, it is obvious that said law not only recognizes the
the cargoes not being jettisoned to save some of the cargoes and the vessel, the trial court and the
existence of the Code of Commerce, but more importantly does not repeal nor limit its application.
Court of Appeals acted correctly in not applying the law on averages (Articles 806 to 818, Code of
Commerce).
On the other hand, Maritime Company of the Philippines claims that Development Insurance and
Surety Corporation, has no cause of action against it because the latter did not prove that its alleged
MCP's claim that the fault or negligence can only be attributed to the pilot of the vessel SS
subrogers have either the ownership or special property right or beneficial interest in the cargo in
Yasushima Maru and not to the Japanese Coast pilot navigating the vessel Dona Nati need not be
question; neither was it proved that the bills of lading were transferred or assigned to the alleged
discussed lengthily as said claim is not only at variance with NDC's posture, but also contrary to the
subrogers; thus, they could not possibly have transferred any right of action to said plaintiff- appellee
factual findings of the trial court affirmed no less by the Court of Appeals, that both pilots were at
in this case. (Brief for the Maritime Company of the Philippines, p. 16).
fault for not changing their excessive speed despite the thick fog obstructing their visibility.

The records show that the Riverside Mills Corporation and Guilcon, Manila are the holders of the
Finally on the issue of prescription, the trial court correctly found that the bills of lading issued allow
duly endorsed bills of lading covering the shipments in question and an examination of the invoices
trans-shipment of the cargo, which simply means that the date of arrival of the ship Dona Nati on
in particular, shows that the actual consignees of the said goods are the aforementioned companies.
April 18,1964 was merely tentative to give allowances for such contingencies that said vessel might
Moreover, no less than MCP itself issued a certification attesting to this fact. Accordingly, as it is
not arrive on schedule at Manila and therefore, would necessitate the trans-shipment of cargo,
undisputed that the insurer, plaintiff appellee paid the total amount of P364,915.86 to said
resulting in consequent delay of their arrival. In fact, because of the collision, the cargo which was
consignees for the loss or damage of the insured cargo, it is evident that said plaintiff-appellee has a
supposed to arrive in Manila on April 18, 1964 arrived only on June 12, 13, 18, 20 and July 10, 13
cause of action to recover (what it has paid) from defendant-appellant MCP (Decision, CA-G.R. No.
and 15, 1964. Hence, had the cargoes in question been saved, they could have arrived in Manila on
46513-R, p. 10; Rollo, p. 43).
the above-mentioned dates. Accordingly, the complaint in the instant case was filed on April 22,
1965, that is, long before the lapse of one (1) year from the date the lost or damaged cargo "should
MCP next contends that it can not be liable solidarity with NDC because it is merely the manager have been delivered" in the light of Section 3, sub-paragraph (6) of the Carriage of Goods by Sea
and operator of the vessel Dona Nati not a ship agent. As the general managing agent, according to Act.
MCP, it can only be liable if it acted in excess of its authority.
PREMISES CONSIDERED, the subject petitions are DENIED for lack of merit and the assailed
decision of the respondent Appellate Court is AFFIRMED.

34
SO ORDERED. ALITALIA appealed to the Intermediate Appellate Court but failed to obtain a reversal of the
judgment. 11 Indeed, the Appellate Court not only affirmed the Trial Court's decision but also
increased the award of nominal damages payable by ALITALIA to P40,000.00. 12 That increase it
justified as follows: 13
[G.R. No. 71929 :  December 4, 1990.]
"Considering the circumstances, as found by the Trial Court and the negligence
192 SCRA 9 committed by defendant, the amount of P20,000.00 under present inflationary conditions
as awarded . . . to the plaintiff as nominal damages, is too little to make up for the
ALITALIA, Petitioner, vs. INTERMEDIATE APPELLATE COURT and FELIPA E. PABLO, plaintiff's frustration and disappointment in not being able to appear at said conference;
Respondents. and for the embarrassment and humiliation she suffered from the academic community for
failure to carry out an official mission for which she was singled out by the faculty to
 
represent her institution and the country. After weighing carefully all the considerations,
DECISION the amount awarded to the plaintiff for nominal damages and attorney's fees should be
increased to the cost of her round trip air fare or at the present rate of peso to the dollar at
  P40,000,00."
NARVASA, J.: ALITALIA has appealed to this Court on Certiorari. Here, it seeks to make basically the same points
it tried to make before the Trial Court and the Intermediate Appellate Court, i.e.:
 
1) that the Warsaw Convention should have been applied to limit ALITALIA'S liability; and
Dr. Felipa Pablo — an associate professor in the University of the Philippines, 1 and a research
grantee of the Philippine Atomic Energy Agency — was invited to take part at a meeting of the 2) that there is no warrant in fact or in law for the award to Dr. Pablo of nominal damages
Department of Research and Isotopes of the Joint FAO-IAEA Division of Atomic Energy in Food and and attorney's fees. 14
Agriculture of the United Nations in Ispra, Italy. 2 She was invited in view of her specialized
knowledge in "foreign substances in food and the agriculture environment." She accepted the In addition, ALITALIA postulates that it was error for the Intermediate Appellate Court to have
invitation, and was then scheduled by the organizers, to read a paper on "The Fate of Radioactive refused to pass on all the assigned errors and in not stating the facts and the law on which its
Fusion Products Contaminating Vegetable Crops." 3 The program announced that she would be the decision is based. 15
second speaker on the first day of the meeting. 4 To fulfill this engagement, Dr. Pablo booked
Under the Warsaw Convention, 16 an air carrier is made liable for damages for:
passage on petitioner airline, ALITALIA.
1) the death, wounding or other bodily injury of a passenger if the accident causing it took
She arrived in Milan on the day before the meeting in accordance with the itinerary and time table
place on board the aircraft or in the course of its operations of embarking or disembarking;
set for her by ALITALIA. She was however told by the ALITALIA personnel there at Milan that her
17
luggage was "delayed inasmuch as the same . . . (was) in one of the succeeding flights from Rome
to Milan." 5 Her luggage consisted of two (2) suitcases: one contained her clothing and other 2) the destruction or loss of, or damage to, any registered luggage or goods, if the
personal items; the other, her scientific papers, slides and other research material. But the other occurrence causing it took place during the carriage by air;" 18 and
flights arriving from Rome did not have her baggage on board.
3) delay in the transportation by air of passengers, luggage or goods. 19
By then feeling desperate, she went to Rome to try to locate her bags herself. There, she inquired
about her suitcases in the domestic and international airports, and filled out the forms prescribed by In these cases, it is provided in the Convention that the "action for damages, however, founded, can
ALITALIA for people in her predicament. However, her baggage could not be found. Completely only be brought subject to conditions and limits set out" therein. 20
distraught and discouraged, she returned to Manila without attending the meeting in Ispra, Italy. :
The Convention also purports to limit the liability of the carriers in the following manner: 21
nad
1. In the carriage of passengers the liability of the carrier for each passenger is limited to
Once back in Manila she demanded that ALITALIA make reparation for the damages thus suffered
the sum of 250,000 francs . . . Nevertheless, by special contract, the carrier and the
by her. ALITALIA offered her "free airline tickets to compensate her for any alleged damages. . . ."
passenger may agree to a higher limit of liability.: nad
She rejected the offer, and forthwith commenced the action 6 which has given rise to the present
appellate proceedings. 2. a) In the carriage of registered baggage and of cargo, the liability of the carrier is limited
to a sum of 250 francs per kilogramme, unless the passenger or consignor has made, at
As it turned out, Prof. Pablo's suitcases were in fact located and forwarded to Ispra, 7 Italy, but only
the time when the package was handed over to the carrier, a special declaration of
on the day after her scheduled appearance and participation at the U.N. meeting there. 8 Of course
interest in delivery at destination and has paid a supplementary sum if the case so
Dr. Pablo was no longer there to accept delivery; she was already on her way home to Manila. And
requires. In that case the carrier will be liable to pay a sum not exceeding the declared
for some reason or other, the suitcases were not actually restored to Prof. Pablo by ALITALIA until
sum, unless he proves that sum is greater than the actual value to the consignor at
eleven (11) months later, and four (4) months after institution of her action. 9
delivery.
After appropriate proceedings and trial, the Court of First Instance rendered judgment in Dr. Pablo's
b) In the case of loss, damage or delay of part of registered baggage or cargo, or of any
favor: 10
object contained therein, the weight to be taken into consideration in determining the
"(1) Ordering the defendant (ALITALIA) to pay . . . (her) the sum of TWENTY THOUSAND amount to which the carrier's liability is limited shall be only the total weight of the package
PESOS (P20,000.00), Philippine Currency, by way of nominal damages; or packages concerned. Nevertheless, when the loss, damage or delay of a part of the
registered baggage or cargo, or of an object contained therein, affects the value of other
(2) Ordering the defendant to pay . . . (her) the sum of FIVE THOUSAND PESOS packages covered by the same baggage check or the same air way bill, the total weight of
(P5,000.00), Philippine Currency, as and for attorney's fees; (and) such package or packages shall also be taken into consideration in determining the limit
of liability.
(3) Ordering the defendant to pay the costs of the suit."

35
 3. As regards objects of which the passenger takes charge himself the liability of the autoradiograms or films, tables and tabulations) that she had painstakingly labored over, at the
carrier is limited to 5000 francs per passenger. prestigious international conference, to attend which she had traveled hundreds of miles, to her
chagrin and embarrassment and the disappointment and annoyance of the organizers. She felt, not
4. The limits prescribed . . shall not prevent the court from awarding, in accordance with unreasonably, that the invitation for her to participate at the conference, extended by the Joint
its own law, in addition, the whole or part of the court costs and of the other expenses of FAO/IAEA Division of Atomic Energy in Food and Agriculture of the United Nations, was a singular
litigation incurred by the plaintiff. The foregoing provision shall not apply if the amount of honor not only to herself, but to the University of the Philippines and the country as well, an
the damages awarded, excluding court costs and other expenses of the litigation, does opportunity to make some sort of impression among her colleagues in that field of scientific activity.
not exceed the sum which the carrier has offered in writing to the plaintiff within a period of The opportunity to claim this honor or distinction was irretrievably lost to her because of Alitalia's
six months from the date of the occurrence causing the damage, or before the breach of its contract.
commencement of the action, if that is later.
Apart from this, there can be no doubt that Dr. Pablo underwent profound distress and anxiety,
The Warsaw Convention however denies to the carrier availment "of the provisions which exclude or which gradually turned to panic and finally despair, from the time she learned that her suitcases
limit his liability, if the damage is caused by his wilful misconduct or by such default on his part as, in were missing up to the time when, having gone to Rome, she finally realized that she would no
accordance with the law of the court seized of the case, is considered to be equivalent to wilful longer be able to take part in the conference. As she herself put it, she "was really shocked and
misconduct," or "if the damage is (similarly) caused . . by any agent of the carrier acting within the distraught and confused."
scope of his employment."  22 The Hague Protocol amended the Warsaw Convention by removing
the provision that if the airline took all necessary steps to avoid the damage, it could exculpate itself Certainly, the compensation for the injury suffered by Dr. Pablo cannot under the circumstances be
completely,  23 and declaring the stated limits of liability not applicable "if it is proved that the restricted to that prescribed by the Warsaw Convention for delay in the transport of baggage.
damage resulted from an act or omission of the carrier, its servants or agents, done with intent to
cause damage or recklessly and with knowledge that damage would probably result." The same She is not, of course, entitled to be compensated for loss or damage to her luggage. As already
deletion was effected by the Montreal Agreement of 1966, with the result that a passenger could mentioned, her baggage was ultimately delivered to her in Manila, tardily but safely. She is however
recover unlimited damages upon proof of wilful misconduct.  24 entitled to nominal damages — which, as the law says, is adjudicated in order that a right of the
plaintiff, which has been violated or invaded by the defendant, may be vindicated and recognized,
The Convention does not thus operate as an exclusive enumeration of the instances of an airline's and not for the purpose of indemnifying the plaintiff for any loss suffered — and this Court agrees
liability, or as an absolute limit of the extent of that liability. Such a proposition is not borne out by the that the respondent Court of Appeals correctly set the amount thereof at P40,000.00. As to the
language of the Convention, as this Court has now, and at an earlier time, pointed out.  25 purely technical argument that the award to her of such nominal damages is precluded by her
Moreover, slight reflection readily leads to the conclusion that it should be deemed a limit of liability omission to include a specific claim therefor in her complaint, it suffices to draw attention to her
only in those cases where the cause of the death or injury to person, or destruction, loss or damage general prayer, following her plea for moral and exemplary damages and attorney's fees, "for such
to property or delay in its transport is not attributable to or attended by any wilful misconduct, bad other and further just and equitable relief in the premises," which certainly is broad enough to
faith, recklessness, or otherwise improper conduct on the part of any official or employee for which comprehend an application as well for nominal damages. Besides, petitioner should have realized
the carrier is responsible, and there is otherwise no special or extraordinary form of resulting injury. that the explicit assertion, and proof, that Dr. Pablo's right had been violated or invaded by it —
The Convention's provisions, in short, do not "regulate or exclude liability for other breaches of absent any claim for actual or compensatory damages, the prayer thereof having been voluntarily
contract by the carrier"  26 or misconduct of its officers and employees, or for some particular or deleted by Dr. Pablo upon the return to her of her baggage — necessarily raised the issue of
exceptional type of damage. Otherwise, "an air carrier would be exempt from any liability for nominal damages.: rd
damages in the event of its absolute refusal, in bad faith, to comply with a contract of carriage, which
is absurd."  27 Nor may it for a moment be supposed that if a member of the aircraft complement This Court also agrees that respondent Court of Appeals correctly awarded attorney's fees to Dr.
should inflict some physical injury on a passenger, or maliciously destroy or damage the latter's Pablo, and the amount of P5,000.00 set by it is reasonable in the premises. The law authorizes
property, the Convention might successfully be pleaded as the sole gauge to determine the carrier's recovery of attorney's fees inter alia where, as here, "the defendant's act or omission has compelled
liability to the passenger. Neither may the Convention be invoked to justify the disregard of some the plaintiff to litigate with third persons or to incur expenses to protect his interest,"  34 or "where
extraordinary sort of damage resulting to a passenger and preclude recovery therefor beyond the the court deems it just and equitable."  35
limits set by said Convention. It is in this sense that the Convention has been applied, or ignored, WHEREFORE, no error being perceived in the challenged decision of the Court of Appeals, it
depending on the peculiar facts presented by each case.:-cralaw appearing on the contrary to be entirely in accord with the facts and the law, said decision is hereby
In Pan American World Airways, Inc. v. I.A.C.,  28 for example, the Warsaw Convention was applied AFFIRMED, with costs against the petitioner.
as regards the limitation on the carrier's liability, there being a simple loss of baggage without any SO ORDERED.
otherwise improper conduct on the part of the officials or employees of the airline or other special
injury sustained by the passenger.
On the other hand, the Warsaw Convention has invariably been held inapplicable, or as not
restrictive of the carrier's liability, where there was satisfactory evidence of malice or bad faith
attributable to its officers and employees.  29 Thus, an air carrier was sentenced to pay not only G.R. No. 122308 July 8, 1997
compensatory but also moral and exemplary damages, and attorney's fees, for instance, where its
employees rudely put a passenger holding a first-class ticket in the tourist or economy section,  30 PURITA S. MAPA, CARMINA S. MAPA and CORNELIO P. MAPA, petitioners,
or ousted a brown Asiatic from the plane to give his seat to a white man,  31 or gave the seat of a vs.
passenger with a confirmed reservation to another,  32 or subjected a passenger to extremely rude, COURT OF APPEALS and TRANS-WORLD AIRLINES INC., respondents.
even barbaric treatment, as by calling him a "monkey."  33
In the case at bar, no bad faith or otherwise improper conduct may be ascribed to the employees of
petitioner airline; and Dr. Pablo's luggage was eventually returned to her, belatedly, it is true, but
without appreciable damage. The fact is, nevertheless, that some special species of injury was
caused to Dr. Pablo because petitioner ALITALIA misplaced her baggage and failed to deliver it to DAVIDE, JR., J.:
her at the time appointed — a breach of its contract of carriage, to be sure — with the result that she
was unable to read the paper and make the scientific presentation (consisting of slides,
36
The main issue in this petition for review under Rule 45 of the Rules of Court is the applicability of wrong gate because their flight was boarding at gate 1. Upon hearing this, plaintiffs
Article 28(1) of the Warsaw Convention,1 which provides as follows: rushed to gate 1 which was in another building terminal. At gate 1, they were told by a
TWA ground stewardess that flight 901 had just departed. However, they were consoled
that another TWA flight was leaving for Boston after 30 minutes and plaintiffs could use
Art. 28. (1) An action for damages must be brought, at the option of the plaintiff, in the
the same boarding pass for the next flight. At around 3:15 p.m., plaintiffs Purita and
territory of one of the High Contracting Parties, either before the court of the domicile of
Carmina were able to board the next flight. However, the plane was not immediately
the carrier or of his principal place of business, or where he has a place of business
cleared for take off on account of a thunderstorm. The passengers were instructed to stay
through which the contract has been made, or before the court at the place of destination.
inside the aircraft until 6:00 p.m. when the plane finally left for Boston.

We are urged by the petitioners to reverse the 31 May 1995 Decision of the Court of Appeals in CA-
Upon arriving in Boston, plaintiffs Purita and Carmina proceeded to the carousel to claim
G.R. CV No. 398962 affirming the 24 July 1992 Order of the Regional Trial Court of Quezon City,
their baggages and found only three out of the seven they checked in, to wit: one
Branch 102, which dismissed Civil Case No. Q-91-96203 on the ground of lack of jurisdiction in view
Samsonite on the carousel, another Samsonite lying on the floor near the carousel and a
of the aforementioned Article 28(1) of the Warsaw Convention.
third baggage, an American Tourister, inside the unclaimed baggage office. Plaintiffs
immediately reported the loss of their four baggages to the TWA Baggage Office at Logan
The antecedent facts, as summarized by the Court of Appeals, are as follows: Airport. TWA's representative confidently assured them that their baggages would be
located within 24 hours and not more than 48 hours.
Plaintiffs Cornelio P. Mapa and Purita S. Mapa are respectable members of the society.
Mr. Mapa is an established businessman and currently the Regional General Manager of On September 2, 1990, plaintiffs received a letter from TWA, signed by Mr. J.A. Butler,
Akerlund and Rausing, a multinational packaging material manufacturer based in Manila. Customer Relations-Baggage Service, apologizing for TWA's failure to locate the missing
He was previously the Senior Vice President of Phimco Industries, an affiliate company of luggage and requesting plaintiffs to accomplish a passenger property questionnaire to
Swedish Match Company. Mrs. Mapa is a successful businesswoman engaged in the facilitate a further intensive and computerized search for the lost luggage. Plaintiffs duly
commercial transactions of high value antique and oriental arts decor items originating accomplished the passenger property questionnaire, taking pains to write down in detail
from Asian countries. Carmina S. Mapa is the daughter of plaintiffs Purita and Cornelio the contents of each missing baggage. The total value of the lost items amounted to
and is a graduate of the International School in Bangkok, Thailand, now presently enrolled $11,283.79.
at the Boston University where she is majoring in communication.
On September 20, 1990, plaintiff's counsel wrote TWA thru its General Sales Manager in
Plaintiffs Mapa entered into contract of air transportation with defendant TWA as evidence the Philippines, Daniel Tuason, with office address at Ground Floor, Saville Building, Sen.
by TWA ticket Nos. 015:9475:153:304 and 015:9475:153:305, purchased in Bangkok, Gil. J. Puyat Avenue corner Paseo de Roxas, Makati, Metro Manila demanding
Thailand. Said TWA tickets are for Los Angeles-New York-Boston-St. Louis-Chicago. . . . indemnification for the grave damage and injury suffered by the plaintiffs.

Domicile of carrier TWA is Kansas City, Missouri, USA. Its principal place of business is TWA again assured plaintiffs that intensive search was being conducted.
Kansas City, Missouri, USA. TWA's place of business through which the contracts were
made is Bangkok, Thailand. The place of destination is Chicago, USA.
On October 8, 1990, TWA offered to amicably settle the case by giving plaintiffs-
appellants two options: (a) transportation credit for future TWA travel or (b) cash
On August 10, 1990, plaintiffs Carmina and Purita left Manila on board PAL flight No. 104 settlement. Five months lapsed without any result on TWA's intensive search.
for Los Angeles. Carmina was to commence schooling and thus was accompanied by
Purita to assist her in settling down at the University.
On January 3, 1991, plaintiffs-appellant opted for transportation credit for future TWA
travel.
They arrived Los Angeles on the same date and stayed there until August 14, 1990 when
they left for New York City.
On January 11, 1991, TWA disregarded plaintiffs' option and unilaterally declared the
payment of $2,560.00 as constituting full satisfaction of the plaintiffs' claim.
On August 14, 1990, plaintiffs Purita and Carmina S. Mapa arrived at the John F.
Kennedy (JFK) Airport, New York, on TWA Flight No. 904.
On July 19, 1991, plaintiffs accepted the check for $2,560.00, as partial payment for the
actual cost of their lost baggages and their contents.
On August 27, 1990, plaintiffs Purita and Carmina S. Mapa departed for Boston, taking a
connecting flight on TWA's carrier, TW 0901, from JFK Airport, New York, to Boston's
Despite demands by plaintiffs, TWA failed and refused without just cause to indemnify and
Logan Airport, checking in seven (7) pieces of luggage at the TWA counter in the JFK
redress plaintiffs for the grave injury and damages they have suffered.4
Airport. The seven baggages were received by a porter who issued seven TWA baggage
receipts numbered 17-8270, 71, 72, 73, 74, 75, and 76 therefor.
Purita S. Mapa, Carmina S. Mapa, and Cornelio P. Mapa (herein petitioners) then filed with the trial
court on 1 August 1991 a complaint5 for damages,6 which was docketed as Civil Case No. Q-91-
From the entrance gate of the terminal building, plaintiffs Purita and Carmina proceeded
9620. Before a responsive pleading was filed, the petitioners filed an Amended Complaint.7 They
to TWA's ticket counter and presented their confirmed TWA tickets numbered
prayed that after due trial private respondent Trans-World Airlines, Inc. (hereafter, TWA), be ordered
015:9475:153:304 and 015:9475:153:305 with a 3:00 p.m. departure time. They were
to pay them the following amounts: (1) US$8,723.79, or its equivalent in Philippine currency,
issued their boarding passes and were instructed to proceed to gate 35 for boarding. At
representing the cost of the lost luggage and its contents; (2) US$2,949.50, or its equivalent in
about 2:40 p.m., plaintiffs noticed that there was still no instruction to board the aircraft so
Philippine currency, representing the cost of hotel, board and lodging, and communication
they made inquiries. The TWA ground stewardess informed plaintiffs that they were at the

37
expenses; (3) P1 million, by way of moral damages; (4) P1 million, by way of exemplary damages, Under Art. 28(1) supra, a complaint for damages against an air carrier can be instituted
with legal interest on said amounts from the date of extrajudicial demand thereof; and (5) only in any of the following places/courts:
P500,000.00 as attorney's fees, costs of the suit, and other expenses of litigation.8
(1) The court of the domicile of the carrier;
On 26 February 1992, TWA filed its Answer to the Amended Complaint raising, as special and
affirmative defense, lack of jurisdiction of Philippine courts over the action for damages in the
(2) The court of its principal place of business;
pursuant to Article 28(1) of the Warsaw Convention, the action could only be brought either in
Bangkok where the contract was entered into, or in Boston which was the place of destination, or in
Kansas City which is the carrier's domicile and principal place of business. (3) The court where it has a place of business through which the contract had been made;

TWA further alleged that pursuant to the Warsaw Convention and the Notice of Baggage Limitations (4) The court of the place of destination.
at the back of the tickets, its liability to the petitioners is limited to US$9.07 per pound, or US$20.00
per kilo, which is in lieu of actual and compensatory damages. Even assuming that petitioners' bag
In interpreting the provision of Art. 28(1) of the Warsaw Convention, the Supreme Court in
weighed the maximum acceptable weight of 70 pounds, TWA's maximum liability is $640.00 per bag
the same case of Augusto Benedicto Santos vs. Northwest Airlines held:
or $2,560.00 for the four pieces of baggage, which the petitioners have been offered and have
accepted. TWA also submitted that it could not be liable for moral and exemplary damages and
attorney's fees because it did not act in a wanton, fraudulent, reckless, oppressive, or malevolent Whether Article 28(1) refers to jurisdiction or only to venue is a question over which
manner.9 authorities are sharply divided. While the petitioner cites several cases holding that Article
28(1) refers to venue rather that jurisdiction, there are later cases cited by the private
respondent supporting the conclusion that the provision is jurisdictional.
On 7 February 1992, the petitioners filed their second Amended Complaint10 to include a claim of
US$2,500, or its equivalent in Philippine Currency, representing the additional replacement cost of
the items and personal effects contained in their lost luggage; and US$4,500 representing the travel Venue and jurisdiction are entirely distinct matters. Jurisdiction may not be conferred by
expenses, hotel, lodging, food and other expenses of petitioner Cornelio Mapa, who was consent or waiver upon a court which otherwise would have no jurisdiction over the
constrained to join his family in Boston to extend the necessary assistance in connection with the subject-matter of an action; but the venue of an action as fixed by statute may be changed
lost luggage. by the consent of the parties and an objection that the plaintiff brought his suit in the
wrong country may be waived by the failure of the defendant to make a timely objection.
In either case, the court may render a valid judgment. Rules as to jurisdiction can never
After the filing of TWA's Answer to the second Amended Complaint,11 and petitioners' Reply thereto,
be left to the consent or agreement of the parties, whether or not prohibition exists against
the trial court gave TWA ten days within which to submit a memorandum in support of its affirmative
their alteration.
defenses; after which the incident would be deemed submitted for resolution.12 However, after TWA
filed its Memorandum,13 the trial court gave the petitioners five days within which to file a reply
memorandum; and TWA, two days from receipt of the latter to file its comment thereon.14 The A number of reasons tends to support the characterization of Article 28(1) as a jurisdiction
petitioners then filed their Opposition (by way of Reply Memorandum)15 to which TWA filed a and not a venue provision. First, the wording of Article 32, which indicates the places
Reply.16 Thereafter, the petitioners submitted a Rejoinder17; TWA, a Surrejoinder.18 where the action for damages "must" be brought, underscores the mandatory nature of
Article 28(1). Second, this characterization is consistent with one of the objectives of the
Convention, which is to "regulate in a uniform manner the conditions of international
On 24 July 1992, the trial court issued an Order19 dismissing the case for lack of jurisdiction in light
transportation by air." Third, the Convention does not contain any provision prescribing
of Article 28(1) of the Warsaw Convention. Thus:
rules of jurisdiction other than Article 28(1), which means that the phrase "rules as to
jurisdiction" used in Article 32 must refer only to Article 28(1). In fact, the last sentence of
It is plaintiffs' theory that the Warsaw Convention does not apply to the instant case Article 32 specifically deals with the exclusive enumeration in Article 28(1) as
because plaintiffs' contract of transportation does not constitute "international "jurisdictions," which, as such, cannot be left to the will of the parties regardless of the
transportation" as defined in said convention. This however is belied by the Passenger time when the damage occurred.
Property Questionnaire which is Annex C of plaintiffs' amended complaint. Page two of
said questionnaire accomplished by plaintiffs under the heading "Your Complete Itinerary"
xxx xxx xxx
shows that the TWA tickets issued to the plaintiffs form part of the contract of
transportation to be performed from Manila to the United States. Since the Philippines and
the United States are parties to the convention, plaintiffs' contracts of transportation come It has been shown by the defendant that the domicile of the defendant Trans World
within the meaning of International Transportation. Airlines, Inc. is Kansas City, Missouri, its principal place of business is also in Kansas
City, Missouri, the carrier's place of business through which the contracts were made is
Bangkok (Annexes A and A-1, Amended Complaint), and the place of destination was
xxx xxx xxx
Boston.

On the basis of the foregoing, the Court holds that the Warsaw Convention is applicable to
The Philippines not being one of the places specified in Art. 28(1) abovequoted where the
the case at bar, even if the basis of plaintiffs' present action is breach of contract of
complaint may be instituted, this Court therefore, does not have jurisdiction over the
carriage under the New Civil Code.
present case.

The next question to be resolved is whether or not the Court has jurisdiction to try the
Evidently discontented with the trial court's order, the petitioners appealed to the Court of Appeals,
present case in the light of the provision of Art. 28(1) above-quoted.
contending that the lower court erred in not holding that (1) it has jurisdiction over the instant case

38
and (2) the Warsaw Convention is inapplicable in the instant case because the subject matter of the tickets, viz., (a) No. 015.9475:153:304 and (b) No. 015:9475:153:305 did not cease to be for the
case is not included within the coverage of the said convention.20 They claimed that their cause of itinerary therein designated. Besides, it is a fact that petitioners Purita and Carmina Mapa traveled
action could be based on breach of contract of air carriage founded on Articles 1733, 1734, 1735, from Manila to Los Angeles via Philippine Airlines (PAL) by virtue of PAL tickets issued
1755, and 1756 of the New Civil Code governing common carriers or Article 2176 of the same Code independently of the TWA tickets.
governing tort or quasi-delict.
The pitch issue to be resolved under the petitioner's first assigned error is whether the contracts of
The appellate court disagreed with the petitioners and affirmed the order of the trial court. It held that transportation between Purita and Carmina Mapa, on the one hand, and TWA, on the other, were
the Warsaw Convention is the law which governs the dispute between the petitioners and TWA contracts of "international transportation" under the Warsaw Convention. If they were, then we
because what is involved is international transportation defined by said Convention in Article I(2). should sustain the trial court and the Court of Appeals in light of our ruling in Santos v. Northwest
This holding is founded on its determination that the two TWA tickets for Los Angeles-New York- Orient Airlines.25 It appears clear to us that TWA itself, the trial court, and the Court of Appeals
Boston-St. Louis-Chicago purchased in Bangkok, Thailand, were issued in conjunction with, and impliedly admit that if the sole basis were the two TWA tickets for Los Angeles-New York-Boston-
therefore formed part of, the contract of transportation performed from Manila, Philippines, to the St. Louis-Chicago, the contracts cannot be brought within the term "international transportation," as
United States. defined in Article I(2) of the Warsaw Convention. As provided therein, a contract is one
of international transportation only if
The respondent court further held that the cause of action of the petitioners arose from the loss of
the four checked pieces of baggage, which then falls under Article 18(1), Chapter III (Liability of the according to the contract made by the parties, the place of departure and the place of
Carrier) of the Warsaw Conventions.21 Pursuant to Article 24(1) of the Convention, all actions for destination, whether or not there be a break in the transportation or a transshipment, are
damages, whether based on tort, code law or common law, arising from loss of baggage under situated either within the territories of two High Contracting Parties, or within the territory
Article 18 of the Warsaw Convention, can only be brought subject to the conditions and limits set of a single High Contracting Party, if there is an agreed stopping place within a territory
forth in the Warsaw Convention. Article 28(1) thereof sets forth conditions and limits in that the subject to the sovereignty, mandate or authority of another power, even though that power
action for damages may be instituted only in the territory of one of the High Contracting Parties, is not a party to this convention.
before the court of (1) the domicile of the carrier, (2) the carrier's principal place of business, (3) the
place of business through which the contract has been made, or (4) the place of destination. Since
There are then two categories of international transportation, viz., (1) that where the place of
the Philippines is not one of these places, a Philippine Court, like the RTC, has no jurisdiction over
departure and the place of destination are situated within the territories of two High Contracting
the complaint for damages.
Parties regardless of whether or not there be a break in the transportation or a transshipment; and
(2) that where the place of departure and the place of destination are within the territory of a single
Respondent Court of Appeals likewise held that the petitioners could not claim application of Articles High Contracting Party if there is an agreed stopping place within a territory subject to the
1733, 1734, 1735, 1755, and 1756 of the New Civil Code on common carriers without taking into sovereignty, mandate, or authority of another power, even though the power is not a party of the
consideration Article 1753 of the same Code, which provides that the law of the country to which the Convention.
goods are to be transported shall govern the liability of the common carrier for their loss, destruction,
or deterioration. Since the country of ultimate destination is Chicago, the law of Chicago shall govern
The High Contracting Parties referred to in the Convention are the signatories thereto and those
the liability of TWA for the loss of the four pieces of baggage. Neither is Article 2176 of the New Civil
which subsequently adhered to it. In the case of the Philippines, the Convention was concurred in by
Code on torts or quasi-delicts applicable in view of the private international law principle of lex loci
the Senate, through Resolution No. 19, on 16 May 1950. The Philippine instrument of accession
delicti commissi.22 In addition, comformably with Santos III v. Northwest Orient Airlines,23 mere
was signed by President Elpidio Quirino on 13 October 1950 and was deposited with the Polish
allegation of willful misconduct resulting in a tort is insufficient to exclude the case from the
Government on 9 November 1950. The Convention became applicable to the Philippines on 9
comprehension of the Warsaw Convention.
February 1951. Then, on 23 September 1955, President Ramon Magsaysay issued Proclamation
No. 201, declaring the Philippines' formal adherence thereto, "to the end that the same and every
Failing in their bid to reconsider the decision, the petitioners filed this petition. They aver that article and clause thereof may be observed and fulfilled in good faith by the Republic of the
respondent Court of Appeals gravely erred (1) in holding that the Warsaw Convention is applicable Philippines and the citizens thereof.26
to this case and (2) in applying Article 1753 of the Civil Code and the principle of lex loci
delicti commissi.24
The contracts of transportation in this case are evidenced by the two TWA tickets, No.
015:9475:153:304 and No. 015:9475:153:305, both purchased and issued in Bangkok, Thailand. On
We resolved to give due course to the petitioner after the filing by TWA of its Comment on the the basis alone of the provisions therein, it is obvious that the place of departure and the place of
petition and noted without action for the reasons stated in the resolution of 25 September 1996 destination are all in the territory of the United States, or of a single High Contracting Party. The
petitioners' Reply and Rejoinder. We then required the parties to submit their respective contracts, therefore, cannot come within the purview of the first category of international
memoranda. They did in due time. transportation. Neither can it be under the second category since there was NO agreed stopping
place within a territory subject to the sovereignty, mandate, or authority of another power.
The petitioners insist that the Warsaw Convention is not applicable to their case because the
contracts they had with TWA did not involve an international transportation. Whether the contracts The only way to bring the contracts between Purita and Carmina Mapa, on the one hand, and TWA,
were of international transportation is to be solely determined from the TWA tickets issued to them in on the other, within the first category of "international transportation" is to link them with, or to make
Bangkok, Thailand, which showed that their itinerary was Los Angeles-New York-Boston-St. Louis- them an integral part of, the Manila-Los Angeles travel of Purita and Carmina through PAL aircraft.
Chicago. Accordingly, since the place of departure (Los Angeles) and the place of destination The "linkages" which have been pointed out by the TWA, the trial court, and the Court of Appeals
(Chicago) are both within the territory of one High Contracting Party, with no agreed stopping place are (1) the handwritten notations, viz., INT'L TKT # 079-4402956821-2 and INT'L TKT # 079-
in a territory subject to the sovereignty, mandate, suzerainty or authority of another Power, the 4402956819, on the two TWA tickets; and (2) the entries made by petitioners Purita and Carmina
contracts did not constitute 'international transportation' as defined by the convention. They also Mapa in column YOUR COMPLETE ITINERARY in TWA's Passenger Property Questionnaire,
claim to be without legal basis the contention of TWA that their transportation contracts were of wherein they mentioned their travel from Manila to Los Angeles in flight PR 102.
international character because of the handwritten notations in the tickets re "INT'S TKT #079-
4402956821-2" and "INT'L TKT #079-4402956819." Notwithstanding such notations, the TWA
39
The alleged "international tickets" mentioned in the notations in conjunction with which the two TWA Without any further evidence as earlier discussed, the trial court should have denied the affirmative
tickets were issued were not presented. Clearly then, there is at all no factual basis of the finding defense of lack of jurisdiction because it did not appear to be indubitable. Section 3 of Rule 16 of the
that the TWA tickets were issued in conjunction with the international tickets, which are even, at Rules of Court provides:
least as of now, non-existent.
Sec. 3. Hearing and order. — After hearing the court may deny or grant the motion or
As regards the petitioner's entry in YOUR COMPLETE ITINERARY column of the Passenger allow amendment of pleading, or may defer the hearing and determination of the motion
Property Questionnaire wherein they included the Manila-Los Angeles travel, it must be pointed out until the trial if the ground alleged therein does not appear to be indubitable.
that this was made on 4 September 199027 by petitioners Purita and Carmina Mapa, and only in
connection with their claim for their lost pieces of baggage. The loss occurred much earlier, or on 27
WHEREFORE, the instant petition is GRANTED and the challenged decision of 31 May 1995 of
August 1990. The entry can by no means be considered as a part of, or supplement to, their
respondent Court of Appeals in CA-G.R. CV No. 39896, as well as the Order of 24 July 1992 of the
contracts of transportation evidenced by the TWA tickets which covered transportation within the
Regional Trial Court of Quezon City, Branch 102, in Civil Case No. Q-91-9620, is REVERSED and
United States only.
SET ASIDE.

It must be underscored that the first category of international transportation under the Warsaw
The Regional Trial Court of Quezon City, Branch 102, is hereby DIRECTED to proceed with the pre-
Convention is based on "the contract made by the parties." TWA does not claim that the Manila-Los
trial, if it has not been terminated, and with the trial on the merits of the case and then to render
Angeles contracts of transportation which brought Purita and Carmina to Los Angeles were also its
judgment thereon, taking into account the foregoing observations on the issue of jurisdiction.
contracts. It does not deny the assertion of the petitioners that those contracts were independent of
the TWA tickets issued in Bangkok, Thailand. No evidence was offered that TWA and PAL had an
agreement concerning transportation of passengers from points of departures not served with SO ORDERED.
aircrafts of one or the other. There could have been no difficulty for such agreement, since TWA
admitted without qualification in paragraph 1 of its Answer28 to the second Amended Complaint the
allegation in paragraph 1.1 of the latter29 that TWA "is a foreign corporation licensed to do business
in the Philippines with office address at Ground Floor, Saville Building, Sen. Gil. J. Puyat Avenue,
corner Paseo de Roxas, Makati, Metro Manila." G.R. No. 118664 August 7, 1998

TWA relies on Article I(3) of the Convention, which provides as follows: JAPAN AIRLINES, petitioner,
vs.
THE COURT OF APPEALS, ENRIQUE AGANA., MARIA ANGELA NINA AGANA, ADALIA B.
3. A carriage to be performed by several successive air carriers is
FRANCISCO and JOSE MIRANDA, respondents.
deemed, for the purposes of this Convention, to be one undivided
carriage, if it has been regarded by the parties as a single operation,
whether it had been agreed upon under the form of a single contract ROMERO, J.:
or of a series of contracts, and it shall not lose its international
character merely because one contract or a series of contracts is to
be performed entirely within a territory subject to the sovereignty, Before us is an appeal by certiorari filed by petitioner Japan Airlines, Inc. (JAL) seeking the reversal
suzerainty, mandate, or authority of the same High Contracting Party. of the decision of the Court of Appeals, 1 which affirmed with modification the award of damages
made by the trial court in favor of herein private respondents Enrique Agana, Maria Angela Nina
Agana, Adelia Francisco and Jose Miranda.
It also points to Article 15 of the IATA Recommend Practice 1724, which provides: Carriage to be
performed by a several successive carriers under one ticket, or under a ticket and any conjunction
ticket issued in connection therewith, is regarded as a single operation."30 On June 13, 1991, private respondent Jose Miranda boarded JAL flight No. JL 001 in San
Francisco, California bound for Manila. Likewise, on the same day private respondents Enrique
Agana, Maria Angela Nina Agana and Adelia Francisco left Los Angeles, California for Manila via
The flaw of respondent's position is the presumption that the parties have "regarded" as an JAL flight No. JL 061. As an incentive for travelling on the said airline, both flights were to make an
"undivided carriage" or as a "single operation" the carriage from Manila to Los Angeles through PAL overnight stopover at Narita, Japan, at the airlines' expense, thereafter proceeding to Manila the
then to New York-Boston-St. Louis-Chicago through TWA. The dismissal then of the second following day.
Amended Complaint by the trial court and the Court of Appeals' affirmance of the dismissal were not
based on indubitable facts or grounds, but no inferences without established factual basis.
Upon arrival at Narita, Japan on June 14, 1991, private respondents were billeted at Hotel Nikko
Narita for the night. The next day, private respondents, on the final leg of their journey, went to the
TWA should have offered evidence for its affirmative defenses at the preliminary hearing therefor. airport to take their flight to Manila. However, due to the Mt. Pinatubo eruption, unrelenting ashfall
Section 5 of Rule 16 of the Rules of Court expressly provides: blanketed Ninoy Aquino International Airport (NAIA), rendering it inaccessible to airline traffic.
Hence, private respondents' trip to Manila was cancelled indefinitely.
Sec. 5. Pleading grounds as affirmative defenses. — Any of the grounds for dismissal
provided for in this rule, except improper venue, may be pleaded as an affirmative To accommodate the needs of its stranded passengers, JAL rebooked all the Manila-bound
defense, and a preliminary hearing may be had thereon as if a motion to dismiss had passengers on flight No. 741 due to depart on June 16, 1991 and also paid for the hotel expenses
been filed. for their unexpected overnight stay. On June 16, 1991, much to the dismay of the private
respondents, their long anticipated flight to Manila was again cancelled due to NAIA's indefinite
closure. At this point, JAL informed the private respondents that it would no longer defray their hotel
and accommodation expense during their stay in Narita.

40
Since NAIA was only reopened to airline traffic on June 22, 1991, private respondents were forced We are not unmindful of the fact that in a plethora of cases we have consistently ruled that a
to pay for their accommodations and meal expenses from their personal funds from June 16 to June contract to transport passengers is quite different in kind, and degree from any other contractual
21, 1991. Their unexpected stay in Narita ended on June 22, 1991 when they arrived in Manila on relation. It is safe to conclude that it is a relationship imbued with public interest. Failure on the part
board JL flight No. 741. of the common carrier to live up to the exacting standards of care and diligence renders it liable for
any damages that may be sustained by its passengers. However, this is not to say that common
carriers are absolutely responsible for all injuries or damages even if the same were caused by a
Obviously, still reeling from the experience, private respondents, on July 25, 1991, commenced an
fortuitous event. To rule otherwise would render the defense of "force majeure," as an exception
action for damages against JAL before the Regional Trial Court of Quezon City, Branch 104. 2 To
from any liability, illusory and ineffective.
support their claim, private respondents asserted that JAL failed to live up to its duty to provide care
and comfort to its stranded passengers when it refused to pay for their hotel and accommodation
expenses from June 16 to 21, 1991 at Narita, Japan. In other words, they insisted that JAL was Accordingly, there is no question that when a party is unable to fulfill his obligation because of "force
obligated to shoulder their expenses as long as they were still stranded in Narita. On the other hand, majeure," the general rule is that he cannot be held liable for damages for non-
JAL denied this allegation and averred that airline passengers have no vested right to these performance.6 Corollarily, when JAL was prevented from resuming its flight to Manila due to the
amenities in case a flight is cancelled due to "force majeure." effects of Mt. Pinatubo eruption, whatever losses or damages in the form of hotel and meal
expenses the stranded passengers incurred, cannot be charged to JAL. Yet it is undeniable that JAL
assumed the hotel expenses of respondents for their unexpected overnight stay on June 15, 1991.
On June 18, 1992, the trial court rendered its judgment in favor of private respondents holding JAL
liable for damages, viz.:
Admittedly, to be stranded for almost a week in a foreign land was an exasperating experience for
the private respondents. To be sure, they underwent distress and anxiety during their unanticipated
WHEREFORE, judgment is rendered in favor of plaintiffs ordering the defendant
stay in Narita, but their predicament was not due to the fault or negligence of JAL but the closure of
Japan Airlines to pay the plaintiffs Enrique Agana, Adalia B. Francisco and
NAIA to international flights. Indeed, to hold JAL, in the absence of bad faith or negligence, liable for
Maria Angela Nina Agana the sum of One million Two Hundred forty-six
the amenities of its stranded passengers by reason of a fortuitous event is too much of a burden to
Thousand Nine Hundred Thirty-Six Pesos (P1,246,936.00) and Jose Miranda
assume.
the sum of Three Hundred Twenty Thousand Six Hundred sixteen and 31/100
(P320,616.31) as actual, moral and exemplary damages and pay attorney's
fees in the amount of Two Hundred Thousand Pesos (P200,000.00), and to pay Furthermore, it has been held that airline passengers must take such risks incident to the mode of
the costs of suit. travel. 7 In this regard, adverse weather conditions or extreme climatic changes are some of the
perils involved in air travel, the consequences of which the passenger must assume or expect. After
all, common carriers are not the insurer of all risks. 8
Undaunted, JAL appealed the decision before the Court of Appeals, which, however, with the
exception of lowering the damages awarded affirmed the trial court's finding, 3 thus:
Paradoxically, the Court of Appeals, despite the presence of "force majeure," still ruled against JAL
relying in our decision in PAL v. Court of Appeals, 9 thus:
Thus, the award of moral damages should be as it is hereby reduced to
P200,000.00 for each of the plaintiffs, the exemplary damages to P300,000.00
and the attorney's fees to P100,000.00 plus the costs. The position taken by PAL in this case clearly illustrates its failure to grasp the
exacting standard required by law. Undisputably, PAL's diversion of its flight due
to inclement weather was a fortuitous event. Nonetheless, such occurrence did
WHEREFORE, with the foregoing Modification, the judgment appealed from is
not terminate PAL's contract with its passengers. Being in the business of air
hereby AFFIRMED in all other respects.
carriage and the sole one to operate in the country, PAL is deemed equipped to
deal with situations as in the case at bar. What we said in one case once again
JAL filed a motion for reconsideration which proved futile and must be stressed, i.e., the relation of carrier and passenger continues until the
unavailing. 4 latter has been landed at the port of destination and has left the carrier's
premises. Hence, PAL necessarily would still have to exercise extraordinary
diligence in safeguarding the comfort, convenience and safety of its stranded
Failing in its bid to reconsider the decision, JAL has now filed this instant petition. passengers until they have reached their final destination. On this score, PAL
grossly failed considering the then ongoing battle between government forces
The issue to be resolved is whether JAL, as a common carrier has the obligation to shoulder the and Muslim rebels in Cotabato City and the fact that the private respondent was
hotel and meal expenses of its stranded passengers until they have reached their final destination, a stranger to the place.
even if the delay were caused by "force majeure."
The reliance is misplaced. The factual background of the PAL case is different from the instant
To begin with, there is no dispute that the Mt. Pinatubo eruption prevented JAL from proceeding to petition. In that case there was indeed a fortuitous event resulting in the diversion of the PAL flight.
Manila on schedule. Likewise, private respondents concede that such event can be considered as However, the unforeseen diversion was worsened when "private respondents (passenger) was left
"force majeure" since their delayed arrival in Manila was not imputable to JAL. 5 at the airport and could not even hitch a ride in a Ford Fiera loaded with PAL personnel," 10 not to
mention the apparent apathy of the PAL station manager as to the predicament of the stranded
passengers. 11 In light of these circumstances, we held that if the fortuitous event was accompanied
However, private respondents contend that while JAL cannot be held responsible for the delayed by neglect and malfeasance by the carrier's employees, an action for damages against the carrier is
arrival in Manila, it was nevertheless liable for their living expenses during their unexpected stay in permissible. Unfortunately, for private respondents, none of these conditions are present in the
Narita since airlines have the obligation to ensure the comfort and convenience of its passengers. instant petition.
While we sympathize with the private respondents' plight, we are unable to accept this contention.

41
We are not prepared, however, to completely absolve petitioner JAL from any liability. It must be PUNO, C.J.:
noted that private respondents bought tickets from the United States with Manila as their final
destination. While JAL was no longer required to defray private respondents' living expenses during
On appeal are the Decision1 and Resolution2 of the Court of Appeals in CA-G.R. CV No. 66891,
their stay in Narita on account of the fortuitous event, JAL had the duty to make the necessary
dated May 21, 2004 and January 7, 2005 respectively, which reversed the Decision3 of the Regional
arrangements to transport private respondents on the first available connecting flight to Manila.
Trial Court (RTC) of Quezon City, dated September 13, 1999, which found respondents jointly and
Petitioner JAL reneged on its obligation to look after the comfort and convenience of its passengers
severally liable to pay petitioner damages for the death of his wife.
when it declassified private respondents from "transit passengers" to "new passengers" as a result
of which private respondents were obliged to make the necessary arrangements themselves for the
next flight to Manila. Private respondents were placed on the waiting list from June 20 to June 24. First, the facts:
To assure themselves of a seat on an available flight, they were compelled to stay in the airport the
whole day of June 22, 1991 and it was only at 8:00 p.m. of the aforesaid date that they were advised
Petitioner Herminio Mariano, Jr. is the surviving spouse of Dr. Frelinda Mariano who was a
that they could be accommodated in said flight which flew at about 9:00 a.m. the next day.
passenger of a Celyrosa Express bus bound for Tagaytay when she met her death. Respondent
Ildefonso C. Callejas is the registered owner of Celyrosa Express, while respondent Edgar de Borja
We are not oblivious to the fact that the cancellation of JAL flights to Manila from June 15 to June was the driver of the bus on which the deceased was a passenger.
21, 1991 caused considerable disruption in passenger booking and reservation. In fact, it would be
unreasonable to expect, considering NAIA's closure, that JAL flight operations would be normal on
At around 6:30 p.m. on November 12, 1991, along Aguinaldo Highway, San Agustin, Dasmariñas,
the days affected. Nevertheless, this does not excuse JAL from its obligation to make the necessary
Cavite, the Celyrosa Express bus, carrying Dr. Mariano as its passenger, collided with an Isuzu
arrangements to transport private respondents on its first available flight to Manila. After all, it had a
truck with trailer bearing plate numbers PJH 906 and TRH 531. The passenger bus was bound for
contract to transport private respondents from the United States to Manila as their final destination.
Tagaytay while the trailer truck came from the opposite direction, bound for Manila. The trailer truck
bumped the passenger bus on its left middle portion. Due to the impact, the passenger bus fell on its
Consequently, the award of nominal damages is in order. Nominal damages are adjudicated in order right side on the right shoulder of the highway and caused the death of Dr. Mariano and physical
that a right of a plaintiff, which has been violated or invaded by the defendant, may be vindicated or injuries to four other passengers. Dr. Mariano was 36 years old at the time of her death. She left
recognized and not for the purpose of indemnifying any loss suffered by him. 12 The court may behind three minor children, aged four, three and two years.
award nominal damages in every obligation arising from any source enumerated in article 1157, or
in every case where any property right has been invaded. 13
Petitioner filed a complaint for breach of contract of carriage and damages against respondents for
their failure to transport his wife and mother of his three minor children safely to her destination.
WHEREFORE, in view of the foregoing, the decision of the Court of Appeals dated December 22, Respondents denied liability for the death of Dr. Mariano. They claimed that the proximate cause of
1993 is hereby MODIFIED. The award of actual, moral and exemplary damages is hereby the accident was the recklessness of the driver of the trailer truck which bumped their bus while
DELETED. Petitioner JAL is ordered to pay each of the private respondents nominal damages in the allegedly at a halt on the shoulder of the road in its rightful lane. Thus, respondent Callejas filed a
sum of P100,000.00 each including attorney' s fees of P50,000.00 plus costs. third-party complaint against Liong Chio Chang, doing business under the name and style of La
Perla Sugar Supply, the owner of the trailer truck, for indemnity in the event that he would be held
liable for damages to petitioner.lavvph!l
SO ORDERED.

Other cases were filed. Callejas filed a complaint,4 docketed as Civil Case No. NC-397 before the
RTC of Naic, Cavite, against La Perla Sugar Supply and Arcadio Arcilla, the truck driver, for
damages he incurred due to the vehicular accident. On September 24, 1992, the said court
dismissed the complaint against La Perla Sugar Supply for lack of evidence. It, however, found
Arcilla liable to pay Callejas the cost of the repairs of his passenger bus, his lost earnings,
exemplary damages and attorney’s fees.5

A criminal case, Criminal Case No. 2223-92, was also filed against truck driver Arcilla in the RTC of
Imus, Cavite. On May 3, 1994, the said court convicted truck driver Arcadio Arcilla of the crime of
reckless imprudence resulting to homicide, multiple slight physical injuries and damage to property.6

In the case at bar, the trial court, in its Decision dated September 13, 1999, found respondents
Ildefonso Callejas and Edgar de Borja, together with Liong Chio Chang, jointly and severally liable to
pay petitioner damages and costs of suit. The dispositive portion of the Decision reads:
G.R. No. 166640               July 31, 2009
ACCORDINGLY, the defendants are ordered to pay as follows:
HERMINIO MARIANO, JR., Petitioner,
vs. 1. The sum of ₱50,000.00 as civil indemnity for the loss of life;
ILDEFONSO C. CALLEJAS and EDGAR DE BORJA, Respondents.
2. The sum of ₱40,000.00 as actual and compensatory damages;
DECISION
3. The sum of ₱1,829,200.00 as foregone income;

42
 4. The sum of ₱30,000.00 as moral damages; In accord with the above provisions, Celyrosa Express, a common carrier, through its driver,
respondent De Borja, and its registered owner, respondent Callejas, has the express obligation "to
carry the passengers safely as far as human care and foresight can provide, using the utmost
5. The sum of ₱20,000.00 as exemplary damages;
diligence of very cautious persons, with a due regard for all the circumstances,"11 and to observe
extraordinary diligence in the discharge of its duty. The death of the wife of the petitioner in the
6. The costs of suit. course of transporting her to her destination gave rise to the presumption of negligence of the
carrier. To overcome the presumption, respondents have to show that they observed extraordinary
diligence in the discharge of their duty, or that the accident was caused by a fortuitous event.
SO ORDERED.7

This Court interpreted the above quoted provisions in Pilapil v. Court of Appeals.12 We elucidated:
Respondents Callejas and De Borja appealed to the Court of Appeals, contending that the trial court
erred in holding them guilty of breach of contract of carriage.
While the law requires the highest degree of diligence from common carriers in the safe transport of
their passengers and creates a presumption of negligence against them, it does not, however, make
On May 21, 2004, the Court of Appeals reversed the decision of the trial court. It reasoned: the carrier an insurer of the absolute safety of its passengers.

. . . the presumption of fault or negligence against the carrier is only a disputable presumption. It Article 1755 of the Civil Code qualifies the duty of extraordinary care, vigilance and precaution in the
gives in where contrary facts are established proving either that the carrier had exercised the degree carriage of passengers by common carriers to only such as human care and foresight can provide.
of diligence required by law or the injury suffered by the passenger was due to a fortuitous event. What constitutes compliance with said duty is adjudged with due regard to all the circumstances.
Where, as in the instant case, the injury sustained by the petitioner was in no way due to any defect
in the means of transport or in the method of transporting or to the negligent or wilful acts of private
respondent's employees, and therefore involving no issue of negligence in its duty to provide safe Article 1756 of the Civil Code, in creating a presumption of fault or negligence on the part of the
and suitable cars as well as competent employees, with the injury arising wholly from causes common carrier when its passenger is injured, merely relieves the latter, for the time being, from
created by strangers over which the carrier had no control or even knowledge or could not have introducing evidence to fasten the negligence on the former, because the presumption stands in the
prevented, the presumption is rebutted and the carrier is not and ought not to be held liable. To rule place of evidence. Being a mere presumption, however, the same is rebuttable by proof that the
otherwise would make the common carrier the insurer of the absolute safety of its passengers which common carrier had exercised extraordinary diligence as required by law in the performance of its
is not the intention of the lawmakers.8 contractual obligation, or that the injury suffered by the passenger was solely due to a fortuitous
event.
The dispositive portion of the Decision reads:
In fine, we can only infer from the law the intention of the Code Commission and Congress to curb
the recklessness of drivers and operators of common carriers in the conduct of their business.
WHEREFORE, the decision appealed from, insofar as it found defendants-appellants Ildefonso
Callejas and Edgar de Borja liable for damages to plaintiff-appellee Herminio E. Mariano, Jr., is
REVERSED and SET ASIDE and another one entered absolving them from any liability for the Thus, it is clear that neither the law nor the nature of the business of a transportation company
death of Dr. Frelinda Cargo Mariano.9 makes it an insurer of the passenger's safety, but that its liability for personal injuries sustained by its
passenger rests upon its negligence, its failure to exercise the degree of diligence that the law
requires.
The appellate court also denied the motion for reconsideration filed by petitioner.

In the case at bar, petitioner cannot succeed in his contention that respondents failed to overcome
Hence, this appeal, relying on the following ground: the presumption of negligence against them. The totality of evidence shows that the death of
petitioner’s spouse was caused by the reckless negligence of the driver of the Isuzu trailer truck
THE DECISION OF THE HONORABLE COURT OF APPEALS, SPECIAL FOURTEENTH which lost its brakes and bumped the Celyrosa Express bus, owned and operated by respondents.
DIVISION IS NOT IN ACCORD WITH THE FACTUAL BASIS OF THE CASE.10
First, we advert to the sketch prepared by PO3 Magno S. de Villa, who investigated the accident.
The following are the provisions of the Civil Code pertinent to the case at bar: The sketch13 shows the passenger bus facing the direction of Tagaytay City and lying on its right
side on the shoulder of the road, about five meters away from the point of impact. On the other
hand, the trailer truck was on the opposite direction, about 500 meters away from the point of
ART. 1733. Common carriers, from the nature of their business and for reasons of public policy, are impact. PO3 De Villa stated that he interviewed De Borja, respondent driver of the passenger bus,
bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the who said that he was about to unload some passengers when his bus was bumped by the driver of
passengers transported by them, according to all the circumstances of each case. the trailer truck that lost its brakes. PO3 De Villa checked out the trailer truck and found that its
brakes really failed. He testified before the trial court, as follows:
ART. 1755. A common carrier is bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all ATTY. ESTELYDIZ:
the circumstances.

q You pointed to the Isuzu truck beyond the point of impact. Did you investigate why did
ART. 1756. In case of death of or injuries to passengers, common carriers are presumed to have (sic) the Isuzu truck is beyond the point of impact?
been at fault or to have acted negligently, unless they prove that they observed extraordinary
diligence as prescribed in articles 1733 and 1755.
a Because the truck has no brakes.

43
 COURT: middle portion. Respondent driver De Borja had every right to expect that the trailer truck coming
from the opposite direction would stay on its proper lane. He was not expected to know that the
trailer truck had lost its brakes. The swerving of the trailer truck was abrupt and it was running on a
q What is the distance between that circle which is marked as Exh. 1-c to the place where
fast speed as it was found 500 meters away from the point of collision. Secondly, any doubt as to
you found the same?
the culpability of the driver of the trailer truck ought to vanish when he pleaded guilty to the charge of
reckless imprudence resulting to multiple slight physical injuries and damage to property in Criminal
a More or less 500 meters. Case No. 2223-92, involving the same incident.1avvph!1

q Why did you say that the truck has no brakes? IN VIEW WHEREOF, the petition is DENIED. The Decision dated May 21, 2004 and the Resolution
dated January 7, 2005 of the Court of Appeals in CA-G.R. CV No. 66891 are AFFIRMED.
a I tested it.
SO ORDERED.
q And you found no brakes?

a Yes, sir.
G.R. No. L-46179 January 31, 1978
xxx
CANDIDA VIRATA, TOMAS VIRATA, MANOLITO VIRATA, EDERLINDA VIRATA, NAPOLEON
VIRATA, ARACELY VIRATA, ZENAIDA VIRATA, LUZMINDA VIRATA, PACITA VIRATA, and
q When you went to the scene of accident, what was the position of Celyrosa bus? EVANGELINA VIRATA, petitioners,
vs.
a It was lying on its side. VICTORIO OCHOA, MAXIMO BORILLA and THE COURT OF FIRST INSTANCE OF CAVITE, 7th
JUDICIAL DISTRICT, BRANCH V, stationed at BACOOR, CAVITE, respondents.
COURT:
FERNANDEZ, J.:
q Right side or left side?
This is an appeal by certiorari, from the order of the Court of First Instance of Cavite, Branch V, in
Civil Case No. B-134 granting the motion of the defendants to dismiss the complaint on the ground
a Right side. that there is another action pending between the same parties for the same cause. 1

ATTY. ESTELYDIZ: The record shows that on September 24, 1975 one Arsenio Virata died as a result of having been
bumped while walking along Taft Avenue, Pasay City by a passenger jeepney driven by Maximo
q On what part of the road was it lying? Borilla and registered in the name Of Victoria Ochoa; that Borilla is the employer of Ochoa; that for
the death of Arsenio Virata, a action for homicide through reckless imprudence was instituted on
September 25, 1975 against Maximo Borilla in the Court of First Instance of Rizal at Pasay City,
a On the shoulder of the road. docketed as C Case No. 3162-P of said court; that at the hearing of the said criminal case on
December 12, 1975, Atty. Julio Francisco, the private prosecutor, made a reservation to file a
COURT: separate civil action for damages against the driver on his criminal liability; that on February 19,
1976 Atty. Julio Francisco filed a motion in said c case to withdraw the reservation to file a separate
civil action; that thereafter, the private prosecutor actively participated in the trial and presented
q How many meters from the point of impact? evidence on the damages; that on June 29, 1976 the heirs of Arsenio Virata again reserved their
right to institute a separate civil action; that on July 19, 1977 the heirs of Arsenio Virata, petitioners
a Near, about 5 meters.14 herein, commenced Civil No. B-134 in the Court of First Instance of Cavite at Bacoor, Branch V, for
damages based on quasi-delict against the driver Maximo Borilla and the registered owner of the
jeepney, Victorio Ochoa; that on August 13, 1976 the defendants, private respondents filed a motion
His police report bolsters his testimony and states: to dismiss on the ground that there is another action, Criminal Case No. 3162-P, pending between
the same parties for the same cause; that on September 8, 1976 the Court of First Instance of Rizal
Said vehicle 1 [passenger bus] was running from Manila toward south direction when, in the course at Pasay City a decision in Criminal Case No. 3612-P acquitting the accused Maximo Borilla on the
of its travel, it was hit and bumped by vehicle 2 [truck with trailer] then running fast from opposite ground that he caused an injury by name accident; and that on January 31, 1977, the Court of First
direction, causing said vehicle 1 to fall on its side on the road shoulder, causing the death of one Instance of Cavite at Bacoor granted the motion to Civil Case No. B-134 for damages. 2
and injuries of some passengers thereof, and its damage, after collission (sic), vehicle 2
continiously (sic) ran and stopped at approximately 500 meters away from the piont (sic) of impact.15 The principal issue is weather or not the of the Arsenio Virata, can prosecute an action for the
damages based on quasi-delict against Maximo Borilla and Victoria Ochoa, driver and owner,
In fine, the evidence shows that before the collision, the passenger bus was cruising on its rightful respectively on the passenger jeepney that bumped Arsenio Virata.
lane along the Aguinaldo Highway when the trailer truck coming from the opposite direction, on full
speed, suddenly swerved and encroached on its lane, and bumped the passenger bus on its left
44
It is settled that in negligence cases the aggrieved parties may choose between an action under the Moreover, for the petitioners to prevail in the action for damages, Civil Case No. B-134, they have
Revised Penal Code or of quasi-delict under Article 2176 of the Civil Code of the Philippines. What only to establish their cause of action by preponderance of the evidence.
is prohibited by Article 2177 of the Civil Code of the Philippines is to recover twice for the same
negligent act.
WHEREFORE, the order of dismissal appealed from is hereby set aside and Civil Case No. B-134 is
reinstated and remanded to the lower court for further proceedings, with costs against the private
The Supreme Court has held that: respondents.

According to the Code Commission: 'The foregoing provision (Article 2177) SO ORDERED.
though at first sight startling, is not so novel or extraordinary when we consider
the exact nature of criminal and civil negligence. The former is a violation of the
criminal law, while the latter is a 'culpa aquiliana' or quasi-delict, of ancient
origin, having always had its own foundation and individuality, separate from
criminal negligence. Such distinction between criminal negligence and 'culpa G.R. No. 91856 October 5, 1990
extra-contractual' or quasi-delito has been sustained by decision of the
Supreme Court of Spain and maintained as clear, sound and perfectly tenable
YAKULT PHILIPPINES AND LARRY SALVADO, petitioner,
by Maura, an outstanding Spanish jurist. Therefore, under the proposed Article
vs.
2177, acquittal from an accusation of criminal negligence, whether on
COURT OF APPEALS, WENCESLAO M. POLO, in his capacity as Presiding Judge of Br. 19 of
reasonable doubt or not, shall not be a bar to a subsequent civil action, not for
the RTC of Manila, and ROY CAMASO, respondents.
civil liability arising from criminal negligence, but for damages due to a quasi-
delict or 'culpa aquiliana'. But said article forestalls a double recovery. (Report
of the Code Commission, p. 162.) GANCAYCO, J.:

Although, again, this Article 2177 does seem to literally refer to only acts of Can a civil action instituted after the criminal action was filed prosper even if there was no
negligence, the same argument of Justice Bocobo about construction that reservation to file a separate civil action? This is the issue in this petition.
upholds 'the spirit that given life' rather than that which is literal that killeth the
intent of the lawmaker should be observed in applying the same. And
considering that the preliminary chapter on human relations of the new Civil On December 24, 1982, a five-year old boy, Roy Camaso, while standing on the sidewalk of M. de
Code definitely establishes the separability and independence of liability in a la Fuente Street, Sampaloc, Manila, was sideswiped by a Yamaha motorcycle owned by Yakult
civil action for acts criminal in character (under Articles 29 to 32) from the civil Philippines and driven by its employee, Larry Salvado.
responsibility arising from crime fixed by Article 100 of the Penal Code, and, in a
sense, the Rules of Court, under Sections 2 and 3(c), Rule 111, contemplate Salvado was charged with the crime of reckless imprudence resulting to slight physical injuries in an
also the same separability, it is 'more congruent' with the spirit of law, equity information that was filed on January 6, 1983 with the then City Court of Manila, docketed as
and justice, and more in harmony with modern progress', to borrow the felicitous Criminal Case No. 027184. On October 19, 1984 a complaint for damages was filed by Roy Camaso
language in Rakes vs. Atlantic Gulf and Pacific Co., 7 Phil. to 359, to hod as We represented by his father, David Camaso, against Yakult Philippines and Larry Salvado in the
do hold, that Article 2176, where it refers to 'fault covers not only acts 'not Regional Trial Court of Manila docketed as Civil Case No. 84-27317.
punishable by law' but also criminal in character, whether intentional and
voluntary or consequently, a separate civil action lies against the in a criminal
act, whether or not he is criminally prosecuted and found guilty and acquitted, In due course a decision was rendered in the civil case on May 26, 1989 ordering defendants to pay
provided that the offended party is not allowed, if he is actually charged also jointly and severally the plaintiff the sum of P13,006.30 for actual expenses for medical services and
criminally, to recover damages on both scores, and would be entitled in such hospital bills; P3,000.00 attorney's fees and the costs of the suit. Although said defendants appealed
eventuality only to the bigger award of the, two assuming the awards made in the judgment, they nevertheless filed a petition for certiorari in the Court of Appeals challenging the
the two cases vary. In other words the extinction of civil liability refereed to in jurisdiction of the trial court over said civil case.
Par. (c) of Section 13, Rule 111, refers exclusively to civil liability founded on
Article 100 of the Revised Penal Code, whereas the civil liability for the same Petitioners' thesis is that the civil action for damages for injuries arising from alleged criminal
act considered as a quasi-delict only and not as a crime is not extinguished negligence of Salvado, being without malice, cannot be filed independently of the criminal action
even by a declaration in the criminal case that the criminal act charged has not under Article 33 of the Civil Code. Further, it is contended that under Section 1, Rule 111 of the
happened or has not been committed by the accused. Brief stated, We hold, in 1985 Rules on Criminal Procedure such a separate civil action may not be filed unless reservation
reitration of Garcia, that culpa aquilina includes voluntary and negligent acts thereof is expressly made.
which may be punishable by law. 3
In a decision dated November 3, 1989, the Court of Appeals dismissed the petition.1 A motion for
The petitioners are not seeking to recover twice for the same negligent act. Before Criminal Case reconsideration thereof filed by petitioners was denied on January 30, 1990. Hence this petition.
No. 3162-P was decided, they manifested in said criminal case that they were filing a separate civil
action for damages against the owner and driver of the passenger jeepney based on quasi-
delict. The acquittal of the driver, Maximo Borilla, of the crime charged in Criminal Case No. 3162-P The petition is devoid of merit.
is not a bar to the prosecution of Civil Case No. B-134 for damages based on quasi-delict The
source of the obligation sought to be enforced in Civil Case No. B-134 is quasi-delict, not an act or Section 1, Rule 111 of the 1985 Rules of Criminal Procedure provides as follows:
omission punishable by law. Under Article 1157 of the Civil Code of the Philippines, quasi-delict and
an act or omission punishable by law are two different sources of obligation.

45
 SEC. 1. Institution of criminal and civil actions. — When a criminal action is ART. 2176. Whoever by act or omission causes damage to another, there being
instituted, the civil action for the recovery of civil liability is impliedly instituted fault or negligence, is obliged to pay for the damage done. Such fault or
with the criminal action, unless the offended party waives the civil action, negligence, if there is no pre-existing contractual relation between the parties, is
reserves his right to institute it separately, or institutes the civil action prior to the called a quasi-delict and is governed by the provisions of this Chapter.
criminal action.
The aforecited revised rule requiring such previous reservation also covers quasi-delict as defined
Such civil action includes recovery of indemnity under the Revised Penal Code, under Article 2176 of the Civil Code arising from the same act or omission of the accused.
and damages under Articles 32, 33, 34 and 2176 of the Civil Code of the
Philippines arising from the same act or omission of the accused.
Although the separate civil action filed in this case was without previous reservation in the criminal
case, nevertheless since it was instituted before the prosecution presented evidence in the criminal
A waiver of any of the civil actions extinguishes the others. The institution of, or action, and the judge handling the criminal case was informed thereof, then the actual filing of the
the reservation of the right to file, any of said civil actions separately waives the civil action is even far better than a compliance with the requirement of an express reservation that
others. should be made by the offended party before the prosecution presents its evidence.

The reservation of the right to institute the separate civil actions shall be made The purpose of this rule requiring reservation is to prevent the offended party from recovering
before the prosecution starts to present its evidence and under circumstances damages twice for the same act or omission.
affording the offended party a reasonable opportunity to make such reservation.
Thus, the Court finds and so holds that the trial court had jurisdiction over the separate civil action
In no case may the offended party recover damages twice for the same act or brought before it.
omission of the accused.
WHEREFORE, the petition is DENIED. The questioned decision of the Court of Appeals dated
When the offended party seeks to enforce civil liability against the accused by November 3, 1989 and its resolution dated January 30, 1990 are hereby AFFIRMED.
way of moral, nominal, temperate or exemplary damages, the filing fees for
such civil action as provided in these Rules shall constitute a first lien on the
SO ORDERED.
judgment except in an award for actual damages.

In cases wherein the amount of damages, other than actual, is alleged in the
complaint or information, the corresponding filing fees shall be paid by the
offended party upon the filing thereof in court for trial. (1a)

Although the incident in question and the actions arising therefrom were instituted before the
promulgation of the 1985 Rules of Criminal Procedure, its provisions which are procedural may
apply retrospectively to the present case. 2

Under the aforecited provisions of the rule, the civil action for the recovery of civil liability is impliedly
instituted with the criminal action unless the offended party waives the civil action, reserves his right
to institute it separately or institutes the civil action prior to the criminal action.

Such civil action includes recovery of indemnity under the Revised Penal Code, and damages under
Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines arising from the same act or
omission of the accused.
G.R. No. L-37750 May 19, 1978
It is also provided that the reservation of the right to institute the separate civil action shall be made
before the prosecution starts to present its evidence and under circumstances affording the offended
party a reasonable opportunity to make such reservation. SWEET LINES, INC., petitioner,
vs.
HON. BERNARDO TEVES, Presiding Judge, CFI of Misamis Oriental Branch VII, LEOVIGILDO
In this case, the offended party has not waived the civil action, nor reserved the right to institute it TANDOG, JR., and ROGELIO TIRO, respondents.
separately. Neither has the offended party instituted the civil action prior to the criminal action.
However, the civil action in this case was filed in court before the presentation of the evidence for
the prosecution in the criminal action of which the judge presiding on the criminal case was duly SANTOS, J.:
informed, so that in the disposition of the criminal action no damages was awarded.
This is an original action for Prohibition with Pre Injunction filed October 3, 1973 to restrain
The civil liability sought arising from the act or omission of the accused in this case is a quasi respondent Judge from proceeding further with Civil Case No. 4091, entitled Leovigildo D. Tandog,
delict as defined under Article 2176 of the Civil Code as follows: Jr. and Rogelio Tiro v. Sweet Lines, Inc." after he denied petitioner's Motion to Dismiss the
complaint, and the Motion for Reconsideration of said order. 1
46
Briefly, the facts of record follow. Private respondents Atty. Leovigildo Tandog and Rogelio Tiro, a they could not refuse, hence, they had no choice but to pay for the tickets and to avail of petitioner's
contractor by professions, bought tickets Nos. 0011736 and 011737 for Voyage 90 on December 31, shipping facilities out of necessity; that the carrier "has been exacting too much from the public by
1971 at the branch office of petitioner, a shipping company transporting inter-island passengers and inserting impositions in the passage tickets too burdensome to bear," that the condition which was
cargoes, at Cagayan de Oro City. Respondents were to board petitioner's vessel, M/S "Sweet Hope" printed in fine letters is an imposition on the riding public and does not bind respondents, citing
bound for Tagbilaran City via the port of Cebu. Upon learning that the vessel was not proceeding to cases; 13 that while venue 6f actions may be transferred from one province to another, such
Bohol, since many passengers were bound for Surigao, private respondents per advice, went to the arrangement requires the "written agreement of the parties", not to be imposed unilaterally; and that
branch office for proper relocation to M/S "Sweet Town". Because the said vessel was already filled assuming that the condition is valid, it is not exclusive and does not, therefore, exclude the filing of
to capacity, they were forced to agree "to hide at the cargo section to avoid inspection of the officers the action in Misamis Oriental, 14
of the Philippine Coastguard." Private respondents alleged that they were, during the trip," "exposed
to the scorching heat of the sun and the dust coming from the ship's cargo of corn grits," and that
There is no question that there was a valid contract of carriage entered into by petitioner and private
the tickets they bought at Cagayan de Oro City for Tagbilaran were not honored and they were
respondents and that the passage tickets, upon which the latter based their complaint, are the best
constrained to pay for other tickets. In view thereof, private respondents sued petitioner for damages
evidence thereof. All the essential elements of a valid contract, i.e., consent, cause or consideration
and for breach of contract of carriage in the alleged sum of P10,000.00 before respondents Court of
and object, are present. As held in Peralta de Guerrero, et al. v. Madrigal Shipping Co., Inc., 15
First Instance of Misamis Oriental. 2

It is a matter of common knowledge that whenever a passenger boards a ship

Petitioner moved to dismiss the complaint on the ground of improper venue. This motion was
for transportation from one place to another he is issued a ticket by the shipper
premised on the condition printed at the back of the tickets, i.e., Condition No. 14, which reads:
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 ship
14. It is hereby agreed and understood that any and all actions arising out of the and the shipper consents or accepts him in the ship for transportation; (2) cause
conditions and provisions of this ticket, irrespective of where it is issued, shall or consideration which is the fare paid by the passenger as stated in the ticket;
be filed in the competent courts in the City of Cebu. 3 (3) object, which is the transportation of the passenger from the place of
departure to the place of destination which are stated in the ticket.
The motion was denied by the trial court. 4 Petitioner moved to reconnsider the order of denial, but
no avail. 5 Hence, this instant petition for prohibition for preliminary injunction, 'alleging that the It should be borne in mind, however, that with respect to the fourteen (14) conditions — one of which
respondent judge has departed from the accepted and usual course of judicial preoceeding" and is "Condition No. 14" which is in issue in this case — printed at the back of the passage tickets,
"had acted without or in excess or in error of his jurisdicton or in gross abuse of discretion. 6 these are commonly known as "contracts of adhesion," the validity and/or enforceability of which will
have to be determined by the peculiar circumstances obtaining in each case and the nature of the
conditions or terms sought to be enforced. For, "(W)hile generally, stipulations in a contract come
In Our resolution of November 20, 1973, We restrained respondent Judge from proceeding further
about after deliberate drafting by the parties thereto, ... there are certain contracts almost all the
with the case and required respondent to comment. 7 On January 18, 1974, We gave due course to
provisions of which have been drafted only by one party, usually a corporation. Such contracts are
the petition and required respondent to answer. 8 Thereafter, the parties submitted their respesctive
called contracts of adhesion, because the only participation of the party is the signing of his
memoranda in support of their respective contentions. 9
signature or his 'adhesion' thereto. Insurance contracts, bills of lading, contracts of make of lots on
the installment plan fall into this category" 16
Presented thus for Our resolution is a question is aquestion which, to all appearances, is one of first
impression, to wit — Is Condition No. 14 printed at the back of the petitioner's passage tickets
By the peculiar circumstances under which contracts of adhesion are entered into — namely, that it
purchased by private respondents, which limits the venue of actions arising from the contract of
is drafted only by one party, usually the corporation, and is sought to be accepted or adhered to by
carriage to theCourt of First Instance of Cebu, valid and enforceable? Otherwise stated, may a
the other party, in this instance the passengers, private respondents, who cannot change the same
common carrier engaged in inter-island shipping stipulate thru condition printed at the back of
and who are thus made to adhere thereto on the "take it or leave it" basis — certain guidelines in the
passage tickets to its vessels that any and all actions arising out of the ocntract of carriage should
determination of their validity and/or enforceability have been formulated in order to that justice and
be filed only in a particular province or city, in this case the City of Cebu, to the exclusion of all
fan play characterize the relationship of the contracting parties. Thus, this Court speaking through
others?
Justice J.B.L. Reyes in Qua Chee Gan v. Law Union and Rock Insurance Co.,  17 and later through
Justice Fernando in Fieldman Insurance v. Vargas, 18 held —
Petitioner contends thaty Condition No. 14 is valid and enforceable, since private respndents
acceded to tit when they purchased passage tickets at its Cagayan de Oro branch office and took its
The courts cannot ignore that nowadays, monopolies, cartels and concentration
vessel M/S "Sweet Town" for passage to Tagbilaran, Bohol — that the condition of the venue of
of capital endowed with overwhelm economic power, manage to impose upon
actions in the City of Cebu is proper since venue may be validly waived, citing cases; 10 that is an
parties d with them y prepared 'agreements' that the weaker party may not
effective waiver of venue, valid and binding as such, since it is printed in bold and capital letters and
change one whit his participation in the 'agreement' being reduced to the
not in fine print and merely assigns the place where the action sing from the contract is institution
alternative 'to take it or leave it,' labelled since Raymond Saleilles 'contracts by
likewise citing cases; 11 and that condition No. 14 is unequivocal and mandatory, the words and
adherence' (contracts d' adhesion) in contrast to those entered into by parties
phrases "any and all", "irrespective of where it is issued," and "shag" leave no doubt that the
bargaining on an equal footing. Such contracts (of which policies of insurance
intention of Condition No. 14 is to fix the venue in the City of Cebu, to the exclusion of other places;
and international bill of lading are prime examples) obviously cap for greater
that the orders of the respondent Judge are an unwarranted departure from established
strictness and vigilance on the part of the courts of justice with a view to
jurisprudence governing the case; and that he acted without or in excess of his jurisdiction in is the
protecting the weaker party from abuses and imposition, and prevent their
orders complained of. 12
becoming traps for the unwary.

On the other hand, private respondents claim that Condition No. 14 is not valid, that the same is not
To the same effect and import, and, in recognition of the character of contracts of this kind, the
an essential element of the contract of carriage, being in itself a different agreement which requires
protection of the disadvantaged is expressly enjoined by the New Civil Code —
the mutual consent of the parties to it; that they had no say in its preparation, the existence of which

47
 In all contractual property or other relations, when one of the parties is at a the respective ports of call of its vessels and can afford to litigate in any of these places. Hence, the
disadvantage on account of his moral dependence, ignorance indigence, mental filing of the suit in the CFI of Misamis Oriental, as was done in the instant case, will not cause
weakness, tender age and other handicap, the courts must be vigilant for his inconvenience to, much less prejudice, petitioner.
protection. 19
Public policy is ". . . that principle of the law which holds that no subject or citizen can lawfully do that
Considered in the light Of the foregoing norms and in the context Of circumstances Prevailing in the which has a tendency to be injurious to the public or against the public good ... 22 Under this
inter-island ship. ping industry in the country today, We find and hold that Condition No. 14 printed at principle" ... freedom of contract or private dealing is restricted by law for the good of the
the back of the passage tickets should be held as void and unenforceable for the following reasons public. 23 Clearly, Condition No. 14, if enforced, will be subversive of the public good or interest,
first, under circumstances obligation in the inter-island ship. ping industry, it is not just and fair to since it will frustrate in meritorious cases, actions of passenger cants outside of Cebu City, thus
bind passengers to the terms of the conditions printed at the back of the passage tickets, on which placing petitioner company at a decided advantage over said persons, who may have perfectly
Condition No. 14 is Printed in fine letters, and second, Condition No. 14 subverts the public policy on legitimate claims against it. The said condition should, therefore, be declared void and
transfer of venue of proceedings of this nature, since the same will prejudice rights and interests of unenforceable, as contrary to public policy — to make the courts accessible to all who may have
innumerable passengers in different s of the country who, under Condition No. 14, will have to file need of their services.
suits against petitioner only in the City of Cebu.
WHEREFORE, the petition for prohibition is DISMISS. ED. The restraining order issued on
1. It is a matter of public knowledge, of which We can take judicial notice, that there is a dearth of November 20, 1973, is hereby LIFTED and SET ASIDE. Costs against petitioner.
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 Tamayo vs. Pascua
— 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
Doctrine: Common Carriers; Relationship of Carrier and Passenger; Creation
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. There is concurrence of offer on the part of a commuter and acceptance on the part of a common
carrier to take the former as a passenger, where the commuter flags down the bus to stop and the
bus, and the bus slows down to a turtle pace along a loading and unloading island, apparently in the
Under these circumstances, it is hardly just and proper to expect the passengers to examine their
act of allowing and enabling the commuter to board it.
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 Common knowledge and experience; slowing down to allow passenger to board bus; driver’s duty.

Again, it should be noted that Condition No. 14 was prepared solely at the ms of the petitioner, A bus need not come to a dead stop to allow passengers to board it. It is enough that it slows down
respondents had no say in its preparation. Neither did the latter have the opportunity to take the into to a negligible speed, allowing people to board it without danger to their lives and limbs. This is a
account prior to the purpose chase of their tickets. For, unlike the small print provisions of contracts matter of common knowledge and experience in the city of manila and suburbs. Under such
— the common example of contracts of adherence — which are entered into by the insured in his circumstances it is a driver’s duty to see to it that every person who wants to board the bus is safe
awareness of said conditions, since the insured is afforded the op to and co the same, passengers inside before picking up speed and moving forward.
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.
Use of diligence of a good father of a family, not a defense

It should also be stressed that slapping companies are franchise holders of certificates of public
convenience and therefore, posses a virtual monopoly over the business of transporting passengers The liability of a common carrier under article 1759 of the Civil Code does not cease upon proof it
between the ports covered by their franchise. This being so, shipping companies, like petitioner, had exercised all the diligence of a good father of a family in the selection and supervision of its
engaged in inter-island shipping, have a virtual monopoly of the business of transporting passengers employees, which is a defense available only in quasi-delict where no contractual relation between
and may thus dictate their terms of passage, leaving passengers with no choice but to buy their the injured and the one causing the Injury exists.
tickets and avail of their vessels and facilities. Finally, judicial notice may be taken of the fact that the
bulk of those who board these inter-island vested come from the low-income groups and are less Facts:
literate, and who have little or no choice but to avail of petitioner's vessels.
A bus of Royal Bus Co. passing the rotonda in Baclaran slowed down upon approaching an island.
2. Condition No. 14 is subversive of public policy on transfers of venue of actions. For, although There were several persons who were waiting for transportation, among whom was Benito Tamayo.
venue may be changed or transferred from one province to another by agreement of the parties in In view of the slow pace of the bus which was a sign that bus was going to pick up passengers from
writing t to Rule 4, Section 3, of the Rules of Court, such an agreement will not be held valid where it the island, Benito Tamayo succeeded in holding the handle at the entrance and placing his 2 feet on
practically negates the action of the claimants, such as the private respondents herein. The the first step of the running board, but all of a sudden the bus suddenly increased its speed causing
philosophy underlying the provisions on transfer of venue of actions is the convenience of the Tamayo to lose his balance and fall to the ground.
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 the City of
Cebu, he would most probably decide not to file the action at all. The condition will thus defeat,
instead of enhance, the ends of justice. Upon the other hand, petitioner has branches or offices in
48
TC: Dismissed complaint on the ground that there was no contract of carriage. There having been Issue:
no offer from plaintiff communicated to the driver of the bus. Plaintiff boarded the bus without
signaling to the driver.
1. W/N Nueca was a passenger?

Issue: Whether there was a contract of carriage between the Royal Bus and Tamayo.
2. W/N MRC is liable?

Held: Yes
3. Was the accident due to MRC’s negligence or force majeur?

The testimony of a traffic officer who was near the place where the incident occurred convinced the
4. Is Nueca liable for contributory negligence?
court that there was indeed a contract of carriage between the parties since there was concurrence
of offer on the part of a commuter and acceptance on the part of a common carrier to take the
former as a passenger, where the commuter flags down the bus to stop and the bus, and the bus Held:
slows down to a turtle pace along a loading and unloading island, apparently in the act of allowing
and enabling the commuter to board it. A bus need not come to a dead stop to allow passengers to
1. No, Nueca was not a passenger thus, MRC did not owe him extraordinary diligence.
board it. It is enough that it slows down to a negligible speed, allowing people to board it without
danger to their lives and limbs. (See doctrine)
A passenger is one who travels in a public conveyance by virtue of a contract, express or implied,
with the carrier as to the payment of the fare, or that which is accepted as an equivalent.

The relation of passenger and carrier commences when one puts himself in the care of the carrier,
or directly under its control, with the bona fide intention of becoming a passenger, and is accepted
GR No. 31731 January 30, 1968
as such by the carrier – as where he makes a contract for trasportation and presents himself at the
JESUSA VDA. DE NUEVA
proper place and in a proper manner to be transported.
V.
THE MANILA RAILROAD COMPANY
Even disregarding the matter of tickets, and assuming Nueca intended to be a passenger, he was
never accepted as such by MRC as he did not present himself at the proper place and in a proper
Facts:
manner to be transported.

- At 3 p.m. on Dec. 22, 1958, Fermin Nueca brought 7 sacks of palay to Manila Railroad
2. Yes, the liability of railroad companies to persons upon the premises is determined by the
Co. (MRC) at its station in Barrio del Rosario, Camarines Sur, to be shipped to the municipality of
general rules of negligence relating to duties of owners/occupiers of property.
Libmanan of the same province.

While railroad companies are not bound to the same degree of care in regard to strangers who are
- He paid P 0.70 as freight charge and was issued Way Bill No. 56515.
unlawfully upon the premises of its passengers, it may still be liable to such strangers for negligent
or tortious acts.
- The cargo was loaded on the freight wagon of Train 537. Passengers boarded the train
and shunting operations started to hook a wagon thereto.
Here, Nueca was not on the track, but either unlawfully inside the baggage car or beside the track.

- Before the train reached the turnoff switch, its passenger coach fell on its side some 40 m
It is normal for people to walk on the track or roadbed when there is no oncoming train and to walk
from the station. The wagon pinned Nueca, killing him instantly.
beside the track when a train passes. This practice is tolerated by MRC. Generally, MRC’s stations
are not enclosed, and is easily accessible to the public.
- Nueca’s widow and children bring this claim for damages, alleging that the Nueca was a
passenger and his death was caused by MRC’s negligence.
3. MRC is negligent; doctrine of res ipsa loquitur applied.

- MRC disclaimed liability stating: (1) it exercised due care in safeguarding the passengers
The train was under the complete control of the railroad company at the time of the accident. The
during the shunting operation, (2) Nueca was not a passenger but a trespasser, (3) even if Nueca
baggage car would not have been derailed if the train had been properly operated.
were a passenger, he illegally boarded the train without permission by not paying the fare, (4) the
mishap was not attributable to any defect in MRC equipment, (5) that the accident happened due to
force majeur. Res ipsa loquitur is a rule of evidence peculiar to the law of negligence which recognizes that prima
facie negligence may be established without direct proof and furnishes a substitute for specific proof
of negligence.
- MRC presented evidence showing there was no mechanical defect, but it did not explain
why the accident occurred or show that force majeur caused the mishap.
4. No.
- The lower court absolved MRC of liability and held that Nueca was a trespasser since he
did not buy any ticket, and in any case, was not in a proper place for passengers.

49
An invitation to stay in the premises is implied from the lack of prohibition to outsiders to keep off the 2. The sum of Twenty Thousand (P20,000.00) by way of moral damages;
premises, hence, a stranger who is injured by a derailed train while staying beside a railroad track is
not guilty of contributory negligence.
3. The sum of Two Hundred Eighty Eight Thousand (P288,000.00) Pesos as actual and
compensatory damages;
Note: Our law on common carriers is lifted from Anglo-American statutes.
4. The costs of this suit.

Petitioners' motion for reconsideration was denied by the Court of Appeals in its resolution dated
G.R. No. 95582 October 7, 1991 October 4, 1990, hence this petition with the central issue herein being whether respondent court
DANGWA TRANSPORTATION CO., INC. and THEODORE LARDIZABAL y MALECDAN, erred in reversing the decision of the trial court and in finding petitioners negligent and liable for the
petitioners, damages claimed.
vs.
COURT OF APPEALS, INOCENCIA CUDIAMAT, EMILIA CUDIAMAT BANDOY, FERNANDO
It is an established principle that the factual findings of the Court of Appeals as a rule are final and
CUDLAMAT, MARRIETA CUDIAMAT, NORMA CUDIAMAT, DANTE CUDIAMAT, SAMUEL
may not be reviewed by this Court on appeal. However, this is subject to settled exceptions, one of
CUDIAMAT and LIGAYA CUDIAMAT, all Heirs of the late Pedrito Cudiamat represented by
which is when the findings of the appellate court are contrary to those of the trial court, in which case
Inocencia Cudiamat, respondents.
a reexamination of the facts and evidence may be undertaken.

REGALADO, J.:
In the case at bar, the trial court and the Court of Appeal have discordant positions as to who
between the petitioners and the victim is guilty of negligence. Perforce, we have had to conduct an
On May 13, 1985, private respondents filed a complaint for damages against petitioners for the evaluation of the evidence in this case for the prope calibration of their conflicting factual findings
death of Pedrito Cudiamat as a result of a vehicular accident which occurred on March 25, 1985 at and legal conclusions.
Marivic, Sapid, Mankayan, Benguet. Among others, it was alleged that on said date, while petitioner
Theodore M. Lardizabal was driving a passenger bus belonging to petitioner corporation in a
The lower court, in declaring that the victim was negligent, made the following findings:
reckless and imprudent manner and without due regard to traffic rules and regulations and safety to
persons and property, it ran over its passenger, Pedrito Cudiamat. However, instead of bringing
Pedrito immediately to the nearest hospital, the said driver, in utter bad faith and without regard to This Court is satisfied that Pedrito Cudiamat was negligent in trying to board a moving vehicle,
the welfare of the victim, first brought his other passengers and cargo to their respective destinations especially with one of his hands holding an umbrella. And, without having given the driver or the
before banging said victim to the Lepanto Hospital where he expired. conductor any indication that he wishes to board the bus. But defendants can also be found wanting
of the necessary diligence. In this connection, it is safe to assume that when the deceased
Cudiamat attempted to board defendants' bus, the vehicle's door was open instead of being closed.
On the other hand, petitioners alleged that they had observed and continued to observe the
This should be so, for it is hard to believe that one would even attempt to board a vehicle (i)n motion
extraordinary diligence required in the operation of the transportation company and the supervision
if the door of said vehicle is closed. Here lies the defendant's lack of diligence. Under such
of the employees, even as they add that they are not absolute insurers of the safety of the public at
circumstances, equity demands that there must be something given to the heirs of the victim to
large. Further, it was alleged that it was the victim's own carelessness and negligence which gave
assuage their feelings. This, also considering that initially, defendant common carrier had made
rise to the subject incident, hence they prayed for the dismissal of the complaint plus an award of
overtures to amicably settle the case. It did offer a certain monetary consideration to the victim's
damages in their favor by way of a counterclaim.
heirs.

On July 29, 1988, the trial court rendered a decision, effectively in favor of petitioners, with this
However, respondent court, in arriving at a different opinion, declares that:
decretal portion:

From the testimony of appellees'own witness in the person of Vitaliano Safarita, it is evident that the
IN VIEW OF ALL THE FOREGOING, judgment is hereby pronounced that Pedrito Cudiamat was
subject bus was at full stop when the victim Pedrito Cudiamat boarded the same as it was precisely
negligent, which negligence was the proximate cause of his death. Nonetheless, defendants in
on this instance where a certain Miss Abenoja alighted from the bus. Moreover, contrary to the
equity, are hereby ordered to pay the heirs of Pedrito Cudiamat the sum of P10,000.00 which
assertion of the appellees, the victim did indicate his intention to board the bus as can be seen from
approximates the amount defendants initially offered said heirs for the amicable settlement of the
the testimony of the said witness when he declared that Pedrito Cudiamat was no longer walking
case. No costs.
and made a sign to board the bus when the latter was still at a distance from him. It was at the
instance when Pedrito Cudiamat was closing his umbrella at the platform of the bus when the latter
SO ORDERED. made a sudden jerk movement (as) the driver commenced to accelerate the bus.

Not satisfied therewith, private respondents appealed to the Court of Appeals which, in a decision in Evidently, the incident took place due to the gross negligence of the appellee-driver in prematurely
CA-G.R. CV No. 19504 promulgated on August 14, 1990, set aside the decision of the lower court, stepping on the accelerator and in not waiting for the passenger to first secure his seat especially so
and ordered petitioners to pay private respondents: when we take into account that the platform of the bus was at the time slippery and wet because of
a drizzle. The defendants-appellees utterly failed to observe their duty and obligation as common
carrier to the end that they should observe extra-ordinary diligence in the vigilance over the goods
1. The sum of Thirty Thousand (P30,000.00) Pesos by way of indemnity for death of the victim
and for the safety of the passengers transported by them according to the circumstances of each
Pedrito Cudiamat;
case (Article 1733, New Civil Code).

50
After a careful review of the evidence on record, we find no reason to disturb the above holding of a passenger while he was attempting to board the same. The premature acceleration of the bus in
the Court of Appeals. Its aforesaid findings are supported by the testimony of petitioners' own this case was a breach of such duty.
witnesses. One of them, Virginia Abalos, testified on cross-examination as follows:
It is the duty of common carriers of passengers, including common carriers by railroad train,
Q It is not a fact Madam witness, that at bunkhouse 54, that is before the place of the incident, there streetcar, or motorbus, to stop their conveyances a reasonable length of time in order to afford
is a crossing? passengers an opportunity to board and enter, and they are liable for injuries suffered by boarding
passengers resulting from the sudden starting up or jerking of their conveyances while they are
doing so.
A The way going to the mines but it is not being pass(ed) by the bus.

Further, even assuming that the bus was moving, the act of the victim in boarding the same cannot
Q And the incident happened before bunkhouse 56, is that not correct?
be considered negligent under the circumstances. As clearly explained in the testimony of the
aforestated witness for petitioners, Virginia Abalos, th bus had "just started" and "was still in slow
A It happened between 54 and 53 bunkhouses. motion" at the point where the victim had boarded and was on its platform.

The bus conductor, Martin Anglog, also declared: It is not negligence per se, or as a matter of law, for one attempt to board a train or streetcar which
is moving slowly. An ordinarily prudent person would have made the attempt board the moving
conveyance under the same or similar circumstances. The fact that passengers board and alight
Q When you arrived at Lepanto on March 25, 1985, will you please inform this Honorable Court if from slowly moving vehicle is a matter of common experience both the driver and conductor in this
there was anv unusual incident that occurred? case could not have been unaware of such an ordinary practice.

A When we delivered a baggage at Marivic because a person alighted there between Bunkhouse 53 The victim herein, by stepping and standing on the platform of the bus, is already considered a
and 54. passenger and is entitled all the rights and protection pertaining to such a contractual relation.
Hence, it has been held that the duty which the carrier passengers owes to its patrons extends to
Q What happened when you delivered this passenger at this particular place in Lepanto? persons boarding cars as well as to those alighting therefrom.

A When we reached the place, a passenger alighted and I signalled my driver. When we stopped we Common carriers, from the nature of their business and reasons of public policy, are bound to
went out because I saw an umbrella about a split second and I signalled again the driver, so the observe extraordina diligence for the safety of the passengers transported by the according to all the
driver stopped and we went down and we saw Pedrito Cudiamat asking for help because he was circumstances of each case. A common carrier is bound to carry the passengers safely as far as
lying down. human care and foresight can provide, using the utmost diligence very cautious persons, with a due
regard for all the circumstances.
Q How far away was this certain person, Pedrito Cudiamat, when you saw him lying down — from
the bus how far was he? It has also been repeatedly held that in an action based on a contract of carriage, the court need not
make an express finding of fault or negligence on the part of the carrier in order to hold it
responsible to pay the damages sought by the passenger. By contract of carriage, the carrier
A It is about two to three meters. assumes the express obligation to transport the passenger to his destination safely and observe
extraordinary diligence with a due regard for all the circumstances, and any injury that might be
Q On what direction of the bus was he found about three meters from the bus, was it at the front or suffered by the passenger is right away attributable to the fault or negligence of the carrier. This is
at the back? an exception to the general rule that negligence must be proved, and it is therefore incumbent upon
the carrier to prove that it has exercised extraordinary diligence as prescribed in Articles 1733 and
1755 of the Civil Code.
A At the back, sir. (Emphasis supplied.)

Moreover, the circumstances under which the driver and the conductor failed to bring the gravely
The foregoing testimonies show that the place of the accident and the place where one of the injured victim immediately to the hospital for medical treatment is a patent and incontrovertible proof
passengers alighted were both between Bunkhouses 53 and 54, hence the finding of the Court of of their negligence. It defies understanding and can even be stigmatized as callous indifference. The
Appeals that the bus was at full stop when the victim boarded the same is correct. They further evidence shows that after the accident the bus could have forthwith turned at Bunk 56 and thence to
confirm the conclusion that the victim fell from the platform of the bus when it suddenly accelerated the hospital, but its driver instead opted to first proceed to Bunk 70 to allow a passenger to alight
forward and was run over by the rear right tires of the vehicle, as shown by the physical evidence on and to deliver a refrigerator, despite the serious condition of the victim. The vacuous reason given
where he was thereafter found in relation to the bus when it stopped. Under such circumstances, it by petitioners that it was the wife of the deceased who caused the delay was tersely and correctly
cannot be said that the deceased was guilty of negligence. confuted by respondent court:

The contention of petitioners that the driver and the conductor had no knowledge that the victim ... The pretension of the appellees that the delay was due to the fact that they had to wait for about
would ride on the bus, since the latter had supposedly not manifested his intention to board the twenty minutes for Inocencia Cudiamat to get dressed deserves scant consideration. It is rather
same, does not merit consideration. When the bus is not in motion there is no necessity for a person scandalous and deplorable for a wife whose husband is at the verge of dying to have the luxury of
who wants to ride the same to signal his intention to board. A public utility bus, once it stops, is in dressing herself up for about twenty minutes before attending to help her distressed and helpless
effect making a continuous offer to bus riders. Hence, it becomes the duty of the driver and the husband.
conductor, every time the bus stops, to do no act that would have the effect of increasing the peril to

51
Further, it cannot be said that the main intention of petitioner Lardizabal in going to Bunk 70 was to DECISION
inform the victim's family of the mishap, since it was not said bus driver nor the conductor but the
companion of the victim who informed his family thereof. In fact, it was only after the refrigerator
VITUG, J.:
was unloaded that one of the passengers thought of sending somebody to the house of the victim,
as shown by the testimony of Virginia Abalos again, to wit:
The case before the Court is an appeal from the decision and resolution of the Court of Appeals,
promulgated on 27 April 2000 and 10 October 2000, respectively, in CA-G.R. CV No. 60720, entitled
Q Why, what happened to your refrigerator at that particular time?
"Marjorie Navidad and Heirs of the Late Nicanor Navidad vs. Rodolfo Roman, et. al.," which has
modified the decision of 11 August 1998 of the Regional Trial Court, Branch 266, Pasig City,
A I asked them to bring it down because that is the nearest place to our house and when I went exonerating Prudent Security Agency (Prudent) from liability and finding Light Rail Transit Authority
down and asked somebody to bring down the refrigerator, I also asked somebody to call the family (LRTA) and Rodolfo Roman liable for damages on account of the death of Nicanor Navidad.
of Mr. Cudiamat.
On 14 October 1993, about half an hour past seven o’clock in the evening, Nicanor Navidad, then
COURT: drunk, entered the EDSA LRT station after purchasing a "token" (representing payment of the fare).
While Navidad was 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
Q Why did you ask somebody to call the family of Mr. Cudiamat?
two apparently ensued that led to a fist fight. No evidence, however, was adduced to indicate how
the fight started or who, between the two, delivered the first blow or how Navidad later fell on the
A Because Mr. Cudiamat met an accident, so I ask somebody to call for the family of Mr. Cudiamat. LRT tracks. At the exact moment that Navidad fell, an LRT train, operated by petitioner Rodolfo
Roman, was coming in. Navidad was struck by the moving train, and he was killed instantaneously.
Q But nobody ask(ed) you to call for the family of Mr. Cudiamat?
On 08 December 1994, the widow of Nicanor, herein respondent Marjorie Navidad, along with her
children, filed a complaint for damages against Junelito Escartin, Rodolfo Roman, the LRTA, the
A No sir. Metro Transit Organization, Inc. (Metro Transit), and Prudent for the death of her husband. LRTA
and Roman filed a counterclaim against Navidad and a cross-claim against Escartin and Prudent.
With respect to the award of damages, an oversight was, however, committed by respondent Court Prudent, in its answer, denied liability and averred that it had exercised due diligence in the selection
of Appeals in computing the actual damages based on the gross income of the victim. The rule is and supervision of its security guards.
that the amount recoverable by the heirs of a victim of a tort is not the loss of the entire earnings, but
rather the loss of that portion of the earnings which the beneficiary would have received. In other The LRTA and Roman presented their evidence while Prudent and Escartin, instead of presenting
words, only net earnings, not gross earnings, are to be considered, that is, the total of the earnings evidence, filed a demurrer contending that Navidad had failed to prove that Escartin was negligent in
less expenses necessary in the creation of such earnings or income and minus living and other his assigned task. On 11 August 1998, the trial court rendered its decision; it adjudged:
incidental expenses.

"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants
We are of the opinion that the deductible living and other expense of the deceased may fairly and Prudent Security and Junelito Escartin ordering the latter to pay jointly and severally the plaintiffs the
reasonably be fixed at P500.00 a month or P6,000.00 a year. In adjudicating the actual or following:
compensatory damages, respondent court found that the deceased was 48 years old, in good health
with a remaining productive life expectancy of 12 years, and then earning P24,000.00 a year. Using
the gross annual income as the basis, and multiplying the same by 12 years, it accordingly awarded "a) 1) Actual damages of P44,830.00;
P288,000. Applying the aforestated rule on computation based on the net earnings, said award must
be, as it hereby is, rectified and reduced to P216,000.00. However, in accordance with prevailing
2) Compensatory damages of P443,520.00;
jurisprudence, the death indemnity is hereby increased to P50,000.00. 23

3) Indemnity for the death of Nicanor Navidad in the sum of P50,000.00;

WHEREFORE, subject to the above modifications, the challenged judgment and resolution of
respondent Court of Appeals are hereby AFFIRMED in all other respects.
"b) Moral damages of P50,000.00;
SO ORDERED.
"c) Attorney’s fees of P20,000;

"d) Costs of suit.

G.R. No. 145804             February 6, 2003
"The complaint against defendants LRTA and Rodolfo Roman are dismissed for lack of merit.
LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, petitioners,
vs. "The compulsory counterclaim of LRTA and Roman are likewise dismissed."1
MARJORIE NAVIDAD, Heirs of the Late NICANOR NAVIDAD & PRUDENT SECURITY
AGENCY, respondents.

52
Prudent appealed to the Court of Appeals. On 27 August 2000, the appellate court promulgated its Escartin’s assault upon Navidad, which caused the latter to fall on the tracks, was an act of a
now assailed decision exonerating Prudent from any liability for the death of Nicanor Navidad and, stranger that could not have been foreseen or prevented. The LRTA would add that the appellate
instead, holding the LRTA and Roman jointly and severally liable thusly: court’s conclusion on the existence of an employer-employee relationship between Roman and
LRTA lacked basis because Roman himself had testified being an employee of Metro Transit and
not of the LRTA.
"WHEREFORE, the assailed judgment is hereby MODIFIED, by exonerating the appellants from any
liability for the death of Nicanor Navidad, Jr. Instead, appellees Rodolfo Roman and the Light Rail
Transit Authority (LRTA) are held liable for his death and are hereby directed to pay jointly and Respondents, supporting the decision of the appellate court, contended that a contract of carriage
severally to the plaintiffs-appellees, the following amounts: was deemed created from the moment Navidad paid the fare at the LRT station and entered the
premises of the latter, entitling 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 of Navidad in
a) P44,830.00 as actual damages;
failing to exercise extraordinary diligence imposed upon a common carrier.

b) P50,000.00 as nominal damages;

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
c) P50,000.00 as moral damages; safety of passengers.4 The Civil Code, governing the liability of a common carrier for death of or
injury to its passengers, provides:
d) P50,000.00 as indemnity for the death of the deceased; and
"Article 1755. A common carrier is bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all
e) P20,000.00 as and for attorney’s fees."2 the circumstances.

The appellate court ratiocinated that while the deceased might not have then as yet boarded the "Article 1756. In case of death of or injuries to passengers, common carriers are presumed to have
train, a contract of carriage theretofore had already existed when the victim entered the place where been at fault or to have acted negligently, unless they prove that they observed extraordinary
passengers were supposed to be after paying the fare and getting the corresponding token therefor. diligence as prescribed in articles 1733 and 1755."
In exempting Prudent from liability, the court stressed that there was nothing to link the security
agency to the death of Navidad. It said that Navidad failed 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 "Article 1759. Common carriers are liable for the death of or injuries to passengers through the
having been hit by the train owned and managed by the LRTA and operated at the time by Roman. negligence or willful acts of the former’s employees, although such employees may have acted
The appellate court faulted petitioners for their failure to present expert evidence to establish the fact beyond the scope of their authority or in violation of the orders of the common carriers.
that the application of emergency brakes could not have stopped the train.
"This liability of the common carriers does not cease upon proof that they exercised all the diligence
The appellate court denied petitioners’ motion for reconsideration in its resolution of 10 October of a good father of a family in the selection and supervision of their employees."
2000.
"Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of the
In their present recourse, petitioners recite alleged errors on the part of the appellate court; viz: willful acts or negligence of other passengers or of strangers, if the common carrier’s employees
through the exercise of the diligence of a good father of a family could have prevented or stopped
the act or omission."
"I.

The law requires common carriers to carry passengers safely using the utmost diligence of very
THE HONORABLE COURT OF APPEALS GRAVELY ERRED BY DISREGARDING THE cautious persons with due regard for all circumstances.5 Such duty of a common carrier to provide
FINDINGS OF FACTS BY THE TRIAL COURT 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
"II. 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
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT PETITIONERS exercise of due diligence could have prevented or stopped the act or omission.7 In case of such
ARE LIABLE FOR THE DEATH OF NICANOR NAVIDAD, JR. 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
"III. 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
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT RODOLFO presumption would be that it has been at fault,10 an exception from the general rule that negligence
ROMAN IS AN EMPLOYEE OF LRTA."3 must be proved.11

Petitioners would contend that the appellate court ignored the evidence and the factual findings of The foundation of LRTA’s liability is the contract of carriage and its obligation to indemnify the victim
the trial court by holding them liable on the basis of a sweeping conclusion that the presumption of arises from the breach of that contract by reason of its failure to exercise the high diligence required
negligence on the part of a common carrier was not overcome. Petitioners would insist that of the common carrier. In the discharge of its commitment to ensure the safety of passengers, a

53
carrier may choose to hire its own employees or avail itself of the services of an outsider or an On December 20, 1953, at about noontime, plaintiffs, husband and wife, together with
independent firm to undertake the task. In either case, the common carrier is not relieved of its their minor daughters, namely, Milagros, 13 years old, Raquel, about 4½ years old, and
responsibilities under the contract of carriage. Fe, over 2 years old, boarded the Pambusco Bus No. 352, bearing plate TPU No. 757
(1953 Pampanga), owned and operated by the defendant, at San Fernando, Pampanga,
bound for Anao, Mexico, Pampanga. At the time, they were carrying with them four pieces
Should Prudent be made likewise liable? If at all, that liability could only be for tort under the
of baggages containing their personal belonging. The conductor of the bus, who
provisions of Article 217612 and related provisions, in conjunction with Article 2180,13 of the Civil
happened to be a half-brother of plaintiff Mariano Beltran, issued three tickets (Exhs. A, B,
Code. The premise, however, for the employer’s liability is negligence or fault on the part of the
& C) covering the full fares of the plaintiff and their eldest child, Milagros. No fare was
employee. Once such fault is established, the employer can then be made liable on the basis of the
charged on Raquel and Fe, since both were below the height at which fare is charged in
presumption juris tantum that the employer failed to exercise diligentissimi patris families in the
accordance with the appellant's rules and regulations.
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 After about an hour's trip, the bus reached Anao whereat it stopped to allow the
common carrier, on the one hand, and an independent contractor, on the other hand, be described? passengers bound therefor, among whom were the plaintiffs and their children to get off.
It would be solidary. A contractual obligation can be breached by tort and when the same act or With respect to the group of the plaintiffs, Mariano Beltran, then carrying some of their
omission causes the injury, one resulting in culpa contractual and the other in culpa aquiliana, Article baggages, was the first to get down the bus, followed by his wife and his children. Mariano
219414 of the Civil Code can well apply.15 In fine, a liability for tort may arise even under a contract, led his companions to a shaded spot on the left pedestrians side of the road about four or
where tort is that which breaches the contract.16 Stated differently, when an act which constitutes a five meters away from the vehicle. Afterwards, he returned to the bus in controversy to get
breach of contract would have itself constituted the source of a quasi-delictual liability had no his other bayong, which he had left behind, but in so doing, his daughter Raquel followed
contract existed between the parties, the contract can be said to have been breached by tort, him, unnoticed by her father. While said Mariano Beltran was on the running board of the
thereby allowing the rules on tort to apply.17 bus waiting for the conductor to hand him his bayong which he left under one of its seats
near the door, the bus, whose motor was not shut off while unloading, suddenly started
moving forward, evidently to resume its trip, notwithstanding the fact that the conductor
Regrettably for LRT, as well as perhaps the surviving spouse and heirs of the late Nicanor Navidad,
has not given the driver the customary signal to start, since said conductor was still
this Court is concluded by the factual finding of the Court of Appeals that "there is nothing to link
attending to the baggage left behind by Mariano Beltran. Incidentally, when the bus was
(Prudent) to the death of Nicanor (Navidad), for the reason that the negligence of its employee,
again placed into a complete stop, it had travelled about ten meters from the point where
Escartin, has not been duly proven x x x." This finding of the appellate court is not without
the plaintiffs had gotten off.
substantial justification in our own review of the records of the case.

Sensing that the bus was again in motion, Mariano Beltran immediately jumped from the
There being, similarly, no showing that petitioner Rodolfo Roman himself is guilty of any culpable act
running board without getting his bayong from the conductor. He landed on the side of the
or omission, he must also be absolved from liability. Needless to say, the contractual tie between the
road almost in front of the shaded place where he left his wife and children. At that precise
LRT and Navidad is not itself a juridical relation between the latter and Roman; thus, Roman can be
time, he saw people beginning to gather around the body of a child lying prostrate on the
made liable only for his own fault or negligence.
ground, her skull crushed, and without life. The child was none other than his daughter
Raquel, who was run over by the bus in which she rode earlier together with her parents.
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 has been violated or invaded by the defendant,
For the death of their said child, the plaintiffs commenced the present suit against the
may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss
defendant seeking to recover from the latter an aggregate amount of P16,000 to cover
suffered by him.18 It is an established rule that nominal damages cannot co-exist with compensatory
moral damages and actual damages sustained as a result thereof and attorney's fees.
damages.19
After trial on the merits, the court below rendered the judgment in question.

WHEREFORE, the assailed decision of the appellate court is AFFIRMED with MODIFICATION but
On the basis of these facts, the trial court found defendant liable for breach of contract of carriage
only in that (a) the award of nominal damages is DELETED and (b) petitioner Rodolfo Roman is
and sentenced it to pay P3,000.00 for the death of the child and P400.00 as compensatory damages
absolved from liability. No costs. SO ORDERED.
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 her death, she was no longer a passenger of the
LA MALLORCA, petitioner, bus involved in the incident and, therefore, the contract of carriage had already terminated. Although
vs. the Court of Appeals sustained this theory, it nevertheless found the defendant-appellant guilty
HONORABLE COURT OF APPEALS, MARIANO BELTRAN, ET AL., respondents. 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. And, the Court of Appeals did not only find the petitioner liable,
but increased the damages awarded the plaintiffs-appellees to P6,000.00, instead of P3,000.00
BARRERA, J.:
granted by the trial court.

La Mallorca seeks the review of the decision of the Court of Appeals in CA-G.R. No. 23267-R, In its brief before us, La Mallorca contends that the Court of Appeals erred (1) in holding it liable
holding it liable for quasi-delict and ordering it to pay to respondents Mariano Beltran, et al., for quasi-delict, considering that respondents complaint was one for breach of contract, and (2) in
P6,000.00 for the death of his minor daughter Raquel Beltran, plus P400.00 as actual damages. raising the award of damages from P3,000.00 to P6,000.00 although respondents did not appeal
from the decision of the lower court.
The facts of the case as found by the Court of Appeals, briefly are:

54
Under the facts as found by the Court of Appeals, we have to sustain the judgement holding The plaintiffs sufficiently pleaded the culpa or negligence upon which the claim was predicated when
petitioner liable for damages for the death of the child, Raquel Beltran. It may be pointed out that it was alleged in the complaint that "the death of Raquel Beltran, plaintiffs' daughter, was caused by
although it is true that respondent Mariano Beltran, his wife, and their children (including the the negligence and want of exercise of the utmost diligence of a very cautious person on the part of
deceased child) had alighted from the bus at a place designated for disembarking or unloading of the defendants and their agent." This allegation was also proved when it was established during the
passengers, it was also established that the father had to return to the vehicle (which was still at a trial that the driver, even before receiving the proper signal from the conductor, and while there were
stop) to get one of his bags or bayong that was left under one of the seats of the bus. There can be still persons on the running board of the bus and near it, started to run off the vehicle. The
no controversy that as far as the father is concerned, when he returned to the bus for presentation of proof of the negligence of its employee gave rise to the presumption that the
his bayong which was not unloaded, the relation of passenger and carrier between him and the defendant employer did not exercise the diligence of a good father of the family in the selection and
petitioner remained subsisting. For, the relation of carrier and passenger does not necessarily cease supervision of its employees. And this presumption, as the Court of Appeals found, petitioner had
where the latter, after alighting from the car, aids the carrier's servant or employee in removing his failed to overcome. Consequently, petitioner must be adjudged peculiarily liable for the death of the
baggage from the car.1 The issue to be determined here is whether as to the child, who was already child Raquel Beltran.
led by the father to a place about 5 meters away from the bus, the liability of the carrier for her safety
under the contract of carriage also persisted.
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
It has been recognized as a rule that the relation of carrier and passenger does not cease at the questions or issues raised and argued in appellant's brief. Plaintiffs did not appeal from that portion
moment the passenger alights from the carrier's vehicle at a place selected by the carrier at the of the judgment of the trial court awarding them on P3,000.00 damages for the death of their
point of destination, but continues until the passenger has had a reasonable time or a reasonable daughter. Neither does it appear that, as appellees in the Court of Appeals, plaintiffs have pointed
opportunity to leave the carrier's premises. And, what is a reasonable time or a reasonable delay out in their brief the inadequacy of the award, or that the inclusion of the figure P3,000.00 was
within this rule is to be determined from all the circumstances. Thus, a person who, after alighting merely a clerical error, in order that the matter may be treated as an exception to the general
from a train, walks along the station platform is considered still a passenger.2 So also, where a rule.5 Herein petitioner's contention, therefore, that the Court of Appeals committed error in raising
passenger has alighted at his destination and is proceeding by the usual way to leave the the amount of the award for damages is, evidently, meritorious.1äwphï1.ñët
company's premises, but before actually doing so is halted by the report that his brother, a fellow
passenger, has been shot, and he in good faith and without intent of engaging in the difficulty,
Wherefore, the decision of the Court of Appeals is hereby modified by sentencing, the petitioner to
returns to relieve his brother, he is deemed reasonably and necessarily delayed and thus continues
pay to the respondents Mariano Beltran, et al., the sum of P3,000.00 for the death of the child,
to be a passenger entitled as such to the protection of the railroad and company and its agents.3
Raquel Beltran, and the amount of P400.00 as actual damages. No costs in this instance. So
ordered.
In the present case, the father returned to the bus to get one of his baggages which was not
unloaded when they alighted from the bus. Raquel, 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 hand him the bag or bayong, the bus started to run, so that even he (the father) had to
jump down from the moving vehicle. It was at this instance that the child, who must be near the bus,
was run over and killed. In the circumstances, it cannot be claimed that the carrier's agent had
exercised the "utmost diligence" of a "very cautions person" required by Article 1755 of the Civil
Code to be observed by a common carrier in the discharge of its obligation to transport safely its
passengers. In the first place, the driver, although stopping the bus, nevertheless did not put off the
engine. 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 passengers near the bus was not unreasonable and they are,
therefore, to be considered still as passengers of the carrier, entitled to the protection under their
contract of carriage.

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 Code. Paragraph 7 of the complaint, which reads —

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 G.R. No. 84458 November 6, 1989
plaintiffs and their daughter safely as far as human care and foresight can provide in the
operation of their vehicle. ABOITIZ SHIPPING CORPORATION, petitioner,
vs.
is clearly an allegation for quasi-delict. The inclusion of this averment for quasi-delict, while HON. COURT OF APPEALS, ELEVENTH DIVISION, LUCILA C. VIANA, SPS. ANTONIO VIANA
incompatible with the other claim under the contract of carriage, is permissible under Section 2 of and GORGONIA VIANA, and PIONEER STEVEDORING CORPORATION, respondents.
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 REGALADO, J.:
may be resolved and determined.4

55
In this appeal by certiorari, petitioner Aboitiz Shipping Corporation seeks a review of the decision 1 of Thereafter, Aboitiz, as third-party plaintiff, filed a third-party complaint 5 against Pioneer imputing
respondent Court of Appeals, dated July 29, 1988, the decretal portion of which reads: liability thereto for Anacleto Viana's death as having been allegedly caused by the negligence of the
crane operator who was an employee of Pioneer under its exclusive control and supervision.
WHEREFORE, the judgment appealed from as modified by the order of
October 27, 1982, is hereby affirmed with the modification that appellant Aboitiz Pioneer, in its answer to the third-party complaint, 6 raised the defenses that Aboitiz had no cause of
Shipping is hereby ordered to pay plaintiff-appellees the amount of P30,000.00 action against Pioneer considering that Aboitiz is being sued by the Vianas for breach of contract of
for the death of Anacleto Viana; actual damages of P9,800.00; P150,000.00 for carriage to which Pioneer is not a party; that Pioneer had observed the diligence of a good father of
unearned income; P7,200.00 as support for deceased's parents; P20,000.00 as a family both in the selection and supervision of its employees as well as in the prevention of
moral damages; P10,000.00 as attorney's fees; and to pay the costs. damage or injury to anyone including the victim Anacleto Viana; that Anacleto Viana's gross
negligence was the direct and proximate 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 through
The undisputed facts of the case, as found by the court a quo and adopted by respondent court, are
reckless imprudence filed against the crane operator, Alejo Figueroa.
as follows: .

In a decision rendered on April 17, 1980 by the trial court, 7 Aboitiz was ordered to pay the Vianas
The evidence disclosed that on May 11, 1975, Anacleto Viana boarded the
for damages incurred, and Pioneer was ordered to reimburse Aboitiz for whatever amount the latter
vessel M/V Antonia, owned by defendant, at the port at San Jose, Occidental
paid the Vianas. The dispositive portion of said decision provides:
Mindoro, bound for Manila, having purchased a ticket (No. 117392) in the sum
of P23.10 (Exh. 'B'). On May 12, 1975, said vessel arrived at Pier 4, North
Harbor, Manila, and the passengers therein disembarked, a gangplank having WHEREFORE, judgment is hereby rendered in favor of the plantiffs:
been provided connecting the side of the vessel to the pier. Instead of using
said gangplank Anacleto Viana disembarked on the third deck which was on the
(1) ordering defendant Aboitiz Shipping Corporation to pay to plaintiffs the sum
level with the pier. After said vessel had landed, the Pioneer Stevedoring
of P12,000.00 for the death of Anacleto Viana P9,800.00 as actual damages;
Corporation took over the exclusive control of the cargoes loaded on said
P533,200.00 value of the 10,664 cavans of palay computed at P50.00 per
vessel pursuant to the Memorandum of Agreement dated July 26, 1975 (Exh.
cavan; P10,000.00 as attorney's fees; F 5,000.00, value of the 100 cavans of
'2') between the third party defendant Pioneer Stevedoring Corporation and
palay as support for five (5) years for deceased (sic) parents, herein plaintiffs
defendant Aboitiz Shipping Corporation.
Antonio and Gorgonia Viana computed at P50.00 per cavan; P7,200.00 as
support for deceased's parents computed at P120.00 a month for five years
The crane owned by the third party defendant and operated by its crane pursuant to Art. 2206, Par. 2, of the Civil Code; P20,000.00 as moral damages,
operator Alejo Figueroa was placed alongside the vessel and one (1) hour after and costs; and
the passengers of said vessel had disembarked, it started operation by
unloading the cargoes from said vessel. While the crane was being operated,
(2) ordering the third party defendant Pioneer Stevedoring Corporation to
Anacleto Viana who had already disembarked from said vessel obviously
reimburse defendant and third party plaintiff Aboitiz Shipping Corporation the
remembering that some of his cargoes were still loaded in the vessel, went back
said amounts that it is ordered to pay to herein plaintiffs.
to the vessel, and it was while he was pointing to the crew of the said vessel to
the place where his cargoes were loaded that the crane hit him, pinning him
between the side of the vessel and the crane. He was thereafter brought to the Both Aboitiz and Pioneer filed separate motions for reconsideration wherein they similarly raised the
hospital where he later expired three (3) days thereafter, on May 15, 1975, the trial court's failure to declare that Anacleto Viana acted with gross negligence despite the
cause of his death according to the Death Certificate (Exh. "C") being overwhelming evidence presented in support thereof. In addition, Aboitiz alleged, in opposition to
"hypostatic pneumonia secondary to traumatic fracture of the pubic bone Pioneer's motion, that under the memorandum of agreement the liability of Pioneer as contractor is
lacerating the urinary bladder" (See also Exh. "B"). For his hospitalization, automatic for any damages or losses whatsoever occasioned by and arising from the operation of its
medical, burial and other miscellaneous expenses, Anacleto's wife, herein arrastre and stevedoring service.
plaintiff, spent a total of P9,800.00 (Exhibits "E", "E-1", to "E-5"). Anacleto Viana
who was only forty (40) years old when he met said fateful accident (Exh. 'E')
In an order dated October 27, 1982, 8 the trial court absolved Pioneer from liability for failure of the
was in good health. His average annual income as a farmer or a farm
Vianas and Aboitiz to preponderantly establish a case of negligence against the crane operator
supervisor was 400 cavans of palay annually. His parents, herein plaintiffs
which the court a quo ruled is never presumed, aside from the fact that the memorandum of
Antonio and Gorgonia Viana, prior to his death had been recipient of twenty (20)
agreement supposedly refers only to Pioneer's liability in case of loss or damage to goods handled
cavans of palay as support or P120.00 monthly. Because of Anacleto's death,
by it but not in the case of personal injuries, and, finally that Aboitiz cannot properly invoke the
plaintiffs suffered mental anguish and extreme worry or moral damages. For the
fellow-servant rule simply because its liability stems from a breach of contract of carriage. The
filing of the instant case, they had to hire a lawyer for an agreed fee of ten
dispositive portion of said order reads:
thousand (P10,000.00) pesos. 2

WHEREFORE, judgment is hereby modified insofar as third party defendant

Private respondents Vianas filed a complaint 3 for damages against petitioner corporation (Aboitiz,
Pioneer Stevedoring Corporation is concerned rendered in favor of the
for brevity) for breach of contract of carriage.
plaintiffs-,:

In its answer. 4 Aboitiz denied responsibility contending that at the time of the accident, the vessel
(1) Ordering defendant Aboitiz Shipping Corporation to pay the plaintiffs the
was completely under the control of respondent Pioneer Stevedoring Corporation (Pioneer, for
sum of P12,000.00 for the death of Anacleto Viana; P9,000.00 (sic) as actual
short) as the exclusive stevedoring contractor of Aboitiz, which handled the unloading of cargoes
damages; P533,200.00 value of the 10,664 cavans of palay computed at
from the vessel of Aboitiz. It is also averred that since the crane operator was not an employee of
P50.00 per cavan; P10,000.00 as attorney's fees; P5,000.00 value of the 100
Aboitiz, the latter cannot be held liable under the fellow-servant rule.
56
 cavans of palay as support for five (5) years for deceased's parents, herein baggage and prepare for his departure.12 The carrier-passenger relationship is not terminated
plaintiffs Antonio and Gorgonia Viana,computed at P50.00 per cavan; merely by the fact that the person transported has been carried to his destination if, for example,
P7,200.00 as support for deceased's parents computed at P120.00 a month for such person remains in the carrier's premises to claim his baggage.13
five years pursuant to Art. 2206, Par. 2, of the Civil Code; P20,000.00 as moral
damages, and costs; and
It was in accordance with this rationale that the doctrine in the aforesaid case of La Mallorca was
enunciated, to wit:
(2) Absolving third-party defendant Pioneer Stevedoring Corporation for (sic)
any liability for the death of Anacleto Viana the passenger of M/V Antonia
It has been recognized as a rule that the relation of carrier and passenger does
owned by defendant third party plaintiff Aboitiz Shipping Corporation it
not cease at the moment the passenger alights from the carrier's vehicle at a
appearing that the negligence of its crane operator has not been established
place selected by the carrier at the point of destination, but continues until the
therein.
passenger has had a reasonable time or a reasonable opportunity to leave the
carrier's premises. And, what is a reasonable time or a reasonable delay within
Not satisfied with the modified judgment of the trial court, Aboitiz appealed the same to respondent this rule is to be determined from all the circumstances. Thus, a person who,
Court of Appeals which affirmed the findings of of the trial court except as to the amount of damages after alighting from a train, walks along the station platform is considered still a
awarded to the Vianas. passenger. So also, where a passenger has alighted at his destination and is
proceeding by the usual way to leave the company's premises, but before
actually doing so is halted by the report that his brother, a fellow passenger, has
Hence, this petition wherein petitioner Aboitiz postulates that respondent court erred:
been 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
(A) In holding that the doctrine laid down by this honorable Court in La Mallorca and thus continues to be a passenger entitled as such to the protection of the
vs. Court of Appeals, et al. (17 SCRA 739, July 27, 1966) is applicable to the railroad company and its agents.
case in the face of the undisputable fact that the factual situation under the La
Mallorca case is radically different from the facts obtaining in this case;
In the present case, the father returned to the bus to get one of his baggages
which was not unloaded when they alighted from the bus. Racquel, the child
(B) In holding petitioner liable for damages in the face of the finding of the court that she was, must have followed the father. However, although the father was
a quo and confirmed by the Honorable respondent court of Appeals that the still on the running board of the bus waiting for the conductor to hand him the
deceased, Anacleto Viana was guilty of contributory negligence, which, We bag or bayong, the bus started to run, so that even he (the father) had to jump
respectfully submit contributory negligence was the proximate cause of his down from the moving vehicle. It was at this instance that the child, who must
death; specifically the honorable respondent Court of Appeals failed to apply be near the bus, was run over and killed. In the circumstances, it cannot be
Art. 1762 of the New Civil Code; claimed that the carrier's agent had exercised the 'utmost diligence' of a 'very
cautious person' required by Article 1755 of the Civil Code to be observed by a
common carrier in the discharge of its obligation to transport safely its
(C) In the alternative assuming the holding of the Honorable respondent Court passengers. ... The presence of said passengers near the bus was not
of Appears that petitioner may be legally condemned to pay damages to the unreasonable and they are, therefore, to be considered still as passengers of
private respondents we respectfully submit that it committed a reversible error the carrier, entitled to the protection under their contract of carriage. 14
when it dismissed petitioner's third party complaint against private respondent
Pioneer Stevedoring Corporation instead of compelling the latter to reimburse
the petitioner for whatever damages it may be compelled to pay to the private It is apparent from the foregoing that what prompted the Court to rule as it did in said case is the fact
respondents Vianas. 9 of the passenger's reasonable presence within 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 common
carrier, the nature of its business, the customs of the place, and so forth, and therefore precludes a
At threshold, it is to be observed that both the trial court and respondent Court of Appeals found the consideration of the time element per se without taking into account such other factors. It is thus of
victim Anacleto Viana guilty of contributory negligence, but holding that it was the negligence of no moment whether in the cited case of La Mallorca there was no appreciable interregnum for the
Aboitiz in prematurely turning over the vessel to the arrastre operator for the unloading of cargoes passenger therein to leave the carrier's premises whereas in the case at bar, an interval of one (1)
which was the direct, immediate and proximate cause of the victim's death. 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 or near the petitioner's
I. Petitioner contends that since one (1) hour had already elapsed from the time Anacleto Viana vessel. We believe there exists such a justifiable cause.
disembarked from the vessel and that he was given more than ample opportunity to unload his
cargoes prior to the operation of the crane, his presence on the vessel was no longer reasonable e It is of common knowledge that, by the very nature of petitioner's business as a shipper, the
and he consequently ceased to be a passenger. Corollarily, it insists that the doctrine in La Mallorca passengers of vessels are allotted a longer period of time to disembark from the ship than other
vs. Court of Appeals, et al. 10 is not applicable to the case at bar. common carriers such as a passenger bus. With respect to the bulk of cargoes and the number of
passengers it can load, such vessels are capable of accommodating a bigger volume of both as
The rule is that the relation of carrier and passenger continues until the passenger has been landed compared to the capacity of a regular commuter bus. Consequently, a ship passenger will need at
at the port of destination and has left the vessel owner's dock or premises. 11 Once created, the least an hour as is the usual practice, to disembark from the vessel and claim his baggage whereas
relationship will not ordinarily terminate until the passenger has, after reaching his destination, safely a bus passenger can easily get off the bus and retrieve his luggage in a very short period of time.
alighted from the carrier's conveyance or had a reasonable opportunity to leave the carrier's Verily, petitioner cannot categorically claim, through the bare expedient of comparing the period of
premises. All persons who remain on the premises a reasonable time after leaving the conveyance time entailed in getting the passenger's cargoes, that the ruling in La Mallorca is inapplicable to the
are to be deemed passengers, and what is a reasonable time or a reasonable delay within this rule case at bar. On the contrary, if we are to apply the doctrine enunciated therein to the instant petition,
is to be determined from all the circumstances, and includes a reasonable time to see after his we cannot in reason doubt that the victim Anacleto Viana was still a passenger at the time of the

57
incident. When the accident occurred, the victim was in the act of unloading his cargoes, which he prevented, the former's death. Moreover, in paragraph 5.6 of its petition, at bar, 19 petitioner has
had every right to do, from petitioner's vessel. As earlier stated, a carrier is duty bound not only to expressly conceded the factual finding of respondent Court of Appeals that petitioner did not present
bring its passengers safely to their destination but also to afford them a reasonable time to claim sufficient evidence in support of its submission that the deceased Anacleto Viana was guilty of gross
their baggage. negligence. Petitioner cannot now be heard to claim otherwise.

It is not definitely shown that one (1) hour prior to the incident, the victim had already disembarked No excepting circumstance being present, we are likewise bound by respondent court's declaration
from the vessel. Petitioner failed to prove this. What is clear to us is that at the time the victim was that there was no negligence on the part of Pioneer Stevedoring Corporation, a confirmation of the
taking his cargoes, the vessel had already docked an hour earlier. In consonance with common trial court's finding to that effect, hence our conformity to Pioneer's being absolved of any liability.
shipping procedure as to the minimum time of one (1) hour allowed for the passengers to
disembark, it may be presumed that the victim had just gotten off the vessel when he went to
As correctly observed by both courts, Aboitiz joined Pioneer in proving the alleged gross negligence
retrieve his baggage. Yet, even if he had already disembarked an hour earlier, his presence in
of the victim, hence its present contention that the death of the passenger was due to the negligence
petitioner's premises was not without cause. The victim had to claim his baggage which was
of the crane operator cannot be sustained both on grounds, of estoppel and for lack of evidence on
possible only one (1) hour after the vessel arrived since it was admittedly standard procedure in the
its present theory. Even in its answer filed in the court below it readily alleged that Pioneer had taken
case of petitioner's vessels that the unloading operations shall start only after that time.
the necessary safeguards insofar as its unloading operations were concerned, a fact which appears
Consequently, under the foregoing circumstances, the victim Anacleto Viana is still deemed a
to have been accepted by the plaintiff therein by not impleading Pioneer as a defendant, and
passenger of said carrier at the time of his tragic death.
likewise inceptively by Aboitiz by filing its third-party complaint only after ten (10) months from the
institution of the suit against it. Parenthetically, Pioneer is not within the ambit of the rule on
II. Under the law, common carriers are, from the nature of their business and for reasons of public extraordinary diligence required of, and the corresponding presumption of negligence foisted on,
policy, bound to observe extraordinary diligence in the vigilance over the goods and for the safety of common carriers like Aboitiz. This, of course, does not detract from what we have said that no
the passengers transported by them, according to all the circumstances of each case. 15 More negligence can be imputed to Pioneer but, that on the contrary, the failure of Aboitiz to exercise
particularly, a common carrier is bound to carry the passengers safely as far as human care and extraordinary diligence for the safety of its passenger is the rationale for our finding on its liability.
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
WHEREFORE, the petition is DENIED and the judgment appealed from is hereby AFFIRMED in
have been at fault or to have acted negligently. 17 This gives rise to an action for breach of contract
toto.
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, 18 which, in the instant case, necessarily includes its failure to safeguard its SO ORDERED.
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 G.R. No. L-22985           January 24, 1968
serious peril. Definitely, even assuming the existence of the supposed cordon of drums loosely
placed around the unloading area and the guard's admonitions against entry therein, these were at
most insufficient precautions which pale into insignificance if considered vis-a-vis the gravity of the BATANGAS TRANSPORTATION COMPANY, petitioner,
danger to which the deceased was exposed. There is no showing that petitioner was extraordinarily vs.
diligent in requiring or seeing to it that said precautionary measures were strictly and actually GREGORIO CAGUIMBAL, PANCRACIO CAGUIMBAL, MARIA MARANAN DE CAGUIMBAL,
enforced to subserve their purpose of preventing entry into the forbidden area. By no stretch of BIÑAN TRANSPORTATION COMPANY and MARCIANO ILAGAN, respondents.
liberal evaluation can such perfunctory acts approximate the "utmost diligence of very cautious
persons" to be exercised "as far as human care and foresight can provide" which is required by law CONCEPCION, C.J.:
of common carriers with respect to their passengers.

Appeal by certiorari from a decision of the Court of Appeals.

While the victim was admittedly contributorily negligent, still petitioner's aforesaid failure to exercise
extraordinary diligence was the proximate and direct cause of, because it could definitely have

58
The main facts are set forth in said decision from which we quote: bus and then the calesa. This notwithstanding, the Court of Appeals rendered judgment against the
BTCO upon the ground that its driver, Tomas Perez, had failed to exercise the "extraordinary
diligence," required in Article 1733 of the new Civil Code, "in the vigilance for the safety" of his
There is no dispute at all that the deceased Pedro Caguimbal, Barrio Lieutenant of Barrio
passengers. 2
Calansayan, San Jose, Batangas, was a paying passenger of BTCO bus, with plate TPU-
507, going south on its regular route from Calamba, Laguna, to Batangas, Batangas,
driven by Tomas Perez, its regular driver, at about 5:30 o'clock on the early morning of The record shows that, in order to permit one of them to disembark, Perez drove his BTCO bus
April 25, 1954. The deceased's destination was his residence at Calansayan, San Jose, partly to the right shoulder of the road and partly on the asphalted portion thereof. Yet, he could
Batangas. The bus of the Biñan Transportation Company, bearing plate TPU-820, driven have and should have seen to it — had he exercised "extraordinary diligence" — that his bus was
by Marciano Ilagan, was coming from the opposite direction (north-bound). Along the completely outside the asphalted portion of the road, and fully within the shoulder thereof, the width
national highway at Barrio Daraza, Tanauan, Batangas, on the date and hour above of which being more than sufficient to accommodate the bus. He could have and should have done
indicated, a horse-driven rig (calesa) managed by Benito Makahiya, which was then this, because, when the aforementioned passenger expressed his wish to alight from the bus, Ilagan
ahead of the Biñan bus, was also coming from the opposite direction, meaning proceeding had seen the aforementioned "calesa", driven by Makahiya, a few meters away, coming from the
towards the north. As to what transpired thereafter, the lower court chose to give more opposite direction, with the Biñan bus about 100 meters behind the rig cruising at a good
credence to defendant Batangas Transportation Company's version which, in the words of speed. 3 When Perez slowed down his BTCO bus to permit said passenger to disembark, he must
the Court a quo, is as follows: "As the BTCO bus was nearing a house, a passenger have known, therefore, that the Biñan bus would overtake the calesa at about the time when the
requested the conductor to stop as he was going to alight, and when he heard the signal latter and BTCO bus would probably be on the same line, on opposite sides of the asphalted
of the conductor, the driver Tomas Perez slowed down his bus swerving it farther to the portions of the road, and that the space between the BTCO bus and the "calesa" would not be
right in order to stop; at this juncture, a calesa, then driven by Benito Makahiya was at a enough to allow the Biñan bus to go through. It is true that the driver of the Biñan bus should have
distance of several meters facing the BTCO bus coming from the opposite direction; that slowed down or stopped, and, hence, was reckless in not doing so; but, he had no especial
at the same time the Biñan bus was about 100 meters away likewise going northward and obligations toward the passengers of the BTCO unlike Perez whose duty was to exercise "utmost"
following the direction of the calesa; that upon seeing the Biñan bus the driver of the or "extraordinary" diligence for their safety. Perez was thus under obligation to avoid a situation
BTCO bus dimmed his light as established by Magno Ilaw, the very conductor of the which would be hazardous for his passengers, and, make their safety dependent upon the diligence
Biñan bus at the time of the accident; that as the calesa and the BTCO bus were passing of the Biñan driver. Such obligation becomes more patent when we considered the fact — of which
each other from the opposite directions, the Biñan bus following the calesa swerved to its the Court may take judicial cognizance — that our motor vehicle drivers, particularly those of public
left in an attempt to pass between the BTCO bus and the calesa; that without diminishing service utilities, have not distinguished themselves for their concern over the safety, the comfort or
its speed of about seventy (70) kilometers an hour, the Biñan bus passed through the the convenience of others. Besides, as correctly stated in the syllabus to Brito Sy vs. Malate
space between the BTCO bus and the calesa hitting first the left side of the BTCO bus Taxicab & Garage, Inc., 4
with the left front corner of its body and then bumped and struck the calesa which was
completely wrecked; that the driver was seriously injured and the horse was killed; that the
In an action based on a contract of carriage, the court need not make an express finding
second and all other posts supporting the top of the left side of the BTCO bus were
of fault or negligence on the part of the carrier in order to hold it responsible to pay the
completely smashed and half of the back wall to the left was ripped open. (Exhibits 1 and
damages sought for by the passenger. By the contract of carriage, the carrier assumes
2). The BTCO bus suffered damages for the repair of its damaged portion.
the express obligation to transport the passenger to his destination safely and to observe
extraordinary diligence with a due regard for all the circumstances, and any injury that
As a consequence of this occurrence, two (2) passengers of BTCO died, namely, Pedro Caguimbal might be suffered by the passenger is right away attributable to the fault or negligence of
and Guillermo Tolentino, apart from others who were injured. The widow and children of Caguimbal the carrier (Article 1756, new Civil Code). This is an exception to the general rule that
instituted the present action, which was tried jointly with a similar action of the Tolentinos, to recover negligence must be proved, and it is therefore incumbent upon the carrier to prove that it
damages from the Batangas Transportation Company, hereinafter referred to as BTCO. The latter, has exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the new
in turn, filed a third-party complaint against the Biñan Transportation Company — hereinafter Civil Code.
referred to as Biñan — and its driver, Marciano Ilagan. Subsequently, the Caguimbals amended
their complaint, to include therein, as defendants, said Biñan and Ilagan.
In the case at bar, BTCO has not proven the exercise of extraordinary diligence on its part. For this
reason, the case of Isaac vs. A. L. Ammen Trans. Co., Inc. 5 relied upon by BTCO, is not in point, for,
After appropriate proceedings, the Court of First Instance of Batangas rendered a decision in said case, the public utility driver had done everything he could to avoid the accident, and could
dismissing the complaint insofar as the BTCO is concerned, without prejudice to plaintiff's right to not have possibly avoided it, for he "swerved the bus to the very extreme right of the road," which
sue Biñan — which had stopped participating in the proceedings herein, owing apparently, to a case the driver, in the present case, had failed to do.
in the Court of First Instance of Laguna for the insolvency of said enterprise — and Ilagan, and
without pronouncement as to costs.
As regards the second assignment of error, appellant argues that the award of attorney's fees is not
authorized by law, because, of the eleven (11) cases specified in Article 1208 of the new Civil Code,
On appeal taken by the Caguimbals, the Court of Appeals reversed said decision and rendered only the fifth and the last are relevant to the one under consideration; but the fifth case requires bad
judgment for them, sentencing the BTCO, Biñan and Ilagan to, jointly and severally, pay to the faith, which does not exist in the case at bar. As regards the last case, which permits the award,
plaintiffs the aggregate sum of P10,500.00 1 and the costs in both instances. Hence, this appeal by "where the court deems it just and equitable that attorney's fees . . . should be recovered," it is urged
BTCO, upon the ground that the Court of Appeals erred: 1) in finding said appellant liable for that the evidence on record does not show the existence of such just and equitable grounds.
damages; and 2) in awarding attorney's fees.
We, however, believe otherwise, for: (1) the accident in question took place on April 25, 1954, and
In connection with the first assignment of error, we note that the recklessness of defendant was, the Caguimbals have been constrained to litigate for over thirteen (13) years to vindicate their rights;
manifestly, a major factor in the occurrence of the accident which resulted, inter alia, in the death of and (2) it is high time to impress effectively upon public utility operators the nature and extent of their
Pedro Caguimbal. Indeed, as driver of the Biñan bus, he overtook Benito Makahiya's horse-driven responsibility in respect of the safety of their passengers and their duty to exercise greater care in
rig or calesa and passed between the same and the BTCO bus despite the fact that the space the selection of drivers and conductor and in supervising the performance of their duties, in
available was not big enough therefor, in view of which the Biñan bus hit the left side of the BTCO accordance, not only with Article 1733 of the Civil Code of the Philippines, but, also, with Articles

59
1755 and 1756 thereof 6 and the spirit of these provisions, as disclosed by the letter thereof, and To begin with, it must be emphasized that a contract to transport passengers is quite different in kind
elucidated by the Commission that drafted the same. 7 and degree from any other contractual relation, and this is because of the relation which an air
carrier sustain with the public. Its business is mainly with the travelling public. It invites people to
avail of the comforts and advantages it offers. The contract of air carriage, therefore, generates a
WHEREFORE, the decision appealed from, should be, as it is hereby, affirmed, with the costs of this
relation attended with a public duty. Neglect or malfeasance of the carrier's employees naturally
instance against appellant Batangas Transportation Company.
could give ground for an action for damages.3

In ruling for respondent Pantejo, both the trial court and the Court of Appeals found that herein
petitioner acted in bad faith in refusing to provide hotel accommodations for respondent Pantejo or
G.R. No. 120262 July 17, 1997 to reimburse him for hotel expenses incurred despite and in contrast to the fact that other
passengers were so favored.
PHILIPPINE AIRLINES, INC., petitioner,
vs. In declaring that bad faith existed, respondent court took into consideration the following factual
COURT OF APPEALS and LEOVIGILDO A. PANTEJO, respondents. circumstances:

REGALADO, J.: 1. Contrary to petitioner's claim that cash assistance was given instead because of non-availability
of rooms in hotels where petitioner had existing tie-ups, the evidence shows that Sky View Hotel,
where respondent Pantejo was billeted, had plenty of rooms available.
In this appeal by certiorari, petitioner Philippine Airlines, Inc. (PAL) seeks to set aside the decision of
respondent Court of Appeals, 1 promulgated on December 29, 1994, which affirmed the award for
damages made by the trial court in favor of herein private respondent Leovegildo A. Pantejo. 2. It is not true that the P300.00 Paid to Ernesto Gonzales, a co-passenger of respondent, was a
refund for his plane ticket, the truth being that it was a reimbursement for hotel and meal expenses.
On October 23, 1988, private respondent Pantejo, then City Fiscal of Surigao City, boarded a PAL
plane in Manila and disembarked in Cebu City where he was supposed to take his connecting flight 3. It is likewise not denied that said Gonzales and herein respondent came to know about the
to Surigao City However, due to typhoon Osang, the connecting flight to Surigao City was cancelled. reimbursements only because another passenger, Mrs. Rocha, informed them that she was able to
obtain the refund for her own hotel expenses.
To accommodate the needs of its stranded passengers, PAL initially gave out cash assistance of
P100.00 and, the next day, P200.00, for their expected stay of two days in Cebu. Respondent 4. Petitioner offered to pay P300.00 to private respondent only after he had confronted the airline's
Pantejo requested instead that he be billeted in a hotel at PAL's expense because he did not have manager about the discrimination committed against him, which the latter realized was an actionable
cash with him at that time, but PAL refused. Thus, respondent Pantejo was forced to seek and wrong.
accept the generosity of a co-passenger, an engineer named Andoni Dumlao, and he shared a room
with the latter at Sky View Hotel with the promise to pay his share of the expenses upon reaching
5. Service Voucher No. 199351, presented by petitioner to prove that it gave cash assistance to its
Surigao.
passengers, was based merely on the list of passengers already given cash assistance and was
purportedly prepared at around 10:00 A.M. of October 23, 1988. This was two
On October 25, 1988 when the flight for Surigao was resumed, respondent Pantejo came to know hours before respondent came to know of the cancellation of his flight to Surigao, hence private
that the hotel expenses of his co-passengers, one Superintendent Ernesto Gonzales and a certain respondent could not have possibly refused the same.4
Mrs. Gloria Rocha, an auditor of the Philippine National Bank, were reimbursed by PAL. At this
point, respondent Pantejo informed Oscar Jereza, PAL's Manager for Departure Services at Mactan
It must be stressed that these factual findings, which are supported by substantial evidence, are
Airport and who was in charge of cancelled flights, that he was going to sue the airline for
binding, final and conclusive upon this Court absent any reason, and we find none, why this settled
discriminating against him. It was only then that Jereza offered to pay respondent Pantejo P300.00
evidential rule should not apply.
which, due to the ordeal and anguish he had undergone, the latter decline.

Petitioner theorizes that the hotel accommodations or cash assistance given in case a flight is
On March 18, 1991, the Regional Trial Court of Surigao City, Branch 30, rendered judgment in the
cancelled is in the nature of an amenity and is merely a privilege that may be extended at its own
action for damages filed by respondent Pantejo against herein petitioner, Philippine Airlines, Inc.,
discretion, but never a right that may be demanded by its passengers. Thus, when respondent
ordering the latter to pay Pantejo P300.00 for actual damages, P150,000.00 as moral damages,
Pantejo was offered cash assistance and he refused it, petitioner cannot be held liable for whatever
P100,000.00 as exemplary damages, P15,000.00 as attorney's fees, and 6% interest from the time
befell respondent Pantejo on that fateful day, because it was merely exercising its discretion when it
of the filing of the complaint until said amounts shall have been fully paid, plus costs of suit. 2 On
opted to just give cash assistance to its passengers.
appeal, respondent court affirmed the decision of the court a quo, but with the exclusion of the
award of attorney's fees and litigation expenses.
Assuming arguendo that the airline passengers have no vested right to these amenities in case a
flight is cancelled due to force majeure, what makes petitioner liable for damages in this particular
The main issue posed for resolution is whether petitioner airlines acted in bad faith when it failed
case and under the facts obtaining herein is its blatant refusal to accord the so-called amenities
and refused to provide hotel accommodations for respondent Pantejo or to reimburse him for hotel
equally to all its stranded passengers who were bound for Surigao City. No compelling or justifying
expenses incurred by reason of the cancellation of its connecting flight to Surigao City due to force
reason was advanced for such discriminatory and prejudicial conduct.
majeure.

More importantly, it has been sufficiently established that it is petitioner's standard company policy,
whenever a flight has been cancelled, to extend to its hapless passengers cash assistance or to

60
provide them accommodations in hotels with which it has existing tie-ups. In fact, petitioner's Mactan expenses and he was not. Worse, he would not even have known about it were it not for a co-
Airport Manager for departure services, Oscar Jereza, admitted that PAL has an existing passenger who verbally told him that she was reimbursed by the airline for hotel and meal
arrangement with hotels to accommodate stranded passengers, 5 and that the hotel bills of Ernesto expenses. It may even be said that the amounts, the time and the circumstances under which those
Gonzales were reimbursed 6 obviously pursuant to that policy. amounts were offered could not salve the moral wounds inflicted by PAL on private respondent but
even approximated insult added to injury.
Also, two witnesses presented by respondent, Teresita Azarcon and Nerie Bol, testified that
sometime in November, 1988, when their flight from Cebu to Surigao was cancelled, they were The discriminatory act of petitioner against respondent ineludibly makes the former liable for moral
billeted at Rajah Hotel for two nights and three days at the expense of PAL. 7 This was never denied damages under Article 21 in relation to Article 2219 (10) of the Civil Code.9 As held in Alitalia
by PAL. Airways vs. CA, et al., 10 such inattention to and lack of care by petitioner airline for the interest of its
passengers who are entitled to its utmost consideration, particularly as to their convenience, amount
to bad faith which entitles the passenger to the award of moral damages.
Further, Ernesto Gonzales, the aforementioned co-passenger of respondent on that fateful flight,
testified that based on his previous experience hotel accommodations were extended by PAL to its
stranded passengers either in Magellan or Rajah Hotels, or even in Cebu Plaza. Thus, we view as Moral damages are emphatically not intended to enrich a plaintiff at the expense of the defendant.
impressed with dubiety PAL's present attempt to represent such emergency assistance as being They are awarded only to allow the former to obtain means, diversion, or amusements that will serve
merely ex gratia and not ex debito. to alleviate the moral suffering he has undergone due to the defendant's culpable action and must,
perforce, be proportional to the suffering inflicted. 11 However, substantial damages do not translate
into excessive damages. 12 Except for attorney's fees and costs of suit, it will be noted that the Court
While petitioner now insists that the passengers were duly informed that they would be reimbursed
of Appeals affirmed point by point the factual findings of the lower court upon which the award of
for their hotel expenses, it miserably and significantly failed to explain why the other passengers
damages had been based.13 We, therefore, see no reason to modify the award of damages made by
were given reimbursement while private respondent was not. Although Gonzales was subsequently
the trial court.
given a refund, this was only so because he came to know about it by accident through Mrs. Rocha,
as earlier explained.
Under the peculiar circumstances of this case, we are convinced that the awards for actual, moral
and exemplary damages granted in the judgment of respondent court, for the reasons meticulously
Petitioner could only offer the strained and flimsy pretext that possibly the passengers were not
analyzed and thoroughly explained in its decision, are just and equitable. It is high time that the
listening when the announcement was made. This is absurd because when respondent Pantejo
travelling public is afforded protection and that the duties of common carriers, long detailed in our
came to know that his flight had been cancelled, he immediately proceeded to petitioner's office and
previous laws and jurisprudence and thereafter collated and specifically catalogued in our Civil Code
requested for hotel accommodations. He was not only refused accommodations, but he was not
in 1950, be enforced through appropriate sanctions.
even informed that he may later on be reimbursed for his hotel expenses. This explains why his co-
passenger, Andoni Dumlao, offered to answer for respondent's hotel bill and the latter promised to
pay him when they arrive in Surigao. Had both know that they would be reimbursed by the airline, We agree, however, with the contention that the interest of 6% imposed by respondent court should
such arrangement would not have been necessary. be computed from the date of rendition of judgment and not from the filing of the complaint. The rule
has been laid down in Eastern Shipping Lines, Inc. vs. Court of Appeals, et al. 14 that:
Respondent Court of Appeals thus correctly concluded that the refund of hotel expenses was
surreptitiously and discriminatorily made by herein petitioner since the same was not made known to When an obligation, not constituting a loan or forbearance of money, is breached, an
everyone, except through word of mouth to a handful of passengers. This is a sad commentary on interest on the amount of damages awarded may be imposed at the discretion of the court
the quality of service and professionalism of an airline company, which is the country's flag carrier at at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated
that. claims or damages except when or until the demand can be established with reasonable
certainty. Accordingly, where the demand is established with reasonable certainty, the
interest shall begin to run from the time the claim is made judicially or extrajudicially (Art.
On the bases of all the foregoing, the inescapable conclusion is that petitioner acted in bad faith in
1169, Civil Code) but when such certainty cannot be so reasonably established at the time
disregarding its duties as a common carrier to its passengers and in discriminating against herein
the demand is made, the interest shall begin to run only from the date the judgment of the
respondent Pantejo. It was even oblivious to the fact that this respondent was exposed to
court is made (at which time the quantification of damages may be deemed to have been
humiliation and embarrassment especially because of his government position and social
reasonably ascertained). The actual base for the computation of legal interest shall, in any
prominence, which altogether necessarily subjected him to ridicule, shame and anguish. It remains
case, be on the amount finally adjudged.
uncontroverted that at the time of the incident, herein respondent was then the City Prosecutor of
Surigao City, and that he is a member of the Philippine Jaycee Senate, past Lt. Governor of the
Kiwanis Club of Surigao, a past Master of the Mount Diwata Lodge of Free Masons of the This is because at the time of the filing of the complaint, the amount of damages to which plaintiff
Philippines, member of the Philippine National Red Cross, Surigao Chapter, may be entitled remains unliquidated and not known, until it is definitely ascertained, assessed and
and past Chairman of the Boy Scouts of the Philippines, Surigao del Norte Chapter. 8 determined by the court, and only after the presentation of proof thereon. 15

It is likewise claimed that the moral and exemplary damages awarded to respondent Pantejo are WHEREFORE, the challenged judgment of respondent Court of Appeals is hereby AFFIRMED,
excessive and unwarranted on the ground that respondent is not totally blameless because of his subject to the MODIFICATION regarding the computation of the 6% legal rate of interest on the
refusal to accept the P100.00 cash assistance which was inceptively offered to him. It bears monetary awards granted therein to private respondent
emphasis that respondent Pantejo had every right to make such refusal since it evidently could not
meet his needs and that was all that PAL claimed it could offer.
SO ORDERED.

His refusal to accept the P300.00 proffered as an afterthought when he threatened suit was justified
by his resentment when he belatedly found out that his co-passengers were reimbursed for hotel

61
G.R. No. 136048       January 23, 2001 (f) As exemplary damages -- P30,000.00; and

JOSE BARITUA and JB LINE, petitioners, (g) To pay the costs."

vs.
NIMFA DIVINA MERCADER in her capacity and as guardian of DARWIN, GIOVANNI, RODEL
The Facts
and DENNIS, all surnamed MERCADER; LEONIDA Vda. de MERCADER on her behalf and on
behalf of her minor child MARY JOY MERCADER; SHIRLEY MERCADER DELA CRUZ; MARIA
THERESA MERCADER-GARCIA; DANILO MERCADER; JOSE DANTE MERCADER; JOSEFINA The antecedents of the case are succinctly summarized by the Court of Appeals in this wise:
MERCADER, respondents.
"The original complaint was filed against JB Lines, Inc. [Petitioner JB Lines, Inc.] filed a
PANGANIBAN, J.: motion to dismiss complaint, to strike out false-impertinent matters therefrom, and/or for
bill of particulars on the primary grounds that [respondents] failed to implead Jose Baritua
as an indispensable party and that the cause of action is a suit against a wrong and non-
The Manchester ruling requiring the payment of docket and other fees as a condition for the
existent party. [Respondents] filed an opposition to the said motion and an amended
acquisition of jurisdiction has no retroactive effect and applies only to cases filed after its finality.
complaint.

"In an Order dated December 11, 1984 the trial court denied the aforesaid motion and
The Case admitted the amended complaint of [respondents] impleading Jose Baritua and alleged
the following:
Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the April 17, 1998
Decision1 and the October 28, 1998 Resolution2 of the Court of Appeals (CA) in CA-GR CY No. '(10) The late Dominador Mercader is a [b]usinessman mainly engaged in the
40772. The decretal portion of said Decision reads as follows: buy and sell of dry goods in Laoang, N. Samar. He buys his goods from Manila
and bring[s] them to Laoang, Northern Samar for sale at his store located in the
said locality;
"WHEREFORE, upon all the foregoing premises considered, the DECISION appealed
from is AFFIRMED with the MODIFICATION that the loss of earnings of the late
Dominador Mercader is reduced to P798,000.00."3 (11) Sometime on March 16, 1983, the late Dominador Mercader boarded
[petitioners'] bus No. 142 with Plate No. 484 EU at [petitioners'] Manila
Station/terminal, bound for Brgy. Rawis, Laoang Northern Samar as a paying
The assailed Resolution denied petitioners' Motion for Reconsideration.
passenger;

The Court of Appeals sustained the Decision of the Regional Trial Court (RTC) of Laoang, Northern
(12) At that time, Dominador Mercader had with him as his baggage, assorted
Samar (Branch 21). Except for the modification of the loss of earnings, it affirmed all the monetary
goods (i.e. long pants, short pants, dusters, etc.) which he likewise loaded in
damages granted by the trial court to respondents. The decretal portion of the assailed RTC
[petitioners'] bus;
Decision reads as follows:4

(13) The late Dominador Mercader was not able to reach his destination
"WHEREFORE, on preponderance of evidence, judgment is for [herein respondents] and
considering that on March 17, 1983 at Beily (Bugco) Bridge, Barangay Roxas,
against [herein petitioners], ordering the latter to pay the former:
Mondragon, Northern Samar, while he was on board [petitioners'] bus no. 142
with Plate No. 484 EU, the said bus fell into the river as a result of which the
(a) As compensatory damages for the death of Dominador Mercader -- P50,000.00; late Dominador Mercader died. x x x.

(b) For the loss of earnings of the late Dominador Mercader -- P1,660,000.00, more or (14) The accident happened because [petitioners'] driver negligently and
less, based on the average life span of 75 years from the time of his death who earned a recklessly operated the bus at a fast speed in wanton disregard of traffic rules
net income of P5,000.00 monthly out of his business; and regulations and the prevailing conditions then existing that caused [the] bus
to fall into the river.'
(c) Actual damages of P30,000.00 receipted purchases of goods in Manila; P5,750.00 for
the first class coffin and a 15-day wake services evidenced by a receipt marked Exh. 'D'; "[Respondents] then filed a motion to declare [petitioners] in default which motion was
[P.]850.00 for the 50 x 60 headstone, receipt marked Exh. 'E' and P1,590.00 -- Deed of opposed by [petitioners]. [Respondents] withdrew the said motion prompting the trial court
Absolute Sale of a burial lot, marked Exh. 'F'; to cancel the scheduled hearing of the said motion to declare [petitioners] in default in an
Order dated January 23, 1985.
(d) 25% of whatever amount is collected by [respondents] from [petitioners] but no less
than P50,000.00 plus P1 ,000.00 per hearing by way of attorney's fees; "In its answer, [petitioners] denied specifically all the material allegations in the complaint
and alleged the following:
(e) As moral damages -- P50,000.00;
'2. The alleged person of Dominador Mercader did not board bus 142 at
[petitioners'] Manila station/terminal x x x as a (supposed paying passenger).
62
There is even no statement in the complaint that Dominador Mercader (if it were proximate and direct cause of his own death, hence, he himself is to be blamed
true that he was a passenger of bus 142 'at the [petitioners'] Manila for whatever may have happened to him or for whatever may have been
station/terminal') was issued any passenger-freight ticket conformably with law sustained by his supposed heirs, vis-à-vis the suit against the wrong party.
and practice. It is a fact of public knowledge that, in compliance with existing
rules and laws, [Petitioner] Baritua, as a public utility operator, issues, thru his
6. Baritua and his driver, as earlier stated, did not commit any actionable breach
conductors, in appropriate situations, to a true passenger, the familiar and
of contract with the alleged Dominador Mercader or the latter's supposed heirs.
known passenger and freight ticket which reads in part:

7. There is no factual nor any legal basis for plaintiffs' proffered claims for
'NOTICE
damages.

Baggage carried at owner's risk x x x liability on prepaid

II. AFFIRMATIVE DEFENSES
freight otherwise declared.

8. Based on the preceding averments, plaintiffs have neither a cause nor a right
x x x      x x x      x x x
of action against [Petitioner] Baritua and his driver.

Whole Fare Paid P ___________________________

8.1. The allegation that supposedly the 'x x x [p]laintiffs are the compulsory heirs
Declared value x x x.
of the late DOMINADOR MERCADER x x x' (par. 8, complaint) is too vague and
too broad, as the subject allegation is a bare and pure conclusionary averment
Description of Freight ________________________ unaccompanied by the requisite statement of ultimate facts constitutive of a
cause or right of action.
            Signature of Owner .'
8.2. Even assuming arguendo, without however conceding, plaintiffs statement
of a cause of action, the complaint is nonetheless replete with false and
3. It is also a fact of public knowledge that [Petitioner] Baritua does not have
impertinent matters which fit the rule on striking out pleadings or parts thereof.
any 'Manila station/terminal,' because what he has is a Pasay city station.
To mention only a glaring few:

4. [Petitioner] Baritua had no prior knowledge that, on or about March 17, 1983,
8.2.a. The allegation on exemplary damages x x x is impertinent and immaterial
and/or previous thereto, the Bugko Bailey Bridge (across Catarman-Laoang
in the complaint against a supposed employer. For, even theoretically
road) in Barangay Roxas, Mondragon, Northern Samar, was in virtual'
assuming, without however admitting a negligent act-omission on the part of a
dilapida[ted] and dangerous condition, in a state of decay and disrepair, thus
driver, nevertheless, in such a hypothetical situation, the causative negligence,
calling for the concerned government and public officials' performance of their
if any there was, is personal to the wrongdoer, i.e., the employee-driver, to the
coordinative and joint duties and responsibilities, to repair, improve and
exclusion of the employer.
maintain that bridge, in good and reasonably safe condition, but, far from
performing or complying with said subject duties and responsibilities, the
adverted officials concerned, without just cause, not only failed and neglected to 8.2.b. The allegation on supposed 'minimum life of 75 years' and on 'he expects
cause such needed repair, improvement and maintenance of the Bugko Bailey to earn no less than P1,680,000.00 x x x is false, a pure hyperbole, and bereft
Bridge, on or prior to March 17, 1983, but also failed, and neglected to either of factual and legal basis. Besides, what jurisprudential rule refers to is
close the Bugko Bridge to public use and travel, and/or to put appropriate only net earning. The law abhors a claim, akin to plaintiffs' allegation, which is
warning and cautionary signs, for repair, improvement, maintenance, and safety manifestly speculative, as it may not exist at all. Furthermore, the questioned
purposes. So that, as a proximate and direct consequence of the aggregate allegation in the plaintiff's original and amended complaints is not preceded by
officials' nonfeasance, bad faith, negligence, serious inefficiency, and callous the requisite statement of definitive facts, nor of any specific fact, which could
indifference to public safety, that Bugko Bridge collapsed inward and caved in possibly afford a rational basis for a reasonable expectation of supposed
ruin, on that March 17, 1983, while Baritua's bus 142 was cautiously and earning that could be lost, or impaired.
prudently passing and travelling across the said bridge, as a result of which the
bus fell into the river and sea waters, despite the exercise and compliance by
8.2.c. Likewise, the allegations that allegedly 'x x x the late Dominador
Baritua and his driver of their duties in the matter of their requisite degree of
Mercader boarded x x x Bus No. 142 x x x and that supposedly the latter had a
diligence, caution and prudence, Baritua also exercised and complied with the
baggage x x x containing drygoods x x x in which case [petitioners have] to
requisite duty of diligence, care, and prudence in the selection and supervision
pay the value thereof in such amount as may be proven by [respondents] in
over his driver, contrary to the baseless imputation in paragraphs 14 and 20 of
court during the trial x x x, apart from being false, are offensive to the rule on
the original and amended complaints. Moreover, Baritua and his driver did not
concise statement of ultimate facts. The assailed allegations also contravene
violate any traffic rule and regulation, contrary to plaintiffs' insinuation.
Interim Rule 11, '(i)f any demand is for damages in a civil action the amount
thereof must be specifically alleged.' In consequence of this averment,
5. Furthermore, [Petitioner] Baritua and his driver have no causative connection [respondents] have not yet paid the correct docket fee, for which reason,
with the alleged death of Dominador Mercader who, according to a reliable [respondents'] case may be dismissed on that ground alone.1âwphi1.nêt
source, was already seriously suffering from a lingering illness even prior to his
alleged demise. Baritua also learned lately, and so it is herein alleged that
Dominador Mercader contributed considerably, to, and/or provided the

63
 8.3. In violation also of the same Interim Rule 11, regarding the requisite f) An amount to be determined by this Honorable Court, representing exemplary
definitive amount of claim, the allegation on the supposed funeral expense x x x damages;
does not also indicate any specific amount. So with the averment on supposed
moral damage which may not be warranted because of absence of allegation of
g) An amount equivalent to 25% of whatever amount the plaintiffs would be able
fraud or bad faith, if any, there was, apart from want of causative connection
to collect from the defendant but in no case less than P50,000.00 plus an
with the defendant.
additional amount of P1,000.00 per hearing as and by way of Attorney's fees;'

8.4. The allegation in paragraph 15 of the original and amended complaint is

"II
also a pure conclusionary averment, without a factual premise.

Did the CA also ignore the fact that the trial court was not paid the correct amount of the
9. [Petitioner] JB LINE, impleaded in the amended, complaint, is merely a
docket and other lawful fees; hence, without jurisdiction over the original and amended
business name and sole proprietorship of defendant Baritua. As such, JB Line
complaints or over the subject matter of the case;
is not a juridical person, nor an entity authorized by law to sue and be sued,
hence, it cannot legally be a party to any action. With this averment, correlated
with that in paragraphs 4-5 hereof, [respondents'] amended complaint is "III
essentially a suit against a wrong party."5
Did the CA likewise arbitrarily disregard petitioners' constitutional right to procedural due
The RTC, after due trial, rendered the aforesaid assailed Decision. process and fairness when it ignored and thrust aside their right to present evidence and
to expect that their evidence will be duly considered and appreciated; and
Ruling of the Court of Appeals
"IV.
As earlier stated, the Court of Appeals affirmed the trial court's award of monetary damages in favor
of respondents, except the amount of Dominador Mercader's lost earnings, which it reduced to In awarding excessive and extravagant damages, did the CA and the trial court adhere to
P798,000. It held that petitioners failed to rebut the presumption that in the event a passenger died the rule that their assailed decision must state clearly and distinctly the facts and the laws
or was injured, the carrier had acted negligently. Petitioners, it added, presented no sufficient proof on which they are based?"7
that they had exercised extraordinary diligence.
Distilling the alleged errors cited above, petitioners raise two main issues for our consideration: (1)
Hence, this Petition.6 whether the CA erred in holding that the RTC had jurisdiction over the subject matter of the case,
and (2) whether the CA disregarded petitioners' procedural rights.
The Issues
The Court's Ruling
In their Memorandum, petitioners submit the following issues for our consideration:
The Petition is devoid of merit.
"I
First Issue:
Did the honorable Court of Appeals (CA) gravely abuse its discretion when it allowed to
pass sub silencio the trial court's failure to rule frontally on petitioners' plea for a bill of Jurisdiction
particulars, and ignored the nature of respondents' prayer in the complaint pleading for an
award of --
Petitioners contend that since the correct amounts of docket and other lawful fees were not paid by
respondents, then the trial court did not acquire jurisdiction over the subject matter of the case.
'a) P12,000.00 -- representing the death compensation;
The Court, in Manchester Development Corporation v. CA,8 held that "[t]he court acquires
b) An amount to be proven in court. representing actual damages; jurisdiction over any case only upon the payment of the prescribed docket fee. An amendment of the
complaint or similar pleading will not thereby vest jurisdiction in the court, much less the payment of
the docket fee based on the amounts sought in the amended pleading. x x x."
c) P1,660,000.00 or more as may be proven during the trial, by way of loss of
earnings;
Generally, the jurisdiction of a court is determined by the statute in force at the commencement of
the action,9 unless such statute provides for its retroactive application.10 Once the jurisdiction of a
d) An amount to be proven in court as and by way of funeral expenses;
court attaches, it continues until the case is finally terminated.11 The trial court cannot be ousted
therefrom by subsequent happenings or events, although of a character that would have prevented
e) An amount to be proven during the trial representing moral damages; jurisdiction from attaching in the first instance.12

64
The Manchester ruling, which became final in 1987, has no retroactive application and cannot be from their Decisions, both courts clearly laid down their bases for awarding monetary damages to
invoked in the subject Complaint filed in 1984. The Court explicitly declared: respondents.

"To put a stop to this irregularity, henceforth all complaints, petitions, answers and other Both the RTC and the CA found that a contract of carriage existed between petitioners and
similar pleadings should specify the amount of damages being prayed for not only in the Dominador Mercader when he boarded Bus No. 142 in Pasay City on March 16, 1983. Petitioners
body of the pleading but also in the prayer, and said damages shall be considered in the failed to transport him to his destination, because the bus fell into a river while traversing the Bugko
assessment of the filing fees in any case. Any pleading that fails to comply with this Bailey Bridge. Although he survived the fall, he later died of asphyxia secondary to drowning.
requirement shall not be accepted nor admitted, or shall otherwise be expunged from the
record."13 (emphasis supplied)
We agree with the findings of both courts that petitioners failed to observe extraordinary
diligence18 that fateful morning. It must be noted that a common carrier, by the nature of its business
Second Issue: and for reasons of public policy, is bound to carry passengers safely as far as human care and
foresight can provide. It is supposed to do so by using the utmost diligence of very cautious persons,
with due regard for all the circunistances.19 In case of death or injuries to passengers, it is presumed
Petitioners' Procedural Rights
to have been at fault or to have acted negligently, unless it proves that it observed extraordinary
diligence as prescribed in Articles 1733 and 175520 of the Civil Code.1âwphi1.nêt
Motion for a Bill of Particulars
We sustain the ruling of the CA that petitioners failed to prove that they had observed extraordinary
Petitioners argue that the Court of Appeals erred when it passed sub silencio on the trial court's diligence.
failure to rule frontally on their plea for a bill of particulars.
First, petitioners did not present evidence on the skill or expertise of the driver of Bus No. 142 or the
We are not impressed. It must be noted that petitioners' counsel manifested in open court his desire condition of that vehicle at the time of the incident.
to file a motion for a bill of particulars. The RTC gave him ten days from March 12, 1985 within
which to do so.14 He, however, filed the aforesaid motion only on April 2, 1985 or eleven days past
Second, the bus was overloaded at the time. In fact, several individuals were standing when the
the deadline set by the trial court.15 Moreover, such motion was already moot and academic
incident occurred.21
because, prior to its filing, petitioners had already filed their answer and several other pleadings to
the amended Complaint. Section 1, Rule 12 of the Rules of Court, provides:
Third, the bus was overspeeding. Its conductor testified that it had overtaken several buses before it
reached the Bugko Bailey Bridge.22 Moreover, prior to crossing the bridge, it had accelerated and
"Section 1. When applied for; purpose. -- Before responding to a pleading, a party may
maintained its speed towards the bridge.23
move for a more definite statement or for a bill of particulars of any matter which is not
averred with sufficient definiteness or particularity to enable him properly to prepare his
responsive pleading. If the pleading is a reply, the motion must be filed within ten (10) We therefore believe that there is no reason to overturn the assailed CA Decision, which affirmed
days from service thereof. Such motion shall point out the defects complained of, the that of the RTC. It is a well-settled rule that the trial court's factual findings, when affirmed by the
paragraphs wherein they are contained, and the details desired."16 (emphasis supplied) appellate court, are conclusive and binding, if they are not tainted with arbitrariness or oversight of
some fact or circumstance of significance and influence.24 As clearly discussed above, petitioners
have not presented sufficient ground to warrant a deviation from this rule.
Petitioners' Right to Adduce Evidence

Finally, we cannot fault the appellate court in its computation of the damages and lost earnings,
Petitioners also argue that their right to present evidence was violated by the CA, because it did not
since it effectively computed only net earnings in accordance with existing jurisprudence.25
consider their contention that the trial judges who heard the case were biased and impartial.
Petitioners contend, as they did before the CA, that Judge Tomas B. Noynay based his Decision" on
certain chosen partial testimonies of [respondents'] witnesses x x x." They further maintain that WHEREFORE, the Petition is hereby DENIED, and the assailed Decision AFFIRMED. Costs
Judge Fortunato Operario, who initially handled the case, questioned some witnesses in an against petitioners.
overzealous manner and "assum[ed] the dual role of magistrate and advocate."17
SO ORDERED.
These arguments are not meritorious. First, judges cannot be expected to rely on the testimonies of
every witness. In ascertaining the facts, they determine who are credible and who are not. In doing
G.R. No. 116110 May 15, 1996
so, they consider all the evidence before them. In other words, the mere fact that Judge Noynay
based his decision on the testimonies of respondents' witnesses does not necessarily mean that he
did not consider those of petitioners. Second, we find no sufficient showing that Judge Operario was BALIWAG TRANSIT, INC., petitioner,
overzealous in questioning the witnesses. His questions merely sought to clarify their testimonies. In vs.
all, we reject petitioners' contention that their right to adduce evidence was violated. COURT OF APPEALS, SPOUSES ANTONIO GARCIA & LETICIA GARCIA, A & J TRADING,
AND JULIO RECONTIQUE, respondents.
Alleged Failure to State Clearly the Facts and the Law
PUNO, J.:p
We are not convinced by petitioners' contention, either, that both the trial and the appellate courts
failed to state clearly and distinctly the facts and the law involved in the case. As can be gleaned

65
This is a petition for certiorari to review the Decision1 of the Court of Appeals in CA-G.R. CV-31246 The trial court ordered Baliwag, A & J Trading and Recontique to pay jointly and severally the Garcia
awarding damages in favor of the spouses Antonio and Leticia Garcia for breach of contract of spouses the following: (1) P25,000,00 hospitalization and medication fee, (2) P450,000.00 loss of
carriage.2 earnings in eight (8) years, (3) P2,000.00 for the hospitalization of their son Allan Garcia, (4)
P50,000.00 moral damages, and (5) P30,000.00 attorney's fee.9
The records show that on July 31, 1980, Leticia Garcia, and her five-year old son, Allan Garcia,
boarded Baliwag Transit Bus No. 2036 bound for Cabanatuan City driven by Jaime Santiago. They On appeal, the Court of Appeals modified the trial court's Decision by absolving A & J Trading from
took the seat behind the driver. liability and by reducing the award of attorney's fees to P10,000.00 and loss of earnings to
P300,000.00, respectively. 10
At about 7:30 in the evening, in Malimba, Gapan, Nueva Ecija, the bus passengers saw a cargo
truck parked at the shoulder of the national highway. Its left rear portion jutted to the outer lane, as Baliwag filed the present petition for review raising the following issues:
the shoulder of the road was too narrow to accommodate the whole truck. A kerosene lamp
appeared at the edge of the road obviously to serve as a warning device. The truck driver, Julio
1. Did the Court of Appeals err in absolving A & J Trading from liability and
Recontique, and his helper, Arturo Escala, were then replacing a flat tire. The truck is owned by
holding Baliwag solely liable for the injuries suffered by Leticia and Allan Garcia
respondent A & J Trading.
in the accident?

Bus driver Santiago was driving at an in ordinately fast speed and failed to notice the truck and the
2. Is the amount of damages awarded by the Court of Appeals to the Garcia
kerosene lamp at the edge of the road. Santiago's passengers urged him to slow down but he paid
spouses correct?
them no heed. Santiago even carried animated conversations with his co-employees while driving.
When the danger of collision became imminent, the bus passengers shouted "Babangga tayo!".
Santiago stepped on the brake, but it was too late. His bus rammed into the stalled cargo truck. It We affirm the factual findings of the Court of Appeals.
caused the instant death of Santiago and Escala, and injury to several others. Leticia and Allan
Garcia were among the injured passengers.
I

Leticia suffered a fracture in her pelvis and right leg. They rushed her to the provincial hospital in
As a common carrier, Baliwag breached its contract of carriage when it failed to deliver its
Cabanatuan City where she treatment. After three days, she was transferred to the National
passengers, Leticia and Allan Garcia to their destination safe and sound. A common carrier is bound
Orthopedic Hospital where she was confined for more than a month.3 She underwent an operation
to carry its passengers safely as far as human care and foresight can provide, using the utmost
for partial hip prosthesis.4
diligence of a very cautious person, with due regard for all the circumstances. 11 In a contract of
carriage, it is presumed that the common carrier was at fault or was negligent when a passenger
Allan, on the other hand, broke a leg. He was also given emergency treatment at the provincial dies or is injured. Unless the presumption is rebutted, the court need not even make an express
hospital. finding of fault or negligence on the part of the common carrier. This statutory presumption may only
be overcome by evidence that the carrier exercised extraordinary diligence as prescribed in Articles
1733 and 1755 of the Civil Code. 12
Spouses Antonio and Leticia Garcia sued Baliwag Transit, Inc., A & J Trading and Julio Recontique
for damages in the Regional Trial Court of Bulacan.5 Leticia sued as an injured passenger of
Baliwag and as mother of Allan. At the time of the complaint, Allan was a minor, hence, the suit The records are bereft of any proof to show that Baliwag exercised extra ordinary diligence. On the
initiated by his parents in his favor. contrary, the evidence demonstrates its driver's recklessness. Leticia Garcia testified that the bus
was running at a very high speed despite the drizzle and the darkness of the highway. The
passengers pleaded for its driver to slow down, but their plea was ignored. 13 Leticia also revealed
Baliwag, A & J Trading and Recontique disclaimed responsibility for the mishap. Baliwag alleged
that the driver was smelling of liquor. 14 She could smell him as she was seated right behind the
that the accident was caused solely by the fault and negligence of A & J Trading and its driver,
driver. Another passenger, Felix Cruz testified that immediately before the collision, the bus driver
Recontique. Baliwag charged that Recontique failed to place an early warning device at the corner
was conversing with a co-employee. 15 All these prove the bus driver's wanton disregard for the
of the disabled cargo truck to warn on coming vehicles.6 On the other hand, A & J Trading and
physical safety of his passengers, which makes Baliwag as a common carrier liable for damages
Recontique alleged that the accident was the result of the negligence and reckless driving of
under Article 1759 of the Civil Code:
Santiago, bus driver of Baliwag.7

Art. 1759. Common carriers are liable for the death of or injuries to passengers
After hearing, the trial court found all the defendants liable, thus:
through the negligence or willfull acts of the former's employees, although such
employees may have acted beyond the scope of their authority or in violation of
xxx xxx xxx the orders of the common carriers.

In view thereof, the Court holds that both defendants should be held liable; the This liability of the common carriers do not cease upon proof that they exercised
defendant Baliwag Transit, Inc. for having failed to deliver the plaintiff and her all the diligence of a good father of a family in the selection or supervision of
son to their point of destination safely in violation of plaintiff's and defendant their employees.
Baliwag Transit's contractual relation.
Baliwag cannot evade its liability by insisting that the accident was caused solely by the negligence
The defendant A & J and Julio Recontique for failure to provide its cargo truck of A & J Trading and Julio Recontique. It harps on their alleged non use of an early warning device
with an early warning device in violation of the Motor Vehicle Law.8 as testified to by Col. Demetrio dela Cruz, the station commander of Gapan, Nueva Ecija who
investigated the incident, and Francisco Romano, the bus conductor.

66
The records do not bear out Baliwag's contention. Col. dela Cruz and Romano testified that they did more so the passengers to notice the truck to be bumped by the bus
not see any early warning device at the scene of the accident. 16 They were referring to the considering the darkness of the place at the time of the accident.
triangular reflectorized plates in red and yellow issued by the Land Transportation Office. However,
the evidence shows that Recontique and Ecala placed a kerosene lamp or torch at the edge of the
xxx xxx xxx
road, near the rear portion of the truck to serve as an early warning
device. 17 This substantially complies with Section 34 (g) of the Land Transportation and Traffic
Code, to wit: While it is true that the investigating officer testified that he found no early
warning device at the time of his investigation, We rule to give less credence to
such testimony insofar as he himself admitted on cross examination that he did
(g) Lights and reflector when parked or disabled. — Appropriate parking
not notice the presence of any kerosene lamp at the back of the truck because
lights or flares visible one hundred meters away shall be displayed at the corner
when he arrived at the scene of the accident, there were already many people
of the vehicle whenever such vehicle is parked on highways or in places that
surrounding the place (TSN, Aug. 22, 1989, p. 13). He further admitted that
are not well-lighted or, is placed in such manner as to endanger passing traffic.
there exists a probability that the lights of the truck may have been smashed by
Furthermore, every motor vehicle shall be provided at all times with built-in
the bus at the time of the accident considering the location of the truck where its
reflectors or other similar warning devices either pasted, painted or attached at
rear portion was connected with the front portion of the bus (TSN, March 29,
its front and back which shall likewise be visible at night at least one hundred
1985, pp. Investigator's testimony therefore did not confirm nor deny the
meters away. No vehicle not provided with any of the requirements mentioned
existence of such warning device, making his testimony of little probative
in this subsection shall be registered. (emphasis supplied)
value. 19

Baliwag's argument that the kerosene lamp or torch does not substantially comply with the law is
We now review the amount of damages awarded to the Garcia spouses.
untenable. The aforequoted law clearly allows the use not only of an early warning device of the
triangular reflectorized plates variety but also parking lights or flares visible one hundred meters
away. Indeed, Col. dela Cruz himself admitted that a kerosene lamp is an acceptable substitute for First, the propriety of the amount awarded as hospitalization and medical fees. The award of
the reflectorized plates. 18 No negligence, therefore, may be imputed to A & J Trading and its driver, P25,000.00 is not supported by the evidence on record. The Garcias presented receipts marked as
Recontique. Exhibits "B-1" to "B-42" but their total amounted only to P5,017.74. To be sure, Leticia testified as to
the extra amount spent for her medical needs but without more reliable evidence, her lone testimony
cannot justify the award of P25,000.00. To prove actual damages, the best evidence available to the
Anent this factual issue, the analysis of evidence made by the Court of Appeals deserves our
injured party must be presented. The court cannot rely on uncorroborated testimony whose truth is
concurrence, viz:
suspect, but must depend upon competent proof that damages have been actually suffered. 20 Thus,
we reduce the actual damages for medical and hospitalization expenses to P5,017.74.
xxx xxx xxx
Second, we find as reasonable the award of P300,000.00 representing Leticia's lost earnings.
In the case at bar, both the injured passengers of the Baliwag involved in the Before the accident, Leticia was engaged in embroidery, earning P5,000.00 per month. 21 Her
accident testified that they saw some sort of kerosene or a torch on the rear injuries forced her to stop working. Considering the nature and extent of her injuries and the length
portion of the truck before the accident. Baliwag Transit's conductor attempted of time it would take her to recover, 22 we find it proper that Baliwag should compensate her lost
to defeat such testimony by declaring that he noticed no early warning device in income for five (5) years. 23
front of the truck.
Third, the award of moral damages is in accord with law. In a breach of contract of carriage, moral
Among the testimonies offered by the witnesses who were present at the scene damages are recoverable if the carrier, through its agent, acted fraudulently or in bad faith. 24 The
of the accident, we rule to uphold the affirmative testimonies given by the two evidence show the gross negligence of the driver of Baliwag bus which amounted to bad faith.
injured passengers and give less credence to the testimony of the bus Without doubt, Leticia and Allan experienced physical suffering, mental anguish and serious anxiety
conductor who solely testified that no such early warning device exists. by reason of the accident. Leticia underwent an operation to replace her broken hip bone with a
metal plate. She was confined at the National Orthopedic Hospital for 45 days. The young Allan was
also confined in the hospital for his foot injury. Contrary to the contention of Baliwag, the decision of
The testimonies of injured passengers who may well be considered as
the trial court as affirmed by, the Court of Appeals awarded moral damages to Antonio and Leticia
disinterested witness appear to be natural and more probable than the
Garcia not in their capacity as parents of Allan. Leticia was given moral damages as an injured
testimony given by; Francisco Romano who is undoubtedly interested in the
party. Allan was also granted moral damages as an injured party but because of his minority, the
outcome of the case, being the conductor of the defendant-appellant Baliwag
award in his favor has to be given to his father who represented him in the suit.
Transit Inc.

Finally, we find the award of attorney's fees justified. The complaint for damages was instituted by
It must be borne in mind that the situation then prevailing at the time of the
the Garcia spouses on December 15, 1982, following the unjustified refusal of Baliwag to settle their
accident was admittedly drizzly and all dark. This being so, it would be
claim. The Decision was promulgated by the trial court only on January 29, 1991 or about nine years
improbable and perhaps impossible on the part of the truck helper without the
later. Numerous pleadings were filed before the trial court, the appellate court and to this Court.
torch nor the kerosene to remove the flat tires of the truck . Moreover, witness
Given the complexity of the case and the amount of damages involved, 25 the award of attorney's fee
including the bus conductor himself admitted that the passengers shouted, that
for P10,000.00 is just and reasonable.
they are going to bump before the collision which consequently caused the bus
driver to apply the brake 3 to 4 meters away from the truck. Again, without the
kerosene nor the torch in front of the truck, it would be improbable for the driver,

67
IN VIEW WHEREOF, the Decision of the respondent Court of Appeals in CA-G.R. CV-31246 is Yobido Liner underwent actual driving tests before they were employed. Defendant Cresencio
AFFIRMED with the MODIFICATION reducing the actual damages for hospitalization and medical Yobido underwent such test and submitted his professional driver's license and clearances from the
fees to P5,017.74. No costs. barangay, the fiscal and the police.

SO ORDERED. On August 29, 1991, the lower court rendered a decision2 dismissing the action for lack of merit. On
the issue of whether or not the tire blowout was a caso fortuito, it found that "the falling of the bus to
the cliff was a result of no other outside factor than the tire blow-out." It held that the ruling in the La
Mallorca and Pampanga Bus Co. v. De Jesus3 that a tire blowout is "a mechanical defect of the
conveyance or a fault in its equipment which was easily discoverable if the bus had been subjected
G.R. No. 113003 October 17, 1997 to a more thorough or rigid check-up before it took to the road that morning" is inapplicable to this
case. It reasoned out that in said case, it was found that the blowout was caused by the established
fact that the inner tube of the left front tire "was pressed between the inner circle of the left wheel
ALBERTA YOBIDO and CRESENCIO YOBIDO, petitioners, and the rim which had slipped out of the wheel." In this case, however, "the cause of the explosion
vs. remains a mystery until at present." As such, the court added, the tire blowout was "a caso
COURT OF APPEALS, LENY TUMBOY, ARDEE TUMBOY and JASMIN TUMBOY, respondents. fortuito which is completely an extraordinary circumstance independent of the will" of the defendants
who should be relieved of "whatever liability the plaintiffs may have suffered by reason of the
ROMERO, J.: explosion pursuant to Article 11744 of the Civil Code."

In this petition for review on certiorari of the decision of the Court of Appeals, the issue is whether or Dissatisfied, the plaintiffs appealed to the Court of Appeals. They ascribed to the lower court the
not the explosion of a newly installed tire of a passenger vehicle is a fortuitous event that exempts following errors: (a) finding that the tire blowout was a caso fortuito; (b) failing to hold that the
the carrier from liability for the death of a passenger. defendants did not exercise utmost and/or extraordinary diligence required of carriers under Article
1755 of the Civil Code, and (c) deciding the case contrary to the ruling in Juntilla v. Fontanar,5 and
Necesito v. Paras.6
On April 26, 1988, spouses Tito and Leny Tumboy and their minor children named Ardee and
Jasmin, bearded at Mangagoy, Surigao del Sur, a Yobido Liner bus bound for Davao City. Along
Picop Road in Km. 17, Sta. Maria, Agusan del Sur, the left front tire of the bus exploded. The bus fell On August 23, 1993, the Court of Appeals rendered the Decision7 reversing that of the lower court. It
into a ravine around three (3) feet from the road and struck a tree. The incident resulted in the death held that:
of 28-year-old Tito Tumboy and physical injuries to other passengers.
To Our mind, the explosion of the tire is not in itself a fortuitous event. The cause of the
On November 21, 1988, a complaint for breach of contract of carriage, damages and attorney's fees blow-out, if due to a factory defect, improper mounting, excessive tire pressure, is not an
was filed by Leny and her children against Alberta Yobido, the owner of the bus, and Cresencio unavoidable event. On the other hand, there may have been adverse conditions on the
Yobido, its driver, before the Regional Trial Court of Davao City. When the defendants therein filed road that were unforeseeable and/or inevitable, which could make the blow-out a caso
their answer to the complaint, they raised the affirmative defense of caso fortuito. They also filed a fortuito. The fact that the cause of the blow-out was not known does not relieve the carrier
third-party complaint against Philippine Phoenix Surety and Insurance, Inc. This third-party of liability. Owing to the statutory presumption of negligence against the carrier and its
defendant filed an answer with compulsory counterclaim. At the pre-trial conference, the parties obligation to exercise the utmost diligence of very cautious persons to carry the passenger
agreed to a stipulation of facts.1 safely as far as human care and foresight can provide, it is the burden of the defendants
to prove that the cause of the blow-out was a fortuitous event. It is not incumbent upon the
plaintiff to prove that the cause of the blow-out is not caso-fortuito.
Upon a finding that the third party defendant was not liable under the insurance contract, the lower
court dismissed the third party complaint. No amicable settlement having been arrived at by the
parties, trial on the merits ensued. Proving that the tire that exploded is a new Goodyear tire is not sufficient to discharge
defendants' burden. As enunciated in Necesito vs. Paras, the passenger has neither
choice nor control over the carrier in the selection and use of its equipment, and the good
The plaintiffs asserted that violation of the contract of carriage between them and the defendants repute of the manufacturer will not necessarily relieve the carrier from liability.
was brought about by the driver's failure to exercise the diligence required of the carrier in
transporting passengers safely to their place of destination. According to Leny Tumboy, the bus left
Mangagoy at 3:00 o'clock in the afternoon. The winding road it traversed was not cemented and was Moreover, there is evidence that the bus was moving fast, and the road was wet and
wet due to the rain; it was rough with crushed rocks. The bus which was full of passengers had rough. The driver could have explained that the blow-out that precipitated the accident
cargoes on top. Since it was "running fast," she cautioned the driver to slow down but he merely that caused the death of Toto Tumboy could not have been prevented even if he had
stared at her through the mirror. At around 3:30 p.m., in Trento, she heard something explode and exercised due care to avoid the same, but he was not presented as witness.
immediately, the bus fell into a ravine.
The Court of Appeals thus disposed of the appeal as follows:
For their part, the defendants tried to establish that the accident was due to a fortuitous event.
Abundio Salce, who was the bus conductor when the incident happened, testified that the 42-seater WHEREFORE, the judgment of the court a quo is set aside and another one entered
bus was not full as there were only 32 passengers, such that he himself managed to get a seat. He ordering defendants to pay plaintiffs the sum of P50,000.00 for the death of Tito Tumboy,
added that the bus was running at a speed of "60 to 50" and that it was going slow because of the P30,000.00 in moral damages, and P7,000.00 for funeral and burial expenses. SO
zigzag road. He affirmed that the left front tire that exploded was a "brand new tire" that he mounted ORDERED.
on the bus on April 21, 1988 or only five (5) days before the incident. The Yobido Liner secretary,
Minerva Fernando, bought the new Goodyear tire from Davao Toyo Parts on April 20, 1988 and she
was present when it was mounted on the bus by Salce. She stated that all driver applicants in

68
The defendants filed a motion for reconsideration of said decision which was denied on November Moreover, a common carrier may not be absolved from liability in case of force majeure or fortuitous
4, 1993 by the Court of Appeals. Hence, the instant petition asserting the position that the tire event alone. The common carrier must still prove that it was not negligent in causing the death or
blowout that caused the death of Tito Tumboy was a caso fortuito. Petitioners claim further that the injury resulting from an accident.16 This Court has had occasion to state:
Court of Appeals, in ruling contrary to that of the lower court, misapprehended facts and, therefore,
its findings of fact cannot be considered final which shall bind this Court. Hence, they pray that this
While it may be true that the tire that blew-up was still good because the grooves of the
Court review the facts of the case.
tire were still visible, this fact alone does not make the explosion of the tire a fortuitous
event. No evidence was presented to show that the accident was due to adverse road
The Court did re-examine the facts and evidence in this case because of the inapplicability of the conditions or that precautions were taken by the jeepney driver to compensate for any
established principle that the factual findings of the Court of Appeals are final and may not be conditions liable to cause accidents. The sudden blowing-up, therefore, could have been
reviewed on appeal by this Court. This general principle is subject to exceptions such as the one caused by too much air pressure injected into the tire coupled by the fact that the jeepney
present in this case, namely, that the lower court and the Court of Appeals arrived at diverse factual was overloaded and speeding at the time of the accident.17
findings.8 However, upon such re-examination, we found no reason to overturn the findings and
conclusions of the Court of Appeals.
It is interesting to note that petitioners proved through the bus conductor, Salce, that the bus was
running at "60-50" kilometers per hour only or within the prescribed lawful speed limit. However, they
As a rule, when a passenger boards a common carrier, he takes the risks incidental to the mode of failed to rebut the testimony of Leny Tumboy that the bus was running so fast that she cautioned the
travel he has taken. After all, a carrier is not an insurer of the safety of its passengers and is not driver to slow down. These contradictory facts must, therefore, be resolved in favor of liability in view
bound absolutely and at all events to carry them safely and without injury.9 However, when a of the presumption of negligence of the carrier in the law. Coupled with this is the established
passenger is injured or dies while travelling, the law presumes that the common carrier is negligent. condition of the road — rough, winding and wet due to the rain. It was incumbent upon the defense
Thus, the Civil Code provides: to establish that it took precautionary measures considering partially dangerous condition of the
road. As stated above, proof that the tire was new and of good quality is not sufficient proof that it
was not negligent. Petitioners should have shown that it undertook extraordinary diligence in the
Art. 1756. In case of death or injuries to passengers, common carriers are presumed to
care of its carrier, such as conducting daily routinary check-ups of the vehicle's parts. As the late
have been at fault or to have acted negligently, unless they prove that they observed
Justice J.B.L. Reyes said:
extraordinary diligence as prescribed in articles 1733 and 1755.

It may be impracticable, as appellee argues, to require of carriers to test the strength of

Article 1755 provides that "(a) common carrier is bound to carry the passengers safely as far as
each and every part of its vehicles before each trip; but we are of the opinion that a due
human care and foresight can provide, using the utmost diligence of very cautious persons, with a
regard for the carrier's obligations toward the traveling public demands adequate
due regard for all the circumstances." Accordingly, in culpa contractual, once a passenger dies or is
periodical tests to determine the condition and strength of those vehicle portions the
injured, the carrier is presumed to have been at fault or to have acted negligently. This disputable
failure of which may endanger the safety of the passengers.18
presumption may only be overcome by evidence that the carrier had observed extraordinary
diligence as prescribed by Articles 1733,10 1755 and 1756 of the Civil Code or that the death or
injury of the passenger was due to a fortuitous event.11 Consequently, the court need not make an Having failed to discharge its duty to overthrow the presumption of negligence with clear and
express finding of fault or negligence on the part of the carrier to hold it responsible for damages convincing evidence, petitioners are hereby held liable for damages. Article 176419 in relation to
sought by the passenger.12 Article 220620 of the Civil Code prescribes the amount of at least three thousand pesos as damages
for the death of a passenger. Under prevailing jurisprudence, the award of damages under Article
2206 has been increased to fifty thousand pesos (P50,000.00).21
In view of the foregoing, petitioners' contention that they should be exempt from liability because the
tire blowout was no more than a fortuitous event that could not have been foreseen, must fail. A
fortuitous event is possessed of the following characteristics: (a) the cause of the unforeseen and Moral damages are generally not recoverable in culpa contractual except when bad faith had been
unexpected occurrence, or the failure of the debtor to comply with his obligations, must be proven. However, the same damages may be recovered when breach of contract of carriage results
independent of human will; (b) it must be impossible to foresee the event which constitutes the caso in the death of a passenger,22 as in this case. Exemplary damages, awarded by way of example or
fortuito, or if it can be foreseen, it must be impossible to avoid; (c) the occurrence must be such as correction for the public good when moral damages are awarded,23 may likewise be recovered in
to render it impossible for the debtor to fulfill his obligation in a normal manner; and (d) the obliger contractual obligations if the defendant acted in wanton, fraudulent, reckless, oppressive, or
must be free from any participation in the aggravation of the injury resulting to the creditor.13 As malevolent manner.24 Because petitioners failed to exercise the extraordinary diligence required of a
Article 1174 provides, no person shall be responsible for a fortuitous event which could not be common carrier, which resulted in the death of Tito Tumboy, it is deemed to have acted
foreseen, or which, though foreseen, was inevitable. In other words, there must be an entire recklessly.25 As such, private respondents shall be entitled to exemplary damages.
exclusion of human agency from the cause of injury or loss.14
WHEREFORE, the Decision of the Court of Appeals is hereby AFFIRMED subject to the
Under the circumstances of this case, the explosion of the new tire may not be considered a modification that petitioners shall, in addition to the monetary awards therein, be liable for the award
fortuitous event. There are human factors involved in the situation. The fact that the tire was new did of exemplary damages in the amount of P20,000.00. Costs against petitioners. SO ORDERED.
not imply that it was entirely free from manufacturing defects or that it was properly mounted on the
vehicle. Neither may the fact that the tire bought and used in the vehicle is of a brand name noted
G.R. No. 118126 March 4, 1996
for quality, resulting in the conclusion that it could not explode within five days' use. Be that as it
TRANS-ASIA SHIPPING LINES, INC., petitioner,
may, it is settled that an accident caused either by defects in the automobile or through the
vs.
negligence of its driver is not a caso fortuito that would exempt the carrier from liability for
COURT OF APPEALS and ATTY. RENATO T. ARROYO, respondents.
damages.15

DAVIDE, JR., J.:p

69
As formulated by the petitioner, the issue in this petition for review on certiorari under Rule 45 of the for a day, incurred additional expenses and loss of income. He then prayed that he be awarded
Rules of Court is as follows: P1,100.00, P50,000.00, and P25,000.00 as compensatory, moral; and exemplary damages,
respectively.5
In case of interruption of a vessel's voyage and the consequent delay in that
vessel's arrival at its port of destination, is the right of a passenger affected In his pre-trial brief, the private respondent asserted that his complaint was "an action for damages
thereby to be determined and governed by the vague Civil Code provision on arising from bad faith, breach of contract and from tort," with the former arising from the petitioner's
common carriers, or shall it be, in the absence of a specific provision "failure to carry [him] to his place of destination as contracted," while the latter from the "conduct of
thereon governed by Art. 698 of the Code of Commerce?1 the [petitioner] resulting [in] the infliction of emotional distress" to the private respondent.6

The petitioner considers it a "novel question of law." After due trial, the trial court rendered its decision7 and ruled that the action was only for breach of
contract, with Articles 1170, 1172, and 1173 of the Civil Code as applicable law — not Article 2180
of the same Code. It was of the opinion that Article 1170 made a person liable for damages if, in the
Upon a closer evaluation, however, of the challenged decision of the Court of Appeals of 23
performance of his obligation, he was guilty of fraud, negligence, or delay, or in any manner
November 1994,2 vis-a-vis, the decision of 29 June 1992 in Civil Case No. 91-491 of the Regional
contravened the tenor thereof; moreover, pursuant to Article 2201 of the same Code, to be entitled
Trial Court (RTC) of Cagayan de Oro City, Branch 24,3 as well as the allegations and arguments
to damages, the non-performance of the obligation must have been tainted not only by fraud,
adduced by the parties, we find the petitioner's formulation of the issue imprecise. As this Court sees
negligence, or delay, but also bad faith, malice, and wanton attitude. It then disposed of the case as
it, what stands for resolution is a common carrier's liability for damages to a passenger who
follows:
disembarked from the vessel upon its return to the port of origin, after it suffered engine trouble and
had to stop at sea, having commenced the contracted voyage on one engine.
WHEREFORE, it not appearing from the evidence that plaintiff was left in the
Port of Cebu because of the fault, negligence, malice or wanton attitude of
The antecedents are summarized by the Court of Appeals as follows:
defendant's employees, the complaint is DISMISSED. Defendant's counterclaim
is likewise dismissed it not appearing also that filing of the case by plaintiff was
Plaintiff [herein private respondent Atty. Renato Arroyo], a public attorney, motivated by malice or bad faith.8
bought a ticket [from] defendant [herein petitioner], a corporation engaged in . . .
inter-island shipping, for the voyage of M/V Asia Thailand vessel to Cagayan de
The trial court made the following findings to support its disposition:
Oro City from Cebu City on November 12, 1991.

In the light of the evidence adduced by the parties and of the above provisions
At around 5:30 in the evening of November 12, 1991, plaintiff boarded the M/V
of the New Civil Code, the issue to be resolved, in the resolution of this case is
Asia Thailand vessel. At that instance, plaintiff noticed that some repair works
whether or not, defendant thru its employees in [sic] the night of November 12,
[sic] were being undertaken on the engine of the vessel. The vessel departed at
1991, committed fraud, negligence, bad faith or malice when it left plaintiff in the
around 11:00 in the evening with only one (1) engine running.
Port of Cebu when it sailed back to Cagayan de Oro City after it has [sic]
returned from Kawit Island.
After an hour of slow voyage, the vessel stopped near Kawit Island and dropped
its anchor thereat. After half an hour of stillness, some passengers demanded
Evaluation of the evidence of the parties tended to show nothing that defendant
that they should be allowed to return to Cebu City for they were no longer willing
committed fraud. As early as 3:00 p.m. of November 12, 1991, defendant did
to continue their voyage to, Cagayan de Oro City. The captain acceeded [sic] to
not hide the fact that the cylinder head cracked. Plaintiff even saw during its
their request and thus the vessel headed back to Cebu City.
repair. If he had doubts as to the vessel's capacity to sail, he had time yet to
take another boat. The ticket could be returned to defendant and corresponding
At Cebu City, plaintiff together with the other passengers who requested to be cash [would] be returned to him.
brought back to Cebu City, were allowed to disembark. Thereafter, the vessel
proceeded to Cagayan de Oro City. Plaintiff, the next day, boarded the M/V
Neither could negligence, bad faith or malice on the part of defendant be
Asia Japan for its voyage to Cagayan de Oro City, likewise a vessel of
inferred from the evidence of the parties. When the boat arrived at [the] Port of
defendant.
Cebu after it returned from Kawit Island, there was an announcement that
passengers who would like to disembark were given ten (10) minutes only to do
On account of this failure of defendant to transport him to the place of so. By this announcement, it could be inferred that the boat will [sic] proceed to
destination on November 12, 1991, plaintiff filed before the trial court a Cagayan de Oro City. If plaintiff entertained doubts, he should have asked a
complaint for damages against defendant.4 member of the crew of the boat or better still, the captain of the boat. But as
admitted by him, he was of the impression only that the boat will not proceed to
Cagayan de Oro that evening so he disembarked. He was instead, the ones
In his complaint, docketed as Civil Case No. 91-491, plaintiff (hereinafter private respondent) alleged [sic] negligent. Had he been prudent, with the announcement that those who will
that the engines of the M/V Asia Thailand conked out in the open sea, and for more than an hour it disembark were given ten minutes only, he should have lingered a little by
was stalled and at the mercy of the waves, thus causing fear in the passengers. It sailed back to staying in his cot and inquired whether the boat will proceed to Cagayan de Oro
Cebu City after it regained power, but for unexplained reasons, the passengers, including the private City or not. Defendant cannot be expected to be telling [sic] the reasons to each
respondent, were arrogantly told to disembark without the necessary precautions against possible passenger. Announcement by microphone was enough.
injury to them. They were thus unceremoniously dumped, which only exacerbated the private
respondent's mental distress. He further alleged that by reason of the petitioner's wanton, reckless,
and willful acts, he was unnecessarily exposed to danger and, having been stranded in Cebu City

70
 The court is inclined to believe that the story of defendant that the boat returned To justify its award of damages, the Court of Appeals ratiocinated as follows:
to the Port of Cebu because of the request of the passengers in view of the
waves. That it did not return because of the defective engines as shown by the
It is an established and admitted fact that the vessel before the voyage had
fact that fifteen (15) minutes after the boat docked [at] the Port of Cebu and
undergone some repair work on the cylinder head of the engine. It is likewise
those who wanted to proceed to Cagayan de Oro disembarked, it left for
admitted by defendant-appellee that it left the port of Cebu City with only one
Cagayan de Oro City.
engine running. Defendant-appellee averred:

The defendant got nothing when the boat returned to Cebu to let those who did
. . . The dropping of the vessel's anchor after running
not want to proceed to Cagayan de Oro City including plaintiff disembarked. On
slowly on only one engine when it departed earlier must
the contrary, this would mean its loss instead because it will have to refund their
have alarmed some nervous passengers . . .
tickets or they will use it the next trip without paying anymore. It is hard
therefore, to imagine how defendant by leaving plaintiff in Cebu could have
acted in bad faith, negligently, wantonly and with malice. The entries in the logbook which defendant-appellee itself offered as evidence
categorically stated therein that the vessel stopped at Kawit Island because of
engine trouble. It reads:
If plaintiff, therefore, was not able to [m]ake the trip that night of November 12,
1991, it was not because defendant maliciously did it to exclude him [from] the
trip. If he was left, it was because of his fault or negligence.9 2330 HRS STBD ENGINE' EMERGENCY STOP

Unsatisfied, the private respondent appealed to the Court of Appeals (CA-G.R. CV No. 39901) and 2350 HRS DROP ANCHOR DUE TO ENGINE TROUBLE, 2 ENGINE STOP.
submitted for its determination the following assignment of errors: (1) the trial court erred in not
finding that the defendant-appellee was guilty of fraud, delay, negligence, and bad faith; and (2) the
The stoppage was not to start and synchronized [sic] the engines of the vessel
trial court. erred in not awarding moral and exemplary damages.10
as claimed by defendant-appellee. It was because one of the engines of the
vessel broke down; it was because of the disability of the vessel which from the
In its decision of 23 November 1994,11 the Court of Appeals reversed the trial court's decision by very beginning of the voyage was known to defendant-appellee.
applying Article 1755 in relation to Articles 2201, 2208, 2217, and 2232 of the Civil Code and,
accordingly, awarded compensatory, moral, and exemplary damages as follows:
Defendant-appellee from the very start of the voyage knew for a fact that the
vessel was not yet in its sailing condition because the second engine was still
WHEREFORE, premises considered, the appealed decision is hereby being repaired. Inspite of this knowledge, defendant-appellee still proceeded to
REVERSED and SET ASIDE and another one is rendered ordering defendant- sail with only one engine running.
appellee to pay plaintiff-appellant:
Defendant-appellee at that instant failed to exercise the diligence which all
1. P20,000.00 as moral damages; common carriers should exercise in transporting or carrying passengers. The
law does not merely require extraordinary diligence in the performance of the
obligation. The law mandates that common carrier[s] should exercise utmost
2. P10,000.00 as exemplary damages;
diligence the transport of passengers.

3. P5,000.00 as attorney's fees;

Article 1755 of the New Civil Code provides:

4. Cost of suit.
Art. 1755. A common carrier is bound to carry the
passengers safely as far as human care and foresight can
SO ORDERED.12 provide, using the utmost diligence of very cautious
persons, with a due regard for all the circumstances.
It did not, however, allow the grant of damages for the delay in the performance of the petitioner's
obligation as the requirement of demand set forth in Article 1169 of the Civil Code had not been met Utmost diligence of a VERY CAUTIOUS person dictates that defendant-
by the private respondent. Besides, it found that the private respondent offered no evidence to prove appellee should have pursued the voyage only when its vessel was already fit
that his contract of carriage with the petitioner provided for liability in case of delay in departure, nor to sail. Defendant-appellee should have made certain that the vessel [could]
that a designation of the time of departure was the controlling motive for the establishment of the complete the voyage before starting [to] sail. Anything less than this, the vessel
contract. On the latter, the court a quo observed that the private respondent even admitted he was [could not] sail . . . with so many passengers on board it.
unaware of the vessel's departure time, and it was only when he boarded the vessel that he became
aware of such. Finally, the respondent Court found no reasonable basis for the private respondent's
However, defendant-appellant [sic] in complete disregard of the safety of the
belief that demand was useless because the petitioner had rendered it beyond its power to perform
passengers, chose to proceed with its voyage even if only one engine was
its obligation; on the contrary, he even admitted that the petitioner had been assuring the
running as the second engine was still being repaired during the voyage.
passengers that the vessel would leave on time, and that it could still perform its obligation to
Defendant-appellee disregarded the not very remote possibility that because of
transport them as scheduled.
the disability of the vessel, other problems might occur which would endanger
the lives of the passengers sailing with a disabled vessel.

71
As expected, . . . engine trouble occurred. Fortunate[ly] for defendant-appellee, Moral damages having been awarded, exemplary damages maybe properly
such trouble only necessitated the stoppage of the vessel and did not cause the awarded. When entitlement to moral damages has been established, the award
vessel to capsize. No wonder why some passengers requested to be brought of exemplary damages is proper.19
back to Cebu City. Common carriers which are mandated to exercise utmost
diligence should not be taking these risks.
The petitioner then instituted this petition and submitted the question of law earlier adverted to.

On this premise, plaintiff-appellant should not be faulted why he chose to

Undoubtedly, there was, between the petitioner and the private respondent, a contract of common
disembark from the vessel with the other passengers when it returned back to
carriage. The laws of primary application then are the provisions on common carriers under Section
Cebu City. Defendant-appellee may call him a very "panicky passenger" or a
4, Chapter 3, Title VIII, Book IV of the Civil Code, while for all other matters not regulated thereby,
"nervous person", but this will not relieve defendant-appellee from the liability it
the Code of Commerce and special laws.20
incurred for its failure to exercise utmost diligence.13

Under Article 1733 of the Civil Code, the petitioner was bound to observe extraordinary diligence in
xxx xxx xxx
ensuring the safety of the private respondent. That meant that the petitioner was, pursuant to Article
1755 of the said Code, bound to carry the private respondent safely as far as human care and
As to the second assigned error, we find that plaintiff-appellant is entitled to the foresight could provide, using the utmost diligence of very cautious persons, with due regard for all
award of moral and exemplary damages for the breach committed by the circumstances. In this case, we are in full accord with the Court of Appeals that the petitioner
defendant-appellee. failed to discharge this obligation.

As discussed, defendant-appellee in sailing to Cagayan de Oro City with only Before commencing the contracted voyage, the petitioner undertook some repairs on the cylinder
one engine and with full knowledge of the true condition of the vessel, acted. in head of one of the vessel's engines. But even before it could finish these repairs, it allowed the
bad faith with malice, in complete disregard for the safety of the passengers and vessel to leave the port of origin on only one functioning engine, instead of two. Moreover, even the
only for its own personal advancement/interest. lone functioning engine was not in perfect condition as sometime after it had run its course, it
conked out. This caused the vessel to stop and remain a drift at sea, thus in order to prevent the
ship from capsizing, it had to drop anchor. Plainly, the vessel was unseaworthy even before the
The Civil Code provides:
voyage began. For a vessel to be seaworthy, it must be adequately equipped for the voyage and
manned with a sufficient number of competent officers and crew. 21 The failure of a common carrier
Art. 2201. to maintain in seaworthy condition its vessel involved in a contract of carriage is a clear breach of its
duty prescribed in Article 1755 of the Civil Code.
x x x           x x x          x x x
As to its liability for damages to the private respondent, Article 1764 of the Civil Code expressly
provides:
In case of fraud, bad faith, malice or wanton attitude, the
obligor shall be responsible for all damages which may be
reasonably attributed to the non-performance of the Art. 1764. Damages in cases comprised in this Section shall be awarded in
obligation. accordance with Title XVIII of this Book, concerning Damages. Article 2206
shall also apply to the death of a passenger caused by the breach of contract by
common carrier.
Plaintiff-appellant is entitled to moral damages for the mental anguish, fright and
serious anxiety he suffered during the voyage when the vessel's engine broke
down and when he disembarked from the vessel during the wee hours of the The damages comprised in Title XVIII of the Civil Code are actual or compensatory,
morning at Cebu City when it returned.14 moral, nominal, temperate or moderate, liquidated, and exemplary.

Moral damages are recoverable in a damage suit predicated upon a breach of In his complaint, the private respondent claims actual or compensatory, moral, and exemplary
contract of carriage where it is proved that the carrier was guilty of fraud or bad damages.
faith even if death does not result. 15
Actual or compensatory damages represent the adequate compensation for pecuniary loss suffered
Fraud and bad faith by defendant-appellee having been established, the award and for profits the obligee failed to obtain.22
of moral damages is in order.16
In contracts or quasi-contracts, the obligor is liable for all the damages which may be reasonably
To serve as a deterrent to the commission of similar acts in the future, attributed to the non-performance of the obligation if he is guilty of fraud, bad faith, malice, or wanton
exemplary damages should be imposed upon defendant-appellee. 17 attitude.23
Exemplary damages are designed by our civil law to permit the courts to
reshape behavior that is socially deleterious in its consequence by creating . . .
Moral damages include moral suffering, mental anguish, fright, serious anxiety, besmirched
negative incentives or deterrents against such behavior.18
reputation, wounded feelings, moral shock, social humiliation, or similar injury. They may be
recovered in the cases enumerated in Article 2219 of the Civil Code, likewise, if they are the
proximate result of, as in this case, the petitioner's breach of the contract of carriage.24 Anent a

72
breach of a contract of common carriage, moral damages may be awarded if the common carrier, disregarded its solemn duty to exercise extraordinary diligence and obviously acted with bad faith
like the petitioner, acted fraudulently or in bad faith.25 and in a wanton and reckless manner. On this score, however, the petitioner asserts that the safety
or the vessel and passengers was never at stake because the sea was "calm" in the vicinity where it
stopped as faithfully recorded in the vessel's log book (Exhibit "4"). Hence, the petitioner concludes,
Exemplary damages are imposed by way of example or correction for the public good, in addition to
the private respondent was merely "over-reacting" to the situation obtaining then.31
moral, temperate, liquidated or compensatory damages.26 In contracts and quasi-contracts,
exemplary damages may be awarded if the defendant acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner.27 It cannot, however, be considered as a matter of right; the court We hold that the petitioner's defense cannot exculpate it nor mitigate its liability. On the contrary,
having to decide whether or not they should be adjudicated.28 Before the court may consider an such a claim demonstrates beyond cavil the petitioner's lack of genuine concern for the safety of its
award for exemplary damages, the plaintiff must first show that he is entitled to moral, temperate or passengers. It was, perhaps, only providential then the sea happened to be calm. Even so, the
compensatory damages; but it is not necessary that he prove the monetary value thereof.29 petitioner should not expect its passengers to act in the manner it desired. The passengers were not
stoics; becoming alarmed, anxious, or frightened at the stoppage of a vessel at sea in an unfamiliar
zone as nighttime is not the sole prerogative of the faint-hearted. More so in the light of the many
The Court of Appeals did not grant the private respondent actual or compensatory damages,
tragedies at sea resulting in the loss of lives of hopeless passengers and damage to property simply
reasoning that no delay was incurred since there was no demand, as required by Article 1169 of the
because common carriers failed in their duty to exercise extraordinary diligence in the performance
Civil Code. This article, however, finds no application in this case because, as found by the
of their obligations.
respondent Court, there was in fact no delay in the commencement of the contracted voyage. If any
delay was incurred, it was after the commencement of such voyage, more specifically, when the
voyage was subsequently interrupted when the vessel had to stop near Kawit Island after the only We cannot, however, give our affirmance to the award of attorney's fees. Under Article 2208 of the
functioning engine conked out. Civil Code, these are recoverable only in the concept of actual damages,32 not as moral
damages33 nor judicial costs. 34 Hence, to merit such an award, it is settled that the amount thereof
must be proven. 35 Moreover, such must be specifically prayed for — as was not done in this case—
As to the rights and duties of the parties strictly arising out of such delay, the Civil Code is silent.
and may not be deemed incorporated within a general prayer for "such other relief and remedy as
However, as correctly pointed out by the petitioner, Article 698 of the Code of Commerce specifically
this court may deem just and equitable."36 Finally, it must be noted that aside from the following, the
provides for such a situation. It reads:
body of the respondent Court's decision was devoid of any statement regarding attorney's fees:

In case a voyage already begun should be interrupted, the passengers shall be

Plaintiff-appellant was forced to litigate in order that he can claim moral and
obliged to pay the fare in proportion to the distance covered, without right to
exemplary damages for the suffering he encurred [sic]. He is entitled to
recover for losses and damages if the interruption is due to fortuitous event
attorney's fees pursuant to Article 2208 of the Civil Code. It states:
or force majeure, but with a right to indemnity if the interruption should have
been caused by the captain exclusively. If the interruption should be caused by
the disability of the vessel and a passenger should agree to await the repairs, Art. 2208. In the absence of stipulation, attorney's fees and expenses of
he may not be required to pay any increased price of passage, but his living litigation, other than judicial costs cannot be recovered except:
expenses during the stay shall be for his own account.
1. When exemplary damages are awarded;
This article applies suppletorily pursuant to Article 1766 of the Civil Code.
2. When the defendant's act or omission has compelled the
Of course, this does not suffice for a resolution of the case at bench for, as earlier stated, the cause plaintiff to litigate with third persons or to incur expenses to
of the delay or interruption was the petitioner's failure to observe extraordinary diligence. Article 698 protect his interest.
must then be read together with Articles 2199, 2200, 2201, and 2208 in relation to Article 21 of the
Civil Code. So read, it means that the petitioner is liable for any pecuniary loss or loss of profits
This Court holds that the above does not satisfy the benchmark of "factual, legal and
which the private respondent may have suffered by reason thereof. For the private respondent, such
equitable justification" needed as basis for an award of attorney's fees.3 7 In sum, for lack
would be the loss of income if unable to report to his office on the day he was supposed to arrive
of factual and legal basis, the award of attorney's fees must be deleted.
were it not for the delay. This, however, assumes that he stayed on the vessel and was with it when
it thereafter resumed its voyage; but he did not. As he and some passengers resolved not to
complete the voyage, the vessel had to return to its port of origin and allow them to disembark. The WHEREFORE, the instant petition is DENIED and the challenged decision of the Court of Appeals
private respondent then took the petitioner's other vessel the following day, using the ticket he had in CA-G.R. CV No. 39901 is AFFIRMED subject to the modification as to the award for attorney's
purchased for the previous day's voyage. fees which is hereby SET ASIDE.

Any further delay then in the private respondent's arrival at the port of destination was caused by his Costs against the petitioner.
decision to disembark. Had he remained on the first vessel, he would have reached his destination
at noon of 13 November 1991, thus been able to report to his office in the afternoon. He, therefore,
SO ORDERED.
would have lost only the salary for half of a day. But actual or compensatory damages must be
proved,30 which the private respondent failed to do. There is no convincing evidence that he did not
receive his salary for 13 November 1991 nor that his absence was not excused.

We likewise fully agree with the Court of Appeals that the petitioner is liable for moral and exemplary G.R. No. 139875             December 4, 2000
damages. In allowing its unseaworthy M/V Asia Thailand to leave the port of origin and undertake
the contracted voyage, with full awareness that it was exposed to perils of the sea, it deliberately

73
GREGORIO PESTAÑO and METRO CEBU AUTOBUS CORPORATION, petitioners, vehicles c[a]me from the North; that as the motorcycle approached the junction
vs. to Tab[a]gon, the driver Ananias Sumayang signalled with his left arm to
Spouses TEOTIMO SUMAYANG and PAZ C. SUMAYANG, respondents. indicate that he was taking the Tab[a]gon Road; that the motorcycle did turn left
but as it did so, it was bumped by an overspeeding bus; that the force of the
impact threw Ananias Sumayang and his companion Manuel Romagos about
PANGANIBAN, J.:
14 meters away. The motorcycle, Neis continued, was badly damaged as it was
dragged by the bus.
Factual findings of the Court of Appeals, affirming those of the trial judge, are binding on this Court.
In quasi-delicts, such findings are crucial because negligence is largely a matter of evidence. In
'On the other hand, Pat. Dinoy testified that he was in the nearby house of
computing an award for lost earning capacity, the life expectancy of the deceased, not that of the
Ruben Tiu [when] he heard the sound or noise caused by the collision; that he
heir, is used as basis.
immediately went to the scene where he found Ananias Sumayang and Manuel
Romagos lying on the road bleeding and badly injured; that he requested the
The Case driver of a PU vehicle to take them to a hospital; that he took note of the various
distances which he included in his sketch (Exh. J) that the probable point of
impact was at the left lane of the highway and right at the junction to Tab[a]gon
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the (Exh J-11); that he based his conclusion on the 'scratches' caused by the
April 21, 1999 Decision and the August 6, 1999 Resolution of the Court of Appeals1 (CA) in CA-GR motorcycle's footrest on the asphalt pavement; that he described the damage
CV No. 30289. The questioned Decision disposed as follows: caused to the motorcycle in his sketch (Exh J); that on the part of the bus, the
right end of its front bumper was bent and the right portion of the radiator grill
"WHEREFORE, premises considered, the instant appeal is hereby DENIED. The assailed was dented. Pat. Dinoy acknowledged that he met at the scene Ignacio Neis
Decision of the lower court is hereby AFFIRMED with the aforesaid modification regarding who informed him that he saw the incident.
the award of death penalty."
'On the contrary, Pestaño blamed Sumayang for the accident. He testified that
The Resolution of August 6, 1999 denied reconsideration.2 when he first blew the horn the motorcycle which was about 15 or 20 meters
ahead went to the right side of the highway that he again blew the horn and
accelerated in order to overtake the motorcycle; that when he was just one
The Facts meter behind, the motorcycle suddenly turned left towards the Tab[a]gon [R]oad
and was bumped by his bus; that he was able to apply his break only after the
The events leading to this Petition were summarized by the Court of Appeals as follows: impact. Pestaño's testimony was corroborated by Ireneo Casilia who declared
that he was one of the passengers of the bus; that the motorcycle suddenly
turned left towards Tab[a]gon [R]oad without giving any signal to indicate its
"It appears from the records that at around 2:00 o'clock [o]n the afternoon of August 9, maneuver; that the bus was going at 40 kph when the accident occurred.
1986, Ananias Sumayang was riding a motorcycle along the national highway in Ilihan,
Tabagon, Cebu. Riding with him was his friend Manuel Romagos. As they came upon a
junction where the highway connected with the road leading to Tabagon, they were hit by 'To substantiate its defense of bonos pater familias [petitioner] [c]orporation
a passenger bus driven by [Petitioner] Gregorio Pestaño and owned by [Petitioner] Metro recalled to the witness box Gregorio Pestaño who explained how his driving
Cebu Autobus Corporation (Metro Cebu, for brevity), which had tried to overtake them, experience and ability were tested by the company before he was hired. He
sending the motorcycle and its passengers hurtling upon the pavement. Both Ananias further declared that the management gave regular lectures to drivers and
Sumayang and Manuel Romagos were rushed to the hospital in Sogod, where Sumayang conductors touching on various topics like speeding, parking, loading and
was pronounced dead on arrival. Romagos was transferred to the Cebu Doctors' Hospital, treatment of passengers, and that before he took to the road at 2:30 AM of that
but he succumbed to his injuries the day after. day he checked together with the mechanic the tires, brake, signal lights as well
as the tools to be brought along. He did the same thing before commencing his
return trip from Hagnaya, San Remegio later in the day.
"Apart from the institution of criminal charges against Gregorio Pestaño, [Respondents]
Teotimo and Paz Sumayang, as heirs of Ananias Sumayang, filed this civil action for
damages against Gregorio Pestaño, as driver of the passenger bus that rammed the 'The corporation also presented its maintenance supervisor, Agustin Pugeda,
deceased's motorcycle, Metro Cebu, as owner and operator of the said bus, and Perla Jr., and its manager, Alfonso Corominas, Jr. who corroborated Pestaño's
Compania de Seguros, as insurer of Metro Cebu. The case was docketed as Civil Case testimony that his driving ability was thoroughly tested, and that all drivers
No. CEB-6108. underwent periodic lecture on various aspects of safety driving including
pertinent traffic regulations. They also confirmed the thorough checkup of every
vehicle before it would depart and that the performance of the drivers was being
"On November 9, 1987, upon motion of [Petitioner] Pestaño, Judge Pedro C. Son ordered monitored by several inspectors posted at random places along the route.'
the consolidation of the said case with Criminal Case No. 10624, pending in Branch 16 of
the same Court, involving the criminal prosecution of Gregorio Pestaño for [d]ouble
[h]omicide thru [r]eckless [i]mprudence. Joint trial of the two cases thereafter ensued, "In judgment, the lower court found [petitioners] liable to the [respondents], in the amounts
where the following assertions were made: of P30,000.00 for death indemnity, P829,079 for loss of earning capacity of the deceased
Ananias Sumayang, and P36,000.00 for necessary interment expenses. The liability of
defendant Perla Compania de Seguros, Inc., however, was limited only to the amount
'[Respondents] rely mainly on the testimonies of Ignacio Neis, Pat. Aquilino stipulated in the insurance policy, which [was] P12,000 for death indemnity and P4,500.00
Dinoy and Teotimo Sumayang, father of the deceased. Neis declared that he for burial expenses.
saw the incident while he was sitting on a bench beside the highway; that both

74
 "In so ruling, the lower court found [Petitioner] Pestaño to have been negligent in driving The Court's Ruling
the passenger bus that hit the deceased. It was shown that Pestaño negligently attempted
to overtake the motorcycle at a dangerous speed as they were coming upon a junction in
The Petition has no merit.
the road, and as the motorcycle was about to turn left towards Tabagon. The court
likewise found Metro Cebu directly and primarily liable, along with Pestaño, the latter's
employer under Article 2180 of the Civil Code, as [Petitioner] Metro Cebu failed to present First Issue: Negligence
evidence to prove that it had observed . . . [the] diligence of a good father of a family to
prevent damage. Nor has Metro Cebu proven that it had exercised due diligence in the
Petitioners contend that Pestaño was not under any obligation to slow down when he overtook the
supervision of its employees and in the maintenance of vehicles."3
motorcycle, because the deceased had given way to him upon hearing the bus horn. Seeing that the
left side of the road was clearly visible and free of oncoming traffic, Pestaño accelerated his speed
Ruling of the Court of Appeals to pass the motorcycle. Having given way to the bus, the motorcycle driver should have slowed
down until he had been overtaken.
The CA affirmed respondent's liability for the accident and for Sumayang's death. Pestaño was
negligent when he tried to overtake the victim's motorcycle at the Tabagon junction. As a They further contend that the motorcycle was not in the middle of the road nearest to the junction as
professional driver operating a public transport vehicle, he should have taken extra precaution to found by the trial and the appellate courts, but was on the inner lane. This explains why the damage
avoid accidents, knowing that it was perilous to overtake at a junction, where adjoining roads had on the bus were all on the right side - the right end of the bumper and the right portion of the radiator
brought about merging and diverging traffic. grill were bent and dented. Hence, they insist that it was the victim who was negligent.

The appellate court opined that Metro Cebu had shown laxity in the conduct of its operations and in We disagree. Petitioners are raising a question of fact based on Pestaño's testimony contradicting
the supervision of its employees. By allowing the bus to ply its route despite the defective that of Eyewitness Ignacio Neis and on the location of the dents on the bumper and the grill. Neis
speedometer, said petitioner showed its indifference towards the proper maintenance of its vehicles. testified that as the two vehicles approached the junction, the victim raised his left arm to signal that
Having failed to observe the extraordinary diligence required of public transportation companies, it he was turning left to Tabagon, but that the latter and his companion were thrown off the motorcycle
was held vicariously liable to the victims of the vehicular accident. after it was bumped by the overspeeding bus.

In accordance with prevailing jurisprudence, the CA raised to P50,000 the granted indemnity for the These contentions have already been passed upon by the trial and the appellate courts. We find no
death of the victim. It also affirmed the award of loss of earning capacity based on his life cogent reason to reverse or modify their factual findings. The CA agreed with the trial court that the
expectancy. Such liability was assessed, not as a pension for the claiming heirs, but as a penalty vehicular collision was caused by Pestaño's negligence when he attempted to overtake the
and an indemnity for the driver's negligent act. motorcycle. As a professional driver operating a public transport bus, he should have anticipated
that overtaking at a junction was a perilous maneuver and should thus have exercised extreme
caution.
Hence, this Petition.4

Factual findings of the CA affirming those of the trial court are conclusive and binding on this Court.
Issues
Petitioners failed to demonstrate that this case falls under any of the recognized exceptions to this
rule.7 Indeed, the issue of negligence is basically factual and, in quasi-delicts, crucial in the award of
Petitioners submit the following issues5 for our consideration: damages.

1) The Court of Appeals misapplied facts of weight and substance affecting the result of Petitioners aver that the CA was wrong in attributing the accident to a faulty speedometer and in
the case. implying that the accident could have been avoided had this instrument been properly functioning.

2) The Court of Appeals misapplied R.A. 4136 as regards the behavior of the deceased at This contention has no factual basis. Under Articles 2180 and 2176 of the Civil Code, owners and
the time of the accident. managers are responsible for damages caused by their employees. When an injury is caused by the
negligence of a servant or an employee, the master or employer is presumed to be negligent either
in the selection or in the supervision of that employee. This presumption may be overcome only by
3) The Court of Appeals erred in ruling that the award of damages representing income
satisfactorily showing that the employer exercised the care and the diligence of a good father of a
that deceased could have earned be considered a penalty.
family in the selection and the supervision of its employee.8

4) The Court of Appeals, contrary to Article 2204, Civil Code, raised the award of
The CA said that allowing Pestaño to ply his route with a defective speedometer showed laxity on
P30,000.00 damages representing indemnity for death to P50,000.00.
the part of Metro Cebu in the operation of its business and in the supervision of its employees. The
negligence alluded to here is in its supervision over its driver, not in that which directly caused the
5) The Court of Appeals used as basis for the loss of earning capacity, the life expectancy accident. The fact that Pestaño was able to use a bus with a faulty speedometer shows that Metro
of the [d]eceased instead of that of the respondents which was shorter."6 Cebu was remiss in the supervision of its employees and in the proper care of its vehicles. It had
thus failed to conduct its business with the diligence required by law.
In short, they raise these questions: whether the CA erred (1) in applying Section 45 of RA 4136
when it ruled that negligence in driving was the proximate cause of the accident; (2) in increasing Second Issue: Life Indemnity
the civil indemnity from P30,000 to P50,000; and (3) in using the life expectancy of the deceased
instead of the life expectancies of respondents.
75
Petitioners aver that the CA erred in increasing the award for life indemnity from P30,000 to SPOUSES PEDRO GARCIA and EUFRACIA LANDINGIN, plaintiffs-appellees,
P50,000, without specifying any aggravating circumstance to justify the increment as provided in the vs.
Civil Code.9 PANGASINAN TRANSPORTATION CO. and MARCELO OLIGAN, defendants-appellants. 

This contention is untenable. The indemnity for death caused by a quasi-delict used to be pegged at VILLAMOR, J.:
P3,000, based on Article 2206 of the Civil Code. However, the amount has been gradually increased
through the years because of the declining value of our currency. At present, prevailing
Direct appeal on a question of law from the portion of the judgment of the Court of First Instance of
jurisprudence fixes the amount at P50,000.10
Manila ordering the defendants Pangasinan Transportation Co. (PANTRANCO) and Marcelo Oligan
to pay the plaintiffs in Civil Case No. D-1468
Third Issue: Loss of Earning Capacity (L-28014) the sum of P6,500.00, and the plaintiffs in Civil Case No. 1470 (L-28015) the sum of
P3,500.00.
Petitioners cite Villa Rey Transit, Inc. v. Court of Appeals,11 which held:
The complaints in said Civil Cases Nos. D-1468 and D-1470 were filed by the spouses Marcelo
Landingin and Racquel Bocasas, and the spouses Pedro Garcia and Eufracia Landingin,
"The determination of the indemnity to be awarded to the heirs of a deceased person has therefore
respectively, for damages allegedly suffered by them in connection with the death of their respective
no fixed basis. . . . The life expectancy of the deceased or of the beneficiary, whichever is shorter, is
daughter, Leonila Landingin and Estrella Garcia, due to the alleged negligence of the defendants
an important factor . . . "
and/or breach of contract of carriage. In their complaints, plaintiffs averred, among others, that in the
morning of April 20, 1963, their above-mentioned daughters were among the passengers in the bus
They contend that the CA used the wrong basis for its computation of earning capacity. driven by defendant Marcelo Oligan and owned and operated by defendant PANTRANCO on an
excursion trip from Dagupan City to Baguio City and back, that the bus was open on one side and
enclosed on the other, in gross violation of the rules of the Public Service Commission; that
We disagree. The Court has consistently computed the loss of earning capacity based on the life defendant PANTRANCO acted with negligence, fraud and bad faith in pretending to have previously
expectancy of the deceased,12 and not on that of the heir.13 Even Villa Rey Transit did likewise. secured a special permit for the trip when in truth it had not done so; that upon reaching an uphill
point at Camp 8, Kennon Road, Baguio City, on the onward trip, defendant driver, through utter lack
The award for loss of earning capacity is based on two factors: (1) the number of years on which the of foresight, experience and driving knowledge, caused the bus to stall and stop for a few moments;
computation of damages is based and (2) the rate at which the loss sustained by the heirs is that through the said defendant's fault and mishandling, the motor ceased to function, causing the
fixed.14 The first factor refers to the life expectancy, which takes into consideration the nature of the bus to slide back unchecked; that when the said defendant suddenly swerved and steered the bus
victim's work, lifestyle, age and state of health prior to the accident. The second refers to the victim's toward the mountainside, Leonila and Estrella, together with several other passengers, were thrown
earning capacity minus the necessary living expenses. Stated otherwise, the amount recoverable is out of the bus through its open side unto the road, suffering serious injuries as a result of which
that portion of the earnings of the deceased which the beneficiary would have received — the net Leonila and Estrella died at the hospital and the same day; and that in connection with the incident,
earnings of the deceased.15 defendant driver had been charged with and convicted of multiple homicide and multiple slight
physical injuries on account of the death of Leonila and Estrella and of the injuries suffered by four
others, although it may be said, by way of parenthesis, that this case is now pending appeal in a
WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution AFFIRMED. Cost higher court. The plaintiffs prayed for awards of moral, actual and exemplary damages in the total
against petitioners. sum of P40,000.00 in Civil Case No. D-1468, and in the total sum of P25,000.00 in Civil Case No. D-
1470 as well as attorney's fees in the amounts of P5,000.00 and P4,000.00, respectively.
SO ORDERED.
Defendants filed a joint answer to each of the two complaints alleging, among others, that at the
time of the accident, defendant driver was driving the bus at, the slow speed of about 10 kilometers
per hour; that while the said defendant was steering his bus toward the mountainside after hearing a
sound coming from under the rear end of the bus, Leonila and Estrella recklessly, and in
disobedience to his shouted warnings and advice, jumped out of the bus causing their heads to hit
the road or pavement; that the bus was then being driven with extraordinary care, prudence and
diligence; that defendant PANTRANCO observed the care and diligence of a good father of a family
to prevent the accident as well as in the selection and supervision of its employees, particularly of
defendant driver; and that the decision convicting the said defendant was not yet final, the same
having been appealed to the Court of Appeals where it was still pending.

By agreement of the parties, the two cases were tried jointly. On October 17, 1966, the court a quo
rendered its decision therein in which it made the following findings; that upon reaching the fatal spot
at Camp 8, a sudden snapping or breaking of metal below the floor of the bus was heard, and the
bus abruptly stopped, rolling back a few moments later; that as a result, some of the passengers
jumped out of the bus, while others stepped down; that defendant driver maneuvered the bus safely
G.R. No. L-28014-15 May 29, 1970 to and against the side of the mountain where its rear end was made to rest, ensuring the safety of
the many passengers still inside the bus; that while defendant driver as steering the bus towards the
SPOUSES MARCELO LANDINGIN and RACQUEL BOCASAS, plaintiffs-appellees, mountainside, he advised the passengers not to jump, but to remain seated; that Leonila and
vs. Estrella were not thrown out of the bus, but that they panicked and jumped out; that the
PANGASINAN TRANSPORTATION CO. and MARCELO OLIGAN, defendants-appellants. malfunctioning of the motor resulted from the breakage of the cross-joint; that there was no

76
negligence on the part of either of the defendants; that only the day before, the said cross-joint was circumstances? We think not. The court below found that the cross-joint of the bus in which the
duly inspected and found to be in order; and that defendant PANTRANCO had exercised the deceased were riding broke, which caused the malfunctioning of the motor, which in turn resulted in
requisite care in the selection and supervision of its employees, including the defendant driver. The panic among some of the passengers. This is a finding of fact which this Court may not disturb. We
court concluded that "the accident was caused by a fortuitous event or an act of God brought about are of the opinion, however, that the lower court's conclusion drawn from that fact, i.e., that "the
by some extra-ordinary circumstances independent of the will of the Pantranco or its employees." accident was caused by a fortuitous event or an act of God brought about by some extraordinary
circumstances independent of the will of the Pantranco or its employees," is in large measure
conjectural and speculative, and was arrived at without due regard to all the circumstances, as
One would wonder why in the face of such factual findings and conclusion of the trial court, the
required by Article 1755. In Lasam vs. Smith (45 Phil. 660), this Court held that an accident caused
defendants, instead of the plaintiffs, should come to this Court on appeal. The answer lies in the
by defects in the automobile is not a caso fortuito. The rationale of the carrier's liability is the fact that
dispositive portion of the decision, to wit:
"the passenger has neither the choice nor control over the carrier in the selection and use of the
equipment and appliances in use by the carrier." (Necesito, et al. vs. Paras, et al., 104 Phil. 75.)
IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court hereby renders
judgment: (a) Absolving the defendants from any liability on account of
When a passenger dies or is injured, the presumption is that the common carrier is at fault or that it
negligence on their part and therefore dismissing the complaints in these two
acted negligently (Article 1756). This presumption is only rebutted by proof on the carrier's part that
cases; (b) However, as stated above, the Court hereby orders the defendant
it observed the "extraordinary diligence" required in Article 1733 and the "utmost diligence of very
Pantranco to pay to the plaintiffs spouses Marcelo Tandingin and Racquel
cautious persons" required in Article 1755 (Article 1756). In the instant case it appears that the court
Bocasas in Civil Case No. D-1468 the amount of P6,500.00; and the amount of
below considered the presumption rebutted on the strength of defendants-appellants' evidence that
P3,500.00 to the spouses Pedro Garcia and Eufracia Landingin in Civil Case
only the day before the incident, the crossjoint in question was duly inspected and found to be in
No. D-1470, not in payment of liability because of any negligence on the part of
order. It does not appear, however, that the carrier gave due regard for all the circumstances in
the defendants but as an expression of sympathy and goodwill. (Emphasis
connection with the said inspection. The bus in which the deceased were riding was heavily laden
supplied.)
with passengers, and it would be traversing mountainous, circuitous and ascending roads. Thus the
entire bus, including its mechanical parts, would naturally be taxed more heavily than it would be
As to what impelled the court below to include item (b) in the dispositive portion of its decision, can under ordinary circumstances. The mere fact that the bus was inspected only recently and found to
be gathered from the penultimate paragraph of the decision, which reads: be in order would not exempt the carrier from liability unless it is shown that the particular
circumstances under which the bus would travel were also considered.
However, there is evidence to the effect that an offer of P8,500.00 in the instant
cases without any admission of fault or negligence had been made by the In the premises, it was error for the trial court to dismiss the complaints. The awards made by the
defendant Pantranco and that actually in Civil Case No. D-1469 for the death of court should be considered in the concept of damages for breach of contracts of carriage.
Pacita Descalso, the other deceased passenger of the bus in question, the heirs
of the decease received P3,000.00 in addition to hospital and medical bills and
IN VIEW OF THE FOREGOING CONSIDERATIONS, the judgment appealed from is modified as
the coffin of the deceased for the dismissal of the said case without Pantranco
indicated above, and defendant-appellant PANTRANCO is ordered to pay to plaintiffs-appellees the
accepting liability. There was as a matter of fact during the pre-trial of these two
amounts stated in the judgment appealed from, as damages for breach of contracts, with interest
cases a continuing offer of settlement on the part of the defendant Pantranco
thereon at the legal rate from the date of the filing of the complaints. Costs against defendant-
without accepting any liability for such damages, and the Court understood that
appellant PANTRANCO.
the Pantranco would be willing still to pay said amounts even if these cases
were to be tried on the merits. It is well-known that the defendant Pantranco is
zealous in the preservation of its public relations. In the spirit therefore of the
offer of the defendant Pantranco aforesaid, to assuage the feelings of the herein
plaintiffs an award of P6,500.00 for the spouses Marcelo Landingin and
Racquel Bocasas in Civil Case No. D-1468 whose daughter Leonila was, when
she died, a third-year Commerce student at the Far Eastern University, and
P3,500.00 for the spouses Pedro Garcia and Eufracia Landingin in Civil Case
No. D-1470 whose daughter Estrella was in the fourth year High at the Dagupan
Colleges when she died, is hereby made in their favor. This award is in addition
to what Pantranco might have spent to help the parents of both deceased after
the accident.

Defendants-appellants complain that having found them to be absolutely free from fault or
negligence, and having in fact dismissed the complaints against them, the court should not have
ordered them to assume any pecuniary liability. There would be merit in his argument but for the fact
that defendant-appellant PANTRANCO was guilty of breach of contract of carriage. It will be noted
that in each of the two complaints it is averred that two buses including the one in which the two
deceased girls were riding, were hired to transport the excursionist passengers from Dagupan City
to Baguio City, and return, and that the said two passengers did not reach destination safely. G.R. No. L-10605             June 30, 1958

As a common carrier, defendant-appellant PANTRANCO was duty bound to carry its passengers PRECILLANO NECESITO, ETC., plaintiff-appellant,
"safely as far as human care and foresight can provide, using the utmost diligence of very cautious vs.
persons, with a due regard for all the circumstances." (Article 1755, Civil Code.) Did defendant- NATIVIDAD PARAS, ET AL., defendants-appellees.
appellant PANTRANCO measure up to the degree of care and foresight required it under the
77
x---------------------------------------------------------x ART. 1755. A common carrier is bound to carry the passengers safely as far as human
care and foresight can provide, using the utmost diligence of very cautious persons, with a
due regard for the all the circumstances.
G.R. No. L-10606             June 30, 1958

It is clear that the carrier is not an insurer of the passengers' safety. His liability rests upon
GERMAN NECESITO, ET AL., plaintiffs-appellants,
negligence, his failure to exercise the "utmost" degree of diligence that the law requires, and by Art.
vs.
1756, in case of a passenger's death or injury the carrier bears the burden of satisfying the court
NATIVIDAD PARAS, ET AL., defendants-appellees.
that he has duly discharged the duty of prudence required. In the American law, where the carrier is
held to the same degree of diligence as under the new Civil Code, the rule on the liability of carriers
REYES, J. B. L., J.: for defects of equipment is thus expressed: "The preponderance of authority is in favor of the
doctrine that a passenger is entitled to recover damages from a carrier for an injury resulting from a
defect in an appliance purchased from a manufacturer, whenever it appears that the defect would
These cases involve ex contractu against the owners and operators of the common carrier known have been discovered by the carrier if it had exercised the degree of care which under the
as Philippine Rabbit Bus Lines, filed by one passenger, and the heirs of another, who injured as a circumstances was incumbent upon it, with regard to inspection and application of the necessary
result of the fall into a river of the vehicle in which they were riding. tests. For the purposes of this doctrine, the manufacturer is considered as being in law the agent or
servant of the carrier, as far as regards the work of constructing the appliance. According to this
In the morning of January 28, 1964, Severina Garces and her one-year old son, Precillano Necesito, theory, the good repute of the manufacturer will not relieve the carrier from liability" (10 Am. Jur.
carrying vegetables, boarded passenger auto truck or bus No. 199 of the Philippine Rabbit Bus 205, s, 1324; see also Pennsylvania R. Co. vs. Roy, 102 U. S. 451; 20 L. Ed. 141; Southern R. Co.
Lines at Agno, Pangasinan. The passenger truck, driven by Francisco Bandonell, then proceeded vs. Hussey, 74 ALR 1172; 42 Fed. 2d 70; and Ed Note, 29 ALR 788; Ann. Cas. 1916E 929).
on its regular run from Agno to Manila. After passing Mangatarem, Pangasinan truck No. 199
entered a wooden bridge, but the front wheels swerved to the right; the driver lost control, and after The rationale of the carrier's liability is the fact that the passenger has neither choice nor control over
wrecking the bridge's wooden rails, the truck fell on its right side into a creek where water was the carrier in the selection and use of the equipment and appliances in use by the carrier. Having no
breast deep. The mother, Severina Garces, was drowned; the son, Precillano Necesito, was injured, privity whatever with the manufacturer or vendor of the defective equipment, the passenger has no
suffering abrasions and fracture of the left femur. He was brought to the Provincial Hospital at remedy against him, while the carrier usually has. It is but logical, therefore, that the carrier, while
Dagupan, where the fracture was set but with fragments one centimeter out of line. The money, not in insurer of the safety of his passengers, should nevertheless be held to answer for the flaws of
wrist watch and cargo of vegetables were lost. his equipment if such flaws were at all discoverable. Thus Hannen, J., in Francis vs. Cockrell, LR 5
Q. B. 184, said:
Two actions for damages and attorney's fees totalling over P85,000 having been filed in the Court of
First Instance of Tarlac (Cases Nos. 908 and 909) against the carrier, the latter pleaded that the In the ordinary course of things, the passenger does not know whether the carrier has
accident was due to "engine or mechanical trouble" independent or beyond the control of the himself manufactured the means of carriage, or contracted with someone else for its
defendants or of the driver Bandonell. manufacture. If the carrier has contracted with someone else the passenger does not
usually know who that person is, and in no case has he any share in the selection. The
After joint trial, the Court of First Instance found that the bus was proceeding slowly due to the bad liability of the manufacturer must depend on the terms of the contract between him and
condition of the road; that the accident was caused by the fracture of the right steering knuckle, the carrier, of which the passenger has no knowledge, and over which he can have no
which was defective in that its center or core was not compact but "bubbled and cellulous", a control, while the carrier can introduce what stipulations and take what securities he may
condition that could not be known or ascertained by the carrier despite the fact that regular thirty-day think proper. For injury resulting to the carrier himself by the manufacturer's want of care,
inspections were made of the steering knuckle, since the steel exterior was smooth and shiny to the the carrier has a remedy against the manufacturer; but the passenger has no remedy
depth of 3/16 of an inch all around; that the knuckles are designed and manufactured for heavy duty against the manufacturer for damage arising from a mere breach of contract with the
and may last up to ten years; that the knuckle of bus No. 199 that broke on January 28, 1954, was carrier . . . . Unless, therefore, the presumed intention of the parties be that the passenger
last inspected on January 5, 1954, and was due to be inspected again on February 5th. Hence, the should, in the event of his being injured by the breach of the manufacturer's contract, of
trial court, holding that the accident was exclusively due to fortuitous event, dismissed both actions. which he has no knowledge, be without remedy, the only way in which effect can be given
Plaintiffs appealed directly to this Court in view of the amount in controversy. to a different intention is by supposing that the carrier is to be responsible to the
passenger, and to look for his indemnity to the person whom he selected and whose
breach of contract has caused the mischief. (29 ALR 789)
We are inclined to agree with the trial court that it is not likely that bus No. 199 of the Philippine
Rabbit Lines was driven over the deeply rutted road leading to the bridge at a speed of 50 miles per
hour, as testified for the plaintiffs. Such conduct on the part of the driver would have provoked And in the leading case of Morgan vs. Chesapeake & O. R. Co. 15 LRA (NS) 790, 16 Ann. Cas.
instant and vehement protest on the part of the passengers because of the attendant discomfort, 608, the Court, in holding the carrier responsible for damages caused by the fracture of a car axle,
and there is no trace of any such complaint in the records. We are thus forced to assume that the due to a "sand hole" in the course of moulding the axle, made the following observations.
proximate cause of the accident was the reduced strength of the steering knuckle of the vehicle
caused by defects in casting it. While appellants hint that the broken knuckle exhibited in court was The carrier, in consideration of certain well-known and highly valuable rights granted to it
not the real fitting attached to the truck at the time of the accident, the records they registered no
by the public, undertakes certain duties toward the public, among them being to provide
objection on that ground at the trial below. The issue is thus reduced to the question whether or not itself with suitable and safe cars and vehicles in which carry the traveling public. There is
the carrier is liable for the manufacturing defect of the steering knuckle, and whether the evidence no such duty on the manufacturer of the cars. There is no reciprocal legal relation
discloses that in regard thereto the carrier exercised the diligence required by law (Art. 1755, new between him and the public in this respect. When the carrier elects to have another build
Civil Code). its cars, it ought not to be absolved by that facts from its duty to the public to furnish safe
cars. The carrier cannot lessen its responsibility by shifting its undertaking to another's
shoulders. Its duty to furnish safe cars is side by side with its duty to furnish safe track,
and to operate them in a safe manner. None of its duties in these respects can be sublet

78
 so as to relieve it from the full measure primarily exacted of it by law. The carrier selects we believe that for the minor Precillano Necesito (G. R. No. L-10605), an indemnity of P5,000 would
the manufacturer of its cars, if it does not itself construct them, precisely as it does those be adequate for the abrasions and fracture of the femur, including medical and hospitalization
who grade its road, and lay its tracks, and operate its trains. That it does not exercise expenses, there being no evidence that there would be any permanent impairment of his faculties or
control over the former is because it elects to place that matter in the hands of the bodily functions, beyond the lack of anatomical symmetry. As for the death of Severina Garces (G.
manufacturer, instead of retaining the supervising control itself. The manufacturer should R. No. L-10606) who was 33 years old, with seven minor children when she died, her heirs are
be deemed the agent of the carrier as respects its duty to select the material out of which obviously entitled to indemnity not only for the incidental loses of property (cash, wrist watch and
its cars and locomotive are built, as well as in inspecting each step of their construction. If merchandise) worth P394 that she carried at the time of the accident and for the burial expenses of
there be tests known to the crafts of car builders, or iron moulders, by which such defects P490, but also for the loss of her earnings (shown to average P120 a month) and for the deprivation
might be discovered before the part was incorporated into the car, then the failure of the of her protection, guidance and company. In our judgment, an award of P15,000 would be adequate
manufacturer to make the test will be deemed a failure by the carrier to make it. This is not (cf Alcantara vs. Surro, 49 Off. Gaz. 2769; 93 Phil., 472).
a vicarious responsibility. It extends, as the necessity of this business demands, the rule
of respondeat superior to a situation which falls clearly within its scope and spirit. Where
The low income of the plaintiffs-appellants makes an award for attorney's fees just and equitable
an injury is inflicted upon a passenger by the breaking or wrecking of a part of the train on
(Civil Code, Art. 2208, par. 11). Considering that he two cases filed were tried jointly, a fee of P3,500
which he is riding, it is presumably the result of negligence at some point by the carrier. As
would be reasonable.
stated by Judge Story, in Story on Bailments, sec. 601a: "When the injury or damage
happens to the passenger by the breaking down or overturning of the coach, or by any
other accident occurring on the ground, the presumption prima facie is that it occurred by In view of the foregoing, the decision appealed from is reversed, and the defendants-appellees are
the negligence of the coachmen, and onus probandi is on the proprietors of the coach to sentenced to indemnify the plaintiffs-appellants in the following amounts: P5,000 to Precillano
establish that there has been no negligence whatever, and that the damage or injury has Necesito, and P15,000 to the heirs of the deceased Severina Garces, plus P3,500 by way of
been occasioned by inevitable casualty, or by some cause which human care and attorney's fees and litigation expenses. Costs against defendants-appellees. So ordered.
foresight could not prevent; for the law will, in tenderness to human life and limb, hold the
proprietors liable for the slightest negligence, and will compel them to repel by satisfactory
Paras, C. J., Bengzon, Reyes, A., Bautista Angelo, Concepcion, and Endencia, JJ., concur.
proofs every imputation thereof." When the passenger has proved his injury as the result
of a breakage in the car or the wrecking of the train on which he was being carried,
whether the defect was in the particular car in which he was riding or not, the burden is Felix, J., concurs in the result.
then cast upon the carrier to show that it was due to a cause or causes which the exercise
of the utmost human skill and foresight could not prevent. And the carrier in this
connection must show, if the accident was due to a latent defect in the material or
construction of the car, that not only could it not have discovered the defect by the
exercise of such care, but that the builders could not by the exercise of the same care RESOLUTION
have discovered the defect or foreseen the result. This rule applies the same whether the
defective car belonged to the carrier or not.
September 11, 1958
In the case now before us, the record is to the effect that the only test applied to the steering knuckle
in question was a purely visual inspection every thirty days, to see if any cracks developed. It
nowhere appears that either the manufacturer or the carrier at any time tested the steering knuckle REYES, J. B. L., J.:
to ascertain whether its strength was up to standard, or that it had no hidden flaws would impair that
strength. And yet the carrier must have been aware of the critical importance of the knuckle's Defendants-appellees have Submitted a motion asking this Court to reconsider its decision of June
resistance; that its failure or breakage would result in loss of balance and steering control of the bus, 30, 1958, and that the same be modified with respect to (1) its holding the carrier liable for the
with disastrous effects upon the passengers. No argument is required to establish that a visual breakage of the steering knuckle that caused the autobus No. 199 to overturn, whereby the
inspection could not directly determine whether the resistance of this critically important part was not passengers riding in it were injured; (2) the damages awarded, that appellees argue to be
impaired. Nor has it been shown that the weakening of the knuckle was impossible to detect by any excessive; and (3) the award of attorneys' fees.
known test; on the contrary, there is testimony that it could be detected. We are satisfied that the
periodical visual inspection of the steering knuckle as practiced by the carrier's agents did not
measure up to the required legal standard of "utmost diligence of very cautious persons" — "as far (1) The rule prevailing in this jurisdiction as established in previous decisions of this Court, cited in
as human care and foresight can provide", and therefore that the knuckle's failure can not be our main opinion, is that a carrier is liable to its passengers for damages caused by mechanical
considered a fortuitous event that exempts the carrier from responsibility (Lasam vs. Smith, 45 Phil. defects of the conveyance. As early as 1924, in Lasam vs. Smith, 45 Phil. 659 this Court ruled:
657; Son vs. Cebu Autobus Co., 94 Phil., 892.)
As far as the record shows, the accident was caused either by defects in the
It may be impracticable, as appellee argues, to require of carriers to test the strength of each and automobile or else through the negligence of its driver. That is not caso fortuito.
every part of its vehicles before each trip; but we are of the opinion that a due regard for the carrier's
obligations toward the traveling public demands adequate periodical tests to determine the condition And in Son vs. Cebu Autobus Company, 94 Phil., 892, this Court held a common carrier liable in
and strength of those vehicle portions the failure of which may endanger the safe of the passengers. damages to passenger for injuries cause by an accident due to the breakage of a faulty drag-link
spring.
As to the damages suffered by the plaintiffs, we agree with appellee that no allowance may be made
for moral damages, since under Article 2220 of the new Civil Code, in case of suits for breach of It can be seen that while the courts of the United States are at variance on the question of a carrier's
contract, moral damages are recoverable only where the defendant acted fraudulently or in bad liability for latent mechanical defects, the rule in this jurisdiction has been consistent in holding the
faith, and there is none in the case before us. As to exemplary damages, the carrier has not acted in carrier responsible. This Court has quoted from American and English decisions, not because it felt
a "wanton, fraudulent, reckless, oppressive or malevolent manner" to warrant their award. Hence, bound to follow the same, but merely in approval of the rationale of the rule as expressed therein,
79
since the previous Philippine cases did not enlarge on the ideas underlying the doctrine established Neither does the fact that the contract between the passengers and their counsel was on a
thereby. contingent basis affect the former's right to counsel fees. As pointed out for appellants, the Court's
award is an party and not to counsel. A litigant who improvidently stipulate higher counsel fees than
those to which he is lawfully entitled, does not for that reason earn the right to a larger indemnity;
The new evidence sought to be introduced do not warrant the grant of a new trial, since the
but, by parity of reasoning, he should not be deprived of counsel fees if by law he is entitled to
proposed proof available when the original trial was held. Said evidence is not newly discovered.
recover them.

(2) With regard to the indemnity awarded to the child Precilliano Necesito, the injuries suffered by
We find no reason to alter the main decision heretofore rendered. Ultimately, the position taken by
him are incapable of accurate pecuniary estimation, particularly because the full effect of the injury is
this Court is that a common carrier's contract is not to be regarded as a game of chance wherein the
not ascertainable immediately. This uncertainty, however, does not preclude the right to an
passenger stakes his limb and life against the carrier's property and profits.
indemnity, since the injury is patent and not denied (Civil Code, Art. 2224). The reasons behind this
award are expounded by the Code Commission in its report:
Wherefore, the motion for reconsideration is hereby denied. So ordered.
There are cases where from the nature of the case, definite proof of pecuniary loss cannot
be offered, although the court is convinced that there has been such loss. For instance,
injury to one's commercial credit or to the goodwill of a business firm is often hard to show
with certainty in terms of money. Should damages be denied for that reason? The judge
G.R. No. 120027 April 21, 1999
should be empowered to calculate moderate damages in such cases, rather than that the
plaintiff should suffer, without redress, from the defendant's wrongful act." (Report of the
Code Commission, p. 75) EDNA A. RAYNERA, for herself and on behalf of the minors RIANNA and REIANNE
RAYNERA, petitioners,
vs.
In awarding to the heirs of the deceased Severina Garces an indemnity for the loss of her "guidance,
FREDDIE HICETA and JIMMY ORPILLA, respondents.
protection and company," although it is but moral damage, the Court took into account that the case
of a passenger who dies in the course of an accident, due to the carrier's negligence constitutes an
exception to the general rule. While, as pointed out in the main decision, under Article 2220 of the PARDO, J.:
new Civil Code there can be no recovery of moral damages for a breach of contract in the absence
of fraud malice or bad faith, the case of a violation of the contract of carriage leading to a
The case is a petition for review certiorari of the decision of the Court of Appeals, 1 reversing that of
passenger's death escapes this general rule, in view of Article 1764 in connection with Article 2206,
the Regional Trial Court, Branch 45, Manila. 2
No. 3 of the new Civil Code.

The rule is well-settled that factual findings of the Court of Appeals are generally considered final
ART. 1764. Damages in cases comprised in this Section shall be awarded in accordance
and may not be reviewed on appeal. However, this principle admits of certain exceptions, among
with Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the
which is when the findings of the appellate court are contrary to those of the trial court, a re-
death of a passenger caused by the breach of contract by a comman carrier. ART. 2206. .
examination of the facts and evidence may be undertaken. 3 This case falls under the cited
..
exception.

(3) The spouse, legitimate and eligimate descendants and ascendants of the deceased
The antecedent facts are as follows:
may demand moral damages for mental anguish by reason of the death of the deceased.

Petitioner Edna A. Raynera was the widow of Reynaldo Raynera and the mother and legal guardian
Being a special rule limited to cases of fatal injuries, these articles prevail over the general rule of
of the minors Rianna and Reianne, both surnamed Raynera. Respondents Freddie Hiceta and
Art. 2220. Special provisions control general ones (Lichauco & Co. vs. Apostol, 44 Phil. 138; Sancio
Jimmy Orpilla were the owner and driver, respectively, of an Isuzu truck-trailer with plate No. NXC
vs. Lizarraga, 55 Phil. 601).
848, involved in the accident.1âwphi1.nêt

It thus appears that under the new Civil Code, in case of accident due to a carrier's negligence, the
On March 23, 1989, at about 2:00 in the morning, Reynaldo Raynera was on his way home. He was
heirs of a deceased passenger may recover moral damages, even though a passenger who is
riding a motorcycle traveling on the southbound lane of East Service Road, Cupang, Muntinlupa.
injured, but manages to survive, is not entitled to them. There is, therefore, no conflict between our
The Isuzu truck was travelling ahead of him at 20 to 30 kilometers per hour. 4 The truck was loaded
main decision in the instant case and that of Cachero vs. Manila Yellow Taxi Cab Co., 101 Phil.,
with two (2) metal sheets extended on both sides, two (2) feet on the left and three (3) feet on the
523, where the passenger suffered injuries, but did not lose his life.
right. There were two (2) pairs of red lights, about 35 watts each, on both sides of the metal
plates. 5 The asphalt road was not well lighted.
(3) In the Cachero case this Court disallowed attorneys' fees to the injured plaintiff because the
litigation arose out of his exaggerated and unreasonable deeds for an indemnity that was out of
At some point on the road, Reynaldo Raynera crashed his motorcycle into the left rear portion of the
proportion with the compensatory damages to which he was solely entitled. But in the present case,
truck trailer, which was without tail lights. Due to the collision, Reynaldo sustained head injuries and
plaintiffs' original claims can not be deemed a priori wholly unreasonable, since they had a right to
truck helper Geraldino D.
indemnity for moral damages besides compensatory ones, and moral damages are not determined
Lutelo 6 rushed him to the Parañaque Medical Center. Upon arrival at the hospital, the attending
by set and invariable bounds.
physician, Dr. Marivic Aguirre, 7 pronounced Reynaldo Raynera dead on arrival.

80
At the time of his death, Reynaldo was manager of the Engineering Department, Kawasaki Motors Taking into account the cooperative negligence of the deceased Reynaldo
(Phils.) Corporation. He was 32 years old, had a life expectancy of sixty five (65) years, and an Raynera, the Court believes that the demand of substantial justice are satisfied
annual net earnings of not less than seventy three thousand five hundred (P73,500.00) pesos, 8 with by allocating the damages on 80-20 ratio. Thus, P1,337,200.00 shall be paid by
a potential increase in annual net earnings of not less than ten percent (10%) of his salary. 9 the defendants with interest thereon, at the legal rate, from date of decision, as
damages for the loss of earnings. To this sum, the following shall be added:
On May 12, 1989, the heirs of the deceased demanded 10 from respondents payment of damages
arising from the death of Reynaldo (a) P33,412.00, actually spent for
Raynera as a result of the vehicular accident. The respondents refused to pay the claims. funeral services, interment and
memorial lot;
On September 13, 1989, petitioners filed with the Regional Trial Court, Manila 11 a complaint12 for
damages against respondents owner and driver of the Isuzu truck. (b) P20,000.00 as attorney's fees;

In their complaint against respondents, petitioners sought recovery of damages for the death of (c) cost of suit.
Reynaldo Raynera caused by the negligent operation of the truck-trailer at nighttime on the highway,
without tail lights.
SO ORDERED. 20

In their answer filed on April 4, 1990, respondents alleged that the truck was travelling slowly on the
On January 10, 1992, respondents Hiceta and Orpilla appealed to the Court of Appeals. 21
service road, not parked improperly at a dark portion of the road, with no tail lights, license plate and
early warning device.
After due proceedings, on April 28, 1995, the Court of Appeals rendered decision setting aside the
appealed decision. The appellate court held that Reynaldo Raynera's bumping into the left rear
At the trial, petitioners presented Virgilio Santos. He testified that at about 1.00 and 2:00 in the
portion of the truck was the proximate cause or his death, 22 and consequently, absolved
morning of March 23, 1989, he and his wife went to Alabang, market, on board a tricycle. They
respondents from liability.
passed by the service road going south, and saw a parked truck trailer, with its hood open and
without tail lights. They would have bumped the truck but the tricycle driver was quick in avoiding a
collision. The place was dark, and the truck had no early warning device to alert passing Hence, this petitition for review on certiorari.
motorists. 13
In this petition, the heirs of Reynaldo Raynera contend that the appellate court erred in: (1)
On the other hand, respondents presented truck helper Geraldino overturning the trial court's finding that respondents' negligent operation of the Isuzu truck was the
Lucelo. 14 He testified that at the time the incident happened, the truck was slowly traveling at proximate cause of the victim's death; (2) applying the doctrine of last clear chance; (3) setting aside
approximately 20 to 30 kilometers per hour. Another employee of respondents, auto-mechanic the trial court's award of actual and compensatory damages.
Rogoberto Reyes, 15 testified that at about 3:00 in the afternoon of March 22, 1989, with the help of
Lucelo, he installed two (2) pairs of red lights, about 30 to 40 watts each, on both sides of the steel
The issues presented are (a) whether respondents were negligent, and if so, (b) whether such
plates. 16 On his part, traffic investigation officer Cpl. Virgilio del Monte 17 admitted that these lights
negligence was the proximate cause of the death of Reynaldo Raynera.
were visible at a distance of 100 meters.

Petitioners maintain that the proximate cause of Reynaldo Raynera's death was respondents'
On December 19, 1991, the trial court rendered decision in favor of petitioners. It found respondents
negligence in operating the truck trailer on the highway without tail lights and license plate.
Freddie Hiceta and Jimmy Orpilla negligent in view of these circumstances: (1) the truck trailer had
no license plate and tail lights; (2) there were only two pairs of red lights, 50 watts 18 each, on both
sides of the steel plates; and (3) the truck trailer was improperly parked in a dark area. The Court finds no reason to disturb the factual findings of the Court of Appeals.

The trial court held that respondents' negligence was the immediate and proximate cause of "Negligence is the omission to do something which a reasonable man, guided by those
Reynaldo Raynera's death, for which they are jointly and severally liable to pay damages to considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of
petitioners. The trial court also held that the victim was himself negligent, although this was something, which a prudent and reasonable man would not do." 23
insufficient to overcome respondents' negligence. The trial court applied the doctrine of contributory
negligence 19 and reduced the responsibility of respondents by 20% on account of the victim's own
negligence. Proximate cause is "that cause, which, in natural and continous sequence, unbroken by any efficient
intervening cause, produces the injury, and without which the result would not have occured." 24

The dispositive portion of the lower court's decision reads as follows:

During the trial, it was established that the truck had no tail lights. The photographs taken of the
scene of the accident showed that there were no tail lights of license plates installed on the Isuzu
All things considered, the Court is of the opinion that it is fair and reasonable to truck. Instead, what were installed were two (2) pairs of lights on top of the steel plates, and one (1)
fix the living and other expenses of the deceased the sum of P54,000.00 a year pair of lights in front of the truck. With regard to the rear of the truck, the photos taken and the
or about P4,500.00 a month (P150.00 p/d) and that, consequently, the loss or sketch in the spot report proved that there were no tail lights.
damage sustained by the plaintiffs may be estimated at P1,674,000.00 for the
31 years of Reynaldo Raynera's life expectancy.
Despite the absence of tail lights and license plate, respondents truck was visible in the highway. It
was traveling at a moderate speed, approximately 20 to 30 kilometers per hour. It used the service
81
road, instead of the highway, because the cargo they were hauling posed a danger to passing SARKIES TOURS PHILIPPINES, INC., petitioner,
motorists. In compliance with the Land Transportation Traffic Code (Republic Act No. vs.
4136)" 25 respondents installed 2 pairs of lights on top of the steel plates, as the vehicle's cargo load HONORABLE COURT OF APPEALS (TENTH DIVISION), DR. ELINO G. FORTADES, MARISOL
extended beyond the bed or body thereof. A. FORTADES and FATIMA MINERVA A. FORTADES, respondents.

We find that the direct cause of the accident was the negligence of the victim. Traveling behind the ROMERO, J.:
truck, he had the responsibility of avoiding bumping the vehicle in front of him. He was in control of
the situation. His motorcycle was equipped with headlights to enable him to see what was in front of
This petition for review is seeking the reversal of the decision of the Court of Appeals in CA-G.R. CV
him. He was traversing the service road where the prescribed speed limit was less than that in the
No. 18979 promulgated on January 13, 1993, as well as its resolution of February 19, 1993, denying
highway.
petitioner's motion for reconsideration for being a mere rehash of the arguments raised in the
appellant's brief.
Traffic investigator Cpl. Virgilio del Monte testified that two pairs of 50-watts bulbs were on top of the
steel plates, 26 which were visible from a distance of 100 meters . 27 Virgilio Santos admitted that from
The case arose from a damage suit filed by private respondents Elino, Marisol, and Fatima Minerva,
the tricycle where he was on board, he saw the truck and its cargo of iron plates from a distance of
all surnamed Fortades, against petitioner for breach of contract of carriage allegedly attended by
ten (10) meters. 28 In light of these circumstances, an accident could have been easily avoided,
bad faith.
unless the victim had been driving too fast and did not exercise dues care and prudence demanded
of him under the circumstances.
On August 31, 1984, Fatima boarded petitioner's De Luxe Bus No. 5 in Manila on her way to
Legazpi City. Her brother Raul helped her load three pieces of luggage containing all of her
Virgilio Santos' testimony strengthened respondents' defense that it was the victim who was
optometry review books, materials and equipment, trial lenses, trial contact lenses, passport and
reckless and negligent in driving his motorcycle at high speed. The tricycle where Santos was on
visa, as well as her mother Marisol's U.S. immigration (green) card, among other important
board was not much different from the victim's motorcycle that figured in the accident. Although
documents and personal belongings. Her belongings were kept in the baggage compartment of the
Santos claimed the tricycle almost bumped into the improperly parked truck, the tricycle driver was
bus, but during a stopover at Daet, it was discovered that only one bag remained in the open
able to void hitting the truck.
compartment. The others, including Fatima's things, were missing and might have dropped along
the way. Some of the passengers suggested retracing the route of the bus to try to recover the lost
It has been said that drivers of vehicles "who bump the rear of another vehicle" are presumed to be items, but the driver ignored them and proceeded to Legazpi City.
"the cause of the accident, unless contradicted by other evidence". 29 The rationale behind the
presumption is that the driver of the rear vehicle has full control of the situation as he is in a position
Fatima immediately reported the loss to her mother who, in turn, went to petitioner's office in Legazpi
to observe the vehicle in front of him.
City and later at its head office in Manila. Petitioner, however, merely offered her P1,000.00 for each
piece of luggage lost, which she turned down. After returning to Bicol, disappointed but not defeated,
We agree with the Court of Appeals that the responsibility to avoid the collision with the front vehicle mother and daughter asked assistance from the radio stations and even from Philtranco bus drivers
lies with the driver of the rear vehicle. who plied the same route on August 31st. The effort paid off when one of Fatima's bags was
recovered. Marisol further reported the incident to the National Bureau of Investigation's field office
in Legazpi City and to the local police.
Consequently, no other person was to blame but the victim himself since he was the one who
bumped his motorcycle into the rear of the Isuzu truck. He had the last clear chance of avoiding the
accident. On September 20, 1984, respondents, through counsel, formally demanded satisfaction of their
complaint from petitioner. In a letter dated 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
WHEREFORE, we DENY the petition for review on certiorari and AFFIRM the decision of the Court
detail"1 of the incident.
of Appeals in CA-G.R. CV No. 35895, dismissing the amended complaint in Civil Case No. 89-
50355, Regional Trial Court, Branch 45, Manila.1âwphi1.nêt
After more than nine months of fruitless waiting, respondents decided to file the case below to
recover the value of the remaining lost items, as well as moral and exemplary damages, attorney's
No costs.
fees and expenses of litigation. They claimed that the loss was due to petitioner's failure to observe
extraordinary diligence in the care of Fatima's luggage and that petitioner dealt with them in bad faith
SO ORDERED. from the start. Petitioner, on the other hand, disowned any liability for the loss on the ground that
Fatima allegedly did not declare any excess baggage upon boarding its bus.

On June 15, 1988, after trial on the merits, the court a quo adjudged the case in favor of
respondents, viz.:

PREMISES CONSIDERED, judgment is hereby rendered in favor of the plaintiffs (herein

respondents) and against the herein defendant Sarkies Tours Philippines, Inc., ordering
the latter to pay to the former the following sums of money, to wit:

1. The sum of P30,000.00 equivalent to the value of the personal belongings of plaintiff
G.R. No. 108897 October 2, 1997 Fatima Minerva Fortades, etc. less the value of one luggage recovered;

82
 2. The sum of P90,000.00 for the transportation expenses, as well as moral damages; carriers, from the nature of their business and for reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over the goods . . . transported by them,"6 and this liability
"lasts from the time the goods are unconditionally placed in the possession of, and received by the
3. The sum of P10,000.00 by way of exemplary damages;
carrier for transportation until the same are delivered, actually or constructively, by the carrier to . . .
the person who has a right to receive them,"7 unless the loss is due to any of the excepted causes
4. The sum of P5,000.00 as attorney's fees; and under Article 1734 thereof.8

5. The sum of P5,000.00 as litigation expenses or a total of One Hundred Forty Thousand The cause of the loss in the case at bar was petitioner's negligence in not ensuring that the doors of
(P140,000.00) Pesos. the baggage compartment of its bus were securely fastened. As a result of this lack of care, almost
all of the luggage was lost, to the prejudice of the paying passengers. As the Court of Appeals
correctly observed:
to be paid by herein defendant Sarkies Tours Philippines, Inc. to the herein plaintiffs within
30 days from receipt of this Decision.
. . . . Where the common carrier accepted its passenger's baggage for transportation and
even had it placed in the vehicle by its own employee, its failure to collect the freight
SO ORDERED. charge is the common carrier's own lookout. It is responsible for the consequent loss of
the baggage. In the instant case, defendant appellant's employee even helped Fatima
On appeal, the appellate court affirmed the trial court's judgment, but deleted the award of moral Minerva Fortades and her brother load the luggages/baggages in the bus' baggage
and exemplary damages. Thus, 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).
WHEREFORE, premises considered, except as above modified, fixing the award for
transportation expenses at P30,000.00 and the deletion of the award for moral and
exemplary damages, the decision appealed from is AFFIRMED, with costs against Finally, petitioner questions the award of actual damages to respondents. On this point, we likewise
defendant-appellant. 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
SO ORDERED. 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
Its motion for reconsideration was likewise rejected by the Court of Appeals, so petitioner elevated reconstituting their lost documents. Under these circumstances, the Court agrees with the Court of
its case to this Court for a review. 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
After a careful scrutiny of the records of this case, we are convinced that the trial and appellate established, should be granted to respondents in the amount of P20,000.00 and P5,000.00,
courts resolved the issues judiciously based on the evidence at hand. respectively.

Petitioner claims that Fatima did not bring any piece of luggage with her, and even if she did, none WHEREFORE, the assailed decision of the Court of Appeals dated January 13, 1993, and its
was declared at the start of the trip. The documentary and testimonial evidence presented at the resolution dated February 19, 1993, are hereby AFFIRMED with the MODIFICATION that petitioner
trial, however, established that Fatima indeed boarded petitioner's De Luxe Bus No. 5 in the evening is ordered to pay respondents an additional P20,000.00 as moral damages and P5,000.00 as
of August 31, 1984, and she brought three pieces of luggage with her, as testified by her brother exemplary damages. Costs against petitioner.
Raul,2 who helped her pack her things and load them on said bus. One of the bags was even
recovered by a Philtranco bus driver. In its letter dated October 1, 1984, petitioner tacitly admitted its
liability by apologizing to respondents and assuring them that efforts were being made to recover the SO ORDERED.
lost items.

The records also reveal that respondents went to great lengths just to salvage their loss. The
incident was reported to the police, the NBI, and the regional and head offices of petitioner. Marisol
even sought the assistance of Philtranco bus drivers and the radio stations. To expedite the
replacement of her mother's lost U.S. immigration documents, Fatima also had to execute an
affidavit of loss.3 Clearly, they would not have gone through all that trouble in pursuit of a fancied
loss.

Fatima was not the only one who lost her luggage. Apparently, other passengers had 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-Magno lost her chemical engineering review materials, while
her brother lost abaca products he was transporting to Bicol.5

Petitioner's receipt of Fatima's personal luggage having been thus established, it must now be
determined if, as a common carrier, it is responsible for their loss. Under the Civil Code, "(c)ommon G.R. No. 143133           June 5, 2002

83
BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and JARDINE DAVIES TRANSPORT "Despite receipt of a formal demand, defendants-appellees refused to submit to the
SERVICES, INC., petitioners, consignee's claim. Consequently, plaintiff-appellant paid the consignee five hundred six
vs. thousand eighty six & 50/100 pesos (P506,086.50), and was subrogated to the latter's
PHILIPPINE FIRST INSURANCE CO., INC., respondents. rights and causes of action against defendants-appellees. Subsequently, plaintiff-
appellant instituted this complaint for recovery of the amount paid by them, to the
consignee as insured.
PANGANIBAN, J.:

"Impugning the propriety of the suit against them, defendants-appellees imputed that the
Proof of the delivery of goods in good order to a common carrier and of their arrival in bad order at
damage and/or loss was due to pre-shipment damage, to the inherent nature, vice or
their destination constitutes prima facie fault or negligence on the part of the carrier. If no adequate
defect of the goods, or to perils, danger and accidents of the sea, or to insufficiency of
explanation is given as to how the loss, the destruction or the deterioration of the goods happened,
packing thereof, or to the act or omission of the shipper of the goods or their
the carrier shall be held liable therefor.
representatives. In addition thereto, defendants-appellees argued that their liability, if
there be any, should not exceed the limitations of liability provided for in the bill of lading
Statement of the Case and other pertinent laws. Finally, defendants-appellees averred that, in any event, they
exercised due diligence and foresight required by law to prevent any damage/loss to said
shipment."6
Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the July 15, 1998
Decision1 and the May 2, 2000 Resolution2 of the Court of Appeals3 (CA) in CA-GR CV No. 53571.
The decretal portion of the Decision reads as follows: Ruling of the Trial Court

"WHEREFORE, in the light of the foregoing disquisition, the decision appealed from is The RTC dismissed the Complaint because respondent had failed to prove its claims with the
hereby REVERSED and SET ASIDE. Defendants-appellees are ORDERED to jointly and quantum of proof required by law.7
severally pay plaintiffs-appellants the following:
It likewise debunked petitioners' counterclaim, because respondent's suit was not manifestly
'1) FOUR Hundred Fifty One Thousand Twenty-Seven Pesos and 32/100 frivolous or primarily intended to harass them.8
(P451,027.32) as actual damages, representing the value of the damaged
cargo, plus interest at the legal rate from the time of filing of the complaint on
Ruling of the Court of Appeals
July 25, 1991, until fully paid;

In reversing the trial court, the CA ruled that petitioners were liable for the loss or the damage of the
'2) Attorney's fees amounting to 20% of the claim; and
goods shipped, because they had failed to overcome the presumption of negligence imposed on
common carriers.
'3) Costs of suit.'"4
The CA further held as inadequately proven petitioners' claim that the loss or the deterioration of the
The assailed Resolution denied petitioner's Motion for Reconsideration. goods was due to pre-shipment damage.9 It likewise opined that the notation "metal envelopes rust
stained and slightly dented" placed on the Bill of Lading had not been the proximate cause of the
damage to the four (4) coils.10
The CA reversed the Decision of the Regional Trial Court (RTC) of Makati City (Branch 134), which
had disposed as follows:
As to the extent of petitioners' liability, the CA held that the package limitation under COGSA was
not applicable, because the words "L/C No. 90/02447" indicated that a higher valuation of the cargo
"WHEREFORE, in view of the foregoing, judgment is hereby rendered, dismissing the had been declared by the shipper. The CA, however, affirmed the award of attorney's fees.
complaint, as well as defendant's counterclaim."5

Hence, this Petition.11

The Facts

Issues
The factual antecedents of the case are summarized by the Court of Appeals in this wise:

In their Memorandum, petitioners raise the following issues for the Court's consideration:
"On June 13, 1990, CMC Trading A.G. shipped on board the M/V 'Anangel Sky' at
Hamburg, Germany 242 coils of various Prime Cold Rolled Steel sheets for transportation
to Manila consigned to the Philippine Steel Trading Corporation. On July 28, 1990, M/V I
Anangel Sky arrived at the port of Manila and, within the subsequent days, discharged the
subject cargo. Four (4) coils were found to be in bad order B.O. Tally sheet No. 154974.
"Whether or not plaintiff by presenting only one witness who has never seen the subject
Finding the four (4) coils in their damaged state to be unfit for the intended purpose, the
shipment and whose testimony is purely hearsay is sufficient to pave the way for the
consignee Philippine Steel Trading Corporation declared the same as total
applicability of Article 1735 of the Civil Code;
loss.1âwphi1.nêt

II

84
 "Whether or not the consignee/plaintiff filed the required notice of loss within the time However, the presumption of fault or negligence will not arise21 if the loss is due to any of the
required by law; following causes: (1) flood, storm, earthquake, lightning, or other natural disaster or calamity; (2) an
act of the public enemy in war, whether international or civil; (3) an act or omission of the shipper or
owner of the goods; (4) the character of the goods or defects in the packing or the container; or (5)
III
an order or act of competent public authority.22 This is a closed list. If the cause of destruction, loss
or deterioration is other than the enumerated circumstances, then the carrier is liable therefor.23
"Whether or not a notation in the bill of lading at the time of loading is sufficient to show
pre-shipment damage and to exempt herein defendants from liability;
Corollary to the foregoing, mere proof of delivery of the goods in good order to a common carrier
and of their arrival in bad order at their destination constitutes a prima facie case of fault or
IV negligence against the carrier. If no adequate explanation is given as to how the deterioration, the
loss or the destruction of the goods happened, the transporter shall be held responsible.24
"Whether or not the "PACKAGE LIMITATION" of liability under Section 4 (5) of COGSA is
applicable to the case at bar."12 That petitioners failed to rebut the prima facie presumption of negligence is revealed in the case at
bar by a review of the records and more so by the evidence adduced by respondent.25
In sum, the issues boil down to three:
First, as stated in the Bill of Lading, petitioners received the subject shipment in good order and
condition in Hamburg, Germany.26
1. Whether petitioners have overcome the presumption of negligence of a common carrier

Second, prior to the unloading of the cargo, an Inspection Report27 prepared and signed by
2. Whether the notice of loss was timely filed representatives of both parties showed the steel bands broken, the metal envelopes rust-stained
and heavily buckled, and the contents thereof exposed and rusty.
3. Whether the package limitation of liability is applicable
Third, Bad Order Tally Sheet No. 15497928 issued by Jardine Davies Transport Services, Inc., stated
This Court's Ruling that the four coils were in bad order and condition. Normally, a request for a bad order survey is
made in case there is an apparent or a presumed loss or damage.29
The Petition is partly meritorious.
Fourth, the Certificate of Analysis30 stated that, based on the sample submitted and tested, the steel
sheets found in bad order were wet with fresh water.
First Issue:

Fifth, petitioners -- in a letter31 addressed to the Philippine Steel Coating Corporation and dated
Proof of Negligence October 12, 1990 -- admitted that they were aware of the condition of the four coils found in bad
order and condition.
Petitioners contend that the presumption of fault imposed on common carriers should not be applied
on the basis of the lone testimony offered by private respondent. The contention is untenable. These facts were confirmed by Ruperto Esmerio, head checker of BM Santos Checkers Agency.
Pertinent portions of his testimony are reproduce hereunder:
Well-settled is the rule that common carriers, from the nature of their business and for reasons of
public policy, are bound to observe extraordinary diligence and vigilance with respect to the safety of "Q.       Mr. Esmerio, you mentioned that you are a Head Checker. Will you inform the
the goods and the passengers they transport.13 Thus, common carriers are required to render Honorable Court with what company you are connected?
service with the greatest skill and foresight and "to use all reason[a]ble means to ascertain the
nature and characteristics of the goods tendered for shipment, and to exercise due care in the
handling and stowage, including such methods as their nature requires."14 The extraordinary A.       BM Santos Checkers Agency, sir.
responsibility lasts from the time the goods are unconditionally placed in the possession of and
received for transportation by the carrier until they are delivered, actually or constructively, to the Q.       How is BM Santos checkers Agency related or connected with defendant Jardine
consignee or to the person who has a right to receive them.15 Davies Transport Services?

This strict requirement is justified by the fact that, without a hand or a voice in the preparation of A.       It is the company who contracts the checkers, sir.
such contract, the riding public enters into a contract of transportation with common carriers.16 Even
if it wants to, it cannot submit its own stipulations for their approval.17 Hence, it merely adheres to the
agreement prepared by them. Q.       You mentioned that you are a Head Checker, will you inform this Honorable Court
your duties and responsibilities?
Owing to this high degree of diligence required of them, common carriers, as a general rule, are
presumed to have been at fault or negligent if the goods they transported deteriorated or got lost or A.       I am the representative of BM Santos on board the vessel, sir, to supervise the
destroyed.18 That is, unless they prove that they exercised extraordinary diligence in transporting the discharge of cargoes.
goods.19 In order to avoid responsibility for any loss or damage, therefore, they have the burden of
proving that they observed such diligence.20
x x x           x x x           x x x
85
 Q.       On or about August 1, 1990, were you still connected or employed with BM Santos From the evidence on record, it cannot be reasonably concluded that the damage to the four coils
as a Head Checker? was due to the condition noted on the Bill of Lading.40 The aforecited exception refers to cases when
goods are lost or damaged while in transit as a result of the natural decay of perishable goods or the
fermentation or evaporation of substances liable therefor, the necessary and natural wear of goods
A.       Yes, sir.
in transport, defects in packages in which they are shipped, or the natural propensities of
animals.41 None of these is present in the instant case.
Q.       And, on or about that date, do you recall having attended the discharging and
inspection of cold steel sheets in coil on board the MV/AN ANGEL SKY?
Further, even if the fact of improper packing was known to the carrier or its crew or was apparent
upon ordinary observation, it is not relieved of liability for loss or injury resulting therefrom, once it
A.       Yes, sir, I was there. accepts the goods notwithstanding such condition.42 Thus, petitioners have not successfully proven
the application of any of the aforecited exceptions in the present case.43
x x x           x x x           x x x
Second Issue:
Q.       Based on your inspection since you were also present at that time, will you inform
this Honorable Court the condition or the appearance of the bad order cargoes that were Notice of Loss
unloaded from the MV/ANANGEL SKY?
Petitioners claim that pursuant to Section 3, paragraph 6 of the Carriage of Goods by Sea
ATTY. MACAMAY: Act44 (COGSA), respondent should have filed its Notice of Loss within three days from delivery. They
assert that the cargo was discharged on July 31, 1990, but that respondent filed its Notice of Claim
only on September 18, 1990.45
Objection, Your Honor, I think the document itself reflects the condition of the
cold steel sheets and the best evidence is the document itself, Your Honor that
shows the condition of the steel sheets. We are not persuaded. First, the above-cited provision of COGSA provides that the notice of claim
need not be given if the state of the goods, at the time of their receipt, has been the subject of a joint
inspection or survey. As stated earlier, prior to unloading the cargo, an Inspection Report46 as to the
COURT: condition of the goods was prepared and signed by representatives of both parties.47

Let the witness answer. Second, as stated in the same provision, a failure to file a notice of claim within three days will not
bar recovery if it is nonetheless filed within one year.48 This one-year prescriptive period also applies
A.       The scrap of the cargoes is broken already and the rope is loosen and the cargoes to the shipper, the consignee, the insurer of the goods or any legal holder of the bill of lading.49
are dent on the sides."32
In Loadstar Shipping Co., Inc, v. Court of Appeals,50 we ruled that a claim is not barred by
All these conclusively prove the fact of shipment in good order and condition and the consequent prescription as long as the one-year period has not lapsed. Thus, in the words of the ponente, Chief
damage to the four coils while in the possession of petitioner,33 who notably failed to explain why.34 Justice Hilario G. Davide Jr.:

Further, petitioners failed to prove that they observed the extraordinary diligence and precaution "Inasmuch as the neither the Civil Code nor the Code of Commerce states a specific
which the law requires a common carrier to know and to follow to avoid damage to or destruction of prescriptive period on the matter, the Carriage of Goods by Sea Act (COGSA)--which
the goods entrusted to it for safe carriage and delivery.35 provides for a one-year period of limitation on claims for loss of, or damage to, cargoes
sustained during transit--may be applied suppletorily to the case at bar."
True, the words "metal envelopes rust stained and slightly dented" were noted on the Bill of Lading;
however, there is no showing that petitioners exercised due diligence to forestall or lessen the In the present case, the cargo was discharged on July 31, 1990, while the Complaint51 was filed by
loss.36 Having been in the service for several years, the master of the vessel should have known at respondent on July 25, 1991, within the one-year prescriptive period.
the outset that metal envelopes in the said state would eventually deteriorate when not properly
stored while in transit.37 Equipped with the proper knowledge of the nature of steel sheets in coils Third Issue:
and of the proper way of transporting them, the master of the vessel and his crew should have
undertaken precautionary measures to avoid possible deterioration of the cargo. But none of these
measures was taken.38 Having failed to discharge the burden of proving that they have exercised the Package Limitation
extraordinary diligence required by law, petitioners cannot escape liability for the damage to the four
coils.39
Assuming arguendo they are liable for respondent's claims, petitioners contend that their liability
should be limited to US$500 per package as provided in the Bill of Lading and by Section 4(5)52 of
In their attempt to escape liability, petitioners further contend that they are exempted from liability COGSA.53
under Article 1734(4) of the Civil Code. They cite the notation "metal envelopes rust stained and
slightly dented" printed on the Bill of Lading as evidence that the character of the goods or defect in
On the other hand, respondent argues that Section 4(5) of COGSA is inapplicable, because the
the packing or the containers was the proximate cause of the damage. We are not convinced.
value of the subject shipment was declared by petitioners beforehand, as evidenced by the
reference to and the insertion of the Letter of Credit or "L/C No. 90/02447" in the said Bill of Lading.54

86
A bill of lading serves two functions. First, it is a receipt for the goods shipped.53 Second, it is a Considering, therefore, the ruling in Eastern Shipping Lines and the fact that the Bill of Lading
contract by which three parties -- namely, the shipper, the carrier, and the consignee -- undertake clearly disclosed the contents of the containers, the number of units, as well as the nature of the
specific responsibilities and assume stipulated obligations.56 In a nutshell, the acceptance of the bill steel sheets, the four damaged coils should be considered as the shipping unit subject to the
of lading by the shipper and the consignee, with full knowledge of its contents, gives rise to the US$500 limitation.1âwphi1.nêt
presumption that it constituted a perfected and binding contract.57
WHEREFORE, the Petition is partly granted and the assailed Decision MODIFIED. Petitioners'
Further, a stipulation in the bill of lading limiting to a certain sum the common carrier's liability for liability is reduced to US$2,000 plus interest at the legal rate of six percent from the time of the filing
loss or destruction of a cargo -- unless the shipper or owner declares a greater value58 -- is of the Complaint on July 25, 1991 until the finality of this Decision, and 12 percent thereafter until
sanctioned by law.59 There are, however, two conditions to be satisfied: (1) the contract is fully paid. No pronouncement as to costs.
reasonable and just under the circumstances, and (2) it has been fairly and freely agreed upon by
the parties.60 The rationale for this rule is to bind the shippers by their agreement to the value
SO ORDERED.
(maximum valuation) of their goods.61

It is to be noted, however, that the Civil Code does not limit the liability of the common carrier to a
fixed amount per package.62 In all matters not regulated by the Civil Code, the right and the
obligations of common carriers shall be governed by the Code of Commerce and special G.R. No. 122039 May 31, 2000
laws.63 Thus, the COGSA, which is suppletory to the provisions of the Civil Code, supplements the
latter by establishing a statutory provision limiting the carrier's liability in the absence of a shipper's
VICENTE CALALAS, petitioner,
declaration of a higher value in the bill of lading.64 The provisions on limited liability are as much a
vs.
part of the bill of lading as though physically in it and as though placed there by agreement of the
COURT OF APPEALS, ELIZA JUJEURCHE SUNGA and FRANCISCO SALVA, respondents.
parties.65

MENDOZA, J.:
In the case before us, there was no stipulation in the Bill of Lading66 limiting the carrier's liability.
Neither did the shipper declare a higher valuation of the goods to be shipped. This fact
notwithstanding, the insertion of the words "L/C No. 90/02447 cannot be the basis for petitioners' This is a petition for review on certiorari of the decision1 of the Court of Appeals, dated March 31,
liability. 1991, reversing the contrary decision of the Regional Trial Court, Branch 36, Dumaguete City, and
awarding damages instead to private respondent Eliza Jujeurche Sunga as plaintiff in an action for
breach of contract of carriage.
First, a notation in the Bill of Lading which indicated the amount of the Letter of Credit obtained by
the shipper for the importation of steel sheets did not effect a declaration of the value of the goods
as required by the bill.67 That notation was made only for the convenience of the shipper and the The facts, as found by the Court of Appeals, are as follows:
bank processing the Letter of Credit.68
At 10 o'clock in the morning of August 23, 1989, private respondent Eliza Jujeurche G. Sunga, then
Second, in Keng Hua Paper Products v. Court of Appeals,69 we held that a bill of lading was a college freshman majoring in Physical Education at the Siliman University, took a passenger
separate from the Other Letter of Credit arrangements. We ruled thus: jeepney owned and operated by petitioner Vicente Calalas. As the jeepney was filled to capacity of
about 24 passengers, Sunga was given by the conductor an "extension seat," a wooden stool at the
back of the door at the rear end of the vehicle.
"(T)he contract of carriage, as stipulated in the bill of lading in the present case, must be
treated independently of the contract of sale between the seller and the buyer, and the
contract of issuance of a letter of credit between the amount of goods described in the On the way to Poblacion Sibulan, Negros Occidental, the jeepney stopped to let a passenger off. As
commercial invoice in the contract of sale and the amount allowed in the letter of credit will she was seated at the rear of the vehicle, Sunga gave way to the outgoing passenger. Just as she
not affect the validity and enforceability of the contract of carriage as embodied in the bill was doing so, an Isuzu truck driven by Iglecerio Verena and owned by Francisco Salva bumped the
of lading. As the bank cannot be expected to look beyond the documents presented to it left rear portion of the jeepney. As a result, Sunga was injured. She sustained a fracture of the
by the seller pursuant to the letter of credit, neither can the carrier be expected to go "distal third of the left tibia-fibula with severe necrosis of the underlying skin." Closed reduction of the
beyond the representations of the shipper in the bill of lading and to verify their fracture, long leg circular casting, and case wedging were done under sedation. Her confinement in
accuracy vis-à-vis the commercial invoice and the letter of credit. Thus, the discrepancy the hospital lasted from August 23 to September 7, 1989. Her attending physician, Dr. Danilo V.
between the amount of goods indicated in the invoice and the amount in the bill of lading Oligario, an orthopedic surgeon, certified she would remain on a cast for a period of three months
cannot negate petitioner's obligation to private respondent arising from the contract of and would have to ambulate in crutches during said period.
transportation."70
On October 9, 1989, Sunga filed a complaint for damages against Calalas, alleging violation of the
In the light of the foregoing, petitioners' liability should be computed based on US$500 per package contract of carriage by the former in failing to exercise the diligence required of him as a common
and not on the per metric ton price declared in the Letter of Credit.71 In Eastern Shipping Lines, Inc. carrier. Calalas, on the other hand, filed a third-party complaint against Francisco Salva, the owner
v. Intermediate Appellate Court,72 we explained the meaning of packages: of the Isuzu truck.

"When what would ordinarily be considered packages are shipped in a container supplied The lower court rendered judgment against Salva as third-party defendant and absolved Calalas of
by the carrier and the number of such units is disclosed in the shipping documents, each liability, holding that it was the driver of the Isuzu truck who was responsible for the accident. It took
of those units and not the container constitutes the 'package' referred to in the liability cognizance of another case (Civil Case No. 3490), filed by Calalas against Salva and Verena, for
limitation provision of Carriage of Goods by Sea Act."

87
quasi-delict, in which Branch 37 of the same court held Salva and his driver Verena jointly liable to There is, thus, no basis for the contention that the ruling in Civil Case No. 3490, finding Salva and
Calalas for the damage to his jeepney. his driver Verena liable for the damage to petitioner's jeepney, should be binding on Sunga. It is
immaterial that the proximate cause of the collision between the jeepney and the truck was the
negligence of the truck driver. The doctrine of proximate cause is applicable only in actions for
On appeal to the Court of Appeals, the ruling of the lower court was reversed on the ground that
quasi-delict, not in actions involving breach of contract. The doctrine is a device for imputing liability
Sunga's cause of action was based on a contract of carriage, not quasi-delict, and that the common
to a person where there is no relation between him and another party. In such a case, the obligation
carrier failed to exercise the diligence required under the Civil Code. The appellate court dismissed
is created by law itself. But, where there is a pre-existing contractual relation between the parties, it
the third-party complaint against Salva and adjudged Calalas liable for damages to Sunga. The
is the parties themselves who create the obligation, and the function of the law is merely to regulate
dispositive portion of its decision reads:
the relation thus created. Insofar as contracts of carriage are concerned, some aspects regulated by
the Civil Code are those respecting the diligence required of common carriers with regard to the
WHEREFORE, the decision appealed from is hereby REVERSED and SET safety of passengers as well as the presumption of negligence in cases of death or injury to
ASIDE, and another one is entered ordering defendant-appellee Vicente passengers. It provides:
Calalas to pay plaintiff-appellant:
Art. 1733. Common carriers, from the nature of their business and for reasons
(1) P50,000.00 as actual and compensatory damages; of public 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.
(2) P50,000.00 as moral damages;

Such extraordinary diligence in the vigilance over the goods is further

(3) P10,000.00 as attorney's fees; and expressed in articles 1734, 1735, and 1746, Nos. 5, 6, and 7, while the
extraordinary diligence for the safety of the passengers is further set forth in
(4) P1,000.00 as expenses of litigation; and articles 1755 and 1756.

(5) to pay the costs. Art. 1755. A common carrier is bound to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence of very
cautious persons, with due regard for all the circumstances.
SO ORDERED.

Art. 1756. In case of death of or injuries to passengers, common carriers are

Hence, this petition. Petitioner contends that the ruling in Civil Case No. 3490 that the negligence of presumed to have been at fault or to have acted negligently, unless they prove
Verena was the proximate cause of the accident negates his liability and that to rule otherwise would that they observed extraordinary diligence as prescribed by articles 1733 and
be to make the common carrier an insurer of the safety of its passengers. He contends that the 1755.
bumping of the jeepney by the truck owned by Salva was a caso fortuito. Petitioner further assails
the award of moral damages to Sunga on the ground that it is not supported by evidence.
In the case at bar, upon the happening of the accident, the presumption of negligence at once
arose, and it became the duty of petitioner to prove that he had to observe extraordinary diligence in
The petition has no merit. the care of his passengers.

The argument that Sunga is bound by the ruling in Civil Case No. 3490 finding the driver and the Now, did the driver of jeepney carry Sunga "safely as far as human care and foresight could provide,
owner of the truck liable for quasi-delict ignores the fact that she was never a party to that case and, using the utmost diligence of very cautious persons, with due regard for all the circumstances" as
therefore, the principle of res judicata does not apply. required by Art. 1755? We do not think so. Several factors militate against petitioner's contention.

Nor are the issues in Civil Case No. 3490 and in the present case the same. The issue in Civil Case First, as found by the Court of Appeals, the jeepney was not properly parked, its rear portion being
No. 3490 was whether Salva and his driver Verena were liable for quasi-delict for the damage exposed about two meters from the broad shoulders of the highway, and facing the middle of the
caused to petitioner's jeepney. On the other hand, the issue in this case is whether petitioner is highway in a diagonal angle. This is a violation of the R.A. No. 4136, as amended, or the Land
liable on his contract of carriage. The first, quasi-delict, also known as culpa aquiliana or culpa extra Transportation and Traffic Code, which provides:
contractual, has as its source the negligence of the tortfeasor. The second, breach of contract
or culpa contractual, is premised upon the negligence in the performance of a contractual obligation.
Sec. 54. Obstruction of Traffic. — No person shall drive his motor vehicle in
such a manner as to obstruct or impede the passage of any vehicle, nor, while
Consequently, in quasi-delict, the negligence or fault should be clearly established because it is the discharging or taking on passengers or loading or unloading freight, obstruct the
basis of the action, whereas in breach of contract, the action can be prosecuted merely by proving free passage of other vehicles on the highway.
the existence of the contract and the fact that the obligor, in this case the common carrier, failed to
transport his passenger safely to his destination.2 In case of death or injuries to passengers, Art.
1756 of the Civil Code provides that common carriers are presumed to have been at fault or to have Second, it is undisputed that petitioner's driver took in more passengers than the allowed seating
acted negligently unless they prove that they observed extraordinary diligence as defined in Arts. capacity of the jeepney, a violation of §32(a) of the same law. It provides:
1733 and 1755 of the Code. This provision necessarily shifts to the common carrier the burden of
proof.

88
 Exceeding registered capacity. — No person operating any motor vehicle shall that it was the driver of the Isuzu truck who took her to the hospital does not imply that petitioner
allow more passengers or more freight or cargo in his vehicle than its registered was utterly indifferent to the plight of his injured passenger. If at all, it is merely implied recognition
capacity. by Verena that he was the one at fault for the accident.

The fact that Sunga was seated in an "extension seat" placed her in a peril greater than that to WHEREFORE, the decision of the Court of Appeals, dated March 31, 1995, and its resolution, dated
which the other passengers were exposed. Therefore, not only was petitioner unable to overcome September 11, 1995, are AFFIRMED, with the MODIFICATION that the award of moral damages is
the presumption of negligence imposed on him for the injury sustained by Sunga, but also, the DELETED.
evidence shows he was actually negligent in transporting passengers.
SO ORDERED.
We find it hard to give serious thought to petitioner's contention that Sunga's taking an "extension
seat" amounted to an implied assumption of risk. It is akin to arguing that the injuries to the many
victims of the tragedies in our seas should not be compensated merely because those passengers
assumed a greater risk of drowning by boarding an overloaded ferry. This is also true of petitioner's
contention that the jeepney being bumped while it was improperly parked constitutes caso fortuito. G.R. No. 150403             January 25, 2007
A caso fortuito is an event which could not be foreseen, or which, though foreseen, was
inevitable.3 This requires that the following requirements be present: (a) the cause of the breach is
CEBU SALVAGE CORPORATION, Petitioner,
independent of the debtor's will; (b) the event is unforeseeable or unavoidable; (c) the event is such
vs.
as to render it impossible for the debtor to fulfill his obligation in a normal manner, and (d) the debtor
PHILIPPINE HOME ASSURANCE CORPORATION, Respondent.
did not take part in causing the injury to the
creditor.4 Petitioner should have foreseen the danger of parking his jeepney with its body protruding
two meters into the highway. DECISION

Finally, petitioner challenges the award of moral damages alleging that it is excessive and without CORONA, J.:
basis in law. We find this contention well taken.
May a carrier be held liable for the loss of cargo resulting from the sinking of a ship it does not own?
In awarding moral damages, the Court of Appeals stated:
This is the issue presented for the Court’s resolution in this petition for review on certiorari1 assailing
Plaintiff-appellant at the time of the accident was a first-year college student in the March 16, 2001 decision2 and September 17, 2001 resolution3 of the Court of Appeals (CA) in
that school year 1989-1990 at the Silliman University, majoring in Physical CA-G.R. CV No. 40473 which in turn affirmed the December 27, 1989 decision4 of the Regional Trial
Education. Because of the injury, she was not able to enroll in the second Court (RTC), Branch 145, Makati, Metro Manila.5
semester of that school year. She testified that she had no more intention of
continuing with her schooling, because she could not walk and decided not to
pursue her degree, major in Physical Education "because of my leg which has a The pertinent facts follow.
defect already."
On November 12, 1984, petitioner Cebu Salvage Corporation (as carrier) and Maria Cristina
Plaintiff-appellant likewise testified that even while she was under confinement, Chemicals Industries, Inc. [MCCII] (as charterer) entered into a voyage charter6 wherein petitioner
she cried in pain because of her injured left foot. As a result of her injury, the was to load 800 to 1,100 metric tons of silica quartz on board the M/T Espiritu Santo7 at Ayungon,
Orthopedic Surgeon also certified that she has "residual bowing of the fracture Negros Occidental for transport to and discharge at Tagoloan, Misamis Oriental to consignee
side." She likewise decided not to further pursue Physical Education as her Ferrochrome Phils., Inc.8
major subject, because "my left leg . . . has a defect already."
Pursuant to the contract, on December 23, 1984, petitioner received and loaded 1,100 metric tons of
Those are her physical pains and moral sufferings, the inevitable bedfellows of silica quartz on board the M/T Espiritu Santo which left Ayungon for Tagoloan the next day.9 The
the injuries that she suffered. Under Article 2219 of the Civil Code, she is shipment never reached its destination, however, because the M/T Espiritu Santo sank in the
entitled to recover moral damages in the sum of P50,000.00, which is fair, just afternoon of December 24, 1984 off the beach of Opol, Misamis Oriental, resulting in the total loss of
and reasonable. the cargo.10

As a general rule, moral damages are not recoverable in actions for damages predicated on a MCCII filed a claim for the loss of the shipment with its insurer, respondent Philippine Home
breach of contract for it is not one of the items enumerated under Art. 2219 of the Civil Code.5 As an Assurance Corporation.11 Respondent paid the claim in the amount of P211,500 and was
exception, such damages are recoverable: (1) in cases in which the mishap results in the death of a subrogated to the rights of MCCII.12 Thereafter, it filed a case in the RTC13 against petitioner for
passenger, as provided in Art. 1764, in relation to Art. 2206(3) of the Civil Code; and (2) in the cases reimbursement of the amount it paid MCCII.
in which the carrier is guilty of fraud or bad faith, as provided in Art. 2220.6
After trial, the RTC rendered judgment in favor of respondent. It ordered petitioner to pay
In this case, there is no legal basis for awarding moral damages since there was no factual finding respondent P211,500 plus legal interest, attorney’s fees equivalent to 25% of the award and costs of
by the appellate court that petitioner acted in bad faith in the performance of the contract of carriage. suit.
Sunga's contention that petitioner's admission in open court that the driver of the jeepney failed to
assist her in going to a nearby hospital cannot be construed as an admission of bad faith. The fact On appeal, the CA affirmed the decision of the RTC. Hence, this petition.
89
Petitioner and MCCII entered into a "voyage charter," also known as a contract of affreightment [I]n cases where a Bill of Lading has been issued by a carrier covering goods shipped aboard a
wherein the ship was leased for a single voyage for the conveyance of goods, in consideration of the vessel under a charter party, and the charterer is also the holder of the bill of lading, "the bill of
payment of freight.14 Under a voyage charter, the shipowner retains the possession, command and lading operates as the receipt for the goods, and as document of title passing the property of the
navigation of the ship, the charterer or freighter merely having use of the space in the vessel in goods, but not as varying the contract between the charterer and the shipowner." The Bill of Lading
return for his payment of freight.15 An owner who retains possession of the ship remains liable as becomes, therefore, only a receipt and not the contract of carriage in a charter of the entire vessel,
carrier and must answer for loss or non-delivery of the goods received for transportation.16 for the contract is the Charter Party, and is the law between the parties who are bound by its terms
and condition provided that these are not contrary to law, morals, good customs, public order and
public policy. 30
Petitioner argues that the CA erred when it affirmed the RTC finding that the voyage charter it
entered into with MCCII was a contract of carriage.17 It insists that the agreement was merely a
contract of hire wherein MCCII hired the vessel from its owner, ALS Timber Enterprises (ALS).18 Not Finally, petitioner asserts that MCCII should be held liable for its own loss since the voyage charter
being the owner of the M/T Espiritu Santo, petitioner did not have control and supervision over the stipulated that cargo insurance was for the charterer’s account.31 This deserves scant consideration.
vessel, its master and crew.19 Thus, it could not be held liable for the loss of the shipment caused by This simply meant that the charterer would take care of having the goods insured. It could not
the sinking of a ship it did not own. exculpate the carrier from liability for the breach of its contract of carriage. The law, in fact, prohibits
it and condemns it as unjust and contrary to public policy.32
We disagree.
To summarize, a contract of carriage of goods was shown to exist; the cargo was loaded on board
the vessel; loss or non-delivery of the cargo was proven; and petitioner failed to prove that it
Based on the agreement signed by the parties and the testimony of petitioner’s operations manager,
exercised extraordinary diligence to prevent such loss or that it was due to some casualty or force
it is clear that it was a contract of carriage petitioner signed with MCCII. It actively negotiated and
majeure. The voyage charter here being a contract of affreightment, the carrier was answerable for
solicited MCCII’s account, offered its services to ship the silica quartz and proposed to utilize the
the loss of the goods received for transportation.33
M/T Espiritu Santo in lieu of the M/T Seebees or the M/T Shirley (as previously agreed upon in the
voyage charter) since these vessels had broken down.20
The idea proposed by petitioner is not only preposterous, it is also dangerous. It says that a carrier
that enters into a contract of carriage is not liable to the charterer or shipper if it does not own the
There is no dispute that petitioner was a common carrier. At the time of the loss of the cargo, it was
vessel it chooses to use. MCCII never dealt with ALS and yet petitioner insists that MCCII should
engaged in the business of carrying and transporting goods by water, for compensation, and offered
sue ALS for reimbursement for its loss. Certainly, to permit a common carrier to escape its
its services to the public.21
responsibility for the goods it agreed to transport (by the expedient of alleging non-ownership of the
vessel it employed) would radically derogate from the carrier's duty of extraordinary diligence. It
From the nature of their business and for reasons of public policy, common carriers are bound to would also open the door to collusion between the carrier and the supposed owner and to the
observe extraordinary diligence over the goods they transport according to the circumstances of possible shifting of liability from the carrier to one without any financial capability to answer for the
each case.22 In the event of loss of the goods, common carriers are responsible, unless they can resulting damages.34
prove that this was brought about by the causes specified in Article 1734 of the Civil Code.23 In all
other cases, common carriers are presumed to be at fault or to have acted negligently, unless they
WHEREFORE, the petition is hereby DENIED.
prove that they observed extraordinary diligence.24

Costs against petitioner.

Petitioner was the one which contracted with MCCII for the transport of the cargo. It had control over
what vessel it would use. All throughout its dealings with MCCII, it represented itself as a common
carrier. The fact that it did not own the vessel it decided to use to consummate the contract of SO ORDERED.
carriage did not negate its character and duties as a common carrier. The MCCII (respondent’s
subrogor) could not be reasonably expected to inquire about the ownership of the vessels which
petitioner carrier offered to utilize. As a practical matter, it is very difficult and often impossible for the
general public to enforce its rights of action under a contract of carriage if it should be required to
know who the actual owner of the vessel is.25 In fact, in this case, the voyage charter itself
denominated petitioner as the "owner/operator" of the vessel.26

Petitioner next contends that if there was a contract of carriage, then it was between MCCII and ALS
as evidenced by the bill of lading ALS issued.27

Again, we disagree.

The bill of lading was merely a receipt issued by ALS to evidence the fact that the goods had been
received for transportation. It was not signed by MCCII, as in fact it was simply signed by the
supercargo of ALS.28 This is consistent with the fact that MCCII did not contract directly with ALS.
While it is true that a bill of lading may serve as the contract of carriage between the parties,29 it
cannot prevail over the express provision of the voyage charter that MCCII and petitioner executed:

90
G.R. No. 155056-57               October 19, 2007 On 25 August 1987, respondent union and several employees filed a Complaint for unfair labor
practice and illegal deduction before the Labor Arbiter with "Panfilo V. Pajarillo Liner" as party-
respondent. This was docketed as NLRC/NCR Case No. 00-08-03013-87.9 On 28 September 1987,
THE HEIRS OF THE LATE PANFILO V. PAJARILLO, Petitioners,
the respondent union filed an Amended Complaint alleging this time not only unfair labor practice
vs.
and illegal deduction but also illegal dismissal.10
THE HON. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION and
SAMAHAN NG MGA MANGGAGAWA NG PANFILO V. PAJARILLO, ALFREDO HOYOHOY,
HERMINIO CASTILLO, BERNARDO ROCO, RODOLFO TORRES, JULIAN JORVINA, LOURDES On 20 January 1988, respondent union and several employees filed another Complaint for violation
ROCO, FLORITA YAPOC, MARLON ALDANA, PARALUMAN ULANG, TOLENTINO SANHI, of labor standard laws claiming non-payment of (1) ECOLA, (2) 13th month pay, (3) overtime pay,
JOHNNY SORIANO, ANDRES CALAQUE, ROBERTO LAVAREZ, FRANCISCO MORALES, (4) legal holiday pay, (5) premium pay, and (6) service incentive leave. The party-respondents in this
SALVACION PERINA, ANTONIO ABALA, ROMEO SALONGA, AUGUR M. MANIPOL, complaint were "PVP LINER INC. and PANFILO V. PAJARILLO, as its General Manager/Operator."
BIENVENIDA TEQUIL, MARIO ELEP, ALADINO LATIGO, BERNARDINE BANSAL, PEDRO DE This was docketed as NLRC Case No. 00-01-00331-88.11
BAGUIO, RICARDO CALICA, LAURA CO, VICENTE RECANA, ELENA TOLLEDO, ALFREDO
PLAZA, SR., HERMINIO BALDONO, FELIPE YAPOC, ARISTON NIPA, and ALFONSO C.
Notifications and summons with respect to NLRC/NCR Case No. 00-08-03013-87 were addressed
BALDOMAR, Respondents.
and sent to "PANFILO V. PAJARILLO, President/Manager, Panfilo V. Pajarillo Liner, Pasig Line St.,
Sta. Ana, Manila" on 31 August 1987. The Registry Return Receipt dated 4 September 1987 was
DECISION addressed to Panfilo V. Pajarillo, and a signature therein appears on top of the signature of the
name of the addressee.12 With regard to NLRC Case No. 00-01-00331-88, notifications and
summonses were addressed and sent to "THE PRESIDENT/MANAGER, PVP Liner Inc. and Panfilo
CHICO-NAZARIO, J.:
V. Pajarillo, 2175 Zamora Street, Sta. Ana, Manila" on 25 January 1988. The Registry Return
Receipt dated 4 February 1988 was addressed to "PVP Liner Inc." and was signed by a certain
In this Petition for Review on Certiorari under Rule 45 of the Rules of Court,1 petitioners, heirs of "Irene G. Pajarillo" as the addressee’s agent.13
Panfilo V. Pajarillo, seek to set aside the Decision,2 and Resolution,3 dated 12 March 2002 and 28
August 2002, respectively, of the Court of Appeals in CA-G.R. SP No. 54330 and CA-G.R. SP No.
Panfilo denied the charges in the complaints. He maintained that private respondents were not
54331, reversing the two Per Curiam Orders dated 28 October 1996 and 10 January 1997,4 of the
dismissed from work on account of their union activities; that private respondents and several of
National Labor Relations Commission (NLRC) in NLRC NCR Cases No. 08-03013-87 and 01-
their co-employees either resigned or were separated from work, or simply abandoned their
00331-88.
employment long before the respondent union was organized and registered with the DOLE; that the
private respondents are not entitled to ECOLA and 13th month pay because they received wages
Stripped of the non-essentials, the facts are as follows: above the minimum provided by law; that the private respondents are not entitled to overtime and
legal holiday pay because these are already included in their daily commissions; that the private
respondents are not entitled to five days incentive leave pay because they work only four days a
Panfilo V. Pajarillo (Panfilo) was the owner and operator of several buses plying certain routes in week; that no deductions were made in the daily commissions of the private respondents; that the
Metro Manila. He used the name "PVP Liner" in his buses. Private respondents were employed as private respondents voluntarily and directly paid certain individuals for barangay protection and for
drivers, conductors and conductresses by Panfilo. the cleaning of the assigned buses; that he had no participation in these activities/arrangements;
that the private respondents were not dismissed from work; and that the private respondents either
During their employment with Panfilo, private respondents worked at least four times a week or for abandoned their jobs or voluntarily resigned from work.14
an average of fifteen working days per month. They were required to observe a work schedule
starting from 4:00 in the morning up to 10:00 in the evening on a straight time basis. Private Upon motion of Panfilo, the complaints in NLRC/NCR Case No. 00-08-03013-87 and NLRC Case
respondent drivers were paid a daily commission of 10%, while private respondent conductors and No. 00-01-00331-88 were consolidated.15 On 29 January 1991, Panfilo died.16
conductresses received a daily commission of 7%. In sum, each of the private respondents earned
an average daily commission of about ₱150.00 a day. They were not given emergency cost of living
allowance (ECOLA), 13th month pay, legal holiday pay and service incentive leave pay.5 After hearing and submission by both parties of their respective position papers and memoranda,
Labor Arbiter Manuel P. Asuncion (Arbiter Asuncion) rendered a Decision17 dated 28 December
1992, dismissing the consolidated complaints for lack of merit. Thus:
The following were deducted from the private respondents’ daily commissions: (a) costs of washing
the assigned buses; (b) terminal fees; (c) fees for sweeping the assigned buses; (d) fees paid to the
barangay tanod at bus terminals; and (e) rental fees for the use of stereo in the assigned buses. Any IN THE LIGHT OF ALL THE FOREGOING CONSIDERATIONS, the complaint should be as it is
employee who refused such deductions were either barred from working or dismissed from work.6 hereby dismissed for lack of merit.

Thereafter, private respondents and several co-employees formed a union called "SAMAHAN NG Respondent union appealed to the NLRC. On 18 June 1996, the NLRC reversed the decision of
MGA MANGGAGAWA NG PANFILO V. PAJARILLO" (respondent union). The Department of Labor Arbiter Asuncion and ordered the reinstatement of, and payment of backwages, ECOLA, 13th month
and Employment (DOLE) issued a Certificate of Registration in favor of the respondent union.7 pay, legal holiday pay and service incentive leave pay to, private respondents.18 The dispositive
portion of the NLRC decision reads:
Upon learning of the formation of respondent union, Panfilo and his children ordered some of the
private respondents to sign a document affirming their trust and confidence in Panfilo and denying Wherefore, the appealed decision is hereby set aside. Accordingly, judgment is hereby rendered
any irregularities on his part. Other private respondents were directed to sign a blank document directing:
which turned out to be a resignation letter. Private respondents refused to sign the said documents,
hence, they were barred from working or were dismissed without hearing and notice. Panfilo and his
(1) The respondent, PVP Liner, Inc. to reinstate to their former positions, without loss of
children and relatives also formed a company union where they acted as its directors and officers.8
seniority rights and other benefits, the following complainants: Alfredo [Hoyohoy],

91
 Bernardo Roco, Rodolfo Torres, Julian Jorvina, Florita Yapoc, Marlon Aldana, Paraluman WHEREFORE, premises considered, the PETITION FOR CERTIORARI is hereby GRANTED.
Ulang, Tolentino Sanhi, Johnny Soriano, Andres Calaque, Roberto Lavarez, Francisco Accordingly, the Order dated October 28 1996 and January 10, 1997 of the NLRC are hereby
Morales, Salvacion Perina, Antonio Abala, Alfonso Baldomar, Jr., Romeo Salonga, Augur NULLIFIED and its Decision dated 18 June 1986 be REINSTATED.
Manipol, Bienvenida Tequil, Mario Elep, Aladino Latigo, Bernardine Bansal, Pedro de
Baguio, Ricardo Calica, Laura Co, Vicente Recana, Elena Tolledo, Alfredo Plaza, Sr.,
Panfilo’s counsel filed a motion for reconsideration of the said decision but this was denied by the
Herminio Baldono, Felioe Yapoc, Ariston Nipa and Herminia Castillo and to pay them their
appellate court in its Resolution dated 28 August 2002.23
backwages corresponding to a period of three (3) years without qualifications and
deductions;
Herein petitioners, as heirs of Panfilo, filed the instant petition before this Court assigning the
following errors:
(2) The same respondent PVP Liner, Inc. to pay amounts to be computed in a hearing
called for said purpose by the Arbitration Branch of Origin, the aforesaid complainants
their claims for emergency cost of living allowance (ECOLA), 13th month pay, legal I.
holiday pay and service incentive leave benefits subject to the three-year prescriptive
period provided under Article 291 of the Labor Code, as amended;
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ARRIVING AT THE
CONCLUSION THAT PVP LINER INC. WAS PROPERLY MISPLEADED, WHICH IS A
(3) The dismissal of the claims on alleged illegal deductions of the respondents for lack of NON-EXISTING CORPORATION.
merits; and
II.
(4) The dismissal of the case of Lourdes Roco due to prescription.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN NOT CONSIDERING
All other claims of the complainants and the respondents are likewise DISMISSED, for being without THAT THERE WAS NO PROPER AND EFFECTIVE SERVICE OF SUMMONS.
merit.
III.
The Arbitration Branch of Origin is hereby directed to enforce this decision.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN PIERCING THE VEIL
Panfilo’s counsel filed a motion for reconsideration which was partially granted by the NLRC in its OF CORPORATE ENTITY OF PVP PAJARILLO LINER INC.
Order dated 28 October 1996, to wit:
IV.
Dictated, however, by the imperatives of due process, we find it more judicious to just remand this
case for further hearing on key questions of:
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN REINSTATING THE
ORDER OF THE NLRC DATED JUNE 18, 1996, WHICH DECLARED THAT PRIVATE
1) whether or not PVP Liner Inc. was properly impleaded as party respondent in the RESPONDENTS WERE ILLEGALLY DISMISSED.24
consolidated cases below;
Anent the first issue, petitioners alleged that the Decision dated 18 June 1996 of the NLRC, ordered
2) whether or not summons was properly served on said corporation below; and PVP Liner Inc. to reinstate private respondents and pay their backwages, ECOLA, 13th month pay,
legal holiday pay and service incentive leave pay; that there was no such entity as PVP Liner Inc.
organized and existing in the Philippines; that it was not possible for Arbiter Asuncion and the NLRC
3) whether or not the subject cases can be considered as principally money claims which
to acquire jurisdiction over a non-existing company; that there can never be a service of summons
have to be litigated in intestate/testate proceedings involving the estate of the late Panfilo
or notice to a non-existent entity; that the true employer of private respondents was Panfilo as the
V. Pajarillo.
sole proprietor/operator of passenger buses doing business under the tradename, PVP Liner, and
not PVP Liner Inc. which was non-existent; that Panfilo never used PVP Liner Inc. as his tradename;
WHEREFORE, our decision dated June 18, 1996 is hereby set aside. Let this case be remanded to that the present operator of PVP Liner buses is P.V. PAJARILLO LINER, a corporation duly
the NCR Arbitration Branch for further hearing on the questions above-mentioned.19 registered with the Securities and Exchange Commission; that at the time the instant case was filed
before Arbiter Asuncion in 1987, the latter did not have jurisdiction over P.V. PAJARILLO LINER
because it was organized and duly registered only on 22 January 1990; that P.V. PAJARILLO
Respondent union filed a motion for reconsideration of the above-stated Order, but this was denied
LINER has a separate and distinct personality from Panfilo as the sole operator of PVP Liner buses;
by the NLRC in its Order dated 10 January 1997.20 Thus, respondent union filed a Petition for
that, therefore, P.V. PAJARILLO LINER cannot be made a party or impleaded in the present case;
Certiorari under Rule 65 before this Court. Pursuant, however, to our ruling in St. Martin Funeral
that the amended complaint in NLRC/NCR Case No. 00-08-03013-87 impleaded as party-
Home v. National Labor Relations Commission,21 we remanded the petition to the Court of Appeals
respondent "PANFILO V. PAJARILLO LINER and PANFILO V. PAJARILLO, as operator and
for proper disposition.
responsible officer"; that PVP Liner Inc. was not impleaded in the instant case; and that no
summons was ever served on PVP Liner Inc. in NLRC/NCR Case No. 00-08-03013-87.25
On 12 March 2002, the Court of Appeals rendered a Decision granting the respondent union’s
petition and nullifying the Orders dated 28 October 1996 and 10 January 1997 of the NLRC. It also
The contentions are bereft of merit.
reinstated the Decision dated 18 June 1986 of the NLRC.22 The appellate court decreed:

92
In the Complaint dated 20 January 1988, PVP Liner Inc. and Panfilo were impleaded as party- Records show that Irene received the summons for NLRC Case No. 00-01-00331-88 on 4 February
respondents, thus: 1988 in behalf of PVP Liner Inc. These summonses were addressed and sent to "THE
PRESIDENT/MANAGER, PVP Liner Inc. and Panfilo V. Pajarillo, 2175 Zamora Street, Sta. Ana,
Manila" on 25 January 1988. The Registry Return Receipt dated 4 February 1988 was addressed to
That respondent PVP Liner, Inc., is a private business entity, engaged in transportation of
"PVP Liner Inc." and was signed by Irene as the addressee’s agent.32 Abel, one of the heirs of
passengers, duly organized and existing pursuant to law and for this purpose maintains its principal
Panfilo and the Operations Manager of PVP Liner Inc., testified during the hearing before Arbiter
office at 2175, Zamora Street, Sta. Ana, Manila; while individual respondent [Panfilo] is the General
Asuncion that Irene was one of the secretaries of PVP Liner Inc.33 Hence, there was a valid service
Manager/Operator and may be served with summons, notices and other processes at the
of summons.
aforementioned principal office.26

Regarding the third issue, petitioners posited that P.V. Pajarillo Liner Inc. is an independent
Panfilo did not question in his position paper or in his motion for consolidation of the complaints the
corporation and cannot be considered as an adjunct or extension of Panfilo as the sole operator of
foregoing allegations. Neither did he assail the inclusion of PVP Liner Inc. as party-respondent in
PVP Liner buses; and that at the time P.V. Pajarillo Liner Inc. was established, it had no liability or
respondent union’s position paper dated 6 June 1988.
obligation which it tried to shield or circumvent.34

In Panfilo’s position paper as well as in the records of the proceedings before Arbiter Asuncion,
It is a fundamental principle of corporation law that a corporation is an entity separate and distinct
there is nothing that shows that Panfilo challenged the jurisdiction of Arbiter Asuncion over PVP
from its stockholders and from other corporations to which it may be connected. However, this
Liner Inc. When Arbiter Asuncion decided in favor of Panfilo, the latter said nothing about the
separate and distinct personality of a corporation is merely a fiction created by law for convenience
inclusion of PVP Liner Inc. as party respondent and the lack of jurisdiction of Arbiter Asuncion over
and to promote justice. Hence, when the notion of separate juridical personality is used to defeat
the same. It was only when the NLRC rendered a Decision adverse to Panfilo that the latter alleged
public convenience, justify wrong, protect fraud or defend crime, or is used as a device to defeat
the non-existence of PVP Liner Inc. and the fact that Arbiter Asuncion and the NLRC had no
labor laws, this separate personality of the corporation may be disregarded or the veil of the
jurisdiction over it.
corporate fiction pierced. This is true likewise when the corporation is merely an adjunct, a business
conduit or an alter ego of another corporation. The corporate mask may be lifted and the corporate
Petitioners are now precluded from questioning the inclusion of PVP Liner Inc. as party-respondent veil may be pierced when a corporation is but the alter ego of a person or another corporation.35
as well as the jurisdiction of Arbiter Asuncion and the NLRC over them under the principle of
estoppel. It is settled that the active participation of a party against whom the action was brought,
It is apparent that Panfilo started his transportation business as the sole owner and operator of
coupled with his failure to object to the jurisdiction of the court or quasi-judicial body where the
passenger buses utilizing the name PVP Liner for his buses. After being charged by respondent
action is pending, is tantamount to an invocation of that jurisdiction and a willingness to abide by the
union of unfair labor practice, illegal deductions, illegal dismissal and violation of labor standard
resolution of the case and will bar said party from later on impugning the court or body’s
laws, Panfilo transformed his transportation business into a family corporation, namely, P.V. Pajarillo
jurisdiction.27 This Court has time and again frowned upon the undesirable practice of a party
Liner Inc. He and petitioners were the incorporators, stockholders and officers therein. P.V. Pajarillo
submitting his case for decision and then accepting the judgment only if favorable, and attacking it
Inc. and the sole proprietorship of Panfilo have the same business address. P.V. Pajarillo Inc. also
for lack of jurisdiction when adverse.28
uses the name "PVP Liner" in its buses. Further, the license to operate or franchise of the sole
proprietorship was merely transferred to P.V. Pajarillo Liner Inc. The testimony of Abel during the
It is apparent that Panfilo V. Pajarillo Liner and PVP Liner Inc. are one and the same entity hearing before Arbiter Asuncion is revealing, thus:
belonging to one and the same person, Panfilo. When PVP Liner Inc. and Panfilo V. Pajarillo Liner
were impleaded as party-respondents, it was Panfilo, through counsel, who answered the
Q: Mr. Pajarillo, when did you start assuming the functions of operations manager of PVP
complaints and filed the position papers, motions for reconsideration and appeals. It was also
Liner?
Panfilo, through counsel, who participated in the hearings and proceedings. In fact, Abel Pajarillo
(Abel), son of Panfilo, testified before Arbiter Asuncion that he was the operations manager of PVP
Liner Inc.29 Further, both Panfilo and PVP Liner Inc. were charged jointly and severally in the A: Seven years from now, sometime in the year 1984 or 1985, sir.
aforesaid complaints.
Q: Do you have any written appointment as Operations Manager?
Apropos the second issue, petitioners alleged that the notices and summons were received by a
certain Irene G. Pajarillo (Irene) for and in behalf of the PVP Liner Inc.; that Irene was neither and
A: No, sir.
could not have been the President/Manager of PVP Liner Inc., the latter being non-existent; and that
Irene was not an officer of P.V. Pajarillo Liner.30
Q: I noticed that your surname is Pajarillo you are one way or another related to Mr.
Panfilo V. Pajarillo, is that correct?
Sections 4 and 5 of Rule IV of the Revised Rules of Procedure of the NLRC provides the rule for the
service of summonses and notices in NLRC cases, viz:
Witness:
Sec. 4. Service of notices and resolutions. – a) Notices or summons and copies of orders,
resolutions or decisions shall be served personally by the bailiff or the duly authorized public officer A: I am the son of Panfilo Pajarillo, sir.
or by registered mail on the parties to the case within five (5) days from receipt thereof by the
serving officer.
Q: In so far as PVP Liner is concerned and being the operations manager, are you aware
if it is a single proprietor or a corporation?
Sec. 5. Proof and completeness of service. – The return is prima facie proof of the facts indicated
therein. Service by registered mail is complete upon receipt by the addressee or his agent.31
A: At the start it was a single proprietorship, lately, it has become a family corporation.

93
 Atty. Flores, Jr. (to witness) bar, however, the private respondents, as former bus drivers, conductors and conductresses of
petitioners, do not hold the position of trust and confidence.39
Q: When you became the Operations Manager of PVP Liner, is it a single proprietor or a
family Corporation? Nonetheless, it appears from the records that some of the private respondents, namely, Augur
Manipol, Rodolfo Torres, Ricardo Calica, Paraluman Ulang, Edith Chua, Alfredo Hoyohoy, Johnny
Soriano, Bernardo Roco, Tolentino Sanhi, Salvacion Perina, Pedro L. de Baguio, Ariston Nipa,
A: It was a single proprietorship.
Felipe Yapoc, Laura Co, Bienvenida Tequil, Roberto Lavarez, Francisco Morales and Herminio
Castillo, had executed a Quitclaim/Release discharging petitioners "from any and all claims by way
Q: Mr. Witness, since PVP Liner is a transportation business it has a license to operate of unpaid wages, separation pay, overtime pay, differential pay, ECOLA, 13th month pay, holiday
these buses? pay, service incentive leave pay or otherwise."40

A: Yes, there is, sir. Generally, deeds of release, waivers, or quitclaims cannot bar employees from demanding benefits
to which they are legally entitled or from contesting the legality of their dismissal, since quitclaims
are looked upon with disfavor and are frowned upon as contrary to public policy. Where, however,
Atty. Flores, Jr. (to witness) the person making the waiver has done so voluntarily, with a full understanding thereof, and the
consideration for the quitclaim is credible and reasonable, the transaction must be recognized as
Q: In whose name was it registered? being a valid and binding undertaking.41

A: Before it was with my father Panfilo V. Pajarillo, sir. There is no showing that the executions of these quitclaims were tainted with deceit or coercion. On
the contrary, each of the private respondents’ Sinumpaang Salaysay, which accompanied the
quitclaims, evinces voluntariness and full understanding of the execution and consequence of the
Q: Do I understand that the licensing of this transportation company was transferred to quitclaim. In their said Sinumpaang Salaysay, the private respondents stated that their lawyer had
another person? extensively explained to them the computation and the actual amount of consideration they would
receive; that they were not forced or tricked by their lawyer in accepting the same; and that they
A: It was never transferred to another person, except now, that it has been transferred to a already received the amount of consideration.42
corporation.36
Further, the considerations received by the private respondents were credible and reasonable
It is clear from the foregoing that P.V. Pajarillo Liner Inc. was a mere continuation and successor of because they were not grossly disproportionate to the computation by the NLRC of the amount of
the sole proprietorship of Panfilo. It is also quite obvious that Panfilo transformed his sole backwages and other money claims.43
proprietorship into a family corporation in a surreptitious attempt to evade the charges of respondent
union. Given these considerations, Panfilo and P.V. Pajarillo Liner Inc. should be treated as one and Given these circumstances, the quitclaims should be considered as binding on the private
the same person for purposes of liability.37 respondents who executed them. It is settled that a legitimate waiver which represents a voluntary
and reasonable settlement of a worker’s claim should be respected as the law between the
Finally, petitioners averred that no unfair labor practice was committed, and that private respondents parties.44 Accordingly, the private respondents who made such quitclaims are already precluded
were not illegally dismissed from work. from claiming reinstatement, backwages, ECOLA, 13TH month pay, legal holiday pay, service
incentive leave pay, and other monetary claims.
In its Decision dated 18 June 1996, the NLRC made an exhaustive discussion of the allegations and
evidence of both parties as regards unfair labor practice and illegal dismissal. It concluded that With regard to the other private respondents who did not execute such quitclaims, they are entitled
private respondents, officers and members of respondent union were dismissed by reason of their to reinstatement, backwages, ECOLA, 13TH month pay, legal holiday pay and service incentive leave
union activities and that there was no compliance with substantial and procedural due process in pay in accordance with the computation of the NLRC.
terminating their services. It also held that the private respondents who were not members of the
respondent union were also dismissed without just or valid cause, and that they were denied due WHEREFORE, the petition is hereby DENIED. The Decision and Resolution dated 12 March 2002
process. These factual findings and conclusions were supported by substantial evidence comprised and 28 August 2002, respectively, of the Court of Appeals in CA-G.R. SP No. 54330 and CA-G.R.
of affidavits, sworn statements, testimonies of witnesses during hearings before Arbiter Asuncion, SP No. 54331, are hereby AFFIRMED with the following MODIFICATIONS: (1) Private respondents
and other documentary evidence. These findings were sustained by the Court of Appeals. Augur Manipol, Rodolfo M. Torres, Ricardo Calica, Paraluman Ulang, Edith Chua, Alfredo Hoyohoy,
Johnny Soriano, Bernardo Roco, Tolentino Sanhi, Salvacion Perina, Pedro L. de Baguio, Ariston
The rule is that findings of fact of quasi-judicial agencies like the NLRC are accorded by this Court Nipa, Felipe Yapoc, Laura Co, Bienvenida Tequil, Roberto Lavarez, Francisco Morales and
not only respect but even finality if they are supported by substantial evidence, or that amount of Herminio Castillo are hereby precluded from claiming reinstatement, backwages, ECOLA,
relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.38 We 13TH month pay, legal holiday pay and service incentive leave pay by reason of their respective
find no compelling reason to deviate from such findings of the NLRC as affirmed by the Court of quitclaims; (2) Petitioners are hereby ordered to reinstate private respondents Julian Jorvina, Florita
Appeals. Yapoc, Marlon Aldana, Andres Calaque, Antonio Abala, Alfonso Baldomar, Romeo Salonga, Mario
Elep, Aladino Latigo, Bernardine Bansal, Vicente Recana, Elena Tolledo and Alfredo Plaza, Sr., and
to pay these respondents backwages from the time of their dismissal up to the finality of this
Consequently, the private respondents are entitled to reinstatement, backwages and other privileges Decision. Petitioners are also ordered to pay the foregoing private respondents ECOLA, 13TH month
and benefits under Article 279 of the Labor Code. Separation pay may be given in lieu of pay, legal holiday pay and service incentive leave pay in accordance with the computation of the
reinstatement if the employee concerned occupies a position of trust and confidence. In the case at NLRC. Costs against petitioners. SO ORDERED.

94
G.R. No. L-55347 October 4, 1985 The Philippine national Railways shall have the following powers:

PHILIPPINE NATIONAL RAILWAYS, petitioner, a. To do all such other things and to transact all such business directly or
vs. indirectly necessary, incidental or conducive to the attainment of the purpose of
THE HONORABLE COURT OF APPEALS and ROSARIO TUPANG, respondents. the corporation; and

ESCOLIN, J.: b. Generally, to exercise all powers of a corporation under the Corporation Law.

Invoking the principle of state immunity from suit, the Philippine National Railways, PNR for short, Under the foregoing section, the PNR has all the powers, the characteristics and attributes of a
instituted this petition for review on certiorari to set aside the decision of the respondent Appellate corporation under the Corporation Law. There can be no question then that the PNR may sue and
Court which held petitioner PNR liable for damages for the death of Winifredo Tupang, a paying be sued and may be subjected to court processes just like any other corporation. 2
passenger who fell off a train operated by the petitioner.
The petitioner's contention that the funds of the PNR are not subject to garnishment or execution
The pertinent facts are summarized by the respondent court as follows: hardly raises a question of first impression. In Philippine National Railways v. Union de Maquinistas,
et al., 3 then Justice Fernando, later Chief Justice, said. "The main issue posed in this certiorari
proceeding, whether or not the funds of the Philippine National Railways, could be garnished or
The facts show that on September 10, 1972, at about 9:00 o'clock in the
levied upon on execution was resolved in two recent decisions, the Philippine National Bank v.
evening, Winifredo Tupang, husband of plaintiff Rosario Tupang, boarded 'Train
Court of Industrial Relations [81 SCRA 314] and Philippine National Bank v. Hon. Judge
No. 516 of appellant at Libmanan, Camarines Sur, as a paying passenger
Pabalan [83 SCRA 595]. This Court in both cases answered the question in the affirmative. There
bound for Manila. Due to some mechanical defect, the train stopped at Sipocot,
was no legal bar to garnishment or execution. The argument based on non-suability of a state
Camarines Sur, for repairs, taking some two hours before the train could
allegedly because the funds are governmental in character was unavailing.So it must be again."
resume its trip to Manila. Unfortunately, upon passing Iyam Bridge at Lucena,
Quezon, Winifredo Tupang fell off the train resulting in his death.The train did
not stop despite the alarm raised by the other passengers that somebody fell In support of the above conclusion, Justice Fernando cited the Court's holding in Philippine National
from the train. Instead, the train conductor Perfecto Abrazado, called the station Bank v. Court of Industrial Relations, to wit: "The premise that the funds could be spoken of as
agent at Candelaria, Quezon, and requested for verification of the information. public in character may be accepted in the sense that the People's Homesite and Housing
Police authorities of Lucena City were dispatched to the Iyam Bridge where they Corporation was a government-owned entity. It does not follow though that they were exempt from
found the lifeless body of Winifredo Tupang. garnishment. National Shipyard and Steel Corporation v. Court of Industrial Relations is squarely in
point. As was explicitly stated in the opinion of then Justice, later Chief Justice, Concepcion: "The
allegation to the effect that the funds of the NASSCO are public funds of the government, and that,
As shown by the autopsy report, Winifredo Tupang died of cardio-respiratory
as such, the same may not be garnished, attached or levied upon, is untenable for, as a
failure due to massive cerebral hemorrhage due to traumatic injury [Exhibits B
government- owned and controlled corporation, the NASSCO has a personality of its own, distinct
and C, Folder of Exhibits],Tupang was later buried in the public cemetery of
and separate from that of the Government. It has-pursuant to Section 2 of Executive Order No. 356,
Lucena City by the local police authorities. [Rollo, pp. 91-92]
dated October 23, 1950 * * *, pursuant to which the NASSCO has been established- 'all the powers
of a corporation under the Corporation Law * * *. 4
Upon complaint filed by the deceased's widow, Rosario Tupang, the then Court of First Instance of
Rizal, after trial, held the petitioner PNR liable for damages for breach of contract of carriage and
As far back as 1941, this Court in the case of Manila Hotel Employees Association v. Manila Hotel
ordered "to pay the plaintiff the sum of P12,000,00 for the death of Winifredo Tupang, plus
Co., 5 laid down the rule that "when the government enters into commercial business, it abandons its
P20,000.00 for loss of his earning capacity and the further sum of P10,000.00 as moral damages,
sovereign capacity and is to be treated like any other corporation. [Bank of the U.S. v. Planters'
and P2,000.00 as attorney's fees, and costs. 1
Bank, 9 Waitch 904, 6 L. ed. 244]. By engaging in a particular business through the instrumentality
of a corporation the government divests itself pro hac vice of its sovereign character, so as to render
On appeal, the Appellate Court sustained the holding of the trial court that the PNR did not exercise the corporation subject to the rules of law governing private corporations. 6 Of Similar import is the
the utmost diligence required by law of a common carrier. It further increased the amount pronouncement in Prisco v. CIR,' that "when the government engages in business, it abdicates part
adjudicated by the trial court by ordering PNR to pay the plaintiff an additional sum of P5,000.00 as of its sovereign prerogatives and descends to the level of a citizen, ... . " In fine, the petitioner PNR
exemplary damages. cannot legally set up the doctrine of non-suability as a bar to the plaintiff's suit for damages.

Moving for reconsideration of the above decision, the PNR raised for the first time, as a defense, the The appellate court found, the petitioner does not deny, that the train boarded by the deceased
doctrine of state immunity from suit. It alleged that it is a mere agency of the Philippine government Winifredo Tupang was so over-crowded that he and many other passengers had no choice but to sit
without distinct or separate personality of its own, and that its funds are governmental in character on the open platforms between the coaches of the train. It is likewise undisputed that the train did
and, therefore, not subject to garnishment or execution. The motion was denied; the respondent not even slow down when it approached the Iyam Bridge which was under repair at the time, Neither
court ruled that the ground advanced could not be raised for the first time on appeal. did the train stop, despite the alarm raised by other passengers that a person had fallen off the train
at lyam Bridge. 7
Hence, this petition for review.
The petitioner has the obligation to transport its passengers to their destinations and to observe
extraordinary diligence in doing so. Death or any injury suffered by any of its passengers gives rise
The petition is devoid of merit. The PNR was created under Rep. Act 4156, as amended. Section 4 to the presumption that it was negligent in the performance of its obligation under the contract of
of the said Act provides:

95
carriage. Thus, as correctly ruled by the respondent court, the petitioner failed to overthrow such
presumption of negligence with clear and convincing evidence.

But while petitioner failed to exercise extraordinary diligence as required by law, 8 it appears that the
deceased was chargeable with contributory negligence. Since he opted to sit on the open platform
between the coaches of the train, he should have held tightly and tenaciously on the upright metal
bar found at the side of said platform to avoid falling off from the speeding train. Such contributory
negligence, while not exempting the PNR from liability, nevertheless justified the deletion of the
amount adjudicated as moral damages. By the same token, the award of exemplary damages must
be set aside. Exemplary damages may be allowed only in cases where the defendant acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner. 9 There being no evidence of fraud,
malice or bad faith on the part of petitioner, the grant of exemplary damages should be discarded.

WHEREFORE, the decision of the respondent appellate court is hereby modified by eliminating
therefrom the amounts of P10,000.00 and P5,000.00 adjudicated as moral and exemplary damages,
respectively. No costs.

SO ORDERED.

96