UNSWORTH TRANSPORT INTERNATIONAL G.R. No.

166250
issued Bill of Lading No. C320/C15991-2,[5] covering the aforesaid shipment. The
(PHILS.), INC.,
Petitioner, Present: subject shipment was insured with private respondent Pioneer Insurance and Surety

CARPIO, J., Corporation in favor of Unilab against all risks in the amount of P1,779,664.77 under
Chairperson, and by virtue of Marine Risk Note Number MC RM UL 0627 92 [6] and Open Cargo
- versus - NACHURA,
PERALTA, Policy No. HO-022-RIU.[7]
ABAD, and
MENDOZA, JJ.
COURT OF APPEALS and PIONEER INSURANCE AND On the same day that the bill of lading was issued, the shipment was loaded
SURETY CORPORATION, Promulgated:
in a sealed 1x40 container van, with no. APLU-982012, boarded on APLs vessel M/V
Respondents.
July 26, 2010 Pres. Jackson, Voyage 42, and transshipped to APLs M/V Pres. Taft[8] for delivery to

x------------------------------------------------------------------------------------x petitioner in favor of the consignee United Laboratories, Inc. (Unilab).

DECISION On September 30, 1992, the shipment arrived at the port of Manila. On
October 6, 1992, petitioner received the said shipment in its warehouse after it stamped
NACHURA, J.:
the Permit to Deliver Imported Goods[9] procured by the Champs Customs
Brokerage.[10] Three days thereafter, or on October 9, 1992, Oceanica Cargo Marine
Surveyors Corporation (OCMSC) conducted a stripping survey of the shipment
For review is the Court of Appeals (CA) Decision[1] dated April 29, 2004 and
located in petitioners warehouse. The survey results stated:
Resolution[2] dated November 26, 2004. The assailed Decision affirmed the Regional
Trial Court (RTC) decision[3] dated February 22, 2001; while the assailed Resolution 2-pallets STC 40 bags Dried Yeast, both in good order
condition and properly sealed
denied petitioner Unsworth Transport International (Philippines), Inc., American
President Lines, Ltd. (APL), and Unsworth Transport International, Inc.s (UTIs) 19- steel drums STC Vitamin B Complex Extract, all in
good order condition and properly sealed
motion for reconsideration.
1-steel drum STC Vitamin B Complex Extra[ct] with
cut/hole on side, with approx. spilling of 1%[11]
The facts of the case are:

On October 15, 1992, the arrastre Jardine Davies Transport Services, Inc. (Jardine)
On August 31, 1992, the shipper Sylvex Purchasing Corporation delivered to UTI a
issued Gate Pass No. 7614[12] which stated that 22 drums[13] Raw Materials for
shipment of 27 drums of various raw materials for pharmaceutical manufacturing,
Pharmaceutical Mfg. were loaded on a truck with Plate No. PCK-434 facilitated by
consisting of: 1) 3 drums (of) extracts, flavoring liquid, flammable liquid x x x banana
Champs for delivery to Unilabs warehouse. The materials were noted to be complete
flavoring; 2) 2 drums (of) flammable liquids x x x turpentine oil; 2 pallets. STC: 40
and in good order in the gate pass.[14] On the same day, the shipment arrived in Unilabs
bags dried yeast; and 3) 20 drums (of) Vitabs: Vitamin B Complex Extract. [4] UTI
 rate of 6% per annum to be computed starting from September 30,
warehouse and was immediately surveyed by an independent surveyor, J.G. Bernas 1993 until fully paid, for and as actual damages;
Adjusters & Surveyors, Inc. (J.G. Bernas). The Report stated:
2. The amount equivalent to 25% of the total sum as attorneys fees;
1-p/bag torn on side contents partly spilled 3. Cost of this litigation.
1-s/drum #7 punctured and retaped on bottom side content lacking
5-drums shortship/short delivery[15] SO ORDERED.[20]

On October 23 and 28, 1992, the same independent surveyor conducted final
On appeal, the CA affirmed the RTC decision on April 29, 2004. The CA rejected
inspection surveys which yielded the same results. Consequently, Unilabs quality
UTIs defense that it was merely a forwarder, declaring instead that it was a common
control representative rejected one paper bag containing dried yeast and one steel drum
carrier. The appellate court added that by issuing the Bill of Lading, UTI
containing Vitamin B Complex as unfit for the intended purpose. [16]
acknowledged receipt of the goods and agreed to transport and deliver them at a
On November 7, 1992, Unilab filed a formal claim[17] for the damage against private
specific place to a person named or his order. The court further concluded that upon
respondent and UTI. On November 20, 1992, UTI denied liability on the basis of the
the delivery of the subject shipment to petitioners warehouse, its liability became
gate pass issued by Jardine that the goods were in complete and good condition; while
similar to that of a depositary. As such, it ought to have exercised ordinary diligence
private respondent paid the claimed amount on March 23, 1993. By virtue of the Loss
in the care of the goods. And as found by the RTC, the CA agreed that petitioner failed
and Subrogation Receipt[18] issued by Unilab in favor of private respondent, the latter
to exercise the required diligence. The CA also rejected petitioners claim that its
filed a complaint for Damages against APL, UTI and petitioner with the RTC of
liability should be limited to $500 per package pursuant to the Carriage of Goods by
Makati.[19]The case was docketed as Civil Case No. 93-3473 and was raffled to Branch
Sea Act (COGSA) considering that the value of the shipment was declared pursuant
134.
to the letter of credit and the pro forma invoice. As to APL, the court considered it as
a common carrier notwithstanding the non-issuance of a bill of lading inasmuch as a
After the termination of the pre-trial conference, trial on the merits ensued. On
bill of lading is not indispensable for the execution of a contract of carriage.[21]
February 22, 2001, the RTC decided in favor of private respondent and against APL,
UTI and petitioner, the dispositive portion of which reads:
Unsatisfied, petitioner comes to us in this petition for review on certiorari, raising the
WHEREFORE, judgment is hereby rendered in favor of plaintif following issues:
PIONEER INSURANCE & SURETY CORPORATION and
against the defendants AMERICAN PRESIDENT LINES and
UNSWORTH TRANSPORT INTERNATIONAL (PHILS.), INC. 1. WHETHER OR NOT THE HONORABLE COURT OF
(now known as JUGRO TRANSPORT INTL., PHILS.), ordering APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
the latter to pay, jointly and severally, the former the following AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN
amounts: UPHOLDING THE DECISION OF THE REGIONAL TRIAL
COURT DATED 22 FEBRUARY 2001, AWARDING THE SUM
1. The sum of SEVENTY SIX THOUSAND TWO HUNDRED OF SEVENTY SIX THOUSAND TWO HUNDRED THIRTY
THIRTY ONE and 27/100 (Php76,231.27) with interest at the legal ONE AND 27/100 PESOS (PHP76,231.27) WITH LEGAL
 INTEREST AT 6% PER ANNUM AS ACTUAL DAMAGES AND
25% AS ATTORNEYS FEES. Admittedly, petitioner is a freight forwarder. The term freight forwarder"
refers to a firm holding itself out to the general public (other than as a pipeline, rail,
2. WHETHER OR NOT PETITIONER UTI IS A COMMON
CARRIER. motor, or water carrier) to provide transportation of property for compensation and, in
the ordinary course of its business, (1) to
3. WHETHER OR NOT PETITIONER UTI EXERCISED THE
REQUIRED ORDINARY DILIGENCE. assemble and consolidate, or to provide for assembling and consolidating, shipments,
and to perform or provide for break-bulk and distribution operations of the shipments;
4. WHETHER OR NOT THE PRIVATE RESPONDENT
SUFFICIENTLY ESTABLISHED THE ALLEGED DAMAGE TO (2) to assume responsibility for the transportation of goods from the place of receipt
ITS CARGO.[22]
to the place of destination; and (3) to use for any part of the transportation a carrier
subject to the federal law pertaining to common carriers.[23]
Petitioner admits that it is a forwarder but disagrees with the CAs conclusion
that it is a common carrier. It also questions the appellate courts findings that it failed A freight forwarders liability is limited to damages arising from its own
to establish that it exercised extraordinary or ordinary diligence in the vigilance over negligence, including negligence in choosing the carrier; however, where the
the subject shipment. As to the damages allegedly suffered by private respondent, forwarder contracts to deliver goods to their destination instead of merely arranging
petitioner counters that they were not sufficiently proven. Lastly, it insists that its for their transportation, it becomes liable as a common carrier for loss or damage to
liability, in any event, should be limited to $500 pursuant to the package limitation goods. A freight forwarder assumes the responsibility of a carrier, which actually
rule. Indeed, petitioner wants us to review the factual findings of the RTC and the CA executes the transport, even though the forwarder does not carry the merchandise
and to evaluate anew the evidence presented by the parties. itself.[24]

The petition is partly meritorious. It is undisputed that UTI issued a bill of lading in favor of Unilab. Pursuant
thereto, petitioner undertook to transport, ship, and deliver the 27 drums of raw
Well established is the rule that factual questions may not be raised in a materials for pharmaceutical manufacturing to the consignee.
petition for review on certiorari as clearly stated in Section 1, Rule 45 of the Rules of
Court, viz.: A bill of lading is a written acknowledgement of the receipt of goods and an

Section 1. Filing of petition with Supreme Court. A party agreement to transport and to deliver them at a specified place to a person named or
desiring to appeal by certiorari from a judgment or final order or on his or her order.[25] It operates both as a receipt and as a contract. It is a receipt for
resolution of the Court of Appeals, the Sandiganbayan, the Regional
Trial Court or other courts whenever authorized by law, may file the goods shipped and a contract to transport and
with the Supreme Court a verified petition for review on certiorari. deliver the same as therein stipulated. As a receipt, it recites the date and place of
The petition shall raise only questions of law which must be
distinctly set forth. shipment, describes the goods as to quantity, weight, dimensions, identification marks,
condition, quality, and value. As a contract, it names the contracting parties, which
include the consignee; fixes the route, destination, and freight rate or charges; and All these conclusively prove the fact of shipment in good order and condition,
stipulates the rights and obligations assumed by the parties. [26] and the consequent damage to one steel drum of Vitamin B Complex Extract while in
the possession of petitioner which failed to explain the reason for the damage. Further,
Undoubtedly, UTI is liable as a common carrier. Common carriers, as a petitioner failed to prove that it observed the extraordinary diligence and precaution
general rule, are presumed to have been at fault or negligent if the goods they which the law requires a common carrier to exercise and to follow in order to avoid
transported deteriorated or got lost or destroyed. That is, unless they prove that they damage to or destruction of the goods entrusted to it for safe carriage and delivery. [29]
exercised extraordinary diligence in transporting the goods. In order to avoid
responsibility for any loss or damage, therefore, they have the burden of proving that However, we affirm the applicability of the Package Limitation Rule under
they observed such diligence.[27] Mere proof of delivery of the goods in good order to the COGSA, contrary to the RTC and the CAs findings.
a common carrier and of their arrival in bad order at their destination constitutes a It is to be noted that the Civil Code does not limit the liability of the common
prima facie case of fault or negligence against the carrier. If no adequate explanation carrier to a fixed amount per package. In all matters not regulated by the Civil Code,
is given as to how the deterioration, loss, or destruction of the goods happened, the the rights and obligations of common carriers are governed by the Code of Commerce
transporter shall be held responsible.[28] and special laws. Thus, the COGSA supplements the Civil Code by establishing a
provision limiting the carriers liability in the absence of a shippers declaration of a
Though it is not our function to evaluate anew the evidence presented, we higher value in the bill of lading.[30] Section 4(5) of the COGSA provides:
refer to the records of the case to show that, as correctly found by the RTC and the
(5) Neither the carrier nor the ship shall in any event be or
CA, petitioner failed to rebut the prima facie presumption of negligence in the carriage become liable for any loss or damage to or in connection with the
of the subject shipment. transportation of goods in an amount exceeding $500 per package
of lawful money of the United States, or in case of goods not shipped
in packages, per customary freight unit, or the equivalent of that sum
First, as stated in the bill of lading, the subject shipment was received by UTI in other currency, unless the nature and value of such goods have
been declared by the shipper before shipment and inserted in the bill
in apparent good order and condition in New York, United States of America. Second, of lading. This declaration, if embodied in the bill of lading, shall
theOCMSC Survey Report stated that one steel drum STC Vitamin B Complex Extract be prima facie evidence, but shall not be conclusive on the carrier.

was discovered to be with a cut/hole on the side, with approximate spilling of

In the present case, the shipper did not declare a higher valuation of the goods
1%. Third, though Gate Pass No. 7614, issued by Jardine, noted that the subject
to be shipped. Contrary to the CAs conclusion, the insertion of the words L/C No. LC
shipment was in good order and condition, it was specifically stated that there were 22
No. 1-187-008394/ NY 69867 covering shipment of raw materials for pharmaceutical
(should be 27 drums per Bill of Lading No. C320/C15991-2) drums of raw materials
Mfg. x x x cannot be the basis of petitioners liability.[31] Furthermore, the insertion of
for pharmaceutical manufacturing. Last, J.G. Bernas Survey Report stated that 1-
an invoice number does not in itself sufficiently and convincingly show that petitioner
s/drum was punctured and retaped on the bottom side and the content was lacking, and
had knowledge of the value of the cargo.[32]
there was a short delivery of 5-drums.
 In light of the foregoing, petitioners liability should be limited to $500 per
steel drum. In this case, as there was only one drum lost, private respondent is entitled
to receive only $500 as damages for the loss. In addition to said amount, as aptly held
by the trial court, an interest rate of 6% per annum should also be imposed, plus 25%
of the total sum as attorneys fees.
WHEREFORE, premises considered, the petition is PARTIALLY
GRANTED. The Court of Appeals Decision dated April 29, 2004 and Resolution
dated November 26, 2004 are AFFIRMED with MODIFICATION by reducing the
principal amount due private respondent Pioneer Insurance and Surety Corporation
from P76,231.27 to $500, with interest of 6% per annum from date of demand, and
25% of the amount due as attorneys fees.

The other aspects of the assailed Decision and Resolution STAND.

SO ORDERED.
 that PKS Shipping was a common carrier at the time it undertook to transport the bags
of cement was wanting because the peculiar method of the shipping companys
FIRST DIVISION carrying goods for others was not generally held out as a business but as a casual
occupation. It then concluded that PKS Shipping, not being a common carrier, was not
expected to observe the stringent extraordinary diligence required of common carriers
in the care of goods. The appellate court, moreover, found that the loss of the goods
[G.R. No. 149038. April 9, 2003] was sufficiently established as having been due to fortuitous event, negating any
liability on the part of PKS Shipping to the shipper.
In the instant appeal, Philamgen contends that the appellate court has committed
a patent error in ruling that PKS Shipping is not a common carrier and that it is not
PHILIPPINE AMERICAN GENERAL INSURANCE
liable for the loss of the subject cargo. The fact that respondent has a limited clientele,
COMPANY, petitioner, vs. PKS SHIPPING COMPANY, respondent.
petitioner argues, does not militate against respondents being a common carrier and
that the only way by which such carrier can be held exempt for the loss of the cargo
DECISION would be if the loss were caused by natural disaster or calamity. Petitioner avers that
VITUG, J.: typhoon "APIANG" has not entered the Philippine area of responsibility and that, even
if it did, respondent would not be exempt from liability because its employees,
particularly the tugmaster, have failed to exercise due diligence to prevent or minimize
The petition before the Court seeks a review of the decision of the Court of
the loss.
Appeals in C.A. G.R. CV No. 56470, promulgated on 25 June 2001, which has
affirmed in toto the judgment of the Regional Trial Court (RTC), Branch 65, of PKS Shipping, in its comment, urges that the petition should be denied because
Makati, dismissing the complaint for damages filed by petitioner insurance corporation what Philamgen seeks is not a review on points or errors of law but a review of the
against respondent shipping company. undisputed factual findings of the RTC and the appellate court. In any event, PKS
Shipping points out, the findings and conclusions of both courts find support from the
Davao Union Marketing Corporation (DUMC) contracted the services of
evidence and applicable jurisprudence.
respondent PKS Shipping Company (PKS Shipping) for the shipment to Tacloban City
of seventy-five thousand (75,000) bags of cement worth Three Million Three Hundred The determination of possible liability on the part of PKS Shipping boils down
Seventy-Five Thousand Pesos (P3,375,000.00). DUMC insured the goods for its full to the question of whether it is a private carrier or a common carrier and, in either case,
value with petitioner Philippine American General Insurance Company to the other question of whether or not it has observed the proper diligence (ordinary,
(Philamgen). The goods were loaded aboard the dumb barge Limar I belonging to PKS if a private carrier, or extraordinary, if a common carrier) required of it given the
Shipping. On the evening of 22 December 1988, about nine oclock, while Limar I was circumstances.
being towed by respondents tugboat, MT Iron Eagle, the barge sank a couple of miles
off the coast of Dumagasa Point, in Zamboanga del Sur, bringing down with it the The findings of fact made by the Court of Appeals, particularly when such
entire cargo of 75,000 bags of cement. findings are consistent with those of the trial court, may not at liberty be reviewed by
this Court in a petition for review under Rule 45 of the Rules of
DUMC filed a formal claim with Philamgen for the full amount of the Court.[1] The conclusions derived from those factual findings, however, are not
insurance. Philamgen promptly made payment; it then sought reimbursement from necessarily just matters of fact as when they are so linked to, or inextricably
PKS Shipping of the sum paid to DUMC but the shipping company refused to pay, intertwined with, a requisite appreciation of the applicable law. In such instances, the
prompting Philamgen to file suit against PKS Shipping with the Makati RTC. conclusions made could well be raised as being appropriate issues in a petition for
review before this Court. Thus, an issue whether a carrier is private or common on the
The RTC dismissed the complaint after finding that the total loss of the cargo
basis of the facts found by a trial court or the appellate court can be a valid and
could have been caused either by a fortuitous event, in which case the ship owner was
reviewable question of law.
not liable, or through the negligence of the captain and crew of the vessel and that,
under Article 587 of the Code of Commerce adopting the Limited Liability Rule, the The Civil Code defines common carriers in the following terms:
ship owner could free itself of liability by abandoning, as it apparently so did, the
vessel with all her equipment and earned freightage. Article 1732. Common carriers are persons, corporations, firms or associations
Philamgen interposed an appeal to the Court of Appeals which affirmed in engaged in the business of carrying or transporting passengers or goods or both, by
toto the decision of the trial court. The appellate court ruled that evidence to establish land, water, or air for compensation, offering their services to the public.
Complementary to the codal definition is Section 13, paragraph (b), of the Public crew.[5] Contrary to the conclusion made by the appellate court, its factual findings
Service Act; it defines public service to be indicate that PKS Shipping has engaged itself in the business of carrying goods for
others, although for a limited clientele, undertaking to carry such goods for a fee. The
x x x every person that now or hereafter may own, operate, manage, or control in the regularity of its activities in this area indicates more than just a casual activity on its
Philippines, for hire or compensation, with general or limited clientele, whether part.[6] Neither can the concept of a common carrier change merely because individual
permanent, occasional or accidental, and done for general business purposes, any contracts are executed or entered into with patrons of the carrier. Such restrictive
common carrier, railroad, street railway, subway motor vehicle, either for freight or interpretation would make it easy for a common carrier to escape liability by the simple
passenger, or both, with or without fixed route and whatever may be its expedient of entering into those distinct agreements with clients.
classification, freight or carrier service of any class, express service, steamboat, or Addressing now the issue of whether or not PKS Shipping has exercised the
steamship, or steamship line, pontines, ferries and water craft, engaged in the proper diligence demanded of common carriers, Article 1733 of the Civil Code
transportation of passengers or freight or both, shipyard, marine repair shop, wharf or requires common carriers to observe extraordinary diligence in the vigilance over the
dock, ice plant, ice refrigeration plant, canal, irrigation system, gas, electric light, goods they carry. In case of loss, destruction or deterioration of goods, common
heat and power, water supply and power petroleum, sewerage system, wire or carriers are presumed to have been at fault or to have acted negligently, and the burden
wireless communication systems, wire or wireless broadcasting stations and other of proving otherwise rests on them.[7] The provisions of Article 1733, notwithstanding,
similar public services. x x x. (Underscoring supplied). common carriers are exempt from liability for loss, destruction, or deterioration of the
goods due to any of the following causes:
The prevailing doctrine on the question is that enunciated in the leading case
of De Guzman vs. Court of Appeals.[2] Applying Article 1732 of the Code, in (1) Flood, storm, earthquake, lightning, or other natural disaster or
conjunction with Section 13(b) of the Public Service Act, this Court has held: calamity;

The above article makes no distinction between one whose principal business (2) Act of the public enemy in war, whether international or civil;
activity is the carrying 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 (3) Act or omission of the shipper or owner of the goods;
transportation service on a regular or scheduled basis and one offering such service
on anoccasional, episodic or unscheduled basis. Neither does Article 1732 (4) The character of the goods or defects in the packing or in the
distinguish between a carrier offering its services to the `general public, i.e., the containers; and
general community or population, and one who offers services or solicits business
only from a narrow segment of the general population. We think that Article 1732 (5) Order or act of competent public authority. [8]
deliberately refrained from making such distinctions.
The appellate court ruled, gathered from the testimonies and sworn marine
So understood, the concept of `common carrier under Article 1732 may be seen to protests of the respective vessel masters of Limar I and MT Iron Eagle, that there was
coincide neatly with the notion of `public service, under the Public Service Act no way by which the barges or the tugboats crew could have prevented the sinking
(Commonwealth Act No. 1416, as amended) which at least partially supplements the of Limar I. The vessel was suddenly tossed by waves of extraordinary height of six (6)
law on common carriers set forth in the Civil Code. to eight (8) feet and buffeted by strong winds of 1.5 knots resulting in the entry of
water into the barges hatches. The official Certificate of Inspection of the barge issued
Much of the distinction between a common or public carrier and a private or by the Philippine Coastguard and the Coastwise Load Line Certificate would attest to
special carrier lies in the character of the business, such that if the undertaking is an the seaworthiness of Limar I and should strengthen the factual findings of the appellate
isolated transaction, not a part of the business or occupation, and the carrier does not court.
hold itself out to carry the goods for the general public or to a limited clientele,
Findings of fact of the Court of Appeals generally conclude this Court; none of
although involving the carriage of goods for a fee, [3] the person or corporation
the recognized exceptions from the rule - (1) when the factual findings of the Court of
providing such service could very well be just a private carrier. A typical case is that
Appeals and the trial court are contradictory; (2) when the conclusion is a finding
of a charter party which includes both the vessel and its crew, such as in a bareboat or
grounded entirely on speculation, surmises, or conjectures; (3) when the inference
demise, where the charterer obtains the use and service of all or some part of a ship for
made by the Court of Appeals from its findings of fact is manifestly mistaken, absurd,
a period of time or a voyage or voyages[4] and gets the control of the vessel and its
or impossible; (4) when there is a grave abuse of discretion in the appreciation of facts;
(5) when the appellate court, in making its findings, went beyond the issues of the case
and such findings are contrary to the admissions of both appellant and appellee;
(6) when the judgment of the Court of Appeals is premised on a misapprehension of
facts; (7) when the Court of Appeals failed to notice certain relevant facts which, if
properly considered, would justify a different conclusion; (8) when the findings of fact
are themselves conflicting; (9) when the findings of fact are conclusions without
citation of the specific evidence on which they are based; and (10) when the findings
of fact of the Court of Appeals are premised on the absence of evidence but such
findings are contradicted by the evidence on record would appear to be clearly extant
in this instance.
All given then, the appellate court did not err in its judgment absolving PKS
Shipping from liability for the loss of the DUMC cargo.
WHEREFORE, the petition is DENIED. No costs.
SO ORDERED.
 The pick-up has a front seat where the driver and two passengers can be
accommodated and the back has a steel flooring enclosed with a steel walling of 16
G.R. No. L-9907 June 30, 1958 to 17 inches tall on the sides and with a 19 inches tall walling at the back. Before
leaving Parang, the sitting arrangement was as follows: defendant was at the wheel
and seated with him in the front seat were Mrs. Valencia and Nicanor Quinain; on
LOURDES J. LARA, ET AL., plaintiffs-appellants,
the back of the pick-up were two improvised benches placed on each side, and seated
vs.
on the right bench were Ricardo Alojipan and Antonio Lagahit, and on the left one
BRIGIDO R. VALENCIA, defendant-appellant.
Bernardo and Pastor Geronimo. A person by the name of Leoning was seated on a
box located on the left side while in the middle Lara sat on a bag. Before leaving
Castillo, Cervantes, Occeña, Lozano, Montana, Cunanan, Sison and Castillo and Parang, defendant invited Lara to sit with him on the front seat but Lara declined. It
Eligio G. Lagman for defendant-appellant. was their understanding that upon reaching barrio Samoay, Cotabato, the passengers
Donato C. Endriga and Emigdio Dakanay for plaintiffs-appellants. were to alight and take a bus bound for Davao, but when they arrived at that place,
only Bernardo alighted and the other passengers requested defendant to allow them
BAUTISTA ANGELO, J.: to ride with him up to Davao because there was then no available bus that they could
take in going to that place. Defendant again accommodated the passengers.
This is an action for damages brought by plaintiffs against defendant in the Court of
First Instance of Davao for the death of one Demetrio Lara, Sr. allegedly caused by When they continued their trip, the sitting arrangement of the passengers remained
the negligent act of defendant. Defendant denied the charge of negligence and set up the same, Lara being seated on a bag in the middle with his arms on a suitcase and
certain affirmative defenses and a counterclaim. his head cove red by a jacket. Upon reaching Km. 96, barrio Catidtuan, Lara
accidentally fell from the pick-up and as a result he suffered serious injuries.
The court after hearing rendered judgment ordering defendant to pay the plaintiffs Valencia stopped the pick-up to see what happened to Lara. He sought the help of the
the following amount: (a) P10,000 as moral damages; (b) P3,000 as exemplary residents of that place and applied water to Lara but to no avail. They brought Lara
damages; and (c) P1,000 as attorney's fees, in addition to the costs of action. Both to the nearest place where they could find a doctor and not having found any they
parties appealed to this Court because the damages claimed in the complaint exceed took him to St. Joseph's Clinic of Kidapawan. But when Lara arrived he was already
the sum of P50,000. dead. From there they proceeded to Davao City and immediately notified the local
authorities. An investigation was made regarding the circumstances surrounding the
In their appeal, plaintiffs claim that the court a quo erred in disregarding their claim death of Lara but no criminal action was taken against defendant.
of P41,400 as actual or compensatory damages and in awarding as attorneys' fees
only the sum of P1,000 instead of P3,000 as agreed upon between plaintiffs and their It should be noted that the deceased went to the lumber concession of defendant in
counsel. Defendant, on the other hand, disputes the finding of the court a quo that the Parang, Cotabato upon instructions of his chief in order to classify the logs of
oath of Demetrio Lara, Sr. was due to the negligence of defendant and the portion of defendant which were then ready to be exported and to be loaded on a ship anchored
the judgment which orders dependant to pay to plaintiffs moral and exemplary in the port of Parang. It took Lara six days to do his work during which he contracted
damages as well as attorneys' fees, said defendant contending that the court should malaria fever and for that reason he evinced a desire to return immediately to Davao.
have declared that the death of Lara was due to unavoidable accident. At that time, there was no available bus that could take him back to Davao and so he
requested the defendant if he could take him in his own pick-up. Defendant agreed
The deceased was an inspector of the Bureau of Forestry stationed in Davao with an and, together with Lara, other passengers tagged along, most of them were
annual salary of P1,800. The defendant is engaged in the business of exporting logs employees of the Government. Defendant merely accommodated them and did not
from his lumber concession in Cotabato. Lara went to said concession upon charge them any fee for the service. It was also their understanding that upon
instructions of his chief to classify the logs of defendant which were about to be reaching barrio Samoay, the passengers would alight and transfer to a bus that
loaded on a ship anchored in the port of Parang. The work Lara of lasted for six days regularly makes the trip to Davao but unfortunately there was none available at the
during which he contracted malaria fever. In the morning of January 9, 1954, Lara time and so the same passengers, including Lara, again requested the defendant to
who then in a hurry to return to Davao asked defendant if he could take him in his drive them to Davao. Defendant again accommodated them and upon reaching Km.
pick-up as there was then no other means of transportation, to which defendant 96, Lara accidentally fell suffering fatal injuries.
agreed, and in that same morning the pick-up left Parang bound for Davao taking
along six passengers, including Lara. It therefore appears that the deceased, as well his companions who rode in the pick-
up of defendant, were merely accommodation passengers who paid nothing for the
service and so they can be considered as invited guests within the meaning of the ocupar el asiento delantero del pick-up no constituye a juicio del Juzgado
law. As accommodation passengers or invited guests, defendant as owner and driver una defensa, pues el demendado conociendo el estado delicado de salud de
of the pick-up owes to them merely the duty to exercise reasonable care so that they Lara, no debio de haber permitido que aquel regrese a Davao en su pick-up;
may be transported safely to their destination. Thus, "The rule is established by the si querria prestar a aquel un favor, debio de haver provisto a Lara de un
weight of authority that the owner or operator of an automobile owes the duty to automobil para su regrese a Davao, ya que el demendado es un millionario;
an invited guest to exercise reasonable care in its operation, and not unreasonably to si no podia prestar a aquel este favor, debio de haver dejado a Lara en
expose him to danger and injury by increasing the hazard of travel. This rule, as Samuay para coger aquel un camion de pasajero de Cotabato a Davao.
frequently stated by the courts, is that an owner of an automobile owes a guest the
duty to exercise ordinary or reasonable care to avoid injuring him. Since one riding Even if we admit as true the facts found by the trial court, still we find that the same
in an automobile is no less a guest because he asked for the privilege of doing so, the are not sufficient to show that defendant has failed to take the precaution necessary
same obligation of care is imposed upon the driver as in the case of one expressly to conduct his passengers safely to their place of destination for there is nothing there
invited to ride" (5 Am. Jur., 626-627). Defendant, therefore, is only required to to indicate that defendant has acted with negligence or without taking the precaution
observe ordinary care, and is not in duty bound to exercise extraordinary diligence as that an ordinary prudent man would have taken under similar circumstances. It
required of a common carrier by our law (Articles 1755 and 1756, new Civil Code). should be noted that Lara went to the lumber concession of defendant in answer to a
call of duty which he was bound to perform because of the requirement of his office
The question that now arises is: Is there enough evidence to show that defendant and he contracted the malaria fever in the course of the performance of that duty. It
failed to observe ordinary care or diligence in transporting the deceased from Parang should also be noted that defendant was not in duty bound to take the deceased in his
to Davao on the date in question? own pick-up to Davao because from Parang to Cotabato there was a line of
transportation that regularly makes trips for the public, and if defendant agreed to
The trial court answered the question in the affirmative but in so doing it took into take the deceased in his own car, it was only to accommodate him considering his
account only the following facts: feverish condition and his request that he be so accommodated. It should also be
noted that the passengers who rode in the pick-up of defendant took their respective
seats therein at their own choice and not upon indication of defendant with the
No debe perderse de vista el hecho, que los negocios de exportacion de
particularity that defendant invited the deceased to sit with him in the front seat but
trozos del demandado tiene un volumen de P1,200. Lara era empleado de la
Oficina de Montes, asalariado por el gobierno, no pagado por el demandado which invitation the deceased declined. The reason for this can only be attributed to
his desire to be at the back so that he could sit on a bag and travel in a reclining
para classificar los trozos exportados; debido a los trabajos de classificacion
position because such was more convenient for him due to his feverish condition. All
que duro 6 dias, en su ultimo dia Lara no durmio toda la noche, al dia
the circumstances therefore clearly indicate that defendant had done what a
siguiente, Lara fue atacado de malaria, tenia inflamada la cara y cuerpo,
reasonable prudent man would have done under the circumstances.
sufria dolores de cabeza con erupciones en la cara y cuerpo; que en la
manana, del dia 2 de enero de 1954, fecha en que Lara salio de Davao para
Parang, en aeroplano para clasificar los trozos del demandado, el automobil There is every reason to believe that the unfortunate happening was only due to an
de este condujo a aquel al aerodromo de Davao. unforeseen accident accused by the fact that at the time the deceased was half asleep
and must have fallen from the pick-up when it ran into some stones causing it to jerk
considering that the road was then bumpy, rough and full of stones.
xxx xxx xxx

The finding of the trial court that the pick-up was running at more than 40 kilometers
El viaje de Cotabato a Davao no es menos de 8 horas, su carretera esta en
per hour is not supported by the evidence. This is a mere surmise made by the trial
malas condiciones, desnivelada, con piedras salientes y baches, que hacen
court considering the time the pick-up left barrio Samoay and the time the accident
del vehiculo no estable en su marcha. Lara estaba enfermo de cierta
occured in relation to the distance covered by the pick-up. And even if this is correct,
gravedad, tenia el cuerpo y cara inflamados, atacado de malaria, con dolores
de cabeza y con erupciones en la cara y cuerpo. still we say that such speed is not unreasonable considering that they were traveling
on a national road and the traffic then was not heavy. We may rather attribute the
incident to lack of care on the part of the deceased considering that the pick-up was
A la vista de estos hechos, el demandado debia de saber que era sumamente open and he was then in a crouching position. Indeed, the law provides that "A
peligroso llevar 5 pasajeros en la parte trasera del pick-up; particularmente, passenger must observe the diligence of a good father of a family to avoid injury to
para la salud de Lara; el permitirlo, el demandado no ha tomado las himself" (Article 1761, new Civil Code), which means that if the injury to the
precausiones, para evitar un posible accidente fatal. La negative de Lara de
passenger has been proximately caused by his own negligence, the carrier cannot be
held liable.

All things considered, we are persuaded to conclude that the accident occurred not
due to the negligence of defendant but to circumstances beyond his control and so he
should be exempt from liability.

Wherefore, the decision appealed from is reversed, without pronouncement as to

costs.

Paras, C. J., Bengzon, Reyes, A., Concepcion, Reyes, J. B. L., Endencia and Felix,
JJ., concur.
G.R. No. 88052 December 14, 1989 as well as moral and exemplary damages in such amount as the Court may deem
reasonable to award to them.
JOSE P. MECENAS, ROMEO P. MECENAS, LILIA P. MECENAS,
ORLANDO P. MECENAS, VIOLETA M. ACERVO, LUZVIMINDA P. Another complaint, docketed as Civil Case No. Q-33932, was filed in the same court
MECENAS; and OFELIA M. JAVIER, petitioners, by Lilia Ciocon claiming damages against Negros Navigation, PNOC and PNOC
vs. Shipping for the death of her husband Manuel Ciocon, another of the luckless
HON. COURT OF APPEALS, CAPT. ROGER SANTISTEBAN and NEGROS passengers of the "Don Juan." Manuel Ciocon's body, too, was never found.
NAVIGATION CO., INC.,respondents.
The two (2) cases were consolidated and heard jointly by the Regional Trial Court of
Benito P. Favie and Jose Dario Magno for petitioners. Quezon City, Branch 82. On 17 July 1986, after trial, the trial court rendered a
decision, the dispositive of which read as follows:
Hernandez, Velicaria, Vibar & Santiago for private respondents.
WHEREFORE, the Court hereby renders judgment ordering:

a) The defendant Negros Navigation Co., Inc. and Capt. Roger

FELICIANO, J.: Santisteban jointly and severally liable to pay plaintiffs in Civil
Case No Q-31525, the sum of P400,000.00 for the death of
plaintiffs' parents, Perfecto A. Mecenas and Sofia P. Mecenas; to
At 6:20 o'clock in the morning of 22 April 1980, the M/T "Tacloban City," a barge-
pay said plaintiff's the sum of P15.000,00 as and for attorney's
type oil tanker of Philippine registry, with a gross tonnage of 1,241,68 tons, owned
fees; plus costs of the suit.
by the Philippine National Oil Company (PNOC) and operated by the PNOC
Shipping and Transport Corporation (PNOC Shipping), having unloaded its cargo of
petroleum products, left Amlan, Negros Occidental, and headed towards Bataan. At b) Each of the defendants Negros Navigation Co Inc. and
about 1:00 o'clock in the afternoon of that same day, the M/V "Don Juan," an Philippine National Oil Company/PNOC Shipping and
interisland vessel, also of Philippine registry, of 2,391.31 tons gross weight, owned Transportation Company, to pay the plaintiff in Civil Case No. Q-
and operated by the Negros Navigation Co., Inc. (Negros Navigation) left Manila 33932, the sum of P100,000.00 for the death of Manuel Ciocon, to
bound for Bacolod with seven hundred fifty (750) passengers listed in its manifest, pay said plaintiff jointly and severally, the sum of P1 5,000.00 as
and a complete set of officers and crew members. and for attorney's fees, plus costs of the suit. 1

On the evening of that same day, 22 April 1980, at about 10:30 o'clock, the Negros Navigation, Capt. Santisteban, PNOC and PNOC Shipping appealed the trial
"Tacloban City" and the "Don Juan" collided at the Talbas Strait near Maestra de court's decision to the Court of Appeals. Later, PNOC and PNOC Shipping withdrew
Ocampo Island in the vicinity of the island of Mindoro. When the collision occurred, their appeal citing a compromise agreement reached by them with Negros
the sea was calm, the weather fair and visibility good. As a result of this collision, Navigation; the Court of Appeals granted the motion by a resolution dated 5
the M/V "Don Juan" sank and hundreds of its passengers perished. Among the ill- September 1988, subject to the reservation made by Lilia Ciocon that she could not
fated passengers were the parents of petitioners, the spouses Perfecto Mecenas and be bound by the compromise agreement and would enforce the award granted her by
Sofia Mecenas, whose bodies were never found despite intensive search by the trial court.
petitioners.
In time, the Court of Appeals rendered a decision dated 26 January 1989 which
On 29 December 1980, petitioners filed a complaint in the then Court- of First decreed the following:
Instance of Quezon City, docketed as Civil Case No. Q-31525, against private
respondents Negros Navigation and Capt. Roger Santisteban, the captain of the "Don WHEREFORE, in view of the foregoing, the decision of the court a quo is hereby
Juan" without, however, impleading either PNOC or PNOC Shipping. In their affirmed as modified with respect to Civil Case No. 31525, wherein defendant
complaint, petitioners alleged that they were the seven (7) surviving legitimate appellant Negros Navigation Co. Inc. and Capt. Roger Santisteban are held jointly
children of Perfecto Mecenas and Sofia Mecenas and that the latter spouses perished and severally liable to pay the plaintiffs the amount of P100,000. 00 as actual and
in the collision which had resulted from the negligence of Negros Navigation and compensatory damages and P15,000.00 as attorney's fees and the cost of the suit. 2
Capt. Santisteban. Petitioners prayed for actual damages of not less than P100,000.00
The issue to be resolved in this Petition for Review is whether or not the Court of collision with "Tacloban City" and the sinking of the "Don Juan" and the resulting
Appeals had erred in reducing the amount of the damages awarded by the trial court heavy loss of lives.
to the petitioners from P400,000.00 to P100,000.00.
The then Commandant of the Philippine Coast Guard, Commodore B.C. Ochoco, in
We note that the trial court had granted petitioners the sum of P400,000,00 "for the a decision dated 2 March 1981, held that the "Tacloban City" was "primarily and
death of [their parents]" plus P15,000.00 as attorney's fees, while the Court of solely [sic] at fault and responsible for the collision." 7Initially, the Minister of
Appeals awarded them P100,000.00 "as actual and compensatory damages" and National Defense upheld the decision of Commodore Ochoco. 8 On Motion for
P15,000.00 as attorney's fees. To determine whether such reduction of the damages Reconsideration, however, the Minister of National Defense reversed himself and
awarded was proper, we must first determine whether petitioners were entitled to an held that both vessels had been at fault:
award of damagesother than actual or compensatory damages, that is, whether they
were entitled to award of moral and exemplary damages. It is therefore evident from a close and thorough review of the
evidence that fault is imputable to both vessels for the collision.
We begin by noting that both the trial court and the Court of Appeals considered the Accordingly, the decision dated March 12, 1982, subject of the
action (Civil Case No. Q-31525) brought by the sons and daughters of the deceased Motion for Reconsideration filed by counsel of M/T Tacloban
Mecenas spouses against Negros Navigation as based on quasi-delict. We believed City, is hereby reversed. However, the administrative penalties
that action is more appropriately regarded as grounded on contract, the contract of imposed oil both vessels and their respective crew concerned are
carriage between the Mecenas spouses as regular passengers who paid for their boat hereby affirmed. 9
tickets and Negros Navigation; the surviving children while not themselves
passengers are in effect suing the carrier in representation of their deceased The trial court, after a review of the evidence submitted during the trial, arrived at
parents. 3 Thus, the suit (Civil Case No. Q-33932) filed by the widow Lilia Ciocon the same conclusion that the Minister of National Defense had reached that both the
was correctly treated by the trial and appellate courts as based on contract (vis-a-vis "Tacloban City" and the "Don Juan" were at fault in the collision. The trial court
Negros Navigation) and as well on quasi-delict (vis-a-vis PNOC and PNOC summarized the testimony and evidence of PNOC and PNOC Shipping as well as of
Shipping). In an action based upon a breach of the contract of carriage, the carrier Negros Navigation in the following terms:
under our civil law is liable for the death of passengers arising from the negligence
or willful act of the carrier's employees although such employees may have acted
Defendant PNOC's version of the incident:
beyond the scope of their authority or even in violation of the instructions of the
carrier, 4which liability may include liability for moral damages. 5 It follows that
petitioners would be entitled to moral damages so long as the collision with the M/V Don Juan was first sighted at about 5 or 6 miles from
"Tacloban City" and the sinking of the "Don Juan" were caused or attended by Tacloban City (TSN, January 21, 1985, p. 13); it was on the
negligence on the part of private respondents. starboard (right) side of Tacloban City. This was a visual contact;
not picked up by radar (p. 15, Ibid). Tacloban City was travelling
310 degrees with a speed of 6 knots, estimated speed of Don Juan
In respect of the petitioners' claim for exemplary damages, it is only necessary to
of 16 knots (TSN, May 9, pp. 5-6). As Don Juan approached,
refer to Article 2232 of the Civil Code:
Tacloban City gave a leeway of 1 0 degrees to the left. 'The
purpose was to enable Tacloban to see the direction of Don Juan
Article 2332. In contracts and quasi-contracts, the court may (p. 19, Ibid). Don Juan switched to green light, signifying that it
exemplary damages if the defendant acted in a wanton, fraudulent, will pass Tacloban City's right side; it will be a starboard to
reckless, oppressive or malevolent manner. 6 starboard passing (p. 21, Ibid) Tacloban City's purpose in giving a
leeway of 10 degrees at this point, is to give Don Juan more space
Thus, whether petitioners are entitled to exemplary damages as claimed must depend for her passage (p. 22, Ibid). This was increased by Tacloban City
upon whether or not private respondents acted recklessly, that is, with gross to an additional 15 degrees towards the left (p. 22, Ibid). The way
negligence. was clear and Don Juan has not changed its course (TSN, May
9,1985, p. 39).
We turn, therefore, to a consideration of whether or not Negros Navigation and Capt.
Santisteban were grossly negligent during the events which culminated in the
When Tacloban City altered its course the second time, from 300 The Court of Appeals, for its part, reached the same conclusion. 12
degrees to 285 degrees, Don Juan was about 4.5 miles away (TSN,
May 9,1985, p. 7). There is, therefore, no question that the "Don Juan" was at least as negligent as the
M/T "Tacloban City" in the events leading up to the collision and the sinking of the
Despite executing a hardport maneuver, the collision nonetheless "Don Juan." The remaining question is whether the negligence on the part of the
occurred. Don Juan rammed the Tacloban City near the starboard "Don Juan" reached that level of recklessness or gross negligence that our Civil Code
bow (p. 7, Ibid)." requires for the imposition of exemplary damages. Our own review of the record in
the case at bar requires us to answer this in the affirmative.
NENACO's [Negros Navigation] version.
In the first place, the report of the Philippine Coast Guard Commandant (Exhibit "l
Don Juan first sighted Tacloban City 4 miles away, as shown by 0"), while holding the "Tacloban City" as "primarily and solely [sic] at fault and
radar (p. 13, May 24, 1983). Tacloban City showed its red and responsible for the collision," did itself set out that there had been fault or negligence
green lights twice; it proceeded to, and will cross, the path of Don on the part of Capt. Santisteban and his officers and crew before the collision and
Juan. Tacloban was on the left side of Don Juan (TSN, April immediately after contact of the two (2) vessels. The decision of Commodore
20,1983, p. 4). Ochoco said:

Upon seeing Tacloban's red and green lights, Don Juan executed xxxxxxxxx
hard starboard (TSN, p. 4, Ibid.) This maneuver is in conformity
with the rule that 'when both vessels are head on or nearly head on, M/S Don Juan's Master, Capt. Rogelio Santisteban, was playing
each vessel must turn to the right in order to avoid each other. (p. mahjong before and up to the time of collision. Moreover, after the
5, Ibid). Nonetheless, Tacloban appeared to be heading towards collision, he failed to institute appropriate measures to delay the
Don Juan (p. 6, Ibid), sinking MS Don Juan and to supervise properly the execution of
his order of abandonship. As regards the officer on watch, Senior
When Don Juan executed hard starboard, Tacloban was about 3rd Mate Rogelio Devera, he admitted that he failed or did not call
1,500 feet away (TSN, May 24,1983, p. 6). Don Juan, after or inform Capt. Santisteban of the imminent danger of collision
execution of hard starboard, will move forward 200 meters before and of the actual collision itself Also, he failed to assist his master
the vessel will respond to such maneuver (p. 7, Ibid). The speed of to prevent the fast sinking of the ship. The record also indicates
Don Juan at that time was 17 knits; Tacloban City 6.3 knots. t that Auxiliary Chief Mate Antonio Labordo displayed laxity in
"Between 9 to 15 seconds from execution of hard starboard, maintaining order among the passengers after the collision.
collision occurred (p. 8, Ibid). (pp. 3-4 Decision). 10
x x x x x x x x x. 13
The trial court concluded:
We believe that the behaviour of the captain of the "Don Juan" in tills instance-
M/ V Don Juan and Tacloban City became aware of each other's playing mahjong "before and up to the time of collision constitutes behaviour that is
presence in the area by visual contact at a distance of something simply unacceptable on the part of the master of a vessel to whose hands the lives
like 6 miles from each other. They were fully aware that if they and welfare of at least seven hundred fifty (750) passengers had been entrusted.
continued on their course, they will meet head on. Don Juan - Whether or not Capt. Santisteban was "off-duty" or "on-duty" at or around the time
steered to the right; Tacloban City continued its course to the left. of actual collision is quite immaterial; there is, both realistically speaking and in
There can be no excuse for them not to realize that, with such contemplation of law, no such thing as "off-duty" hours for the master of a vessel at
maneuvers, they will collide. They executed maneuvers sea that is a common carrier upon whom the law imposes the duty of extraordinary
inadequate, and too late, to avoid collision. diligence-

The Court is of the considered view that the defendants are equally [t]he duty to carry the passengers safely as far as human care and
negligent and are liable for damages. (p. 4, decision). 11 foresight can provide, using the utmost diligence of very cautious
persons, with a due regard for all the circumstances. 14
The record does not show that was the first or only time that Capt. Santisteban had We hold that under these circumstances, a presumption of gross negligence on the
entertained himself during a voyage by playing mahjong with his officers and part of the vessel (her officers and crew) and of its ship-owner arises; this
passengers; Negros Navigation in permitting, or in failing to discover and correct presumption was never rebutted by Negros Navigation.
such behaviour, must be deemed grossly negligent.
The grossness of the negligence of the "Don Juan" is underscored when one
Capt. Santisteban was also faulted in the Philippine Coast Guard decision for failing considers the foregoing circumstances in the context of the following facts: Firstly,
after the collision, "to institute appropriate measures to delay the sinking of M/V the "Don Juan" was more than twice as fast as the "Tacloban City." The "Don Juan's"
Don Juan." This appears to us to be a euphemism for failure to maintain the sea- top speed was 17 knots; while that of the "Tacloban City" was 6.3. knots. 19Secondly,
worthiness or the water-tight integrity of the "Don Juan." The record shows that the the "Don Juan" carried the full complement of officers and crew members specified
"Don Juan" sank within ten (10) to fifteen (15) minutes after initial contact with the for a passenger vessel of her class. Thirdly, the "Don Juan" was equipped with radar
"Tacloban City. 15 While the failure of Capt. Santisteban to supervise his officers and which was functioning that night. Fourthly, the "Don Juan's" officer on-watch had
crew in the process of abandoning the ship and his failure to avail of measures to sighted the "Tacloban City" on his radar screen while the latter was still four (4)
prevent the too rapid sinking of his vessel after collision, did not cause the collision nautical miles away. Visual confirmation of radar contact was established by the
by themselves, such failures doubtless contributed materially to the consequent loss "Don Juan" while the "Tacloban City" was still 2.7 miles away. 20 In the total set of
of life and, moreover, were indicative of the kind and level of diligence exercised by circumstances which existed in the instant case, the "Don Juan," had it taken
Capt. Santisteban in respect of his vessel and his officers and men prior to actual seriously its duty of extraordinary diligence, could have easily avoided the collision
contact between the two (2) vessels. The officer-on-watch in the "Don Juan" with the "Tacloban City," Indeed, the "Don Juan" might well have avoided the
admitted that he had failed to inform Capt. Santisteban not only of the "imminent collision even if it had exercised ordinary diligence merely.
danger of collision" but even of "the actual collision itself "
It is true that the "Tacloban City" failed to follow Rule 18 of the International Rules
There is also evidence that the "Don Juan" was carrying more passengers than she of the Road which requires two (2) power- driven vessels meeting end on or nearly
had been certified as allowed to carry. The Certificate of Inspection 16 dated 27 end on each to alter her course to starboard (right) so that each vessel may pass on
August 1979, issued by the Philippine Coast Guard Commander at Iloilo City, the the port side (left) of the other. 21 The "Tacloban City," when the two (2) vessels
Don Juan's home port, states: were only three-tenths (0.3) of a mile apart, turned (for the second time) 150 to port
side while the "Don Juan" veered hard to starboard. This circumstance, while it may
Passengers allowed : 810 have made the collision immediately inevitable, cannot, however, be viewed in
isolation from the rest of the factual circumstances obtaining before and up to the
collision. In any case, Rule 18 like all other International Rules of the Road, are not
Total Persons Allowed : 864
to be obeyed and construed without regard to all the circumstances surrounding a
particular encounter between two (2) vessels. 22 In ordinary circumstances, a vessel
The report of the Philippine Coast Guard (Exhibit "10") stated that the "Don Juan" discharges her duty to another by a faithful and literal observance of the Rules of
had been "officially cleared with 878 passengers on board when she sailed from the Navigation, 23 and she cannot be held at fault for so doing even though a different
port of Manila on April 22, 1980 at about 1:00 p.m." This head-count of the course would have prevented the collision. This rule, however, is not to be applied
passengers "did not include the 126 crew members, children below three (3) years where it is apparent, as in the instant case, that her captain was guilty of negligence
old and two (2) half-paying passengers" which had been counted as one adult or of a want of seamanship in not perceiving the necessity for, or in so acting as to
passenger. 17 Thus, the total number of persons on board the "Don Juan" on that ill- create such necessity for, a departure from the rule and acting accordingly. 24 In other
starred night of 22 April 1 980 was 1,004, or 140 persons more than the maximum words, "route observance" of the International Rules of the Road will not relieve a
lumber that could be safely carried by the "Don Juan," per its own Certificate of vessel from responsibility if the collision could have been avoided by proper care
Inspection. 18 We note in addition, that only 750 passengers had been listed in its and skill on her part or even by a departure from the rules. 25
manifest for its final voyage; in other words, at least 128 passengers on board had not
even been entered into the "Don Juan's" manifest. The "Don Juan's" Certificate of
Inspection showed that she carried life boat and life raft accommodations for only In the petition at bar, the "Don Juan" having sighted the "Tacloban City" when it was
still a long way off was negligent in failing to take early preventive action and in
864 persons, the maximum number of persons she was permitted to carry; in other
allowing the two (2) vessels to come to such close quarters as to render the collision
words, she did not carry enough boats and life rafts for all the persons actually on
inevitable when there was no necessity for passing so near to the "Tacloban City" as
board that tragic night of 22 April 1980.
to create that hazard or inevitability, for the "Don Juan" could choose its own
distance. 26, It is noteworthy that the "Tacloban City," upon turning hard to port
shortly before the moment of collision, signalled its intention to do so by giving two given the award specified below, and that such additional filing fee shall constitute a
(2) short blasts with horn. 26A The "Don Juan " gave no answering horn blast to lien upon the judgment.
signal its own intention and proceeded to turn hatd to starboard. 26B
We consider, finally, the amount of damages-compensatory, moral and exemplary-
We conclude that Capt. Santisteban and Negros Navigation are properly held liable properly imposable upon private respondents in this case. The original award of the
for gross negligence in connection with the collision of the "Don Juan" and trial court of P400,000.00 could well have been disaggregated by the trial court and
"Tacloban City" and the sinking of the "Don Juan" leading to the death of hundreds the Court of Appeals in the following manner:
of passengers. We find no necessity for passing upon the degree of negligence or
culpability properly attributable to PNOC and PNOC Shipping or the master of the 1. actual or compensatory damages proved in the course of trial
"Tacloban City," since they were never impleaded here. consisting of actual expenses

It will be recalled that the trial court had rendered a lump sum of P400,000.00 to incurred by petitioners
petitioners for the death of their parents in the "Don Juan" tragedy. Clearly, the trial
court should have included a breakdown of the lump sum award into its component
in their search for their
parts: compensatory damages, moral damages and exemplary damages. On appeal,
the Court of Appeals could have and should have itself broken down the lump sum
award of the trial court into its constituent parts; perhaps, it did, in its own mind. In parents' bodies- -P126,000.00
any case, the Court of Appeals apparently relying uponManchester Development
Corporation V. Court of Appeals 27 reduced the P400,000.00 lump sum award into a 2. actual or compensatory
P100,000.00 for actual and compensatory damages only.
damages in case of
We believe that the Court of Appeals erred in doing so, It is true that the petitioners'
complaint before the trial court had in the body indicated that the petitioner-plaintiffs wrongful death
believed that moral damages in the amount of at least P1,400,000.00 were properly
due to them (not P12,000,000.00 as the Court of Appeals erroneously stated) as well (P30,000.00 x 2) -P60,000.00 29
as exemplary damages in the sum of P100,000.00 and that in the prayer of their
complaint, they did not specify the amount of moral and exemplary damages sought
(3) moral damages -P107,000.00
from the trial court. We do not believe, however, that the Manchester doctrine,
which has been modified and clarified in subsequent decision by the Court in Sun
Insurance Office, Ltd. (SIOL), et al. v. Asuncion, et al. 28 can be applied in the instant (4) exemplary damages -P107,000.00
case so as to work a striking out of that portion of the trial court's award which could
be deemed nationally to constitute an award of moral and exemplary Total -P400,000.00
damages. Manchester was promulgated by the Court on 7 May 1987. Circular No. 7
of this Court, which embodied the doctrine in Manchester, is dated 24 March 1988. Considering that petitioners, legitimate children of the deceased spouses Mecenas,
Upon the other hand, the complaint in the case at bar was filed on 29December 1980, are seven (7) in number and that they lost both father and mothe in one fell blow of
that is, long before either Manchester or Circular No. 7 of 24 March 1988 emerged. fate, and considering the pain and anxiety they doubtless experienced while
The decision of the trial court was itself promulgated on 17 July 1986, again, searching for their parents among the survivors and the corpses recovered from the
before Manchester and Circular No. 7 were promulgated. We do not believe that sea or washed ashore, we believe that an additional amount of P200,000.00 for moral
Manchester should have been applied retroactively to this case where a decision on damages, making a total of P307,000.00 for moral damages, making a total of
the merits had already been rendered by the trial court, even though such decision P307,000.00 as moral damages, would be quite reasonable.
was then under appeal and had not yet reached finality. There is no indication at
all that petitioners here sought simply to evade payment of the court's filing fees or Exemplary damages are designed by our civil law to permit the courts to reshape
to mislead the court in the assessment of the filing fees. In any event, we behaviour that is socially deleterious in its consequence by creating negative
apply Manchester as clarified and amplified by Sun Insurance Office Ltd. (SIOL), by incentives or deterrents against such behaviour. In requiring compliance with the
holding that the petitioners shall pay the additional filing fee that is properly payable standard which is in fact that of the highest possible degree of diligence, from
common carriers and in creating a presumption of negligence against them, the law trial court, and shall constitute a lien upon the judgment here awarded. Cost against
seels to compel them to control their employees, to tame their reckless instincts and private respondents.
to force them to take adequate care of human beings and their property. The Court
will take judicial notive of the dreadful regularity with which grievous maritime SO ORDERED.
disasters occur in our waters with massive loss of life. The bulk of our population is
too poor to afford domestic air transportation. So it is that notwithstanding the
Fernan,C.J., Gutierrez, Jr., Bibin and Cortes, JJ., concur.
frequent sinking of passenger vessels in our waters, crowds of people continue to
travel by sea. This Court is prepared to use the instruments given to it by the law for
securing the ends of law and public policy. One of those instruments is the institution
of exemplary damages; one of those ends, of special importance in an archipelagic
state like the Philippines, is the safe and reliable carriage of people and goods by sea.
Considering the foregoing, we believe that an additional award in the amount of
P200,000.00 as exmplary damages, is quite modest.

The Court is aware that petitioners here merely asked for the restoration of the P
400.000.00 award of the trial court. We underscore once more, however, the firmly
settled doctrine that this Court may consider and resolved all issues which must be
decided in order to render substantial justice to the parties, including issues not
explicity raised by the party affected. In the case at bar, as in Kapalaran Bus Line v.
Coronado, et al., 30 both the demands of sustantial justice and the imperious
requirements of public policy compel us to the conclusion that the trial court's
implicit award of moral and exemplary damages was erronoeusly deledted and must
be restored and augmented and brought more nearely to the level required by public
policy and substantial justice.

WHEREFORE, the Petition for Review on certiorari is hereby GRANTED and the
Decision of the Court of Appeals insofar as it redurce the amount of damages
awarded to petitioners to P100,000.00 is hereby REVERSED and SET ASIDE. The
award granted by the trial court is hereby RESTORED and AUGMENTED as
follows:

(a) P 126,000.00 for actual damages;

(b) P 60,000.00 as compensatory damages for wrongful death;

(c) P 307,000.00 as moral damages;

(d) P 307,000.00 as exemplary damages making a total of P

800,000.00; and

(e) P 15,000.00 as attorney's fees.

Petitioners shall pay the additional filing fees properly due and payable in view of
the award here made, which fees shall be computed by the Clerks of Court of the
G.R. No. L-30309 November 25, 1983 The evidence of the prosecution tends to show that in the afternoon of January 6,
1957, Juanito Gesmundo bought a train ticket at the railroad station in Tagkawayan,
CLEMENTE BRIÑAS, petitioner, Quezon for his 55-year old mother Martina Bool and his 3-year old daughter Emelita
vs. Gesmundo, who were bound for Barrio Lusacan, Tiaong, same province. At about
THE PEOPLE OF THE PHILIPPINES and HONORABLE COURT OF 2:00 p.m., Train No. 522 left Tagkawayan with the old woman and her
APPEALS, respondents. granddaughter among the passengers. At Hondagua the train's complement were
relieved, with Victor Millan taking over as engineman, Clemente Briñas as
Mariano R. Abad for petitioner. conductor, and Hermogenes Buencamino as assistant conductor. Upon approaching
Barrio Lagalag in Tiaong at about 8:00 p.m. of that same night, the train slowed
down and the conductor shouted 'Lusacan', 'Lusacan'. Thereupon, the old woman
The Solicitor General for respondents. walked towards the left front door facing the direction of Tiaong, carrying the child
with one hand and holding her baggage with the other. When Martina and Emelita
were near the door, the train suddenly picked up speed. As a result the old woman
and the child stumbled and they were seen no more. It took three minutes more
GUTIERREZ, JR., J.: before the train stopped at the next barrio, Lusacan, and the victims were not among
the passengers who disembarked thereat .têñ.£îhqwâ£
This is a petition to review the decision of respondent Court of Appeals, now
Intermediate Appellate Court, affirming the decision of the Court of First Instance of Next morning, the Tiaong police received a report that two corpses
Quezon, Ninth Judicial District, Branch 1, which found the accused Clemente Briñas were found along the railroad tracks at Barrio Lagalag. Repairing
guilty of the crime of DOUBLE HOMICIDE THRU RECKLESS IMPRUDENCE to the scene to investigate, they found the lifeless body of a female
prior the deaths of Martina Bool and Emelita Gesmundo. child, about 2 feet from the railroad tracks, sprawled to the ground
with her belly down, the hand resting on the forehead, and with the
The information charged the accused-appellant. and others as follows: back portion of the head crushed. The investigators also found the
corpse of an old woman about 2 feet away from the railroad tracks
with the head and both legs severed and the left hand missing. The
That on or about the 6th day of January, 1957, in the Municipality of Tiaong,
head was located farther west between the rails. An arm was found
Province of Quezon, Philippines, and within the jurisdiction of this Hon. Court, the
midway from the body of the child to the body of the old woman.
said accused Victor Milan, Clemente Briñas and Hermogenes Buencamino, being
Blood, pieces of scattered brain and pieces of clothes were at the
then persons in charge of passenger Train No. 522-6 of the Manila Railroad
scene. Later, the bodies were Identified as those of Martina Bool
Company, then running from Tagkawayan to San Pablo City, as engine driver,
and Emelita Gesmundo. Among the personal effects found on
conductor and assistant conductor, respectively, wilfully and unlawfully drove and
Martina was a train ticket (Exhibits "B").
operated the same in a negligent, careless and imprudent manner, without due regard
to existing laws, regulations and ordinances, that although there were passengers on
board the passenger coach, they failed to provide lamps or lights therein, and failed On January 7, 1957, the bodies of the deceased were autopsied by Dr. Pastor
to take the necessary precautions for the safety of passengers and to prevent accident Huertas, the Municipal Health Officer of Tiaong. Dr. Huertas testified on the cause
to persons and damage to property, causing by such negligence, carelessness and of death of the victims as follows: têñ.£îhqwâ£
imprudence, that when said passenger Train No. 522-6 was passing the railroad
tracks in the Municipality of Tiaong, Quezon, two of its passengers, Martina Bool, FISCAL YNGENTE:
an old woman, and Emelita Gesmundo, a child about three years of age, fell from the
passenger coach of the said train, as a result of which, they were over run, causing Q What could have caused the death of those
their instantaneous death. " women?

The facts established by the prosecution and accepted by the respondent court as A Shock.
basis for the decision are summarized as follows:
Q What could have caused that shock?
 A Traumatic injury. subsidiary imprisonment in case of insolvency not to exceed one-
third of the principal penalty, and to pay the costs.
Q What could have caused traumatic injury?
For lack of sufficient evidence against the defendant Hermogenes
A The running over by the wheel of the train. Buencamino and on the ground of reasonable doubt in the case of
defendant Victor Millan the court hereby acquits them of the crime
Q With those injuries, has a person a chance to charged in the information and their bail bonds declared cancelled.
survive?
As to the responsibility of the Manila Railroad Company in this
case, this will be the subject of court determination in another
A No chance to survive.
proceeding.
Q What would you say death would come?
On appeal, the respondent Court of Appeals affirmed the judgment of the lower
court.
A Instantaneous.
During the pendency of the criminal prosecution in the Court of First Instance of
Q How about the girl, the young girl about four Quezon, the heirs of the deceased victims filed with the same court, a separate civil
years old, what could have caused the death? action for damages against the Manila Railroad Company entitled "Civil Case No.
5978, Manaleyo Gesmundo, et al., v. Manila Railroad Company". The separate civil
A Shock too. action was filed for the recovery of P30,350.00 from the Manila Railroad Company
as damages resulting from the accident.
Q What could have caused the shock?
The accused-appellant alleges that the Court of Appeals made the following errors in
A Compound fracture of the skull and going out its decision:
of the brain.
I têñ.£îhqwâ£
Q What could have caused the fracture of the
skull and the going out of the brain? THE HONORABLE COURT OF APPEALS ERRED IN
CONVICTING PETITIONER-APPELLANT UNDER THE
A That is the impact against a steel object. FACTS AS FOUND BY SAID COURT; and
(TSN., pp. 81-82, July 1, 1959)
II têñ.£îhqwâ£
The Court of First Instance of Quezon convicted defendant-appellant Clemente
Briñas for double homicide thru reckless imprudence but acquitted Hermogenes THE HONORABLE COURT OF APPEALS ERRED IN
Buencamino and Victor Millan The dispositive portion of the decision INCLUDING THE PAYMENT OF DEATH INDEMNITY BY
reads: têñ.£îhqw⣠THE PETITIONER- APPELLANT, WITH SUBSIDIARY
IMPRISONMENT IN CASE OF INSOLVENCY, AFTER THE
WHEREFORE, the court finds the defendant Clemente Briñas HEIRS OF THE DECEASED HAVE ALREADY COMMENCED
guilty beyond doubt of the crime of double homicide thru reckless A SEPARATE CIVIL ACTION FOR DAMAGES AGAINST
imprudence, defined and punished under Article 305 in connection THE RAILROAD COMPANY ARISING FROM THE SAME
with Article 249 of the Revised Penal Code, and sentences him to MISHAP.
suffer six (6) months and one (1) day of prision correccional to
indemnify the heirs of the deceased Martina Bool and Emelita We see no error in the factual findings of the respondent court and in the conclusion
Gesmundo in the amounts of P6,000 and P3,000, respectively, with drawn from those findings.
It is undisputed that the victims were on board the second coach where the petitioner- conductor announces the name of the place. It is also a matter of common experience
appellant was assigned as conductor and that when the train slackened its speed and that as the train or bus slackens its speed, some passengers usually stand and proceed
the conductor shouted "Lusacan, Lusacan", they stood up and proceeded to the to the nearest exit, ready to disembark as the train or bus comes to a full stop. This is
nearest exit. It is also undisputed that the train unexpectedly resumed its regular especially true of a train because passengers feel that if the train resumes its run
speed and as a result "the old woman and the child stumbled and they were seen no before they are able to disembark, there is no way to stop it as a bus may be stopped.
more.
It was negligence on the conductor's part to announce the next flag stop when said
In finding petitioner-appellant negligent, respondent Court têñ.£îhqw⣠stop was still a full three minutes ahead. As the respondent Court of Appeals
correctly observed, "the appellant's announcement was premature and erroneous.
xxx xxx xxx
That the announcement was premature and erroneous is shown by the fact that
The appellant's announcement was premature and erroneous, for it immediately after the train slowed down, it unexpectedly accelerated to full speed.
took a full three minutes more before the next barrio of Lusacan Petitioner-appellant failed to show any reason why the train suddenly resumed its
was reached. In making the erroneous and premature regular speed. The announcement was made while the train was still in Barrio
announcement, appellant was negligent. He ought to have known Lagalag.
that train passengers invariably prepare to alight upon notice from
the conductor that the destination was reached and that the train The proximate cause of the death of the victims was the premature and erroneous
was about to stop. Upon the facts, it was the appellant's negligent announcement of petitioner' appelant Briñas. This announcement prompted the
act which led the victims to the door. Said acts virtually exposed victims to stand and proceed to the nearest exit. Without said announcement, the
the victims to peril, for had not the appellant mistakenly made the victims would have been safely seated in their respective seats when the train jerked
announcement, the victims would be safely ensconced in their as it picked up speed. The connection between the premature and erroneous
seats when the train jerked while picking up speed, Although it announcement of petitioner-appellant and the deaths of the victims is direct and
might be argued that the negligent act of the appellant was not the natural, unbroken by any intervening efficient causes.
immediate cause of, or the cause nearest in time to, the injury, for
the train jerked before the victims stumbled, yet in legal Petitioner-appellant also argues that it was negligence per se for Martina Bool to go
contemplation appellant's negligent act was the proximate cause of to the door of the coach while the train was still in motion and that it was this
the injury. As this Court held in Tucker v. Milan, CA G.R. No. negligence that was the proximate cause of their deaths.
7059-R, June 3, 1953: 'The proximate cause of the injury is not
necessarily the immediate cause of, or the cause nearest in time to, We have carefully examined the records and we agree with the respondent court that
the injury. It is only when the causes are independent of each other
the negligence of petitioner-appellant in prematurely and erroneously announcing the
that the nearest is to be charged with the disaster. So long as there
next flag stop was the proximate cause of the deaths of Martina Bool and Emelita
is a natural, direct and continuous sequence between the negligent
Gesmundo. Any negligence of the victims was at most contributory and does not
act the injury (sic) that it can reasonably be said that but for the act
exculpate the accused from criminal liability.
the injury could not have occurred, such negligent act is the
proximate cause of the injury, and whoever is responsible therefore
is liable for damages resulting therefrom. One who negligently With respect to the second assignment of error, the petitioner argues that after the
creates a dangerous condition cannot escape liability for the natural heirs of Martina Bool and Emelita Gesmundo had actually commenced the separate
and probable consequences thereof, although the act of a third civil action for damages in the same trial court during the pendency of the criminal
person, or an act of God for which he is not responsible intervenes action, the said court had no more power to include any civil liability in its judgment
to precipitate the loss. of conviction.

xxx xxx xxx The source of the obligation sought to be enforced in Civil Case No. 5978 is culpa
contractual, not an act or omission punishable by law. We also note from the
appellant's arguments and from the title of the civil case that the party defendant is
It is a matter of common knowledge and experience about common carriers like the Manila Railroad Company and not petitioner-appellant Briñas Culpa contractual
trains and buses that before reaching a station or flagstop they slow down and the and an act or omission punishable by law are two distinct sources of obligation.
The petitioner-appellant argues that since the information did not allege the existence G.R. No. L-23733 October 31, 1969
of any kind of damages whatsoever coupled by the fact that no private prosecutors
appeared and the prosecution witnesses were not interrogated on the issue of HERMINIO L. NOCUM, plaintiff-appellee,
damages, the trial court erred in awarding death indemnity in its judgment of vs.
conviction. LAGUNA TAYABAS BUS COMPANY, defendant-appellant.

A perusal of the records clearly shows that the complainants in the criminal action Fernando M. Mangubat and Felimon H. Mendoza for plaintiff-appellee.
for double homicide thru reckless imprudence did not only reserve their right to file Domingo E. de Lara and Associates for defendant-appellant.
an independent civil action but in fact filed a separate civil action against the Manila
Railroad Company.
BARREDO, J.:

The trial court acted within its jurisdiction when, despite the filing with it of the Appeal of the Laguna Tayabas Bus Co., defendant in the Court below, from a
separate civil action against the Manila Railroad Company, it still awarded death judgment of the said court (Court of First Instance of Batangas) in its Civil Case No.
indemnity in the judgment of conviction against the petitioner-appellant.
834, wherein appellee Herminio L. Nocum was plaintiff, sentencing appellant to pay
appellee the sum of P1,351.00 for actual damages and P500.00 as attorney's fees with
It is well-settled that when death occurs as a result of the commission of a crime, the legal interest from the filing of the complaint plus costs. Appellee, who was a
following items of damages may be recovered: (1) an indemnity for the death of the passenger in appellant's Bus No. 120 then making a trip within the barrio of Dita,
victim; (2) an indemnity for loss of earning capacity of the deceased; (3) moral Municipality of Bay, Laguna, was injured as a consequence of the explosion of
damages; (4) exemplary damages; (5) attorney's fees and expenses of litigation, and firecrackers, contained in a box, loaded in said bus and declared to its conductor as
(6) interest in proper cases. containing clothes and miscellaneous items by a co-passenger. The findings of fact
of the trial court are not assailed. The appeal is purely on legal questions.
The indemnity for loss of earning capacity, moral damages, exemplary damages,
attorney's fees, and interests are recoverable separately from and in addition to the Appellee has not filed any brief. All that We have before Us is appellant's brief with
fixed slim of P12,000.00 corresponding to the indemnity for the sole fact of death. the following assignment of errors:
This indemnity arising from the fact of death due to a crime is fixed whereas the
others are still subject to the determination of the court based on the evidence
I
presented. The fact that the witnesses were not interrogated on the issue of damages
is of no moment because the death indemnity fixed for death is separate and distinct
from the other forms of indemnity for damages. BASED ON THE FACTS THE LOWER COURT FOUND AS
ESTABLISHED, IT ERRED AS A MATTER OF LAW IN NOT
ABSOLVING APPELLANT FROM LIABILITY RESULTING FROM
WHEREFORE, the judgment appealed from is modified in that the award for death
THE EXPLOSION OF FIRECRACKERS CONTAINED IN A PACKAGE,
indemnity is increased to P12,000.00 for the death of Martina Bool instead of THE CONTENTS OF WHICH WERE MISREPRESENTED BY A
P6,000.00 and P12,000.00 for the death of Emelita Gesmundo instead of P3,000.00, PASSENGER.
but deleting the subsidiary imprisonment in case of insolvency imposed by the lower
court. The judgment is AFFIRMED in all other respects.
II
SO ORDERED.1äwphï1.ñët
THE LOWER COURT ERRED, AS A MATTER OF LAW, IN
AWARDING DAMAGES WITH LEGAL INTEREST IN FAVOR OF
Teehankee (Chairman), Melencio-Herrera; Plana and Relova, JJ., concur.
THE APPELLEE.

III

THE LOWER COURT ERRED IN NOT DISMISSING THE

COMPLAINT, WITH COSTS AGAINST THE APPELLEE.
Upon consideration of the points raised and discussed by appellant, We find the Dispatcher Nicolas Cornista of defendant company corroborrated the
appeal to be well taken. testimony of Mendoza and he said, among other things, that he was present
when the box was loaded in the truck and the owner agreed to pay its fare.
The main basis of the trial court's decision is that appellant did not observe the He added that they were not authorized to open the baggages of passengers
extraordinary or utmost diligence of a very cautious person required by the following because instruction from the management was to call the police if there
articles of the Civil Code: were packages containing articles which were against regulations.

ART. 1733. Common carriers, from the nature of their business and for xxx xxx xxx
reasons of public policy, are bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of the passengers transported by There is no question that Bus No. 120 was road worthy when it left its
them, according to all the circumstances of each case. Manila Terminal for Lucena that morning of December 5, 1960. The
injuries suffered by the plaintiff were not due to mechanical defects but to
Such extraordinary diligence in the vigilance over the goods is further the explosion of firecrackers inside the bus which was loaded by a co-
expressed in articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the passenger.
extraordinary diligence for the safety of the passengers is further set forth in
articles 1755 and 1756. ... Turning to the present case, it is quite clear that extraordinary or utmost
diligence of a very cautious person was not observed by the defendant
ART. 1755. A common carrier is bound to carry the passengers safely as far company. The service manual, exhibits "3" and "3-A," prohibits the
as human care and foresight can provide, using the utmost diligence of very employees to allow explosives, such as dynamite and firecrackers to be
cautious persons, with a due regard for all the circumstances. transported on its buses. To implement this particular rule for 'the safety of
passengers, it was therefore incumbent upon the employees of the company
to make the proper inspection of all the baggages which are carried by the
ART 1756. In case of death of or injuries to passengers, common carriers
are presumed to have been at fault or to have acted negligently, unless they passengers.
prove that they observed extraordinary diligence as prescribed in articles
1733 and 1755. But then, can it not be said that the breach of the contract was due to
fortuitous event? The Supreme Court in the case of Lasam vs. Smith, 45
Phil. 657, quoted Escriche's definition of caso fortuito as "an unexpected
Analyzing the evidence presented by the parties, His Honor found:
event or act of God which could neither be foreseen nor resisted, such as
floods, torrents, shipwrecks, conflagrations, lightning, compulsions,
According to Severino Andaya, a witness for the plaintiff, a man with a box insurrections, destructions of buildings by unforeseen accidents and other
went up the baggage compartment of the bus where he already was and said occurrences of a similar nature." In other words, the cause of the unexpected
box was placed under the seat. They left Azcarraga at about 11:30 in the event must be independent of the will of man or something which cannot be
morning and when the explosion occurred, he was thrown out. PC avoided. This cannot be said of the instant case. If proper and rigid
investigation report states that thirty seven (37) passengers were injured inspection were observed by the defendant, the contents of the box could
(Exhibits "O" and "2"). have been discovered and the accident avoided. Refusal by the passenger to
have the package opened was no excuse because, as stated by Dispatcher
The bus conductor, Sancho Mendoza, testified that the box belonged to a Cornista, employees should call the police if there were packages containing
passenger whose name he does not know and who told him that it contained articles against company regulations. Neither was failure by employees of
miscellaneous items and clothes. He helped the owner in loading the defendant company to detect the contents of the packages of passengers
baggage which weighed about twelve (12) kilos and because of company because like the rationale in the Necesito vs. Paras case (supra), a passenger
regulation, he charged him for it twenty-five centavos (P0.25). From its has neither choice nor control in the exercise of their discretion in
appearance there was no indication at all that the contents were explosives determining what are inside the package of co-passengers which may
or firecrackers. Neither did he open the box because he just relied on the eventually prove fatal.
word of the owner.
We cannot agree. No doubt, the views of His Honor do seem to be in line with the secured in the manner provided by law are not beyond the pale of constitutional
reasons that the Code Commission had for incorporating the above-quoted provisions inhibitions designed to protect individual human rights and liberties. Withal, what
in its draft of the Civil Code. Indeed, in approving the said draft, Congress must have must be importantly considered here is not so much the infringement of the
concurred with the Commission that by requiring the highest degree of diligence fundamental sacred rights of the particular passenger herein involved, but the
from common carriers in the safe transport of their passengers and by creating a constant threat any contrary ruling would pose on the right of privacy of all
presumption of negligence against them, the recklessness of their drivers which is a passengers of all common carriers, considering how easily the duty to inspect can be
common sight even in crowded areas and, particularly, on the highways throughout made an excuse for mischief and abuse. Of course, when there are sufficient
the country may, somehow, if not in a large measure, be curbed. We are not indications that the representations of the passenger regarding the nature of his
convinced, however, that the exacting criterion of said provisions has not been met baggage may not be true, in the interest of the common safety of all, the assistance of
by appellant in the circumstances of this particular case. the police authorities may be solicited, not necessarily to force the passenger to open
his baggage, but to conduct the needed investigation consistent with the rules of
It is undisputed that before the box containing the firecrackers were allowed to be propriety and, above all, the constitutional rights of the passenger. It is in this sense
loaded in the bus by the conductor, inquiry was made with the passenger carrying the that the mentioned service manual issued by appellant to its conductors must be
same as to what was in it, since its "opening ... was folded and tied with abaca." understood.
(Decision p. 16, Record on Appeal.) According to His Honor, "if proper and rigid
inspection were observed by the defendant, the contents of the box could have been Decisions in other jurisdictions cited by appellant in its brief, evidently because of
discovered and the accident avoided. Refusal by the passenger to have the package the paucity of local precedents squarely in point, emphasize that there is need, as We
opened was no excuse because, as stated by Dispatcher Cornista, employees should hold here, for evidence of circumstances indicating cause or causes for apprehension
call the police if there were packages containing articles against company that the passenger's baggage is dangerous and that it is failure of the common
regulations." That may be true, but it is Our considered opinion that the law does not carrier's employee to act in the face of such evidence that constitutes the cornerstone
require as much. Article 1733 is not as unbending as His Honor has held, for it of the common carrier's liability in cases similar to the present one.
reasonably qualifies the extraordinary diligence required of common carriers for the
safety of the passengers transported by them to be "according to all the The principle that must control the servants of the carrier in a case like the
circumstances of each case." In fact, Article 1755 repeats this same qualification: "A one before us is correctly stated in the opinion in the case of Clarke v.
common carrier is bound to carry the passengers safely as far as human care and Louisville & N.R. Co. 20 Ky L. Rep. 839, 49 S.W. 1120. In that case Clarke
foresight can provide, using the utmost diligence of very cautious persons, with due was a passenger on the defendant's train. Another passenger took a quantity
regard for all the circumstances." of gasoline into the same coach in which Clarke was riding. It ignited and
exploded, by reason of which he was severely injured. The trial court
In this particular case before Us, it must be considered that while it is true the peremptorily instructed the jury to find for the defendant. In the opinion,
passengers of appellant's bus should not be made to suffer for something over which affirming the judgment, it is said: "It may be stated briefly, in assuming the
they had no control, as enunciated in the decision of this Court cited by His liability of a railroad to its passengers for injury done by another passenger,
Honor,1 fairness demands that in measuring a common carrier's duty towards its only where the conduct of this passenger had been such before the injury as
passengers, allowance must be given to the reliance that should be reposed on the to induce a reasonably prudent and vigilant conductor to believe that there
sense of responsibility of all the passengers in regard to their common safety. It is to was reasonable ground to apprehend violence and danger to the other
be presumed that a passenger will not take with him anything dangerous to the lives passengers, and in that case asserting it to be the duty of the conductor of
and limbs of his co-passengers, not to speak of his own. Not to be lightly considered the railroad train to use all reasonable means to prevent such injury, and if
must be the right to privacy to which each passenger is entitled. He cannot be he neglects this reasonable duty, and injury is done, that then the company
subjected to any unusual search, when he protests the innocuousness of his baggage is responsible; that otherwise the railroad is not responsible."
and nothing appears to indicate the contrary, as in the case at bar. In other words,
inquiry may be verbally made as to the nature of a passenger's baggage when such is The opinion quotes with approval from the case of Gulf, C. & S. F. R. Co.
not outwardly perceptible, but beyond this, constitutional boundaries are already in vs. Shields, 9 Tex. Civ. App. 652, 29 S. W. 652, in which case the plaintiff
danger of being transgressed. Calling a policeman to his aid, as suggested by the was injured by alcohol which had been carried upon the train by another
service manual invoked by the trial judge, in compelling the passenger to submit to passenger. In the opinion in that case it is said: "It was but a short period of
more rigid inspection, after the passenger had already declared that the box contained time after the alcohol was spilt when it was set on fire and the accident
mere clothes and other miscellaneous, could not have justified invasion of a occurred, and it was not shown that appellant's employees knew that the jug
constitutionally protected domain. Police officers acting without judicial authority contained alcohol. In fact, it is not shown that the conductor or any other
 employee knew that Harris had a jug with him until it fell out of the sack,
though the conductor had collected ... (his) fare, and doubtless knew that he
had the sack on the seat with him. ... It cannot be successfully denied that
Harris had the right as a passenger to carry baggage on the train, and that he
had a right to carry it in a sack if he chose to do so. We think it is equally
clear that, in the absence of some intimation or circumstance indicating that
the sack contained something dangerous to other passengers, it was not the
duty of appellant's conductor or any other employee to open the sack and
examine its contents." Quinn v. Louisville & N. R. Co. 98 Ky. 231, 32 S.
W. 742; Wood v. Louisville & N. R. Co. 101 Ky. 703, 42 S. W. 349;
Louisville & N. R. Co. v. Vincent, 29 Ky. L. Rep. 1049, 96 S. W. 898;
Louisville & N. R. Co. v. Renfro, 142 Ky. 590, 33 L. R. A. (N. S.) 133, 135
S. W. 266.2 (Emphasis supplied)

Explosive or Dangerous Contents. — A carrier is ordinarily not liable for

injuries to passengers from fires or explosions caused by articles brought
into its conveyances by other passengers, in the absence of any evidence
that the carrier, through its employees, was aware of the nature of the article
or had any reason to anticipate danger therefrom. (Bogard v. Illinois C. R
Co. 144 Ky. 649, 139 S. W. 855, 36 L. R. A.[N. S.] 337; Clarke v.
Louisville & N. R. Co. 101 Ky. 34, 39 S. W. 840, 36 L. R. A. 123
[explosion of can of gasoline]; East Indian R. Co. v. Mukerjee [1901] A. C.
[Eng.] 396, 3 B. R. C. 420 — P. C. [explosion of fireworks]; Annotation: 37
L. R. A. [N. S.] 725.)3

Appellant further invokes Article 1174 of the Civil Code which relieves all obligors,
including, of course, common carriers like appellant, from the consequence of
fortuitous events. The court a quo held that "the breach of contract (in this case) was
not due to fortuitous event and that, therefore, the defendant is liable in damages."
Since We hold that appellant has succeeded in rebutting the presumption of
negligence by showing that it has exercised extraordinary diligence for the safety of
its passengers, "according to the circumstances of the (each) case", We deem it
unnecessary to rule whether or not there was any fortuitous event in this case.

ACCORDINGLY, the appealed judgment of the trial court is reversed and the case is
dismissed, without costs.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez and

Fernando, JJ., concur.
Castro, J., concurs in the result.
Teehankee, J., reserves his vote.
 and Baylon Sales, all passengers of the BLTB Bus No. 1046. The evidence shows
that as BLTB Bus No. 1046 was negotiating the bend of the highway, it tried to
overtake a Ford Fiera car just as Bus No. 404 of Superlines was coming from the
opposite direction. Seeing thus, Armando Pon (driver of the BLTB Bus) made a
G.R. Nos. 74387-90 November 14, 1988 belated attempt to slacken the speed of his bus and tried to return to his proper lane.
It was an unsuccessful try as the two (2) buses collided with each other.
BATANGAS LAGUNA TAYABAS BUS COMPANY & ARMANDO
PON, petitioners, Nena Vda. de Rosales and Baylon Sales and the surviving heirs of the deceased
vs. Francisco Pamfilo, Aniceto Rosales and Romeo Neri instituted separate cases in the
INTERMEDIATE APPELLATE COURT, THE HEIRS OF PAZ VDA. DE Court of First Instance of Marinduque against BLTB and Superlines together with
PAMFILO, THE HEIRS OF NORMA NERI, and BAYLON SALES and NENA their respective drivers praying for damages, attorney's fees and litigation expenses
VDA. DE ROSALES, respondents. plus costs. Criminal cases against the drivers of the two buses were filed in the Court
of First Instance of Quezon.
Sibal, Custodia, Santos & Nofuente for petitioners.
Defendants BLTB and Superlines, together with their drivers Pon and Dasco, denied
Restituto L. Opis for respondents Pamfilos and Rosaleses. liability by claiming that they exercised due care and diligence and shifted the fault,
against each other. They all interposed counterclaims against the plaintiffs and
crossclaims against each other.
Citizens Legal Assistance Office for N. Neri and Baylon Sales.
After trial on the merits, the lower court exonerated defendants Superlines and its
driver Dasco from liability and attributed sole responsibility to defendants BLTB and
its driver Pon, and ordered them jointly and severally to pay damages to the
PARAS, J.: plaintiffs. Defendants BLTB and Armando Pon appealed from the decision of the
lower court to respondent appellate court which affirmed with modification the
Before Us is a Petition to Review by Certiorari, the decision 1 of the respondent judgment of the lower court as earlier stated.
appellate court which affirmed with modification the joint decision of the trial court
in four (4) cases involving similar facts and issues, finding favorably for the Hence, this petition to review by certiorari of defendant BLTB assigning a lone error,
plaintiffs (private respondents herein), the dispositive portion of said appellate to wit:
judgment reading as follows:
THE INTERMEDIATE APPELLATE COURT ERRED IN
WHEREFORE, with the modification that the death indemnity is ADJUDGING THAT THE ACTIONS OF PRIVATE
raised to P30,000.00 to each set of the victims' heirs, the rest of the RESPONDENTS ARE BASED ON CULPA CONTRACTUAL. (p.
judgment appealed from is hereby affirmed in toto. Costs against 12, Rollo)
the defendants-appellants.
It is argued by petitioners that if the intention of private respondents were to file an
SO ORDERED. (p. 20, Rollo) action based on culpa contractual or breach of contract of carriage, they could have
done so by merely impleading BLTB and its driver Pon. As it was in the trial court,
From the records of the case We have gathered the following antecedent facts: private respondents filed an action against all the defendants basing their action
on culpa aquiliana or tort.
The collision between Bus No. 1046 of the Batangas Laguna Tayabas Bus Company
(BLTB, for brevity) driven by Armando Pon and Bus No. 404 of Superlines Petitioners' contentions deserve no merit. A reading of the respondent court's
Transportation Company (Superlines, for brevity) driven by Ruben Dasco took place decision shows that it anchored petitioners' liability both on culpa contractual and
at the highway traversing Barangay Isabong, Tayabas, Quezon in the afternoon of culpa aquiliana, to wit:
August 11, 1978, which collision resulted in the death of Aniceto Rosales, Francisco
Pamfilo and Romeo Neri and in several injuries to Nena Rosales (wife of Anecito)
The proximate cause of the collision resulting in the death of three In failing to observe these simple precautions, BLTB's driver
and injuries to two of the passengers of BLTB was the negligence undoubtedly failed to act with the diligence demanded by the
of the driver of the BLTB bus, who recklessly operated and drove circumstances.
said bus by overtaking a Ford Fiera car as he was negotiating the
ascending bend of the highway (tsn, October 4, 1979, pp. 9-10, 35, We now come to the subject of liability of the appellants.
36, 61; Exhibit 6 Superlines, p. 47) which was divided into two
lanes by a continuous yellow strip (tsn, October 4, 1979, p. 36).
For his own negligence in recklessly driving the truck owned by
The driver of the BLTB bus admitted in his cross-examination that his employer, appellant Armando Pon is primarily liable (Article
the continuous yellow line on the ascending bend of the highway 2176, Civil Code).<äre||anº•1àw>
signifies a no-overtaking zone (tsn, October 4, 1979, p. 36). It is no
surprise then that the driver of the Superlines bus was exonerated
by the lower court. He had a valid reason to presuppose that no one On the other hand the liability of Pon's employer, appellant BLTB,
would overtake in such a dangerous situation. These facts show is also primary, direct and immediate in view of the fact that the
that patient imprudence of the BLTB driver. death of or injuries to its passengers was through the negligence of
its employee (Marahan v. Mendoza, 24 SCRA 888, 894), and such
liability does not cease even upon proof that BLTB had exercised
It is well settled that a driver abandoning his proper lane for the
all the diligence of a good father of a family in the selection and
purpose of overtaking another vehicle in ordinary situation has the
supervision of its employees (Article 1759, Civil Code).
duty to see that the road is clear and not to proceed if he can not do
so in safety (People v. Enriquez, 40 O.G. No. 5, 984).
The common carrier's liability for the death of or injuries to its
passengers is based on its contractual obligation to carry its
... Before attempting to pass the vehicle ahead, the rear driver must
passengers safely to their destination. That obligation is so serious
see that the road is clear and if there is no sufficient room for a safe
that the Civil Code requires "utmost diligence of very cautious
passage, or the driver ahead does not turn out so as to afford
person (Article 1755, Civil Code). They are presumed to have been
opportunity to pass, or if, after attempting to pass, the driver of the at fault or to have acted negligently unless they prove that they
overtaking vehicle finds that he cannot make the passage in safety,
have observed extraordinary diligence" (Article 1756, Civil Code).
the latter must slacken his speed so as to avoid the danger of a
In the present case, the appellants have failed to prove
collision, even bringing his car to a stop if necessary. (3-4 Huddy
extraordinary diligence. Indeed, this legal presumption was
Encyclopedia of Automobile Law, Sec. 212, p. 195).
confirmed by the fact that the bus driver of BLTB was negligent. It
must follow that both the driver and the owner must answer for
The above rule becomes more particularly applicable in this case injuries or death to its passengers.
when the overtaking took place on an ascending curved highway
divided into two lanes by a continuous yellow line. Appellant Pon
The liability of BLTB is also solidarily with its driver (Viluan v.
should have remembered that:
Court of Appeals, 16 SCRA 742, 747) even though the liability of
the driver springs from quasi delict while that of the bus company
When a motor vehicle is approaching or rounding a curve there is from contract. (pp. 17-19, Rollo)
special necessity for keeping to the right side of the road and the
driver has not the right to drive on the left hand side relying upon
Conclusively therefore in consideration of the foregoing findings of the respondent
having time to turn to the right if a car is approaching from the
appellate court it is settled that the proximate cause of the collision resulting in the
opposite direction comes into view. (42 C.J. 42 906). death of three and injuries to two of the passengers of BLTB was the sole
negligence of the driver of the BLTB Bus, who recklessly operated and drove said
Unless there is proof to the contrary, it is presumed that a person bus in a lane where overtaking is not allowed by Traffic Rules and Regulations. Such
driving a motor vehicle has been negligent if at the time of the negligence and recklessness is binding against petitioner BLTB, more so when We
mishap, he was violating any traffic regulation. (Art. 2165, Civil consider the fact that in an action based on a contract of carriage, the court need not
Code). make an express finding of fault or negligence on the part of the carrier in order to
hold it responsible for the payment of the damages sought by the passenger. By the
contract of carriage, the carrier BLTB assumed the express obligation to transport the
passengers to their destination safely and to observe extraordinary diligence with a
due regard for all the circumstances, and any injury that might be suffered by its
passengers is right away attributable to the fault or negligence of the carrier (Art.
1756, New Civil Code).

Petitioners also contend that "a common carrier is not an absolute insurer against all
risks of travel and are not liable for acts or accidents which cannot be foreseen or
inevitable and that responsibility of a common carrier for the safety of its passenger
prescribed in Articles 1733 and 1755 of the New Civil Code is not susceptible of a
precise and definite formulation." (p. 13, Rollo) Petitioners' contention holds no
water because they had totally failed to point out any factual basis for their defense
of force majeure in the light of the undisputed fact that the cause of the collision was
the sole negligence and recklessness of petitioner Armando Pon. For the defense
offorce majeure or act of God to prosper the accident must be due to natural causes
and exclusively without human intervention.

WHEREFORE, premises considered, the appealed decision is hereby AFFIRMED.

SO ORDERED. G.R. No. L-82619 September 15, 1993

Melencio-Herrera (Chairperson), Padilla, Sarmiento and Regalado, JJ., concur. PHILIPPINE AIRLINES, INC., petitioner,
vs.
COURT OF APPEALS and PEDRO ZAPATOS, respondents.

Leighton R. Liazon for petitioner.

Balmes L. Ocampo for private respondent.

BELLOSILLO, J.:

This petition for review in certiorari seeks to annul and set aside the decision of the
then Intermediate Appellant Court, 1 now Court of Appeals, dated 28 February 1985,
in AC-G.R. CV No. 69327 ("Pedro Zapatos v. Philippine Airlines, Inc.") affirming
the decision of the then Court of first Instance, now Regional Trial Court, declaring
Philippine Airlines, Inc., liable in damages for breach of contract.

On 25 November 1976, private respondent filed a complaint for damages for breach
of contract of carriage 2against Philippine Airlines, Inc. (PAL), before the then Court
of First Instance, now Regional Trial Court, of Misamis Occidental, at Ozamiz City.
According to him, on 2 August 1976, he was among the twenty-one (21) passengers
of PAL Flight 477 that took off from Cebu bound for Ozamiz City. The routing of
this flight was Cebu-Ozamiz-Cotabato. While on flight and just about fifteen (15) only the private respondent who insisted on being given priority in the
minutes before landing at Ozamiz City, the pilot received a radio message that the accommodation; that pieces of checked-in baggage and had carried items of the
airport was closed due to heavy rains and inclement weather and that he should Ozamiz City passengers were removed from the aircraft; that the reason for their
proceed to Cotabato City instead. pilot's inability to land at Ozamis City airport was because the runway was wet due
to rains thus posing a threat to the safety of both passengers and aircraft; and, that
Upon arrival at Cotabato City, the PAL Station Agent informed the passengers of such reason of force majeure was a valid justification for the pilot to bypass Ozamiz
their options to return to Cebu on flight 560 of the same day and thence to Ozamiz City and proceed directly to Cotabato City.
City on 4 August 1975, or take the next flight to Cebu the following day, or remain
at Cotabato and take the next available flight to Ozamiz City on 5 August 1975. 3 The On 4 June 1981, the trial court rendered its decision 10 the dispositive portion of
Station Agent likewise informed them that Flight 560 bound for Manila would make which states:
a stop-over at Cebu to bring some of the diverted passengers; that there were only six
(6) seats available as there were already confirmed passengers for Manila; and, that WHEREFORE, judgment is hereby rendered in favor of the
the basis for priority would be the check-in sequence at Cebu. plaintiff and against the defendant Philippine AirLines, Inc.
ordering the latter to pay:
Private respondent chose to return to Cebu but was not accommodated because he
checked-in as passenger No. 9 on Flight 477. He insisted on being given priority over (1) As actual damages, the sum of Two Hundred Pesos (P200.00)
the confirmed passengers in the accommodation, but the Station Agent refused representing plaintiff's expenses for transportation, food and
private respondent's demand explaining that the latter's predicament was not due to accommodation during his stranded stay at Cotabato City; the sum
PAL's own doing but to be a force majeure. 4 of Forty-Eight Pesos (P48.00) representing his flight fare from
Cotabato City to Iligan city; the sum of Five Hundred Pesos
Private respondent tried to stop the departure of Flight 560 as his personal (P500.00) representing plaintiff's transportation expenses from
belongings, including a package containing a camera which a certain Miwa from Iligan City to Ozamiz City; and the sum of Five Thousand Pesos
Japan asked him to deliver to Mrs. Fe Obid of Gingoog City, were still on board. His (P5,000.00) as loss of business opportunities during his stranded
plea fell on deaf ears. PAL then issued to private respondent a free ticket to Iligan stay in Cotabato City;
city, which the latter received under protest. 5 Private respondent was left at the
airport and could not even hitch a ride in the Ford Fiera loaded with PAL (2) As moral damages, the sum of Fifty Thousand Pesos
personnel. 6 PAL neither provided private respondent with transportation from the (P50,000.00) for plaintiff's hurt feelings, serious anxiety, mental
airport to the city proper nor food and accommodation for his stay in Cotabato City. anguish and unkind and discourteous treatment perpetrated by
defendant's employees during his stay as stranded passenger in
The following day, private respondent purchased a PAL ticket to Iligan City. He Cotabato City;
informed PAL personnel that he would not use the free ticket because he was filing a
case against PAL. 7 In Iligan City, private respondent hired a car from the airport to (3) As exemplary damages, the sum of Ten Thousand Pesos
Kolambugan, Lanao del Norte, reaching Ozamiz City by crossing the bay in a (P10,000.00) to set a precedent to the defendant airline that it shall
launch. 8 His personal effects including the camera, which were valued at P2,000.00 provide means to give comfort and convenience to stranded
were no longer recovered. passengers;

On 13 January 1977, PAL filed its answer denying that it unjustifiably refused to (4) The sum of Three Thousand Pesos (P3,000.00) as attorney's
accommodate private respondent. 9 It alleged that there was simply no more seat for fees;
private respondent on Flight 560 since there were only six (6) seats available and the
priority of accommodation on Flight 560 was based on the check-in sequence in
(5) To pay the costs of this suit.
Cebu; that the first six (6) priority passengers on Flight 477 chose to take Flight 560;
that its Station Agent explained in a courteous and polite manner to all passengers
the reason for PAL's inability to transport all of them back to Cebu; that the stranded PAL appealed to the Court of Appeals which on 28 February 1985, finding no
passengers agreed to avail of the options and had their respective tickets exchanged reversible error, affirmed the judgment of the court a quo. 11
for their onward trips; that it was
PAL then sought recourse to this Court by way of a petition for review Q After that what did you do?
on certiorari 12 upon the following issues: (1) Can the Court of Appeals render a
decision finding petitioner (then defendant-appellant in the court below) negligent A I tried to look for a transportation that could
and, consequently, liable for damages on a question of substance which was neither bring me down to the City of Cotabato.
raised on a question nor proved at the trial? (2) Can the Court of Appeals award
actual and moral damages contrary to the evidence and established jurisprudence? 13
Q Were you able to go there?

An assiduous examination of the records yields no valid reason for reversal of the A I was at about 7:00 o'clock in the evening
judgment on appeal; only a modification of its disposition.
more or less and it was a private jeep that I
boarded. I was even questioned why I and who
In its petition, PAL vigorously maintains that private respondent's principal cause of am (sic) I then. Then I explained my side that I
action was its alleged denial of private respondent's demand for priority over the am (sic) stranded passenger. Then they brought
confirmed passengers on Flight 560. Likewise, PAL points out that the complaint did me downtown at Cotabato.
not impute to PAL neglect in failing to attend to the needs of the diverted passengers;
and, that the question of negligence was not and never put in issue by the pleadings
Q During your conversation with the Manager
or proved at the trial.
were you not offered any vehicle or
transportation to Cotabato airport downtown?
Contrary to the above arguments, private respondent's amended complaint touched
on PAL's indifference and inattention to his predicament. The pertinent portion of the
A In fact I told him (Manager) now I am by-
amended complaint 14 reads:
passed passenger here which is not my
destination what can you offer me. Then they
10. That by virtue of the refusal of the defendant through its agent answered, "it is not my fault. Let us forget that."
in Cotabato to accommodate (sic) and allow the plaintiff to take
and board the plane back to Cebu, and by accomodating (sic) and
Q In other words when the Manager told you that
allowing passengers from Cotabato for Cebu in his stead and place,
offer was there a vehicle ready?
thus forcing the plaintiff against his will, to be left and stranded in
Cotabato, exposed to the peril and danger of muslim rebels
plundering at the time, the plaintiff, as a consequence, (have) A Not yet. Not long after that the Ford Fiera
suffered mental anguish, mental torture, social humiliation, loaded with PAL personnel was passing by going
bismirched reputation and wounded feeling, all amounting to a to the City of Cotabato and I stopped it to take
conservative amount of thirty thousand (P30,000.00) Pesos. me a ride because there was no more available
transportation but I was not accommodated.
To substantiate this aspect of apathy, private respondent testified 15
Significantly, PAL did not seem to mind the introduction of evidence which focused
on its alleged negligence in caring for its stranded passengers. Well-settled is the rule
A I did not even notice that I was I think the last
in evidence that the protest or objection against the admission of evidence should be
passenger or the last person out of the PAL
presented at the time the evidence is offered, and that the proper time to make protest
employees and army personnel that were left or objection to the admissibility of evidence is when the question is presented to the
there. I did not notice that when I was already witness or at the time the answer thereto is given. 16 There being no objection, such
outside of the building after our conversation.
evidence becomes property of the case and all the parties are amenable to any
favorable or unfavorable effects resulting from the evidence. 17
Q What did you do next?
PAL instead attempted to rebut the aforequoted testimony. In the process, it failed to
A I banished (sic) because it seems that there substantiate its counter allegation for want of concrete proof 18 —
was a war not far from the airport. The sound of
guns and the soldiers were plenty.
 Atty. Rubin O. Rivera — PAL's counsel: The contract of air carriage is a peculiar one. Being imbued with public interest, the
law requires common carriers to carry the passengers safely as far as human care and
Q You said PAL refused to help you when you foresight can provide, using the utmost diligence of very cautious persons, with due
were in Cotabato, is that right? regard for all the circumstances. 20 In Air France v. Carrascoso, 21 we held that —

Private respondent: A contract to transport passengers is quite different in kind and

degree from any other contractual relation. And this, because of the
A Yes. relation which an air carrier sustains 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,
Q Did you ask them to help you regarding any therefore, generates a relation attended with a public duty . . . . (
offer of transportation or of any other matter emphasis supplied).
asked of them?
The position taken by PAL in this case clearly illustrates its failure to grasp the
A Yes, he (PAL PERSONNEL) said what is? It exacting standard required by law. Undisputably, PAL's diversion of its flight due to
is not our fault. inclement weather was a fortuitous event. Nonetheless, such occurrence did not
terminate PAL's contract with its passengers. Being in the business of air carriage
Q Are you not aware that one fellow passenger and the sole one to operate in the country, PAL is deemed equipped to deal with
even claimed that he was given Hotel situations as in the case at bar. What we said in one case once again must be
accommodation because they have no money? stressed, i.e., the relation of carrier and passenger continues until the latter has been
landed at the port of destination and has left the carrier's premises. 22 Hence, PAL
xxx xxx xxx necessarily would still have to exercise extraordinary diligence in safeguarding the
comfort, convenience and safety of its stranded passengers until they have reached
A No, sir, that was never offered to me. I said, I their final destination. On this score, PAL grossly failed considering the then
tried to stop them but they were already riding ongoing battle between government forces and Muslim rebels in Cotabato City and
that PAL pick-up jeep, and I was not the fact that the private respondent was a stranger to the place. As the appellate court
accommodated. correctly ruled —

Having joined in the issue over the alleged lack of care it exhibited towards its While the failure of plaintiff in the first instance to reach his
passengers, PAL cannot now turn around and feign surprise at the outcome of the destination at Ozamis City in accordance with the contract of
case. When issues not raised by the pleadings are tried by express or implied consent carriage was due to the closure of the airport on account of rain and
of the parties, they shall be treated in all respects as if they had been raised in the inclement weather which was radioed to defendant 15 minutes
pleadings. 19 before landing, it has not been disputed by defendant airline that
Ozamis City has no all-weather airport and has to cancel its flight
to Ozamis City or by-pass it in the event of inclement weather.
With regard to the award of damages affirmed by the appellate court, PAL argues
Knowing this fact, it becomes the duty of defendant to provide all
that the same is unfounded. It asserts that it should not be charged with the task of
means of comfort and convenience to its passengers when they
looking after the passengers' comfort and convenience because the diversion of the
would have to be left in a strange place in case of such by-passing.
flight was due to a fortuitous event, and that if made liable, an added burden is given
The steps taken by defendant airline company towards this end has
to PAL which is over and beyond its duties under the contract of carriage. It submits
not been put in evidence, especially for those 7 others who were
that granting arguendo that negligence exists, PAL cannot be liable in damages in
not accommodated in the return trip to Cebu, only 6 of the 21
the absence of fraud or bad faith; that private respondent failed to apprise PAL of the
having been so accommodated. It appears that plaintiff had to leave
nature of his trip and possible business losses; and, that private respondent himself is
on the next flight 2 days later. If the cause of non-fulfillment of the
to be blamed for unreasonably refusing to use the free ticket which PAL issued.
contract is due to a fortuitous event, it has to be the sole and only
cause (Art. 1755 CC., Art. 1733 C.C.) Since part of the failure to
comply with the obligation of common carrier to deliver its
 passengers safely to their destination lay in the defendant's failure A Yes.
to provide comfort and convenience to its stranded passengers
using extra-ordinary diligence, the cause of non-fulfillment is not COURT:
solely and exclusively due to fortuitous event, but due to
something which defendant airline could have prevented,
Q What do you mean by "yes"? You meant you
defendant becomes liable to plaintiff. 23
were not informed?

While we find PAL remiss in its duty of extending utmost care to private respondent A Yes, I was not informed of their decision, that
while being stranded in Cotabato City, there is no sufficient basis to conclude that
they will only accommodate few passengers.
PAL failed to inform him about his non-accommodation on Flight 560, or that it was
inattentive to his queries relative thereto.
Q Aside from you there were many other
stranded passengers?
On 3 August 1975, the Station Agent reported to his Branch Manager in Cotabato
City that —
A I believed, yes.
3. Of the fifteen stranded passengers two pax elected to take F478
on August 05, three pax opted to take F442 August 03. The Q And you want us to believe that PAL did not
remaining ten (10) including subject requested that they be instead explain (to) any of these passengers about the
accommodated (sic) on F446 CBO-IGN the following day where decision regarding those who will board the
they intended to take the surface transportation to OZC. Mr. Pedro aircraft back to Cebu?
Zapatos had by then been very vocal and boiceterous (sic) at the
counter and we tactfully managed to steer him inside the Station A No, Sir.
Agent's office. Mr. Pedro Zapatos then adamantly insisted that all
the diverted passengers should have been given priority over the Q Despite these facts Mr. Zapatos did any of the
originating passengers of F560 whether confirmed or otherwise. other passengers complained (sic) regarding that
We explained our policies and after awhile he seemed pacified and incident?
thereafter took his ticket (in-lieued (sic) to CBO-IGN, COCON
basis), at the counter in the presence of five other passengers who xxx xxx xxx
were waiting for their tickets too. The rest of the diverted pax had
left earlier after being assured their tickets will be ready the
A There were plenty of argument and I was one
following day.24
of those talking about my case.
Aforesaid Report being an entry in the course of business is prima facie evidence of
Q Did you hear anybody complained (sic) that he
the facts therein stated. Private respondent, apart from his testimony, did not offer
has not been informed of the decision before the
any controverting evidence. If indeed PAL omitted to give information about the
plane left for Cebu?
options available to its diverted passengers, it would have been deluged with
complaints. But, only private respondent complained —
A No. 25
Atty. Rivera (for PAL)
Admittedly, private respondent's insistence on being given priority in
accommodation was unreasonable considering the fortuitous event and that there was
Q I understand from you Mr. Zapatos that at the
a sequence to be observed in the booking, i.e., in the order the passengers checked-in
time you were waiting at Cotabato Airport for
at their port of origin. His intransigence in fact was the main cause for his having to
the decision of PAL, you were not informed of
stay at the airport longer than was necessary.
the decision until after the airplane left is that
correct?
 Atty. Rivera: WHEREFORE the decision appealed from is AFFIRMED with modification
however that the award of moral damages of Fifty Thousand Pesos (P50,000.00) is
Q And, you were saying that despite the fact that reduced to Ten Thousand Pesos (P10,000.00) while the exemplary damages of Ten
according to your testimony there were at least Thousand Pesos (P10,000.00) is also reduced to Five Thousand Pesos (P5,000.00).
16 passengers who were stranded there in The award of actual damages in the amount Five Thousand Pesos (P5,000.00)
Cotabato airport according to your testimony, representing business losses occasioned by private respondent's being stranded in
and later you said that there were no other people Cotabato City is deleted.
left there at that time, is that correct?
SO ORDERED.
A Yes, I did not see anyone there around. I think
I was the only civilian who was left there. Cruz, Griño-Aquino, Davide, Jr. and Quiason, JJ., concur.

Q Why is it that it took you long time to leave

that place?

A Because I was arguing with the PAL

personnel. 26

Anent the plaint that PAL employees were disrespectful and inattentive toward
private respondent, the records are bereft of evidence to support the same. Thus, the
ruling of respondent Court of Appeals in this regard is without basis. 27 On the
contrary, private respondent was attended to not only by the personnel of PAL but
also by its Manager." 28

In the light of these findings, we find the award of moral damages of Fifty Thousand
Pesos (P50,000.00) unreasonably excessive; hence, we reduce the same to Ten
Thousand Pesos (P10,000.00). Conformably herewith, the award of exemplary
damages is also reduced to five Thousand Pesos (5,000.00). Moral damages are not
intended to enrich the private respondent. They are awarded only to enable the
injured party to obtain means, diversion or amusements that will serve to alleviate
the moral suffering he has undergone by reason of the defendant's culpable action. 29

With regard to the award of actual damages in the amount of P5,000.00 representing
private respondent's alleged business losses occasioned by his stay at Cotabato City,
we find the same unwarranted. Private respondent's testimony that he had a
scheduled business "transaction of shark liver oil supposedly to have been
consummated on August 3, 1975 in the morning" and that "since (private respondent)
was out for nearly two weeks I missed to buy about 10 barrels of shark liver
oil," 30 are purely speculative. Actual or compensatory damages cannot be presumed
but must be duly proved with reasonable degree of certainty. A court cannot rely on
speculation, conjecture or guesswork as to the fact and amount of damages, but must
depend upon competent proof that they have suffered and on evidence of the actual
amount thereof. 31

G.R. No. L-28692 July 30, 1982

CONRADA VDA. DE ABETO, CARME0000LO ABETO, CECILIA ABETO, Abeto, must have been killed instantly and their remains were scattered all over the
CONCEPCION ABETO, MARIA ABETO, ESTELA ABETO, PERLA area. Among the articles recovered on the site of the crash was a leather bag with the
ABETO, PATRIA ABETO and ALBERTO ABETO, plaintiffs-appellees, name "Judge Quirico Abeto. " (Exhibit C.)
vs.
PHILIPPINE AIR LINES, INCORPORATED, defendant-appellant. Judge Abeto, prior to the plane crash, was a Technical Assistant in the Office of the
President receiving an annual compensation of P7,200.00; and before that, has held
Quijano, Arroyo & Padilla Law Offices for plaintiffs-appellees. the various positions in the government, namely: Municipal President of Iloilo;
Provincial Fiscal of Antique, Negros Occidental and Cebu; Judge of the Court of
Siguion Reyna, Montecillo & Ongsiako, Belo and Associates for defendant- First Instance of Manila, and Secretary of Justice. He was in good health before the
appellant. incident even if he was already 79 years old at that time.

Plaintiff-appellee Conrada Vda. de Abeto was appointed administratrix of the estate

of Judge Abeto. The other plaintiffs-appellees are the children of the deceased. When
they received the news of the plane crash, Mrs. Abeto was shocked and until it was
RELOVA, J..
ascertained that the plane had crashed three weeks after, she could not sleep and eat.
She felt sick and was miserable after that. The members of the family also suffered.
Appeal from the decision of the Court of First Instance of Iloilo finding that
defendant-appellant "did not exercise extraordinary diligence or prudence as far as
human foresight can provide ... but on the contrary showed negligence and Personal belongings which were lost amounted to P300.00. Burial expenses of the
late judge was P1,700.00.
indifference for the safety of the passengers that it was bound to transport, …" and
for the death of Judge Quirico Abeto, defendant- appellant was ordered to pay
plaintiffs, the heirs of Judge Abeto, the following: When defendant-appellant would not hear demands for settlement of damages,
plaintiffs-appellees were compelled to hire counsel for the institution and prosecution
1st — For the death of Judge Quirico Abeto, the amount of of this case.
P6,000.00;
Defendant-appellant tried to prove that the plane crash at Mt. Baco was beyond the
control of the pilot. The plane at the time of the crash was airworthy for the purpose
2nd — For the loss of his earning capacity, for 4.75 (4 ¾) years at
the rate of P7,200.00 per annum in the amount of P34,200.00; of conveying passengers across the country as shown by the certificate of
airworthiness issued by the Civil Aeronautics Administration (CAA). There was
navigational error but no negligence or malfeasance on the part of the pilot. The
3rd — For moral damages in favor of the plaintiffs in the sum of plane had undergone 1,822 pre- flight checks, 364 thorough checks, 957 terminating
P10,000.00; checks and 501 after maintenance checks. These checks were part of the quality
control operation of defendant airline Further, deviation from its prescribed route
4th — For actual damages in the sum of P2,000.00 minus P400.00 was due to the bad weather conditions between Mt. Baco and Romblon and strong
received under Voucher Exhibit 'H' the amount of Pl,600.00; winds which caused the plane to drift to Mt. Baco. Under the circumstances,
appellant argues that the crash was a fortuitous event and, therefore, defendant-
5th — For attorney's fees, the sum of P6,000.00 and/or the total appellant cannot be held liable under the provisions of Article 1174 of the New Civil
sum of P57,800.00 and; To pay the costs of this proceedings. Code. Besides, appellant tried to prove that it had exercised all the cares, skill and
diligence required by law on that particular flight in question.
Plaintiff's evidence shows that about 5:30 in the afternoon of November 23, 1960,
Judge Quirico Abeto, with the necessary tickets, boarded the Philippine Air Lines' The trial court, finding for the plaintiffs, said:
PI-C133 plane at the Mandurriao Airport, Iloilo City for Manila. He was listed as the
No. 18 passenger in its Load Manifest (Exhibit A). The plane which would then take The Court after a thorough perusal of the evidences, testimonial
two hours from Iloilo to Manila did not reach its destination and the next day there and documentaries submitted by both parties has come into the
was news that the plane was missing. After three weeks, it was ascertained that the conclusion that the evidence introduced by the plaintiffs have
plane crashed at Mt. Baco, Province of Mindoro. All the passengers, including Judge established the following significant facts which proved the
 negligence of the defendant's pilot of the plane on that flight- in foresight can provide, using the utmost diligence of a very cautious
question. person with due regard for all the circumstances and in not finding
that the crash of PI-C133 was caused by fortuitous events;
1st — That the Pilot of the plane disobeyed instruction given in not
following the route of Amber 1 prescribed by the CAA in ... in awarding damages to the appellees; and
Violation of Standard Regulation.
IV
Second — The defendant failed to perform the pre-flight test on
plane PIC-133 before the same took off from Mandurriao Airport ... in not finding that appellant acted in good faith and exerted
to Manila in order to find out a possible defect of the plane. efforts to minimize damages.

Third — When the defendant allowed during the flight in question, The issue before Us in this appeal is whether or not the defendant is liable for
student Officer Rodriguez on training as proved when his body violation of its contract of carriage.
was found on the plane's cockpit with its microphone hanging still
on his left leg.
The provisions of the Civil Code on this question of liability are clear and explicit.
Article 1733 binds common carriers, "from the nature of their business and by
Fourth — When the Pilot during the flight in question failed or did reasons of public policy, ... to observe extraordinary diligence in the vigilance ... for
not report his position over or abeam Romblon which is a the safety of the passengers transported by them according to all the circumstances of
compulsory reporting point. each case." Article 1755 establishes the standard of care required of a common
carrier, which is, "to carry the passengers safely as far as human care and foresight
These facts as established by the evidence of the plaintiff lead to can provide, using the utmost diligence of very cautious persons, with due regard for
the inevitable conclusion that the defendant did not exercise all the circumstances." Article 1756 fixes the burden of proof by providing that "in
extraordinary diligence or prudence as far as human foresight can case of death of or injuries to passengers, common carriers are presumed to have
provide imposed upon by the Law, but on the contrary showed been at fault or to have acted negligently, unless they prove that they observed extra-
negligence and indifference for the safety of the passengers that it ordinary diligence as prescribed in Articles 1733 and 1755." Lastly, Article 1757
was bound to transport. By the very evidence of the defendant, as states that "the responsibility of a common carrier for the safety of passengers ...
shown by the deposition of one Jose Abanilla, dated December 13, cannot be dispensed with or lessened by stipulation, by the posting of notices, by
1963, Section Chief of the Actuarial Department of the Insular Life statements on tickets, or otherwise."
Insurance Company regarding life expectancy through American
experience, the late Judge Abeto at the age of 79 would still live or The prescribed airway of plane PI-C133 that afternoon of November 23, 1960, with
have a life expectancy of 4.75 years. Capt. de Mesa, as the pilot, was Iloilo-Romblon-Manila, denominated as airway
"Amber l," and the prescribed elevation of the flight was 6,000 ft. The fact is, the
Appealing to this Court, defendant claimed that the trial court erred: plane did not take the designated route because it was some 30 miles to the west
when it crashed at Mt. Baco. According to defendant's witness, Ramon A. Pedroza,
I Administrative Assistant of the Philippine Air Lines, Inc., this tragic crash would
have not happened had the pilot continued on the route indicated. Hereunder is Mr.
... in finding, contrary to the evidence, that the appellant was Pedroza's testimony on this point:
negligent;
Q Had the pilot continued on the route indicated,
Amber A-1 there would have been no crash,
III
obviously?
... in not finding that the appellant, in the conduct and operation of
A Yes, Your Honor
PI-C133, exercised its statutory obligation over the passengers of
PI C133 of extraordinary diligence as far as human care and
ATTY. HILADO:
 (To the witness) It is clear that the pilot did not follow the designated route for his
flight between Romblon and Manila. The weather was clear and he
Q Because Mt. Baco is 30 miles from Amber I? was supposed to cross airway "Amber I" over Romblon; instead,
he made a straight flight to Manila in violation of air traffic rules.
A Yes,sir.(TSN,p.75,Oct.22,1963 hearing)
At any rate, in the absence of a satisfactory explanation by appellant as to how the
xxx xxx xxx accident occurred, the presumption is, it is at fault.

In an action based on a contract of carriage, the court need not

And, Assistant Director Cesar Mijares of the Civil Aeronautics Administration
make an express finding of fault or negligence on the part of the
testified that the pilot of said plane was "off course."
carrier in order to hold it responsible to pay the damages sought for
by the passenger. By the contract of carriage, the carrier assumes
Q But the fact is that you found him out, that he the express obligation to transport the passenger to his destination
was off course? safely and to observe extraordinary diligence with a due regard for
all the circumstances, and any injury that might be suffered by the
A Yes, sir. passenger is right away attributable to the fault or negligence of the
carrier (Art. 1756, New Civil Code). This is an exception to the
Q And off course, you mean that he did not general rule that negligence must be proved. (Batangas
follow the route prescribed for him? Transportation Company vs. Caguimbal, 22 SCRA 171.)

A Yes, sir. The total of the different items which the lower court adjudged herein appellant to
pay the plaintiffs is P57,800.00. The judgment of the court a quo is modified in the
Q And the route for him to follow was Amber A- sense that the defendant is hereby ordered to pay the said amount to the plaintiffs,
l? with legal interest thereon from the finality of this judgment. With costs against
defendant-appellant.
A Yes, sir.
Teehankee (Chairman), Makasiar, Melencio-Herrera, Plana and Vasquez, JJ.,
concur.
Q And the route for Iloilo direct to Manila, is
passing Romblon to Manila?
Gutierrez, Jr., J., is on leave.
A Yes, passing Romblon to Manila.

Q And you found that he was not at all following

the route to Romblon to Manila?

A Yes, sir.

Q You know Mr. Witness that a disregard or,

violation, or disregard of instruction is
punishable by law?

A Yes,sir. (TSN,pp.247-248,Dec. 20, 1963)

xxx xxx xxx

 SECOND DIVISION

LOADMASTERS CUSTOMS SERVICES, G.R. No. 179446

INC.,
Petitioner, Present:

CARPIO, J., Chairperson,

NACHURA,
PERALTA,
- versus - ABAD, and
MENDOZA, JJ.

GLODEL BROKERAGE
CORPORATION and
R&B INSURANCE CORPORATION, Promulgated:
Respondents.
January 10, 2011

X -------------------------------------------------------------------------------------- X

DECISION

MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court
assailing the August 24, 2007 Decision[1] of the Court of Appeals (CA) in CA-G.R.
CV No. 82822, entitled R&B Insurance Corporation v. Glodel Brokerage Corporation
and Loadmasters Customs Services, Inc., which held petitioner Loadmasters Customs
Services, Inc. (Loadmasters) liable to respondent Glodel Brokerage
Corporation (Glodel) in the amount of P1,896,789.62 representing the insurance
indemnity which R&B Insurance Corporation (R&B Insurance) paid to the insured-
consignee, Columbia Wire and Cable Corporation (Columbia).
THE FACTS:

R&B Insurance, thereafter, filed a complaint for damages against both

On August 28, 2001, R&B Insurance issued Marine Policy No. MN-00105/2001 in
Loadmasters and Glodel before the Regional Trial Court, Branch 14, Manila (RTC),
favor of Columbia to insure the shipment of 132 bundles of electric copper cathodes
docketed as Civil Case No. 02-103040. It sought reimbursement of the amount it had
against All Risks. On August 28, 2001, the cargoes were shipped on board the vessel
paid to Columbia for the loss of the subject cargo. It claimed that it had been
Richard Rey from Isabela, Leyte, to Pier 10, North Harbor, Manila. They arrived on
subrogated to the right of the consignee to recover from the party/parties who may be
the same date.
held legally liable for the loss.[2]

Columbia engaged the services of Glodel for the release and withdrawal of
On November 19, 2003, the RTC rendered a decision[3] holding Glodel liable for
the cargoes from the pier and the subsequent delivery to its warehouses/plants. Glodel,
damages for the loss of the subject cargo and dismissing Loadmasters counterclaim
in turn, engaged the services of Loadmasters for the use of its delivery trucks to
for damages and attorneys fees against R&B Insurance. The dispositive portion of the
transport the cargoes to Columbias warehouses/plants in Bulacan
decision reads:
and Valenzuela City.
WHEREFORE, all premises considered, the plaintiff
having established by preponderance of evidence its claims against
The goods were loaded on board twelve (12) trucks owned by Loadmasters, defendant Glodel Brokerage Corporation, judgment is hereby
rendered ordering the latter:
driven by its employed drivers and accompanied by its employed truck helpers. Six
(6) truckloads of copper cathodes were to be delivered to Balagtas, Bulacan, while the
1. To pay plaintiff R&B Insurance Corporation
other six (6) truckloads were destined for Lawang Bato, Valenzuela City. The cargoes the sum of P1,896,789.62 as actual and
in six truckloads for Lawang Bato were duly delivered in Columbias warehouses compensatory damages, with interest from the
date of complaint until fully paid;
there. Of the six (6) trucks en route to Balagtas, Bulacan, however, only five (5)
reached the destination. One (1) truck, loaded with 11 bundles or 232 pieces of copper 2. To pay plaintiff R&B Insurance Corporation
the amount equivalent to 10% of the principal
cathodes, failed to deliver its cargo. amount recovered as and for attorneys fees
plus P1,500.00 per appearance in Court;

3. To pay plaintiff R&B Insurance Corporation

Later on, the said truck, an Isuzu with Plate No. NSD-117, was recovered but without the sum of P22,427.18 as litigation expenses.
the copper cathodes. Because of this incident, Columbia filed with R&B Insurance a
WHEREAS, the defendant Loadmasters Customs
claim for insurance indemnity in the amount of P1,903,335.39. After the requisite Services, Inc.s counterclaim for damages and attorneys fees against
investigation and adjustment, R&B Insurance paid Columbia the amount plaintiff are hereby dismissed.

of P1,896,789.62 as insurance indemnity.

 2. Under the set of facts established and undisputed in the case,
can petitioner Loadmasters be legally considered as an Agent of
respondent Glodel?[6]

With costs against defendant Glodel Brokerage

Corporation. To totally exculpate itself from responsibility for the lost goods, Loadmasters

SO ORDERED.[4] argues that it cannot be considered an agent of Glodel because it never represented the

Both R&B Insurance and Glodel appealed the RTC decision to the CA. latter in its dealings with the consignee. At any rate, it further contends that Glodel has
no recourse against it for its (Glodels) failure to file a cross-claim pursuant to Section

On August 24, 2007, the CA rendered the assailed decision which reads in 2, Rule 9 of the 1997 Rules of Civil Procedure.

part:
Glodel, in its Comment,[7] counters that Loadmasters is liable to it under its cross-claim
Considering that appellee is an agent of appellant Glodel, because the latter was grossly negligent in the transportation of the subject cargo. With
whatever liability the latter owes to appellant R&B Insurance
Corporation as insurance indemnity must likewise be the amount it respect to Loadmasters claim that it is already estopped from filing a cross-claim,
shall be paid by appellee Loadmasters.
Glodel insists that it can still do so even for the first time on appeal because there is no
WHEREFORE, the foregoing considered, the appeal is rule that provides otherwise. Finally, Glodel argues that its relationship with
PARTLY GRANTED in that the appellee Loadmasters is likewise
held liable to appellant Glodel in the amount ofP1,896,789.62 Loadmasters is that of Charter wherein the transporter (Loadmasters) is only hired for
representing the insurance indemnity appellant Glodel has been held the specific job of delivering the merchandise. Thus, the diligence required in this case
liable to appellant R&B Insurance Corporation.
is merely ordinary diligence or that of a good father of the family, not the extraordinary
Appellant Glodels appeal to absolve it from any liability is diligence required of common carriers.
herein DISMISSED.

SO ORDERED.[5]
R&B Insurance, for its part, claims that Glodel is deemed to have interposed a cross-
claim against Loadmasters because it was not prevented from presenting evidence to
Hence, Loadmasters filed the present petition for review on certiorari before prove its position even without amending its Answer. As to the relationship between
this Court presenting the following Loadmasters and Glodel, it contends that a contract of agency existed between the two
ISSUES corporations.[8]

1. Can Petitioner Loadmasters be held liable to

Respondent Glodel in spite of the fact that the latter respondent Subrogation is the substitution of one person in the place of another with
Glodel did not file a cross-claim against it (Loadmasters)? reference to a lawful claim or right, so that he who is substituted succeeds to the rights
of the other in relation to a debt or claim, including its remedies or that the rights and obligations of the parties to a contract of private carriage are
securities.[9] Doubtless, R&B Insurance is subrogated to the rights of the insured to the governed principally by their stipulations, not by the law on common carriers. [11]
extent of the amount it paid the consignee under the marine insurance, as provided
under Article 2207 of the Civil Code, which reads: In the present case, there is no indication that the undertaking in the contract
between Loadmasters and Glodel was private in character. There is no showing that
ART. 2207. If the plaintiffs property has been insured, and Loadmasters solely and exclusively rendered services to Glodel.
he has received indemnity from the insurance company for the
injury or loss arising out of the wrong or breach of contract
complained of, the insurance company shall be subrogated to the In fact, Loadmasters admitted that it is a common carrier.[12]
rights of the insured against the wrong-doer or the person who has
violated the contract. If the amount paid by the insurance company
does not fully cover the injury or loss, the aggrieved party shall be In the same vein, Glodel is also considered a common carrier within the
entitled to recover the deficiency from the person causing the loss or
injury. context of Article 1732. In its Memorandum,[13] it states that it is a corporation duly
organized and existing under the laws of the Republic of the Philippines and is
engaged in the business of customs brokering. It cannot be considered otherwise
As subrogee of the rights and interest of the consignee, R&B Insurance has
because as held by this Court inSchmitz Transport & Brokerage Corporation v.
the right to seek reimbursement from either Loadmasters or Glodel or both for breach
Transport Venture, Inc.,[14] a customs broker is also regarded as a common carrier, the
of contract and/or tort.
transportation of goods being an integral part of its business.

The issue now is who, between Glodel and Loadmasters, is liable to pay R&B
Insurance for the amount of the indemnity it paid Columbia. Loadmasters and Glodel, being both common carriers, are mandated from the
nature of their business and for reasons of public policy, to observe the extraordinary
At the outset, it is well to resolve the issue of whether Loadmasters and Glodel are diligence in the vigilance over the goods transported by them according to all the
common carriers to determine their liability for the loss of the subject cargo. Under circumstances of such case, as required by Article 1733 of the Civil Code. When the
Article 1732 of the Civil Code, common carriers are persons, corporations, firms, or Court speaks of extraordinary diligence, it is that extreme measure of care and caution
associations engaged in the business of carrying or transporting passenger or goods, which persons of unusual prudence and circumspection observe for securing and
or both by land, water or air for compensation, offering their services to the public. preserving their own property or rights.[15] This exacting standard imposed on common
Based on the aforecited definition, Loadmasters is a common carrier because carriers in a contract of carriage of goods is intended to tilt the scales in favor of the
it is engaged in the business of transporting goods by land, through its trucking shipper who is at the mercy of the common carrier once the goods have been lodged
service. It is acommon carrier as distinguished from a private carrier wherein for shipment.[16] Thus, in case of loss of the goods, the common carrier is presumed to
the carriage is generally undertaken by special agreement and it does not hold itself have been at fault or to have acted negligently.[17] This presumption of fault or
out to carry goods for the general public.[10] The distinction is significant in the sense
 We agree with the Court of Appeals that the complaint filed
negligence, however, may be rebutted by proof that the common carrier has observed by Phoenix and McGee against Mindanao Terminal, from which the
extraordinary diligence over the goods. present case has arisen, states a cause of action. The present action
is based on quasi-delict, arising from the negligent and careless
loading and stowing of the cargoes belonging to Del Monte Produce.
With respect to the time frame of this extraordinary responsibility, the Civil Even assuming that both Phoenix and McGee have only been
subrogated in the rights of Del Monte Produce, who is not a party to
Code provides that the exercise of extraordinary diligence lasts from the time the goods the contract of service between Mindanao Terminal and Del Monte,
are unconditionally placed in the possession of, and received by, the carrier for still the insurance carriers may have a cause of action in light of the
Courts consistent ruling that the act that breaks the contract may be
transportation until the same are delivered, actually or constructively, by the carrier to also a tort. In fine, a liability for tort may arise even under a
contract, where tort is that which breaches the contract. In the
the consignee, or to the person who has a right to receive them.[18]
present case, Phoenix and McGee are not suing for damages for
injuries arising from the breach of the contract of service but
from the alleged negligent manner by which Mindanao Terminal
Premises considered, the Court is of the view that both Loadmasters and handled the cargoes belonging to Del Monte Produce. Despite the
Glodel are jointly and severally liable to R & B Insurance for the loss of the subject absence of contractual relationship between Del Monte Produce and
Mindanao Terminal, the allegation of negligence on the part of the
cargo. Under Article 2194 of the New Civil Code, the responsibility of two or more defendant should be sufficient to establish a cause of action arising
persons who are liable for a quasi-delict is solidary. from quasi-delict. [Emphases supplied]

Loadmasters claim that it was never privy to the contract entered into by In connection therewith, Article 2180 provides:
Glodel with the consignee Columbia or R&B Insurance as subrogee, is not a valid
ART. 2180. The obligation imposed by Article 2176 is
defense. It may not have a direct contractual relation with Columbia, but it is liable for demandable not only for ones own acts or omissions, but also for
those of persons for whom one is responsible.
tort under the provisions of Article 2176 of the Civil Code on quasi-delicts which
expressly provide: xxxx

Employers shall be liable for the damages caused by their

ART. 2176. Whoever by act or omission causes damage to employees and household helpers acting within the scope of their
another, there being fault or negligence, is obliged to pay for the assigned tasks, even though the former are not engaged in any
damage done. Such fault or negligence, if there is no pre-existing business or industry.
contractual relation between the parties, is called a quasi-delict and
is governed by the provisions of this Chapter.

It is not disputed that the subject cargo was lost while in the custody of
Loadmasters whose employees (truck driver and helper) were instrumental in the
Pertinent is the ruling enunciated in the case of Mindanao Terminal and hijacking or robbery of the shipment. As employer, Loadmasters should be made
Brokerage Service, Inc. v. Phoenix Assurance Company of New York,/McGee & Co., answerable for the damages caused by its employees who acted within the scope of
Inc.[19] where this Court held that a tort may arise despite the absence of a contractual their assigned task of delivering the goods safely to the warehouse.
relationship, to wit:
 Whenever an employees negligence causes damage or injury to another, there is, the agent acts for and on behalf of the principal on matters within the scope of his
instantly arises a presumption juris tantum that the employer failed to authority and said acts have the same legal effect as if they were personally executed
exercise diligentissimi patris families in the selection (culpa in eligiendo) or by the principal. On the part of the principal, there must be an actual intention to
supervision (culpa in vigilando) of its employees.[20] To avoid liability for a quasi- appoint or an intention naturally inferable from his words or actions, while on the part
delict committed by its employee, an employer must overcome the presumption by of the agent, there must be an intention to accept the appointment and act on it.[23] Such
presenting convincing proof that he exercised the care and diligence of a good father mutual intent is not obtaining in this case.
of a family in the selection and supervision of his employee. [21] In this regard,
Loadmasters failed. What then is the extent of the respective liabilities of Loadmasters and
Glodel? Each wrongdoer is liable for the total damage suffered by R&B Insurance.
Glodel is also liable because of its failure to exercise extraordinary Where there are several causes for the resulting damages, a party is not relieved from
diligence. It failed to ensure that Loadmasters would fully comply with the liability, even partially. It is sufficient that the negligence of a party is an efficient
undertaking to safely transport the subject cargo to the designated destination. It cause without which the damage would not have resulted. It is no defense to one of the
should have been more prudent in entrusting the goods to Loadmasters by taking concurrent tortfeasors that the damage would not have resulted from his negligence
precautionary measures, such as providing escorts to accompany the trucks in alone, without the negligence or wrongful acts of the other concurrent tortfeasor. As
delivering the cargoes. Glodel should, therefore, be held liable with Loadmasters. Its stated in the case of Far Eastern Shipping v. Court of Appeals,[24]
defense of force majeure is unavailing.
X x x. Where several causes producing an injury are
concurrent and each is an efficient cause without which the injury
At this juncture, the Court clarifies that there exists no principal-agent would not have happened, the injury may be attributed to all or any
of the causes and recovery may be had against any or all of the
relationship between Glodel and Loadmasters, as erroneously found by the CA. Article responsible persons although under the circumstances of the case, it
1868 of the Civil Code provides: By the contract of agency a person binds himself to may appear that one of them was more culpable, and that the duty
owed by them to the injured person was not the same. No actor's
render some service or to do something in representation or on behalf of another, with negligence ceases to be a proximate cause merely because it does
not exceed the negligence of other actors. Each wrongdoer is
the consent or authority of the latter. The elements of a contract of agency are: (1)
responsible for the entire result and is liable as though his acts were
consent, express or implied, of the parties to establish the relationship; (2) the object the sole cause of the injury.
is the execution of a juridical act in relation to a third person; (3) the agent acts as a There is no contribution between joint tortfeasors whose
liability is solidary since both of them are liable for the total damage.
representative and not for himself; (4) the agent acts within the scope of his Where the concurrent or successive negligent acts or omissions of
authority.[22] two or more persons, although acting independently, are in
combination the direct and proximate cause of a single injury to a
third person, it is impossible to determine in what proportion each
contributed to the injury and either of them is responsible for the
Accordingly, there can be no contract of agency between the
whole injury. Where their concurring negligence resulted in injury
parties. Loadmasters never represented Glodel. Neither was it ever authorized to make or damage to a third party, they become joint tortfeasors and are
such representation. It is a settled rule that the basis for agency is representation, that
 solidarily liable for the resulting damage under Article 2194 of the the amount of P1,896,789.62 representing the insurance indemnity;
Civil Code. [Emphasis supplied] b] the amount equivalent to ten (10%) percent thereof for attorneys
fees; and c] the amount of P22,427.18 for litigation expenses.

The Court now resolves the issue of whether Glodel can collect from The cross-claim belatedly prayed for by respondent Glodel
Loadmasters, it having failed to file a cross-claim against the latter. Brokerage Corporation against petitioner Loadmasters Customs
Services, Inc. is DENIED.

SO ORDERED.
Undoubtedly, Glodel has a definite cause of action against Loadmasters for
breach of contract of service as the latter is primarily liable for the loss of the subject
cargo. In this case, however, it cannot succeed in seeking judicial sanction against
Loadmasters because the records disclose that it did not properly interpose a cross-
claim against the latter. Glodel did not even pray that Loadmasters be liable for any
and all claims that it may be adjudged liable in favor of R&B Insurance. Under the
Rules, a compulsory counterclaim, or a cross-claim, not set up shall be
barred.[25] Thus, a cross-claim cannot be set up for the first time on appeal.

For the consequence, Glodel has no one to blame but itself. The Court cannot
come to its aid on equitable grounds. Equity, which has been aptly described as a
justice outside legality, is applied only in the absence of, and never against, statutory
law or judicial rules of procedure.[26] The Court cannot be a lawyer and take the
cudgels for a party who has been at fault or negligent.

WHEREFORE, the petition is PARTIALLY GRANTED. The August 24,

2007 Decision of the Court of Appeals is MODIFIED to read as follows:

WHEREFORE, judgment is rendered declaring petitioner

Loadmasters Customs Services, Inc. and respondent Glodel
Brokerage Corporation jointly and severally liable to respondent
R&B Insurance Corporation for the insurance indemnity it paid to
consignee Columbia Wire & Cable Corporation and ordering both
parties to pay, jointly and severally, R&B Insurance Corporation a]
 SPOUSES DANTE CRUZ and G.R. No. 186312
LEONORA CRUZ,
Petitioners, Present: Matute stayed at the Resort from September 8 to 11, 2000. He was originally

CARPIO MORALES, J., scheduled to leave the Resort in the afternoon of September 10, 2000, but was advised
Chairperson, to stay for another night because of strong winds and heavy rains.
BRION,
- versus - BERSAMIN,
ABAD,* and On September 11, 2000, as it was still windy, Matute and 25 other Resort guests
SUN HOLIDAYS, INC., VILLARAMA, JR., JJ.
Respondent. including petitioners son and his wife trekked to the other side of
Promulgated:
the Coco Beach mountain that was sheltered from the wind where they boarded M/B
June 29, 2010
Coco Beach III, which was to ferry them to Batangas.
x-------------------------------------------------x

Shortly after the boat sailed, it started to rain. As it moved farther away from Puerto

DECISION Galera and into the open seas, the rain and wind got stronger, causing the boat to tilt
from side to side and the captain to step forward to the front, leaving the wheel to one
of the crew members.
CARPIO MORALES, J.:

The waves got more unwieldy. After getting hit by two big waves which
Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on January 25,
came one after the other, M/B Coco Beach III capsized putting all passengers
2001[1] against Sun Holidays, Inc. (respondent) with the Regional Trial Court (RTC)
underwater.
of Pasig City for damages arising from the death of their son Ruelito C. Cruz (Ruelito)
The passengers, who had put on their life jackets, struggled to get out of the boat. Upon
who perished with his wife on September 11, 2000 on board the boat M/B Coco Beach
seeing the captain, Matute and the other passengers who reached the surface asked him
III that capsized en route to Batangas from Puerto Galera, Oriental Mindoro where the
what they could do to save the people who were still trapped under the boat. The
couple had stayed at Coco Beach Island Resort (Resort) owned and operated by
captain replied Iligtas niyo na lang ang sarili niyo (Just save yourselves).
respondent.

The stay of the newly wed Ruelito and his wife at the Resort from September 9 to 11, Help came after about 45 minutes when two boats owned by Asia Divers in Sabang,
2000 was by virtue of a tour package-contract with respondent that included Puerto Galera passed by the capsized M/B Coco Beach III. Boarded on those two boats
transportation to and from the Resort and the point of departure in Batangas. were 22 persons, consisting of 18 passengers and four crew members, who were
brought to Pisa Island. Eight passengers, including petitioners son and his wife, died
Miguel C. Matute (Matute),[2] a scuba diving instructor and one of the survivors, gave during the incident.
his account of the incident that led to the filing of the complaint as follows:
At the time of Ruelitos death, he was 28 years old and employed as a contractual a subasco or squall, characterized by strong winds and big waves, suddenly occurred,
worker for Mitsui Engineering & Shipbuilding Arabia, Ltd. in Saudi Arabia, with a causing the boat to capsize.[10]
basic monthly salary of $900.[3] By Decision of February 16, 2005,[11] Branch 267 of the Pasig RTC dismissed
Petitioners, by letter of October 26, 2000,[4] demanded indemnification from petitioners Complaint and respondents Counterclaim.
respondent for the death of their son in the amount of at least P4,000,000.
Petitioners Motion for Reconsideration having been denied by Order dated September
2, 2005,[12] they appealed to the Court of Appeals.
Replying, respondent, by letter dated November 7, 2000,[5] denied any responsibility
for the incident which it considered to be a fortuitous event. It nevertheless offered, as
By Decision of August 19, 2008,[13] the appellate court denied petitioners
an act of commiseration, the amount of P10,000 to petitioners upon their signing of a
appeal, holding, among other things, that the trial court correctly ruled that respondent
waiver.
is a private carrier which is only required to observe ordinary diligence; that
As petitioners declined respondents offer, they filed the Complaint, as earlier reflected, respondent in fact observed extraordinary diligence in transporting its guests on
alleging that respondent, as a common carrier, was guilty of negligence in board M/B Coco Beach III; and that the proximate cause of the incident was a squall,
allowing M/B Coco Beach III to sail notwithstanding storm warning bulletins issued a fortuitous event.
by the Philippine Atmospheric, Geophysical and Astronomical Services
[6]
Administration (PAGASA) as early as 5:00 a.m. of September 11, 2000. Petitioners Motion for Reconsideration having been denied by Resolution
dated January 16, 2009,[14] they filed the present Petition for Review.[15]
[7]
In its Answer, respondent denied being a common carrier, alleging that its boats are
not available to the general public as they only ferry Resort guests and crew
Petitioners maintain the position they took before the trial court, adding that
members.Nonetheless, it claimed that it exercised the utmost diligence in ensuring the
respondent is a common carrier since by its tour package, the transporting of its guests
safety of its passengers; contrary to petitioners allegation, there was no storm
is an integral part of its resort business. They inform that another division of the
on September 11, 2000as the Coast Guard in fact cleared the voyage; and M/B Coco
appellate court in fact held respondent liable for damages to the other survivors of the
Beach III was not filled to capacity and had sufficient life jackets for its passengers. By
incident.
way of Counterclaim, respondent alleged that it is entitled to an award for attorneys
fees and litigation expenses amounting to not less than P300,000.
Upon the other hand, respondent contends that petitioners failed to present evidence

Carlos Bonquin, captain of M/B Coco Beach III, averred that the Resort customarily to prove that it is a common carrier; that the Resorts ferry services for guests cannot

requires four conditions to be met before a boat is allowed to sail, to wit: (1) the sea is be considered as ancillary to its business as no income is derived therefrom; that it

calm, (2) there is clearance from the Coast Guard, (3) there is clearance from the exercised extraordinary diligence as shown by the conditions it had imposed before

captain and (4) there is clearance from the Resorts assistant manager. [8] He added allowing M/B Coco Beach III to sail; that the incident was caused by a fortuitous event

that M/B Coco Beach III met all four conditions on September 11, 2000,[9] but without any contributory negligence on its part; and that the other case wherein the
 accidental, and done for general business
appellate court held it liable for damages involved different plaintiffs, issues and purposes, any common carrier, railroad, street
evidence.[16] railway, traction railway, subway motor vehicle,
either for freight or passenger, or both, with or
without fixed route and whatever may be its
The petition is impressed with merit. classification, freight or carrier service of any
class, express service, steamboat, or steamship
line, pontines, ferries and water craft, engaged in
Petitioners correctly rely on De Guzman v. Court of Appeals[17] in characterizing the transportation of passengers or freight or both,
shipyard, marine repair shop, wharf or dock, ice
respondent as a common carrier. plant, ice-refrigeration plant, canal, irrigation
system, gas, electric light, heat and power, water
supply and power petroleum, sewerage system,
The Civil Code defines common carriers in the following terms: wire or wireless communications systems, wire or
Article 1732. Common carriers are persons, wireless broadcasting stations and other similar
corporations, firms or associations engaged in the public services . . .[18] (emphasis and underscoring
business of carrying or transporting passengers or supplied.)
goods or both, by land, water, or air for
compensation, offering their services to the
public.
Indeed, respondent is a common carrier. Its ferry services are so intertwined
The above article makes no distinction between one with its main business as to be properly considered ancillary thereto. The constancy of
whose principal business activity is the carrying of persons or
goods or both, and one who does such carrying only as respondents ferry services in its resort operations is underscored by its having its
an ancillary activity (in local idiom, as a sideline). Article 1732 own Coco Beach boats. And the tour packages it offers, which include the ferry
also carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled services, may be availed of by anyone who can afford to pay the same. These services
basis and one offering such service on an occasional, episodic or are thus available to the public.
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
That respondent does not charge a separate fee or fare for its ferry services is
solicits business only from a narrow segment of the general
population. We think that Article 1733 deliberately refrained from of no moment. It would be imprudent to suppose that it provides said services at a
making such distinctions.
loss. The Court is aware of the practice of beach resort operators offering tour
So understood, the concept of common carrier under Article 1732 packages to factor the transportation fee in arriving at the tour package price. That
may be seen to coincide neatly with the notion of public service,
under the Public Service Act (Commonwealth Act No. 1416, as guests who opt not to avail of respondents ferry services pay the same amount is
amended) which at least partially supplements the law on common likewise inconsequential. These guests may only be deemed to have overpaid.
carriers set forth in the Civil Code. Under Section 13, paragraph (b)
of the Public Service Act, public service includes:
As De Guzman instructs, Article 1732 of the Civil Code defining common carriers has
. . . every person that now or hereafter may own,
operate, manage, or control in the Philippines, for deliberately refrained from making distinctions on whether the carrying of persons or
hire or compensation, with general or limited
clientele, whether permanent, occasional or goods is the carriers principal business, whether it is offered on a regular basis, or
whether it is offered to the general public. The intent of the law is thus to not consider A very cautious person exercising the utmost diligence would thus not brave such
such distinctions. Otherwise, there is no telling how many other distinctions may be stormy weather and put other peoples lives at risk. The extraordinary diligence
concocted by unscrupulous businessmen engaged in the carrying of persons or goods required of common carriers demands that they take care of the goods or lives entrusted
in order to avoid the legal obligations and liabilities of common carriers. to their hands as if they were their own. This respondent failed to do.

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
Respondents insistence that the incident was caused by a fortuitous event
case.[19] They are bound to carry the passengers safely as far as human care and
does not impress either.
foresight can provide, using the utmost diligence of very cautious persons, with due
The elements of a "fortuitous event" are: (a) the cause of the unforeseen and
regard for all the circumstances.[20]
unexpected occurrence, or the failure of the debtors to comply with their obligations,
must have been independent of human will; (b) the event that constituted the caso
fortuito must have been impossible to foresee or, if foreseeable, impossible to avoid;
When a passenger dies or is injured in the discharge of a contract of carriage,
(c) the occurrence must have been such as to render it impossible for the debtors to
it is presumed that the common carrier is at fault or negligent. In fact, there is even no
fulfill their obligation in a normal manner; and (d) the obligor must have been free
need for the court to make an express finding of fault or negligence on the part of the
from any participation in the aggravation of the resulting injury to the creditor.[24]
common carrier. This statutory presumption may only be overcome by evidence that
the carrier exercised extraordinary diligence.[21] To fully free a common carrier from any liability, the fortuitous event must have been
the proximate and only cause of the loss. And it should have exercised due diligence
Respondent nevertheless harps on its strict compliance with the earlier mentioned to prevent or minimize the loss before, during and after the occurrence of the fortuitous
conditions of voyage before it allowed M/B Coco Beach III to sail on September 11, event.[25]
2000.Respondents position does not impress.
Respondent cites the squall that occurred during the voyage as the fortuitous event that
The evidence shows that PAGASA issued 24-hour public weather forecasts and overturned M/B Coco Beach III. As reflected above, however, the occurrence of
tropical cyclone warnings for shipping on September 10 and 11, 2000 advising of squalls was expected under the weather condition of September 11, 2000. Moreover,
tropical depressions in Northern Luzon which would also affect evidence shows that M/B Coco Beach III suffered engine trouble before it capsized
the province of Mindoro.[22] By the testimony of Dr. Frisco Nilo, supervising weather and sank.[26]The incident was, therefore, not completely free from human intervention.
specialist of PAGASA, squalls are to be expected under such weather condition. [23]
The Court need not belabor how respondents evidence likewise fails to demonstrate is not equivalent to the entire earnings of the deceased, but only such portion as he
that it exercised due diligence to prevent or minimize the loss before, during and after would have used to support his dependents or heirs. Hence, to be deducted from his
the occurrence of the squall. gross earnings are the necessary expenses supposed to be used by the deceased for his
own needs.[33]

In computing the third factor necessary living expense, Smith Bell Dodwell
Shipping Agency Corp. v. Borja[34] teaches that when, as in this case, there is no
Article 1764[27] vis--vis Article 2206[28] of the Civil Code holds the common
showing that the living expenses constituted the smaller percentage of the gross
carrier in breach of its contract of carriage that results in the death of a passenger liable
income, the living expenses are fixed at half of the gross income.
to pay the following: (1) indemnity for death, (2) indemnity for loss of earning capacity
and (3) moral damages.
Applying the above guidelines, the Court determines Ruelito's life
expectancy as follows:
Petitioners are entitled to indemnity for the death of Ruelito which is fixed
at P50,000.[29]
Life expectancy = 2/3 x [80 - age of deceased at the time of death]
As for damages representing unearned income, the formula for its
2/3 x [80 - 28]
computation is:
2/3 x [52]
Net Earning Capacity = life expectancy x (gross annual income -
reasonable and Life expectancy = 35
necessary living expenses).

Life expectancy is determined in accordance with the formula: Documentary evidence shows that Ruelito was earning a basic monthly salary
2 / 3 x [80 age of deceased at the time of death] [30] of $900[35] which, when converted to Philippine peso applying the annual average
exchange rate of $1 = P44 in 2000,[36] amounts to P39,600. Ruelitos net earning
capacity is thus computed as follows:
The first factor, i.e., life expectancy, is computed by applying the formula
(2/3 x [80 age at death]) adopted in the American Expectancy Table of Mortality or
Net Earning Capacity = life expectancy x (gross annual income -
the Actuarial of Combined Experience Table of Mortality. [31] reasonable and necessary living expenses).
The second factor is computed by multiplying the life expectancy by the net
= 35 x (P475,200 - P237,600)
earnings of the deceased, i.e., the total earnings less expenses necessary in the creation = 35 x (P237,600)
of such earnings or income and less living and other incidental expenses.[32] The loss
Net Earning Capacity = P8,316,000
 the rate of 6% per annum. No interest, however, shall be adjudged
on unliquidated 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
Respecting the award of moral damages, since respondent common carriers begin to run from the time the claim is made judicially or
breach of contract of carriage resulted in the death of petitioners son, following Article extrajudicially (Art. 1169, Civil Code) but when such certainty
cannot be so reasonably established at the time the demand is made,
1764vis--vis Article 2206 of the Civil Code, petitioners are entitled to moral damages. the interest shall begin to run only from the date the judgment of the
Since respondent failed to prove that it exercised the extraordinary diligence court is made (at which time the quantification of damages may be
deemed to have been reasonably ascertained). The actual base for
required of common carriers, it is presumed to have acted recklessly, thus warranting the computation of legal interest shall, in any case, be on the amount
finally adjudged.
the award too of exemplary damages, which are granted in contractual obligations if
the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent 3. When the judgment of the court awarding a sum of
money becomes final and executory, the rate of legal interest,
manner.[37] whether the case falls under paragraph 1 or paragraph 2, above, shall
Under the circumstances, it is reasonable to award petitioners the amount be 12% per annum from such finality until its satisfaction, this
interim period being deemed to be by then an equivalent to a
of P100,000 as moral damages and P100,000 as exemplary damages.[38] forbearance of credit. (emphasis supplied).

Pursuant to Article 2208[39] of the Civil Code, attorney's fees may also be Since the amounts payable by respondent have been determined with certainty only in

awarded where exemplary damages are awarded. The Court finds that 10% of the the present petition, the interest due shall be computed upon the finality of this decision

total amount adjudged against respondent is reasonable for the purpose. at the rate of 12% per annum until satisfaction, in accordance with paragraph number
3 of the immediately cited guideline in Easter Shipping Lines, Inc.

Finally, Eastern Shipping Lines, Inc. v. Court of Appeals[40] teaches that when
an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or WHEREFORE, the Court of Appeals Decision of August 19,

quasi-delicts is breached, the contravenor can be held liable for payment of interest in 2008 is REVERSED and SET ASIDE. Judgment is rendered in favor of petitioners

the concept of actual and compensatory damages, subject to the following rules, to wit ordering respondent to pay petitioners the following: (1) P50,000 as indemnity for the
death of Ruelito Cruz; (2) P8,316,000 as indemnity for Ruelitos loss of earning

1. When the obligation is breached, and it consists in the capacity; (3) P100,000 as moral damages; (4) P100,000 as exemplary damages; (5)
payment of a sum of money, i.e., a loan or forbearance of money, 10% of the total amount adjudged against respondent as attorneys fees; and (6) the
the interest due should be that which may have been stipulated in
writing. Furthermore, the interest due shall itself earn legal interest costs of suit.
from the time it is judicially demanded. In the absence of stipulation,
the rate of interest shall be 12% per annum to be computed from
The total amount adjudged against respondent shall earn interest at the rate of 12% per
default, i.e., from judicial or extrajudicial demand under and subject
to the provisions of Article 1169 of the Civil Code. annum computed from the finality of this decision until full payment.

2. When an obligation, not constituting a loan or

forbearance of money, is breached, an interest on the amount of SO ORDERED.
damages awarded may be imposed at the discretion of the court at
 [G.R. No. 116110. May 15,1996] Section 34 (g) of the Land Transportation and Traffic Code, to wit: "(g) lights
and reflector when parked or disabled. Appropriate parking lights or flares
visible one hundred meters away shall be displayed at the corner of the vehicle
whenever such vehicle is parked on highways or in places that are not well-
BALIWAG TRANSIT, INC., petitioner, vs. COURT OF APPEALS, SPOUSES lighted or, is placed in such manner as to endanger passing traffic. Furthermore,
ANTONIO GARCIA & LETICIA GARCIA, A & J TRADING, AND every motor vehicle shall be provided at all times with built-in reflectors or other
JULIO RECONTIQUE, respondents. similar warning devices either pasted, painted or attached at its front and back
which shall likewise be visible at night at least one hundred meters away. No
SYLLABUS vehicle not provided with any of the requirements mentioned in this subsection
1. CIVIL LAW; CONTRACTS; SPECIAL CONTRACTS; COMMON shall be registered." Baliwag's argument that the kerosene lamp or torch does not
CARRIERS; LIABILITY FOR DAMAGES; ESTABLISHED IN CASE AT substantially comply with the law is untenable. The aforequoted law clearly
BAR. As a common carrier, Baliwag breached its contract of carriage when it allows the use not only of an early warning device of the triangular reflectorized
failed to deliver its passengers, Leticia and Allan Garcia to their destination safe plates variety but also parking lights or flares visible one hundred meters
and sound. A common carrier is bound to carry its passengers safely as far as away. Indeed, Col. dela Cruz himself admitted that a kerosene lamp is an
human care and foresight can provide, using the utmost diligence of a very acceptable substitute for the reflectorized plates. No negligence, therefore, may
cautious person, with due regard for all the circumstances. In a contract of be imputed to A & J Trading and its driver, Recontique.
carriage, it is presumed that the common carrier was at fault or was negligent 3. ID.; DAMAGES; To PROVE ACTUAL DAMAGES, THE BEST EVIDENCE
when a passenger dies or is injured. Unless the presumption is rebutted, the court AVAILABLE TO THE PARTIES MUST BE PRESENTED. The propriety
need not even make an express finding of fault or negligence on the part of the of the amount awarded as hospitalization and medical fees. The award of
common carrier. This statutory presumption may only be overcome by evidence P25,000.00 is not supported by the evidence on record. The Garcias presented
that the carrier exercised extraordinary diligence as prescribed in Articles 1733 receipts marked as Exhibits "B-1 " to "B-42" but their total amounted only to
and 1755 of the Civil Code. The records are bereft of any proof to show that P5,017.74. To be sure, Leticia testified as to the extra amount spent for her
Baliwag exercised extraordinary diligence. On the contrary, the evidence medical needs but without more reliable evidence, her lone testimony cannot
demonstrates its driver's recklessness. Leticia Garcia testified that the bus was justify the award of P25,000.00. To prove actual damages, the best evidence
running at a very high speed despite the drizzle and the darkness of the available to the injured party must be presented. The court cannot rely on
highway. The passengers pleaded for its driver to slow down, but their plea was uncorroborated testimony whose truth is suspect, but must depend upon
ignored. Leticia also revealed that the driver was smelling of liquor. She could competent proof that damages have been actually suffered. Thus, we reduce the
smell him as she was seated right behind the driver. Another passenger, Felix actual damages for medical and hospitalization expenses to P5,017.74.
Cruz testified that immediately before the collision, the bus driver was
conversing with a co-employee. All these prove the bus driver's wanton disregard 4. ID.; ID.; MORAL DAMAGES; RECOVERABLE IF THE CARRIER
for the physical safety of his passengers, which make Baliwag as a common THROUGH ITS AGENT, ACTED FRAUDULENTLY OR IN BAD
carrier liable for damages under Article 1759 of the Civil Code. FAITH. The award of moral damages is in accord with law. In a breach of
contract of carriage, moral damages are recoverable if the carrier, through its
2. ID.; ID.; ID.; ID.; LAND TRANSPORTATION AND TRAFFIC CODE; agent, acted fraudulently or in bad faith. The evidence shows the gross
SECTION 34(g) THEREOF; SUBSTANTIALLY COMPLIED WITH IN negligence of the driver of Baliwag bus which amounted to bad faith. Without
CASE AT BAR. Baliwag cannot evade its liability by insisting that the accident doubt, Leticia and Allan experienced physical suffering, mental anguish and
was caused solely by the negligence of A & J Trading and Julio Recontique. It serious anxiety by reason of the accident.
harps on their alleged non use of early warning device as testified to by Col.
Demetrio dela Cruz, the station commander of Gapan, Nueva Ecija who APPEARANCES OF COUNSEL
investigated the incident, and Francisco Romano, the bus conductor. The records
Leopoldo C. Sta. Maria for Baliwag Transit, Inc.
do not bear out Baliwag's contention. Col. dela Cruz and Romano testified that
Arturo D. Vallar for Sps. Antonio & Leticia Garcia.
they did not see any early warning device at the scene of the accident. They were
Allan A. Leynes for A & J Trading, and Julio Recontique.
referring to the 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 road, near the rear portion DECISION
of the truck to serve as an early warning device. This substantially complies with PUNO, J.:
 This is a petition for certiorari to review the Decision[1] of the Court of Appeals After hearing, the trial court found all the defendants liable, thus:
in CA-G.R. CV-31246 awarding damages in favor of the spouses Antonio and Leticia
Garcia for breach of contract of carriage.[2] filed by the spouses Garcia questioning the xxxxxxxxx
same Court of Appeals' Decision which reduced their award of damages. On
November 13, 1995, we denied their petition for review.
"In view thereof, the Court holds that both defendants should be held liable; the
The records show that on July 31, 1980, Leticia Garcia, and her five-year old son, defendant Baliwag Transit, Inc. for having failed to deliver the plaintiff and her son
Allan Garcia, boarded Baliwag Transit Bus No. 2036 bound for Cabanatuan City to their point of destination safely in violation of plaintiff's and defendant Baliwag
driven by Jaime Santiago. They took the seat behind the driver. Transit's contractual relation.

At about 7:30 in the evening, in Malimba, Gapan, Nueva Ecija, the bus The defendant A & J and Julio Recontique for failure to provide its cargo truck with
passengers saw a cargo truck parked at the shoulder of the national highway. Its left an early warning device in violation of the Motor Vehicle Law."[8]
rear portion jutted to the outer lane, 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 Recontique, and his The trial court ordered Baliwag, A & J Trading and Recontique to pay jointly
helper, Arturo Escala, were then replacing a flat tire. The truck is owned by respondent and severally the Garcia spouses the following: (1) P25,000.00 hospitalization and
A & J Trading. medication fee, (2) P450,000.00 loss of 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)
Bus driver Santiago was driving at an inordinately fast speed and failed to notice P30,000.00 attorney's fee.[9]
the truck and the kerosene lamp at the edge of the road. Santiago's passengers urged
him to slow down but he paid them no heed. Santiago even carried animated On appeal, the Court of Appeals modified the trial court's Decision by absolving
conversations with his co-employees while driving. When the danger of collision A & J Trading from liability and by reducing the award of attorney's fees to P10,000.00
became imminent, the bus passengers shouted "Babangga tayo!". Santiago stepped on and loss of earnings to P300,000.00, respectively.[10]
the brake, but it was too late. His bus rammed into the stalled cargo truck. It caused Baliwag filed the present petition for review raising the following issues:
the instant death of Santiago and Escala, and injury to several others. Leticia and Allan
Garcia were among the injured passengers.
1. Did the Court of Appeals err in absolving A & J Trading from liability and
Leticia suffered a fracture in her pelvis and right leg. They rushed her to the holding Baliwag solely liable for the injuries suffered by Leticia and Allan Garcia in
provincial hospital in Cabanatuan City where she was given emergency the accident?
treatment. After three days, she was transferred to the National Orthopedic Hospital
where she was confined for more than a month.[3] She underwent an operation for 2. Is the amount of damages awarded by the Court of Appeals to the Garcia spouses
partial hip prosthesis.[4] correct?
Allan, on the other hand, broke a leg. He was also given emergency treatment at
the provincial hospital. We affirm the factual findings of the Court of Appeals.

Spouses Antonio and Leticia Garcia sued Baliwag Transit, Inc., A & J Trading I
and Julio Recontique for damages in the Regional Trial Court of Bulacan.[5] Leticia As a common carrier, Baliwag breached its contract of carriage when it failed to
sued as an injured passenger of Baliwag and as mother of Allan. At the time of the deliver its passengers, Leticia and Allan Garcia to their destination safe and sound. A
complaint, Allan was a minor, hence, the suit initiated by his parents in his favor. common carrier is bound to carry its passengers safely as far as human care and
Baliwag, A & J Trading and Recontique disclaimed responsibility for the foresight can provide, using the utmost diligence of a very cautious person, with due
mishap. Baliwag alleged that the accident was caused solely by the fault and regard for all the circumstances.[11] In a contract of carriage, it is presumed that the
negligence of A & J Trading and its driver, Recontique. Baliwag charged that common carrier was at fault or was negligent when a passenger dies or is
Recontigue failed to place an early warning device at the corner of the disabled cargo injured. Unless the presumption is rebutted, the court need not even make an express
truck to warn oncoming vehicles.[6] On the other hand, A & J Trading and Recontique finding of fault or negligence on the part of the common carrier. This statutory
alleged that the accident was the result of the negligence and reckless driving of presumption may only be overcome by evidence that the carrier exercised
Santiago, bus driver of Baliwag.[7] extraordinary diligence as prescribed in Articles 1733 and 1755 of the Civil Code. [12]
 The records are bereft of any proof to show that Baliwag exercised extraordinary early warning device of the triangular reflectorized plates variety but also parking
diligence. On the contrary, the evidence demonstrates its driver's recklessness. Leticia lights or flares visible one hundred meters away. Indeed, Col. dela Cruz himself
Garcia testified that the bus was running at a very high speed despite the drizzle and admitted that a kerosene lamp is an acceptable substitute for the reflectorized
the darkness of the highway. The passengers pleaded for its driver to slow down, but plates.[18] No negligence, therefore, may be imputed to A & J Trading and its driver,
their plea was ignored.[13]Leticia also revealed that the driver was smelling of Recontique.
liquor.[14] She could smell him as she was seated right behind the driver. Another
passenger, Felix Cruz testified that immediately before the collision, the bus driver Anent this factual issue, the analysis of evidence made by the Court of Appeals
was conversing with a co-employee.[15] All these prove the bus driver's wanton deserves our concurrence, viz:
disregard for the physical safety of his passengers, which makes Baliwag as a common xxx xxx xxx
carrier liable for damages under Article 1759 of the Civil Code:
In the case at bar, both the injured passengers of the Baliwag involved in the accident
Art. 1759. Common carriers are liable for the death of or injuries to passengers testified that they saw some sort of kerosene or a torch on the rear portion of the
through the negligence or willfull acts of the former's employees, although such truck before the accident. Baliwag Transit's conductor attempted to defeat such
employees may have acted beyond the scope of their authority or in violation of the testimony by declaring that he noticed no early warning device in front of the truck.
orders of the common carriers.
Among the testimonies offered by the witnesses who were present at the scene
This liability of the common carriers do not cease upon proof that they exercised all of the accident, we rule to uphold the affirmative testimonies given by the two injured
the diligence of a good father of a family in the selection or supervision of their passengers and give less credence to the testimony of the bus conductor who solely
employees. testified that no such early warning device exists.

Baliwag cannot evade its liability by insisting that the accident was caused solely The testimonies of injured passengers who may well be considered as
by the negligence of A & J Trading and Julio Recontique. It harps on their alleged non disinterested witness appear to be natural and more probable than the testimony given
use of an early warning device as testified to by Col. Demetrio dela Cruz, the station by Francisco Romano who is undoubtedly interested in the outcome of the case, being
commander of Gapan, Nueva Ecija who investigated the incident, and Francisco the conductor of the defendant-appellant Baliwag Transit Inc.
Romano, the bus conductor. It must be borne in mind that the situation then prevailing at the time of the
The records do not bear out Baliwag's contention. Col. dela Cruz and Romano accident was admittedly drizzly and all dark. This being so, it would be improbable
testified that they did not see any early warning device at the scene of the and perhaps impossible on the part of the truck helper without the torch nor the
accident.[16] They were referring to the triangular reflectorized plates in red and yellow kerosene to remove the flat tires of the truck. Moreover, witness including the bits
issued by the Land Transportation Office. However, the evidence shows that conductor himself admitted that the passengers shouted, that they are going to bump
Recontique and Ecala placed a kerosene lamp or torch at the edge of the road, near the before the collision which consequently caused the bus driver to apply the brake 3 to
rear portion of the truck to serve as an early warning device. [17] This substantially 4 meters away from the truck. Again, without the kerosene nor the torch in front of the
complies with Section 34 (g) of the Land Transportation and Traffic Code, to wit: truck, it would be improbable for the driver, more so the passengers to notice the truck
to be bumped by the bus considering the darkness of the place at the time of the
accident.
(g) Lights and reflector when parked or disabled. Appropriate parking lights or
flares visible one hundred meters away shall be displayed at the corner of the xxxxxxxxx
vehicle whenever such vehicle is parked on highways or in places that are not well-
lighted or, is placed in such manner as to endanger passing traffic. Furthermore, While it is true that the investigating officer testified that he found no early
every motor vehicle shall be provided at all times with built-in reflectors or other warning device at the time of his investigation, We rule to give less credence to such
similar warning devices either pasted, painted or attached at its front and back which testimony insofar as he himself admitted on cross examination that he did not notice
shall likewise be visible at night at least one hundred meters away. No vehicle not the presence of any kerosene lamp at the back of the truck because when he arrived at
provided with any of the requirements mentioned in this subsection shall be the scene of the accident, there were already many people surrounding the place (TSN,
registered. (Italics supplied) Aug, 22, 1989, p. 13). He further admitted that there exists a probability that the lights
of the truck may have been smashed by the bus at the time of the accident considering
the location of the truck where its rear portion was connected with the front portion of
Baliwag's argument that the kerosene lamp or torch does not substantially comply
the bus (TSN, March 29, 1985, pp. 11-13). Investigator's testimony therefore did not
with the law is untenable. The aforequoted law clearly allows the use not only of an
confirm nor deny the existence of such warning device, making his testimony of little IN VIEW WHEREOF, the Decision of the respondent Court of Appeals in CA-
probative value.[19] G.R. CV-31246 is AFFIRMED with the MODIFICATION reducing the actual
damages for hospitalization and medical fees to P5,017.74. No costs.
II
SO ORDERED.
We now review the amount of damages awarded to the Garcia spouses.
Regalado (Chairman), Romero, Mendoza, and Torres, Jr., JJ., concur.
First, the propriety of the amount awarded as hospitalization and medical
fees. The award of P25,000.00 is not supported by the evidence on record. The Garcias
presented receipts marked as 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 injured
party must be presented. The court cannot rely on uncorroborated testimony whose
truth is 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.
Second, we find as reasonable the award of P300,000.00 representing Leticia's
lost earnings. Before the accident, Leticia was engaged in embroidery, earning
P5,000.00 per month.[21] Her injuries forced her to stop working. Considering the
nature and extent of her injuries and the length of time it would take her to
recover,[22] we find it proper that Baliwag should compensate her lost income for five
(5) years.[23]
Third, the award of moral damages is in accord with law. In a breach of contract
of carriage, moral damages are recoverable if the carrier, through its agent, acted
fraudulently or in bad faith.[24] The evidence shows the gross negligence of the driver
of Baliwag bus which amounted to bad faith. Without doubt, Leticia and Allan
experienced physical suffering, mental anguish and serious anxiety 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 trial court as affirmed by the Court of Appeals awarded
moral damages to Antonio and Leticia Garcia not in their capacity as parents of
Allan. Leticia was given moral damages as an injured party. Allan was also granted
moral damages as an injured party but because of his minority, the award in his favor
has to be given to his father who represented him in the suit.
Finally, we find the award of attorney's fees justified. The complaint for damages
was instituted by the Garcia spouses on December 15, 1982, following the unjustified
refusal of Baliwag to settle their claim. The Decision was promulgated by the trial
court only on January 29, 1991 or about nine years later. Numerous pleadings were
filed before the trial court, the appellate court and to this Court. Given the complexity
of the case and the amount of damages involved,[25] the award of attorney's fee for
P10,000.00 is just and reasonable.
 SPOUSES FERNANDO G.R. No. 188288 REYES, J.:

and LOURDES VILORIA,

Petitioners, Present:
This is a petition for review under Rule 45 of the Rules of Court from the
January 30, 2009 Decision1 of the Special Thirteenth Division of the Court of
CARPIO, J., Appeals (CA) in CA-G.R. CV No. 88586 entitled “Spouses Fernando and Lourdes
Viloria v. Continental Airlines, Inc.,” the dispositive portion of which states:
Chairperson,

PEREZ,

- versus - SERENO, WHEREFORE, the Decision of the Regional Trial

Court, Branch 74, dated 03 April 2006, awarding US$800.00 or its
REYES, and peso equivalent at the time of payment, plus legal rate of interest
from 21 July 1997 until fully paid, [P]100,000.00 as moral
damages, [P]50,000.00 as exemplary damages, [P]40,000.00 as
BERNABE, JJ.  attorney’s fees and costs of suit to plaintiffs-appellees is
herebyREVERSED and SET ASIDE.

Promulgated:
Defendant-appellant’s counterclaim is DENIED.
CONTINENTAL AIRLINES, INC.,

Respondent. January 16, 2012

Costs against plaintiffs-appellees.

x------------------------------------------------------------------------------------x SO ORDERED.2

DECISION
On April 3, 2006, the Regional Trial Court of Antipolo City, Branch 74
(RTC) rendered a Decision, giving due course to the complaint for sum of money
and damages filed by petitioners Fernando Viloria (Fernando) and Lourdes Viloria
(Lourdes), collectively called Spouses Viloria, against respondent Continental As he was having second thoughts on traveling via Frontier Air, Fernando
Airlines, Inc. (CAI). As culled from the records, below are the facts giving rise to went to the Greyhound Station where he saw an Amtrak station nearby. Fernando
such complaint. made inquiries and was told that there are seats available and he can travel on
Amtrak anytime and any day he pleased. Fernando then purchased two (2) tickets for
Washington, D.C.

On or about July 21, 1997 and while in the United States, Fernando
purchased for himself and his wife, Lourdes, two (2) round trip airline tickets from
San Diego, California to Newark, New Jersey on board Continental Airlines. From Amtrak, Fernando went to Holiday Travel and confronted Mager with
Fernando purchased the tickets at US$400.00 each from a travel agency called the Amtrak tickets, telling her that she had misled them into buying the Continental
“Holiday Travel” and was attended to by a certain Margaret Mager (Mager). Airlines tickets by misrepresenting that Amtrak was already fully booked. Fernando
According to Spouses Viloria, Fernando agreed to buy the said tickets after Mager reiterated his demand for a refund but Mager was firm in her position that the subject
informed them that there were no available seats at Amtrak, an intercity passenger tickets are non-refundable.
train service provider in the United States. Per the tickets, Spouses Viloria were
scheduled to leave for Newark on August 13, 1997 and return to San Diego on
August 21, 1997.
Upon returning to the Philippines, Fernando sent a letter to CAI on
February 11, 1998, demanding a refund and alleging that Mager had deluded them
into purchasing the subject tickets.3
Subsequently, Fernando requested Mager to reschedule their flight to
Newark to an earlier date or August 6, 1997. Mager informed him that flights to
Newark via Continental Airlines were already fully booked and offered the
In a letter dated February 24, 1998, Continental Micronesia informed
alternative of a round trip flight via Frontier Air. Since flying with Frontier Air
Fernando that his complaint had been referred to the Customer Refund Services of
called for a higher fare of US$526.00 per passenger and would mean traveling by
Continental Airlines at Houston, Texas.4
night, Fernando opted to request for a refund. Mager, however, denied his request as
the subject tickets are non-refundable and the only option that Continental Airlines
can offer is the re-issuance of new tickets within one (1) year from the date the
subject tickets were issued. Fernando decided to reserve two (2) seats with Frontier In a letter dated March 24, 1998, Continental Micronesia denied Fernando’s
Air. request for a refund and advised him that he may take the subject tickets to any
Continental ticketing location for the re-issuance of new tickets within two (2) years
from the date they were issued. Continental Micronesia informed Fernando that the
subject tickets may be used as a form of payment for the purchase of another
Continental ticket, albeit with a re-issuance fee.5 CAI interposed the following defenses: (a) Spouses Viloria have no right to
ask for a refund as the subject tickets are non-refundable; (b) Fernando cannot insist
on using the ticket in Lourdes’ name for the purchase of a round trip ticket to Los
Angeles since the same is non-transferable; (c) as Mager is not a CAI employee, CAI
On June 17, 1999, Fernando went to Continental’s ticketing office at Ayala is not liable for any of her acts; (d) CAI, its employees and agents did not act in bad
Avenue, Makati City to have the subject tickets replaced by a single round trip ticket faith as to entitle Spouses Viloria to moral and exemplary damages and attorney’s
to Los Angeles, California under his name. Therein, Fernando was informed that fees. CAI also invoked the following clause printed on the subject tickets:
Lourdes’ ticket was non-transferable, thus, cannot be used for the purchase of a
ticket in his favor. He was also informed that a round trip ticket to Los Angeles was
US$1,867.40 so he would have to pay what will not be covered by the value of his
3. To the extent not in conflict with the foregoing carriage and
San Diego to Newark round trip ticket. other services performed by each carrier are subject to: (i)
provisions contained in this ticket, (ii) applicable tariffs, (iii)
carrier’s conditions of carriage and related regulations which are
made part hereof (and are available on application at the offices of
carrier), except in transportation between a place in the United
States or Canada and any place outside thereof to which tariffs in
In a letter dated June 21, 1999, Fernando demanded for the refund of the
force in those countries apply.8
subject tickets as he no longer wished to have them replaced. In addition to the
dubious circumstances under which the subject tickets were issued, Fernando
claimed that CAI’s act of charging him with US$1,867.40 for a round trip ticket to
Los Angeles, which other airlines priced at US$856.00, and refusal to allow him to
use Lourdes’ ticket, breached its undertaking under its March 24, 1998 letter.6 According to CAI, one of the conditions attached to their contract of
carriage is the non-transferability and non-refundability of the subject tickets.

On September 8, 2000, Spouses Viloria filed a complaint against CAI,

praying that CAI be ordered to refund the money they used in the purchase of the The RTC’s Ruling
subject tickets with legal interest from July 21, 1997 and to pay P1,000,000.00 as
moral damages, P500,000.00 as exemplary damages and P250,000.00 as attorney’s
fees.7
 The act of a travel agent or agency being involved here,
Following a full-blown trial, the RTC rendered its April 3, 2006 Decision,
the following are the pertinent New Civil Code provisions on
holding that Spouses Viloria are entitled to a refund in view of Mager’s agency:
misrepresentation in obtaining their consent in the purchase of the subject
tickets.9 The relevant portion of the April 3, 2006 Decision states:
Art. 1868. By the contract of agency a
person binds himself to render some service or to
do something in representation or on behalf of
another, with the consent or authority of the
Continental Airlines agent Ms. Mager was in bad faith latter.
when she was less candid and diligent in presenting to plaintiffs
spouses their booking options. Plaintiff Fernando clearly wanted to
travel via AMTRAK, but defendant’s agent misled him into
purchasing Continental Airlines tickets instead on the fraudulent
misrepresentation that Amtrak was fully booked. In fact, defendant Art. 1869. Agency may be express, or
Airline did not specifically denied (sic) this allegation. implied from the acts of the principal, from his
silence or lack of action, or his failure to
repudiate the agency, knowing that another
person is acting on his behalf without authority.

Plainly, plaintiffs spouses, particularly plaintiff Fernando,

were tricked into buying Continental Airline tickets on Ms.
Mager’s misleading misrepresentations. Continental Airlines agent
Ms. Mager further relied on and exploited plaintiff Fernando’s Agency may be oral, unless the law
need and told him that they must book a flight immediately or risk requires a specific form.
not being able to travel at all on the couple’s preferred date.
Unfortunately, plaintiffs spouses fell prey to the airline’s and its
agent’s unethical tactics for baiting trusting customers.”10
As its very name implies, a travel agency binds itself to
render some service or to do something in representation or on
behalf of another, with the consent or authority of the latter. This
court takes judicial notice of the common services rendered by
travel agencies that represent themselves as such, specifically the
reservation and booking of local and foreign tours as well as the
Citing Articles 1868 and 1869 of the Civil Code, the RTC ruled that Mager issuance of airline tickets for a commission or fee.

is CAI’s agent, hence, bound by her bad faith and misrepresentation. As far as the
RTC is concerned, there is no issue as to whether Mager was CAI’s agent in view of
The services rendered by Ms. Mager of Holiday Travel
CAI’s implied recognition of her status as such in its March 24, 1998 letter.
agency to the plaintiff spouses on July 21, 1997 were no different
from those offered in any other travel agency. Defendant airline
impliedly if not expressly acknowledged its principal-agent
relationship with Ms. Mager by its offer in the letter dated March
24, 1998 – an obvious attempt to assuage plaintiffs spouses’ hurt
feelings.11
 Plaintiffs-appellees assert that Mager was a sub-agent of
Holiday Travel who was in turn a ticketing agent of Holiday Travel
Furthermore, the RTC ruled that CAI acted in bad faith in reneging on its who was in turn a ticketing agent of Continental Airlines.
Proceeding from this premise, they contend that Continental
undertaking to replace the subject tickets within two (2) years from their date of issue Airlines should be held liable for the acts of Mager. The trial court
when it charged Fernando with the amount of US$1,867.40 for a round trip ticket to held the same view.

Los Angeles and when it refused to allow Fernando to use Lourdes’ ticket.
Specifically:
We do not agree. By the contract of agency, a person
binds him/herself to render some service or to do something in
representation or on behalf of another, with the consent or
authority of the latter. The elements of agency are: (1) consent,
Tickets may be reissued for up to two years from the original date express or implied, of the parties to establish the relationship; (2)
of issue. When defendant airline still charged plaintiffs spouses the object is the execution of a juridical act in relation to a third
US$1,867.40 or more than double the then going rate of person; (3) the agent acts as a representative and not for
US$856.00 for the unused tickets when the same were presented him/herself; and (4) the agent acts within the scope of his/her
within two (2) years from date of issue, defendant airline exhibited authority. As the basis of agency is representation, there must be,
callous treatment of passengers.12 on the part of the principal, an actual intention to appoint, an
intention naturally inferable from the principal’s words or actions.
In the same manner, there must be an intention on the part of the
agent to accept the appointment and act upon it. Absent such
mutual intent, there is generally no agency. It is likewise a settled
rule that persons dealing with an assumed agent are bound at their
peril, if they would hold the principal liable, to ascertain not only
The Appellate Court’s Ruling the fact of agency but also the nature and extent of authority, and
in case either is controverted, the burden of proof is upon them to
establish it. Agency is never presumed, neither is it created by the
mere use of the word in a trade or business name. We have perused
the evidence and documents so far presented. We find nothing
except bare allegations of plaintiffs-appellees that Mager/Holiday
On appeal, the CA reversed the RTC’s April 3, 2006 Decision, holding that Travel was acting in behalf of Continental Airlines. From all sides
CAI cannot be held liable for Mager’s act in the absence of any proof that a of legal prism, the transaction in issue was simply a contract of
sale, wherein Holiday Travel buys airline tickets from Continental
principal-agent relationship existed between CAI and Holiday Travel. According to Airlines and then, through its employees, Mager included, sells it
at a premium to clients.13
the CA, Spouses Viloria, who have the burden of proof to establish the fact of
agency, failed to present evidence demonstrating that Holiday Travel is CAI’s agent.
Furthermore, contrary to Spouses Viloria’s claim, the contractual relationship
between Holiday Travel and CAI is not an agency but that of a sale.
 The CA also ruled that refund is not available to Spouses Viloria as the faith when it required them to pay a higher amount for a round trip ticket to Los
word “non-refundable” was clearly printed on the face of the subject tickets, which Angeles considering CAI’s undertaking to re-issue new tickets to them within the
constitute their contract with CAI. Therefore, the grant of their prayer for a refund period stated in their March 24, 1998 letter. CAI likewise acted in bad faith when it
would violate the proscription against impairment of contracts. disallowed Fernando to use Lourdes’ ticket to purchase a round trip to Los Angeles
given that there is nothing in Lourdes’ ticket indicating that it is non-transferable. As
a common carrier, it is CAI’s duty to inform its passengers of the terms and
conditions of their contract and passengers cannot be bound by such terms and
Finally, the CA held that CAI did not act in bad faith when they charged
conditions which they are not made aware of. Also, the subject contract of carriage is
Spouses Viloria with the higher amount of US$1,867.40 for a round trip ticket to Los
a contract of adhesion; therefore, any ambiguities should be construed against CAI.
Angeles. According to the CA, there is no compulsion for CAI to charge the lower
Notably, the petitioners are no longer questioning the validity of the subject contracts
amount of US$856.00, which Spouses Viloria claim to be the fee charged by other
and limited its claim for a refund on CAI’s alleged breach of its undertaking in its
airlines. The matter of fixing the prices for its services is CAI’s prerogative, which
March 24, 1998 letter.
Spouses Viloria cannot intervene. In particular:

It is within the respective rights of persons owning and/or The Respondent’s Case
operating business entities to peg the premium of the services and
items which they provide at a price which they deem fit, no matter
how expensive or exhorbitant said price may seem vis-à-vis those
of the competing companies. The Spouses Viloria may not
intervene with the business judgment of Continental Airlines. 14 In its Comment, CAI claimed that Spouses Viloria’s allegation of bad faith
is negated by its willingness to issue new tickets to them and to credit the value of
the subject tickets against the value of the new ticket Fernando requested. CAI
argued that Spouses Viloria’s sole basis to claim that the price at which CAI was
willing to issue the new tickets is unconscionable is a piece of hearsay evidence – an
The Petitioners’ Case
advertisement appearing on a newspaper stating that airfares from Manila to Los
Angeles or San Francisco cost US$818.00.15 Also, the advertisement pertains to
airfares in September 2000 and not to airfares prevailing in June 1999, the time when
In this Petition, this Court is being asked to review the findings and Fernando asked CAI to apply the value of the subject tickets for the purchase of a
conclusions of the CA, as the latter’s reversal of the RTC’s April 3, 2006 Decision new one.16 CAI likewise argued that it did not undertake to protect Spouses Viloria
allegedly lacks factual and legal bases. Spouses Viloria claim that CAI acted in bad from any changes or fluctuations in the prices of airline tickets and its only
obligation was to apply the value of the subject tickets to the purchase of the newly b. Assuming that an agency relationship exists between CAI and
issued tickets. Holiday Travel, is CAI bound by the acts of Holiday
Travel’s agents and employees such as Mager?

c. Assuming that CAI is bound by the acts of Holiday Travel’s

With respect to Spouses Viloria’s claim that they are not aware of CAI’s agents and employees, can the representation of Mager as
restrictions on the subject tickets and that the terms and conditions that are printed on to unavailability of seats at Amtrak be considered
them are ambiguous, CAI denies any ambiguity and alleged that its representative fraudulent as to vitiate the consent of Spouse Viloria in
informed Fernando that the subject tickets are non-transferable when he applied for the purchase of the subject tickets?
the issuance of a new ticket. On the other hand, the word “non-refundable” clearly
appears on the face of the subject tickets. d. Is CAI justified in insisting that the subject tickets are non-
transferable and non-refundable?

e. Is CAI justified in pegging a different price for the round trip

CAI also denies that it is bound by the acts of Holiday Travel and Mager ticket to Los Angeles requested by Fernando?
and that no principal-agency relationship exists between them. As an independent
contractor, Holiday Travel was without capacity to bind CAI. f. Alternatively, did CAI act in bad faith or renege its obligation to
Spouses Viloria to apply the value of the subject tickets in
the purchase of new ones when it refused to allow

Issues Fernando to use Lourdes’ ticket and in charging a higher

price for a round trip ticket to Los Angeles?

To determine the propriety of disturbing the CA’s January 30, 2009

Decision and whether Spouses Viloria have the right to the reliefs they prayed for, This Court’s Ruling
this Court deems it necessary to resolve the following issues:

I. A principal-agent
relationship exists between
a. Does a principal-agent relationship exist between CAI and CAI and Holiday Travel.
Holiday Travel?
 Out of the above given principles, sprung the creation and
acceptance of the relationship of agency whereby one party, called
the principal (mandante), authorizes another, called the agent
With respect to the first issue, which is a question of fact that would require (mandatario), to act for and in his behalf in transactions with third
this Court to review and re-examine the evidence presented by the parties below, this persons. The essential elements of agency are: (1) there is consent,
express or implied of the parties to establish the relationship; (2)
Court takes exception to the general rule that the CA’s findings of fact are conclusive the object is the execution of a juridical act in relation to a third
person; (3) the agent acts as a representative and not for himself,
upon Us and our jurisdiction is limited to the review of questions of law. It is well-
and (4) the agent acts within the scope of his authority.
settled to the point of being axiomatic that this Court is authorized to resolve
questions of fact if confronted with contrasting factual findings of the trial court and
appellate court and if the findings of the CA are contradicted by the evidence on Agency is basically personal, representative,
record.17 and derivative in nature. The authority of the agent to act emanates
from the powers granted to him by his principal; his act is the act
of the principal if done within the scope of the authority. Qui facit
per alium facit se. "He who acts through another acts himself." 19

According to the CA, agency is never presumed and that he who alleges that
it exists has the burden of proof. Spouses Viloria, on whose shoulders such burden
rests, presented evidence that fell short of indubitably demonstrating the existence of
such agency. Contrary to the findings of the CA, all the elements of an agency exist in
this case. The first and second elements are present as CAI does not deny that it
concluded an agreement with Holiday Travel, whereby Holiday Travel would enter
into contracts of carriage with third persons on CAI’s behalf. The third element is
We disagree. The CA failed to consider undisputed facts, discrediting CAI’s also present as it is undisputed that Holiday Travel merely acted in a representative
denial that Holiday Travel is one of its agents. Furthermore, in erroneously capacity and it is CAI and not Holiday Travel who is bound by the contracts of
characterizing the contractual relationship between CAI and Holiday Travel as a carriage entered into by Holiday Travel on its behalf. The fourth element is also
contract of sale, the CA failed to apply the fundamental civil law principles present considering that CAI has not made any allegation that Holiday Travel
governing agency and differentiating it from sale. exceeded the authority that was granted to it. In fact, CAI consistently maintains the
validity of the contracts of carriage that Holiday Travel executed with Spouses
Viloria and that Mager was not guilty of any fraudulent misrepresentation. That CAI
admits the authority of Holiday Travel to enter into contracts of carriage on its behalf
In Rallos v. Felix Go Chan & Sons Realty Corporation, 18 this Court
is easily discernible from its February 24, 1998 and March 24, 1998 letters, where it
explained the nature of an agency and spelled out the essential elements thereof:
impliedly recognized the validity of the contracts entered into by Holiday Travel
with Spouses Viloria. When Fernando informed CAI that it was Holiday Travel who
issued to them the subject tickets, CAI did not deny that Holiday Travel is its between CAI and Holiday Travel as one of sale. The distinctions between a sale and
authorized agent. an agency are not difficult to discern and this Court, as early as 1970, had already
formulated the guidelines that would aid in differentiating the two (2) contracts.
In Commissioner of Internal Revenue v. Constantino,21 this Court extrapolated that
the primordial differentiating consideration between the two (2) contracts is the
Prior to Spouses Viloria’s filing of a complaint against it, CAI never refuted
transfer of ownership or title over the property subject of the contract. In an agency,
that it gave Holiday Travel the power and authority to conclude contracts of carriage
the principal retains ownership and control over the property and the agent merely
on its behalf. As clearly extant from the records, CAI recognized the validity of the
acts on the principal’s behalf and under his instructions in furtherance of the
contracts of carriage that Holiday Travel entered into with Spouses Viloria and
objectives for which the agency was established. On the other hand, the contract is
considered itself bound with Spouses Viloria by the terms and conditions thereof;
clearly a sale if the parties intended that the delivery of the property will effect a
and this constitutes an unequivocal testament to Holiday Travel’s authority to act as
relinquishment of title, control and ownership in such a way that the recipient may
its agent. This Court cannot therefore allow CAI to take an altogether different
do with the property as he pleases.
position and deny that Holiday Travel is its agent without condoning or giving
imprimatur to whatever damage or prejudice that may result from such denial or
retraction to Spouses Viloria, who relied on good faith on CAI’s acts in recognition
Since the company retained ownership of the goods, even
of Holiday Travel’s authority. Estoppel is primarily based on the doctrine of good as it delivered possession unto the dealer for resale to customers,
faith and the avoidance of harm that will befall an innocent party due to its injurious the price and terms of which were subject to the company's control,
the relationship between the company and the dealer is one of
reliance, the failure to apply it in this case would result in gross travesty of agency, tested under the following criterion:
justice.20 Estoppel bars CAI from making such denial.

“The difficulty in distinguishing between

contracts of sale and the creation of an agency to sell has
As categorically provided under Article 1869 of the Civil Code, “[a]gency led to the establishment of rules by the application of
which this difficulty may be solved. The decisions say the
may be express, or implied from the acts of the principal, from his silence or lack of transfer of title or agreement to transfer it for a price paid
or promised is the essence of sale. If such transfer puts the
action, or his failure to repudiate the agency, knowing that another person is acting
transferee in the attitude or position of an owner and
on his behalf without authority.” makes him liable to the transferor as a debtor for the
agreed price, and not merely as an agent who must
account for the proceeds of a resale, the transaction is a
sale; while the essence of an agency to sell is the delivery
to an agent, not as his property, but as the property of the
principal, who remains the owner and has the right to
Considering that the fundamental hallmarks of an agency are present, this control sales, fix the price, and terms, demand and receive
Court finds it rather peculiar that the CA had branded the contractual relationship the proceeds less the agent's commission upon sales made.
 1 Mechem on Sales, Sec. 43; 1 Mechem on Agency, Sec.
Considering that Holiday Travel is CAI’s agent, does it necessarily follow
48; Williston on Sales, 1; Tiedeman on Sales, 1.”
(Salisbury v. Brooks, 94 SE 117, 118-119)22 that CAI is liable for the fault or negligence of Holiday Travel’s employees?
Citing China Air Lines, Ltd. v. Court of Appeals, et al.,23 CAI argues that it cannot be
held liable for the actions of the employee of its ticketing agent in the absence of an
employer-employee relationship.

As to how the CA have arrived at the conclusion that the contract between
CAI and Holiday Travel is a sale is certainly confounding, considering that CAI is
the one bound by the contracts of carriage embodied by the tickets being sold by An examination of this Court’s pronouncements in China Air Lines will
Holiday Travel on its behalf. It is undisputed that CAI and not Holiday Travel who is reveal that an airline company is not completely exonerated from any liability for the
the party to the contracts of carriage executed by Holiday Travel with third persons tort committed by its agent’s employees. A prior determination of the nature of the
who desire to travel via Continental Airlines, and this conclusively indicates the passenger’s cause of action is necessary. If the passenger’s cause of action against
existence of a principal-agent relationship. That the principal is bound by all the the airline company is premised onculpa aquiliana or quasi-delict for a tort
obligations contracted by the agent within the scope of the authority granted to him is committed by the employee of the airline company’s agent, there must be an
clearly provided under Article 1910 of the Civil Code and this constitutes the very independent showing that the airline company was at fault or negligent or has
notion of agency. contributed to the negligence or tortuous conduct committed by the employee of its
agent. The mere fact that the employee of the airline company’s agent has committed
a tort is not sufficient to hold the airline company liable. There is no vinculum

II. In actions based on quasi- juris between the airline company and its agent’s employees and the contractual
delict, a principal can only be relationship between the airline company and its agent does not operate to create a
held liable for the tort
committed by its agent’s juridical tie between the airline company and its agent’s employees. Article 2180 of
employees if it has been the Civil Code does not make the principal vicariously liable for the tort committed
established by
preponderance of evidence by its agent’s employees and the principal-agency relationship per se does not make
that the principal was also at
the principal a party to such tort; hence, the need to prove the principal’s own fault or
fault or negligent or that the
principal exercise control negligence.
and supervision over them.

On the other hand, if the passenger’s cause of action for damages against
the airline company is based on contractual breach or culpa contractual, it is not
necessary that there be evidence of the airline company’s fault or negligence. As this validity of the subject contracts. It may likewise be argued that CAI cannot deny
Court previously stated in China Air Lines and reiterated in Air France vs. liability as it benefited from Mager’s acts, which were performed in compliance with
Gillego,24 “in an action based on a breach of contract of carriage, the aggrieved party Holiday Travel’s obligations as CAI’s agent.
does not have to prove that the common carrier was at fault or was negligent. All that
he has to prove is the existence of the contract and the fact of its non-performance by
the carrier.”
However, a person’s vicarious liability is anchored on his possession of
control, whether absolute or limited, on the tortfeasor. Without such control, there is
nothing which could justify extending the liability to a person other than the one who
Spouses Viloria’s cause of action on the basis of Mager’s alleged fraudulent committed the tort. As this Court explained in Cangco v. Manila Railroad Co.:25
misrepresentation is clearly one of tort or quasi-delict, there being no pre-existing
contractual relationship between them. Therefore, it was incumbent upon Spouses
Viloria to prove that CAI was equally at fault. With respect to extra-contractual obligation arising from
negligence, whether of act or omission, it is competent for the
legislature to elect — and our Legislature has so elected — to limit
such liability to cases in which the person upon whom such an
obligation is imposed is morally culpable or, on the contrary, for
However, the records are devoid of any evidence by which CAI’s alleged reasons of public policy, to extend that liability, without regard
to the lack of moral culpability, so as to include responsibility
liability can be substantiated. Apart from their claim that CAI must be held liable for for the negligence of those persons whose acts or omissions are
Mager’s supposed fraud because Holiday Travel is CAI’s agent, Spouses Viloria did imputable, by a legal fiction, to others who are in a position to
exercise an absolute or limited control over them. The
not present evidence that CAI was a party or had contributed to Mager’s complained legislature which adopted our Civil Code has elected to limit extra-
contractual liability — with certain well-defined exceptions — to
act either by instructing or authorizing Holiday Travel and Mager to issue the said
cases in which moral culpability can be directly imputed to the
misrepresentation. persons to be charged. This moral responsibility may consist in
having failed to exercise due care in one's own acts, or in having
failed to exercise due care in the selection and control of one's
agent or servants, or in the control of persons who, by reasons of
their status, occupy a position of dependency with respect to the
person made liable for their conduct.26 (emphasis supplied)
It may seem unjust at first glance that CAI would consider Spouses Viloria
bound by the terms and conditions of the subject contracts, which Mager entered into
with them on CAI’s behalf, in order to deny Spouses Viloria’s request for a refund or
Fernando’s use of Lourdes’ ticket for the re-issuance of a new one, and
simultaneously claim that they are not bound by Mager’s supposed misrepresentation It is incumbent upon Spouses Viloria to prove that CAI exercised control or
for purposes of avoiding Spouses Viloria’s claim for damages and maintaining the supervision over Mager by preponderant evidence. The existence of control or
 entitled to a refund.
supervision cannot be presumed and CAI is under no obligation to prove its denial or
Mager’s statement
nugatory assertion. Citing Belen v. Belen,27 this Court ruled in Jayme v. cannot be considered
a causal fraud that
Apostol,28 that: would justify the
annulment of the
subject contracts
that would oblige
CAI to indemnify
In Belen v. Belen, this Court ruled that it was enough for defendant Spouses Viloria and
to deny an alleged employment relationship. The defendant is return the money
under no obligation to prove the negative averment. This Court they paid for the
said: subject tickets.

“It is an old and well-settled rule of the

courts that the burden of proving the action is
upon the plaintiff, and that if he fails
satisfactorily to show the facts upon which he Article 1390, in relation to Article 1391 of the Civil Code, provides that if
bases his claim, the defendant is under no
obligation to prove his exceptions. This [rule] is the consent of the contracting parties was obtained through fraud, the contract is
in harmony with the provisions of Section 297 of considered voidable and may be annulled within four (4) years from the time of the
the Code of Civil Procedure holding that each
party must prove his own affirmative allegations, discovery of the fraud. Once a contract is annulled, the parties are obliged under
etc.”29 (citations omitted) Article 1398 of the same Code to restore to each other the things subject matter of
the contract, including their fruits and interest.

Therefore, without a modicum of evidence that CAI exercised control over Holiday On the basis of the foregoing and given the allegation of Spouses Viloria
Travel’s employees or that CAI was equally at fault, no liability can be imposed on that Fernando’s consent to the subject contracts was supposedly secured by Mager
CAI for Mager’s supposed misrepresentation. through fraudulent means, it is plainly apparent that their demand for a refund is
tantamount to seeking for an annulment of the subject contracts on the ground of
vitiated consent.
III. Even on the
assumption that CAI
may be held liable
for the acts of
Mager, still, Spouses
Viloria are not
 Whether the subject contracts are annullable, this Court is required to
determine whether Mager’s alleged misrepresentation constitutes causal fraud. Art. 1344. In order that fraud may make
a contract voidable, it should be serious and
Similar to the dispute on the existence of an agency, whether fraud attended the
should not have been employed by both
execution of a contract is factual in nature and this Court, as discussed above, may contracting parties.
scrutinize the records if the findings of the CA are contrary to those of the RTC.

To quote Tolentino again, the “misrepresentation

constituting the fraud must be established by full, clear, and
convincing evidence, and not merely by a preponderance thereof.
Under Article 1338 of the Civil Code, there is fraud when, through insidious The deceit must be serious. The fraud is serious when it is
words or machinations of one of the contracting parties, the other is induced to enter sufficient to impress, or to lead an ordinarily prudent person into
error; that which cannot deceive a prudent person cannot be a
into a contract which, without them, he would not have agreed to. In order that fraud ground for nullity. The circumstances of each case should be
considered, taking into account the personal conditions of the
may vitiate consent, it must be the causal (dolo causante), not merely the incidental
victim.”34
(dolo incidente), inducement to the making of the contract.30 In Samson v. Court of
Appeals,31 causal fraud was defined as “a deception employed by one party prior to
or simultaneous to the contract in order to secure the consent of the other.”32

After meticulously poring over the records, this Court finds that the fraud
alleged by Spouses Viloria has not been satisfactorily established as causal in nature
Also, fraud must be serious and its existence must be established by clear
to warrant the annulment of the subject contracts. In fact, Spouses Viloria failed to
and convincing evidence. As ruled by this Court in Sierra v. Hon. Court of Appeals,
prove by clear and convincing evidence that Mager’s statement was fraudulent.
et al.,33 mere preponderance of evidence is not adequate:
Specifically, Spouses Viloria failed to prove that (a) there were indeed available
seats at Amtrak for a trip to New Jersey on August 13, 1997 at the time they spoke
with Mager on July 21, 1997; (b) Mager knew about this; and (c) that she purposely
Fraud must also be discounted, for according to the Civil informed them otherwise.
Code:

Art. 1338. There is fraud when, through

This Court finds the only proof of Mager’s alleged fraud, which is
insidious words or machinations of one of the
contracting parties, the other is induced to enter Fernando’s testimony that an Amtrak had assured him of the perennial availability of
into a contract which without them, he would not
have agreed to. seats at Amtrak, to be wanting. As CAI correctly pointed out and as Fernando
 ceased, the person who has a right to invoke it should execute an
admitted, it was possible that during the intervening period of three (3) weeks from act which necessarily implies an intention to waive his right.
the time Fernando purchased the subject tickets to the time he talked to said Amtrak
employee, other passengers may have cancelled their bookings and reservations with
Amtrak, making it possible for Amtrak to accommodate them. Indeed, the existence
of fraud cannot be proved by mere speculations and conjectures. Fraud is never
lightly inferred; it is good faith that is. Under the Rules of Court, it is presumed that Implied ratification may take diverse forms, such as by silence or

"a person is innocent of crime or wrong" and that "private transactions have been fair acquiescence; by acts showing approval or adoption of the contract; or by acceptance

and regular."35 Spouses Viloria failed to overcome this presumption. and retention of benefits flowing therefrom.36

IV. Assuming the contrary, Simultaneous with their demand for a refund on the ground of Fernando’s
Spouses Viloria are
nevertheless deemed to have vitiated consent, Spouses Viloria likewise asked for a refund based on CAI’s
ratified the subject contracts.
supposed bad faith in reneging on its undertaking to replace the subject tickets with a
round trip ticket from Manila to Los Angeles.

Even assuming that Mager’s representation is causal fraud, the subject In doing so, Spouses Viloria are actually asking for a rescission of the
contracts have been impliedly ratified when Spouses Viloria decided to exercise their
subject contracts based on contractual breach. Resolution, the action referred to in
right to use the subject tickets for the purchase of new ones. Under Article 1392 of
Article 1191, is based on the defendant’s breach of faith, a violation of the
the Civil Code, “ratification extinguishes the action to annul a voidable contract.”
reciprocity between the parties37 and in Solar Harvest, Inc. v. Davao Corrugated
Carton Corporation,38 this Court ruled that a claim for a reimbursement in view of
the other party’s failure to comply with his obligations under the contract is one for

Ratification of a voidable contract is defined under Article 1393 of the Civil rescission or resolution.

Code as follows:

However, annulment under Article 1390 of the Civil Code and rescission
Art. 1393. Ratification may be effected expressly or tacitly. It is under Article 1191 are two (2) inconsistent remedies. In resolution, all the elements
understood that there is a tacit ratification if, with knowledge of the
reason which renders the contract voidable and such reason having to make the contract valid are present; in annulment, one of the essential elements to
a formation of a contract, which is consent, is absent. In resolution, the defect is in
the consummation stage of the contract when the parties are in the process of The power to rescind obligations is implied in reciprocal ones, in
case one of the obligors should not comply with what is incumbent
performing their respective obligations; in annulment, the defect is already present at
upon him.
the time of the negotiation and perfection stages of the contract. Accordingly, by
pursuing the remedy of rescission under Article 1191, the Vilorias had impliedly
admitted the validity of the subject contracts, forfeiting their right to demand their The injured party may choose between the fulfilment and the
annulment. A party cannot rely on the contract and claim rights or obligations under rescission of the obligation, with the payment of damages in either
case. He may also seek rescission, even after he has chosen
it and at the same time impugn its existence or validity. Indeed, litigants are enjoined fulfillment, if the latter should become impossible.
from taking inconsistent positions.39

The court shall decree the rescission claimed, unless there be just
cause authorizing the fixing of a period.
V. Contracts cannot be
rescinded for a slight or
casual breach.
This is understood to be without prejudice to the rights of third
persons who have acquired the thing, in accordance with articles
1385 and 1388 and the Mortgage Law.

CAI cannot insist on the non-

transferability of the subject
tickets.

According to Spouses Viloria, CAI acted in bad faith and breached the
subject contracts when it refused to apply the value of Lourdes’ ticket for Fernando’s
purchase of a round trip ticket to Los Angeles and in requiring him to pay an amount
higher than the price fixed by other airline companies.
Considering that the subject contracts are not annullable on the ground of
vitiated consent, the next question is: “Do Spouses Viloria have the right to rescind
the contract on the ground of CAI’s supposed breach of its undertaking to issue new
tickets upon surrender of the subject tickets?” In its March 24, 1998 letter, CAI stated that “non-refundable tickets may be
used as a form of payment toward the purchase of another Continental ticket for
$75.00, per ticket, reissue fee ($50.00, per ticket, for tickets purchased prior to
Article 1191, as presently worded, states: October 30, 1997).”
 inform Spouses Viloria thereof, CAI cannot refuse to apply the value of Lourdes’
ticket as payment for Fernando’s purchase of a new ticket.
Clearly, there is nothing in the above-quoted section of CAI’s letter from
which the restriction on the non-transferability of the subject tickets can be inferred.
In fact, the words used by CAI in its letter supports the position of Spouses Viloria,
CAI’s refusal to accept
that each of them can use the ticket under their name for the purchase of new tickets Lourdes’ ticket for the
purchase of a new ticket for
whether for themselves or for some other person.
Fernando is only a casual
breach.

Moreover, as CAI admitted, it was only when Fernando had expressed his
interest to use the subject tickets for the purchase of a round trip ticket between
Manila and Los Angeles that he was informed that he cannot use the ticket in Nonetheless, the right to rescind a contract for non-performance of its
Lourdes’ name as payment. stipulations is not absolute. The general rule is that rescission of a contract will not
be permitted for a slight or casual breach, but only for such substantial and
fundamental violations as would defeat the very object of the parties in making the
agreement.40 Whether a breach is substantial is largely determined by the attendant
Contrary to CAI’s claim, that the subject tickets are non-transferable cannot
circumstances.41
be implied from a plain reading of the provision printed on the subject tickets stating
that “[t]o the extent not in conflict with the foregoing carriage and other services
performed by each carrier are subject to: (a) provisions contained in this ticket, x x x
(iii) carrier’s conditions of carriage and related regulations which are made part While CAI’s refusal to allow Fernando to use the value of Lourdes’ ticket as
hereof (and are available on application at the offices of carrier) x x x.” As a payment for the purchase of a new ticket is unjustified as the non-transferability of
common carrier whose business is imbued with public interest, the exercise of the subject tickets was not clearly stipulated, it cannot, however be considered
extraordinary diligence requires CAI to inform Spouses Viloria, or all of its substantial. The endorsability of the subject tickets is not an essential part of the
passengers for that matter, of all the terms and conditions governing their contract of underlying contracts and CAI’s failure to comply is not essential to its fulfillment of
carriage. CAI is proscribed from taking advantage of any ambiguity in the contract of its undertaking to issue new tickets upon Spouses Viloria’s surrender of the subject
carriage to impute knowledge on its passengers of and demand compliance with a tickets. This Court takes note of CAI’s willingness to perform its principal obligation
certain condition or undertaking that is not clearly stipulated. Since the prohibition and this is to apply the price of the ticket in Fernando’s name to the price of the
on transferability is not written on the face of the subject tickets and CAI failed to round trip ticket between Manila and Los Angeles. CAI was likewise willing to
accept the ticket in Lourdes’ name as full or partial payment as the case may be for
the purchase of any ticket, albeit under her name and for her exclusive use. In other reduction coming from the value of the subject tickets. It cannot be denied that
words, CAI’s willingness to comply with its undertaking under its March 24, 1998 Spouses Viloria had the concomitant obligation to pay whatever is not covered by
cannot be doubted, albeit tainted with its erroneous insistence that Lourdes’ ticket is the value of the subject tickets whether or not the subject tickets are transferable or
non-transferable. not.

Moreover, Spouses Viloria’s demand for rescission cannot prosper as CAI There is also no showing that Spouses Viloria were discriminated against in
cannot be solely faulted for the fact that their agreement failed to consummate and no bad faith by being charged with a higher rate. The only evidence the petitioners
new ticket was issued to Fernando. Spouses Viloria have no right to insist that a presented to prove that the price of a round trip ticket between Manila and Los
single round trip ticket between Manila and Los Angeles should be priced at around Angeles at that time was only $856.00 is a newspaper advertisement for another
$856.00 and refuse to pay the difference between the price of the subject tickets and airline company, which is inadmissible for being “hearsay evidence, twice removed.”
the amount fixed by CAI. The petitioners failed to allege, much less prove, that CAI Newspaper clippings are hearsay if they were offered for the purpose of proving the
had obliged itself to issue to them tickets for any flight anywhere in the world upon truth of the matter alleged. As ruled in Feria v. Court of Appeals,:44
their surrender of the subject tickets. In its March 24, 1998 letter, it was clearly stated
that “[n]on-refundable tickets may be used as a form of payment toward the purchase
of another Continental ticket”42 and there is nothing in it suggesting that CAI had [N]ewspaper articles amount to “hearsay evidence, twice removed”
obliged itself to protect Spouses Viloria from any fluctuation in the prices of tickets and are therefore not only inadmissible but without any probative
value at all whether objected to or not, unless offered for a purpose
or that the surrender of the subject tickets will be considered as full payment for any other than proving the truth of the matter asserted. In this case, the
ticket that the petitioners intend to buy regardless of actual price and destination. The news article is admissible only as evidence that such publication
does exist with the tenor of the news therein stated.45(citations
CA was correct in holding that it is CAI’s right and exclusive prerogative to fix the omitted)
prices for its services and it may not be compelled to observe and maintain the prices
of other airline companies.43

The records of this case demonstrate that both parties were equally in
The conflict as to the endorsability of the subject tickets is an altogether default; hence, none of them can seek judicial redress for the cancellation or
different matter, which does not preclude CAI from fixing the price of a round trip resolution of the subject contracts and they are therefore bound to their respective
ticket between Manila and Los Angeles in an amount it deems proper and which obligations thereunder. As the 1st sentence of Article 1192 provides:
does not provide Spouses Viloria an excuse not to pay such price, albeit subject to a
 Art. 1192. In case both parties have committed a Sulpicio M. Tolentino for damages, in the form of penalties and
breach of the obligation, the liability of the first infractor shall surcharges, for not paying his overdue P17,000.00 debt. x x x.47
be equitably tempered by the courts. If it cannot be determined
which of the parties first violated the contract, the same shall be
deemed extinguished, and each shall bear his own damages.
(emphasis supplied)
Another consideration that militates against the propriety of holding CAI
liable for moral damages is the absence of a showing that the latter acted fraudulently
and in bad faith. Article 2220 of the Civil Code requires evidence of bad faith and
Therefore, CAI’s liability for damages for its refusal to accept Lourdes’
fraud and moral damages are generally not recoverable in culpa contractual except
ticket for the purchase of Fernando’s round trip ticket is offset by Spouses Viloria’s
when bad faith had been proven.48The award of exemplary damages is likewise not
liability for their refusal to pay the amount, which is not covered by the subject
warranted. Apart from the requirement that the defendant acted in a wanton,
tickets. Moreover, the contract between them remains, hence, CAI is duty bound to
oppressive and malevolent manner, the claimant must prove his entitlement to moral
issue new tickets for a destination chosen by Spouses Viloria upon their surrender of
damages.49
the subject tickets and Spouses Viloria are obliged to pay whatever amount is not
covered by the value of the subject tickets.

WHEREFORE, premises considered, the instant Petition is DENIED.

This Court made a similar ruling in Central Bank of the Philippines v. Court
of Appeals.46 Thus:
SO ORDERED.

Since both parties were in default in the performance of

their respective reciprocal obligations, that is, Island Savings Bank
failed to comply with its obligation to furnish the entire loan and
Sulpicio M. Tolentino failed to comply with his obligation to pay
his P17,000.00 debt within 3 years as stipulated, they are both
liable for damages.

Article 1192 of the Civil Code provides that in case both

parties have committed a breach of their reciprocal obligations, the
liability of the first infractor shall be equitably tempered by the
courts. WE rule that the liability of Island Savings Bank for
damages in not furnishing the entire loan is offset by the liability of
G.R. No. L-22272 June 26, 1967 Calamba to Manila. The stipulation of facts is clear that when Devesa shot
and killed Gillaco, Devesa was assigned to guard the Manila-San Fernando
ANTONIA MARANAN, plaintiff-appellant, (La Union) trains, and he was at Paco Station awaiting transportation to
vs. Tutuban, the starting point of the train that he was engaged to guard. In fact,
PASCUAL PEREZ, ET AL., defendants. his tour of duty was to start at 9:00 two hours after the commission of the
PASCUAL PEREZ, defendant appellant. crime. Devesa was therefore under no obligation to safeguard the
passengers of the Calamba-Manila train, where the deceased was riding;
Pedro Panganiban for plaintiff-appellant. and the killing of Gillaco was not done in line of duty. The position of
Magno T. Bueser for defendant-appellant. Devesa at the time was that of another would be passenger, a stranger also
awaiting transportation, and not that of an employee assigned to discharge
any of the duties that the Railroad had assumed by its contract with the
BENGZON, J.P., J.: deceased. As a result, Devesa's assault can not be deemed in law a breach of
Gillaco's contract of transportation by a servant or employee of the carrier. .
Rogelio Corachea, on October 18, 1960, was a passenger in a taxicab owned and . . (Emphasis supplied)
operated by Pascual Perez when he was stabbed and killed by the driver, Simeon
Valenzuela. Now here, the killing was perpetrated by the driver of the very cab transporting the
passenger, in whose hands the carrier had entrusted the duty of executing the contract
Valenzuela was prosecuted for homicide in the Court of First Instance of Batangas. of carriage. In other words, unlike the Gillaco case, the killing of the passenger here
Found guilty, he was sentenced to suffer imprisonment and to indemnify the heirs of took place in the course of duty of the guilty employee and when the employee was
the deceased in the sum of P6,000. Appeal from said conviction was taken to the acting within the scope of his duties.
Court of Appeals.1äwphï1.ñët
Moreover, the Gillaco case was decided under the provisions of the Civil Code of
On December 6 1961, while appeal was pending in the Court of Appeals, Antonia 1889 which, unlike the present Civil Code, did not impose upon common carriers
Maranan, Rogelio's mother, filed an action in the Court of First Instance of Batangas absolute liability for the safety of passengers against wilful assaults or negligent acts
to recover damages from Perez and Valenzuela for the death of her son. Defendants committed by their employees. The death of the passenger in the Gillaco case was
asserted that the deceased was killed in self-defense, since he first assaulted the truly a fortuitous event which exempted the carrier from liability. It is true that Art.
driver by stabbing him from behind. Defendant Perez further claimed that the death 1105 of the old Civil Code on fortuitous events has been substantially reproduced in
was a caso fortuito for which the carrier was not liable. Art. 1174 of the Civil Code of the Philippines but both articles clearly remove from
their exempting effect the case where the law expressly provides for liability in spite
The court a quo, after trial, found for the plaintiff and awarded her P3,000 as of the occurrence of force majeure. And herein significantly lies the statutory
damages against defendant Perez. The claim against defendant Valenzuela was difference between the old and present Civil Codes, in the backdrop of the factual
dismissed. From this ruling, both plaintiff and defendant Perez appealed to this situation before Us, which further accounts for a different result in theGillaco case.
Court, the former asking for more damages and the latter insisting on non-liability. Unlike the old Civil Code, the new Civil Code of the Philippines expressly makes the
Subsequently, the Court of Appeals affirmed the judgment of conviction earlier common carrier liable for intentional assaults committed by its employees upon its
mentioned, during the pendency of the herein appeal, and on May 19, 1964, final passengers, by the wording of Art. 1759 which categorically states that
judgment was entered therein. (Rollo, p. 33).
Common carriers are liable for the death of or injuries to passengers through
Defendant-appellant relies solely on the ruling enunciated in Gillaco v. Manila the negligence or willful acts of the former's employees, although such
Railroad Co., 97 Phil. 884, that the carrier is under no absolute liability for assaults employees may have acted beyond the scope of their authority or in
of its employees upon the passengers. The attendant facts and controlling law of that violation of the orders of the common carriers.
case and the one at bar are very different however. In the Gillaco case, the passenger
was killed outside the scope and the course of duty of the guilty employee. As this The Civil Code provisions on the subject of Common Carriers1 are new and were
Court there found: taken from Anglo-American Law.2 There, the basis of the carrier's liability for
assaults on passengers committed by its drivers rests either on (1) the doctrine
x x x when the crime took place, the guard Devesa had no duties to of respondeat superior or (2) the principle that it is the carrier's implied duty to
discharge in connection with the transportation of the deceased from transport the passenger safely.3
Under the first, which is the minority view, the carrier is liable only when the act of awardmoral damages in addition to compensatory damages, to the parents of the
the employee is within the scope of his authority and duty. It is not sufficient that the passenger killed to compensate for the mental anguish they suffered. A claim
act be within the course of employment only.4 therefor, having been properly made, it becomes the court's duty to award moral
damages.9 Plaintiff demands P5,000 as moral damages; however, in the
Under the second view, upheld by the majority and also by the later cases, it is circumstances, We consider P3,000 moral damages, in addition to the P6,000
enough that the assault happens within the course of the employee's duty. It is no damages afore-stated, as sufficient. Interest upon such damages are also due to
defense for the carrier that the act was done in excess of authority or in disobedience plaintiff-appellant. 10
of the carrier's orders.5 The carrier's liability here is absolute in the sense that it
practically secures the passengers from assaults committed by its own employees.6 Wherefore, with the modification increasing the award of actual damages in
plaintiff's favor to P6,000, plus P3,000.00 moral damages, with legal interest on both
As can be gleaned from Art. 1759, the Civil Code of the Philippines evidently from the filing of the complaint on December 6, 1961 until the whole amount is paid,
follows the rule based on the second view. At least three very cogent reasons the judgment appealed from is affirmed in all other respects. No costs. So ordered.
underlie this rule. As explained in Texas Midland R.R. v. Monroe, 110 Tex. 97, 216
S.W. 388, 389-390, and Haver v. Central Railroad Co., 43 LRA 84, 85: (1) the Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez and Castro,
special undertaking of the carrier requires that it furnish its passenger that full JJ., concur.
measure of protection afforded by the exercise of the high degree of care prescribed
by the law, inter alia from violence and insults at the hands of strangers and other
passengers, but above all, from the acts of the carrier's own servants charged with the
passenger's safety; (2) said liability of the carrier for the servant's violation of duty to
passengers, is the result of the formers confiding in the servant's hands the
performance of his contract to safely transport the passenger, delegating therewith
the duty of protecting the passenger with the utmost care prescribed by law; and (3)
as between the carrier and the passenger, the former must bear the risk of wrongful
acts or negligence of the carrier's employees against passengers, since it, and not the
passengers, has power to select and remove them.

Accordingly, it is the carrier's strict obligation to select its drivers and similar
employees with due regard not only to their technical competence and physical
ability, but also, no less important, to their total personality, including their patterns
of behavior, moral fibers, and social attitude.

Applying this stringent norm to the facts in this case, therefore, the lower court
rightly adjudged the defendant carrier liable pursuant to Art. 1759 of the Civil Code.
The dismissal of the claim against the defendant driver was also correct. Plaintiff's
action was predicated on breach of contract of carriage 7 and the cab driver was not a
party thereto. His civil liability is covered in the criminal case wherein he was
convicted by final judgment.

In connection with the award of damages, the court a quo granted only P3,000 to
plaintiff-appellant. This is the minimum compensatory damages amount recoverable
under Art. 1764 in connection with Art. 2206 of the Civil Code when a breach of
contract results in the passenger's death. As has been the policy followed by this
Court, this minimal award should be increased to P6,000. As to other alleged actual
damages, the lower court's finding that plaintiff's evidence thereon was not
convincing,8 should not be disturbed. Still, Arts. 2206 and 1764
G.R. No. L-8034 November 18, 1955 delicto, under Art. 103 of the Revised Penal Code, because the crime was not
committed while the slayer was in the actual performance of his ordinary duties and
CORNELIA A. DE GILLACO, ET AL., plaintiffs-appellees, service; nor is it responsible ex contractu, since the complaint did not aver sufficient
vs. facts to establish such liability, and no negligence on appellant's party was shown.
MANILA RAILROAD COMPANY, defendant-appellant. The Court below held the Railroad company responsible on the ground that a
contract of transportation implies protection of the passengers against acts of
personal violence by the agents or employees of the carrier.
First Assistant Corporate Counsel Federico C. Alikpala and Attorney Higino R.
Francisco for appellant.
Restituto Luna for appellees. There can be no quarrel with the principle that a passenger is entitled to protection
from personal violence by the carrier or its agents or employees, since the contract of
transportation obligates the carrier to transport a passenger safely to his destination.
REYES, J.B.L., J.:
But under the law of the case, this responsibility extends only to those that the carrier
could foresee or avoid through the exercise of the degree of car and diligence
The Manila Railroad Company has appealed from a judgment of the Court of First required of it.
Instance of Laguna sentencing it to pay P4,000 damages to the appellees herein, the
widow and children of the late Tomas Gillaco, shot by an employee of the Company
Discussing the basis of a carrier's liability under the old Civil Code of 1889 (which
in April, 1946.
was in force in 1946, when Gillaco was shot) this Court said in Lasam vs. Smith (45
Phil., 657):
The judgment was rendered upon the following stipulation of facts:
In our opinion, the conclusions of the court below are entirely correct. That
That at about 7:30 a.m., on the morning of April 1, 1946, Lieut. Tomas upon the facts stated the defendant's liability, if any, is contractual, is well
Gillaco, husband of the plaintiff, was a passenger in the early morning train settled by previous decisions of the court, beginning with the case of
of the Manila Railroad Company from Calamba, Laguna to Manila; Rakes vs. Atlantic, Gulf & Pacific Co. (7 Phil., 359), and the distinction
between extra-contractual liability and contractual liability has been so ably
That when the train reached the Paco Railroad station, Emilio Devesa, a and exhaustively discussed in various other cases that nothing further need
train guard of the Manila Railroad Company assigned in the Manila-San here be said upon that subject. (See Cangco vs. Manila Railroad Co., 38
Fernando, La Union Line, happened to be in said station waiting for the Phil., 768; Manila Railroad vs. Compañia Transatlantica and Atlantic, Gulf
same train which would take him to Tutuban Station, where he was going to & Pacific Co., 38 Phil., 875; De Guia vs. Manila Electric Railroad & Light
report for duty; Co., 40 Phil., 706). It is sufficient to reiterate that the source of the
defendant's legal liability is the contract of carriage; that by entering into
That Emilio Devesa had a long standing personal grudge against Tomas that contract he bound himself to carry the plaintiff safely and securely to
Gillaco, same dating back during the Japanese occupation; their destination; and that having failed to do so he is liable in damages
unless he shows that the failure to fulfill his obligation was due to causes
That because of this personal grudge, Devesa shot Gillaco with the carbine mentioned in article 1105 of the Civil Code, which reads as follows:
furnished to him by the Manila Railroad Company for his use as such train
guard, upon seeing him inside the train coach; "No one shall be liable for events which could not be foreseen or which,
even if foreseen, were inevitable, with the exception of the cases in which
That Tomas Gillaco died as a result of the would which he sustained from the law expressly provides otherwise and those in which the obligation itself
the shot fired by Devesa. imposes such liability."

It is also undisputed that Devesa was convicted with homicide by final judgment of The act of guard Devesa in shooting passenger Gillaco (because of a personal grudge
the Court of Appeals. nurtured against the latter since the Japanese occupation) was entirely unforeseeable
by the Manila Railroad Co. The latter had no means to ascertain or anticipate that the
two would meet, nor could it reasonably foresee every personal rancor that might
Appellant's contention is that, on the foregoing facts, no liability attaches to it as
exist between each one of its many employees and any one of the thousands of
employer of the killer, Emilio Devesa; that it is not responsible subsidiary ex
eventual passengers riding in its trains. The shooting in question was therefore "caso said, we think, that there is any such delegation to the employees at a station
fortuito" within the definition of article 105 of the old Civil Code, being both with reference to passenger embarking at another or traveling on the train.
unforeseeable and inevitable under the given circumstances; and pursuant to Of course, we are speaking only of the principle which holds a carrier
established doctrine, the resulting breach of appellant's contract of safe carriage with responsible for wrong done to passenger by servants acting in their own
the late Tomas Gillaco was excused thereby. interest, and not in that of the employer. That principle is not the ordinary
rule, respondent superior, by which the employer is held responsible only
No doubt that a common carrier is held to a very high degree of care and diligence in for act or omissions of the employee in the scope of his employment; but
the protection of its passengers; but, considering the vast and complex activities of the only reason in our opinion for a broader liability arises from the fact that
modern rail transportation, to require of appellant that it should guard against all the servant, in mistreating the passenger wholly for some private purpose of
possible misunderstanding between each and every one of its employees and every his own, in the very act, violates the contractual obligation of the employer
passenger that might chance to ride in its conveyances at any time, strikes us as for the performance of which he has put the employee in his place. The
demanding diligence beyond what human care and foresight can provide. reason does not exist where the employee who committed the assault was
never in a position in which it became his duty to his employer to represent
The lower Court and the appellees both relied on the American authorities that him in discharging any duty of the latter toward the passenger. The
particularly hold carriers to be insurers of the safety of their passengers against proposition that the carrier clothes every employee engaged in the
transportation business with the comprehensive duty of protecting every
willful assault and intentional ill treatment on the part of their servants, it being
passenger with whom he may in any way come in contact, and hereby
immaterial that the act should be one of private retribution on the part of the servant,
makes himself liable for every assault commited by such servant, without
impelled by personal malice toward the passenger (10 Am. Jur. 108; Ed. Note to
regard to the inquiry whether or not the passenger has come within the
Gassenheimer vs. Wester R. Co. 40 LRA (NS), p. 999, et seq.) But as can be inferred
from the previous jurisprudence of this Court , the Civil Code of 1889 did not impose sphere of duty of that servant as indicated by the employment, is regarded
such absolute liability (Lasam vs. Smith, supra). The liability of a carrier as an as not only not sustained by the authorities, but as being unsound and
oppressive both to the employer and the employee. (Houston & T. C. R. Co.
insurer was not recognized in this jurisdiction (Government vs. Inchausti & Co., 40
vs. Bush, 32 LRA (NS), p. 1205.)
Phil., 219; Oriental Comm. Co. vs. Naviera Filipina, 38 Off. Gaz., 1020).

Another very important consideration that must be borne in mind is that, when the Wherefore, the judgment appealed from is reversed and the complaint ordered
dismissed, without cost. So ordered.
crime took place, the guard Devesa had no duties to discharge in connection with the
transportation of the deceased from Calamba to Manila. The stipulation of facts is
clear that when Devesa shot and killed Gillaco, Devesa was assigned to guard the Bengzon, Padilla, Montemayor, Reyes, A., Jugo, Bautista Angelo, and Concepcion,
Manila-San Fernando (La Union) trains, and he was at Paco Station awaiting JJ., concur.
transportation to Tutuban, the starting point of the train that he was engaged to guard.
In fact, his tour of duty was to start at 9:00 a.m., two hours after the commission of
the crime. Devesa was therefore under no obligation to safeguard the passenger of
the Calamba-Manila train, where the deceased was riding; and the killing of Gillaco
was not done in line of duty. The position of Devesa at the time was that of another
would be passenger, a stranger also awaiting transportation, and not that of an
employee assigned to discharge any of the duties that the Railroad had assumed by
its contract with the deceased. As a result, Devesa's assault cannot be deemed in law
a breach of Gillaco's contract of transportation by a servant or employee of the
carrier. We agree with the position taken by the Supreme Court of Texas in a similar
case, where it held:

The only good reason for making the carrier responsible for the misconduct
of the servant perpetrated in his own interest, and not in that of his
employer, or otherwise within the scope of his employment, is that the
servant is clothed with the delegated authority, and charge with the duty by
the carrier, to execute his undertaking with the passenger. And it cannot be
BACHELOR EXPRESS, INCORPORATED, and CRESENCIO corporation had exercised due diligence in the choice of its employees to avoid as
RIVERA, petitioners, much as possible accidents; the incident on August 1, 1980 was not a traffic accident
vs. or vehicular accident; it was an incident or event very much beyond the control of
THE HONORABLE COURT OF APPEALS (Sixth Division), RICARDO the defendants; defendants were not parties to the incident complained of as it was an
BETER, SERGIA BETER, TEOFILO RAUTRAUT and ZOETERA act of a third party who is not in any way connected with the defendants and of
RAUTRAUT, respondents. which the latter have no control and supervision; ..." (Rollo, pp. 112-113).i•t•c-aüsl

Aquino W. Gambe for petitioners. After due trial, the trial court issued an order dated August 8, 1985 dismissing the
complaint.
Tranquilino O. Calo, Jr. for private respondents.
Upon appeal however, the trial court's decision was reversed and set aside. The
dispositive portion of the decision of the Court of Appeals states:

GUTIERREZ, JR., J.: WHEREFORE, the Decision appealed from is REVERSED and
SET ASIDE and a new one entered finding the appellees jointly
and solidarily liable to pay the plaintiffs-appellants the following
This is a petition for review of the decision of the Court of Appeals which reversed
and set aside the order of the Regional Trial Court, Branch I, Butuan City dismissing amounts:
the private respondents' complaint for collection of "a sum of money" and finding the
petitioners solidarily liable for damages in the total amount of One Hundred Twenty 1) To the heirs of Ornominio Beter, the amount of Seventy Five
Thousand Pesos (P120,000.00). The petitioners also question the appellate court's Thousand Pesos (P75,000.00) in loss of earnings and support,
resolution denying a motion for reconsideration. moral damages, straight death indemnity and attorney's fees; and,

On August 1, 1980, Bus No. 800 owned by Bachelor Express, Inc. and driven by 2) To the heirs of Narcisa Rautraut, the amount of Forty Five
Cresencio Rivera was the situs of a stampede which resulted in the death of Thousand Pesos (P45,000.00) for straight death indemnity, moral
passengers Ornominio Beter and Narcisa Rautraut. damages and attorney's fees. Costs against appellees. (Rollo, pp.
71-72)
The evidence shows that the bus came from Davao City on its way to Cagayan de
Oro City passing Butuan City; that while at Tabon-Tabon, Butuan City, the bus The petitioners now pose the following questions
picked up a passenger; that about fifteen (15) minutes later, a passenger at the rear
portion suddenly stabbed a PC soldier which caused commotion and panic among the What was the proximate cause of the whole incident? Why were
passengers; that when the bus stopped, passengers Ornominio Beter and Narcisa the passengers on board the bus panicked (sic) and why were they
Rautraut were found lying down the road, the former already dead as a result of head shoving one another? Why did Narcisa Rautraut and Ornominio
injuries and the latter also suffering from severe injuries which caused her death Beter jump off from the running bus?
later. The passenger assailant alighted from the bus and ran toward the bushes but
was killed by the police. Thereafter, the heirs of Ornominio Beter and Narcisa The petitioners opine that answers to these questions are material to arrive at "a fair,
Rautraut, private respondents herein (Ricardo Beter and Sergia Beter are the parents just and equitable judgment." (Rollo, p. 5) They claim that the assailed decision is
of Ornominio while Teofilo Rautraut and Zoetera [should be Zotera] Rautraut are the based on a misapprehension of facts and its conclusion is grounded on speculation,
parents of Narcisa) filed a complaint for "sum of money" against Bachelor Express, surmises or conjectures.
Inc. its alleged owner Samson Yasay and the driver Rivera.
As regards the proximate cause of the death of Ornominio Beter and Narcisa
In their answer, the petitioners denied liability for the death of Ornominio Beter and Rautraut, the petitioners maintain that it was the act of the passenger who ran amuck
Narcisa Rautraut. They alleged that ... the driver was able to transport his passengers and stabbed another passenger of the bus. They contend that the stabbing incident
safely to their respective places of destination except Ornominio Beter and Narcisa triggered off the commotion and panic among the passengers who pushed one
Rautraut who jumped off the bus without the knowledge and consent, much less, the another and that presumably out of fear and moved by that human instinct of self-
fault of the driver and conductor and the defendants in this case; the defendant preservation Beter and Rautraut jumped off the bus while the bus was still running
resulting in their untimely death." (Rollo, p. 6) Under these circumstances, the In the case at bar, Ornominio Beter and Narcisa Rautraut were passengers of a bus
petitioners asseverate that they were not negligent in the performance of their duties belonging to petitioner Bachelor Express, Inc. and, while passengers of the bus,
and that the incident was completely and absolutely attributable to a third person, the suffered injuries which caused their death. Consequently, pursuant to Article 1756 of
passenger who ran amuck, for without his criminal act, Beter and Rautraut could not the Civil Code, petitioner Bachelor Express, Inc. is presumed to have acted
have been subjected to fear and shock which compelled them to jump off the running negligently unless it can prove that it had observed extraordinary diligence in
bus. They argue that they should not be made liable for damages arising from acts of accordance with Articles 1733 and 1755 of the New Civil Code.
third persons over whom they have no control or supervision.
Bachelor Express, Inc. denies liability for the death of Beter and Rautraut on its
Furthermore, the petitioners maintain that the driver of the bus, before, during and posture that the death of the said passengers was caused by a third person who was
after the incident was driving cautiously giving due regard to traffic rules, laws and beyond its control and supervision. In effect, the petitioner, in order to overcome the
regulations. The petitioners also argue that they are not insurers of their passengers presumption of fault or negligence under the law, states that the vehicular incident
as ruled by the trial court. resulting in the death of passengers Beter and Rautraut was caused by force majeure
or caso fortuito over which the common carrier did not have any control.
The liability, if any, of the petitioners is anchored on culpa contractual or breach of
contract of carriage. The applicable provisions of law under the New Civil Code are Article 1174 of the present Civil Code states:
as follows:
Except in cases expressly specified by law, or when it is otherwise
ART. 1732. Common carriers are persons, corporations, firms or declared by stipulations, or when the nature of the obligation
associations engaged in the business of carrying or transporting requires the assumption of risk, no person shall be responsible for
passengers or goods or both by land, water, or air, for those events which could not be foreseen, or which though
compensation, offering their services to the public. foreseen, were inevitable.

ART. 1733. Common carriers, from the nature of their business The above-mentioned provision was substantially copied from Article 1105 of the
and for reasons of public policy, are bound to observe old Civil Code which states"
extraordinary diligence in the vigilance over the goods and for the
safety of the passengers transported by them, according to all the No one shall be liable for events which could not be foreseen or
circumstances of each case. which, even if foreseen, were inevitable, with the exception of the
cases in which the law expressly provides otherwise and those in
xxx xxx xxx which the obligation itself imposes liability.

ART. 1755. A common carrier is bound to carry the passengers In the case of Lasam v. Smith (45 Phil. 657 [1924]), we defined "events" which
safely as far as human care and foresight can provide, using the cannot be foreseen and which, having been foreseen, are inevitable in the following
utmost diligence of very cautious persons, with a due regard for all manner:
the circumstances.
... The Spanish authorities regard the language employed as an
ART. 1756. In case of death of or injuries to passengers, common effort to define the term 'caso fortuito' and hold that the two
carriers are presumed to have been at fault or to have acted expressions are synonymous. (Manresa Comentarios al Codigo
negligently, unless they prove that they observed extraordinary Civil Español, vol. 8, pp. 88 et seq.; Scaevola, Codigo Civil, vol.
diligence as prescribed in Articles 1733 and 1755. 19, pp. 526 et seq.)

There is no question that Bachelor Express, Inc. is a common carrier. Hence, from The antecedent to Article 1105 is found in Law II, Title 33, Partida
the nature of its business and for reasons of public policy Bachelor Express, Inc. is 7, which defines caso fortuito as 'occasion que acaese por aventura
bound to carry its passengers safely as far as human care and foresight can provide de que non se puede ante ver. E son estos, derrivamientos de casas
using the utmost diligence of very cautious persons, with a due regard for all the e fuego que enciende a so ora, e quebrantamiento de navio, fuerca
circumstances. de ladrones' (An event that takes place by incident and could not
 have been foreseen. Examples of this are destruction of houses, of the defendant company or its agents. (Tan Chiong Sian v.
unexpected fire, shipwreck, violence of robbers ...) Inchausti & Co., 22 Phil. 152 [1912]; Emphasis supplied).

Escriche defines caso fortuito as an unexpected event or act of God This principle was reiterated in a more recent case, Batangas Laguna Tayabas Co. v.
which could neither be foreseen nor resisted, such as floods, Intermediate Appellate Court (167 SCRA 379 [1988]), wherein we ruled:
torrents, shipwrecks, conflagrations, lightning, compulsion,
insurrections, destruction of buildings by unforeseen accidents and ... [F]or their defense of force majeure or act of God to prosper the
other occurrences of a similar nature. accident must be due to natural causes and exclusively without
human intervention. (Emphasis supplied)
In discussing and analyzing the term caso fortuito the Enciclopedia
Juridica Española says: 'In a legal sense and, consequently, also in Therefore, the next question to be determined is whether or not the petitioner's
relation to contracts, a caso fortuito presents the following essential common carrier observed extraordinary diligence to safeguard the lives of its
characteristics: (1) The cause of the unforeseen and unexpected passengers.
occurrence, or of the failure of the debtor to comply with his
obligation, must be independent of the human will. (2) It must be
In this regard the trial court and the appellate court arrived at conflicting factual
impossible to foresee the event which constitutes the caso fortuito,
findings.
or if it can be foreseen, it must be impossible to avoid. (3) The
occurrence must be such as to render it impossible for the debtor to
fulfill his obligation in a normal manner. And (4) the obligor The trial court found the following facts:
(debtor) must be free from any participation in the aggravation of
the injury resulting to the creditor. (5) Enciclopedia Juridica The parties presented conflicting evidence as to how the two
Española, 309) deceased Narcisa Rautruat and Ornominio Beter met their deaths.

As will be seen, these authorities agree that some extraordinary However, from the evidence adduced by the plaintiffs, the Court
circumstance independent of the will of the obligor or of his could not see why the two deceased could have fallen off the bus
employees, is an essential element of a caso fortuito. ... when their own witnesses testified that when the commotion
ensued inside the bus, the passengers pushed and shoved each
The running amuck of the passenger was the proximate cause of the incident as it other towards the door apparently in order to get off from the bus
triggered off a commotion and panic among the passengers such that the passengers through the door. But the passengers also could not pass through
started running to the sole exit shoving each other resulting in the falling off the bus the door because according to the evidence the door was locked.
by passengers Beter and Rautraut causing them fatal injuries. The sudden act of the
passenger who stabbed another passenger in the bus is within the context of force On the other hand, the Court is inclined to give credence to the
majeure. evidence adduced by the defendants that when the commotion
ensued inside the bus, the two deceased panicked and, in state of
However, in order that a common carrier may be absolved from liability in case shock and fear, they jumped off from the bus by passing through
of force majeure, it is not enough that the accident was caused by force majeure. The the window.
common carrier must still prove that it was not negligent in causing the injuries
resulting from such accident. Thus, as early as 1912, we ruled: It is the prevailing rule and settled jurisprudence that transportation
companies are not insurers of their passengers. The evidence on
From all the foregoing, it is concluded that the defendant is not record does not show that defendants' personnel were negligent in
liable for the loss and damage of the goods shipped on the lorcha their duties. The defendants' personnel have every right to accept
Pilar by the Chinaman, Ong Bien Sip, inasmuch as such loss and passengers absent any manifestation of violence or drunkenness. If
damage were the result of a fortuitous event or force majeure, and and when such passengers harm other passengers without the
there was no negligence or lack of care and diligence on the part knowledge of the transportation company's personnel, the latter
should not be faulted. (Rollo, pp. 46-47)
A thorough examination of the records, however, show that there are material facts (Tsn., p. 4, Aug. 8, 1984)
ignored by the trial court which were discussed by the appellate court to arrive at a
different conclusion. These circumstances show that the petitioner common carrier xxx xxx xxx
was negligent in the provision of safety precautions so that its passengers may be
transported safely to their destinations. The appellate court states:
Q What happened after there was a commotion at the rear portion
of the bus?
A critical eye must be accorded the lower court's conclusions of
fact in its tersely written ratio decidendi. The lower court A When the commotion occurred, I stood up and I noticed that
concluded that the door of the bus was closed; secondly, the
there was a passenger who was sounded (sic). The conductor
passengers, specifically the two deceased, jumped out of the
panicked because the passengers were shouting 'stop, stop'. The
window. The lower court therefore concluded that the defendant
conductor opened the bus.'
common carrier is not liable for the death of the said passengers
which it implicitly attributed to the unforeseen acts of the
unidentified passenger who went amuck. (Tsn. p. 3, August 8, 1984).

There is nothing in the record to support the conclusion that the Accordingly, there is no reason to believe that the deceased
solitary door of the bus was locked as to prevent the passengers passengers jumped from the window when it was entirely possible
from passing through. Leonila Cullano, testifying for the defense, for them to have alighted through the door. The lower court's
clearly stated that the conductor opened the door when the reliance on the testimony of Pedro Collango, as the conductor and
passengers were shouting that the bus stop while they were in a employee of the common carrier, is unjustified, in the light of the
state of panic. Sergia Beter categorically stated that she actually clear testimony of Leonila Cullano as the sole uninterested
saw her son fall from the bus as the door was forced open by the eyewitness of the entire episode. Instead we find Pedro Collango's
force of the onrushing passengers. testimony to be infused by bias and fraught with inconsistencies, if
not notably unreliable for lack of veracity. On direct examination,
he testified:
Pedro Collango, on the other hand, testified that he shut the door
after the last passenger had boarded the bus. But he had quite
conveniently neglected to say that when the passengers had xxx xxx xxx
panicked, he himself panicked and had gone to open the door.
Portions of the testimony of Leonila Cullano, quoted below, are Q So what happened to the passengers inside your bus?
illuminating:
A Some of the passengers jumped out of the window.
xxx xxx xxx
COURT:
Q When you said the conductor opened the door, the door at the
front or rear portion of the bus? Q While the bus was in motion?

A Front door. A Yes, your Honor, but the speed was slow because we have just
picked up a passenger.
Q And these two persons whom you said alighted, where did they
pass, the fron(t) door or rear door? Atty. Gambe:

A Front door. Q You said that at the time of the incident the bus was running
slow because you have just picked up a passenger. Can you
xxx xxx xxx estimate what was your speed at that time?
Atty. Calo: and loading capacity, in contravention of rules and regulations
provided for under the Land Transportation and Traffic Code (RA
No basis, your Honor, he is neither a driver nor a conductor. 4136 as amended.) (Rollo, pp. 23-26)

COURT: Considering the factual findings of the Court of Appeals-the bus driver did not
immediately stop the bus at the height of the commotion; the bus was speeding from
Let the witness answer. Estimate only, the conductor experienced. a full stop; the victims fell from the bus door when it was opened or gave way while
the bus was still running; the conductor panicked and blew his whistle after people
had already fallen off the bus; and the bus was not properly equipped with doors in
Witness: accordance with law-it is clear that the petitioners have failed to overcome the
presumption of fault and negligence found in the law governing common carriers.
Not less than 30 to 40 miles.
The petitioners' argument that the petitioners "are not insurers of their passengers"
COURT: deserves no merit in view of the failure of the petitioners to prove that the deaths of
the two passengers were exclusively due to force majeureand not to the failure of the
Kilometers or miles? petitioners to observe extraordinary diligence in transporting safely the passengers to
their destinations as warranted by law. (See Batangas Laguna Tayabas Co. v.
A Miles. Intermediate Appellate Court,supra).

Atty. Gambe: The petitioners also contend that the private respondents failed to show to the court
that they are the parents of Ornominio Beter and Narcisa Rautraut respectively and
therefore have no legal personality to sue the petitioners. This argument deserves
Q That is only your estimate by your experience?
scant consideration. We find this argument a belated attempt on the part of the
petitioners to avoid liability for the deaths of Beter and Rautraut. The private
A Yes, sir, estimate. respondents were Identified as the parents of the victims by witnesses during the trial
and the trial court recognized them as such. The trial court dismissed the complaint
(Tsn., pp. 4-5, Oct. 17, 1983). solely on the ground that the petitioners were not negligent.

At such speed of not less than 30 to 40 miles ..., or about 48 to 65 Finally, the amount of damages awarded to the heirs of Beter and Rautraut by the
kilometers per hour, the speed of the bus could scarcely be appellate court is supported by the evidence. The appellate court stated:
considered slow considering that according to Collango himself,
the bus had just come from a full stop after picking a passenger Ornominio Beter was 32 years of age at the time of his death,
(Tsn, p. 4, Id.) and that the bus was still on its second or third gear single, in good health and rendering support and service to his
(Tsn., p. 12, Id.). mother. As far as Narcisa Rautraut is concerned, the only evidence
adduced is to the effect that at her death, she was 23 years of age,
In the light of the foregoing, the negligence of the common carrier, in good health and without visible means of support.
through its employees, consisted of the lack of extraordinary
diligence required of common carriers, in exercising vigilance and In accordance with Art. 1764 in conjunction with Art. 2206 of the
utmost care of the safety of its passengers, exemplified by the Civil Code, and established jurisprudence, several factors may be
driver's belated stop and the reckless opening of the doors of the considered in determining the award of damages, namely: 1) life
bus while the same was travelling at an appreciably fast speed. At expectancy (considering the state of health of the deceased and the
the same time, the common carrier itself acknowledged, through its mortality tables are deemed conclusive) and loss of earning
administrative officer, Benjamin Granada, that the bus was capacity; (2) pecuniary loss, loss of support and service; and (3)
commissioned to travel and take on passengers and the public at moral and mental suffering (Alcantara, et al. v. Surro, et al., 93
large, while equipped with only a solitary door for a bus its size Phil. 470).
In the case of People v. Daniel (No. L-66551, April 25, 1985, 136 Five Thousand Pesos (P5,000.00) as attorney's fees, or a total of
SCRA 92, at page 104), the High Tribunal, reiterating the rule Forty Five Thousand Pesos (P45,000.00) as total indemnity for her
in Villa Rey Transit, Inc. v. Court of Appeals (31 SCRA 511), death in the absence of any evidence that she had visible means of
stated that the amount of loss of earring capacity is based mainly support. (Rollo, pp. 30-31)
on two factors, namely, (1) the number of years on the basis of
which the damages shall be computed; and (2) the rate at which the WHEREFORE, the instant petition is DISMISSED. The questioned decision dated
losses sustained by the heirs should be fixed. May 19, 1988 and the resolution dated August 1, 1988 of the Court of Appeals are
AFFIRMED.
As the formula adopted in the case of Davila v. Philippine Air
Lines, 49 SCRA 497, at the age of 30 one's normal life expectancy SO ORDERED.
is 33-1/3 years based on the American Expectancy Table of
Mortality (2/3 x 80-32).i•t•c-aüsl By taking into account the pace
Fernan, C.J., (Chairman), Feliciano, Bidin and Cortes, JJ., concur.
and nature of the life of a carpenter, it is reasonable to make
allowances for these circumstances and reduce the life expectancy
of the deceased Ornominio Beter to 25 years (People v.
Daniel, supra). To fix the rate of losses it must be noted that Art.
2206 refers to gross earnings less necessary living expenses of the
deceased, in other words, only net earnings are to be considered
(People v. Daniel, supra; Villa Rey Transit, Inc. v. Court of
Appeals,supra).

Applying the foregoing rules with respect to Ornominio Beter, it is

both just and reasonable, considering his social standing and
position, to fix the deductible, living and incidental expenses at the
sum of Four Hundred Pesos (P400.00) a month, or Four Thousand
Eight Hundred Pesos (P4,800.00) annually. As to his income,
considering the irregular nature of the work of a daily wage
carpenter which is seasonal, it is safe to assume that he shall have
work for twenty (20) days a month at Twenty Five Pesos
(P150,000.00) for twenty five years. Deducting therefrom his
necessary expenses, his heirs would be entitled to Thirty Thousand
Pesos (P30,000.00) representing loss of support and service
(P150,000.00 less P120,000.00). In addition, his heirs are entitled
to Thirty Thousand Pesos (P30,000.00) as straight death indemnity
pursuant to Article 2206 (People v. Daniel, supra). For damages for
their moral and mental anguish, his heirs are entitled to the
reasonable sum of P10,000.00 as an exception to the general rule
against moral damages in case of breach of contract rule Art. 2200
(Necesito v. Paras, 104 Phil. 75). As attorney's fees, Beter's heirs
are entitled to P5,000.00. All in all, the plaintiff-appellants Ricardo
and Sergia Beter as heirs of their son Ornominio are entitled to an
indemnity of Seventy Five Thousand Pesos (P75,000.00).

In the case of Narcisa Rautraut, her heirs are entitled to a straight

death indemnity of Thirty Thousand Pesos (P30,000.00), to moral
damages in the amount of Ten Thousand Pesos (P10,000.00) and
COMPANIA MARITIMA, INC., EL VARADERO DE MANILA, MINDANAO yan; and (3) Civil Case No. 86-
TERMINAL AND BROKERAGE SERVICES, CARLOS P. FERNAN 37196 entitled Compania Maritima v. GenstarContainer Corporation, an action for In
DEZ, VICENTET. FERNANDEZ, LUIS T. FERNANDEZ, and RAMO junction, Annulment of Execution Proceedings, and Damages.[3]
N B. FERNANDEZ, petitioners, vs. COURT OF APPEALS and EXEQ
UIEL S. CONSULTA,. respondents. The cases were eventually resolved in this wise: (1) in Civil Case No. 85-
30134, the trial court dismissed the third-
party claim and motion for the issuance of a writ of preliminary injunction filed by A
DECISION tty.Consulta; (2) after Atty. Consulta filed the complaint with the Tanodbayan in TB
MENDOZA, J.: P Case No. 86-
03662, petitioners transferred the handling of the case to another lawyer; and (3) Civi
l Case No. 86-
This is a petition for review on certiorari of the decision[1]of the Court of Appe
37196 waseventually dismissed on motion of both parties, but only after the trial cou
als, dated February 27, 1996, affirming the decision of the Regional Trial Court, Bra
rts denial of the motion to dismiss filed by Genstar Container Corporation was uphel
nch 94, Quezon City, dated March 16,1993, which ordered petitioners to pay private
d on appeal by both the Court of Appeals and theSupreme Court.[4]
respondent, Atty. Exequiel S. Consulta, the total amount of P2,590,000.00, as attorne
ys fees, and P21,856.40, as filing fees, in connection with three cases whichthe latter, For his services in the three cases, Atty. Consulta billed petitioners as follows: (
as attorney, handled for the former. 1) P100,000.00 for Civil Case No. 85-30134; (2) P50,000.00 for TBP Case No. 86-
03662; and (3) P5,000,000.00 for CivilCase No. 86-
The facts are as follows:
37196, including the subsequent appeals to the Court of Appeals and the Supreme Co
Maritime Company of the Philippines was sued by Genstar Container Corporati urt. Petitioners did not pay the amount demanded but only P30,000.00 for Civil Case
on before the Regional Trial Court, Branch 31, Manila. On November 29, 1985, it w No. 85-30134 andP10,000.00 for TBP Case No. 86-03662.[5]
as ordered to pay Genstar ContainerCorporation the following amounts:
Because of the failure of corporate petitioners to pay the balance of his attorney
a. $469,860.35, or its equivalent in pesos at the current exchange rate. s fees, Atty. Consulta brought suit against petitioners in the Regional Trial Court, Bra
nch 94, Quezon City. He sought therecovery of the following: (1) P70,000.00, as the
b. 25% of the total obligation, P2,000.00 as Acceptance Fee, and P250.00 per a balance of the P100,000.00 attorneys fees billed for Civil Case No. 85-
ppearance - - as Attorneys Fees. 30134; (2) P40,000.00, as the balance of the P50,000.00 attorneys fees for TBP Case
c. Costs of suit. No. 86-03662, and (3) P5,000,000.00 as attorneys fees for Civil Case No. 86-
37196, including the subsequent appeals therefrom to the Court of Appeals and the S
As a result, properties of petitioners Compania Maritima, Inc., El Varadero de upreme Court. He likewise asked for moraland exemplary damages, attorneys fees, a
Manila, and Mindanao Terminal and Brokerage Services at Sangley Point, Cavite, w nd the costs of suit.[6]
ere levied upon in execution. Theproperties, consisting of the tugboats Dadiangas, M
arinero, and Timonel, the floating crane Northwest Murphy Diesel Engine, and the m On March 16, 1993, the trial court rendered a decision which in part stated:
otorized launch Sea Otter, were worth P51,000,000.00 in sum.However, the same we Considering all the circumstances as above set forth, this Court believes that the
re sold at public auction for only P1,235,000.00 to the highest bidder, a certain Rolan amount equivalent to five percent (5%) of the amount involved, or the amount of Tw
do Patriarca.[2] o Million Five Hundred FiftyThousand Pesos (P2,550,000.00) would be reasonable a
Petitioners Compania Maritima, Inc., El Varadero de Manila, and Mindanao Te ttorneys fees for the services rendered by the plaintiff in Civil Case No. 37196 and th
rminal and Brokerage Services engaged the services of private respondent, Atty. Exe e two related proceedings in the Court of Appeals and the SupremeCourt.
quiel S. Consulta, who representedthem in the following cases: (1) Civil Case No. 85 As for the services rendered by the plaintiff in Civil Case No. 30134, for which
- he appears to have already been paid P30,000.00, the Court believes that an additiona
30134, entitled Genstar Container Corporation v. Maritime Company of the Philippin l amount of P20,000.00 would bereasonable.
es, wherein petitioners properties were levied upon although petitionershad not been
impleaded as defendants therein; (2) TBP Case No. 86- On plaintiffs demand of P40,000.00, in addition to the P10,000.00 he had initial
03662, entitled Compania Maritima, Inc., v. Ramon C. Enriquez, which was a crimin ly received for services rendered in the Tanodbayan case No. 86-
al case for falsification and for violation of R.A. No.3019, otherwise known as the A 03662, the Court grants him an additional P20,000.00.
nti-
Graft and Corrupt Practices Act, against Deputy Sheriff Enriquez before the Tanodba
 WHEREFORE, judgment is hereby rendered for the plaintiff and orders the def With respect to the first question, it is pertinent to note two concepts of attorney
endant to pay the plaintiff, jointly and severally, damages as follows: s fees in this jurisdiction. In the ordinary sense, attorneys fees represent the reasonabl
e compensation paid to a lawyer byhis client for the legal services he has rendered to
a. For services rendered by plaintiff in Civil Case No. 37196 and the related pro the latter. On the other hand, in its extraordinary concept, attorneys fees may be awar
ceedings in the Court of Appeals and the Supreme Court - Two Million Five Hundre ded by the court as indemnity for damages to be paid by the losing partyto the prevail
d Fifty Thousand Pesos(P2,550,000.00). ing party.[7]
b. For services rendered by plaintiff in Civil Case No. 30134 - Twenty Thousan The issue in this case concerns attorneys fees in the ordinary concept. Generally
d Pesos (P20,000.00). , the amount of attorneys fees due is that stipulated in the retainer agreement which is
c. For services rendered in the TBP Case No. 86- conclusive as to the amount of thelawyers compensation. In the absence thereof, the
03662 - Twenty Thousand Pesos (P20,000.00). amount of attorneys fees is fixed on the basis of quantum meruit, i.e., the reasonable
worth of his services.[8] In determining the amount of attorneys fees, thefollowing fac
d. Filing fees in the amount of P21,856.40. tors are considered: (1) the time spent and extent of services rendered; (2) the novelty
and difficulty of the questions involved; (3) the importance of the subject matter; (4)
The defendants counterclaim and plaintiffs counterclaim to defendants counterc
the skill demanded; (5)the probability of losing other employment as a result of the a
laim are both dismissed.
cceptance of the proffered case; (6) the amount involved in the controversy and the b
SO ORDERED. enefits resulting to the client; (7) the certainty ofcompensation; (8) the character of e
mployment; and (9) the professional standing of the lawyer.[9]
On appeal, the Court of Appeals affirmed the decision of the trial court. Said th
e appellate court: Both the Court of Appeals and the trial court approved attorneys fees in the tota
l amounts of P50,000.00 and P30,000.00 for the services of Atty. Consulta in Civil C
In Civil Case No. 37196, where appellee rendered his legal services, appellants ase No. 85-30134 and TBP Case No.86-
property worth Fifty One Million Pesos (P51,000,000.00) was involved. Likewise, th 03662, respectively. Based on the above criteria, we think said amounts are reasonab
e aforementioned case was not asimple action for collection of money, considering th le, although the third-
at complex legal issues were raised therein which reached until the Supreme Court. I party claim and motion for the issuance of a writ of preliminary injunction filed by A
n the course of such protracted legal battle to save the appellantsproperties, the appell tty. Consultain Civil Case No. 85-
ee prepared numerous pleadings and motions, which were diligently and effectively e 30134 was dismissed by the trial court, while TBP Case No. 86-
xecuted, as a result of which, the appellants properties were saved from execution an 03662 was given by petitioners to another lawyer after Atty. Consulta had filed the c
d theiroppositors were forced to settle by way of a compromise agreement. omplaint. On the other hand, althoughthe order of the trial court in Civil Case No. 86
.... -
37196 granting the motion to dismiss filed by both parties did not state the grounds t
It is a well- herefor, it is reasonable to infer that petitioners agreed thereto inconsideration of som
settled rule that in the recovery of attorneys fees, whether as a main action or as an in e advantage. Hence, the rulings of the Court of Appeals and the trial court that, becau
cident of another action, the determination of the reasonableness is within the prerog se of the complexity of the issues involved and the work done by counsel, the amoun
ative of the courts(Roldan vs. Court of Appeals, 218 SCRA 713; Radiowealth Financ t ofP2,550,000.00 was reasonable for Atty. Consultas services.
e Co., Inc. vs. International Corporate Bank, 182 SCRA 862; Panay Electric vs. Cour
t of Appeals, 119 SCRA 456). In addition, the value of the properties involved was considerable. As already st
ated, to satisfy the judgment in favor of Genstar Container Corporation in Civil Case
Based on the aforequoted ruling, We find that the court a quo did not commit a No. 85-
ny reversible error in awarding attorneys fees equivalent to five percent (5%) of the t 30134, properties ofpetitioners worth P51,000,000.00 were sold at public auction. On
otal value of properties involved inCivil Case No. 37196. ly P1,235,000.00 was realized from the sale and petitioners were in danger of losing t
heir properties. As the appellate court pointed out, Atty.Consulta rendered profession
Hence, this appeal. Petitioners raise the following issues: al services not only in the trial court but in the Court of Appeals and in this Court. Th
a) Whether or not the amount of attorneys fees awarded to the private responde ere is no question that through his efforts, properties owned by petitioners were save
nt by the court a quo and affirmed by the Honorable Court is reasonable. d fromexecution.

b) Whether or not the doctrine of piercing the veil of corporate fiction may be a It is settled that great weight, and even finality, is given to the factual conclusio
pplied in the case at bar. ns of the Court of Appeals which affirm those of the trial courts.[10] Only where it is s
hown that such findings arewhimsical, capricious, and arbitrary can they be overturn
ed. In the present case, the Court of Appeals affirmed the factual conclusions of the t
rial court that: (1) the issues in Civil Case No. 86-
03662,including the appeals taken therefrom to the Court of Appeals and the Suprem
e Court, were quite complex; (2) the pleadings filed by Atty. Consulta were well-
researched; and (3) as a result of Atty. Consultasefforts, the adverse parties were ind
uced to agree to the dismissal of the case.
Petitioners contend, however, that: (1) the said cases merely involved simple iss
ues; (2) the pleadings filed by Atty. Consulta did not exhibit an extraordinary level of
competence, effort, and skill; and (3)they did not benefit from the efforts of Atty. Co
nsulta. These allegations have not been proven. Petitioners have not shown that the f
actual findings of both the Court of Appeals and the trial court are contraryto the evi
dence. Nor have they shown that they did not benefit from their representation by Att
y. Consulta.
With respect to the liability of individual petitioners Carlos P. Fernandez, Vicen
te T. Fernandez, Luis T. Fernandez, and Ramon B. Fernandez, we hold that the mere
fact that they were stockholders anddirectors of corporate petitioners does not justify
a finding that they are liable for the obligations of the corporations.
It is well-
settled that as a legal entity, a corporation has a personality separate and distinct fro
m its individual stockholders or members. The fiction of corporate entity will be set a
side and the individualstockholders will be held liable for its obligation only if it is s
hown that it is being used for fraudulent, unfair, or illegal purposes.[11] In this case, th
e Court of Appeals held that individual petitioners wereguilty of fraud, based on its fi
nding that they refused to pay the attorneys fees demanded by Atty. Consulta. It shou
ld be noted, however, that although petitioners Compania Maritima, Inc., El Varader
o deManila, and Mindanao Terminal and Brokerage Services have an obligation to p
ay Atty. Consulta for his attorneys fees, the amount thereof was still in dispute. It wa
s therefore improper for the Court ofAppeals to conclude that individual petitioners
were guilty of fraud simply because corporate petitioners had refused to make the pa
yments demanded. The fact remains that at the time of demand, the amountdue to Att
y. Consulta had not been finally determined.
WHEREFORE, in view of the foregoing, the decision of the Court of Appeals,
dated February 27, 1996, is AFFIRMED with the modification that individual petitio
ners Carlos P. Fernandez, Vicente T.Fernandez, Luis T. Fernandez, and Ramon B. Fe
rnandez are absolved from personal liability for attorneys fees to Atty. Exequiel S. C
onsulta.
SO ORDERED.
G.R. No. L-5203 April 18, 1956 deep that the anchor did not touch bottom; that in the afternoon of the same day the
weather become worse as the wind increased in intensity and the waves were
STANDARD VACUUM OIL COMPANY, plaintiff-appellant, likewise increased in size and force; that due to the rough condition of the sea the
vs. anchor chains of the Snapper' and the four barges broke one by one and as a
LUZON STEVEDORING CO., INC., defendant-appellee. consequence thereof they were drifted and were finally dashed against the rocks a
hole was opened in the hull of the Snapper', which ultimately caused it to sink, while
the barge No. L-522 was so badly damaged that the gasoline it had on board leaked
Ross, Selph, Carrascoso and Janda and Martin B. Laurena for appellant.
Perkins, Ponce Enrile and Contreras for appellee. out; and that the Tamban arrived at the place after the gasoline had already leaked
out.
BAUTISTA ANGELO, J.:
Defendant is a private stevedoring company engaged in transporting local products,
including gasoline in bulk and has a fleet of about 140 tugboats and about 90 per cent
Plantiff entered into a contract with defendant to transport between the ports of of its business is devoted to transportation. Though it is engaged in a limited contract
Manila and Nin Bay, Sangay, Iloilo, 2,916.44 barrels of bulk gasoline belonging to of carriage in the sense that it chooses its customers and is not opened to the public,
plaintiff. The gasoline was delivered in accordance with the contract but defendant nevertheless, the continuity of its operation in this kind of business have earned for it
failed to transport it to its place of destination and so plaintiff brought his action in the level of a public utility. The contract between the plaintiff and defendant comes
the Court of First Instance of Manila to recover the sum of P75,578.50 as damages. therefore under the provisions of the Code of Commerce. The pertinent law is article
361 which provides:
Defendant, in its answer, pleaded that its failure to deliver the gasoline was due to
fortuitous event or caused by circumstances beyond its control and not to its fault or ART. 361. The merchandise shall be transported at the risk and venture of
negligence or that of any of its employees. The court, after receiving the evidence, the shipper, if the contrary was not expressly stipulated.
rendered decision finding that the disaster that had befallen the tugboat was the result
of an avoidable accident and the loss of the gasoline was due to a fortuitous even
which was beyond the control of defendant and, consequently, dismissed the case Therefore, all damages and impairment suffered by the goods during the
with costs against the plaintiff. transportation, by reason of accident, force majeure, or by virtue of the
nature or defect of the articles, shall be for the account and risk of the
shipper.
The facts as found by the trial court are: "that pursuant to an agreement had between
the parties, defendant's barge No. L-522 was laden with gasoline belonging to the
plaintiff to be transported from Manila to the Port of Iloilo; that early in the morning The proof of these accidents is incumbent on the carrier.
of February 2, 1947, defendant's tugboat "Snapper" picked up the barge outside the
breakwater; that the barge was placed behind the tugboat, it being connected to the It therefore appears that whenever merchandise is transported on the sea by virtue of
latter by a tow rope ten inches in circumstances; that behind the barge, three other a contract entered into between the shipper and the carrier, the merchandise is
barges were likewise placed, one laden with some cargo while the other two deemed transported at the risk and venture of the shipper, if the contrary is not
containing hardly any cargo at all; that the weather was good when on that day the stipulated, and all damages suffered by the merchandise during the transportation by
tugboat with its tow started on its voyage; that the weather remained good on reason of accident or force majeure shall be for the account and risk of the
February 3, 1947, when it passed Santiago Point in Batangas; that at about 3:00 shipper, but the proof of these accidents is incumbent on the carrier. Implementing
o'clock in the morning of February 4, 1947, the engine of the tugboat came to a dead this provision, our Supreme Court has held that all a shipper has to prove in
stop; that the engineer on board the tugboat found out that the trouble was due to a connection with sea carriage is delivery of the merchandise in good condition and its
broken idler; that a message was then sent to the defendant's radio station in Manila non-delivery at the place of destination in order that the burden of proof may shift to
informing its official of the engine trouble; that upon the receipt of the message the the carrier to prove any of the accidents above adverted to. Thus, it was held that
defendant called up several shipping companies in Manila to find out if they had any "Shippers who are forced to ship goods on an ocean liner or any other ship have
vessels in the vicinity where the "Snapper' had stalled but sais companies replied in some legal rights, and when goods are delivered on board a ship in good order and
the negative; that thereupon the defendant redioed its tugboat Tamban' which was condition, and the shipowner delivers them to the shipper in bad order and condition,
docked at Batangas, ordering it to proceed to the place where the Snapper' was; that it then devolves upon the shipowner to both allege and prove that the goods were
at about 6:00 o'clock in the same morning of February 4, 1947, the master of the damaged by reason of some fact which legally exempts him from liability" (Mirasol
Snapper' attempted to cast anchor but the water areas around Elefante Island were so vs. Robert Dollar Co., 53 Phil., 129).
The issue to be determined is: Has defendant proven that its failure to deliver the A tug engaged to tow a barge is liable for damage to the cargo of the barge
gasoline to its place of destination is due to accident or force majeure or to a cause caused by faulty equipment of the tug. The Raleigh, D.C. Md. 50 F. Supp.
beyond its control? This would require an analysis of the facts and circumstances 961. (80 C.J.S. Footnote.).
surrounding the transportation of said gasoline.
Another circumstance refers to the deficiency or incomplete in the man power of the
It appears that the tugboat "Snapper" was acquired by defendant from the foreign tug boat. According to law, a tugboat of the tonnage and powers of one like the
Liquidation Commission. It was a surplus property. It was a deep-sea tugboat that "Snapper" is required to have a complement composed of one first mate, one second
had been in the service of the United States Armed Forces prior to its purchase by the mate, one third mate, one chief engineer, one second engineer, and one third
Luzon Stevedoring Co. The tugboat was put into operation without first submitting it engineer, (section 1203, Revised Administrative Code), but when the trip in question
to an overhaul in a dry-dock. It also appears that this tugboat had previously made was undertaken, it was only manned by one master, who was merely licensed as a
several trips and each time it had to obtain a special permit from the Bureau of bay, river and lake patron, one second mate, who was licensed as a third mate, oner
Customs because it had never been dry-dock and did not have complete equipment to chief engineer who was licensed as third motor engineer, one assistant engineer, who
be able to obtain the permanent permit. The special permits that were issued by said was licensed as a bay, river, and lake motor engineer, and one second assistant
Bureau specifically state that they were issued "pending submission of plans and engineer, who was unlicensed. The employment of this crew to perform functions
load line certificate, including test and final inspection of equipment." It futher beyond its competence and qualifications is not onl;y risky but against the law and if
appears that, when the tugboat was inspected by the Bureau of Customs on October a mishap is caused, as in this case, one cannot but surmise that such incompetence
18, 1946, it found it to be inadequately equipped and so the Bureau required has something to do with the mishap. The fact that the tugboat had undertaken
defendant to provide it with the requisite equipment but it was never able to complete several trips before with practically the same crew without any untoward
it. The fact that the tugboat was a surplus property, has not been dry-docked, and was consequence, cannot furnish any justification for continuing in its employ a deficient
not provided with the requisite equipment to make it seaworthy, shows that or incompetent personnel contrary to law and the regulations of the Bureau of
defendant did not use reasonable diligence in putting the tugboat in such a condition Customs.
as would make its use safe for operation. It is true, as defendant contends, that there
were then no dry-dock facilities in the Philippines, but this does not mean that they (1) Generally, seaworthiness is that strength, durability and engineering
could not be obtained elsewhere. It being a surplus property, a dry-dock inspection skill made a part of a ship's construction and continued
was a must to put the tugboat in a sea going condition. It may also be true , as maintenance, together with a competent and sufficient crew, which would
contended, that the deficiency in the equipment was due to the fact that no such withstand the vicissitudes and dangers of the elements which might
equipment was available at the time, but this did not justify defendant in putting such reasonably be expected or encountered during her voyage without loss or
tugboat in business even if unequipped merely to make a profit. Nor could the fact damage to her particular cargo. The Cleveco, D.C. Ohio, 59 F. Supp. 71, 78,
that the tugboat was given a special permit by the Bureau of Customs to make the affirmed, C.C.A., 154 F. 2d 606. (80 C.J.S. 997, Footnote.).
trip relieve defendant from liability.
Let us now come to the eeforts exerted by defendant in extending help to the tugboat
Where owner buys old tug, licensed coastwise, and equips it for ocean when it was notified of the breakage of the idler. The evidence shows that the idler
going, it is negligence to send tug out without stability test, where history was broken at about 3:00 o'clock in the morning of February 4, 1947. Within a few
and performance with respect to crankiness and tenderness are matters of minutes, a massage was sent to defendant by radio informing it of the engine trouble.
official record. Sabine Towing Co. vs. Brennan, C.C.A. Tex., 72 F 2d The weather was good until 12:00 o'clock noon when the wind started to blow.
490, certiorari denied 55 S. Ct. 141, 293 U.S. 632, 79 L. Ed. 717. (80 C.J. According to defendant, since it received the message, it called up different shipping
S. 803 Footnote). lines in Manila asking them if they had any vessel in the vicinity where the
"Snapper" stalled but, unfortunately, none was available at the time,and as its tug
There are other circumstances which show the lack of precaution and diligence taken "Tamban" was then docked in Batangas, Batangas, which was nearest to the place, it
by defendant to make the travel of the tugboat safe. One is the failure to carry on radioed said tug to go to the aid of the "Snapper". Accordingly, the tug "Tamban" set
board the necessary spare parts. When the idler was broken, the engineer of the sail from Batangas for the rescue only to return to secure a map of the vicinity where
tugboat examined it for the first time and it was only then that he found that there the "Snapper" had stalled, which entailed a delay of two hours. In the meantime, the
were no spare parts to use except a worn out spare driving chain. And the necessity captain of the "Snapper" attempted to cast anchor. The water areas off Elefante
of carrying such spare parts was emphasized by the very defendant's winess, Mr. Island were deep and the anchor would not touch bottom. Then the sea became rough
Depree, who said that in vessels motored by diesel engines it is necessary always to and the waves increased in size and force and notwithstanding the efforts of the crew
carry spare chains, ball bearings and chain drives. And this was not done. to prevent the tug from drifting away, the force of the wind and the violence of the
 1
waves dashed the tug and the barges against the rocks. The tug developed a hole in According to weather reports, the weather in the area only showed a
her hull and sank. The barge carrying the gasoline was so badly damaged that the maximum wind velocity of 12 miles per hour, slight rains and no typhoon.
gasoline leaked out. The tug "Tamban" was finally able to locate the "Snapper" but it
was too late.

The foregoing acts only serve to emphasize that the efforts made by defeandant fall
short of that diligence and precaution that are demanded by the situation to save the
tugboat and the barge it was towing from disaster for it appears that more than
twenty-four hours had elapsed befora the tug "Tamban" showed up to extend help.
The delay was caused not so much because of the lack of available ships in the
vicinity where the "Snapper" stalled but because defendant did not have in readiness
any tugboat sufficient in tonnage and equipment to attend to the rescue. The tug
"Tamban" that was ordered to extend help was fully inadequate for the purpose. It
was a small vessel that was authorized to operate only within Manila Bay and did not
even have any map of the Visayan Islands. A public utility that is engaged in sea
transportation even for a limited service with a fleet of 140 tugboats should have a
competent tug to rush for towing or repairs in the event of untoward happening
overseas. If defendant had only such a tug ready for such an emergency, this disaster
would not have happened. Defendant could have avoided sending a poorly equipped
tug whic, as it is to be expected, failed to do job.

While the breaking of the idler may be due to an accident, or to something

unexpected, the cause of the disaster which resulted in the loss of the gasoline can
only be attributed to the negligence or lack of precaution to avert it on the part of
defendant. Defendant had enough time to effectuate the rescue if it had only a
competent tug for the purpose because the weather was good from 3:00 o'clock a.m.
to 12:00 o'clock noon of February 4, 1947 and it was only in the afternoon that the
wind began to blow with some intensity,1 but failed to do so because of that
shortcoming. The loss of the gasoline certainly cannot be said to be due to force
majeure or unforeseen event but to the failure of defendant to extend adequate and
proper help. Considering these circumstances, and those we have discussed
elsewhere, we are persuaded to conclude that defendant has failed to established that
it is exempt from liability under the law.

Wherefore, the decision appealed from is reversed. Defendant is hereby ordered to

pay to plaintiff the sum of P75,578.50, with legal interest from the date of the filing
of the complaint, with costs.

Bengzon, Paras, C.J., Padilla, Montemayor, Reyes, A., Jugo, Labrador,Concepcion,

Reyes, J.B.L., and Endencia, JJ., concur.

Footnotes