Trasportation Cases

Haystacks
Transportation Law
Michael Vernon Guerrero Mendiola
2004
Shared under Creative Commons ttri!ution"
#onCommercial"Sharelike $%0 &hilippines license%
Some 'i(hts 'eserved%
Ta!le o) Contents
Calte* vs% Sulpicio Lines +G' ,$,,--. $0 Septem!er ,///0 1%%%%%%%%% ,
2irst &hilippine 3ndustrial Corp% vs% C +G' ,24/45. 2/ 6ecem!er ,//50 1%%%%%%%%% 4
rada vs% C +G' /524$. , 7uly ,//20 1%%%%%%%%% -
Sa!ena 8el(ian 9orld irlines vs% C +G' ,04-54. ,4 March ,//-0 1%%%%%%%%% 5
&hilippine #ational 'ailways +&#'0 vs% C +G' L"44$4:. 4 ;cto!er ,/540 1%%%%%%%%% ,,
<astern Shippin( Lines vs% C +G' /:4,2. ,2 7uly ,//40 1%%%%%%%%% ,$
Metro &ort Services vs% C +G' L"4:452. 24 u(ust ,/540 1%%%%%%%%% ,4
Home 3nsurance Co% vs% merican Steamship (encies +G' L"244//. 4 pril ,/-50 1%%%%%%%%% ,-
Lastimosa vs. Doliente ......... [unavailable]
#ational Steel vs% C +G' ,,225:. ,2 6ecem!er ,//:0 1%%%%%%%%% ,5
6e Villata vs% 7S Stanley +G' 5,44. 20 6ecem!er ,/,40 1%%%%%%%%% 24
=S vs% >uina?on +G' 5-5-. $0 7uly ,/,40 1%%%%%%%%% $,
6e Gu@man vs% C +G' L"4:522. 22 6ecem!er ,/550 1%%%%%%%%% $4
&lanters &roducts vs% C +G' ,0,40$. ,4 Septem!er ,//$0 1%%%%%%%%% $/
8ascos vs% C +G' ,0,05/. : pril ,//$0 1%%%%%%%%% 4$
Mendo@a vs% &L +G' L"$-:5. 2/ 2e!ruary ,/420 1%%%%%%%%% 44
Coastwise Li(htera(e Corp% vs% C +G' ,,4,-:. ,2 7uly ,//40 1%%%%%%%%% 4/
8enedicto vs% 3C +G' :05:-. ,/ 7uly ,//00 1%%%%%%%%% 4,
Te?a Marketin( vs% 3C +G' L"-44,0. / March ,/5:0 1%%%%%%%%% 4$
8 2inance vs% C +G' /52:4. ,$ #ovem!er ,//20 1%%%%%%%%% 44
Vargas vs. Langkay ......... [unavailable]
#ocum vs% La(una Taya!as 8us Co% +G' L"2$:$$. $, ;cto!er ,/-/0 1%%%%%%%%% 4:
Tamayo vs% Auino. et%al% +G' L",2-$4 B L",2:20. 2/ May ,/4/0 1%%%%%%%%% -0
<re@o vs% 7epte +G' L"/-04. $0 Septem!er ,/4:0 1%%%%%%%%% -2
Cam!oan(a Transportation Co% vs% C +G' L"242/2. 2/ #ovem!er ,/-/0 1%%%%%%%%% -4
Santos vs% Si!o( +G' L"2-5,4. 2- May ,/5,0 1%%%%%%%%% --
&L vs% #L'C +G' L"-2/-,. 2 Septem!er ,/5$0 1%%%%%%%%% :0
VasAue@ vs% C +G' L"42/2-. ,$ Septem!er ,/540 1%%%%%%%%% :,
6an(wa Transportation vs% C +G' /4452. : ;cto!er ,//,0 1%%%%%%%%% :$
6elsan Transport Lines vs% C +G' ,2:5/:. ,4 #ovem!er 200,0 1%%%%%%%%% :-
Loadstar Shippin( vs% C +G' ,$,-2,. 25 Septem!er ,///0 1%%%%%%%%% :/
Metro Manila Transit Corporation vs% C +G' ,04405. 2, 7une ,//$0 1%%%%%%%%% 5,
Dapalaran 8us vs% Coronado +G' 54$$,. 24 u(ust ,/5/0 1%%%%%%%%% 5-
Trans"sia Shippin( Lines vs% C +G' ,,5,2-. 4 March ,//-0 1%%%%%%%%% /0
8el(ian ;verseas Charterin( and Shippin( vs% &hilippine 2irst 3nsurance Co% 3nc% +G' ,4$,$$. 4 7une 20020 1%%%%%%%%% /$
Eo!ido vs% C +G' ,,$00$. ,: ;cto!er ,//:0 1%%%%%%%%% /-
Tan Liam Grocery. vs. De La Rama Steamship ......... [unavailable]
#ational 6evelopment Co% vs% C +G' L"4/40:. ,/ u(ust ,/550 1%%%%%%%%% //
Gan@on vs% C +G' L"45:4:. $0 Mary ,/550 1%%%%%%%%% ,02
Mirasol vs% 'o!ert 6ollar Co% +G' 2/:2,. 2: March ,/2/0 1%%%%%%%%% ,04
<astern Shippin( Lines vs% 3C +G' L"-/044. 2/ May ,/5:0 1%%%%%%%%% ,0-
Dui &ai B Co% vs% 6ollar Steamship Line +G' $00,/. 2 March ,/2/0 1%%%%%%%%% ,,2
Compania Maritima vs% 3nsurance Co% o) #orth merica +G' L",5/-4. $0 ;cto!er ,/-40 1%%%%%%%%% ,,4
Government vs% 3nchausti +G' -/4:. ,4 2e!ruary ,/,$0 1%%%%%%%%% ,,:
Samar Minin( Co% vs% #ordeutscher Lloyd +G' L"25-:$. 2$ ;cto!er ,/540 1%%%%%%%%% ,,/
Macam vs% C +G' ,24424. 24 u(ust ,///0 1%%%%%%%%% ,22
Saludo vs% C +G' /44$-. 2$ March ,//20 1%%%%%%%%% ,24
6el(ado 8ros% vs% C +G' L",4-44. 2/ 6ecem!er ,/-00 1%%%%%%%%% ,$4
<astern Shippin( Lines vs% C +G' 50/$-. ,: ;cto!er ,//00 1%%%%%%%%% ,$-
Limpan(co Sons vs% Ean(co Steamship +G' ,025$. 24 7uly ,/,-0 1%%%%%%%%% ,$/
G% Martini Ltd% vs% Macondray B Co% +G' ,$/:2. 25 7uly ,/,/0 1%%%%%%%%% ,4,
Heirs o) de los Santos vs% C +G' 4,,-4. 2, 7une ,//00 1%%%%%%%%% ,4-
nternational Department Store vs. !abellana ......... [unavailable]
Compania Maritima vs% C +G' L"$,$:/. 2/ u(ust ,/550 1%%%%%%%%% ,40
H< Heacock vs% Macondray +G' ,-4/5. $ ;cto!er ,/2,0 1%%%%%%%%% ,4$
St% &aul 2ire B Marine 3nsurance vs% Macondray +G' L"2::/4. 24 March ,/:-0 1%%%%%%%%% ,44
Valen@uela Hardwood and 3ndustrial vs% C +G' ,02$,-. $0 7une ,//:0 1%%%%%%%%% ,4:
Sweet Line vs% Teves +G' L"$::40. ,/ May ,/:50 1%%%%%%%%% ,-,
<astern and ustralian Steamship vs% Great merican 3nsurance +G' L"$:-04. 2$ ;cto!er ,/5,0 1%%%%%%%%% ,-4
Sea"land Service vs% 3C +G' :4,,5. $, u(ust ,/5:0 1%%%%%%%%% ,-4
!oiti@ Shippin( vs% C +G' 5/:4:. - u(ust ,//00 1%%%%%%%%% ,:0
<verett Steamship Corp% vs% C +G' ,224/4. 5 ;cto!er ,//50 1%%%%%%%%% ,:$
Shewaram vs% &L +G' L"200//. : 7uly ,/--0 1%%%%%%%%% ,::
;n( Eiu vs% C +G' L"404/:. 2/ 7une ,/:/0 1%%%%%%%%% ,:/
8ritish irways vs% C +G' ,2,524. 2/ 7anuary ,//50 1%%%%%%%%% ,52
&L vs% C +G' /240,. - March ,//20 1%%%%%%%%% ,54
Robles vs. Santos ......... [unavailable]
>uisum!in( vs% C +G' 400:-. ,4 Septem!er ,//00 1%%%%%%%%% ,5:
&anm 9orld irways vs% 'apadas +G' -0-:$. ,/ May ,//20 1%%%%%%%%% ,5/
&L vs% C +G' ,202-2. ,: 7uly ,//:0 1%%%%%%%%% ,/$
8aliwa( Transit vs% C +G' ,,-,,0. ,4 May ,//-0 1%%%%%%%%% ,/-
Mecenas vs% C +G' 55042. ,4 6ecem!er ,/5/0 1%%%%%%%%% ,//
&L vs% C +G' L"4-445. $, 7uly ,/5,0 1%%%%%%%%% 204
&ilapil vs% C +G' 42,4/. 22 6ecem!er ,/5/0 1%%%%%%%%% 205
2ortune <*press vs% C +G' ,,/:4-. ,5 March ,///0 1%%%%%%%%% 2,,
Landin(in vs% &an(asinan Transportation +G' L"250,4",4. 2/ May ,/:00 1%%%%%%%%% 2,4
Cali)ornia Lines vs% de los Santos +G' L",$244. $0 6ecem!er ,/-,0 1%%%%%%%%% 2,-
<strada vs% Consolacion +G' L"40/45. 2/ 7une ,/:-0 1%%%%%%%%% 2,:
Lara vs% Valencia +G' L"//0:. $0 7une ,/450 1%%%%%%%%% 220
8ayasen vs% C +G' L"24:54. 2- 2e!ruary ,/5,0 1%%%%%%%%% 222
Cervantes vs% C +G' ,24,$5. 2 March ,///0 1%%%%%%%%% 22$
6e Gillaco vs% Manila 'ailroad Co% +G' L"50$4. ,5 #ovem!er ,/440 1%%%%%%%%% 224
Maranan vs% &ere@ +G' L"22:2. 2- 7une ,/-:0 1%%%%%%%%% 22:
Lasam vs% Smith +G' ,/4/4. 2 2e!ruary ,/240 1%%%%%%%%% 2$0
Sweet Lines vs% C +G' L"4-$40. 25 pril ,/5$0 1%%%%%%%%% 2$2
Ma(!oo vs% 8ernardo +G' L",-:/0. $0 pril ,/-$0 1%%%%%%%%% 2$4
3saac vs% L mmen Transportation +G' L"/-:,. 2$ u(ust ,/4:0 1%%%%%%%%% 2$4
Sane" vs. Samala ......... [unavailable]
&anay uto!us vs% &astor +G' 4:/$$. 2/ 7uly ,/420 1%%%%%%%%% 2$5
6el &rado vs% Meralco +G' 2/4-2. : March ,/2/0 1%%%%%%%%% 2$5
Can(co vs% Manila 'ailroad +G' ,2,/,. ,4 ;cto!er ,/,50 1%%%%%%%%% 24,
6e Guia vs% Manila <lectric 'ailroad B Li(ht Co% +G' ,4$$4. 25 7anuary ,/200 1%%%%%%%%% 245
Calalas vs% C +G' ,220$/. $, May 20000 1%%%%%%%%% 24,
!esusa V#a. De $ueca vs %anila Railroa# ......... [unavailable]
Li(ht 'ail Transit uthority vs% #avidad +G' ,44504. - 2e!ruary 200$0 1%%%%%%%%% 24$
La Mallorca vs% C +G' L"20:-,. 2: 7uly ,/--0 1%%%%%%%%% 24-
!oiti@ Shippin( Corp% vs% C +G' 54445. - #ovem!er ,/5/0 1%%%%%%%%% 245
8achelor <*press vs% C +G' 54-/,. $, 7uly ,//00 1%%%%%%%%% 2-,
8acarro vs% Castano +H' L"$44/:. 4 #ovem!er ,/520 1%%%%%%%%% 2-4
La(una Taya!as 8us vs% Tion(son +G' L"22,4$. $0 pril ,/--0 1%%%%%%%%% 2-:
Sulpicio Lines vs% C +G' ,,$4:5. ,4 7uly ,//40 1%%%%%%%%% 2-/
2isher vs% Ean(co Steamship +G' 5054. 4 #ovem!er ,/,40 1%%%%%%%%% 2:2
2isher vs% Ean(co Steamship +G' 50/4. $, March ,/,40 1%%%%%%%%% 250
Maritime Co% o) the &hilippines vs% C +G' 4:004. 5 March ,/5/0 1%%%%%%%%% 252
Gatchalian vs% 6elim +G' 4-45:. 2, ;cto!er ,//,0 1%%%%%%%%% 254
merican Home ssurance vs% C +G' /4,4/. 4 May ,//20 1%%%%%%%%% 255
<astern Shippin( Lines vs% Mar(arine"Verkau)s"=nion Gm!H +G' L"$,05:. 2: Septem!er ,/:/0 1%%%%%%%%% 2/0
Ma(ellan Manu)acturin( Marketin( vs% C +G' /442/. 22 u(ust ,//,0 1%%%%%%%%% 2/2
'eyma 8rokera(e vs% &hilippine Home ssurance Corp% +G' /$4-4. : ;cto!er ,//,0 1%%%%%%%%% 2/-
Den( Hua &aper &roducts vs% C +G' ,,-5-$. ,2 2e!ruary ,//50 1%%%%%%%%% 2/5
Esmael vs% 8arretto +G' 25025. 24 #ovem!er ,/2:0 1%%%%%%%%% $0,
Maersk Line vs% C +G' /4:-,. ,: May ,//$0 1%%%%%%%%% $04
#ew Cealand 3nsurance Co% vs% 3C +G' L"--4/-. 25 u(ust ,/540 1%%%%%%%%% $0:
Mariano =y Chaco Sons B Co% vs% dmiral Line +G' 22,$4. ,: ;cto!er ,/240 1%%%%%%%%% $05
Standard Vacuum ;il Co% vs% Lu@on Stevedorin( Co% +G' L"420$. ,5 pril ,/4-0 1%%%%%%%%% $,0
Tan Chion( Sian vs% 3nchausti +G' -0/2. 5 March ,/,20 1%%%%%%%%% $,$
&orl# 'ire vs. %acon#ray ......... [unavailable]
(eacock)s *klam vs. *boiti" ......... [unavailable]
#ew Cealand 3nsurance vs% Chua 7oy +G' L":$,,. $0 Septem!er ,/440 1%%%%%%%%% $,5
<% 'a@on vs. C +G' L"40242. 2, May ,/550 1%%%%%%%%% $20
&ernito rrastre Services vs% Mendo@a +G' L"4$4/2. 2/ 6ecem!er ,/5-0 1%%%%%%%%% $22
Tan &ho vs% 6alamal +G' 444/5. 2- pril ,/$/0 1%%%%%%%%% $2:
8aer Senior B Co% vs% La Compania Maritima +G' ,/-$. $0 pril ,/0-0 1%%%%%%%%% $25
Lope@ vs% 6uruelo +G' 2/,--. 22 ;cto!er ,/250 1%%%%%%%%% $$0
&hilippine 'e)inin( v% 7arAue +G' 4,40-. 24 March ,/$40 1%%%%%%%%% $$$
McMickin( vs% <l 8anco <spanol"2ilipino +G' 402/. , pril ,/0/0 1%%%%%%%%% $$4
3vancich vs% ;dlin +G' /24. , May ,/020 1%%%%%%%%% $$:
Heath vs% Steamer San #icolas +G' L"$0--. 24 2e!ruary ,/0:0 1%%%%%%%%% $$/
Manila Steamship vs% 3nsa !dulhaman +G' L"/4$4. 2/ Septem!er ,/4-0 1%%%%%%%%% $4$
Chua Eek Hon( vs% 3C +G' L":45,,. $0 Septem!er ,/550 1%%%%%%%%% $44
Commissioner vs% =S Lines +G' L",-540. $0 May ,/-20 1%%%%%%%%% $45
Madri(al Shippin( vs% ;(ilve +G' L"54$,. $0 ;cto!er ,/450 1%%%%%%%%% $40
Garcia vs% 'ui@ +G' /2$. ,- 7anuary ,/0$0 1%%%%%%%%% $4$
Eaptico vs% nderson +G' /$--. , u(ust ,/,-0 1%%%%%%%%% $44
Eu Con vs% 3pil +G' ,0,/4. 2/ 6ecem!er ,/,-0 1%%%%%%%%% $4-
=S vs% Steamship F3slas 2ilipinasG +G' 5:4-. $0 ;cto!er ,/,40 1%%%%%%%%% $-0
;hta 6evelopment Co% vs% Steamship &ompey +G' 24-45. $, March ,/2-0 1%%%%%%%%% $-$
Triton 3nsurance vs% 7ose +G' ,0$5, and ,0:,4. ,4 7anuary ,/,-0 1%%%%%%%%% $-4
=S vs% Steamship 'u!i +G' /2$4. ,: #ovem!er ,/,40 1%%%%%%%%% $-4
3nternational Harvester Co% in 'ussia vs% Ham!ur("merican Line +G' ,,4,4. 2/ 7uly ,/,50 1%%%%%%%%% $:0
Compa(nie 2ranco"3ndochinoise vs% 6eutsch ustralische 6ampschi))s Gesselscha)t +G' ,,,-/. $, March ,/,:0 1%%%%%%%%% $:4
Gu@man vs% 9illiam H +G' L"$-4/. 24 ;cto!er ,/0:0 1%%%%%%%%% $:5
=S vs% 8acho +G' L"40/,. 24 March ,/050 1%%%%%%%%% $50
Vir"7en Shippin( and Marine Services. #L'C +G' L"450,,",2. 20 7uly ,/520 1%%%%%%%%% $5,
9allem &hil% Shippin( vs% Minister o) La!or +G' L"40:$4"$:. 20 2e!ruary ,/5,0 1%%%%%%%%% $5:
!ue( vs% San 6ie(o +C"::$"::4. ,: 6ecem!er ,/4-0 1%%%%%%%%% $/0
Murillo vs% Mendo@a +G' 4-020. 5 6ecem!er ,/$50 1%%%%%%%%% $/2
Macondray vs% 6el(ado 8ros% +G' L",$,,5. 25 pril ,/-00 1%%%%%%%%% $/:
8ryan vs% <astern B ustralian SS +G' /40$. 4 #ovem!er ,/,40 1%%%%%%%%% $/5
&uromines 3nc% vs% C +G' /,225. 22 March ,//$0 1%%%%%%%%% 400
Liton?ua Shippin( vs% #ational Seamen 8oard +G' 4,/,0. ,0 u(ust ,/5/0 1%%%%%%%%% 40$
Maritime (encies B Services vs% C +G' ::-$5. ,2 7uly ,//00 1%%%%%%%%% 40-
;uano vs% C +G' /4/00. 2$ 7uly ,//20 1%%%%%%%%% 4,,
#2 vs% C +G' /-44$. 4 u(ust ,///0 1%%%%%%%%% 4,4
Market 6evelopers vs% 3C +G' :4/:5. 5 Septem!er ,/5/0 1%%%%%%%%% 4,5
Marimperio Compania #aviera vs% C +G' L"402$4. ,4 6ecem!er ,/5:0 1%%%%%%%%% 42,
;I2arrel vs% Meralco +G' $,222. 2/ ;cto!er ,/2/0 1%%%%%%%%% 424
;verseas 2actors 3nc% vs% South Sea Shippin( +G' L",2,$5. 2: 2e!ruary ,/-20 1%%%%%%%%% 42-
&hoeni* ssurance Co% Ltd% vs% =S Lines G' L"240$$. 22 2e!ruary ,/-50 1%%%%%%%%% 4$,
Telen(tan 8ros% B Sons% Vs% C +G' ,,045,. 2, Septem!er ,//40 1%%%%%%%%% 4$4
6e la 'iva vs% Li@arra(a Hermanos +G' L"24-4. : 7anuary ,/0:0 1%%%%%%%%% 4$5
+anco *gricola y ,ecuario v. -l Dora#o Tra#ing ......... [unavailable]
,. *ilment v. %acon#ray ......... [unavailable]
Litton v. ,$+ ......... [unavailable]
/riental .ommercial v. La $aviera 'ilipina ......... [unavailable]
&hilippine Home ssurance vs% C +G' ,0-///. 20 7une ,//-0 1%%%%%%%%% 4$/
% Ma(saysay 3nc% vs% (an +G' L"-$/$. $, 7anuary ,/440 1%%%%%%%%% 44,
ustria vs% C +G' ,$$$2$. / March 20000 1%%%%%%%%% 44$
Smith 8ell vs% C +G' 4-2/4. 20 May ,//,0 1%%%%%%%%% 444
Manila vs% tlantic Gul) and &aci)ic Co% +G' 44,0. ,/ 6ecem!er ,/050 1%%%%%%%%% 440
Marine Tradin( vs% Government +G' ,$422. 5 #ovem!er ,/,50 1%%%%%%%%% 44,
% =rrutia B Co% vs% 8aco 'iver &lantation +G' :-:4. 24 March ,/,$0 1%%%%%%%%% 442
Verso@a vs% Lim +G' 20,44. ,4 #ovem!er ,/2$0 1%%%%%%%%% 445
Government vs% &hilippine Steamship Co% +G' ,5/4:. ,- 7anuary ,/2$0 1%%%%%%%%% 4-,
&icart vs% Smith +G' L",22,/. ,4 March ,/,50 1%%%%%%%%% 4-2
=S vs% Smith 8ell +G' ,5:-. $0 Septem!er ,/040 1%%%%%%%%% 4-4
&hilippine Shippin( Co% vs% Ver(ara +G' ,-00. , 7une ,/0-0 1%%%%%%%%% 4-4
Chin Guan vs% Compania Maritima +G' 440:0. 25 #ovem!er ,/$50 1%%%%%%%%% 4-:
Manila 'ailroad vs% Macondray +G' L",24:4. 2, March ,/,50 1%%%%%%%%% 4-5
Standard ;il Co% o) #ew Eork vs% Lope@ Castelo +G' ,$-/4. ,5 ;cto!er ,/2,0 1%%%%%%%%% 4:0
7arAue vs% Smith 8ell +G' $2/5-. ,, #ovem!er ,/$00 1%%%%%%%%% 4:$
Ta*ica! ;perators v% The 8oard o) Transportation JG' L"4/2$4. $0 Septem!er ,/52K 1%%%%%%%%% 4:4
#apocor vs% C +G' ,,$,0$. ,$ 7une ,//:0 1%%%%%%%%% 4:-
GMC' vs% 8ell Telecoms +G' ,2-4/-. $0 pril ,//:0 1%%%%%%%%% 450
Maceda vs% <'8 +G' /420$"04. ,5 6ecem!er ,//00 1%%%%%%%%% 454
La(man vs% Manila +G' L"2$$04. $0 7une ,/--0 1%%%%%%%%% 455
&hilippine Glo!al Communications vs% 'elova +G' L"425,/. 2 ;cto!er ,/500 1%%%%%%%%% 4/,
&hilippine Glo!al vs% 'elova +G' L"-0445. ,0 #ovem!er ,/5-0 1%%%%%%%%% 4/2
&L6T vs% #TC +G' 55404. ,5 ;cto!er ,//00 1%%%%%%%%% 4/-
'C&3 vs% 'odri(ue@ +G' 5$:-5. 25 2e!ruary ,//00 1%%%%%%%%% 402
Tele)ast Communications vs% Castro +G' :$5-:. 2/ 2e!ruary ,/550 1%%%%%%%%% 404
'C&3 vs% C +G' :/4:5. ,$ March ,//,0 1%%%%%%%%% 40:
Culueta vs% &an merican 9orld irways +G' L"2545/. 5 7anuary ,/:$0L 'es% 1%%%%%%%%% 40/
Lope@ vs% &an merican 9orld irways +G' L"224,4. $0 March ,/--0 1%%%%%%%%% 4,-
&an merican 9orld irways vs% 3C +G' L":04-2. ,, u(ust ,/550 1%%%%%%%%% 42,
Luna vs% C +G' ,00$:4":4. 2: #ovem!er ,//20 1%%%%%%%%% 424
Santos vs% #orthwest ;rient irlines +G' ,0,4$5. 2$ 7une ,//20 1%%%%%%%%% 42-
Tan vs% #orthwestern irlines +G' ,$4502. $ March 20000 1%%%%%%%%% 4$2
merican irlines vs% C +G' ,,-044"44. / March 20000 1%%%%%%%%% 4$$
Eu <n( Cho vs% &an merican 9orld irways +G' ,2$4-0. 2: March 20000 1%%%%%%%%% 4$4 M200",,N
'i@al Surety B 3nsurance vs% Macondray B Co% +G' L"240-4. 2/ 2e!ruary ,/-50 1%%%%%%%%% 440
The merican 3nsurance Co% vs% Compania Maritima +G' L"244,4. ,5 #ovem!er ,/-:0 1%%%%%%%%% 44,
Mitsui vs% C +G' ,,/4:,. ,, March ,//50 1%%%%%%%%% 442
Mayer Steel &ipe vs% C +G' ,24040. ,/ 7une ,//:0 1%%%%%%%%% 444
8arrios vs% Go Thon( +G' L",:,/2. $0 March ,/-$0 1%%%%%%%%% 444
9allace vs% &u?alte Co% +G' ,00,/. 2/ March ,/,-0 1%%%%%%%%% 44:
tlantic Gul) B &aci)ic Co% vs% =chida Disen Daisha +G' ,45:,. : #ovem!er ,/2,0 1%%%%%%%%% 44/
<rlan(er B Galin(er vs% Swedish <ast siatic +G' ,004,. / March ,/,-0 1%%%%%%%%% 442
&estano vs% Sumayan( +G' ,$/5:4. 4 6ecem!er 20000 1%%%%%%%%% 4-,
This collection contains one hundred ninety eight (198)
out of two hundred nine (209) assigned cases
summarized in this format by
Michael Vernon M !uerrero (as a "unior law student)
during the #irst $emester% school year 200&'200(
in the Trans)ortation *aw class
under +tty ,orfirio ,anganiban
at the +rellano -ni.ersity $chool of *aw (+-$*)
/om)iled as ,0#% 1uly 2011
2erne !uerrero entered +-$* in 1une 2002
and e.entually graduated from +-$* in 2003
4e )assed the ,hili))ine bar e5aminations immediately after (+)ril 2006)
www%!erne(uerrero%com
Haystacks (Berne Guerrero)
[1], also [173]
Caltex vs. Sulpicio Lines (GR 1311! 3" Septe#$er 1%%%)
First Division, Pardo (J): 3 concur, 1 took no part
&acts' MT Vector is a tramping motor tanker owned and operated ! Vector "#ipping $orporation, w#ic# is
engaged in t#e usiness o% transporting %ue& products suc# as gaso&ine, kerosene, diese& and crude oi&' (n t#e
ot#er #and, t#e MV Do)a Pa* is a passenger and cargo vesse& owned and operated ! "u&picio +ines, ,nc'
p&!ing t#e route o% Mani&a- Tac&oan- $ata&ogan- Mani&a- $ata&ogan- Tac&oan- Mani&a, making trips twice
a week' (n 1. Decemer 1./0, motor tanker MT Vector &e%t +ima!, 1ataan, enroute to Masate, &oaded wit#
/,/22 arre&s o% petro&eum products s#ipped ! $a&te3, ! virtue o% a c#arter contract etween Vector
"#ipping and $a&te3' T#e ne3t da!, t#e passenger s#ip MV Do)a Pa* &e%t t#e port o% Tac&oan #eaded %or
Mani&a wit# a comp&ement o% 4. crew memers inc&uding t#e master and #is o%%icers, and passengers tota&ing
1,5.3 as indicated in t#e $oast 6uard $&earance, ut possi&! carr!ing an estimated 5,222 passengers' 7t
aout 12:32 p'm' o% 82 Decemer 1./0, t#e two vesse&s co&&ided in t#e open sea wit#in t#e vicinit! o% Duma&i
Point etween Marindu9ue and (rienta& Mindoro' 7&& t#e crewmemers o% MV Do)a Pa* died, w#i&e t#e two
survivors %rom MT Vector c&aimed t#at t#e! were s&eeping at t#e time o% t#e incident' (n&! 85 survived t#e
traged! a%ter #aving een rescued %rom t#e urning waters ! vesse&s t#at responded to distress ca&&s' 7mong
t#ose w#o peris#ed were pu&ic sc#oo& teac#er "eastian $a)e*a& (50 !ears o&d) and #is daug#ter $ora*on
$a)e*a& (11 !ears o&d), ot# unmani%ested passengers ut proved to e on oard t#e vesse&' (n 88 Marc#
1.//, t#e oard o% marine in9uir! a%ter investigation %ound t#at t#e MT Vector, its registered operator
Francisco "oriano, and its owner and actua& operator Vector "#ipping $orporation, were at %au&t and
responsi&e %or its co&&ision wit# MV Do)a Pa*'
(n 13 Feruar! 1./., Teresita and "otera $a)e*a&, %i&ed wit# t#e :T$ Mani&a, a comp&aint %or ;Damages
7rising %rom 1reac# o% $ontract o% $arriage< against "u&picio +ines, ,nc' "u&picio, in turn, %i&ed a t#ird part!
comp&aint against Francisco "oriano, Vector "#ipping $orporation and $a&te3 (P#i&ippines), ,nc' (n 14
"eptemer 1..8, t#e tria& court rendered decision dismissing t#e t#ird part! comp&aint against $a&te3'
(n appea& to t#e $ourt o% 7ppea&s interposed ! "u&picio +ines, ,nc' ($7=6: $V 3.>8>), on 14 7pri& 1..0,
t#e $ourt o% 7ppea& modi%ied t#e tria& court?s ru&ing and inc&uded petitioner $a&te3 as one o% t#e t#ose &ia&e
%or damages' @ence t#e petition'
T#e "upreme $ourt granted t#e petition and set aside t#e decision o% t#e $ourt o% 7ppea&s, inso%ar as it #e&d
$a&te3 &ia&e under t#e t#ird part! comp&aint to reimurse-indemni%! "u&picio +ines, ,nc' t#e damages t#e
&atter is adAudged to pa! p&ainti%%s=appe&&ees' T#e $ourt a%%irmed t#e decision o% t#e $ourt o% 7ppea&s inso%ar
as it orders "u&picio +ines, ,nc' to pa! t#e #eirs o% "eastian B' $a)e*a& and $ora*on $a)e*a& damages as set
%ort# t#erein' T#ird=part! de%endant=appe&&ee Vector "#ipping $orporation and Francisco "oriano are #e&d
&ia&e to reimurse-indemni%! de%endant "u&picio +ines, ,nc' w#atever damages, attorne!s? %ees and costs t#e
&atter is adAudged to pa! p&ainti%%s=appe&&ees in t#e case'
1. ()e respective ri*)ts an+ +uties o, a carrier +epen+s on t)e nature o, t)e contract o, carria*e
T#e respective rig#ts and duties o% a s#ipper and t#e carrier depends not on w#et#er t#e carrier is
pu&ic or private, ut on w#et#er t#e contract o% carriage is a i&& o% &ading or e9uiva&ent s#ipping documents
on t#e one #and, or a c#arter part! or simi&ar contract on t#e ot#er' ,n t#e case at ar, $a&te3 and Vector
entered into a contract o% a%%reig#tment, a&so known as a vo!age c#arter'
-. C)arter party an+ contract o, a,,rei*)t#ent +e,ine+
7 c#arter part! is a contract ! w#ic# an entire s#ip, or some principa& part t#ereo%, is &et ! t#e
owner to anot#er person %or a speci%ied time or useC a contract o% a%%reig#tment is one ! w#ic# t#e owner o% a
(ransportation La.! -""/ ( 1 )
s#ip or ot#er vesse& &ets t#e w#o&e or part o% #er to a merc#ant or ot#er person %or t#e conve!ance o% goods, on
a particu&ar vo!age, in consideration o% t#e pa!ment o% %reig#t'
3. 0in+s o, contract o, a,,rei*)t#ent
7 contract o% a%%reig#tment ma! e eit#er time c#arter, w#erein t#e &eased vesse& is &eased to t#e
c#arterer %or a %i3ed period o% time, or vo!age c#arter, w#erein t#e s#ip is &eased %or a sing&e vo!age' ,n ot#
cases, t#e c#arter=part! provides %or t#e #ire o% t#e vesse& on&!, eit#er %or a determinate period o% time or %or a
sing&e or consecutive vo!age, t#e s#ip owner to supp&! t#e s#ip?s store, pa! %or t#e wages o% t#e master o% t#e
crew, and de%ra! t#e e3penses %or t#e maintenance o% t#e s#ip'
/. C)arterer1s lia$ility' Bare$oat c)arter vs. Contract o, a,,rei*)t#ent
Dnder a demise or areoat c#arter, t#e c#arterer mans t#e vesse& wit# #is own peop&e and ecomes,
in e%%ect, t#e owner %or t#e vo!age or service stipu&ated, suAect to &iai&it! %or damages caused ! neg&igence'
,% t#e c#arter is a contract o% a%%reig#tment, w#ic# &eaves t#e genera& owner in possession o% t#e s#ip as owner
%or t#e vo!age, t#e rig#ts and t#e responsii&ities o% owners#ip rest on t#e owner' T#e c#arterer is %ree %rom
&iai&it! to t#ird persons in respect o% t#e s#ip'
2. Cate*ories o, c)arter parties
$#arter parties %a&& into t#ree main categories: (1) Demise or areoat, (8) time c#arter, (3) vo!age
c#arter'
. Bare$oat! $ut not voya*e c)arter! trans,or#s co##on carrier into private carrier
7&t#oug# a c#arter part! ma! trans%orm a common carrier into a private one, t#e same #owever is not
true in a contract o% a%%reig#tment (Coastwise Lighterage Corp. vs. CA) 7 pu&ic carrier s#a&& remain as suc#,
notwit#standing t#e c#arter o% t#e w#o&e or portion o% a vesse& ! one or more persons, provided t#e c#arter is
&imited to t#e s#ip on&!, as in t#e case o% a time=c#arter or vo!age c#arter' ,t is on&! w#en t#e c#arter inc&udes
ot# t#e vesse& and its crew, as in a areoat or demise t#at a common carrier ecomes private, at &east inso%ar
as t#e particu&ar vo!age covering t#e c#arter=part! is concerned' ,nduita&!, a s#ip=owner in a time or vo!age
c#arter retains possession and contro& o% t#e s#ip, a&t#oug# #er #o&ds ma!, %or t#e moment, e t#e propert! o%
t#e c#arterer' (Planters Products vs. CA). ,n t#e case at ar, t#e c#arter part! agreement did not convert t#e
common carrier into a private carrier' T#e parties entered into a vo!age c#arter, w#ic# retains t#e c#aracter o%
t#e vesse& as a common carrier'
3. Co##on carrier +e,ine+
7 common carrier is a person or corporation w#ose regu&ar usiness is to carr! passengers or propert!
%or a&& persons w#o ma! c#oose to emp&o! and to remunerate #im' ,n t#e case at ar, MT Vector %its t#e
de%inition o% a common carrier under 7rtic&e 1038 o% t#e $ivi& $ode ($ommon carriers are persons,
corporations, %irms or associations engaged in t#e usiness o% carr!ing or transporting passengers %or
passengers or goods or ot#, ! &and, water, or air %or compensation, o%%ering t#eir services to t#e pu&ic)'
4. 5rticle 133-! Co##on carrier! construe+
7rtic&e 1038 makes no distinction etween one w#ose principa& usiness activit! is t#e carr!ing o%
persons or goods or ot#, and one w#o does suc# carr!ing on&! as an anci&&ar! activit! (in &oca& idiom, as ;a
side&ine<)' 7rtic&e 1038 a&so care%u&&! avoids making an! distinction etween a person or enterprise o%%ering
transportation service on a regu&ar or sc#edu&ed asis and one o%%ering suc# services on a an occasiona&,
episodic or unsc#edu&ed asis' Eeit#er does 7rtic&e 1038 distinguis# etween a carrier o%%ering its services to
t#e ;genera& pu&ic,< i'e', t#e genera& communit! or popu&ation, and one w#o o%%ers services or so&icits
usiness on&! %rom a narrow segment o% t#e genera& popu&ation' 7rtic&e 1033 de&ierate&! re%rained %rom
making suc# distinctions'
%. Responsi$ility o, carrier $e,ore voya*e6 Sea.ort)iness
(ransportation La.! -""/ ( - )
Dnder "ection 3 o% t#e $arriage o% 6oods ! "ea 7ct, (1) T#e carrier s#a&& e ound e%ore and at t#e
eginning o% t#e vo!age to e3ercise due di&igence to (a) Make t#e s#ip seawort#!C () Proper&! man, e9uip,
and supp&! t#e s#ipC among ot#ers' $arriers are deemed to warrant imp&ied&! t#e seawort#iness o% t#e s#ip'
For a vesse& to e seawort#!, it must e ade9uate&! e9uipped %or t#e vo!age and manned wit# a su%%icient
numer o% competent o%%icers and crew' T#e %ai&ure o% a common carrier to maintain in seawort#! condition
t#e vesse& invo&ved in its contract o% carriage is a c&ear reac# o% its dut! prescried in 7rtic&e 1044 o% t#e
$ivi& $ode'
1". 5rticle 1133 o, t)e 7e. Civil Co+e
7rtic&e 1103 o% t#e $ivi& $ode provides t#at ;t#e %au&t or neg&igence o% t#e o&igor consists in t#e
omission o% t#at di&igence w#ic# is re9uired ! t#e nature o% t#e o&igation and corresponds wit# t#e
circumstances o% t#e persons, o% t#e time and o% t#e p&ace' F#en neg&igence s#ows ad %ait#, t#e provisions o%
7rtic&e 1101 and 8821 paragrap# 8, s#a&& app&!' ,% t#e &aw does not state t#e di&igence w#ic# is to e oserved
in t#e per%ormance, t#at w#ic# is e3pected o% a good %at#er o% a %ami&! s#a&& e re9uired'<
11. 7e*li*ence +e,ine+
Eeg&igence, as common&! understood, is conduct w#ic# natura&&! or reasona&! creates undue risk or
#arm to ot#ers' ,t ma! e t#e %ai&ure to oserve t#at degree o% care, precaution, and vigi&ance, w#ic# t#e
circumstances Aust&! demand, or t#e omission to do somet#ing w#ic# ordinari&! regu&ate t#e conduct o%
#uman a%%airs, wou&d do (outheastern College vs. CA).
1-. Reason ,or t)e applica$ility o, Section 3 C8GS5! an+ 5rticle 1322 7CC to carriers! not s)ipper
an+ passen*ers6 8r+inary +ili*ence re9uire+ o, s)ippers
T#e provisions owed t#eir conception to t#e nature o% t#e usiness o% common carriers' T#is usiness
is impressed wit# a specia& pu&ic dut!' T#e pu&ic must o% necessit! re&! on t#e care and ski&& o% common
carriers in t#e vigi&ance over t#e goods and sa%et! o% t#e passengers, especia&&! ecause wit# t#e modern
deve&opment o% science and invention, transportation #as ecome more rapid, more comp&icated and
some#ow more #a*ardous' For t#ese reasons, a passenger or a s#ipper o% goods is under no o&igation to
conduct an inspection o% t#e s#ip and its crew, t#e carrier eing o&iged ! &aw to imp&ied&! warrant its
seawort#iness' T#e c#arterer o% a vesse& #as no o&igation e%ore transporting its cargo to ensure t#at t#e
vesse& it c#artered comp&ied wit# a&& &ega& re9uirements' T#e dut! rests upon t#e common carrier simp&! %or
eing engaged in ;pu&ic service'< T#e $ivi& $ode demands di&igence w#ic# is re9uired ! t#e nature o% t#e
o&igation and t#at w#ic# corresponds wit# t#e circumstances o% t#e persons, t#e time and t#e p&ace' 1ecause
o% t#e imp&ied warrant! o% seawort#iness, s#ippers o% goods, w#en transacting wit# common carriers, are not
e3pected to in9uire into t#e vesse&?s seawort#iness, genuineness o% its &icenses and comp&iance wit# a&&
maritime &aws' To demand more %rom s#ippers and #o&d t#em &ia&e in case o% %ai&ure e3#iits not#ing ut t#e
%uti&it! o% our maritime &aws inso%ar as t#e protection o% t#e pu&ic in genera& is concerned' 1! t#e same
token, passengers cannot e e3pected to in9uire ever! time t#e! oard a common carrier, w#et#er t#e carrier
possesses t#e necessar! papers or t#at a&& t#e carrier?s emp&o!ees are 9ua&i%ied' "uc# a practice wou&d e an
asurdit! in a usiness w#ere time is a&wa!s o% t#e essence' $onsidering t#e nature o% transportation usiness,
passengers and s#ippers a&ike customari&! presume t#at common carriers possess a&& t#e &ega& re9uisites in its
operation' ,n t#e case at ar, t#e nature o% t#e o&igation o% $a&te3 demands ordinar! di&igence &ike an! ot#er
s#ipper in s#ipping #is cargoes'
13. Caltex not lia$le ,or +a#a*es
$a&te3 and Vector "#ipping $orporation #ad een doing usiness since 1./4, or %or aout two !ears
e%ore t#e tragic incident occurred in 1./0' Past services rendered s#owed no reason %or $a&te3 to oserve a
#ig#er degree o% di&igence' $&ear&!, as a mere vo!age c#arterer, $a&te3 #ad t#e rig#t to presume t#at t#e s#ip
was seawort#! as even t#e P#i&ippine $oast 6uard itse&% was convinced o% its seawort#iness' 7&& t#ings
considered, we %ind no &ega& asis to #o&d petitioner &ia&e %or damages'
[-], also [1!]
&irst :)ilippine ;n+ustrial Corp. vs. C5 (GR 1-2%/4! -% <ece#$er 1%%4)
"econd Division , Martine* (J): 3 concur
&acts' First P#i&ippine ,ndustria& $orporation (FP,$) is a grantee o% a pipe&ine concession under :7 3/0, as
amended, to contract, insta&& and operate oi& pipe&ines' T#e origina& pipe&ine concession was granted in 1.>0
and renewed ! t#e Bnerg! :egu&ator! 1oard in 1..8' "ometime in Januar! 1..4, FP,$ app&ied %or a
ma!or?s permit wit# t#e (%%ice o% t#e Ma!or o% 1atangas $it!' @owever, e%ore t#e ma!or?s permit cou&d e
issued, t#e $it! Treasurer re9uired FP,$ to pa! a &oca& ta3 ased on its gross receipts %or t#e %isca& !ear 1..3
pursuant to t#e +oca& 6overnment $ode' T#e $it! Treasurer assessed a usiness ta3 on t#e petitioner
amounting to P.4>,20>'25 pa!a&e in %our insta&&ments ased on t#e gross receipts %or products pumped at
6P"=1 %or t#e %isca& !ear 1..3 w#ic# amounted to P1/1,>/1,141'22' ,n order not to #amper its operations,
FP,$ paid t#e ta3 under protest in t#e amount o% P83.,21.'21 %or t#e %irst 9uarter o% 1..3' (n / Marc# 1..5,
t#e $it! Treasurer denied t#e protest contending t#at petitioner cannot e considered engaged in
transportation usiness, t#us it cannot c&aim e3emption under "ection 133 (A) o% t#e +oca& 6overnment $ode'
(n 14 June 1..5, FP,$ %i&ed wit# t#e :T$ 1atangas $it! a comp&aint %or ta3 re%und wit# pra!er %or writ o%
pre&iminar! inAunction against t#e $it! o% 1atangas and 7doracion 7re&&ano in #er capacit! as $it! Treasurer
($ivi& $ase 58.3)' (n 3 (ctoer 1..5, t#e tria& court rendered a decision dismissing t#e comp&aint'
PF,$ assai&ed t#e a%oresaid decision e%ore t#e "upreme $ourt via a petition %or review' (n 80 Feruar!
1..4, t#e "upreme $ourt re%erred t#e case to t#e $ourt o% 7ppea&s %or consideration and adAudication ($7=6:
"P 3>/21)' (n 8. Eovemer 1..4, t#e $7 rendered a decision a%%irming t#e tria& court?s dismissa& o%
petitioner?s comp&aint' FP,$?s motion %or reconsideration was denied on 1/ Ju&! 1..>' @ence, t#e petition %or
review on certiorari'
7t %irst, t#e petition was denied due course in a :eso&ution dated 11 Eovemer 1..>' FP,$ moved %or a
reconsideration w#ic# was granted ! t#e "upreme $ourt in a :eso&ution o% 88 Januar! 1..0' T#us, t#e
petition was reinstated' Fina&&!, t#e "upreme $ourt granted t#e petition, and t#us reversed and set aside t#e
decision o% t#e $ourt o% 7ppea&s'
1. Co##on Carrier +e,ine+ ($roa+ +e,inition)
7 ;common carrier< ma! e de%ined, road&!, as one w#o #o&ds #imse&% out to t#e pu&ic as engaged
in t#e usiness o% transporting persons or propert! %rom p&ace to p&ace, %or compensation, o%%ering #is services
to t#e pu&ic genera&&!'
-. Co##on Carrier +e,ine+ (5rticle 133-)
7rtic&e 1038 o% t#e $ivi& $ode de%ines a ;common carrier< as ;an! person, corporation, %irm or
association engaged in t#e usiness o% carr!ing or transporting passengers or goods or ot#, ! &and, water, or
air, %or compensation, o%%ering t#eir services to t#e pu&ic'<
3. (est ,or +eter#inin* .)et)er a party is a co##on carrier o, *oo+s
a' @e must e engaged in t#e usiness o% carr!ing goods %or ot#ers as a pu&ic emp&o!ment, and must
#o&d #imse&% out as read! to engage in t#e transportation o% goods %or person genera&&! as a usiness
and not as a casua& occupationC
' @e must undertake to carr! goods o% t#e kind to w#ic# #is usiness is con%inedC
c' @e must undertake to carr! ! t#e met#od ! w#ic# #is usiness is conducted and over #is
esta&is#ed roadsC and
d' T#e transportation must e %or #ire'
(ransportation La.! -""/ ( / )
/. &:;C is a co##on carrier
1ased on t#e de%initions and re9uirements, FP,$ is a common carrier' ,t is engaged in t#e usiness o%
transporting or carr!ing goods, i'e' petro&eum products, %or #ire as a pu&ic emp&o!ment' ,t undertakes to carr!
%or a&& persons indi%%erent&!, t#at is, to a&& persons w#o c#oose to emp&o! its services, and transports t#e goods
! &and and %or compensation'
2. ()e ,act t)at &:;C )as a li#ite+ clientele +oes not exclu+e it ,ro# t)e +e,inition o, a co##on
carrier
7rtic&e 1038 o% t#e $ivi& $ode makes no distinction etween one w#ose principa& usiness activit! is
t#e carr!ing o% persons or goods or ot#, and one w#o does suc# carr!ing on&! as an anci&&ar! activit! (in
&oca& idiom, as a Gside&ine?)' 7rtic&e 1038 ' ' ' avoids making an! distinction etween a person or enterprise
o%%ering transportation service on a regu&ar or sc#edu&ed asis and one o%%ering suc# service on an occasiona&,
episodic or unsc#edu&ed asis' Eeit#er does 7rtic&e 1038 distinguis# etween a carrier o%%ering its services to
t#e Ggenera& pu&ic,? i'e', t#e genera& communit! or popu&ation, and one w#o o%%ers services or so&icits
usiness on&! %rom a narrow segment o% t#e genera& popu&ation' Fe t#ink t#at 7rtic&e 1/00 de&ierate&!
re%rained %rom making suc# distinctions' ("e #u$%an vs. CA)
. Co##on Carrier un+er 5rticle 133- coinci+es neatly .it) notion o, :u$lic Service
T#e concept o% Gcommon carrier? under 7rtic&e 1038 ma! e seen to coincide neat&! wit# t#e notion
o% ;pu&ic service,< under t#e Pu&ic "ervice 7ct ($ommonwea&t# 7ct 151>, as amended) w#ic# at &east
partia&&! supp&ements t#e &aw on common carriers set %ort# in t#e $ivi& $ode' Dnder "ection 13, paragrap# ()
o% t#e Pu&ic "ervice 7ct, Gpu&ic service? inc&udes ;ever! person t#at now or #erea%ter ma! own, operate,
manage, or contro& in t#e P#i&ippines, %or #ire or compensation, wit# genera& or &imited c&iente&e, w#et#er
permanent, occasiona& or accidenta&, and done %or genera& usiness purposes, an! common carrier, rai&road,
street rai&wa!, traction rai&wa!, suwa! motor ve#ic&e, eit#er %or %reig#t or passenger, or ot#, wit# or wit#out
%i3ed route and w#atever ma! e its c&assi%ication, %reig#t or carrier service o% an! c&ass, e3press service,
steamoat, or steams#ip &ine, pontines, %erries and water cra%t, engaged in t#e transportation o% passengers or
%reig#t or ot#, s#ip!ard, marine repair s#op, w#ar% or dock, ice p&ant, ice=re%rigeration p&ant, cana&, irrigation
s!stem gas, e&ectric &ig#t #eat and power, water supp&! and power petro&eum, sewerage s!stem, wire or
wire&ess communications s!stems, wire or wire&ess roadcasting stations and ot#er simi&ar pu&ic services'<
3. 8il pipeline operators are co##on carriers6 =otor ve)icle not re9uire+
T#e de%inition o% ;common carriers< in t#e $ivi& $ode makes no distinction as to t#e means o%
transporting, as &ong as it is ! &and, water or air' ,t does not provide t#at t#e transportation o% t#e passengers
or goods s#ou&d e ! motor ve#ic&e' ,n %act, in t#e Dnited "tates, oi& pipe &ine operators are considered
common carriers'
4. :ipeline concessionaire as co##on carrier (R5 343)
Dnder t#e Petro&eum 7ct o% t#e P#i&ippines (:epu&ic 7ct 3/0), FP,$ is considered a ;common
carrier'< T#us, 7rtic&e /> t#ereo% provides t#at ;Pipe &ine concessionaire as common carrier' H 7 pipe &ine
s#a&& #ave t#e pre%erentia& rig#t to uti&i*e insta&&ations %or t#e transportation o% petro&eum owned ! #im, ut is
o&iged to uti&i*e t#e remaining transportation capacit! pro rata %or t#e transportation o% suc# ot#er petro&eum
as ma! e o%%ered ! ot#ers %or transport, and to c#ange wit#out discrimination suc# rates as ma! #ave een
approved ! t#e "ecretar! o% 7gricu&ture and Eatura& :esources'<
%. :etroleu# operation re*ar+e+ as pu$lic utility (R5 343)
:epu&ic 7ct 3/0 a&so regards petro&eum operation as a pu&ic uti&it!' Pertinent portion o% 7rtic&e 0
t#ereo% provides ;t#at ever!t#ing re&ating to t#e e3p&oration %or and e3p&oitation o% petro&eum ' ' ' and
ever!t#ing re&ating to t#e manu%acture, re%ining, storage, or transportation ! specia& met#ods o% petro&eum, is
#ere! dec&ared to e a pu&ic uti&it!'<
1". :ipeline concessionaire a co##on carrier (B;R Rulin* "%>43)
T#e 1ureau o% ,nterna& :evenue &ikewise considers FP,$ a ;common carrier'< ,n 1,: :u&ing 2>.=/3,
it dec&ared t#at ;' ' ' since (petitioner) is a pipe&ine concessionaire t#at is engaged on&! in transporting
petro&eum products, it is considered a common carrier under :epu&ic 7ct Eo' 3/0 ' ' ' "uc# eing t#e case, it
is not suAect to wit##o&ding ta3 prescried ! :evenue :egu&ations Eo' 13=0/, as amended'<
11. &:;C is a co##on carrier an+ is t)us exe#pt ,ro# t)e $usiness tax provi+e+ in Section 133 (?)
LGC
FP,$ is a ;common carrier< and, t#ere%ore, e3empt %rom t#e usiness ta3 as provided %or in "ection
133 (A), o% t#e +oca& 6overnment $ode' "ection 133 (A) provides t#at ;($ommon +imitations on t#e Ta3ing
Powers o% +oca& 6overnment Dnits) Dn&ess ot#erwise provided #erein, t#e e3ercise o% t#e ta3ing powers o%
provinces, cities, municipa&ities, and aranga!s s#a&& not e3tend to t#e &ev! o% t#e %o&&owing: 333 (A') Ta3es on
t#e gross receipts o% transportation contractors and persons engaged in t#e transportation o% passengers or
%reig#t ! #ire and common carriers ! air, &and or water, e3cept as provided in t#is $ode'<
1-. 7on>i#position o, $usiness tax a*ainst co##on carriers to prevent +uplication o, @co##on
carrier1s taxA
T#e &egis&ative intent in e3c&uding %rom t#e ta3ing power o% t#e &oca& government unit t#e imposition
o% usiness ta3 against common carriers is to prevent a dup&ication o% t#e so=ca&&ed ;common carrier?s ta3'<
T#e &egis&ature t#us provided an e3ception under "ection 184 (now "ection 130) t#at a province ma! impose
t#is ta3 at a speci%ic rate' ,n t#e case at ar, FP,$ is a&read! pa!ing 3I common carrier?s ta3 on its gross
sa&es-earnings under t#e Eationa& ,nterna& :evenue $ode' To ta3 FP,$ again on its gross receipts in its
transportation o% petro&eum usiness wou&d de%eat t#e purpose o% t#e +oca& 6overnment $ode'
[3]
5ra+a vs. C5 (GR %4-/3! 1 Buly 1%%-)
"econd Division, Paras (J): 3 concur
&acts' 7&eAandro 7rada is t#e proprietor and operator o% t#e %irm "out# Eegros Bnterprises w#ic# #as een
organi*ed and esta&is#ed %or more t#an 12 !ears' ,t is engaged in t#e usiness o% sma&& sca&e s#ipping as a
common carrier, servicing t#e #au&ing o% cargoes o% di%%erent corporations and companies wit# t#e %ive
vesse&s it was operating' (n 85 Marc# 1./8, 7rada entered into a contract wit# "an Migue& $orporation
("M$) to sa%e&! transport as a common carrier, cargoes o% t#e &atter %rom "an $ar&os $it!, Eegros (ccidenta&
to Mandaue $it! using one o% 7rada?s vesse&s, M-+ Ma!a' (n 85 Marc# 1./8, 7rada t#ru its crew master,
Mr' Vivencio 1aao, app&ied %or a c&earance wit# t#e P#i&ippine $oast 6uard %or M-+ Ma!a to &eave t#e port
o% "an $ar&os $it!, ut due to a t!p#oon, it was denied c&earance ! "E, 7ntonio Prestado PE w#o was t#en
assigned at "an $ar&os $it! $oast 6uard Detac#ment' (n 84 Marc# 1./8 M-+ Ma!a was given c&earance as
t#ere was no storm and t#e sea was ca&m' @ence, said vesse& &e%t %or Mandaue $it!' F#i&e it was navigating
towards $eu, a t!p#oon deve&oped and said vesse& was u%%eted on a&& its sides ! ig waves' ,ts rudder was
destro!ed and it dri%ted %or 1> #ours a&t#oug# its engine was running' (n 80 Marc# 1./8 at aout 5:22 a'm',
t#e vesse& sank wit# w#atever was &e%t o% its cargoes' T#e crew was rescued ! a passing pump oat and was
roug#t to $a&anggaman ,s&and' +ater in t#e a%ternoon, t#e! were roug#t to Pa&ompon, +e!te, w#ere
Vivencio 1aao %i&ed a marine protest' (n t#e asis o% suc# marine protest, t#e 1oard o% Marine ,n9uir!
conducted a #earing o% t#e sinking o% M-+ Ma!a w#erein "M$ was du&! represented' "aid 1oard made it
%indings and recommendation dated 0 Eovemer 1./3, aso&ving t#e owner-operator, o%%icers and crew o%
M-+ Ma!a %rom an! administrative &iai&it!' T#e 1oard?s report containing its %indings and recommendation
was t#en %orwarded to t#e #ead9uarters o% t#e P#i&ippine $oast 6uard %or appropriate action' (n t#e asis o%
suc# report, t#e $ommandant o% t#e P#i&ippine $oast 6uard rendered a decision dated 81 Decemer 1./5 in
"1M, 7dm' $ase Eo' //=/8 e3onerating t#e owner-operator o%%icers and crew o% t#e i&&=%ated M-+ Ma!a %rom
an! administrative &iai&it! on account o% said incident'
(ransportation La.! -""/ ( )
(n 84 Marc# 1./3, "M$ %i&ed a comp&aint in t#e :T$ its %irst cause o% action eing %or t#e recover! o% t#e
va&ue o% t#e cargoes anc#ored on reac# o% contract o% carriage' 7%ter due #earing, said court rendered a
decision dated 1/ Ju&! 1.//, w#ere (1) Fit# respect to t#e %irst cause o% action, c&aim o% p&ainti%% is #ere!
dismissedC (8) Dnder t#e second cause o% action, de%endant must pa! p&ainti%% t#e sum o% P8,222'22C (3) ,n t#e
t#ird cause o% action, t#e de%endant must pa! p&ainti%% t#e sum o% P8,/5.'82C (5) "ince t#e p&ainti%% #as
wit##e&d t#e pa!ment o% P18,..0'50 due t#e de%endant, t#e p&ainti%% s#ou&d deduct t#e amount o% P5,/5.'82
%rom t#e P18,..0'50 and t#e a&ance o% P/,15/'80 must e paid to t#e de%endantC and (4) De%endant?s
counterc&aim not #aving een sustantiated ! evidence, is &ikewise dismissed' E( $("T"'< ((rig' :ecord,
pp' 1.3=1.4)'
T#erea%ter, "M$ appea&ed t#e decision to t#e $ourt o% 7ppea&s ($7=6: $V 824.0)' ,n its decision
promu&gated on / 7pri& 1..1, t#e $ourt o% 7ppea&s reversed t#e decision o% t#e &ower court, and t#ereupon
ordered 7rada to pa! unto t#e "M$ t#e amount o% P10>,/85'/2 representing t#e va&ue o% t#e cargo &ost on
oard t#e i&&=%ated vesse&, M-+ Ma!a, wit# interest t#ereon at t#e &ega& rate %rom date o% t#e %i&ing o% t#e
comp&aint on 84 Marc# 1./3, unti& %u&&! paid, and t#e costs' @ence, t#e petition %or review on certiorari'
(n 82 Eovemer 1..1, t#e "upreme $ourt gave due course to t#e petition' Fina&&!, it a%%irmed t#e appea&ed
decision'
1. Co##on carriers +e,ine+
$ommon carriers are persons, corporations, %irms or associations engaged in t#e usiness o% carr!ing
or transporting passengers or goods or ot#, ! &and, water or air, %or compensation o%%ering t#eir services to
t#e pu&ic (7rt' 1038 o% t#e Eew $ivi& $ode)' ,n t#e case at ar, t#ere is no dout t#at 7rada was e3ercising
its %unction as a common carrier w#en it entered into a contract wit# "M$ to carr! and transport t#e &atter?s
cargoes' T#is %act is est supported ! t#e admission o% petitioner?s son, Mr' Bric 7rada, w#o testi%ied as t#e
o%%icer=in=c#arge %or operations o% "out# Eegros Bnterprises in $eu $it!'
-. <uty o, co##on carrier to exercise extraor+inary +ili*ence6 &ortuitous event
7 common carrier, ot# %rom t#e nature o% its usiness and %or insistent reasons o% pu&ic po&ic! is
urdened ! &aw wit# t#e dut! o% e3ercising e3traordinar! di&igence not on&! in ensuring t#e sa%et! o%
passengers, ut in caring %or t#e goods transported ! it' T#e &oss or destruction or deterioration o% goods
turned over to t#e common carrier %or t#e conve!ance to a designated destination raises instant&! a
presumption o% %au&t or neg&igence on t#e part o% t#e carrier, save on&! w#ere suc# &oss, destruction or damage
arises %rom e3treme circumstances suc# as a natura& disaster or ca&amit!' (&enedicto v. 'AC, #.(. )o. 7!*7+,
,ul- 1., 1..!, 1*7 C(A /07)
3. 7atural +isaster #ust $e t)e proxi#ate an+ only cause o, t)e loss to exe#pt co##on carrier
,ro# lia$ility
,n order t#at t#e common carrier ma! e e3empted %rom responsii&it!, t#e natura& disaster must #ave
een t#e pro3imate and on&! cause o% t#e &oss' @owever, t#e common carrier must e3ercise due di&igence to
prevent or minimi*e t#e &oss e%ore, during and a%ter t#e occurrence o% %&ood, storm or ot#er natura& disaster in
order t#at t#e common carrier ma! e e3empted %rom &iai&it! %or t#e destruction or deterioration o% t#e goods
(7rtic&e 103., Eew $ivi& $ode)'
/. &ailure to ascertain t)e location an+ +irection o, typ)oon s)o.s ne*li*ence
Vivencio 1aao, t#e s#ip?s captain, knew o% t#e impending t!p#oon on 85 Marc# 1./8 w#en t#e
P#i&ippine $oast 6uard denied M-+ Ma!a t#e issuance o% a c&earance to sai&' +ess t#an 85 #ours e&apsed since
t#e time o% t#e denia& o% said c&earance and t#e time a c&earance to sai& was %ina&&! issued on 84 Marc# 1./8'
:ecords wi&& s#ow t#at 1aao did not ascertain w#ere t#e t!p#oon was #eaded ! t#e use o% #is vesse&?s
arometer and radio' Eeit#er did t#e captain o% t#e vesse& monitor and record t#e weat#er conditions ever!da!
as re9uired ! 7rt' >18 o% t#e $ode o% $ommerce' @ad #e done so w#i&e navigating %or 31 #ours, #e cou&d
#ave anticipated t#e strong winds and ig waves and taken s#e&ter'
2. :5G>5S51s recor+s as per =arc) -2>-3! 1%4- on con+itions prevailin* in t)e vicinity o,
Cat#on! Ce$u
7s per o%%icia& records o% t#e $&imato&ogica& Division o% t#e P#i&ippine 7tmosp#eric, 6eop#!sica& and
7stronomica& "ervices 7dministration (P76=7"7) issued ! its $#ie% o% $&imato&ogica& Division, Primitivo
6' 1a&&an, Jr' as to t#e weat#er and sea conditions t#at prevai&ed in t#e vicinit! o% $atmon, $eu during t#e
period Marc# 84=80, 1./8, t#e sea conditions on Marc# 84, 1./8 were s&ig#t to roug# and t#e weat#er
conditions t#en prevai&ing during t#ose times were c&oud! skies wit# rains#owers and t#e sma&& waves grew
&arger and &arger'
. Circu#stances constitute lack o, ,oresi*)t an+ #ini#u# vi*ilance over t)e car*oes
7 common carrier is o&iged to oserve e3traordinar! di&igence and t#e %ai&ure o% 1aao to ascertain
t#e direction o% t#e storm and t#e weat#er condition o% t#e pat# t#e! wou&d e traversing, constitute &ack o%
%oresig#t and minimum vigi&ance over its cargoes taking into account t#e surrounding circumstances o% t#e
case'
3. Carrier1s ,ault or ne*li*ence presu#e+
F#i&e t#e goods are in t#e possession o% t#e carrier, it is ut %air t#at it e3ercises e3traordinar!
di&igence in protecting t#em %rom &oss or damage, and i% &oss occurs, t#e &aw presumes t#at it was due to t#e
carrier?s %au&t or neg&igenceC t#at is necessar! to protect t#e interest o% t#e s#ipper w#ic# is at t#e merc! o% t#e
carrier (Art. 17/+, Civil Code, A1oiti$ hipping Corporation v. Court o2 Appeals, #.(. )o. *.7/7, Aug. +,
1..!, 1** C(A 3*7).
4. Cre. o, =CL =aya +i+ not )ave t)e re9uire+ 9uali,ications
T#e records s#ow t#at t#e crew o% M-+ Ma!a did not #ave t#e re9uired 9ua&i%ications provided %or in
PD .0 or t#e P#i&ippine Merc#ant Marine (%%icers +aw, a&& o% w#om were un&icensed' F#i&e it is true t#at
t#e! were given specia& permit to man t#e vesse&, suc# permit was issued at t#e risk and responsii&it! o% t#e
owner'
%. Dxoneration ,ro# a+#inistrative lia$ility +oes not #ean exoneration ,ro# lia$ility as co##on
carrier
T#e e3oneration made ! t#e "pecia& 1oard o% Marine ,n9uir! was ut wit# respect to t#e
administrative &iai&it! o% t#e ;owner-operator, o%%icers and crew o% t#e i&&=%ated< vesse&' ,t cou&d not #ave
meant e3oneration o% 7rada %rom &iai&it! as a common carrier %or #is %ai&ure to oserve e3traordinar!
di&igence in t#e vigi&ance over t#e goods it was transporting and %or t#e neg&igent acts or omissions o% #is
emp&o!ees' "uc# is t#e %unction o% t#e $ourt, not t#e "pecia& 1oard o% Marine ,n9uir!'<
1". Buris+iction o, t)e Boar+ o, =arine ;n9uiry an+ t)e Special Boar+ o, =arine ;n9uiry
T#e P#i&ippine Merc#ant Marine :u&es and :egu&ations particu&ar&! $#apter JV, t#ereo% entit&ed
;Marine ,nvestigation and "uspension and :evocation Proceedings< prescries t#e :u&es governing maritime
casua&ties or accidents, t#e ru&es and procedures in administrative investigation o% a&& maritime cases wit#in
t#e Aurisdiction or cogni*ance o% t#e P#i&ippine $oast 6uard and t#e grounds %or suspension and revocation o%
&icenses-certi%icates o% marine o%%icers and seamen (1>21 H "$(PB)C c&ear&!, &imiting t#e Aurisdiction o% t#e
1oard o% Marine ,n9uir! and "pecia& 1oard o% Marine ,n9uir! to t#e administrative aspect o% marine
casua&ties in so %ar as it invo&ves t#e s#ipowners and o%%icers'
[/], also [1!1]
Sa$ena Bel*ian Eorl+ 5irlines vs. C5 (GR 1"/42! 1/ =arc) 1%%)
First Division: Vitug (J): 5 concur
&acts' (n 81 7ugust 1./0, Ma' Pau&a "an 7gustin was a passenger on oard %&ig#t "E 8/5 o% "aena 1e&gian
For&d 7ir&ines originating %rom $asa&anca to 1russe&s, 1e&gium' "#e was issued Tag 00153 on #er
va&ua&es, name&!: Aewe&ries va&ued at K8,342'22C c&ot#es K1,422'22 s#oes-ag K142C accessories K04C &uggage
itse&% K12'22C or a tota& o% K5,8>4'22' "#e sta!ed overnig#t in 1russe&s and #er &uggage was &e%t on oard
F&ig#t "E 8/5' F#en s#e arrived at Mani&a ,nternationa& 7irport on 8 "eptemer 1./0 and immediate&!
sumitted #er Tag to %aci&itate t#e re&ease o% #er &uggage ut t#e &uggage was missing' "#e was advised to
accomp&is# and sumitted and %i&ed on t#e same da!' "#e %o&&owed up #er c&aim on 15 "eptemer 1./0 ut
t#e &uggage remained to e missing' (n 14 "eptemer 1./0, s#e %i&ed #er %orma& comp&aint wit# t#e o%%ice o%
Ferge Massed, t#e air&ines?s +oca& Manager, demanding immediate attention' (n 32 "eptemer 1./0, on t#e
(ccasion o% "an 7gustin?s %o&&owing up #er &uggage c&aim, s#e was %urnis#ed copies o% t#e air&ines?s te&e3es
wit# and in%ormation t#at t#e 1russe&?s (%%ice o% de%endant %ound t#e &uggage and t#at t#e! #ave assured !
t#e air&ine t#at it #as noti%ied its Mani&a (%%ice 1./0' 1ut un%ortunate&! "an 7gustin was in%ormed t#at t#e
&uggage was &ost %or t#e second time'
7t t#e time o% t#e %i&&ing o% t#e comp&aint, t#e &uggage was its content #as not een %ound' "an 7gustin
demanded %rom t#e de%endant t#e mone! va&ue o% t#e &uggage and its contents amounting to K5,8>4'22 or its
e3c#ange va&ue, ut t#e air&ine re%used to sett&e t#e c&aim' 7%ter tria&, t#e tria& court rendered Audgment
ordering "aena 1e&gian For&d 7ir&ines to pa! Ma' Pau&a "an 7gustin (a) D"K5,8>4'22 or its &ega& e3c#ange
in P#i&ippine pesosC ;() P32,222'22 as mora& damagesC (c) P12,222'22 as e3emp&ar! damagesC (d)
P12,222'22' attorne!?s %eesC and (e) (t)#e cost o% t#e suit'
"aena appea&ed t#e decision o% t#e :egiona& Tria& $ourt to t#e $ourt o% 7ppea&s' T#e appe&&ate court, in its
decision o% 80 Feruar! 1..8, a%%irmed in toto t#e tria& court?s Audgment' @ence, t#e petition %or review'
T#e "upreme $ourt a%%irmed t#e appea&ed decision, wit# costs against "aena 1e&gian For&d 7ir&ines'
1. &ault or ne*li*ence6 Rule in contracts an+ co##on carriers
Fau&t or neg&igence consists in t#e omission o% t#at di&igence w#ic# is demanded ! t#e nature o% an
o&igation and corresponds wit# t#e circumstances o% t#e person, o% t#e time, and o% t#e p&ace' F#en t#e
source o% an o&igation is derived %rom a contract, t#e mere reac# or non=%u&%i&&ment o% t#e prestation gives
rise to t#e presumption o% %au&t on t#e part o% t#e o&igor' T#is ru&e is not di%%erent in t#e case o% common
carriers in t#e carriage o% good %at#er o% a %ami&! ut t#at o% ;e3traordinar!< care in t#e vigi&ance over t#e
goods'
-. Dxtraor+inary +ili*ence re9uire+ on carriers
7rt' 1033 o% t#e L$ivi&M $ode provides t#at %rom t#e ver! nature o% t#eir usiness and ! reason o%
pu&ic po&ic!, common carriers are ound to oserve e3traordinar! di&igence in t#e vigi&ance over t#e goods
transported ! t#em' T#is e3traordinar! responsii&it!, according to 7rt' 103>, &asts %rom t#e time t#e goods
are unconditiona&&! p&aced in t#e possession o% and received ! t#e consignee or person w#o #as t#e rig#t to
receive t#em' 7rt 1030 states t#at t#e common carrier?s dut! to oserve e3traordinar! di&igence in t#e
vigi&ance over t#e goods transported ! t#em remains in %u&& %orce and e%%ect even w#en t#e! are temporari&!
un&oaded or stored in transits'? 7nd 7rt' 1034 esta&is#es t#e presumption t#at i% t#e goods are &ost, destro!ed
or deteriorate, common carrier are presumed to #ave een at %au&t or to #ave acted neg&igent&!, un&ess t#e!
prove t#at t#e! #ad oserved e3traordinar! di&igence as re9uired in 7rtic&e 1033'
3. Dxceptions to extraor+inary +ili*ence re9uire#ent
T#e on&! e3ceptions to t#e %oregoing e3traordinar! responsii&it! o% t#e common carrier is w#en t#e
&oss, destruction, or deterioration o% t#e goods is due to an! o% t#e %o&&owing causes:
(1) F&ood, storm, eart#9uake, &ig#tning, or ot#er natura& disaster or ca&amit!C
(ransportation La.! -""/ ( % )
(8) 7ct o% t#e pu&ic enem! in war, w#et#er internationa& or civi&C
(3) 7ct or omission o% t#e s#ipper or owner o% t#e goodsC
(5) T#e c#aracter o% t#e goods or de%ects in t#e packing or in t#e containersC
(4) (rder or act o% e3cepted causes otains in t#e case'
/. (ort +octrine not a +e,ense in ,ailure to o$serve extraor+inary +ili*ence
T#e ru&es as to t#e e3traordinar! di&igence re9uired in carriers remain asica&&! unc#anged even w#en
t#e contract is reac#ed ! tort (on t#e ground t#at "ection 4(c), 7rtic&e ,J, o% t#e 6enera& $onditions o%
$arriage, signed at Farsaw, Po&and, on 28 (ctoer 1.8., as amended ! t#e @ague Protoco& o% 1.44,
genera&&! oserved ! ,nternationa& carriers, stating among ot#er t#ings, t#at: ;Passengers s#a&& not inc&ude in
#is c#ecked aggage, and t#e carrier ma! re%use to carr! as c#ecked aggage, Fragi&es or peris#a&e artic&es,
mone!, Aewe&r!, precious meta&s, negotia&e papers, securities or ot#er va&ua&e<) a&t#oug# noncontradictor!
princip&es on 9uasi=de&ict ma! t#en e assimi&ated as a&so %orming part o% t#e governing &aw' T#e air&ine
compan! is not t#us entire&! o%% track w#en it #as &ikewise raised in its de%ense t#e tort doctrine cannot
support its case'
2. :roxi#ate cause +e,ine+
Pro3imate cause is t#at w#ic#, in natura& and continues se9uence, unroken ! an! e%%icient
intervening cause, produces inAur! and wit#out w#ic# t#e resu&t wou&d not #ave occurred'
. :roxi#ate le*al cause +e,ine+
T#e pro3imate &ega& cause is t#at acting %irst and producing t#e inAur!, eit#er immediate&! or !
setting ot#er events in motion, a&& constituting a natura& and continuous c#ain o% events, eac# #aving a c&ose
causa& connection wit# its immediate predecessors, t#e %ina& event in t#e c#ain immediate&! a%%ecting t#e
inAur! as a natura& and proa&e resu&t o% t#e cause w#ic# %irst acted, under suc# circumstances t#at t#e person
responsi&e %or t#e event s#ou&d, as an ordinari&! prudent and inte&&igent person, #ave reasona&e ground to
e3pect at t#e moment o% #is act or de%au&t t#at an inAur! to some person mig#t proa&! resu&t t#ere%rom'
3. Loss o, $a**a*e t.ice s)o.s *ross ne*li*ence
,t remained undisputed t#at "an 7gustin?s &uggage was &ost w#i&e it was in t#e custod! o% "aena
1e&gian For&d 7ir&ines' ,t was supposed to arrive on t#e same %&ig#t t#at "an 7gustin took in returning to
Mani&a on 8 "eptemer 1./0' (n 83 (ctoer 1./0, s#e was advised t#at #er &uggage #ad %ina&&! een %ound,
wit# its contents intactC on&! to e to&d &ater t#at #er &uggage #ad een &ost %or t#e second time' T#us, "aena
1e&gian For&d 7ir&ines is u&timate&! gui&t! o% ;gross neg&igence< in t#e #and&ing o% "an 7gustin?s &uggage, %or
t#e ;&oss o% said aggage not on&! once ! twice underscore t#e wanton neg&igence and &ack o% care ; on t#e
part o% t#e carrier'
4. Earsa. convention +enies t)e carrier avail#ent o, provisions li#itin* lia$ility i, +a#a*e is
cause+ $y .ill,ul #iscon+uct or +e,ault
T#e Farsaw $onvention denies to t#e carrier avai&ment ;o% t#e provisions w#ic# e3c&ude or &imit #is
&iai&it! i% t#e damage is caused ! #is wi&&%u&C misconduct or ! suc# de%au&t on #is part as, in accordance
wit# t#e &aw o% t#e court sei*ed o% t#e case, is considered to e e9uiva&ent to wi&&%u& misconduct,< or ;i% t#e
damage is (simi&ar&!) caused ! an! agent o% t#e carrier acting wit#in t#e scope o% #is emp&o!ment'< T#e
@ague Protoco& amended t#e Farsaw $onvention ! removing t#e provision t#at i% t#e air&ine took a&&
necessar! steps to avoid t#e damage, it cou&d e3cu&pate itse&% comp&ete&!, and dec&aring t#e stated &imits o%
&iai&it! not app&ica&e ;i% it is proved t#at t#e damage resu&ted %rom an act or omission o% t#e carrier, its
servants or agents, done wit# intent to cause damage or reck&ess&! and wit# know&edge t#at damage wou&d
proa&! resu&t'< T#e same de&etion was e%%ected ! t#e Montrea& 7greement o% 1.>>, wit# t#e resu&t t#at a
passenger cou&d recover un&imited damages upon proo% o% wi&%u& misconduct' T#e $onvention does not t#us
operate as an e3c&usive enumeration o% t#e instances o% an air&ine?s &iai&it!, or as an aso&ute &imit o% t#e
e3tent o% t#at &iai&it!' "&ig#t re%&ection readi&! &eads to t#e conc&usion t#at it s#ou&d e deemed a &imit o%
(ransportation La.! -""/ ( 1" )
&iai&it! on&! in t#ose cases w#ere t#e cause o% t#e deat# or inAur! to person, or destruction, &oss or damage to
propert! or de&a! in its transport is not attriuta&e to or attended ! an! wi&%u& misconduct, ad %ait#,
reck&essness or ot#erwise improper conduct on t#e part o% an! o%%icia& or emp&o!ee %or w#ic# t#e carrier is
responsi&e, and t#e carrier? or misconduct o% its emp&o!ees, or %or some Particu&ar or e3ceptiona& t!pe o%
damage' (Alitalia vs. 'AC)
%. :)ilippines is country o, +estination6 7o error in application o, usual rules on extent o,
recovera$le +a#a*es $eyon+ t)e Earsa. li#itations
T#ere is no error in t#e preponderant app&ication to t#e case o% t#e usua& ru&es on t#e e3tent o%
recovera&e damages e!ond t#e Farsaw &imitations' Dnder domestic &aw and Aurisprudence (t#e P#i&ippines
eing t#e countr! o% destination), t#e attendance o% gross neg&igence (given t#e e9uiva&ent o% %raud or ad
%ait#) #o&ds t#e common carrier &ia&e %or a&& damages w#ic# can e reasona&! attriute, a&t#oug# un%oreseen,
to t#e non=per%ormance o% t#e o&igation, inc&uding mora& and e3emp&ar! damages'
[2]
:)ilippine 7ational Rail.ays (:7R) vs. C5 (GR L>223/3! / 8cto$er 1%42)
"econd Division, Bsco&in (J): 3 concur

&acts' (n 12 "eptemer 1.08, at aout .:22 p'm', Fini%redo Tupang, #usand o% :osario Tupang, oarded
Train 41> o% t#e P#i&ippine Eationa& :ai&wa!s at +imanan, $amarines "ur, as a pa!ing passenger ound %or
Mani&a' Due to some mec#anica& de%ect, t#e train stopped at "ipocot, $amarines "ur, %or repairs, taking some
two #ours e%ore t#e train cou&d resume its trip to Mani&a' Dn%ortunate&!, upon passing ,!am 1ridge at
+ucena, Nue*on, Fini%redo Tupang %e&& o%% t#e train resu&ting in #is deat#' T#e train did not stop despite t#e
a&arm raised ! t#e ot#er passengers t#at someod! %e&& %rom t#e train' ,nstead, t#e train conductor, Per%ecto
7ra*ado, ca&&ed t#e station agent at $ande&aria, Nue*on, and re9uested %or veri%ication o% t#e in%ormation'
Po&ice aut#orities o% +ucena $it! were dispatc#ed to t#e ,!am 1ridge w#ere t#e! %ound t#e &i%e&ess od! o%
Fini%redo Tupang' 7s s#own ! t#e autops! report, Fini%redo Tupang died o% cardio=respirator! %ai&ure due
to massive cerera& #emorr#age due to traumatic inAur!' Tupang was &ater uried in t#e pu&ic cemeter! o%
+ucena $it! ! t#e &oca& po&ice aut#orities'

Dpon comp&aint %i&ed ! t#e deceased?s widow, :osario Tupang, t#e t#en $F, :i*a&, a%ter tria&, #e&d t#e PE:
&ia&e %or damages %or reac# o% contract o% carriage and ordered it to pa! :osario Tupang t#e sum o%
P18,222'22 %or t#e deat# o% Fini%redo Tupang, p&us P82,222'22 %or &oss o% #is earning capacit!, and t#e
%urt#er sum o% P12,222'22 as mora& damages, and P8,222'22 as attorne!?s %ees, and cost'
(n appea&, t#e 7ppe&&ate $ourt sustained t#e #o&ding o% t#e tria& court t#at t#e PE: did not e3ercise t#e
utmost di&igence re9uired ! &aw o% a common carrier' ,t %urt#er increased t#e amount adAudicated ! t#e tria&
court ! ordering PE: to pa! t#e :osario Tupang an additiona& sum o% P4,222,22 as e3emp&ar! damages'
Moving %or reconsideration o% t#e aove decision, t#e PE: raised %or t#e %irst time, as a de%ense, t#e doctrine
o% state immunit! %rom suit' T#e motion was denied' @ence t#e petition %or review'
T#e "upreme $ourt modi%ied t#e decision o% t#e appe&&ate court ! e&iminating t#ere%rom t#e amounts o%
P12,222'22 and P4,222'22 adAudicated as mora& and e3emp&ar! damages, respective&!C wit#out costs'
1. :7R create+ un+er R5 /1%6 :7R #ay sue an+ $e sue+ like any ot)er corporation
T#e PE: was created under 7 514>, as amended' "ection 5 o% t#e said 7ct provides t#at ;t#e
P#i&ippine Eationa& :ai&wa!s s#a&& #ave t#e %o&&owing powers: (a) To do a&& suc# ot#er t#ings and to transact
a&& suc# usiness direct&! or indirect&! necessar!, incidenta& or conducive to t#e attainment o% t#e purpose o%
t#e corporationC and () 6enera&&!, to e3ercise a&& powers o% a corporation under t#e $orporation +aw'< Dnder
t#e %oregoing section, t#e PE: #as a&& t#e powers, t#e c#aracteristics and attriutes o% a corporation under t#e
$orporation +aw' PE: ma! sue and e sued and ma! e suAected to court processes Aust &ike an! ot#er
corporation'
-. :7R ,un+s su$?ect to *arnis)#ent or execution
,n P#i&ippine Eationa& :ai&wa!s v' Dnion de Ma9uinistas, et a&', t#en Justice Fernando, &ater $#ie%
Justice, said t#at t#e main issue posed in said proceeding, i'e' ;w#et#er or not t#e %unds o% t#e P#i&ippine
Eationa& :ai&wa!s cou&d e garnis#ed or &evied upon on e3ecution<, was reso&ved in two recent decisions, t#e
P#i&ippine Eationa& 1ank v' $ourt o% ,ndustria& :e&ations L/1 "$:7 315M and P#i&ippine Eationa& 1ank v'
@on' Judge Paa&an L/3 "$:7 4.4M, w#ere t#e $ourt ru&ed t#at t#ere was no &ega& ar to garnis#ment or
e3ecution' T#e argument ased on non=suai&it! o% a state a&&eged&! ecause t#e %unds are governmenta& in
c#aracter was unavai&ing'
3. 8t)er cases as to *arnis)#ent o, G8CC ,un+s
a. :)ilippine 7ational Bank v. Court o, ;n+ustrial Relations' ;T#e premise t#at t#e %unds cou&d e
spoken o% as pu&ic in c#aracter ma! e accepted in t#e sense t#at t#e Peop&e?s @omesite and @ousing
$orporation was a government=owned entit!' ,t does not %o&&ow t#oug# t#at t#e! were e3empt %rom
garnis#ment' ;
$. 7ational S)ipyar+ an+ Steel Corporation v. Court o, ;n+ustrial Relations' 7 government=owned
and contro&&ed corporation #as a persona&it! o% its own, distinct and separate %rom t#at o% t#e
6overnment'
/. By en*a*in* in a particular $usiness as a corporation! *overn#ent +ivests itsel, pro )ac vice o,
its soverei*n c)aracter6 <octrine o, non>sua$ility cannot $e le*ally set up
7s #e&d in =anila Hotel D#ployees 5ssociation v. =anila Hotel Co., w#en t#e government enters
into commercia& usiness, it aandons its sovereign capacit! and is to e treated &ike an! ot#er corporation'
1! engaging in a particu&ar usiness t#roug# t#e instrumenta&it! o% a corporation, t#e government divests
itse&% pro #ac vice o% its sovereign c#aracter, so as to render t#e corporation suAect to t#e ru&es o% &aw
governing private corporations' ,n :risco v. C;R, it was #e&d t#at ;w#en t#e government engages in
usiness, it adicates part o% its sovereign prerogatives and descends to t#e &eve& o% a citi*en< ,n t#e case at
ar, PE: cannot &ega&&! set up t#e doctrine o% non=suai&it! as a ar to t#e Tupang?s suit %or damages'
2. :7R )as o$li*ation to o$serve extraor+inary +ili*ence in transportin* passen*ers to t)eir
+estinations
PE: #as t#e o&igation to transport its passengers to t#eir destinations and to oserve e3traordinar!
di&igence in doing so' Deat# or an! inAur! su%%ered ! an! o% its passengers gives rise to t#e presumption t#at
it was neg&igent in t#e per%ormance o% its o&igation under t#e contract o% carriage' PE: %ai&ed to overt#row
suc# presumption o% neg&igence wit# c&ear and convincing evidence, inasmuc# as PE: does not den!, (1) t#at
t#e train oarded ! t#e deceased Fini%redo Tupang was so overcrowded t#at #e and man! ot#er passengers
#ad no c#oice ut to sit on t#e open p&at%orms etween t#e coac#es o% t#e train, (8) t#at t#e train did not even
s&ow down w#en it approac#ed t#e ,!am 1ridge w#ic# was under repair at t#e time, and (3) t#at neit#er did
t#e train stop, despite t#e a&arm raised ! ot#er passengers t#at a person #ad %a&&en o%% t#e train at ,!am
1ridge'
. Contri$utory ne*li*ence o, (upan* .arrants +eletion o, #oral +a#a*es
F#i&e PE: %ai&ed to e3ercise e3traordinar! di&igence as re9uired ! &aw, it appears t#at t#e deceased
was c#argea&e wit# contriutor! neg&igence' "ince #e opted to sit on t#e open p&at%orm etween t#e coac#es
o% t#e train, #e s#ou&d #ave #e&d tig#t&! and tenacious&! on t#e uprig#t meta& ar %ound at t#e side o% said
p&at%orm to avoid %a&&ing o%% %rom t#e speeding train' "uc# contriutor! neg&igence, w#i&e not e3empting t#e
PE: %rom &iai&it!, nevert#e&ess Austi%ied t#e de&etion o% t#e amount adAudicated as mora& damages'
3. 5.ar+ o, exe#plary +a#a*es in t)e a$sence o, ,rau+! #alice or $a+ ,ait)
(ransportation La.! -""/ ( 1- )
T#e award o% e3emp&ar! damages must e set aside' B3emp&ar! damages ma! e a&&owed on&! in
cases w#ere t#e de%endant acted in a wanton, %raudu&ent, reck&ess, oppressive or ma&evo&ent manner' T#ere
eing no evidence o% %raud, ma&ice or ad %ait# on t#e part o% PE:, t#e grant o% e3emp&ar! damages s#ou&d e
discarded'
[], also [/1]
Dastern S)ippin* Lines vs. C5 (GR %3/1-! 1- Buly 1%%/)
Bn 1anc, Vitug (J): 13 concur, 1 took no part
&acts' (n 5 Decemer 1./1, 8 %ier drums o% rio%&avin were s#ipped %rom Ooko#ama, Japan %or de&iver!
vesse& ;"" Bastern $omet< owned ! Bastern "#ipping +ines under 1i&& o% +ading OM7=/' T#e s#ipment
was insured under Mercanti&e ,nsurance $ompan!?s Marine ,nsurance Po&ic! /1-21100 %or P3>,3/8,5>>'3/'
Dpon arriva& o% t#e s#ipment in Mani&a on 18 Decemer 1./1, it was disc#arged unto t#e custod! o% Metro
Port "ervices, ,nc' T#e &atter e3cepted to one drum, said to e in ad order, w#ic# damage was unknown to
Mercanti&e ,nsurance' (n 0 Januar! 1./8, 7&&ied 1rokerage $orporation received t#e s#ipment %rom Metro
Port "ervice, one drum opened and wit#out sea&' (n Januar! / and 15, 1./8, 7&&ied 1rokerage made
de&iveries o% t#e s#ipment to t#e consignees? ware#ouse' T#e &atter e3cepted to one drum w#ic# contained
spi&&ages, w#i&e t#e rest o% t#e contents was adu&terated-%ake' Due to t#e &osses-damage sustained ! said
drum, t#e consignee su%%ered &osses tota&ing P1.,238'.4, due to t#e %au&t and neg&igence o% t#e s#ipping
compan!, arrastre operator and roker=%orwarder' $&aims were presented against t#em w#o %ai&ed and re%used
to pa! t#e same' 7s a conse9uence o% t#e &osses sustained, Mercanti&e ,nsurance was compe&&ed to pa! t#e
consignee P1.,238'.4 under t#e a%orestated marine insurance po&ic!, so t#at it ecame surogated to a&& t#e
rig#ts o% action o% said consignee against t#e s#ipping compan!, etc'
7%ter tria&, t#e tria& court rendered Audgment (1) ordering t#e s#ipping compan!, t#e arrastre operator and t#e
roker=%orwarder to pa! Mercanti&e ,nsurance, in so&idum, t#e amount o% P1.,238'.4 wit# t#e present &ega&
interest o% 18I per annum %rom (ctoer 1, 1./8, t#e date o% %i&ing o% t#is comp&aints, unti& %u&&! paid (t#e
&iai&it! o% de%endant Bastern "#ipping, ,nc' s#a&& not e3ceed D"K422 per case or t#e $,F va&ue o% t#e &oss,
w#ic#ever is &esser, w#i&e t#e &iai&it! o% de%endant Metro Port "ervice, ,nc' s#a&& e to t#e e3tent o% t#e actua&
invoice va&ue o% eac# package, crate o3 or container in no case to e3ceed P4,222'22 eac#, pursuant to
"ection >'21 o% t#e Management $ontract)C P3,222'22 as attorne!?s %ees, and costsC and dismissing t#e
counterc&aims and crossc&aim o% de%endant-cross=c&aimant 7&&ied 1rokerage $orporation'
Dissatis%ied, Bastern "#ipping +ines appea&ed to t#e $ourt o% 7ppea&s' T#e $ourt o% 7ppea& a%%irmed in toto
t#e Audgment o% t#e court a 9uo'
T#e "upreme $ourt part&! granted t#e petition' T#e $ourt a%%irmed t#e appea&ed decision wit# t#e
modi%ication t#at t#e &ega& interest to e paid is >I on t#e amount due computed %rom t#e decision, dated 3
Feruar! 1.//, o% t#e court a 9uo' 7 18I interest, in &ieu o% >I, s#a&& e imposed on suc# amount upon
%ina&it! o% t#is decision unti& t#e pa!ment t#ereo%'
1. <uration o, co##on carrier1s +uty to o$serve re9uisite +ili*ence
T#e common carrier?s dut! to oserve t#e re9uisite di&igence in t#e s#ipment o% goods &asts %rom t#e
time t#e artic&es are surrendered to or unconditiona&&! p&aced in t#e possession o%, and received !, t#e carrier
%or transportation unti& de&ivered to, or unti& t#e &apse o% a reasona&e time %or t#eir acceptance, ! t#e person
entit&ed to receive t#em (7rts' 103>=103/, $ivi& $odeC 6an*on vs' $ourt o% 7ppea&s, 1>1 "$:7 >5>C Pui 1ai
vs' Do&&ar "teams#ip +ines, 48 P#i&' />3)'
-. :resu#ption o, carrier1s ne*li*ence in case o, loss! +a#a*e o, *oo+s6 7one o, t)e exclusive
exceptions can $e applie+
F#en t#e goods s#ipped eit#er are &ost or arrive in damaged condition, a presumption arises against
t#e carrier o% its %ai&ure to oserve t#at di&igence, and t#ere need not e an e3press %inding o% neg&igence to
#o&d it &ia&e (7rt' 1034, $ivi& $odeC P#i&ippine Eationa& :ai&wa!s vs' $ourt o% 7ppea&s, 13. "$:7 /0C Metro
Port "ervice vs' $ourt o% 7ppea&s, 131 "$:7 3>4)' T#ere are, o% course, e3ceptiona& cases w#en suc#
presumption o% %au&t is not oserved ut t#ese cases, enumerated in 7rtic&e 1035 1 o% t#e $ivi& $ode, are
e3c&usive, not one o% w#ic# can e app&ied to t#e case at ar'
3. ()e rationale .)y t)e carrier an+ arrastre operator are #a+e lia$le in soli+u#
,n Fireman?s Fund ,nsurance vs' Metro Port "ervices (1/8 "$:7 544), t#e $ourt #as e3p&ained in
#o&ding t#e carrier and t#e arrastre operator &ia&e in so&idum, in t#e manner t#at ;T#e &ega& re&ations#ip
etween t#e consignee and t#e arrastre operator is akin to t#at o% a depositor and ware#ouseman (+ua Pian v'
Mani&a :ai&road $o', 1. "$:7 4 L1.>0M' T#e re&ations#ip etween t#e consignee and t#e common carrier is
simi&ar to t#at o% t#e consignee and t#e arrastre operator (Eort#ern Motors, ,nc' v' Prince +ine, et a&', 120 P#i&'
843 L1.>2M)' "ince it is t#e dut! o% t#e 7rrastre to take good care o% t#e goods t#at are in its custod! and to
de&iver t#em in good condition to t#e consignee, suc# responsii&it! a&so devo&ves upon t#e $arrier' 1ot# t#e
7rrastre and t#e $arrier are t#ere%ore c#arged wit# t#e o&igation to de&iver t#e goods in goods condition to
t#e consignee'< T#e pronouncement, #owever, does not imp&! t#at t#e arrastre operator and t#e customs
roker are t#emse&ves a&wa!s and necessari&! &ia&e so&idari&! wit# t#e carrier, or vice=versa, nor t#at
attendant %acts in a given case ma! not var! t#e ru&e'
/. &irst *roup o, cases on variances on t)e Court1s rulin* on le*al interest
,n t#e cases o% t#e cases o% :e%ormina v' Tomo& (1./4), P#i&ippine :ait 1us +ines v' $ru* (1./>),
F&orendo v' :ui* (1./.) and Eationa& Power $orporation v' angas (1..8), t#e asic issue %ocus on t#e
app&ication o% eit#er t#e >I (under t#e $ivi& $ode) or 18I (under t#e $entra& 1ank $ircu&ar) interest per
annum' ,t is easi&! discerni&e in t#ese cases t#at t#ere #as een a consistent #o&ding t#at t#e $entra& 1ank
$ircu&ar imposing t#e 18I interest per annum app&ies on&! to &oans or %orearance 1> o% mone!, goods or
credits, as we&& as to Audgments invo&ving suc# &oan or %orearance o% mone!, goods or credits, and t#at t#e
>I interest under t#e $ivi& $ode governs w#en t#e transaction invo&ves t#e pa!ment o% indemnities in t#e
concept o% damage arising %rom t#e reac# o% a de&a! in t#e per%ormance o% o&igations in genera&' (serve,
too, t#at in t#ese cases, a common time %rame in t#e computation o% t#e >I interest per annum #as een
app&ied, i'e', %rom t#e time t#e comp&aint is %i&ed unti& t#e adAudged amount is %u&&! paid'
2. Secon+ *roup o, cases on variances on t)e Court1s rulin* on le*al interest
T#e cases o% Ma&a!an ,nsurance $ompan! v' Mani&a Port "ervice (1.>.), Eakpi& and "ons v' $ourt o%
7ppea&s (1.//), and 7merican B3press ,nternationa& v' ,ntermediate 7ppe&&ate $ourt (1.//), did not a&ter t#e
pronounced ru&e on t#e app&ication o% t#e >I or 18I interest per annum, depending on w#et#er or not t#e
amount invo&ved is a &oan or %orearance, on t#e one #and, or one o% indemnit! %or damage, on t#e ot#er #and'
Dn&ike, #owever, t#e ;%irst group< w#ic# remained consistent in #o&ding t#at t#e running o% t#e &ega& interest
s#ou&d e %rom t#e time o% t#e %i&ing o% t#e comp&aint unti& %u&&! paid, t#e ;second group< varied on t#e
commencement o% t#e running o% t#e &ega& interest' Ma&a!an #e&d t#at t#e amount awarded s#ou&d ear &ega&
interest %rom t#e date o% t#e decision o% t#e court a 9uo, e3p&aining t#at ;i% t#e suit were %or damages,
Gun&i9uidated and not known unti& de%inite&! ascertained, assessed and determined ! t#e courts a%ter proo%,?
t#en, interest Gs#ou&d e %rom t#e date o% t#e decision'?< 7merican B3press ,nternationa& v' ,7$, introduced a
di%%erent time %rame %or reckoning t#e >I interest ! ordering it to e ;computed %rom t#e %ina&it! o% (t#e)
decision unti& paid'< T#e Eakpi& and "ons case ru&ed t#at 18I interest per annum s#ou&d e imposed %rom t#e
%ina&it! o% t#e decision unti& t#e Audgment amount is paid' T#e %actua& circumstances ma! #ave ca&&ed %or
di%%erent app&ications, guided ! t#e ru&e t#at t#e courts are vested wit# discretion, depending on t#e e9uities
o% eac# case, on t#e award o% interest'
. Rules in t)e +eter#ination o, le*al interests
(ransportation La.! -""/ ( 1/ )
a' F#en an o&igation, regard&ess o% its source, i'e', &aw, contracts, 9uasi=contracts, de&icts or 9uasi=
de&icts 1/ is reac#ed, t#e contravenor can e #e&d &ia&e %or damages' T#e provisions under Tit&e
JV,,, on ;Damages< o% t#e $ivi& $ode govern in determining t#e measure o% reovera&e damages'
' Fit# regard particu&ar&! to an award o% interest in t#e concept o% actua& and compensator! damages,
t#e rate o% interest, as we&& as t#e accrua& t#ereo%, is imposed, as %o&&ows:
1' F#en t#e o&igation is reac#ed, and it consists in t#e pa!ment o% a sum o% mone!, i'e', a &oan or
%orearance o% mone!, t#e interest due s#ou&d e t#at w#ic# ma! #ave een stipu&ated in writing'
Furt#ermore, t#e interest due s#a&& itse&% earn &ega& interest %rom t#e time it is Audicia&&!
demanded' ,n t#e asence o% stipu&ation, t#e rate o% interest s#a&& e 18I per annum to e
computed %rom de%au&t, i'e', %rom Audicia& or e3traAudicia& demand under and suAect to t#e
provisions o% 7rtic&e 11>. o% t#e $ivi& $ode'
8' F#en a o&igation, not constituting a &oan or %orearance o% mone!, is reac#ed, an interest on t#e
amount o% damages awarded ma! e imposed at t#e discretion o% t#e court at t#e rate o% >I per
annum' Eo interest, #owever, s#a&& e adAudged on un&i9uidated c&aims or damages e3cept w#en
or unti& t#e demand can e esta&is#ed wit# reasona&e certaint!' 7ccording&!, w#ere t#e demand
is esta&is#ed wit# reasona&e certaint!, t#e interest s#a&& egin to run %rom t#e time t#e c&aim is
made Audicia&&! or e3traAudicia&&! (7rtic&e 11>., $ivi& $ode) ut w#en suc# certaint! cannot e so
reasona&! esta&is#ed at t#e time t#e demand is made, t#e interest s#a&& egin to run on&! %rom
t#e date o% t#e Audgment o% t#e court is made (at w#ic# time t#e 9uanti%ication o% damages ma! e
deemed to #ave een reasona&! ascertained)' T#e actua& ase %or t#e computation o% &ega&
interest s#a&&, in an! case, e on t#e amount o% %ina&&! adAudged'
3' F#en t#e Audgment o% t#e court awarding a sum o% mone! ecomes %ina& and e3ecutor!, t#e rate
o% &ega& interest, w#et#er t#e case %a&&s under paragrap# 1 or paragrap# 8, aove, s#a&& e 18I per
annum %rom suc# %ina&it! unti& its satis%action, t#is interim period eing deemed to e ! t#en an
e9uiva&ent to a %orearance o% credit'
[3]
=etro :ort Services vs. C5 (GR L>2324-! -/ 5u*ust 1%4/)
First Division, Me&encio=@errera (J): 4 concur
&acts' "ometime in 7pri& 1.03, Dnion "a&es Marketing $orporation (DE,(E) ordered %rom Dnion $aride
o% 7ntwerp, 1e&gium, ..,452 ki&ograms o% +ow Densit! Po&!et#!&ene, va&ued at D" K'854 per ki&ogram or a
tota& purc#ase price o% D" K85,510'32, at t#e conversion rate o% P>'/5/ to a D" Do&&ar' T#e s#ipment was
packed in 5,222 ags o% 84 net ki&ograms, more or &ess, %or eac# ag, and was &oaded at 7ntwerp, 1e&gium, in
good order condition on oard t#e ;"-" Dinga&an 1a!<, owned and operated ! Dniversa& "#ipping +ines,
,nc' ($7::,B:) and consigned to DE,(E in Mani&a' T#e s#ipment was covered ! a Marine :isk Eote
issued ! $#arter ,nsurance $o' (,E"D:B:) %or P818,03/'10 against a&& risks' T#e $7::,B: arrived in
Mani&a on 88 June 1.03 and arrastre services were #and&ed ! B' :a*on, ,nc' (7::7"T:B), now ca&&ed
Metro Port "ervice, ,nc' (ut o% t#e 5,222 ags, 1,242 ags were received ! t#e consignee DE,(E in ad
order condition' 7s a conse9uence o% t#e damage and &oss, t#e ,E"D:B: paid DE,(E t#e sum o%
P34,02.'11 in %u&& sett&ement o% t#e c&aim, and t#e ,E"D:B: ecame t#e surogee o% a&& o% DE,(E?s rig#ts
to recover %rom t#e parties concerned'
(n 1 Ju&! 1.05, t#e ,E"D:B: sued %or damages wit# t#e t#en $F, Mani&a against t#e $7::,B: and t#e
7::7"T:B in t#e amount o% P34,02.'11, in addition to e3emp&ar! damages and attorne!?s %ees' ,n its
Decision, t#e Tria& $ourt ordered (1) t#e Dniversa& "#ipping +ines, ,nc', to pa! $#arter ,nsurance $o' t#e
amount o% P18,8/4'.5 p&us 18I interest per annum %rom Ju&! 1, 1.05 unti& %u&& pa!ment t#ereo%C (8) B' :a*on
,nc' to pa! $#arter ,nsurance $o' t#e amount o% P.,0>3'.5 p&us 18I interest per annum %rom Ju&! 1, 1.05
unti& %u&& pa!ment t#ereo%C (3) ot# Dniversa& "#ipping and B' :a*on to pa! t#e costsC and (5) ot# Dniversa&
"#ipping and B' :a*on to pa! $#arter ,nsurance, in so&idum, P8,222'22 as attorne!?s %ees'
(n appea& ! t#e $7::,B: and 7::7"T:B, t#e t#en $ourt o% 7ppea&s, on 83 Marc# 1./1, aso&ved t#e
$7::,B: o% an! and a&& &iai&it! and #e&d t#e 7::7"T:B so&e&! &ia&e' :econsideration %i&ed ! t#e
7::7"T:B was denied ! t#e 7ppe&&ate $ourt'
T#e "upreme $ourt reversed and set aside t#e appea&ed Audgment o% $ourt o% 7ppea&s, and reinstated t#at o%
t#e $F, Mani&a, 1ranc# J,C wit#out costs'
1. 8nly 9uestions o, la. #ay $e raise+ in a :etition ,or Revie. on Certiorari! exceptions
(rdinari&!, in a Petition %or :eview on $ertiorari, on&! 9uestions o% &aw ma! e raised' T#e $ourt #as
#e&d in a numer o% cases t#at %indings o% %act ! t#e $ourt o% 7ppea&s are, in genera&, conc&usive on t#e
"upreme $ourt w#en supported ! t#e evidence on record' T#e ru&e is not aso&ute, #owever, and a&&ows o%
e3ceptions, w#ic# t#e $ourt %inds present in t#e case at ar in t#at t#e appe&&ate court?s %indings o% %acts are
contrar! to t#ose o% t#e Tria& $ourt and are contradicted ! t#e evidence on record'
-. 5ppellate Court1s rulin* +isre*ar+s evi+ence o, t)e C5RR;DR an+ 5RR5S(RD t)at 1% $a*s
.ere +isc)ar*e+ in $a+ or+er con+ition
,n aso&ving t#e $7::,B:, t#e appe&&ate court comp&ete&! disregards t#e evidence o% t#e $7::,B:
and t#e 7::7"T:B t#at >1. ags were disc#arged ! t#e $7::,B: to t#e 7::7"T:B in ad order
condition, as evidenced ! t#e origina& and dup&icate copies o% t#e $argo :eceipts issued ! t#e $7::,B: to
t#e 7::7"T:B and signed ! t#eir respective representatives' T#e condition o% t#e >1. ags e%ore t#e
turnover to t#e 7::7"T:B %rom t#e $7::,B: was &oss or spoi&age o% up to 42I, as re%&ected in t#e "urve!
o% 1ad (rder $argoes, signed ! t#e $7::,B: and 7::7"T:B representatives' 7ccording&!, t#e Tria&
$ourt #e&d t#e $7::,B: &ia&e on&! %or t#e va&ue o% a tota& o% 553 ags, as t#is is t#e ;evidence o% t#e
p&ainti%%< (,E"D:B:), at 1>'/82. ki&ograms per ag, &ess t#an t#e actua& weig#t o% 84 ki&ograms net per ag
due to some recover! o% spoi&age, or a tota& &iai&it! o% P18,8/4'.5' "ince >1. ags were disc#arged %rom t#e
$7::,B: a&read! in ad order condition, it %o&&ows t#at t#e remaining 531 ags were damaged w#i&e in t#e
7::7"T:B?s custod! %or w#ic# it s#ou&d e #e&d &ia&e'
3. 5RR5S(RD1s lia$ility ,ixe+ to 321 $a*s! as ;7SFRDR ,aile+ to appeal a.ar+
@owever, since t#e Tria& $ourt computed t#e &iai&it! o% t#e 7::7"T:B at 341 ags,
notwit#standing t#e 7::7"T:B?s admission t#at ;/2 ags were not inc&uded in t#e ad order cargo
certi%icate,< and t#e ,E"D:B: did not appea& said award ! t#e Tria& $ourt in its desire to #ave t#e case
terminated soonest, t#e ,E"D:B: ma! not, in t#is appea&, #ave t#e Audgment modi%ied' T#e &iai&it! o% t#e
7::7"T:B %or P.,0>3'.5 %i3ed ! t#e Tria& $ourt is t#us in order'
[4], also [170]
Ho#e ;nsurance Co. vs. 5#erican Stea#s)ip 5*encies (GR L>-22%%! / 5pril 1%4)
Bn 1anc, 1eng*on JP (J): 0 concur
&acts' ;$onsorcio Pes9uero de& Peru o% "out# 7merica< s#ipped %reig#t pre=paid at $#imate, Peru, 81,052
Aute ags o% Peruvian %is# mea& t#roug# "" $roworoug#, covered ! c&ean i&&s o% &ading Eumers 1 and 8,
ot# dated 10 Januar! 1.>3' T#e cargo, consigned to "an Migue& 1rewer!, ,nc', now "an Migue& $orporation,
and insured ! @ome ,nsurance $ompan! %or K828,424, arrived in Mani&a on 0 Marc# 1.>3 and was
disc#arged into t#e &ig#ters o% +u*on "tevedoring $ompan!' F#en t#e cargo was de&ivered to consignee "an
Migue& 1rewer!, ,nc', t#ere were s#ortages amounting to P18,233'/4, causing t#e &atter to &a! c&aims against
+u*on "tevedoring $orporation, @ome ,nsurance $ompan! and t#e 7merican "teams#ip 7gencies, owner
and operator o% "" $roworoug#' 1ecause t#e ot#ers denied &iai&it!, @ome ,nsurance $ompan! paid t#e
consignee P15,/02'01 H t#e insurance va&ue o% t#e &oss, as %u&& sett&ement o% t#e c&aim'
@aving een re%used reimursement ! ot# t#e +u*on "tevedoring $orporation and 7merican "teams#ip
7gencies, @ome ,nsurance $ompan!, as surogee to t#e consignee, %i&ed against t#em on > Marc# 1.>5
e%ore t#e $F, Mani&a a comp&aint %or recover! o% P15,/02'01 wit# &ega& interest, p&us attorne!?s %ees' (n 10
Eovemer 1.>4, t#e $F,, a%ter tria&, aso&ved +u*on "tevedoring $orporation, #aving %ound t#e &atter to #ave
mere&! de&ivered w#at it received %rom t#e carrier in t#e same condition and 9ua&it!, and ordered 7merican
"teams#ip 7gencies to pa! @ome ,nsurance $o' P15,/02'01 wit# &ega& interest p&us P1,222 attorne!s %ees'
Disagreeing wit# suc# Audgment, 7merican "teams#ip 7gencies appea&ed direct&! to t#e "upreme $ourt' T#e
"upreme $ourt reversed t#e Audgment appea&ed %rom, and aso&ved t#e 7merican "teams#ip 7gencies %rom
&iai&it! to @ome ,nsurance $o'C wit#out costs'
1. Contents o, t)e $ill la+in* in t)e present case
T#e i&&s o% &ading, covering t#e s#ipment o% Peruvian %is# mea& provide at t#e ack t#ereo% t#at t#e
i&&s o% &ading s#a&& e governed ! and suAect to t#e terms and conditions o% t#e c#arter part!, i% an!,
ot#erwise, t#e i&&s o% &ading prevai& over a&& t#e agreements' (n t#e %ace o% t#e i&&s are stamped ;Freig#t
prepaid as per c#arter part!' "uAect to a&& terms, conditions and e3ceptions o% c#arter part! dated +ondon,
Dec' 13, 1.>8'<
-. C)arter party in instant case is a Contract o, 5,,rei*)t#ent
7 perusa& o% t#e c#arter part! re%erred to s#ows t#at w#i&e t#e possession and contro& o% t#e s#ip were
not entire&! trans%erred to t#e c#arterer, t#e vesse& was c#artered to its %u&& and comp&ete capacit!'
Furt#ermore, t#e c#arterer #ad t#e option to go nort# or sout# or vice=versa, &oading, stowing and disc#arging
at its risk and e3pense' 7ccording&!, t#e c#arter part! contract is one o% a%%reig#tment over t#e w#o&e vesse&
rat#er t#an a demise' 7s suc#, t#e &iai&it! o% t#e s#ipowner %or acts or neg&igence o% its captain and crew,
wou&d remain in t#e asence o% stipu&ation'
3. Source o, provisions o, Civil Co+e on co##on carriers
T#e provisions o% our $ivi& $ode on common carriers were taken %rom 7ng&o=7merican &aw' Dnder
7merican Aurisprudence, a common carrier undertaking to carr! a specia& cargo or c#artered to a specia&
person on&!, ecomes a private carrier' 7s a private carrier, a stipu&ation e3empting t#e owner %rom &iai&it!
%or t#e neg&igence o% its agent is not against pu&ic po&ic!, and is deemed va&id' T#us, t#e $ivi& $ode
provisions on common carriers (especia&&! 7rtic&e 1055) s#ou&d not e app&ied w#ere t#e carrier is not acting
as suc# ut as a private carrier' ,n t#e case at ar, "ection 8, paragrap# 8 o% t#e c#arter part! Q w#ic# provides
t#at t#e owner is &ia&e %or &oss or damage to t#e goods caused ! persona& want o% due di&igence on its part or
its manager to make t#e vesse& in a&& respects seawort#! and to secure t#at s#e e proper&! manned, e9uipped
and supp&ied or ! t#e persona& act or de%au&t o% t#e owner or its manager' "aid paragrap#, #owever, e3empts
t#e owner o% t#e vesse& %rom an! &oss or damage or de&a! arising %rom an! ot#er source, even %rom t#e neg&ect
or %au&t o% t#e captain or crew or some ot#er person emp&o!ed ! t#e owner on oard, %or w#ose acts t#e
owner wou&d ordinari&! e &ia&e e3cept %or said paragrap# Q is va&id' "uc# po&ic! #as no %orce w#ere t#e
pu&ic at &arge is not invo&ved, as in t#e case o% a s#ip tota&&! c#artered %or t#e use o% a sing&e part!'
/. Consi*nee cannot clai# i*norance o, c)arter party! as $ills o, la+in* expressly re,erre+ to t)e
sa#e6 ;nstance ,or recovery not present in case
,n a c#arter o% t#e entire vesse&, t#e i&& o% &ading issued ! t#e master to t#e c#arterer, as s#ipper, is in
%act and &ega& contemp&ation mere&! a receipt and a document o% tit&e, not a contract, %or t#e contract is t#e
c#arter part!' T#e consignee ma! not c&aim ignorance o% said c#arter part! ecause t#e i&&s o% &ading
e3press&! re%erred to t#e same' 7ccording&!, t#e consignees under t#e i&&s o% &ading must &ikewise aide !
t#e terms o% t#e c#arter part!' 7nd as stated recover! cannot e #ad t#ereunder, %or &oss or damage to t#e
cargo, against t#e s#ipowners, un&ess t#e same is due to persona& acts or neg&igence o% said owner or its
manager, as distinguis#ed %rom its ot#er agents or emp&o!ees' ,n t#is case, no suc# persona& act or neg&igence
#as een proved'
[%]
Lasti%osa vs. "oliente
[10] FPIC vs. CA, see [2]
[11]
7ational Steel vs. C5 (GR 11--43! 1- <ece#$er 1%%3)
Glasons S)ippin* vs. C5 (GR 11-32")
T#ird Division, Panganian (J): 5 concur
&acts' T#e MV V&asons , is a vesse& w#ic# renders tramping service and, as suc#, does not transport cargo or
s#ipment %or t#e genera& pu&ic' ,ts services are avai&a&e on&! to speci%ic persons w#o enter into a specia&
contract o% c#arter part! wit# its owner' T#e s#ip is a private carrier, and it is in t#is capacit! t#at its owner,
V&asons "#ipping, ,nc' (V"7), entered into a contract o% a%%reig#tment or contract o% vo!age c#arter #ire wit#
Eationa& "tee& $orporation (E"$) on 10 Ju&! 1.05, w#ere! E"$ #ired V",?s vesse&, t#e MV GV+7"(E" ,?
to make 1 vo!age to &oad stee& products at ,&igan $it! and disc#arge t#em at Eort# @aror, Mani&a, under t#e
%o&&owing terms and conditions, vi*: ;333 (8) $argo: Fu&& cargo o% stee& products o% not &ess t#an 8,422 MT,
12I more or &ess at Master?s option' 333 (5) Freig#t-Pa!ment: P32'22-metric ton, F,("T asis' Pa!ment
upon presentation o% 1i&& o% +ading wit#in %i%teen (14) da!s' (4) +a!da!s-$ance&&ing: Ju&! 8>, 1.05-7ug' 4,
1.05' (>) +oading-Disc#arging :ate: 042 tons per FFD"@,E$' (Feat#er Forking Da! o% 85 consecutive
#ours, "unda!s and @o&ida!s ,nc&uded)' (0) Demurrage-Dispatc#: P/,222'22-P5,222'22 per da!' 333 (.)
$argo ,nsurance: $#arterer?s and-or "#ipper?s must insure t#e cargoes' "#ipowners not responsi&e %or
&osses-damages e3cept on proven wi&&%u& neg&igence o% t#e o%%icers o% t#e vesse&' (12) (t#er terms: (a) 7&&
terms-conditions o% E(EO7R7, $-P LsicM or ot#er internationa&&! recogni*ed $#arter Part! 7greement s#a&&
%orm part o% t#is $ontract' 333< (n 7ugust >, 0 and /, 1.05, in accordance wit# t#e $ontract o% Vo!age
$#arter @ire, t#e MV GV+7"(E" ,? &oaded at E"$?s pier at ,&igan $it!, t#e E"$?s s#ipment o% 1,>00 skids o%
tinp&ates and .8 packages o% #ot ro&&ed s#eets or a tota& o% 1,0>. packages wit# a tota& weig#t o% aout
8,5/1'1. metric tons %or carriage to Mani&a' T#e s#ipment was p&aced in t#e 3 #atc#es o% t#e s#ip' $#ie% Mate
6on*a&o "aando, acting as agent o% t#e vesse&, acknow&edged receipt o% t#e cargo on oard and signed t#e
corresponding i&& o% &ading, 1+PP 2833 on / 7ugust 1.05' T#e vesse& arrived wit# t#e cargo at Pier 18,
Eort# @aror, Mani&a, on 18 7ugust 1.05' T#e %o&&owing da!, w#en t#e vesse&?s 3 #atc#es containing t#e
s#ipment were opened ! E"$?s agents, near&! a&& t#e skids o% tinp&ates and #ot ro&&ed s#eets were a&&eged&!
%ound to e wet and rust!' T#e cargo was disc#arged and un&oaded ! stevedores #ired ! t#e $#arterer'
Dn&oading was comp&eted on&! on 85 7ugust 1.05 a%ter incurring a de&a! o% 11 da!s due to t#e #eav! rain
w#ic# interrupted t#e un&oading operations' To determine t#e nature and e3tent o% t#e wetting and rusting,
E"$ ca&&ed %or a surve! o% t#e s#ipment ! t#e Mani&a 7dAusters and "urve!ors $ompan! (M7"$()' ,n a
&etter to t#e E"$ dated 10 Marc# 1.04, M7"$( made a report o% its ocu&ar inspection conducted on t#e
cargo, ot# w#i&e it was sti&& on oard t#e vesse& and &ater at t#e ED$ ware#ouse in Pure*a "t', "ta' Mesa,
Mani&a w#ere t#e cargo was taken and stored' M7"$( reported t#at it %ound wetting and rusting o% t#e
packages o% #ot ro&&ed s#eets and meta& covers o% t#e tinp&atesC t#at tarpau&in #atc# covers were noted torn at
various e3tentsC t#at container-meta& casings o% t#e skids were rusting a&& over' M7"$(?s surve!ors drew at
random samp&es o% ad order packing materia&s o% t#e tinp&ates and de&ivered t#e same to t#e M,T Testing
+aoratories %or ana&!sis' (n 31 7ugust 1.05, t#e M,T Testing +aoratories issued :eport 1002 w#ic# in
part, states, ;T#e ana&!sis o% ad order samp&es o% packing materia&s ' ' ' s#ows t#at wetting was caused !
contact wit# sea water'< (n > "eptemer 1.05, on t#e asis o% :eport 1002, E"$ %i&ed wit# V", its c&aim %or
damages su%%ered due to t#e downgrading o% t#e damaged tinp&ates in t#e amount o% P.51,154'1/' T#en on 3
(ctoer 1.05, E"$ %orma&&! demanded pa!ment o% said c&aim ut V", re%used and %ai&ed to pa!'
E"$ %i&ed its comp&aint against V", on 81 7pri& 1.0> ($ivi& $ase 83310) e%ore t#e $F, o% :i*a&' T#e tria&
court rendered Audgment in %avor o% V", and against E"$ dismissing t#e comp&aint wit# costs against E"$,
and ordering E"$ to pa! V", on t#e counterc&aim %or t#e sum o% P04,222'22 as unpaid %reig#t and
P//,222'22 as demurrage wit# interest at t#e &ega& rate on ot# amounts %rom 7pri& 0, 1.0> unti& t#e same
s#a&& #ave een %u&&! paidC attorne!?s %ees and e3penses o% &itigation in t#e sum o% P122,222'22C and cost o%
suit'
(n appea&, and on 18 7ugust 1..3, t#e $ourt o% 7ppea&s modi%ied t#e decision o% t#e tria& court ! reducing
t#e demurrage %rom P//,222'22 to P55,222'22 and de&eting t#e award o% attorne!s %ees and e3penses o%
&itigation' E"$ and V", %i&ed separate motions %or reconsideration' ,n a :eso&ution dated 82 (ctoer 1..3,
t#e appe&&ate court denied ot# motions' Dndaunted, E"$ and V", %i&ed t#eir respective petitions %or review
e%ore t#e "upreme $ourt' (n motion o% V",, t#e $ourt ordered on 15 Feruar! 1..5 t#e conso&idation o% t#e
petitions'
T#e "upreme $ourt denied t#e conso&idated petitionsC and a%%irmed t#e 9uestioned Decision o% t#e $ourt o%
7ppea&s wit# t#e modi%ication t#at t#e demurrage awarded to V", is de&eted' Eo pronouncement as to costs'
1. ()e ter# @&;8S(A6 :ara*rap) 2 o, t)e 757H8I5; C)arter :arty
T#e terms GF','('"'T'? w#ic# is used in t#e s#ipping usiness is a standard provision in t#e
E7EO(R7, $#arter Part! w#ic# stands %or GFreig#t ,n and (ut inc&uding "tevedoring and Trading?, w#ic#
means t#at t#e #and&ing, &oading and un&oading o% t#e cargoes are t#e responsii&it! o% t#e $#arterer' Dnder
Paragrap# 4 o% t#e E7EO(R7, $#arter Part!, it states, ;$#arterers to &oad, stow and disc#arge t#e cargo %ree
o% risk and e3penses to owners' ' ' '<
-. :ara*rap) 1" o, t)e 757H8I5; C)arter :arty
Dnder paragrap# 12 o% t#e E7EO(R7, $#arter Part!, it is provided t#at ;owners s#a&&, e%ore and at
t#e eginning o% t#e vo!age, e3ercise due di&igence to make t#e vesse& seawort#! and proper&! manned,
e9uipped and supp&ied and to make t#e #o&ds and a&& ot#er parts o% t#e vesse& in w#ic# cargo is carried, %it and
sa%e %or its reception, carriage and preservation' (wners s#a&& not e &ia&e %or &oss o% or damage o% t#e cargo
arising or resu&ting %rom: unseawort#iness un&ess caused ! want o% due di&igence on t#e part o% t#e owners to
make t#e vesse& seawort#!, and to secure t#at t#e vesse& is proper&! manned, e9uipped and supp&ied and to
make t#e #o&ds and a&& ot#er parts o% t#e vesse& in w#ic# cargo is carried, %it and sa%e %or its reception, carriage
and preservationC ' ' C peri&s, dangers and accidents o% t#e sea or ot#er naviga&e watersC ' ' C wastage in u&k or
weig#t or an! ot#er &oss or damage arising %rom in#erent de%ect, 9ua&it! or vice o% t#e cargoC insu%%icienc! o%
packingC ' ' 'C &atent de%ects not discovera&e ! due di&igenceC an! ot#er cause arising wit#out t#e actua& %au&t
or privit! o% (wners or wit#out t#e %au&t o% t#e agents or servants o% owners'<
3. :ara*rap) 1- o, t)e 757H8I5; C)arter :arty
Paragrap# 18 o% said E7EO(R7, $#arter Part! a&so provides t#at ;owners s#a&& not e responsi&e
%or sp&it, c#a%ing and-or an! damage un&ess caused ! t#e neg&igence or de%au&t o% t#e master and crew'<
/. Co##on carriers +e,ine+ (5rticle 133-)6 (est o, co##on carrier
7rtic&e 1038 o% t#e $ivi& $ode de%ines a common carrier as ;persons, corporations, %irms or
associations engaged in t#e usiness o% carr!ing or transporting passengers or goods or ot#, ! &and, water,
or air, %or compensation, o%%ering t#eir services to t#e pu&ic'< ,t #as een #e&d t#at t#e true test o% a common
carrier is t#e carriage o% passengers or goods, provided it #as space, %or a&& w#o opt to avai& t#emse&ves o% its
transportation service %or a %ee'
(ransportation La.! -""/ ( 1% )
2. :rivate Carrier6 C)arter party
7 carrier w#ic# does not 9ua&i%! under t#e test o% a common carrier is deemed a private carrier'
;6enera&&!, private carriage is undertaken ! specia& agreement and t#e carrier does not #o&d #imse&% out to
carr! goods %or t#e genera& pu&ic' T#e most t!pica&, a&t#oug# not t#e on&! %orm o% private carriage, is t#e
c#arter part!, a maritime contract ! w#ic# t#e c#arterer, a part! ot#er t#an t#e s#ipowner, otains t#e use and
service o% a&& or some part o% a s#ip %or a period o% time or a vo!age or vo!ages'<
. GS; a private carrier6 Ri*)ts an+ o$li*ations o, GS; an+ 7SC are +eter#ine+ $y stipulations in
c)arter party
@erein, V", did not o%%er its services to t#e genera& pu&ic' ,t carried passengers or goods on&! %or
t#ose it c#ose under a ;specia& contract o% c#arter part!'< T#e MV V&asons , ;was not a common ut a private
carrier'< $onse9uent&!, t#e rig#ts and o&igations o% V", and E"$, inc&uding t#eir respective &iai&it! %or
damage to t#e cargo, are determined primari&! ! stipu&ations in t#eir contract o% private carriage or c#arter
part!'
3. Contract o, private carria*e6 GalenJuela Har+.oo+ vs. C5
,n Va&en*ue&a @ardwood and ,ndustria& "upp&!, ,nc', vs' $ourt o% 7ppea&s and "even 1rot#ers
"#ipping $orporation, t#e $ourt ru&ed t#at ;in a contract o% private carriage, t#e parties ma! %ree&! stipu&ate
t#eir duties and o&igations w#ic# per%orce wou&d e inding on t#em' Dn&ike in a contract invo&ving a
common carrier, private carriage does not invo&ve t#e genera& pu&ic' @ence, t#e stringent provisions o% t#e
$ivi& $ode on common carriers protecting t#e genera& pu&ic cannot Austi%ia&! e app&ied to a s#ip
transporting commercia& goods as a private carrier' $onse9uent&!, t#e pu&ic po&ic! emodied t#erein is not
contravened ! stipu&ations in a c#arter part! t#at &essen or remove t#e protection given ! &aw in contracts
invo&ving common carriers'<
4. Dxtent o, GS;1s Responsi$ility an+ Lia$ility 8ver 7SC1s Car*o
From t#e parties? $ontract o% Vo!age $#arter @ire, dated 10 Ju&! 1.05, V", ;s#a&& not e responsi&e
%or &osses e3cept on proven wi&&%u& neg&igence o% t#e o%%icers o% t#e vesse&'< T#e E7EO(R7, $#arter Part!,
w#ic# was incorporated in t#e parties? contract o% transportation %urt#er provided t#at t#e s#ipowner s#a&& not
e &ia&e %or &oss o% or damage to t#e cargo arising or resu&ting %rom unseawort#iness, un&ess t#e same was
caused ! its &ack o% due di&igence to make t#e vesse& seawort#! or to ensure t#at t#e same was ;proper&!
manned, e9uipped and supp&ied,< and to ;make t#e #o&ds and a&& ot#er parts o% t#e vesse& in w#ic# cargo was
carried, %it and sa%e %or its reception, carriage and preservation'< T#e E7EO(R7, $#arter Part! a&so
provided t#at ;owners s#a&& not e responsi&e %or sp&it, c#a%ing and-or an! damage un&ess caused ! t#e
neg&igence or de%au&t o% t#e master or crew'<
%. Bur+en o, :roo, (parties1 a*ree#ent)
@erein, E"$ must prove t#at t#e damage to its s#ipment was caused ! V",?s wi&&%u& neg&igence or
%ai&ure to e3ercise due di&igence in making MV V&asons , seawort#! and %it %or #o&ding, carr!ing and
sa%ekeeping t#e cargo' ,ne&ucta&!, t#e urden o% proo% was p&aced on E"$ ! t#e parties? agreement'
1". 5rticle 31 o, t)e Co+e o, Co##erce
7rtic&e 3>1 o% t#e $ode o% $ommerce provides t#at ;Merc#andise s#a&& e transported at t#e risk and
venture o% t#e s#ipper, i% t#e contrar! #as not een e3press&! stipu&ated' T#ere%ore, t#e damage and
impairment su%%ered ! t#e goods during t#e transportation, due to %ortuitous event, %orce maAeure, or t#e
nature and in#erent de%ect o% t#e t#ings, s#a&& e %or t#e account and risk o% t#e s#ipper' T#e urden o% proo%
o% t#ese accidents is on t#e carrier'<
11. 5rticle 3- o, t)e Co+e o, Co##erce
7rtic&e 3>8 o% t#e $ode o% $ommerce provides t#at ;T#e carrier, #owever, s#a&& e &ia&e %or damages
arising %rom t#e cause mentioned in t#e preceding artic&e i% proo%s against #im s#ow t#at t#e! occurred on
(ransportation La.! -""/ ( -" )
account o% #is neg&igence or #is omission to take t#e precautions usua&&! adopted ! care%u& persons, un&ess
t#e s#ipper committed %raud in t#e i&& o% &ading, making #im to e&ieve t#at t#e goods were o% a c&ass or
9ua&it! di%%erent %rom w#at t#e! rea&&! were'<
1-. :rivate carrier6 S)ipo.ner1s o$li*ation *overne+ $y Co+e o, Co##erce! not Civil Co+e
7s t#e MV V&asons , was a private carrier, t#e s#ipowner?s o&igations are governed ! t#e %oregoing
provisions o% t#e $ode o% $ommerce and not ! t#e $ivi& $ode w#ic#, as a genera& ru&e, p&aces t#e prima
%acie presumption o% neg&igence on a common carrier'
13. Bur+en o, proo, in action a*ainst private carrier ,or loss o, car*o6 :lainti,, entitle+ to $ene,it o,
presu#ptions an+ in,erences
,n an action against a private carrier %or &oss o%, or inAur! to, cargo, t#e urden is on t#e p&ainti%% to
prove t#at t#e carrier was neg&igent or unseawort#!, and t#e %act t#at t#e goods were &ost or damaged w#i&e in
t#e carrier?s custod! does not put t#e urden o% proo% on t#e carrier' "ince a private carrier is not an insurer
ut undertakes on&! to e3ercise due care in t#e protection o% t#e goods committed to its care, t#e urden o%
proving neg&igence or a reac# o% t#at dut! rests on p&ainti%% and proo% o% &oss o%, or damage to, cargo w#i&e in
t#e carrier?s possession does not cast on it t#e urden o% proving proper care and di&igence on its part or t#at
t#e &oss occurred %rom an e3cepted cause in t#e contract or i&& o% &ading' @owever, in disc#arging t#e urden
o% proo%, p&ainti%% is entit&ed to t#e ene%it o% t#e presumptions and in%erences ! w#ic# t#e &aw aids t#e ai&or
in an action against a ai&ee, and since t#e carrier is in a etter position to know t#e cause o% t#e &oss and t#at
it was not one invo&ving its &iai&it!, t#e &aw re9uires t#at it come %orward wit# t#e in%ormation avai&a&e to it,
and its %ai&ure to do so warrants an in%erence or presumption o% its &iai&it!' @owever, suc# in%erences and
presumptions, w#i&e t#e! ma! a%%ect t#e urden o% coming %orward wit# evidence, do not a&ter t#e urden o%
proo% w#ic# remains on p&ainti%%, and, w#ere t#e carrier comes %orward wit# evidence e3p&aining t#e &oss or
damage, t#e urden o% going %orward wit# t#e evidence is again on p&ainti%%'
1/. Bur+en o, proo, in action $ase+ on s)ipo.ner1s .arranty o, sea.ort)iness6 E)ere contract o,
carria*e exe#pts carrier ,ro# lia$ility ,or unsea.ort)iness not +iscovera$le $y +ue +ili*ence
F#ere t#e action is ased on t#e s#ipowner?s warrant! o% seawort#iness, t#e urden o% proving a
reac# t#ereo% and t#at suc# reac# was t#e pro3imate cause o% t#e damage rests on p&ainti%%, and proo% t#at
t#e goods were &ost or damaged w#i&e in t#e carrier?s possession does not cast on it t#e urden o% proving
seawort#iness' ' ' ' F#ere t#e contract o% carriage e3empts t#e carrier %rom &iai&it! %or unseawort#iness not
discovera&e ! due di&igence, t#e carrier #as t#e pre&iminar! urden o% proving t#e e3ercise o% due di&igence
to make t#e vesse& seawort#!'
12. &in+in*s o, t)e trial court! su$se9uently a,,ir#e+ $y t)e Court o, 5ppeals! $in+in* upon t)e
Supre#e Court
F#ere t#e %actua& %indings o% ot# t#e tria& court and t#e $ourt o% 7ppea&s coincide, t#e same are
inding on t#e "upreme $ourt' T#e $ourt stresses t#at, suAect to some e3ceptiona& instances, on&! 9uestions
o% &aw H not 9uestions o% %act H ma! e raised e%ore t#e "upreme $ourt in a petition %or review under :u&e
54 o% t#e :u&es o% $ourt' @erein, a%ter a t#oroug# review o% t#e case, t#e $ourt %inds no reason to distur t#e
&ower courts? %actua& %indings'
1. =G Glasons ; .as sea.ort)y
V", e3ercised due di&igence to make t#e s#ip seawort#! and %it %or t#e carriage o% E"$?s cargo o%
stee& and tinp&ates' T#is is s#own ! t#e %act t#at it was dr!docked and #arored ! t#e P#i&ippine $oast
6uard e%ore it proceeded to ,&igan $it! %or its vo!age to Mani&a under t#e contract o% vo!age c#arter #ire'
T#e vesse&?s vo!age %rom ,&igan to Mani&a was t#e vesse&?s %irst vo!age a%ter dr!docking' T#e P#i&ippine
$oast 6uard "tation in $eu c&eared it as seawort#!, %itted and e9uippedC it met a&& re9uirements %or trading
as cargo vesse&'
(ransportation La.! -""/ ( -1 )
13. <ue +ili*ence exercise+ $y o,,icers an+ cre. o, =G Glasons ;6 Fse o, ol+ tarpaulin an a++ition
to ne. one use+ to #ake )atc) .aterproo,
Due di&igence was e3ercised ! t#e o%%icers and t#e crew o% t#e MV V&asons ,' T#is was %urt#er
demonstrated ! t#e %act t#at, despite encountering roug# weat#er twice, t#e new tarpau&in did not give wa!
and t#e s#ip?s #atc#es and cargo #o&ds remained waterproo%' @erein, t#e s#ip used t#e o&d tarpau&in, on&! in
addition to t#e new one used primari&! to make t#e s#ip?s #atc#es watertig#t' T#e %oregoing are c&ear %rom t#e
marine protest o% t#e master o% t#e MV V&asons ,, 7ntonio $' Dum&ao, and t#e deposition o% t#e s#ip?s
oatswain, Jose Pascua, w#ere it was stated t#at ever! time t#e strong winds and ig waves caused t#e %irst
&a!er o% t#e canvass covering to give wa!, t#e new canvass covering sti&& #o&d on' E"$ %ai&ed to disc#arge its
urden to s#ow neg&igence on t#e part o% t#e o%%icers and t#e crew o% MV V&asons ,,
14. Steve+ores o, 7SC ne*li*ent in unloa+in* car*o ,or# s)ip6 Reason ,or +elay in pointin* out
steve+ores1 ne*li*ence to 7SC
,t was t#e stevedores o% E"$ w#o were neg&igent in un&oading t#e cargo %rom t#e s#ip' T#e
stevedores emp&o!ed on&! a tent=&ike materia& to cover t#e #atc#es w#en strong rains occasioned ! a passing
t!p#oon disrupted t#e &oading o% t#e cargo' T#is tent=&ike covering, #owever, was c&ear&! inade9uate %or
keeping rain and seawater awa! %rom t#e #atc#es o% t#e s#ip' E"$ attempts to discredit t#e testimon! o%
Vicente 7ng&iongto, an o%%icer o% V",, ! 9uestioning #is %ai&ure to comp&ain immediate&! aout t#e
stevedores? neg&igence on t#e %irst da! o% un&oading, pointing out t#at #e wrote #is &etter to E"$ on&! 0 da!s
&ater' 0 da!s &apsed ecause #e %irst ca&&ed t#e attention o% t#e stevedores, t#en t#e E"$?s representative, aout
t#e neg&igent and de%ective procedure adopted in un&oading t#e cargo' T#is series o% actions constitutes a
reasona&e response in accord wit# common sense and ordinar! #uman e3perience' 7ng&iongto cou&d not e
&amed %or ca&&ing t#e stevedores? attention %irst and t#en t#e E"$?s representative on &ocation e%ore
%orma&&! in%orming E"$ o% t#e neg&igence #e #ad oserved, ecause #e was not responsi&e %or t#e stevedores
or t#e un&oading operations' ,n %act, #e was mere&! e3pressing concern %or E"$ w#ic# was u&timate&!
responsi&e %or t#e stevedores it #ad #ired and t#e per%ormance o% t#eir task to un&oad t#e cargo'
1%. 7SC )as cause o, action a*ainst steve+orin* co#pany! an+ not a*ainst GS;
T#e %act t#at E"$ actua&&! accepted and proceeded to remove t#e cargo %rom t#e s#ip during
un%avora&e weat#er wi&& not make V", &ia&e %or an! damage caused t#ere!' ,n passing, it ma! e noted t#at
t#e E"$ ma! seek indemni%ication, suAect to t#e &aws on prescription, %rom t#e stevedoring compan! at %au&t
in t#e disc#arge operations'
-". <uty o, a steve+ore co#pany
7 stevedore compan! engaged in disc#arging cargo #as t#e dut! to &oad t#e cargo in a prudent
manner, and it is &ia&e %or inAur! to, or &oss o%, cargo caused ! its neg&igence and w#ere t#e o%%icers and
memers and crew o% t#e vesse& do not#ing and #ave no responsii&it! in t#e disc#arge o% cargo !
stevedores, t#e vesse& is not &ia&e %or &oss o%, or damage to, t#e cargo caused ! t#e neg&igence o% t#e
stevedores'
-1. D,,ect o, 7SC1s &ailure to ;nsure t)e Car*o
T#e o&igation o% E"$ to insure t#e cargo stipu&ated in t#e $ontract o% Vo!age $#arter @ire is tota&&!
separate and distinct %rom t#e contractua& or statutor! responsii&it! t#at ma! e incurred ! V", %or damage
to t#e cargo caused ! t#e wi&&%u& neg&igence o% t#e o%%icers and t#e crew o% MV V&asons , ' $&ear&!, t#ere%ore,
E"$?s %ai&ure to insure t#e cargo wi&& not a%%ect its rig#t, as owner and rea& part! in interest, to %i&e an action
against V", %or damages caused ! t#e &atter?s wi&&%u& neg&igence' Eot#ing in t#e c#arter part! wou&d make
t#e &iai&it! o% V", %or damage to t#e cargo contingent on or a%%ected in an! manner ! E"$?s otaining an
insurance over t#e cargo'
--. 5+#issi$ility o, certi,icates provin* sea.ort)iness6 Dx)i$its 3>% an+ 1- ina+#issi$le
(ransportation La.! -""/ ( -- )
T#e certi%icates o% seawort#iness o%%ered in evidence ! V", inc&ude t#e (1) $erti%icate o% ,nspection
o% t#e P#i&ippine $oast 6uard at $eu, (8) $erti%icate o% ,nspection %rom t#e P#i&ippine $oast 6uard, (3)
,nternationa& +oad +ine $erti%icate %rom t#e P#i&ippine $oast 6uard, (5) $oastwise +icense %rom t#e 1oard o%
Transportation, and (4) $erti%icate o% 7pprova& %or $onversion issued ! t#e 1ureau o% $ustoms' B3#iits 3,
5, 4, >, 0, /, . and 18 are inadmissi&e, %or t#e! #ave not een proper&! o%%ered as evidence' B3#iits 3 and 5
are certi%icates issued ! private parties, ut t#e! #ave not een proven ! one w#o saw t#e writing e3ecuted,
or ! evidence o% t#e genuineness o% t#e #andwriting o% t#e maker, or ! a suscriing witness' B3#iits 4, >,
0, /, ., and 18 are p#otocopies, ut t#eir admission under t#e est evidence ru&e #ave not een demonstrated'
-3. Dx)i$it 11 a+#issi$le as exception to )earsay rule
@erein, B3#iit 11 is admissi&e under a we&&=sett&ed e3ception to t#e #earsa! ru&e per "ection 55 o%
:u&e 132 o% t#e :u&es o% $ourt, w#ic# provides t#at ;(e)ntries in o%%icia& records made in t#e per%ormance o% a
dut! ! a pu&ic o%%icer o% t#e P#i&ippines, or ! a person in t#e per%ormance o% a dut! specia&&! enAoined !
&aw, are prima %acie evidence o% t#e %acts t#erein stated'< B3#iit 11 is an origina& certi%icate o% t#e P#i&ippine
$oast 6uard in $eu issued ! +ieutenant Junior 6rade Eo&i $' F&ores to t#e e%%ect t#at ;t#e vesse&
GV+7"(E" ,?, was dr!docked and P$6 ,nspectors were sent on oard %or inspection' 7%ter comp&etion o%
dr!docking and du&! inspected ! P$6 ,nspectors, t#e vesse& GV+7"(E" ,?, a cargo vesse&, is in seawort#!
condition, meets a&& re9uirements, %itted and e9uipped %or trading as a cargo vesse& was c&eared ! t#e
P#i&ippine $oast 6uard and sai&ed %or $eu Port on Ju&! 12, 1.05'< (sic) E"$?s $&aim, t#ere%ore, is ovious&!
mis&eading and erroneous'
-/. 5ssailin* *enuineness o, certi,icate o, sea.ort)iness not su,,icient proo, o, unsea.ort)iness
E"$ #as t#e urden o% proving t#at MV V&asons , was not seawort#!' T#e vesse& was a private carrier
and, as suc#, it did not #ave t#e o&igation o% a common carrier to s#ow t#at it was seawort#!' ,ndeed, E"$
g&aring&! %ai&ed to disc#arge its dut! o% proving t#e wi&&%u& neg&igence o% V", in making t#e s#ip seawort#!
resu&ting in damage to its cargo' 7ssai&ing t#e genuineness o% t#e certi%icate o% seawort#iness is not su%%icient
proo% t#at t#e vesse& was not seawort#!'
-2. <e#urra*e +e,ine+
T#e $ourt de%ined demurrage in its strict sense as t#e compensation provided %or in t#e contract o%
a%%reig#tment %or t#e detention o% t#e vesse& e!ond t#e &a!time or t#at period o% time agreed on %or &oading
and un&oading o% cargo' 52 ,t is given to compensate t#e s#ipowner %or t#e nonuse o% t#e vesse&'
-. Ho. layti#e runs
+a!time runs according to t#e particu&ar c&ause o% t#e c#arter part!' ,% &a!time is e3pressed in
;running da!s,< t#is means da!s w#en t#e s#ip wou&d e run continuous&!, and #o&ida!s are not e3cepted' 7
9ua&i%ication o% ;weat#er permitting< e3cepts on&! t#ose da!s w#en ad weat#er reasona&! prevents t#e work
contemp&ated'
-3. Layti#e ,or ,our +ays! an+ 9uali,ie+ as EE<SH;7C! in present case
@erein, t#e contract o% vo!age c#arter #ire provided %or a %our=da! &a!timeC it a&so 9ua&i%ied &a!time as
FFD"@,E$ or weat#er working da!s "unda!s and #o&ida!s inc&uded' T#e running o% &a!time was t#us
made suAect to t#e weat#er, and wou&d cease to run in t#e event un%avora&e weat#er inter%ered wit# t#e
un&oading o% cargo' $onse9uent&!, E"$ ma! not e #e&d &ia&e %or demurrage as t#e %our=da! &a!time a&&owed
it did not &apse, #aving een to&&ed ! un%avora&e weat#er condition in view o% t#e FFD"@,E$
9ua&i%ication agreed upon ! t#e parties' $&ear&!, it was error %or t#e tria& court and t#e $ourt o% 7ppea&s to
#ave %ound and a%%irmed respective&! t#at E"$ incurred 11 da!s o% de&a! in un&oading t#e cargo'
-4. 5ttorney1s ,ees not ?usti,ie+
F#i&e V", was compe&&ed to &itigate to protect its rig#ts, suc# %act ! itse&% wi&& not Austi%! an award
o% attorne!?s %ees under 7rtic&e 882/ o% t#e $ivi& $ode w#en ;no su%%icient s#owing o% ad %ait# wou&d e
re%&ected in a part!?s persistence in a case ot#er t#an an erroneous conviction o% t#e rig#teousness o% #is
cause'< Moreover, attorne!?s %ees ma! not e awarded to a part! %or t#e reason a&one t#at t#e Audgment
rendered was %avora&e to t#e &atter, as t#is is tantamount to imposing a premium on one?s rig#t to &itigate or
seek Audicia& redress o% &egitimate grievances'
[1-]
<e Gillata vs. BS Stanley (GR 412/! -" <ece#$er 1%12)
Bn 1anc, $arson (J): 5 concur, 1 concur in resu&t
&acts' Joa9uin de Vi&&ata is t#e master o% "" Vi*ca!a o% t#e coastwise trade' 7s suc# captain, on > Ju&! 1.18,
w#en sai&ing %rom t#e port o% 6uat to t#e port o% +egaspi, P#i&ippine ,s&ands, #e %ai&ed to noti%! t#e
postmaster o% t#e %ormer port, in advance, o% #is intended sai&ing, and t#ere%ore %ai&ed to carr! t#e mai&s
etween said ports' T#e $o&&ector o% $ustoms (J" "tan&e!, 7cting ,nsu&ar $o&&ector o% $ustoms) was
t#reatening to suspend or revoke t#e &icense o% de Vi&&ata ! reason o% said %acts, under and ! virtue o% t#e
terms o% $ustoms 7dministrative $ircu&ar >80' De Vi&&ata %i&ed an app&ication %or a writ o% pro#iition
directed against t#e $o&&ector o% $ustoms to restrain #im %rom en%orcing $ustoms 7dministrative $ircu&ar >80
against de Vi&&ata' T#e case was sumitted to t#e "upreme $ourt upon de Vi&&ata?s demurrer to "tan&e!?s
answer to t#e comp&aint'
T#e "upreme $ourt #e&d t#at t#e comp&aint, un&ess amended, must e dismissed, on t#e ground t#at no cause
o% action is deve&oped ! t#e p&eadings' T#e $ourt ordered t#at 82 da!s t#erea%ter, t#e comp&aint e dismissed
at t#e costs o% t#e de Vi&&ata un&ess amended so as to set %ort# a cause o% action, and 12 da!s t#erea%ter &et t#e
record e %i&ed in t#e arc#ives o% origina& actions in t#e "upreme $ourt'
1. Custo#s 5+#inistrative Circular -3 (:rescri$in* re*ulations ,or t)e transportation o, #ails
on vessels en*a*e+ in t)e :)ilippine coast.ise tra+e! -/ <ece#$er 1%1")
[par 1] Bver! vesse& to w#ic# a &icense is granted under t#e provisions o% section 110 o% 7ct Eo' 344
to engage in t#e coastwise trade o% t#e P#i&ippine ,s&ands ' ' ' s#a&& carr! mai& tendered %or transportation in a
sa%e and secure manner, and s#a&& keep t#e same %ree %rom inAur! ! water or ot#erwise' Masters, owners, or
agents o% vesse&s s#a&& give prompt advance notice o% t#e intended sai&ing t#ereo% to t#e postmaster at eac#
port o% departure in amp&e time to permit t#e making up o% mai&s %or dispatc#' 7n! c#anges in suc# sai&ings
s#a&& a&so e prompt&! communicated to t#e postmaster' [par 3] Mai&s carried ! vesse&s s#a&& e de&ivered at
ports o% ca&& on s#ore or on a w#ar% immediate&! a%ter arriva& and prior to t#e disc#arge or &ading o% an! cargo,
and s#a&& e taken %rom s#ore or w#ar% Aust e%ore t#e vesse&?s sai&ing time, e3cept at ports w#ere t#e posta&
aut#orities #ave arranged %or s#ip=side de&iver!' [par 3] Bac# vesse& mentioned in t#e preceding paragrap#
s#a&& e provided wit# a &ock o3 #aving a s&ot in t#e top or side t#ereo% to receive &etters, papers, or ot#er
mai& matter de&ivered on oard t#e vesse& a%ter t#e mai&s #ave een c&osed at t#e post o%%ice %or t#at particu&ar
vo!age' 7&& mai& matter deposited in suc# o3 s#a&& e de&ivered ! t#e master, or #is representative, to t#e
postmaster at a port o% ca&& w#ere a post o%%ice is &ocated' [par 0] T#e master, owner, agent, or ot#er person in
c#arge o% a vesse& s#a&& e &ega&&! &ia&e %or t#e &oss o% or damage to mai& in #is custod!, or in t#e custod! o%
#is representatives or agents' [par /] T#e &icense o% t#e master o% an! vesse& engaged in t#e coastwise trade o%
t#e P#i&ippine ,s&ands ma! e suspended or revoked ! t#e ,nsu&ar $o&&ector o% $ustoms %or %ai&ure to comp&!
wit# or strict&! en%orce t#e regu&ations governing t#e transportation o% mai&s' [par +] Postmasters t#roug#out
t#e ,s&ands are re9uested to prompt&! report to t#is o%%ice in writing an! unnecessar! de&a! in t#e #and&ing o%
mai&s transported ! vesse&s, or %ai&ure on t#e part o% masters t#ereo% to comp&! wit# t#e re9uirements o% t#is
circu&ar' [par 7] P#i&ippine customs o%%icers s#a&& give due pu&icit! to t#e terms o% t#is circu&ar'<
-. <ecree o, / 5u*ust 143
7 decree dated 5 7ugust 1/>3, provided as %o&&ows: ;,n t#e matter o% t#e investigation made %or t#e
app&ication o% t#e provisions now in %orce re&ative to t#e notice to e given in advance to t#e post o%%ice o% t#e
(ransportation La.! -""/ ( -/ )
sai&ings o% s#ips, in t#e e3ceptiona& case o% a s#ip Aust arrived in port and w#ic# #as to sai& immediate&! %or t#e
convenience o% t#e interests o% its owners or consignees, @aving considered t#e ordinances re&ating to packet
oats and ot#er ro!a& orders and superior decrees imposing upon t#e captain o% ever! s#ip t#e dut! o% giving
notice to t#e posto%%ice %our da!s in advance at &east o% t#e date t#e! are to sai& and t#e port o% destination,
$onsidering t#at t#e actua& app&ication o% suc# provisions mig#t a%%ect in a remarka&e wa! t#e commercia&
interests in t#e ver! e3ceptiona& case spoken o%, w#ere t#e s#ip Aust anc#ored s#ou&d #ave to set sai& again
e%ore t#e period o% %our da!s re%erred to, T#e capitamia de& puerto, t#e administracion genera& de aduanas,
comandancia genera& de caraineros and t#e administracion genera& de correos, #aving een #eard, T#is
superior civi& government ordains: T#at w#en a s#ip %a&&s wit#in t#e precise e3ceptiona& case raised ! t#e
wit#in reso&ution, its captain s#a&& on&! e re9uired to give, %rom t#e ver! instant o% determining t#e sai&ing o%
t#e s#ip, immediate notice to t#e posto%%ice stating t#e da! and #our in w#ic# t#e sai&ing must e made, For
t#e purposes t#at ma! e proper, &et t#is decree e communicated to t#e comandancia genera& de marina,
capitania de& puerto de Mani&a and $avite and t#e administracion genera& de correos, and &et same e
pu&is#ed in t#e 6a*ette %or genera& in%ormation' :eport to t#e government o% @' M' and %i&e'< (1erri*,
Diccionario de &a 7dministracion de Fi&ipinas, 1///, vo&' 1, p' 41>')
3. <ecree o, 13 Banuary 143
7 &ater decree dated 13 Januar! 1/0>, was as %o&&ows: ;@aving considered t#e consu&tation made !
t#e comandancia genera& de marina proposing t#e amendment o% section 0 o% t#e superior decree o% Decemer
1/, 1/>/, re&ative to t#e dut! imposed upon s#ipowners or consignees o% steamers w#et#er nationa& or
%oreign, p&!ing etween t#is port and t#e ot#er ports o% t#e 7rc#ipe&ago or $#ina and vice versa, o% giving
%our da!s? notice e%ore t#e da! t#e! are to sai&, to t#eir great preAudiceC and @aving considered t#e reports
sumitted ! t#e direccion genera& de administracion civi& and t#e administracion genera& de correos:
$onsidering t#e %act t#at since t#at superior order was en%orced, t#e %ortunate increase o% steamers and
conse9uent&! t#e %re9uent repetition o% vo!ages made ! t#em, is evident, and t#ere%ore, t#is circumstance
a&one wou&d c#ange t#e oAect or reason w#ic# at t#at time made it necessar! to impose t#e dut! re%erred to in
said section 0' $onsidering t#e importance and va&ue at certain times o% t#e prompt c&earance o% one o% its
s#ips to a commercia& %irm w#ic# is at a&& times wort#! o% protection ! t#e government' T#is genera&
government ordains as %o&&ows: (1) T#e period o% %our da!s prescried ! section 0 o% t#e superior decree o%
Decemer 1/, 1/>/, is reduced to two' (8) T#e s#ipowners or consignees o% steamers, w#et#er nationa& or
%oreign, p&!ing etween t#is port and t#e ot#er ports o% t#e arc#ipe&ago or $#ina, and vice versa, s#a&& give
notice to t#e captain o% t#e port?s e%ore midda!, in order t#at t#e post o%%ice ma! #ave immediate notice o%
t#e sai&ing at an #our t#at ma! ena&e it to insert same in t#e 6a*ette o% ne3t da!, and t#e s#ip ma! sai& in t#e
a%ternoon o% t#e da! ne3t %o&&owing' (3) T#e o%%ice o% t#e captain o% t#e port wi&& report dai&! to t#e
administracion genera& de correos a&& s#ips t#at at 18 o?c&ock, noon, ma! #ave re9uested t#e visita de sa&ida
and in t#e event o% t#ere eing none a report s#a&& e sent stating t#at %act' (5) T#e report o% t#e captain o% t#e
port?s o%%ice must e at t#at administracion genera& e%ore 8 o?c&ock, p' m', ever! da!' (4) $aptains and
consignees o% s#ips can in no case re9uest t#e visita de sa&ida wit#out t#e period o% %ort!=eig#t #ours
intervening etween t#e time t#e! report and t#e visit, so as to give opportune notice to t#e administracion de
correos' (>) T#e centro de correos s#a&& send t#e notices to t#e 6a*ette and ot#er newspapers, and s#a&& post
t#em esides on a u&&etin oard at t#e door o% t#e posto%%ice'< (1erri*, Diccionario de &a 7dministracion de
Fi&ipinas, 1///, vo&' 1, pp' 48/, 48.')
/. Gessels re9uire+ to carry #ails un+er Spanis) soverei*nty
7n e3amination o% its terms &eaves &itt&e room %or dout t#at under "panis# sovereignt! t#e
6overnment o% t#ese ,s&ands assumed and e3ercised t#e rig#t to prescrie reasona&e regu&ations re9uiring
vesse&s trading in t#e P#i&ippine ,s&ands to carr! t#e mai&s and to give due notice o% t#eir sai&ing #ours to t#e
posta& aut#orities' ,ndeed it is a matter o% common know&edge t#at, under t#e &aws and regu&ations in %orce at
t#e time o% t#e c#ange o% sovereignt!, a&& vesse&s engaged in t#e coasting trade were re9uired to carr! t#e
mai&s, and to %urnis# t#e posta& aut#orities wit# due notice o% t#eir sai&ing #ours' T#ere is no a&&egation in t#e
p&eadings den!ing t#e continuance in %orce o% t#is practice under 7merican sovereignt! down to t#e date o%
t#e issuance o% t#e aove cited $ustoms 7dministrative $ircu&ar'
2. 7ot)in* in :)ilippine Bill o, Ri*)ts +eprivin* *overn#ent po.er to #ake an+ en,orce
re*ulations
T#ere is not#ing in t#e P#i&ippine 1i&& o% :ig#ts w#ic# deprived t#e P#i&ippine 6overnment o% t#e
power to make and en%orce reasona&e regu&ations o% t#is nature wit# w#ic# it was c&ot#ed prior to t#e
enactment o% t#at statute'
. Re*ulations an+ control exercise+ on vessels license+ to en*a*e in interislan+ tra+e not in
contravention o, :)ilippine Bill o, Ri*)ts or FS Constitution
Vesse&s &icensed to engage in t#e interis&and trade are common carriersC and t#at as to t#em, t#ere is
an e3tensive %ie&d o% regu&ation and contro& w#ic# ma! proper&! e e3ercised ! t#e state wit#out
contravention o% t#e provisions o% t#e P#i&ippine 1i&& o% :ig#ts or t#e $onstitution o% t#e Dnited "tatesC and
t#is notwit#standing t#e %act t#at t#e en%orcement o% suc# regu&ations ma! tend to restrict t#eir &iert!, and to
contro& t#e %ree e3ercise o% t#eir discretion in t#e conduct o% t#eir usiness to a degree and in a %orm and
manner w#ic# wou&d not e to&erated under t#e constitutiona& guarantees wit# re&ation to t#e private usiness
o% a private citi*en'
3. Business o, co##on carriers a,,ecte+ .it) pu$lic interest
$ommon carriers e3ercise a sort o% pu&ic o%%ice, and #ave duties to per%orm in w#ic# t#e pu&ic is
interested' T#eir usiness is, t#ere%ore, a%%ected wit# a pu&ic interest, and is suAect to pu&ic regu&ation'
4. 5s $usiness is o, pu$lic e#ploy#ent! state #ay i#pose reasona$le re*ulations
T#e nature o% t#e usiness in w#ic# t#e! are engaged as a pu&ic emp&o!ment, is suc# t#at it is c&ear&!
wit#in t#e power o% t#e state to impose suc# Aust and reasona&e regu&ations t#ereon as in t#e interest o% t#e
pu&ic it ma! deem proper' (% course suc# regu&ations must not #ave t#e e%%ect o% depriving an owner o% t#is
propert! wit#out due process o% &aw, nor o% con%iscating or appropriating private propert! wit#out Aust
compensation, nor o% &imiting or prescriing irrevoca&! vested rig#ts or privi&eges &aw%u&&! ac9uired under a
c#arter or %ranc#ise' 1ut aside %rom suc# constitutiona& &imitations, t#e determination o% t#e nature and e3tent
o% t#e regu&ations w#ic# s#ou&d e precried rests in t#e #ands o% t#e &egis&ator' (Eew Jerse! "team Eav' $o'
vs' Merc#ants? 1ank, > @ow', 355, 3/8C Munn vs' ,&&inois, .5 D' "', 113, 13()')
%. :o.er to re*ulate not po.er to +estroy! li#itation not con,iscation
T#e power to regu&ate is not a power to destro!, and &imitation is not t#e e9uiva&ent o% con%iscation'
Dnder pretense o% regu&ating %ares and %reig#ts t#e state can not re9uire a rai&road corporation to carr! persons
or propert! wit#out reward' Eor can it do t#at w#ic# in &aw amounts to a taking o% private propert! %or pu&ic
use wit#out Aust compensation, or wit#out due process o% &aw' ($#icago etc' :' $o' v's' Minnesota, 135 D' "',
51/C Minneapo&is Bastern :' $o' vs' Minnesota, 135 D' "', 5>0')
1". Bu+icial inter,erence +oes not occur unless t)e case presents ,la*rant attack upon ri*)ts an+
property in *uise o, re*ulation
T#e Audiciar! oug#t not to inter%ere wit# regu&ations esta&is#ed under &egis&ative sanction un&ess t#e!
are so p&ain&! and pa&pa&! unreasona&e as to make t#eir en%orcement e9uiva&ent to t#e taking o% propert! %or
pu&ic use wit#out suc# compensation as under a&& t#e circumstances is Aust ot# to t#e owner and to t#e
pu&ic, t#at is, Audicia& inter%erence s#ou&d never occur un&ess t#e case presents, c&ear&! and e!ond a&& dout,
suc# a %&agrant attack upon t#e rig#ts and propert! under t#e guise o% regu&ations as to compe& t#e court to sa!
t#at t#e regu&ations in 9uestion wi&& #ave t#e e%%ect to den! Aust compensation %or private propert! taken %or
t#e pu&ic use' ($#icago etc' :' $o' vs' Fe&&= man, 153 D' "', 33.C "m!t# vs' 7mes, 1>. D' "', 5>>, 485C
@enderson 1ridge $o' vs' @enderson $it!, 103 D' "', 4.8, >15') ; (Fis#er vs' Oangco "teams#ip $o', 31 P#i&'
:ep', 1')
11. Re*ulation is reasona$le
7 regu&ation re9uiring a&& coasting vesse&s &icensed to engage in t#e interis&and trade to carr! t#e mai&s
and give prompt advance notice in a&& cases o% intended sai&ings in amp&e time to permit dispatc# o% mai&s, and
o% c#anges o% sai&ing #ours, (mani%est&! wit# a view to make it possi&e %or t#e post=o%%ice o%%icia&s to tender
mai& %or transportation at t#e &ast practica&e moment prior to t#e #our o% departure) is a reasona&e regu&ation,
made in t#e interests o% t#e pu&ic, w#ic# t#e state #as a rig#t to impose w#en it grants &icenses to t#e vesse&s
a%%ected t#ere!'
1-. Govern#ents incur consi+era$le expen+itures to secure sa,ety o, vessels plyin* in :)ilippine
.aters
$onsidera&e e3penditures o% pu&ic mone! #ave een made in t#e past and continue to e made
annua&&! %or t#e purpose o% securing t#e sa%et! o% vesse&s p&!ing in P#i&ippine waters' To t#is end &ig#t#ouses
#ave een erectedC w#ar%s and docks constructedC and uo!s, e&&s and ot#er warning signa&s maintained at
points o% danger' +arge&! %or t#e purpose o% conve!ing time&! warnings o% t#reatening weat#er to t#ose t#at
go down into t#e sea in s#ips, appropriations are made %or t#e support o% a Feat#er 1ureau' $oast and
geodetic surve!s are conducted to keep t#em in%ormed as to t#e dangers #idden eneat# t#e treac#erous sea'
+icensed pi&ots are provided to insure sa%e entr! into t#e dangerous ports and #arors t#roug#out t#e ,s&ands'
Maps, c#arts and genera& in%ormation as to conditions a%%ecting trave& ! water are kept up to date, and
%urnis#ed a&& vesse&s #aving need %or t#em' ,n a word, t#e 6overnment un#esitating&! spends a considera&e
part o% t#e pu&ic %unds w#erever and w#enever it appears t#at t#e sa%et! and even t#e convenience o% t#e
s#ipping in P#i&ippine waters wi&& e advanced t#ere!' $an it e %air&! contended t#at a regu&ation is
unreasona&e w#ic# re9uires vesse&s &icensed to engage in t#e interis&and trade, in w#ose e#a&% t#e pu&ic
%unds are so &avis#&! e3pended, to #o&d t#emse&ves in readiness to carr! t#e pu&ic mai&s w#en du&! tendered
%or transportation, and to give suc# reasona&e notice o% t#eir sai&ing #ours as wi&& insure t#e prompt dispatc#
o% a&& mai&s read! %or de&iver! at t#e #ours t#us designatedS
13. Re*ulations only $e*in to a,,ect $usiness o, s)ipo.ner .)en it enters into e#ploy#ent as
co##on carrier
,t is on&! w#en t#e owner o% a vesse& enters t#e 9uasi=pu&ic emp&o!ment o% a common carrier t#at
regu&ations o% t#is kind egin to a%%ect or contro& t#e conduct o% #is usiness, and #e cannot e #eard to
comp&ain t#at #e is deprived o% #is propert! wit#out due process o% &aw w#en #e e&ects, o% #is own %ree wi&&
and accord, to secure a &icense as a common carrier in P#i&ippine waters, and to engage in a usiness, one o%
t#e conditions o% w#ic# is t#at #e wi&& comp&! wit# suc# regu&ations' Dnder t#e &aw in %orce in t#ese ,s&ands at
t#e time o% t#e c#ange o% sovereignt!, and o% t#e enactment o% t#e 7ct o% $ongress t#e owners o% a&& &icensed
coasting vesse&s were re9uired to comp&! wit# regu&ations o% t#is c#aracter, as one o% t#e conditions upon
w#ic# t#e! were permitted to engage in t#e 9uasi=pu&ic emp&o!ment o% carriers in t#e interis&and trade' Eo
one is compe&&ed to comp&! wit# t#ese regu&ations un&ess #e vo&untari&! enters upon t#e usiness w#ic# t#e!
a%%ect, and i% #e does enter suc# usiness #e cannotC c&aim t#at #e is un&aw%u&&! deprived, wit#out due process
o% &aw, o% t#at w#ic# #e vo&untari&! agrees to surrender'
1/. Fni,or#ity o, taxes (assu#in*)
,% regu&ations o% t#is kind e regarded as in t#e nature o% a ta3 upon t#e vesse&s a%%ected t#ere!, t#e
ta3 cannot e attacked %or &ack o% uni%ormit! so &ong as it is &aid uni%orm&! upon a&& t#e memers o% t#e c&ass
to w#ic# it e3tends' T#e on&! &imitation upon t#e aut#orit! con%erred is uni%ormit! in &a!ing t#e ta3, and
uni%ormit! does not re9uire t#e e9ua& app&ication o% t#e ta3 to a&& persons or corporations w#o ma! come
wit#in its operation, ut it is &imited to geograp#ica& uni%ormit!'
12. <istinction $et.een @e9ualityA an+ @uni,or#ityA
T#e distinction etween ;e9ua&it!< and ;uni%ormit!< in ta3ation is t#us stated in 1&ack on
$onstitutiona& +aw, page 3.8, citing Mi&&er, $onst', 851: ;,n practice, t#ere%ore, Ge9ua&it!? in ta3ation means
to e ca&&ed upon to pa! ta3es, w#ic# ta3es s#a&& e strict&! proportioned to t#e re&ative va&ue o% t#eir ta3a&e
propert!' 7nd Guni%ormit!? in ta3ation means t#at a&& ta3a&e artic&es or kinds o% propert!, o% t#e same c&ass,
s#a&& e ta3ed at t#e same rate' ,t does not mean t#at &ands, c#atte&s, securities, incomes, occupations,
%ranc#ises, privi&eges, necessities, and &u3uries s#a&& a&& e assessed at t#e same rate' Di%%erent artic&es ma! e
ta3ed at di%%erent amounts, provided t#e rate is uni%orm on t#e same c&ass ever!w#ere, wit# a&& peop&e, and at
a&& times' ;
1. :o.er to i#pose taxes unli#ite+ in ,orce
T#e power to impose ta3es is one so un&imited in %orce and so searc#ing in e3tent, t#at t#e courts
scarce&! venture to dec&are t#at it is su'iect to an! restrictions w#atever, e3cept suc# as rest in t#e discretion
o% t#e aut#orit! w#ic# e3ercises it' ,t reac#es to ever! trade or occupationC to ever! oAect o% industr!, use, or
enAo!mentC to ever! species o% possessionC and it imposes a urden w#ic#, in case o% %ai&ure to disc#arge it,
ma! e %o&&owed ! sei*ure and sa&e or con%iscation o% propert!' Eo attriute o% sovereignt! is more
pervading, and at no point does t#e power o% t#e 6overnment a%%ect more constant&! and intimate&! a&& t#e
re&ations o% &i%e t#an t#roug# t#e e3actions made under it' ' ' '
13. :o.er to tax rests upon necessity! an+ is in)erent in every soverei*nty
T#e power to ta3 rests upon necessit!, and is in#erent in ever! sovereignt!' T#e &egis&ature o% ever!
%ree "tate wi&& possess it under t#e genera& grant o% &egis&ative power, w#et#er particu&ar&! speci%ied in t#e
constitution among t#e powers to e e3ercised ! it or not' Eo constitutiona& government can e3ist wit#out it,
and no aritrar! government wit#out regu&ar and stead! ta3ation cou&d e an!t#ing ut an oppressive and
ve3atious despotism, since t#e on&! a&terative to ta3ation wou&d e a %orced e3tortion %or t#e needs o%
government %rom suc# persons or oAects as t#e men in power mig#t se&ect as victims' $#ie% Justice Mars#a&&
#as said o% t#is power: GT#e power o% ta3ing t#e peop&e and t#eir propert! is essentia& to t#e ver! e3istence o%
government, and ma! e &egitimate&! e3ercised on t#e oAects to w#ic# it is app&ica&e to t#e utmost e3tent to
w#ic# t#e government ma! c#oose to carr! it'
14. Security a*ainst a$use o, po.er o, taxation
T#e on&! securit! against t#e ause o% t#is power is %ound in t#e structure o% t#e government itse&%' ,n
imposing a ta3, t#e &egis&ature acts upon its constituents' T#is is, in genera&, a su%%icient securit! against
erroneous and oppressive ta3ation' T#e peop&e o% a "tate, t#ere%ore, give to t#eir government a rig#t o% ta3ing
t#emse&ves and t#eir propert!C and as t#e e3igencies o% t#e government cannot e &imited, t#e! prescrie no
&imits to t#e e3ercise o% t#is rig#t, resting con%ident&! on t#e interest o% t#e &egis&ator, and on t#e in%&uence o%
t#e constituents over t#eir representative, to guard t#em against its ause'?
1%. Scope o, po.er o, le*islation an+ taxation
T#e power o% &egis&ation, and conse9uent&! o% ta3ation, operates on a&& persons and propert!
e&onging to t#e od! po&itic' T#is is an origina& princip&e, w#ic# #as its %oundation in societ! itse&%' ,t is
granted ! a&& %or t#e ene%it o% a&&' ,t resides in t#e government as part o% itse&%, and need not e reserved
w#ere propert! o% an! description, or t#e rig#t to use it in an! manner, is granted to individua&s or corporate
odies' @owever aso&ute t#e rig#t o% an individua& ma! e, it is sti&& in t#e nature o% t#at rig#t t#at it must
ear a portion o% t#e pu&ic urdens, and t#at portion must e determined ! t#e &egis&ature' T#is vita& power
ma! e ausedC ut t#e interest, wisdom, and Austice o% t#e representative od!, and its re&ations wit# its
constituents, %urnis# t#e on&! securit! w#ere t#ere is no e3press contract against unAust and e3cessive ta3ation,
as we&& as against unwise &egis&ation genera&&!'
-". Bu+icial +epart#ent un,it to in9uire on +e*ree o, taxation
,t is un%it %or t#e Audicia& department to in9uire w#at degree o% ta3ation is t#e &egitimate use, and w#at
degree ma! amount to t#e ause, o% t#e power' T#e Audicia& cannot prescrie to t#e &egis&ative department o%
t#e government &imitations upon t#e e3ercise o% its acknow&edged powers' T#e power to ta3 ma! e e3ercised
oppressive&! upon persons, ut t#e responsii&it! o% t#e &egis&ature is not to t#e courts, ut to t#e peop&e !
w#om its memers are e&ected' "o i% a particu&ar ta3 ears #eavi&! upon a corporation or a c&ass o%
corporations, it cannot, %or t#at reason on&!, e pronounced contrar! to t#e $onstitution' (Vea*ie 1ank vs'
Fenno, / Fa&&', 433, 45/')
-1. Bu+icial +epart#ent c)ar*e+ .it) +uty o, en,orcin* constitution6 Separation o, po.ers
7s a resu&t o% our written constitution, it is a3iomatic t#at t#e Audicia& department o% t#e government is
c#arged wit# t#e so&emn dut! o% en%orcing t#e $onstitution, and t#ere%ore in cases proper&! presented, o%
determining w#et#er a given mani%estation o% aut#orit! #as e3ceed t#e power con%erred ! t#at instrument, no
instance is a%%orded %rom t#e %oundation o% t#e government w#ere an act, w#ic# was wit#in a power
con%erred, was dec&ared to e repugnant to t#e $onstitution, ecause it appeared to t#e Audicia& mind t#at t#e
particu&ar e3ertion o% constitutiona& power was eit#er unwise or unAust' To announce suc# a princip&e wou&d
amount to dec&aring t#at in our constitutiona& s!stem t#e Audiciar! was not on&! c#arged wit# t#e dut! o%
up#o&ding t#e $onstitution ut a&so wit# t#e responsii&it! o% correcting ever! possi&e ause arising %rom t#e
e3ercise ! t#e ot#er departments o% t#eir conceded aut#orit!' "o to #o&d wou&d e to overt#row t#e entire
distinction etween t#e &egis&ative, Audicia& and e3ecutive departments o% t#e government, upon w#ic# our
s!stem is %ounded, and wou&d e a mere act o% Audicia& usurpation' (Mc$ra! vs' D' "', 1.4 D' "', 80')
--. :resu#e+ intention o, Collector in circular
T#e provisions o% paragrap# , re9uire trading vesse&s to carr! mai&s tendered %or transportation in a
sa%e and secure manner' T#is does not necessari&! re9uire t#ese vesse&s to accept and to carr! mai& %ree o%
c#arge' ,t is on&! w#en goods are &aw%u&&! tendered t#at common carriers ma! e compe&&ed to carr! t#em,
and it must e presumed t#at t#e aut#or o% t#e circu&ar #ad in mind a &aw%u& tender o% mai&s w#en #e wrote
t#is paragrap#' ,% a vesse&s ma! not e re9uired to carr! mai& wit#out direct compensation, or a contract
providing %or suc# compensation, it must e presumed t#at t#e $o&&ector did not intend to re9uire vesse&s to
accept mai& wit#out tender o% reasona&e compensation %or suc# services or provision %or pa!ment ! contract
or ot#erwise, and t#at t#is paragrap# was intended mere&! as a regu&ation re9uiring t#e acceptance o% a&& mai&
t#us &aw%u&&! tendered and t#e sa%e transportation o% suc# mai& w#en accepted %or transportation'
-3. 7o ,act or alle*ation in plea+in* t)at Collector o, Custo#s is co#pellin* vessel1s #aster to
carry #ail ,ree o, c)ar*e
T#ere is asence o% t#e necessar! a&&egations setting %ort# t#at t#e $o&&ector o% $ustoms #as
compe&&ed and is t#reatening to compe& t#e master o% t#e Visca!a to carr! mai&s %ree o% c#arge' ,t does not
appear %rom t#e p&eadings, nor in %act, t#at an! attempt #as een made or is eing made ! t#e $o&&ector to
compe& t#e master o% t#e Vi*ca!a, over #is protest, to carr! mai& wit#out compensation' T#e a&&egations o% t#e
comp&aint disc&ose mere&! t#at #e t#reatened to en%orce t#e regu&ations o% t#e circu&ar re9uiring t#e master o%
t#e Vi*ca!a to make provision %or t#e transportation o% t#e mai&s w#en tendered, and %or t#e giving o%
reasona&e notice as to sai&ing #ours upon w#ic# suc# tender mig#t e ased'
-/. Section 3 o, 5ct 322
"ection 3 o% 7ct 344 provides t#at t#e customs service s#a&& emrace, among ot#er t#ings, (1) t#e
documenting o% vesse&s ui&t or owned in t#e P#i&ippine ,s&ands, etc'C (8) t#e e3c&usion o% %oreign vesse&s %rom
t#e coastwise tradeC (3) t#e entr! and c&earance o% vesse&sC (5) t#e en%orcement o% suc# regu&ation o%
commerce, %oreign and coastwise, as s#a&& e esta&is#ed ! competent aut#orit!C and (4) t#e regu&ation o% t#e
carriage o% passengers ! water and t#e &icensing o% vesse&s t#ere%or'
-2. Section 3 o, 5ct 322
"ection 0 o% 7ct 344 provides, in part, as %o&&ows: ;T#e ,nsu&ar $o&&ector s#a&& #ave genera& aut#orit!
t#roug#out t#e P#i&ippine ,s&ands in a&& matters emraced wit#in t#e Aurisdiction o% t#e $ustoms "ervice'<
-. Section 1% o, 5ct 322
(ransportation La.! -""/ ( -% )
"ection 1. o% 7ct 344 provides, in part, as %o&&ows: ;T#e ,nsu&ar $o&&ector s#a&&, %rom time to time,
make and promu&gate genera& ru&es and regu&ations, not inconsistent wit#&aw, suAect to t#e approva& o% t#e
"ecretar! o% Finance and Justice: (1) Directing t#e manner o% e3ecution o% t#e customs &aw and &aws re&ating
to commerce, navigation' and immigration' 333 (0) Prescriing t#e met#od o% &oading and un&oading
merc#andise and t#e transportation t#ereo% ! onded carriers, rai&wa!s, vesse&s, onded &ig#ters, carts, or
ot#erwise<
-3. Section 33 o, 5ct 322
"ection 03 o% 7ct 344 provides as %o&&ows: ;,n t#e coasting trade, t#e admeasurement, documenting,
enro&&ment and &icensing o% vesse&s ui&t or owned in t#e P#i&ippine 7rc#ipe&ago and in t#e making and
recording o% a&& documents re&ating t#ereto, t#e ,nsu&ar $o&&ector s#a&& oserve, promu&gate, and en%orce suc#
orders and regu&ations respecting t#e same as #ave een #ereto%ore or s#a&& #erea%ter e prescried ! t#e
proper aut#orit!' ,n t#e asence o% suc# regu&ations or orders #e s#a&& oserve and %o&&ow t#e &aws o% t#e
Dnited "tates and t#e regu&ations o% t#e Treasur! Department o% t#e Dnited "tates so %ar as t#e same ma! e,
in #is sound Audgment, app&ica&e' $erti%icates o% protection s#a&& #erea%ter e signed ! t#e co&&ector o%
customs at ports w#ere issued and countersigned ! t#e ,nsu&ar $o&&ector'<
-4. Section 13/ o, 5ct 322
"ection 135 o% 7ct 344 is as %o&&ows: ;T#e coastwise trade s#a&& e under t#e genera& contro& and
supervision o% t#e ,nsu&ar $o&&ector, and under t#e direct supervision o% co&&ectors o% customs at t#e suports
o% entr! wit#in t#eir respective co&&ection districts'<
-%. Section 1 o, 5ct 34"! as a#en+e+ $y Section 1 o, 5ct 1"-
"ection 1 o% 7ct 0/2, as amended ! section 1 o% 7ct 1>28, provides, in part, as %o&&ows: ;7 oard is
#ere! created, to consist o% t#e ,nsu&ar $o&&ector o% $ustoms, t#e supervising inspector o% #u&&s and oi&ers,
and assistant inspector o% #u&&s, one person #o&ding an une3pired &icense as master in t#e P#i&ippine coastwise
trade, and one ot#er competent person, w#ose dut! it s#a&& e to e3amine and certi%! %or &icenses a&& app&icants
%or &icenses as watc# o%%icers and engineers upon vesse&s o% t#e P#i&ippine ,s&ands'<
3". Section - o, 5ct 34"
"ection 8 o% 7ct 0/2 is as %o&&ows: ;F#enever an! person app&ies %or &icense as master, mate, patron,
or engineer o% a P#i&ippine coastwise vesse& it s#a&& e t#e dut! o% t#e 1oard on P#i&ippine Marine
B3aminations to make a t#oroug# in9uir! as to #is c#aracter and care%u&&! to e3amine t#e app&icant, t#e
evidence #e presents in support o% #is app&ication, and suc# ot#er evidence as it ma! deem proper or
desira&e, and i% satis%ied t#at #is capacit!, e3perience, #aits o% &i%e, and c#aracter are suc# as to warrant t#e
e&ie% t#at #e can e sa%e&! intrusted wit# t#e duties and responsii&ities o% t#e position %or w#ic# #e makes
app&ication, it s#a&& so certi%! to t#e ,nsu&ar $o&&ector o% $ustoms, w#o s#a&& issue a &icense aut#ori*ing suc#
app&icant to act as master, mate, patron, or engineer, as t#e case ma! e'<
31. Section o, 5ct 34"
"ection > o% 7ct 0/2 is as %o&&ows: ;Bver! &icense aut#ori*ed to e issued as aove set %ort# s#a&& e
operative and in %orce unti& Ju&! %irst, nineteen #undred and %our, ut t#e ,nsu&ar $o&&ector o% $ustoms ma! at
an! time suspend or revoke an! &icense upon satis%actor! proo% o% misconduct, intemperate #aits, incapacit!,
or inattention to dut! on t#e part o% t#e &icensee'<
3-. Section - o, 5ct 1"-2
"ection 8 o% 7ct 1284 is as %o&&ows: ;Dpon t#e e3piration o% t#e &icense aut#ori*ed to e issued !
said 7ct Eumered "even @undred and eig#t!, t#e said 1oard is %urt#er aut#ori*ed and empowered to renew
suc# &icense %rom !ear to !ear upon due app&ication eing made as prescried in said 7ct, ut eac# renewa&
s#a&& e operative %or on&! one !ear' ,n case o% renewa& o% &icense t#e written e3amination re9uired ! section
t#ree o% said 7ct s#a&& not e #ad ut t#e app&icant %or renewa& s#a&& on&! e re9uired to sumit to an
e3amination, i% deemed necessar! ! t#e 1oard, to test #is p#!sica& soundness, ut t#e 1oard is aut#ori*ed to
re%use an! app&ication %or renewa& upon satis%actor! evidence o% misconduct, intemperate #aits, incapacit!,
or inattention to dut! on t#e part o% t#e &icensee and a&so to revoke an! suc# renewa& &icense, w#en granted,
%or t#e same reasons, or an! o% t#em'<
33. <uties o, captain o, t)e port +evolve+ upon ;nsular Collector o, Custo#s an+ )is su$or+inates
T#e duties o% t#e captain o% t#e port, as t#at o%%ice %ormer&! e3isted and as provided in t#e "panis#
&aws, now devo&ve upon t#e ,nsu&ar $o&&ector o% $ustoms and #is suordinates as #e ma! direct, pursuant to
t#e provisions o% section 1 o% 7ct Eo' >84' 7n! duties w#ic# t#e captain o% t#e port was re9uired to per%orm
under t#e decrees and simi&ar regu&ations issued under t#e "panis# 7dministration o% t#e 6overnment o% t#ese
,s&ands, devo&ved upon t#e $o&&ector o% $ustoms at t#e date o% t#e promu&gation o% $ircu&ar >80, so %ar as
t#ose decrees and simi&ar regu&ations continued in %orce at t#at time'
3/. ;nsular collector clot)e+ .it) necessary aut)ority to prepare! pro#ul*ate! an+ en,orce Custo#s
5+#inistrative Circular -3
,nso%ar as $ustoms 7dministrative $ircu&ar >80 consists o% a od! o% reasona&e regu&ations
contro&&ing and prescriing t#e conduct o% vesse&s &icensed to engage in t#e coastwise trade, and o% &icensed
o%%icers aoard suc# vesse&s, wit# re%erence to t#e transportation o% mai&, t#e ,nsu&ar $o&&ector was c&ot#ed
wit# t#e necessar! aut#orit! at t#e date o% t#e circu&ar %or its preparation, promu&gation and en%orcement' T#e
circu&ar is, w#en correct&! construed, suc# a od! o% reasona&e regu&ations, touc#ing t#e conduct o%
coastwise vesse&s and t#eir o%%icers wit# re%erence to t#e transportation o% mai&s'
[13]
FS vs. Kuina?on (GR 44! 3" Buly 1%12)
Bn 1anc, Jo#nson (J): 5 concur, 1 dissents
&acts' Pascua& NuinaAon and Bugenio Nuitoriano, acting as representatives o% t#e Dnion (rera, esta&is#ed
at t#e port o% $urrimao, ,&ocos Eorte, and engaged ! means o% vira!es as common carriers o% passengers and
in &oading and un&oading %reig#t %rom steamers anc#oring at said port, to t#e s#ore or to t#e ware#ouses, and
vice versa, #ave regu&ar&! co&&ected, during t#e &ast %our !ears, > centavos %or eac# sack o% rice &oaded or
un&oaded ! said association' NuinaAon and Nuitoriano, representing t#e same association, co&&ected %rom t#e
provincia& government o% ,&ocos Eorte 12 centavos %or eac# o% t#e 4,./> sacks o% rice w#ic# t#e! un&oaded
%rom t#e steamers during t#e mont#s o% June, Ju&!, and "eptemer, as propert! e&onging to t#e said
government, a price w#ic# di%%ered %rom t#e usua& c#arge o% > centavos made to ot#er s#ippers o% said
commodit!'
NuinaAon and Nuitoriano were c#arged wit# a vio&ation o% t#e provisions o% 7ct ./' 7 comp&aint was
presented in t#e court o% t#e Austice o% t#e peace on 11 Eovemer 1.18' 7 pre&iminar! e3amination was #ad
and NuinaAon and Nuitoriano were #e&d %or tria& in t#e $ourt o% First ,nstance o% t#e Province o% ,&ocos Eorte'
(n 10 Eovemer 1.18, t#e prosecuting attorne! o% t#e Province o% ,&ocos Eorte presented a comp&aint' Dpon
t#at comp&aint NuinaAon and Nuitoriano were du&! arraigned, tried, %ound gui&t! o% t#e crime c#arged, and
sentenced ! t#e @onora&e Dionisio $#anco, Audge, to pa! a %ine o% K122 (P822) and costs, and to return to
t#e provincia& government o% t#e Province o% ,&ocos Eorte t#e sum o% P34.'1>'
From t#at sentence, NuinaAon and Nuitoriano appea&ed to t#e "upreme $ourt'
T#e "upreme $ourt a%%irmed t#e Audgment o% t#e &ower court, wit# modi%ication' T#e $ourt ordered NuinaAon
and Nuitoriano to t#e Province o% ,&ocos Eorte t#e sum P83.'55, %or w#ic# sum a Audgment is ordered to e
entered against t#em, %or w#ic# e3ecution ma! issue w#en t#is Audgment ecomes %ina&, in case t#e same is
not paid' Fit# costs'
1. Kuina?on an+ Kuitoriano collecte+ centavos per packa*e
@erein, NuinaAon and Nuitoriano co&&ected > centavos %or eac# package, o% w#atever kind o%
merc#andise, &arge or sma&&, #eav! or &ig#t, %rom t#ose merc#ants on&! wit# w#om t#e! #ad a specia& contract'
From ot#er merc#ants, wit# w#om t#e! #ad not made said specia& contract, as we&& as t#e Province o% ,&ocos
Eorte, t#e! co&&ected a di%%erent rate' T#e! co&&ected %rom t#e Province o% ,&ocos Eorte 12 centavos %or eac#
sack o% rice w#ic# t#e! un&oaded %rom t#e steamers during t#e mont#s o% June, Ju&!, and "eptemer'
-. Si#pli,ie+ ,acts o, t)e case
(1) T#e de%endants, as common carriers, c#arged and co&&ected %rom some s#ippers and merc#ants, a
certain price %or eac# package o% merc#andise, &oaded or un&oaded, according to a certain sc#edu&e' T#e prices
%i3ed in t#e sc#edu&e depended upon t#e si*e and weig#t o% t#e package' (8) T#e de%endants entered into a
specia& contract wit# certain merc#ants, under and ! virtue o% t#e terms o% w#ic# t#e! c#arged and co&&ected,
%or &oading and un&oading merc#andise in said port, t#e sum o% > centavos %or eac# package, wit#out
re%erence to its si*e or weig#t'
3. 5ct %4 an+ 5ct o, Con*ress o, / &e$ruary 1443 are si#ilar6 5+option o, interpretation $y FS
&e+eral courts ?usti,ie+
7ct ./ was &arge&! orrowed %rom t#e 7ct o% $ongress o% 5 Feruar! 1//0' T#e &anguage o% t#e two
7cts, so %ar as t#e! re&ate to t#e present case, is practica&&! t#e same' "aid 7ct o% $ongress #as een construed
! t#e Federa& courts o% t#e Dnited "tates in severa& decisions' ,n view o% t#e simi&arit! o% t#e two 7cts, we
%ee& Austi%ied in adopting t#e interpretation given ! t#e Federa& courts o% t#e Dnited "tates to said 7ct o%
$ongress'
/. Section 1! 5ct %4
;Eo person or corporation engaged as a common carrier o% passengers or propert! s#a&& direct&! or
indirect&! ! an! specia& rate, reate,, drawack or ot#er device, c#arge, demand, co&&ect or receive %rom an!
person or persons, a greater or &ess compensation %or an! service rendered in t#e transportation o% passengers
or propert! on &and or water etween an! points in t#e P#i&ippine ,s&ands t#an suc# common carriers c#arges,
demands, co&&ects or receives %rom an! ot#er person or persons %rom doing %or #im a &ike or contemporaneous
service in t#e transportation o% a &ike kind o% tra%%ic under sustantia&&! simi&ar circumstances and conditions,
and an! suc# unAust discrimination is #ere! pro#iited and dec&ared to e &aw%u&'<
2. Section -! 5ct o, Con*ress! / &e$ruary 1443
;T#at i% an! common carrier suAect to t#e provision o% t#is 7ct s#a&&, direct&!, or indirect&!, ! an!
specia& rate, reate, drawack, or ot#er device, c#arge, demand, co&&ect, or receive %rom an! person or persons
a greater or &ess compensation %or an! service rendered, or to e rendered, in t#e transportation o% passengers
or propert!, suAect to t#e provisions o% t#is 7ct, t#an it c#arges, demands, co&&ects, or receives %rom an!
person or persons %or doing %or #im or t#em a &ike and contemporaneous service in t#e transportation o% a &ike
kind o% tra%%ic under sustantia&&! simi&ar circumstances and conditions, suc# common carrier s#a&& e deemed
gui&t! o% unAust discrimination, w#ic# is #ere! pro#iited and dec&ared to e un&aw%u&'<
. Section -! 5ct %4
;,t s#a&& e un&aw%u& %or an! common carrier engaged in t#e transportation o% passengers or propert!
as aove set %ort# to make or give an! unnecessar! or unreasona&e pre%erence or advantage to an! particu&ar
person, compan!, %irm, corporation or &oca&it!, or an! particu&ar kind o% tra%%ic in an! respect w#atsoever, or
to suAect an! particu&ar person, compan!, %irm, corporation or &oca&it! or an! kind o% tra%%ic, to an! undue or
unreasona&e preAudice or discrimination is a&so #ere! pro#iited and dec&ared to e un&aw%u&'<
3. Section 3! 5ct o, Con*ress! / &e$ruary 1443
;T#at it s#a&& e un&aw%u& %or an! common carrier suAect to t#e provision o% t#is 7ct to make or give
an! undue or unreasona&e pre%erence or advantage to an! particu&ar person, compan!, %irm, corporation, or
&oca&it!, or an! particu&ar description o% tra%%ic, to an! undue or unreasona&e preAudice or disadvantage in an!
respect w#atsoever'<
4. :urpose o, 5ct %46 Scope
7ct ./ is ;7n 7ct to regu&ate commerce in t#e P#i&ippine ,s&ands'< ,ts purpose, so %ar as it is possi&e,
is to compe& common carriers to render to a&& persons e3act&! t#e same or ana&ogous service %or e3act&! t#e
same price, to t#e end t#at t#ere ma! e no unAust advantage or unreasona&e discrimination' ,t app&ies to
persons or corporations engaged as common carriers o% passengers or propert!'
%. Co##on Carriers +e,ine+
7 common carrier is a person or corporation w#ose regu&ar usiness is to carr! passengers or propert!
%or a&& persons w#o ma! c#oose to emp&o! and remunerate #im' 7 common carrier is a person or corporation
w#o undertakes to carr! goods or persons %or #ire' @erein, NuinaAon and Nuitoriano admit t#at t#e! are
common carriers'
1". E)at 5ct %4 provi+es an+ .)at it pro)i$its
(1) T#e &aw provides t#at no common carrier s#a&& direct&! or indirect&!, ! an! specia& rate, reate,
drawack, or ot#er device, c#arge, demand, co&&ect, or receive %rom an! person or persons, a greater or &ess
compensation %or an! service rendered in t#e transportation o% passengers or propert!, etween points in t#e
P#i&ippine ,s&ands, t#an #e c#arges, demands, co&&ects, or receives %rom an! ot#er person or persons, %or doing
a &ike or contemporaneous service, under sustantia&&! simi&ar conditions or circumstances'
(8) T#e &aw pro#iits an! common carrier %rom making or giving an! unnecessar! or unreasona&e
pre%erence or advantage to an! particu&ar person, compan!, %irm, corporation or &oca&it!, or an! particu&ar kind
o% tra%%ic, or to suAect an! particu&ar person, compan!, %irm, corporation, or &oca&it!, or an! particu&ar kind o%
tra%%ic, to an! undue or unreasona&e preAudice or discrimination w#atsoever'
(r simp&!,
(1) T#e &aw re9uires common carriers to carr! %or a&& persons, eit#er passengers or propert!, %or
e3act&! t#e same c#arge %or a &ike or contemporaneous service in t#e transportation o% &ike kind o% tra%%ic
under sustantia&&! simi&ar circumstances or conditions'
(8) T#e &aw pro#iits common carriers %rom suAecting an! person, etc', or &oca&it!, or an! particu&ar
kind o% tra%%ic, to an! undue or unreasona&e preAudice or discrimination w#atsoever'
11. E)at 5ct %4 +oes not re9uire! an+ .)at it +oes not pro)i$it
(1) T#e &aw does not re9uire t#at t#e same c#arge s#a&& e made %or t#e carr!ing o% passengers or
propert!, un&ess a&& t#e conditions are a&ike and contemporaneous'
(8) ,t is not e&ieved t#at t#e &aw pro#iits t#e c#arging o% a di%%erent rate %or t#e carr!ing o%
passengers or propert! w#en t#e actua& cost o% #and&ing and transporting t#e same is di%%erent'
(3) ,t is not e&ieved t#at t#e &aw intended to re9uire common carriers to carr! t#e same kind o%
merc#andise, even at t#e same price, under di%%erent and un&ike conditions and w#ere t#e actua& cost is
di%%erent' T#e actua& cost o% #and&ing and transporting t#e same 9uantit! o% rice, %or e3amp&e, mig#t e
di%%erent, depending upon t#e %orm o% t#e package or ot#er conditions' ,t wou&d cost more to #and&e and
transport rice packed in open o3es or askets, %or e3amp&e, t#an it wou&d to #and&e and transport t#e same
9uantit! o% rice neat&! packed in sacks' ,t wou&d cost more to #and&e and transport #emp, w#en it is una&ed
and &oose, t#an it wou&d w#en it is a&ed' ,t mig#t cost more to #and&e and transport #ouse#o&d goods uncrated
t#an w#en t#e! are crated'
(5) ,t is not e&ieved t#at t#e &aw pro#iits t#e c#arging o% a di%%erent price %or #and&ing and s#ipping
merc#andise w#en t#e s#ipper e3ercises greater care in preparing t#e same %or s#ipment, t#ere! reducing t#e
actua& cost o% #and&ing and transporting' ,% t#e s#ipper puts #is merc#andise in a condition w#ic# costs &ess to
#and&e and transport, #e is certain&! entit&ed to a etter rate' T#e di%%erence in t#e c#arge to di%%erent
merc#ants or s#ippers must e ased upon t#e actua& cost o% #and&ing and transporting'
(4) T#e &aw does not re9uire common carriers to per%orm di%%erent services %or t#e same price, un&ess
t#e actua& cost is t#e same' ,t is w#en t#e price c#arged is %or t#e purpose o% %avoring persons ! &oca&ities or
particu&ar kinds o% merc#andise, t#at t#e &aw intervenes and pro#iits'
(>) ,t is not e&ieved t#at t#e &aw pro#iits common carriers %rom making specia& rates %or t#e
#and&ing and transporting o% merc#andise, w#en t#e same are made %or t#e purpose o% increasing t#eir
usiness, and to manage t#eir important interests upon t#e same princip&es w#ic# are regarded as sound, and
adopted in ot#er trades and pursuits'
(0) ,t is not e&ieved t#at t#e &aw re9uires aso&ute e9ua&it! in a&& cases' $ircumstances and conditions
ma! make it inAurious to t#e carrier' 7so&ute e9ua&it!, under certain circumstances and conditions, ma! give
some s#ippers an advantage over ot#ers'
1-. ()e la. pro)i$its ,avoritis# an+ +iscri#ination
,t is %avoritism and discrimination w#ic# t#e &aw pro#iits' T#e di%%erence in c#arge must not e made
to %avor one merc#ant, or s#ipper, or &oca&it!, to t#e disadvantage o% anot#er merc#ant, or s#ipper, or &oca&it!'
,% t#e services are a&ike and contemporaneous, discrimination in t#e price c#arged is pro#iited'
13. =erc)an+ise #ay $e alike in kin+ or 9uantity $ut not as to cost o, transportation6 Dxa#ple
For t#e purposes o% t#e &aw, it is not su%%icient a&wa!s to sa! t#at merc#andise is a&ike, simp&! ecause
it is o% a &ike kind or 9uantit!' T#e 9uantit!, kind, and 9ua&it! ma! e e3act&! t#e same, and !et not e a&ike, so
%ar as t#e cost o% transportation is concerned' For e3amp&e, 7 and 1 are eac# s#ippers o% ananas etween t#e
same points' 7 de&ivers #is ananas to t#e carrier in separate und&es or unc#es, wit#out a wrapper or an!
kind o% protection, w#i&e 1 de&ivers e3act&! t#e same numer o% unc#es o% ananas, ut t#e! are neat&!
packed in a %ew o3es or askets' ,t does not re9uire muc# argument to convince men conversant wit# t#e
s#ipping o% merc#andise, in suc# a case, t#at t#e actua& cost o% #and&ing and s#ipping wou&d e di%%erent and
wou&d, t#ere%ore, not e ;a&ike,< a&t#oug# contemporaneous, per#aps'
1/. S)ip#ents not ren+ere+ unlike $ecause s)ip#ent co#pose+ o, +i,,erent classes o, #erc)an+ise6
Dxa#ple
Eeit#er is it e&ieved t#at s#ipments ma! e rendered un&ike ! t#e %act t#at t#e tota& s#ipment is
composed o% di%%erent kinds or c&asses o% merc#andise' For e3amp&e, 7 is a s#ipper o% rice and #emp and 1 is
a s#ipper o% rice a&one' 1ot# 7 and 1 prepare t#eir rice %or s#ipment in e3act&! t#e same %orm o% package' ,t is
not e&ieved t#at t#e carrier is permitted, under t#e &aw, to carr! 7?s rice %or a &ess price t#an #e carries 1?s
rice, simp&! ecause 7 is a&so a s#ipper o% #emp'
12. <i,,erence in c)ar*e o, )an+in* #ay +epen+ on actual cost! actual cost #ay +epen+ upon
9uantity6 Dxa#ples
7 di%%erence in t#e c#arge %or #and&ing and transporting ma! on&! e made w#en t#e di%%erence is
ased upon actua& cost' T#e actua& cost ma! depend upon 9uantit!' For e3amp&e, 7 man w#o s#ips %reig#t !
t#e car=&oad, ! reason o% t#e actua& cost o% #and&ing and s#ipping, ma! e entit&ed, under certain conditions,
to a etter rate t#an t#e man w#o s#ips a sing&e artic&e or package o% t#e same c&ass or kind o% merc#andise'
7s anot#er e3amp&e, a train=&oad o% catt&e mig#t e s#ipped %rom Dagupan to Mani&a at &ess cost per #ead t#an
it wou&d cost to s#ip Aust a %ew #ead, &ess t#an a car=&oad'
1. 5ctual cost +epen+ upon an+ settle+ upon proo,6 <i,,erence in c)ar*e #ust $e +i,,erence in cost
T#e actua& cost o% eac# s#ipment must necessari&! depend upon and e sett&ed ! its own proo%' T#is
ru&e, #owever, does not pro#iit t#e making o% genera& sc#edu&es, providing t#e! are made app&ica&e to a&&'
T#e di%%erence in t#e c#arge made ! t#e common carrier cannot e made %or t#e purpose o% %avoring an!
person or &oca&it!, to t#e preAudice or disadvantage o% anot#er person or &oca&it!' 7 common carrier ma!
discriminate etween s#ippers w#en t#e amount o% goods s#ipped ! one actua&&! costs &ess to #and&e and
transport, ut #e cannot discriminate upon t#e ground simp&! t#at #e carries a&& o% t#e goods o% one s#ipper,
w#i&e #e does not carr! a&& o% t#e goods o% anot#er' T#e di%%erence in t#e c#arge must e t#e di%%erence in t#e
cost'
13. Co##on carriers co#petent to enter into special a*ree#ents ,or )an+lin* an+ transportin*
#erc)an+ise
,t is competent %or a common carrier under t#e &aw to enter into specia& agreements %or #and&ing and
transporting merc#andise, w#ere! advantage ma! accrue to individua&s, w#en it is made c&ear&! to appear
t#at ! suc# agreements t#e common carrier #as on&! its interests and t#e &egitimate increase o% its pro%its in
view, and w#en t#e consideration given to t#e individua& is %or t#e interest o% t#e common carrier a&one, and
w#en t#e common carrier gives a&& s#ippers e3act&! t#e same rate, under t#e same conditions'
14. La. pro)i$its un?ust! un+ue! an+ unreasona$le +iscri#ination6 Circu#stances #ay intervene
in +eter#inin* rate o, co#pensation
,t is on&! unAust, undue, and unreasona&e discrimination w#ic# t#e &aw %orids' T#e &aw o% e9ua&it! is
in %orce on&! w#ere t#e services per%ormed in t#e di%%erent cases are sustantia&&! t#e same, and t#e
circumstances and conditions are simi&ar' Man! considerations ma! proper&! enter into t#e agreement %or t#e
carriage or s#ipment rate, suc# as t#e 9uantit! carried, its nature, its risks, t#e e3pense o% carriage at di%%erent
periods o% time, and t#e &ike' Eumerous circumstances ma! intervene, w#ic# ear upon t#e cost and e3pense
o% transportation, and it is ut Aust to t#e carrier t#at #e e permitted to take t#ese circumstances into
consideration, in determining t#e rate or amount o% #is compensation' 7 9uestion o% %act is raised in eac# case
%or t#e courts to decide'
1%. Kuina?on an+ Kuitoriano +iscri#inate+ a*ainst t)e province
@erein, t#ere is no pretense t#at it actua&&! cost more to #and&e t#e rice %or t#e province t#an it did %or
t#e merc#ants wit# w#om t#e specia& contracts were made' From t#e evidence it wou&d seem t#at t#ere was a
c&ear discrimination made against t#e province' Discrimination is t#e t#ing w#ic# is speci%ica&&! pro#iited
and punis#ed under t#e &aw'
-". Section 2 o, 5ct %4
"ection 4 o% 7ct ./ provides t#at an! person or corporation, w#o ma! e damaged ! reason o% t#e
doing ! a common carrier o% an! matters and t#ings pro#iited, s#a&& e entit&ed to sue %or and recover a&&
damages so incurred, etc'
-1. Kuina?on an+ Kuitoriano re9uire+ to return overpay#ent o, :-3%.//
NuinaAon and Nuitoriano #ad a rig#t to c#arge t#e provincia& government > centavos %or eac# sack o%
rice un&oaded' T#e! un&oaded %or t#e province 4,./> sacks, %or w#ic# t#e! c#arged t#e sum o% P4./'>2' T#e!
#ad a rig#t to co&&ect > centavos, or t#e sum o% P34.'1>' NuinaAon and Nuitoriano co&&ected %rom t#e province
more t#an t#e! #ad a rig#t to co&&ect, t#e di%%erence etween P4./'>2 and P34.'1>, or P83.'55' T#e! s#ou&d
e re9uired to return to t#e province t#e e3cess w#ic# t#e! co&&ected, or t#e sum o% P83.'55'
[14] also [39]
<e GuJ#an vs. C5 (GR L>/34--! -- <ece#$er 1%44)
T#ird Division, Fe&iciano (J): 5 concur
&acts' Brnesto $enda)a, a Aunk dea&er, was engaged in u!ing up used ott&es and scrap meta& in Pangasinan'
Dpon gat#ering su%%icient 9uantities o% suc# scrap materia&, $enda)a wou&d ring suc# materia& to Mani&a %or
resa&e' @e uti&i*ed 8 si3=w#ee&er trucks w#ic# #e owned %or #au&ing t#e materia& to Mani&a' (n t#e return trip
to Pangasinan, $enda)a wou&d &oad #is ve#ic&es wit# cargo w#ic# various merc#ants wanted de&ivered to
di%%ering esta&is#ments in Pangasinan' For t#at service, $enda)a c#arged %reig#t rates w#ic# were common&!
&ower t#an regu&ar commercia& rates' "ometime in Eovemer 1.02, Pedro de 6u*man, a merc#ant and
aut#ori*ed dea&er o% 6enera& Mi&k $ompan! (P#i&ippines), ,nc' in Drdaneta, Pangasinan, contracted wit#
$enda)a %or t#e #au&ing o% 042 cartons o% +iert! %i&&ed mi&k %rom a ware#ouse o% 6enera& Mi&k in Makati,
:i*a&, to de 6u*man?s esta&is#ment in Drdaneta on or e%ore 5 Decemer 1.02' 7ccording&!, on 1 Decemer
1.02, $enda)a &oaded in Makati t#e merc#andise on to #is trucks: 142 cartons were &oaded on a truck driven
! $enda)a #imse&%C w#i&e >22 cartons were p&aced on oard t#e ot#er truck w#ic# was driven ! Manue&
Bstrada, $enda)a Gs driver and emp&o!ee' (n&! 142 o3es o% +iert! %i&&ed mi&k were de&ivered to de
6u*man' T#e ot#er >22 o3es never reac#ed de 6u*man, since t#e truck w#ic# carried t#ese o3es was
#iAacked somew#ere a&ong t#e Mac7rt#ur @ig#wa! in Pani9ui, Tar&ac, ! armed men w#o took wit# t#em t#e
truck, its driver, #is #e&per and t#e cargo'
(n > Januar! 1.01, de 6u*man commenced action against $enda)a in t#e $F, o% Pangasinan, demanding
pa!ment o% P88,142'22, t#e c&aimed va&ue o% t#e &ost merc#andise, p&us damages and attorne!?s %ees' De
6u*man argued t#at $enda)a, eing a common carrier, and #aving %ai&ed to e3ercise t#e e3traordinar!
di&igence re9uired o% #im ! t#e &aw, s#ou&d e #e&d &ia&e %or t#e va&ue o% t#e unde&ivered goods' ,n #is
7nswer, $enda)a denied t#at #e was a common carrier and argued t#at #e cou&d not e #e&d responsi&e %or
t#e va&ue o% t#e &ost goods, suc# &oss #aving een due to %orce maAeure' (n 12 Decemer 1.04, t#e tria& court
rendered a Decision? %inding $enda)a to e a common carrier and #o&ding #im &ia&e %or t#e va&ue o% t#e
unde&ivered goods (P88,142'22) as we&& as %or P5,222'22 as damages and P8,222'22 as attorne!?s %ees'
(n appea& e%ore t#e $ourt o% 7ppea&s, $enda)a urged t#at t#e tria& court #ad erred in considering #im a
common carrierC in %inding t#at #e #ad #aitua&&! o%%ered trucking services to t#e pu&icC in not e3empting
#im %rom &iai&it! on t#e ground o% %orce maAeureC and in ordering #im to pa! damages and attorne!?s %ees'
T#e $ourt o% 7ppea&s reversed t#e Audgment o% t#e tria& court and #e&d t#at $enda)a #ad een engaged in
transporting return &oads o% %reig#t ;as a casua& occupation H a side&ine to #is scrap iron usiness< and not as
a common carrier' De 6u*man came to t#e "upreme $ourt ! wa! o% a Petition %or :eview'
T#e "upreme $ourt denied t#e Petition %or :eview on $ertiorariC and a%%irmed t#e Decision o% t#e $ourt o%
7ppea&s dated 3 7ugust 1.00C wit#out pronouncement as to costs'
1. Co##on carriers +e,ine+6 5rticle 133- 7CC
T#e $ivi& $ode de%ines ;common carriers< in t#e %o&&owing terms (7rtic&e 1038): ;$ommon carriers
are persons, corporations, %irms or associations engaged in t#e usiness o% carr!ing or transporting passengers
or goods or ot#, ! &and, water, or air %or compensation, o%%ering t#eir services to t#e pu&ic'<
-. 5rticle 133- 7CC #akes no +istinctions
7rtic&e 1038 o% t#e $ivi& $ode makes no distinction etween one w#ose principa& usiness activit! is
t#e carr!ing o% persons or goods or ot#, and one w#o does suc# carr!ing on&! as an anci&&ar! activit! (in
&oca& idiom, as ;a side&ine<)' 7rtic&e 1038 a&so care%u&&! avoids making an! distinction etween a person or
enterprise o%%ering transportation service on a regu&ar or sc#edu&ed asis and one o%%ering suc# service on an
occasiona&, episodic or unsc#edu&ed asis' Eeit#er does 7rtic&e 1038 distinguis# etween a carrier o%%ering its
services to t#e ;genera& pu&ic,< i'e', t#e genera& communit! or popu&ation, and one w#o o%%ers services or
so&icits usiness on&! %rom a narrow segment o% t#e genera& popu&ation' 7rtic&e 1033 de&ierate&! re%rained
%rom making suc# distinctions'
3. Concept o, @co##on carrierA coinci+es neatly .it) t)e notion o, @pu$lic serviceA
T#e concept o% ;common carrier< under 7rtic&e 1038 ma! e seen to coincide neat&! wit# t#e notion
o% ;pu&ic service,< under t#e Pu&ic "ervice 7ct ($ommonwea&t# 7ct 151>, as amended) w#ic# at &east
partia&&! supp&ements t#e &aw on common carriers set %ort# in t#e $ivi& $ode'
/. :u$lic Service6 Section 13! para*rap) ($) o, t)e :u$lic Service 5ct
Dnder "ection 13, paragrap# () o% t#e Pu&ic "ervice 7ct, ;pu&ic service< inc&udes ;ever! person
t#at now or #erea%ter ma! own, operate, manage, or contro& in t#e P#i&ippines, %or #ire or compensation, wit#
genera& or &imited c&iente&e, w#et#er permanent, occasiona& or accidenta&, and done %or genera& usiness
purposes, an! common carrier, rai&road, street rai&wa!, traction rai&wa!, suwa! motor ve#ic&e, eit#er %or
%reig#t or passenger, or ot#, wit# or wit#out %i3ed route and w#atever ma! e its c&assi%ication, %reig#t or
carrier service o% an! c&ass, e3press service, steamoat, or steams#ip &ine, pontines, %erries and water cra%t,
engaged in t#e transportation o% passengers or %reig#t or ot#, s#ip!ard, marine repair s#op, w#ar% or dock, ice
p&ant, ice=re%rigeration p&ant, cana&, irrigation s!stem, gas, e&ectric &ig#t, #eat and power, water supp&! and
power petro&eum, sewerage s!stem, wire or wire&ess communications s!stems, wire or wire&ess roadcasting
stations and ot#er simi&ar pu&ic services' ;
2. Cen+aLa a co##on carrier
$enda)a is proper&! c#aracteri*ed as a common carrier even t#oug# #e mere&! ;ack=#au&ed< goods
%or ot#er merc#ants %rom Mani&a to Pangasinan, a&t#oug# suc# ack#au&ing was done on a periodic or
occasiona& rat#er t#an regu&ar or sc#edu&ed manner, and even t#oug# $enda)a?s principa& occupation was not
t#e carriage o% goods %or ot#ers' T#ere is no dispute t#at $enda)a c#arged #is customers a %ee %or #au&ing t#eir
goodsC t#at %ee %re9uent&! %e&& e&ow commercia& %reig#t rates is not re&evant'
. Certi,icate o, pu$lic convenience not re9uisite ,or incurrin* o, lia$ility as co##on carrier
7 certi%icate o% pu&ic convenience is not a re9uisite %or t#e incurring o% &iai&it! under t#e $ivi& $ode
provisions governing common carriers' T#at &iai&it! arises t#e moment a person or %irm acts as a common
carrier, wit#out regard to w#et#er or not suc# carrier #as a&so comp&ied wit# t#e re9uirements o% t#e
app&ica&e regu&ator! statute and imp&ementing regu&ations and #as een granted a certi%icate o% pu&ic
convenience or ot#er %ranc#ise' @erein, to e3empt $enda)a %rom t#e &iai&ities o% a common carrier ecause
#e #as not secured t#e necessar! certi%icate o% pu&ic convenience, wou&d e o%%ensive to sound pu&ic po&ic!C
t#at wou&d e to reward private respondent precise&! %or %ai&ing to comp&! wit# app&ica&e statutor!
re9uirements'
3. Business o, co##on carrier i#$ue+ .it) pu$lic interest
T#e usiness o% a common carrier impinges direct&! and intimate&! upon t#e sa%et! and we&& eing
and propert! o% t#ose memers o% t#e genera& communit! w#o #appen to dea& wit# suc# carrier' T#e &aw
imposes duties and &iai&ities upon common carriers %or t#e sa%et! and protection o% t#ose w#o uti&i*e t#eir
services and t#e &aw cannot a&&ow a common carrier to render suc# duties and &iai&ities mere&! %acu&tative !
simp&! %ai&ing to otain t#e necessar! permits and aut#ori*ations'
4. Dxtraor+inary +ili*ence re9uire+ o, co##on carriers
$ommon carriers, ;! t#e nature o% t#eir usiness and %or reasons o% pu&ic po&ic!,< are #e&d to a ver!
#ig# degree o% care and di&igence (;e3traordinar! di&igence<) in t#e carriage o% goods as we&& as o% passengers'
T#e speci%ic import o% e3traordinar! di&igence in t#e care o% goods transported ! a common carrier is,
according to 7rtic&e 1033, ;%urt#er e3pressed in 7rtic&es 1035, 1034 and 1054, numers 4, > and 0< o% t#e
$ivi& $ode'
%. 5rticle 133/ 7CC
7rtic&e 1035 esta&is#es t#e genera& ru&e t#at common carriers are responsi&e %or t#e &oss, destruction
or deterioration o% t#e goods w#ic# t#e! carr!, ;un&ess t#e same is due to an! o% t#e %o&&owing causes on&!: (1)
F&ood, storm, eart#9uake, &ig#tning, or ot#er natura& disaster or ca&amit!C (8) 7ct o% t#e pu&ic enem! in war,
w#et#er internationa& or civi&C (3) 7ct or omission o% t#e s#ipper or owner o% t#e goodsC (5) T#e c#aracter o%
t#e goods or de%ects in t#e packing or in t#e containersC and (4) (rder or act o% competent pu&ic aut#orit!'<
1". Dnu#eration in 5rticle 133/ 7CC exclusive6 5rticle 1332 7CC
,t is important to point out t#at t#e aove &ist o% causes o% &oss, destruction or deterioration w#ic#
e3empt t#e common carrier %or responsii&it! t#ere%or, is a c&osed &ist' $auses %a&&ing outside t#e %oregoing
&ist, even i% t#e! appear to constitute a species o% %orce maAeure, %a&& wit#in t#e scope o% 7rtic&e 1034, w#ic#
provides t#at ;,n a&& cases ot#er t#an t#ose mentioned in numers 1, 8, 3, 5 and 4 o% t#e preceding artic&e, i%
t#e goods are &ost, destro!ed or deteriorated, common carriers are presumed to #ave een at %au&t or to #ave
acted neg&igent&!, un&ess t#e! prove t#at t#e! oserved e3traordinar! di&igence as re9uired in 7rtic&e 1033'<
11. Cen+aLa presu#e+ at ,ault6 Cen+aLa! )o.ever! not re9uire+ to retain security *uar+ to ri+e
.it) truck
7pp&!ing 7rtic&es 1035 and 1034, t#e #iAacking o% t#e carrier?s truck does not %a&& wit#in an! o% t#e 4
categories o% e3empting causes &isted in 7rtic&e 1035' ,t wou&d %o&&ow t#at t#e #iAacking o% t#e carrier?s
ve#ic&e must e dea&t wit# under t#e provisions o% 7rtic&e 1034, in ot#er words, t#at $enda)a as common
carrier is presumed to #ave een at %au&t or to #ave acted neg&igent&!' T#is presumption, #owever, ma! e
overt#rown ! proo% o% e3traordinar! di&igence on t#e part o% $enda)a' T#e standard o% e3traordinar!
di&igence re9uired $enda)a to retain a securit! guard to ride wit# t#e truck and to engage rigands in a %ire
%ig#t at t#e risk o% #is own &i%e and t#e &ives o% t#e driver and #is #e&per'
1-. Hol+ uppers o, secon+ truck ar#e+
@erein, armed men #e&d up t#e second truck owned ! $enda)a w#ic# carried de 6u*man?s cargo'
T#e record s#ows t#at an in%ormation %or roer! in and was %i&ed in t#e $F, o% Tar&ac, 1ranc# 8, in
$rimina& $ase 1./ entit&ed ;Peop&e o% t#e P#i&ippines v' Fe&ipe 1oncorno, Eapo&eon Presno, 7rmando
Mesina, (scar (ria and one Jo#n Doe'< T#ere, t#e accused were c#arged wit# wi&&%u&&! and un&aw%u&&! taking
and carr!ing awa! wit# t#em t#e second truck, driven ! Manue& Bstrada and &oaded wit# t#e >22 cartons o%
+iert! %i&&ed mi&k destined %or de&iver! at de 6u*man?s store in Drdaneta, Pangasinan' T#e decision o% t#e
tria& court s#ows t#at t#e accused acted wit# grave, i% not irresisti&e, t#reat, vio&ence or %orce' 3 o% t#e 4 #o&d=
uppers were armed wit# %irearms' T#e roers not on&! took awa! t#e truck and its cargo ut a&so kidnapped
t#e driver and #is #e&per, detaining t#em %or severa& da!s and &ater re&easing t#em in anot#er province (in
Rama&es)' T#e #iAacked truck was suse9uent&! %ound ! t#e po&ice in Nue*on $it!' T#e $F, convicted a&&
t#e accused o% roer!, t#oug# not o% roer! in and'
1-. Speci,ic re9uire#ents o, t)e +uty o, extraor+inary +ili*ence in t)e vi*ilance over t)e *oo+s
carrie+ in t)e speci,ic context o, )i?ackin* or ar#e+ ro$$ery6 5r#e+ ro$$ery )erein is ,ortuitous event
T#e dut! o% e3traordinar! di&igence in t#e vigi&ance over goods is, under 7rtic&e 1033, given
additiona& speci%ication not on&! ! 7rtic&es 1035 and 1034 ut a&so ! 7rtic&e 1054, numers 5, 4 and >,
7rtic&e 1054 provides in re&evant part: ;7n! o% t#e %o&&owing or simi&ar stipu&ations s#a&& e considered
unreasona&e, unAust and contrar! to pu&ic po&ic!: 333 (4) t#at t#e common carrier s#a&& not e responsi&e
%or t#e acts or omissions o% #is or its emp&o!eesC (>) t#at t#e common carrier?s &iai&it! %or acts committed !
t#ieves, or o% roers w#o do not act wit# grave or irresisti&e t#reat, vio&ence or %orce, is dispensed wit# or
diminis#edC and (0) t#at t#e common carrier s#a&& not responsi&e %or t#e &oss, destruction or deterioration o%
goods on account o% t#e de%ective condition o% t#e car, ve#ic&e, s#ip, airp&ane or ot#er e9uipment used in t#e
contract o% carriage'< Dnder 7rtic&e 1054 (>), a common carrier is #e&d responsi&e H and wi&& not e a&&owed
to divest or to diminis# suc# responsii&it! H even %or acts o% strangers &ike t#ieves or roers, e3cept w#ere
suc# t#ieves or roers in %act acted ;wit# grave or irresisti&e t#reat, vio&ence or %orce'< T#e &imits o% t#e
dut! o% e3traordinar! di&igence in t#e vigi&ance over t#e goods carried are reac#ed w#ere t#e goods are &ost as
a resu&t o% a roer! w#ic# is attended ! ;grave or irresisti&e t#reat, vio&ence or %orce'< ,n t#ese
circumstances, t#e occurrence o% t#e &oss must reasona&! e regarded as 9uite e!ond t#e contro& o% t#e
common carrier and proper&! regarded as a %ortuitous event'
1/. Co##on carriers not a$solute insurers a*ainst all risks o, travel an+ o, transport o, *oo+s
Bven common carriers are not made aso&ute insurers against a&& risks o% trave& and o% transport o%
goods, and are not #e&d &ia&e %or acts or events w#ic# cannot e %oreseen or are inevita&e, provided t#at t#e!
s#a&& #ave comp&ied wit# t#e rigorous standard o% e3traordinar! di&igence'
[12], also [171]
:lanters :ro+ucts vs. C5 (GR 1"12"3! 12 Septe#$er 1%%3)
First Division, 1e&&osi&&o (J): 8 concur, 1 on &eave, 1 took no part
&acts' P&anters Products, ,nc' (PP,), purc#ased %rom Mitsuis#i ,nternationa& $orporation o% Eew Oork, D"7,
.,38.'02>. metric tons (M-T) o% Drea 5>I %erti&i*er w#ic# t#e &atter s#ipped in u&k on 1> June 1.05 aoard
t#e cargo vesse& M-V ;"un P&um< owned ! P!osei Pisen Paus#iki Pais#a (PPPP) %rom Penai, 7&aska,
D"7, to Poro Point, "an Fernando, +a Dnion, P#i&ippines, as evidenced ! 1i&& o% +ading PP=1 signed ! t#e
master o% t#e vesse& and issued on t#e date o% departure' (n 10 Ma! 1.05, or prior to its vo!age, a time
c#arter=part! on t#e vesse& M-V ;"un P&um< pursuant to t#e Dni%orm 6enera& $#arter was entered into
etween Mitsuis#i as s#ipper-c#arterer and PPPP as s#ipowner, in Tok!o, Japan' :iders to t#e a%oresaid
c#arter=part! starting %rom paragrap# 1> to 52 were attac#ed to t#e pre=printed agreement' 7ddenda 1, 8, 3
and 5 to t#e c#arter=part! were a&so suse9uent&! entered into on t#e 1/t#, 82t#, 81st and 80t# o% Ma! 1.05,
respective&!' 1e%ore &oading t#e %erti&i*er aoard t#e vesse&, 5 o% #er #o&ds were a&& presuma&! inspected !
t#e c#arterer?s representative and %ound %it to take a &oad o% urea in u&k pursuant to paragrap# 1> o% t#e
c#arter=part!' 7%ter t#e Drea %erti&i*er was &oaded in u&k ! stevedores #ired ! and under t#e supervision o%
t#e s#ipper, t#e stee& #atc#es were c&osed wit# #eav! iron &ids, covered wit# 3 &a!ers o% tarpau&in, t#en tied
wit# stee& onds' T#e #atc#es remained c&osed and tig#t&! sea&ed t#roug#out t#e entire vo!age' Dpon arriva&
o% t#e vesse& at #er port o% ca&& on 3 Ju&! 1.05, t#e stee& pontoon #atc#es were opened wit# t#e use o% t#e
vesse&?s oom' PP, un&oaded t#e cargo %rom t#e #o&ds into its stee&=odied dump trucks w#ic# were parked
a&ongside t#e ert#, using meta& scoops attac#ed to t#e s#ip, pursuant to t#e terms and conditions o% t#e
c#arter=part! (w#ic# provided %or an F,(" c&ause)' T#e #atc#es remained open t#roug#out t#e duration o% t#e
disc#arge' Bac# time a dump truck was %i&&ed up, its &oad o% Drea was covered wit# tarpau&in e%ore it was
transported to t#e consignee?s ware#ouse &ocated some 42 meters %rom t#e w#ar%' Midwa! to t#e ware#ouse,
t#e trucks were made to pass t#roug# a weig#ing sca&e w#ere t#e! were individua&&! weig#ed %or t#e purpose
o% ascertaining t#e net weig#t o% t#e cargo' T#e port area was wind!, certain portions o% t#e route to t#e
ware#ouse were sand! and t#e weat#er was varia&e, raining occasiona&&! w#i&e t#e disc#arge was in
progress' PP,?s ware#ouse was made o% corrugated ga&vani*ed iron (6,) s#eets, wit# an opening at t#e %ront
w#ere t#e dump trucks entered and un&oaded t#e %erti&i*er on t#e ware#ouse %&oor' Tarpau&ins and 6, s#eets
were p&aced in=etween and a&ongside t#e trucks to contain spi&&ages o% t#e %erti&i*er' ,t took 11 da!s %or PP,
to un&oad t#e cargo, %rom 4 Ju&! to 1/ Ju&! 1.05 (e3cept Ju&! 18t#, 15t# and 1/t#)' 7 private marine and
cargo surve!or, $argo "uperintendents $ompan! ,nc' ($"$,), was #ired ! PP, to determine t#e ;outturn< o%
t#e cargo s#ipped, ! taking dra%t readings o% t#e vesse& prior to and a%ter disc#arge' T#e surve! report
sumitted ! $"$, to t#e consignee (PP,) dated 1. Ju&! 1.05 revea&ed a s#ortage in t#e cargo o% 12>'08> M-T
and t#at a portion o% t#e Drea %erti&i*er appro3imating 1/ M-T was contaminated wit# dirt' T#e same resu&ts
were contained in a $erti%icate o% "#ortage-Damaged $argo dated 1/ Ju&! 1.05 prepared ! PP, w#ic#
s#owed t#at t#e cargo de&ivered was indeed s#ort o% .5'/3. M-T and aout 83 M-T were rendered un%it %or
commerce, #aving een po&&uted wit# sand, rust and dirt' $onse9uent&!, PP, sent a c&aim &etter dated 1/
Decemer 1.05 to "oriamont "teams#ip 7gencies (""7), t#e resident agent o% t#e carrier, PPPP, %or
P854,.>.'31 representing t#e cost o% t#e a&&eged s#ortage in t#e goods s#ipped and t#e diminution in va&ue o%
t#at portion said to #ave een contaminated wit# dirt' ""7 e3p&ained t#at t#e! were not a&e to respond to t#e
consignee?s c&aim %or pa!ment ecause, according to t#em, w#at t#e! received was Aust a re9uest %or
s#ort&anded certi%icate and not a %orma& c&aim, and t#at t#is ;re9uest< was denied ! t#em ecause t#e! ;#ad
not#ing to do wit# t#e disc#arge o% t#e s#ipment'<
(n 1/ Ju&! 1.04, PP, %i&ed an action %or damages wit# t#e $ourt o% First ,nstance o% Mani&a' T#e court a 9uo
#owever sustained t#e c&aim o% PP, against t#e carrier %or t#e va&ue o% t#e goods &ost or damaged'
(n appea&, t#e $ourt o% 7ppea&s reversed t#e &ower court and aso&ved t#e carrier %rom &iai&it! %or t#e va&ue
o% t#e cargo t#at was &ost or damaged' PP, appea&ed ! wa! o% petition %or review'
T#e "upreme $ourt dismissed t#e petitionC a%%irmed t#e assai&ed decision o% t#e $ourt o% 7ppea&s, w#ic#
reversed t#e tria& courtC and conse9uent&!, dismissed $ivi& $ase ./>83 o% t#e t#en $F,, now :T$, o% Mani&aC
wit# costs against PP,'
1. C)arter party +e,ine+
7 ;c#arter=part!< is de%ined as a contract ! w#ic# an entire s#ip, or some principa& part t#ereo%, is &et
! t#e owner to anot#er person %or a speci%ied time or useC a contract o% a%%reig#tment ! w#ic# t#e owner o%
a s#ip or ot#er vesse& &ets t#e w#o&e or a part o% #er to a merc#ant or ot#er person %or t#e conve!ance o%
goods, on a particu&ar vo!age, in consideration o% t#e pa!ment o% %reig#t'
-. (ypes o, c)arter parties
$#arter parties are o% two t!pes: (a) contract o% a%%reig#tment w#ic# invo&ves t#e use o% s#ipping
space on vesse&s &eased ! t#e owner in part or as a w#o&e, to carr! goods %or ot#ersC and, () c#arter !
demise or areoat c#arter, ! t#e terms o% w#ic# t#e w#o&e vesse& is &et to t#e c#arterer wit# a trans%er to #im
o% its entire command and possession and conse9uent contro& over its navigation, inc&uding t#e master and t#e
crew, w#o are #is servants'
3. 0in+s o, contract o, a,,rei*)t#ent
$ontract o% a%%reig#tment ma! eit#er e time c#arter, w#erein t#e vesse& is &eased to t#e c#arterer %or a
%i3ed period o% time, or vo!age c#arter, w#erein t#e s#ip is &eased %or a sing&e vo!age' ,n ot# cases, t#e
c#arter=part! provides %or t#e #ire o% t#e vesse& on&!, eit#er %or a determinate period o% time or %or a sing&e or
consecutive vo!age, t#e s#ipowner to supp&! t#e s#ip?s stores, pa! %or t#e wages o% t#e master and t#e crew,
and de%ra! t#e e3penses %or t#e maintenance o% t#e s#ip'
/. Co##on or pu$lic carrier +e,ine+6 Scope o, +e,inition
T#e term ;common or pu&ic carrier< is de%ined in 7rtic&e 1038 o% t#e $ivi& $ode' T#e de%inition
e3tends to carriers eit#er ! &and, air or water w#ic# #o&d t#emse&ves out as read! to engage in carr!ing goods
or transporting passengers or ot# %or compensation as a pu&ic emp&o!ment and not as a casua& occupation'
2. <istinction $et.een co##on or pu$lic carrier! an+ private or special carrier
T#e distinction etween a ;common or pu&ic carrier< and a ;private or specia& carrier< &ies in t#e
c#aracter o% t#e usiness, suc# t#at i% t#e undertaking is a sing&e transaction, not a part o% t#e genera& usiness
or occupation, a&t#oug# invo&ving t#e carriage o% goods %or a %ee, t#e person or corporation o%%ering suc#
service is a private carrier'
. Dxtraor+inary +ili*ence re9uire+ o, co##on carriers (5rticle 1333)6 8r+inary +ili*ence
re9uire+ o, private carriers
7rtic&e 1033 o% t#e Eew $ivi& $ode mandates t#at common carriers, ! reason o% t#e nature o% t#eir
usiness, s#ou&d oserve e3traordinar! di&igence in t#e vigi&ance over t#e goods t#e! carr!' ,n t#e case o%
private carriers, #owever, t#e e3ercise o% ordinar! di&igence in t#e carriage o% goods wi&& su%%ice'
3. Co##on carriers presu#e+ ne*li*ent in case o, loss! etc. o, *oo+s6 7o presu#ption in private
carriers
,n case o% &oss, destruction or deterioration o% t#e goods, common carriers are presumed to #ave een
at %au&t or to #ave acted neg&igent&!, and t#e urden o% proving ot#erwise rests on t#em' (n t#e contrar!, no
(ransportation La.! -""/ ( /" )
suc# presumption app&ies to private carriers, %or w#osoever a&&eges damage to or deterioration o% t#e goods
carried #as t#e onus o% proving t#at t#e cause was t#e neg&igence o% t#e carrier'
4. 0yosei 0isen 0a$us)iki 0ais)a a co##on carrier! re#aine+ as so in c)arter party
P!osei Pisen Paus#iki Pais#a, in t#e ordinar! course o% usiness, operates as a common carrier,
transporting goods indiscriminate&! %or a&& persons' F#en PP, c#artered t#e vesse& M-V ;"un P&um<, t#e s#ip
captain, its o%%icers and comp&iment were under t#e emp&o! o% t#e s#ipowner and t#ere%ore continued to e
under its direct supervision and contro&' $onsidering t#at t#e steering o% t#e s#ip, t#e manning o% t#e decks,
t#e determination o% t#e course o% t#e vo!age and ot#er tec#nica& incidents o% maritime navigation were a&&
consigned to t#e o%%icers and crew w#o were screened, c#osen and #ired ! t#e s#ipowner, t#e c#arterer is a
stranger to t#e crew and to t#e s#ip' T#us, a pu&ic carrier s#a&& remain as suc#, notwit#standing t#e c#arter o%
t#e w#o&e or portion o% a vesse& ! one or more persons, provided t#e c#arter is &imited to t#e s#ip on&!, as in
t#e case o% a time=c#arter or vo!age=c#arter' ,nduita&!, a s#ipowner in a time or vo!age c#arter retains
possession and contro& o% t#e s#ip, a&t#oug# #er #o&ds ma!, %or t#e moment, e t#e propert! o% t#e c#arterer'
%. E)en c)arter party converts co##on carrier to private carrier
,t is on&! w#en t#e c#arter inc&udes ot# t#e vesse& and its crew, as in a areoat or demise t#at a
common carrier ecomes private, at &east inso%ar as t#e particu&ar vo!age covering t#e c#arter=part! is
concerned'
1". Reliance on case o, Ho#e ;nsurance vs. 5#erican Stea#s)ip #isplace+
T#e carrier?s #eav! re&iance on t#e case o% @ome ,nsurance $o' v' 7merican "teams#ip 7gencies is
misp&aced %or t#e reason t#at t#e meat o% t#e controvers! t#erein was t#e va&idit! o% a stipu&ation in t#e
c#arter=part! e3empting t#e s#ipowner %rom &iai&it! %or &oss due to t#e neg&igence o% its agent, and not t#e
e%%ects o% a specia& c#arter on common carriers'
11. 5#erican rule as to s)ipper carryin* special car*o not applica$le in t)e :)ilippines6 Stricter
interpretation o, a+#iralty la.s
T#e ru&e in t#e Dnited "tates t#at a s#ip c#artered ! a sing&e s#ipper to carr! specia& cargo is not a
common carrier, does not %ind app&ication in P#i&ippine Aurisdiction, %or t#e $ourt #as oserved t#at t#e
growing concern %or sa%et! in t#e transportation o% passengers and-or carriage o% goods ! sea re9uires a more
e3acting interpretation o% admira&t! &aws, more particu&ar&!, t#e ru&es governing common carriers'
1-. 8$servations o, Raoul Colinvaux! t)e learne+ $arrister>at>la.
;7s a matter o% princip&e, it is di%%icu&t to %ind a va&id distinction etween cases in w#ic# a s#ip is
used to conve! t#e goods o% one and o% severa& persons' F#ere t#e s#ip #erse&% is &et to a c#arterer, so t#at #e
takes over t#e c#arge and contro& o% #er, t#e case is di%%erentC t#e s#ipowner is not t#en a carrier' 1ut w#ere
#er services on&! are &et, t#e same grounds %or imposing a strict responsii&it! e3ist, w#et#er #e is emp&o!ed
! one or man!' T#e master and t#e crew are in eac# case #is servants, t#e %reig#ter in eac# case is usua&&!
wit#out an! representative on oard t#e s#ipC t#e same opportunities %or %raud or co&&ussion occurC and t#e
same di%%icu&t! in discovering t#e trut# as to w#at #as taken p&ace arises ' ' '<
13. Bur+en o, proo, in an action ,or recovery o, +a#a*es a*ainst a co##on carrier
,n an action %or recover! o% damages against a common carrier on t#e goods s#ipped, t#e s#ipper or
consignee s#ou&d %irst prove t#e %act o% s#ipment and its conse9uent &oss or damage w#i&e t#e same was in t#e
possession, actua& or constructive, o% t#e carrier' T#erea%ter, t#e urden o% proo% s#i%ts to respondent to prove
t#at #e #as e3ercised e3traordinar! di&igence re9uired ! &aw or t#at t#e &oss, damage or deterioration o% t#e
cargo was due to %ortuitous event, or some ot#er circumstances inconsistent wit# its &iai&it!'
1/. Carrier )as su,,iciently overco#e! $y clear an+ convincin* proo,! t)e pri#a ,acie presu#ption
o, ne*li*ence
(ransportation La.! -""/ ( /1 )
(1) T#e master o% t#e carr!ing vesse&, $aptain +ee Tae 1o, in #is deposition taken on 1. 7pri& 1.00
e%ore t#e P#i&ippine $onsu& and +ega& 7ttac#e in t#e P#i&ippine Bmass! in Tok!o, Japan, testi%ied t#at
e%ore t#e %erti&i*er was &oaded, t#e 5 #atc#es o% t#e vesse& were c&eaned, dried and %umigated' 7%ter
comp&eting t#e &oading o% t#e cargo in u&k in t#e s#ip?s #o&ds, t#e stee& pontoon #atc#es were c&osed and
sea&ed wit# iron &ids, t#en covered wit# 3 &a!ers o% servicea&e tarpau&ins w#ic# were tied wit# stee& onds'
T#e #atc#es remained c&ose and tig#t&! sea&ed w#i&e t#e s#ip was in transit as t#e weig#t o% t#e stee& covers
made it impossi&e %or a person to open wit#out t#e use o% t#e s#ip?s oom' (8) ,t was a&so s#own during t#e
tria& t#at t#e #u&& o% t#e vesse& was in good condition, %orec&osing t#e possii&it! o% spi&&age o% t#e cargo into
t#e sea or seepage o% water inside t#e #u&& o% t#e vesse&' F#en M-V ;"un P&um< docked at its ert#ing p&ace,
representatives o% t#e consignee oarded, and in t#e presence o% a representative o% t#e s#ipowner, t#e
%oreman, t#e stevedores, and a cargo surve!or representing $"$,, opened t#e #atc#es and inspected t#e
condition o% t#e #u&& o% t#e vesse&' T#e stevedores un&oaded t#e cargo under t#e watc#%u& e!es o% t#e
s#ipmates w#o were overseeing t#e w#o&e operation on rotation asis' Veri&!, t#e presumption o% neg&igence
on t#e part o% respondent carrier #as een e%%icacious&! overcome ! t#e s#owing o% e3traordinar! *ea& and
assiduit! e3ercised ! t#e carrier in t#e care o% t#e cargo'
12. :erio+ .)ic) carrier .as to o$serve +e*ree o, +ili*ence6 Li#itation clause o, &;8S #eanin*
T#e period during w#ic# t#e carrier was to oserve t#e degree o% di&igence re9uired o% it as a pu&ic
carrier egan %rom t#e time t#e cargo was unconditiona&&! p&aced in its c#arge a%ter t#e vesse&?s #o&ds were
du&! inspected and passed scrutin! ! t#e s#ipper, up to and unti& t#e vesse& reac#ed its destination and its #u&&
was re=e3amined ! t#e consignee, ut prior to un&oading' T#is is c&ear %rom t#e &imitation c&ause agreed upon
! t#e parties in t#e 7ddendum to t#e standard ;6BE$(E< time c#arter=part! w#ic# provided %or an F','('"',
meaning, t#at t#e &oading, stowing, trimming and disc#arge o% t#e cargo was to e done ! t#e c#arterer, %ree
%rom a&& risk and e3pense to t#e carrier' Moreover, a s#ipowner is &ia&e %or damage to t#e cargo resu&ting
%rom improper stowage on&! w#en t#e stowing is done ! stevedores emp&o!ed ! #im, and t#ere%ore under
#is contro& and supervision, not w#en t#e same is done ! t#e consignee or stevedores under t#e emp&o! o%
t#e &atter'
12. E)en co##on carriers not lia$le ,or loss! +estruction or +eterioration o, *oo+s
7rtic&e 1035 o% t#e Eew $ivi& $ode provides t#at common carriers are not responsi&e %or t#e &oss,
destruction or deterioration o% t#e goods i% caused ! t#e c#aracter o% t#e goods or de%ects in t#e packaging or
in t#e containers' T#e $ode o% $ommerce a&so provides t#at a&& &osses and deteriorations w#ic# t#e goods ma!
su%%er during t#e transportation ! reason o% %ortuitous event, %orce maAeure, or t#e in#erent de%ect o% t#e
goods, s#a&& e %or t#e account and risk o% t#e s#ipper, and t#at proo% o% t#ese accidents is incument upon t#e
carrier' T#e carrier, nonet#e&ess, s#a&& e &ia&e %or t#e &oss and damage resu&ting %rom t#e preceding causes i%
it is proved, as against #im, t#at t#e! arose t#roug# #is neg&igence or ! reason o% #is #aving %ai&ed to take t#e
precautions w#ic# usage #as esta&is#ed among care%u& persons'
1. C)aracteristics o, urea
Drea is a c#emica& compound consisting most&! o% ammonia and caron mono3ide compounds w#ic#
are used as %erti&i*er' Drea a&so contains 5>I nitrogen and is #ig#&! so&u&e in water' @owever, during
storage, nitrogen and ammonia do not norma&&! evaporate even on a &ong vo!age, provided t#at t#e
temperature inside t#e #u&& does not e3ceed /2 degrees centigrade'
13. Dxpecte+ risks o, $ulk s)ippin*
(1) ,n un&oading %erti&i*er in u&k wit# t#e use o% a c&amped s#e&&, &osses due to spi&&age during suc#
operation amounting to one percent (1I) against t#e i&& o% &ading is deemed ;norma&< or ;to&era&e'< T#e
primar! cause o% t#ese spi&&ages is t#e c&amped s#e&& w#ic# does not sea& ver! tig#t&!' 7&so, t#e wind tends to
&ow awa! some o% t#e materia&s during t#e un&oading process' (8) T#e dissipation o% 9uantities o% %erti&i*er,
or its deterioration in va&ue, is caused eit#er ! an e3treme&! #ig# temperature in its p&ace o% storage, or w#en
it comes in contact wit# water' F#en Drea is drenc#ed in water, eit#er %res# or sa&ine, some o% its partic&es
(ransportation La.! -""/ ( /- )
disso&ve' 1ut t#e sa&vaged portion w#ic# is in &i9uid %orm sti&& remains potent and usa&e a&t#oug# no &onger
sa&ea&e in its origina& market va&ue' (3) T#e proai&it! o% t#e cargo eing damaged or getting mi3ed or
contaminated wit# %oreign partic&es was made greater ! t#e %act t#at t#e %erti&i*er was transported in ;u&k,<
t#ere! e3posing it to t#e inimica& e%%ects o% t#e e&ements and t#e grim! condition o% t#e various pieces o%
e9uipment used in transporting and #au&ing it'
14. Hull o, vessel in *oo+ con+ition6 ;#pro$a$le t)at sea .ater seep in vessel1s )ol+
,t was #ig#&! improa&e %or sea water to seep into t#e vesse&?s #o&ds during t#e vo!age since t#e #u&&
o% t#e vesse& was in good condition and #er #atc#es were tig#t&! c&osed and %irm&! sea&ed, making t#e M-V
;"un P&um< in a&& respects seawort#! to carr! t#e cargo s#e was c#artered %or' ,% t#ere was &oss or
contamination o% t#e cargo, it was more &ike&! to #ave occurred w#i&e t#e same was eing transported %rom
t#e s#ip to t#e dump trucks and %ina&&! to t#e consignee?s ware#ouse' T#is ma! e g&eaned %rom t#e testimon!
o% t#e marine and cargo surve!or o% $"$, w#o supervised t#e un&oading' @e e3p&ained t#at t#e 1/ M-T o%
a&&eged ;ad order cargo< as contained in t#eir report to PP, was Aust an appro3imation or estimate made !
t#em a%ter t#e %erti&i*er was disc#arged %rom t#e vesse& and segregated %rom t#e rest o% t#e cargo'
1%. Garia$le .eat)er con+ition a risk o, loss or +a#a*e .)ic) o.ner or s)ipper o, *oo+s )as to ,ace
@erein, it was in t#e mont# o% Ju&! w#en t#e vesse& arrived port and un&oaded #er cargo' ,t rained
%rom time to time at t#e #aror area w#i&e t#e cargo was eing disc#arged according to t#e supp&! o%%icer o%
PP,, w#o a&so testi%ied t#at it was wind! at t#e water%ront and a&ong t#e s#ore&ine w#ere t#e dump trucks
passed enroute to t#e consignee?s ware#ouse' 1u&k s#ipment o% #ig#&! so&u&e goods &ike %erti&i*er carries
wit# it t#e risk o% &oss or damageC more so, wit# a varia&e weat#er condition preva&ent during its un&oading'
T#is is a risk t#e s#ipper or t#e owner o% t#e goods #as to %ace'
[1]
Bascos vs. C5 (GR 1"1"4%! 3 5pril 1%%3)
"econd Division, $ampos Jr' (J): 5 concur
&acts' :odo&%o 7' $ipriano representing $ipriano Trading Bnterprise ($,PT:7DB) entered into a #au&ing
contract wit# Ji%air "#ipping 7genc! $orp' w#ere! t#e %ormer ound itse&% to #au& t#e &atter?s 8,222 m-tons
o% so!a ean mea& %rom Maga&&anes Drive, De& Pan, Mani&a to t#e ware#ouse o% Pure%oods $orporation in
$a&ama, +aguna' To carr! out its o&igation, $,PT:7DB, t#roug# :odo&%o $ipriano, sucontracted wit#
Bstre&&ita 1ascos to transport and to de&iver 522 sacks o% so!a ean mea& wort# P14>,525'22 %rom t#e Mani&a
Port 7rea to $a&ama, +aguna at t#e rate o% P42'22 per metric ton' 1ascos %ai&ed to de&iver t#e said cargo' 7s
a conse9uence o% t#at %ai&ure, $ipriano paid Ji%air "#ipping 7genc! t#e amount o% t#e &ost goods in
accordance wit# t#e contract' $ipriano demanded reimursement %rom 1ascos ut t#e &atter re%used to pa!'
Bventua&&!, $ipriano %i&ed a comp&aint %or a sum o% mone! and damages wit# writ o% pre&iminar! attac#ment
%or reac# o% a contract o% carriage' T#e tria& court granted t#e writ o% pre&iminar! attac#ment on 10 Feruar!
1./0' 7%ter tria&, t#e tria& court rendered a decision, ordering 1ascos to pa! $ipriano (1) t#e amount o%
P14>,525'22 %or actua& damages wit# &ega& interest o% 18I per cent per annum to e counted %rom 5
Decemer 1./> unti& %u&&! paidC (8) t#e amount o% P4,222'22 as and %or attorne!?s %eesC and (3) t#e costs o%
t#e suit' T#e court %urt#er denied t#e ;Drgent Motion To Disso&ve-+i%t pre&iminar! 7ttac#ment< dated 12
Marc# 1./0 %i&ed ! 1ascos %or eing moot and academic'
1ascos appea&ed to t#e $ourt o% 7ppea&s ($7=6: $V 8481>) ut t#e appe&&ate court a%%irmed t#e tria& court?s
Audgment' @ence, t#e petition %or review on certiorari'
T#e "upreme $ourt dismissed t#e petition and a%%irmed t#e decision o% t#e $ourt o% 7ppea&s'
1. 5rticle 133- 7CC +e,ines co##on carrier
7rtic&e 1038 o% t#e $ivi& $ode de%ines a common carrier as ;(a) person, corporation or %irm, or
association engaged in t#e usiness o% carr!ing or transporting passengers or goods or ot#, ! &and, water or
-. (est to +eter#ine co##on carrier
T#e test to determine a common carrier is ;w#et#er t#e given undertaking is a part o% t#e usiness
engaged in ! t#e carrier w#ic# #e #as #e&d out to t#e genera& pu&ic as #is occupation rat#er t#an t#e 9uantit!
or e3tent o% t#e usiness transacted'<
3. Bu+icial a+#issions are conclusive
Judicia& admissions are conc&usive and no evidence is re9uired to prove t#e same' @erein, 1ascos
#erse&% #as made t#e admission t#at s#e was in t#e trucking usiness, o%%ering #er trucks to t#ose wit# cargo
to move'
/. 7o +istinctions in 5rticle 133- as to co##on carriers6 <e GuJ#an vs. C5
,n re%erring to 7rtic&e 1038 o% t#e $ivi& $ode, it #e&d in De 6u*man vs' $ourt o% 7ppea&s t#at ;T#e
aove artic&e makes no distinction etween one w#ose principa& usiness activit! is t#e carr!ing o% persons or
goods or ot#, and one w#o does suc# carr!ing on&! as an anci&&ar! activit! (in &oca& idiom, as a ;side&ine<)'
7rtic&e 1038 a&so care%u&&! avoids making an! distinction etween a person or enterprise o%%ering
transportation service on a regu&ar or sc#edu&ed asis and one o%%ering suc# service on an occasiona&, episodic
or unsc#edu&ed asis' Eeit#er does 7rtic&e 1038 distinguis# etween a carrier o%%ering its services to t#e
;genera& pu&ic,< i'e', t#e genera& communit! or popu&ation, and one w#o o%%ers services or so&icits usiness
on&! %rom a narrow segment o% t#e genera& popu&ation' Fe t#ink t#at 7rtic&e 1038 de&ierate&! re%rained %rom
making suc# distinctions'<
2. &actual conclusions o, t)e appellate court conclusive upon t)e Supre#e Court6 Court1s role in a
petition ,or revie. on certiorari
:egarding t#e a%%idavits (&ease agreements) presented ! 1ascos to t#e court, ot# t#e tria& and
appe&&ate courts #ave dismissed t#em as se&%=serving' T#e "upreme $ourt is ound ! t#e appe&&ate court?s
%actua& conc&usions' ,n a petition %or review on certiorari, t#e court is not to determine t#e proative va&ue o%
evidence ut to reso&ve 9uestions o% &aw'
. Contracts are un+erstoo+ as .)at t)e la. +e,ines t)e# to $e an+ not .)at parties call t)e#6
Bur+en o, proo,
6ranting t#at t#e said evidence were not se&%=serving, t#e same were not su%%icient to prove t#at t#e
contract was one o% &ease' ,t must e understood t#at a contract is w#at t#e &aw de%ines it to e and not w#at it
is ca&&ed ! t#e contracting parties' Furt#ermore, 1ascos presented no ot#er proo% o% t#e e3istence o% t#e
contract o% &ease' @e w#o a&&eges a %act #as t#e urden o% proving it'
3. Dxtraor+inary +ili*ence6 :resu#ption o, ne*li*ence6 Dxceptions in 5rticle 133/6 Bur+en o,
:roo,
$ommon carriers are o&iged to oserve e3traordinar! di&igence in t#e vigi&ance over t#e goods
transported ! t#em' 7ccording&!, t#e! are presumed to #ave een at %au&t or to #ave acted neg&igent&! i% t#e
goods are &ost, destro!ed or deteriorated' T#ere are ver! %ew instances w#en t#e presumption o% neg&igence
does not attac# and t#ese instances are enumerated in 7rtic&e 1035' ,n t#ose cases w#ere t#e presumption is
app&ied, t#e common carrier must prove t#at it e3ercised e3traordinar! di&igence in order to overcome t#e
presumption'
4. Hi?ackin* not inclu+e+ in 5rticle 133/6 5rticle 13/2 7CC! Rulin* in <e GuJ#an vs. C5
(ransportation La.! -""/ ( // )
,n De 6u*man vs' $ourt o% 7ppea&s, t#e $ourt #e&d t#at #iAacking, not eing inc&uded in t#e
provisions o% 7rtic&e 1035, must e dea&t wit# under t#e provisions o% 7rtic&e 1034 and t#us, t#e common
carrier is presumed to #ave een at %au&t or neg&igent' To e3cu&pate t#e carrier %rom &iai&it! arising %rom
#iAacking, #e must prove t#at t#e roers or t#e #iAackers acted wit# grave or irresisti&e t#reat, vio&ence, or
%orce' T#is is in accordance wit# 7rtic&e 1054 o% t#e $ivi& $ode'
%. 5rticle 13/2 () 7CC
7rtic&e 1054 o% t#e $ivi& $ode provides t#at ;7n! o% t#e %o&&owing or simi&ar stipu&ations s#a&& e
considered unreasona&e, unAust and contrar! to pu&ic po&ic!C 333 (>) T#at t#e common carrier?s &iai&it! %or
acts committed ! t#ieves, or o% roers w#o do not act wit# grave or irresisti&e t#reat, vio&ences or %orce, is
dispensed wit# or diminis#ed'<
1". E)en ar#e+ ro$$ery a ,orce #a?eure6 <e GuJ#an vs. C5
;Dnder 7rtic&e 1054 (>) aove, a common carrier is #e&d responsi&e H and wi&& not e a&&owed to
divest or to diminis# suc# responsii&it! H even %or acts o% strangers &ike t#ieves or roers e3cept w#ere
suc# t#ieves or roers in %act acted wit# grave or irresisti&e t#reat, vio&ence or %orce' Fe e&ieve and so #o&d
t#at t#e &imits o% t#e dut! o% e3traordinar! di&igence in t#e vigi&ance over t#e goods carried are reac#ed w#ere
t#e goods are &ost as a resu&t o% a roer! w#ic# is attended ! ;grave or irresisti&e t#reat, vio&ence or %orce'<
11. Grave an+ irresisti$le ,orce not s)o.n
To esta&is# grave and irresisti&e %orce, 1ascos presented #er accusator! a%%idavit, Jesus 1ascos?
a%%idavit, and Juanito Morden?s ;"a&a!sa!<' @owever, ot# t#e tria& court and t#e $ourt o% 7ppea&s #ave
conc&uded t#at t#ese a%%idavits were not enoug# to overcome t#e presumption' (1) 1ascos?s a%%idavit aout t#e
#iAacking was ased on w#at #ad een to&d #er ! Juanito Morden' ,t was not a %irst=#and account' F#i&e it
#ad een admitted in court %or &ack o% oAection on t#e part o% $ipriano, t#e &ower court #ad discretion in
assigning weig#t to suc# evidence' (8) T#e a%%idavit o% Jesus 1ascos did not dwe&& on #ow t#e #iAacking took
p&ace' (3) F#i&e t#e a%%idavit o% Juanito Morden, t#e truck #e&per in t#e #iAacked truck, was presented as
evidence in court, #e #imse&% was a witness as cou&d e g&eaned %rom t#e contents o% t#e petition'
1-. 5,,i+avits not consi+ere+ $est evi+ence i, a,,iants are availa$le as .itnesses
7%%idavits are not considered t#e est evidence i% t#e a%%iants are avai&a&e as witnesses' T#e
suse9uent %i&ing o% t#e in%ormation %or carnapping and roer! against t#e accused named in said a%%idavits
did not necessari&! mean t#at t#e contents o% t#e a%%idavits were true ecause t#e! were !et to e determined
in t#e tria& o% t#e crimina& cases'
[13], also [117]
=en+oJa vs. :5L (GR L>334! -% &e$ruary 1%2-)
Bn 1anc, Montema!or (J): 0 concur
&acts' ,n 1.5/, Jose Mendo*a was t#e owner o% t#e $ita T#eater &ocated in t#e $it! o% Eaga, $amarines "ur,
w#ere #e used to e3#iit movie pictures ooked %rom movie producers or %i&m owners in Mani&a' T#e %iesta or
town #o&ida! o% t#e $it! o% Eaga, #e&d on "eptemer 10 and 1/, !ear&!, was usua&&! attended ! a great man!
peop&e, most&! %rom t#e 1ico& region, especia&&! since t#e Patron "aint Virgin o% Pe)a Francia was e&ieved
! man! to e miracu&ous' 7s a good usinessman, #e took advantage o% t#ese circumstances and decided to
e3#iit a %i&m w#ic# wou&d %it t#e occasion and #ave a specia& attraction and signi%icance to t#e peop&e
attending said %iesta' 7 mont# e%ore t#e #o&ida!, t#at is to sa!, 7ugust 1.5/, #e contracted wit# t#e +VE
pictures ,nc', a movie producer in Mani&a %or #im to s#ow during t#e town %iesta t#e Taga&og %i&m entit&ed
;@ima&a ng 1ir#en< or Mirac&e o% t#e Virgin' @e made e3tensive preparationsC #e #ad 8,222 posters printed
and &ater distriuted not on&! in t#e $it! o% Eaga ut a&so in t#e neig#oring towns' @e a&so advertised in a
week&! o% genera& circu&ation in t#e province' T#e posters and advertisement stated t#at t#e %i&m wou&d e
s#own in t#e $ita T#eater on t#e 10t# and 1/t# o% "eptemer, corresponding to t#e eve and da! o% t#e %iesta
itse&%' ,n pursuance o% t#e agreement etween t#e +VE Pictures ,nc' and Mendo*a, t#e %ormer on "eptemer
10t#, 1.5/, de&ivered to t#e P#i&ippine 7ir&ines (P7+) w#ose p&anes carried passengers and cargo and made
regu&ar trips %rom Mani&a to t#e Pi&i 7ir Port near Eaga, $amarines "ur, a can containing t#e %i&m ;@ima&a ng
1ir#en< consigned to t#e $ita T#eater' For t#is s#ipment, P7+ issued its 7ir Fa! 1i&& 310133' T#is can o%
%i&ms was &oaded on P7+ %&ig#t 113, t#e p&ane arriving at t#e 7ir Port at Pi&i a &itt&e a%ter 5:22 p'm' o% t#e
same da!, "eptemer 10t#' For reasons not e3p&ained ! P7+, ut w#ic# wou&d appear to e t#e %au&t o% its
emp&o!ees or agents, t#is can o% %i&m was not un&oaded at Pi&i 7ir Port and it was roug#t ack to Mani&a'
Mendo*a w#o #ad comp&eted a&& arrangements %or t#e e3#iition o% t#e %i&m eginning in t#e evening o%
"eptemer 10t#, to e3p&oit t#e presence o% t#e ig crowd t#at came to attend t#e town %iesta, went to t#e 7ir
Port and in9uired %rom P7+?s station master t#ere aout t#e can o% %i&m' "aid station master cou&d not e3p&ain
w#! t#e %i&m was not un&oaded and sent severa& radiograms to #is principa& in Mani&a making in9uiries and
asking t#at t#e %i&m e sent to Eaga immediate&!' 7%ter investigation and searc# in t#e Mani&a o%%ice, t#e %i&m
was %ina&&! &ocated t#e %o&&owing da!, "eptemer 1/t#, and t#en s#ipped to t#e Pi&i 7ir Port on "eptemer
82t#' Mendo*a received it and e3#iited t#e %i&m ut #e #ad missed #is opportunit! to rea&i*e a &arge pro%it as
#e e3pected %or t#e peop&e a%ter t#e %iesta #ad a&read! &e%t %or t#eir towns'
To recoup #is &osses, Mendo*a roug#t t#is action against t#e P7+' 7%ter tria&, t#e &ower court %ound t#at
ecause o% #is %ai&ure to e3#iit t#e %i&m ;@ima&a ng 1ir#en< during t#e town %iesta, Mendo*a su%%ered
damages or rat#er %ai&ed to earn pro%its in t#e amount o% P3,222'22, ut %inding t#e P7+ not &ia&e %or said
damages, dismissed t#e comp&aint'
T#e "upreme $ourt a%%irmed t#e decision appea&ed %romC wit# no pronouncement as to costs'
1. :5L a +e$tor in *oo+ ,ait)
7&t#oug# P7+ was not o&igated to &oad t#e %i&m on an! speci%ied p&ane or on an! particu&ar da!, once
said can o% %i&m was &oaded and s#ipped on one o% its p&anes making t#e trip to $amarines, t#en it assumed t#e
o&igation to un&oad it at its point o% destination and de&iver it to t#e consignee, and its une3p&ained %ai&ure to
comp&! wit# t#is dut! constituted neg&igence' T#e $ourt #owever %ound t#at %raud was not invo&ved and t#at
P7+ was a detor in good %ait#'
-. 5 +e$tor in *oo+ ,ait) is lia$le only ,or ,oreseen losses an+ +a#a*es
7pp&!ing t#e provisions o% 7rt' 1120 o% t#e $ivi& $ode w#ic# provides t#at &osses and damages %or
w#ic# a detor in good %ait# is &ia&e are t#ose %oreseen, or w#ic# mig#t #ave een %oreseen, at t#e time o%
constituting t#e o&igation, and w#ic# are a necessar! conse9uence o% t#e %ai&ure to per%orm it, t#e $ourt #e&d
t#at inasmuc# as t#ese damages su%%ered ! Mendo*a were not %oreseen or cou&d not #ave een %oreseen at
t#e time t#at P7+ accepted t#e can o% %i&m %or s#ipment, %or t#e reason t#at neit#er t#e s#ipper +VE Pictures
,nc' nor t#e consignee Mendo*a #ad ca&&ed its attention to t#e specia& circumstances attending t#e s#ipment
and t#e s#owing o% t#e %i&m during t#e town %iesta o% Eaga, Mendo*a ma! not recover t#e damages soug#t'
("ee "imi&ar case o% Da!wa&t vs' $orporacion de PP 7gustinos :eco&etos, 3. P@,+ 4/0)
3. Contract o, transportation $y air #ay $e re*ar+e+ as co##ercial6 8$vious reason .)y
transport $y air not inclu+e+ in Co+e o, Co##erce
7 contract o% transportation ! air ma! e regarded as commercia&' T#e reason is t#at at &east in t#e
present case t#e transportation compan! (P7+) is a common carrierC esides, air transportation is c&ear&!
simi&ar or ana&ogous to &and and water transportation' T#e ovious reason %or its non=inc&usion in t#e $ode o%
$ommerce was t#at at t#e time o% its promu&gation, transportation ! air on a commercia& asis was not !et
known' ,n t#e Dnited "tates w#ere air transportation #as reac#ed its #ig#est deve&opment, an air&ine compan!
engaged in t#e transportation usiness is regarded as a common carrier'
/. E)en 5ircra,t 8perator is co##on carrier
;T#at aircra%t and t#e industr! o% carriage ! aircra%t are new is no reason w#! one in %act emp&o!ing
aircra%t as common=carrier ve#ic&es s#ou&d not e c&assi%ied as a common carrier and c#arged wit# &iai&it! as
suc#' T#ere can e no dout, under t#e genera& &aw o% common carriers, t#at t#ose air &ines and aircra%t
owners engaged in t#e passenger service on regu&ar sc#edu&es on de%inite routes, w#o so&icit t#e patronage o%
t#e trave&ing pu&ic, advertise sc#edu&es %or routes, times o% &eaving, and rates o% %are, and make t#e usua&
stipu&ation as to aggage, are common carriers ! air' 7 %&!ing service compan! w#ic#, according to its
printed advertising, wi&& take an!one an!w#ere at an! time, t#oug# not operating on regu&ar routes or
sc#edu&es, and asing its c#arges not on t#e numer o% passengers, ut on t#e operating cost o% t#e p&ane per
mi&e, #as een #e&d to e a common carrier' ,t is not necessar!, in order to make one carr!ing passengers !
aircra%t a common carrier o% passengers t#at t#e passengers e carried %rom one point to anot#erC t#e status
and t#e &iai&it! as a common carrier ma! e3ist notwit#standing t#e passenger?s ticket issued ! an airp&ane
carrier o% passengers %or #ire contains a statement t#at it is not a common carrier, etc', or a stipu&ation t#at it is
to e #e&d on&! %or its proven neg&igence' 1ut an airp&ane owner cannot e c&assed as a common carrier o%
passengers un&ess #e undertakes, %or #ire, to carr! a&& persons w#o app&! %or passage indiscriminate&! as &ong
as t#ere is room and no &ega& e3cuse %or re%using' ;
2. Rules an+ principles applie+ to ot)er co##on carrier applica$le to carriers $y aircra,t
T#e princip&es w#ic# govern carriers ! ot#er means, suc# as ! rai&road or motor us, govern
carriers ! aircra%t' T#e ru&es governing t#e usiness o% a common carrier ! airs#ip or %&!ing mac#ine ma! e
readi&! assimi&ated to t#ose app&ied to ot#er common carriers'
. (est to +eter#ine co##on carrier $y air
T#e test o% w#et#er one is a common carrier ! air is w#et#er #e #o&ds out t#at #e wi&& carr! %or #ire,
so &ong as #e #as room, goods o% ever!one ringing goods to #im %or carriage, not w#et#er #e is carr!ing as a
pu&ic emp&o!ment or w#et#er #e carries to a %i3ed p&ace'
3. 5rticle 324 o, t)e Co+e o, Co##erce si#ilar to 5rticle 11"1 o, t)e Civil Co+e! pertainin* to
or+inary +a#a*es or +a#a*es in *eneral
7rt' 34/ o% t#e $ode o% $ommerce provides t#at i% t#ere is no period %i3ed %or t#e de&iver! o% t#e
goods, t#e carrier s#a&& e ound to %orward t#em in t#e %irst s#ipment o% t#e same or simi&ar merc#andise
w#ic# #e ma! make to t#e point o% de&iver!, and t#at upon %ai&ure to do so, t#e damages caused ! t#e de&a!
s#ou&d e su%%ered ! t#e carrier' T#is is a genera& provision %or ordinar! damages and is no di%%erent %rom t#e
provisions o% t#e $ivi& $ode, particu&ar&! 7rt' 1121 t#ereo%, providing %or t#e pa!ment o% damages caused !
t#e neg&igence or de&a! in t#e %u&%i&&ment o% one?s o&igation' T#e pertinent provisions regarding damages
on&! treats o% ordinar! damages or damages in genera&, not specia& damages &ike t#ose su%%ered ! Mendo*a'
%. 8r+er o, applica$le la.s pertainin* to co##ercial transactions
7rtic&e 8 o% t#e $ode o% $ommerce provides t#at commercia& transactions are to e governed ! t#e
provisions o% t#e $ode o% $ommerce, ut in t#e asence o% app&ica&e provisions, t#e! wi&& e governed !
t#e usages o% commerce genera&&! oserved in eac# p&aceC and in de%au&t o% ot#, ! t#ose o% t#e $ivi& +aw' ,n
t#e present case, assuming t#at t#e present case invo&ved a commercia& transaction, sti&& inasmuc# as t#e
specia& damages c&aimed %inds no app&ica&e provision in t#e $ode o% $ommerce, neit#er #as it een s#own
t#at t#ere are an! commercia& usages app&ica&e t#ereto, t#en in t#e &ast ana&!sis, t#e ru&es o% t#e civi& &aw
wou&d #ave to come into p&a!'
1". C)ap#an vs. &ar*o si#ilar
,n t#e case o% $#apman vs' Fargo, +':'7' (1.1/ F) p' 125., t#e p&ainti%% in Tro!, Eew Oork, de&ivered
motion picture %i&ms to Fargo, an e3press compan!, consigned and to e de&ivered to #im in Dtica' 7t t#e time
o% s#ipment t#e attention o% t#e e3press compan! was ca&&ed to t#e %act t#at t#e s#ipment invo&ved motion
picture %i&ms to e e3#iited in Dtica, and t#at t#e! s#ou&d e sent to t#eir destination, rus#' T#ere was de&a!
in t#eir de&iver! and it was %ound t#at t#e p&ainti%% ecause o% #is %ai&ure to e3#iit t#e %i&m in Dtica due to t#e
de&a! su%%ered damages or &oss o% pro%its' 1ut t#e #ig#est court in t#e "tate o% Eew Oork re%used to award #im
specia& damages'
11. =eans to #ake co##on carrier lia$le ,or special +a#a*es
1e%ore de%endant cou&d e #e&d to specia& damages, suc# as a&&eged &oss o% pro%its on account o% de&a!
or %ai&ure o% de&iver!, it must #ave appeared t#at #e #ad notice at t#e time o% de&iver! to #im o% t#e particu&ar
circumstances attending t#e s#ipment, and w#ic# proa&! wou&d &ead to suc# specia& &oss i% #e de%au&ted' (r,
as t#e ru&e #as een stated in anot#er %orm, in order to impose on t#e de%au&ting part! %urt#er &iai&it! t#an %or
damages natura&&! and direct&!, i'e', in t#e ordinar! course o% t#ings, arising %rom a reac# o% contract, suc#
unusua& or e3traordinar! damages must #ave een roug#t wit#in t#e contemp&ation o% t#e parties as t#e
proa&e resu&t o% a reac# at t#e time o% or prior to contracting' 6enera&&!, notice t#en o% an! specia&
circumstances w#ic# wi&& s#ow t#at t#e damages to e anticipated %rom a reac# wou&d e en#anced #as een
#e&d su%%icient %or t#is e%%ect'<
1-. :ro#pt +elivery not re9uire+ o, co##on carriers! unless t)ey previously assu#e t)e o$li*ation
$ommon carriers are not o&igated ! &aw to carr! and to de&iver merc#andise, and persons are not
vested wit# t#e rig#t to prompt de&iver!, un&ess suc# common carriers previous&! assume t#e o&igation' "aid
rig#ts and o&igations are created ! a speci%ic contract entered into ! t#e parties'
13. =en+oJa a party to t)e contract o, transportation
+VE Pictures ,nc' and Jose Mendo*a on one side, and P7+ on t#e ot#er, entered into a contract o%
transportation'
a' (ne interpretation o% said %inding is t#at t#e +VE Pictures ,nc' t#roug# previous agreement wit#
Mendo*a acted as t#e &atter?s agent' F#en #e negotiated wit# t#e +VE Pictures ,nc' to rent t#e %i&m
;@ima&a ng 1ir#en< and s#ow it during t#e Eaga town %iesta, #e most proa&! aut#ori*ed and
enAoined t#e Picture $ompan! to s#ip t#e %i&m %or #im on t#e P7+ on "eptemer 10t#'
' 7not#er interpretation is t#at even i% t#e +VE Pictures ,nc' as consignor o% its own initiative, and
acting independent&! o% Mendo*a %or t#e time eing, made Mendo*a as consignee, a stranger to t#e
contract i% t#at is possi&e, nevert#e&ess w#en #e, Mendo*a, appeared at t#e Pi&i 7ir Port armed wit#
t#e cop! o% t#e 7ir Fa! 1i&& demanding t#e de&iver! o% t#e s#ipment to #im, #e t#ere! made #imse&%
a part! to t#e contract o% transportation'
1/. =ala*arri*a in )is $ook Co+i*o +e Co#ercio Co#enta+o! Gol. ;! p. /""
(n t#e possii&it! o% a con%&ict etween t#e order o% t#e s#ipper on t#e one #and and t#e order o% t#e
consignee on t#e ot#er, as w#en t#e s#ipper orders t#e s#ipping compan! to return or retain t#e goods s#ipped
w#i&e t#e consignee demands t#eir de&iver!, t#e rig#t o% t#e s#ipper to countermand t#e s#ipment terminates
w#en t#e consignee or &egitimate #o&der o% t#e i&& o% &ading appears wit# suc# i&& o% &ading e%ore t#e carrier
and makes #imse&% a part! to t#e contract' Prior to t#at time, #e is stranger to t#e contract'
12. 5 cause o, action $y a party to t)e contract o, transportation #ust $e ,oun+e+ on its $reac)
T#e contract o% carriage etween t#e +VE Pictures ,nc' and P7+ contains t#e stipu&ations o% de&iver!
to Mendo*a as consignee (7rt' 1840, paragrap# 8, o% t#e o&d $ivi& $ode: "#ou&d t#e contract contain an!
stipu&ation in %avor o% a t#ird person, #e ma! demand its %u&%i&&ment, provided #e #as given notice o% #is
acceptance to t#e person ound e%ore t#e stipu&ation #as een revoked)' @is demand %or t#e de&iver! o% t#e
can o% %i&m to #im at t#e Pi&i 7ir Port ma! e regarded as a notice o% #is acceptance o% t#e stipu&ation o% t#e
de&iver! in #is %avor contained in t#e contract o% carriage, suc# demand eing one %or t#e %u&%i&&ment o% t#e
contract o% carriage and de&iver!' ,n t#is case #e a&so made #imse&% a part! to t#e contract, or at &east #as come
to court to en%orce it' @is cause o% action must necessari&! e %ounded on its reac#'
1. :recautions to $e #a+e $y ex)i$itor in si#ilar cases
,n situations w#ere %ai&ure to e3#iit %i&ms on a certain da! wou&d spe&& sustantia& damages or
considera&e &oss o% pro%its, inc&uding waste o% e%%orts on preparations and e3penses incurred in
advertisements, e3#iitors, %or t#eir securit!, ma! eit#er get #o&d o% t#e %i&ms we&& a#ead o% t#e time o%
e3#iition in order to make a&&owance %or an! #itc# in t#e de&iver!, or e&se enter into a specia& contract or
make a suita&e arrangement wit# t#e common carrier %or t#e prompt de&iver! o% t#e %i&ms, ca&&ing t#e
attention o% t#e carrier to t#e circumstances surrounding t#e case and t#e appro3imate amount o% damages to
e su%%ered in case o% de&a!'
[14], also [177]
Coast.ise Li*)tera*e Corp. vs. C5 (GR 11/13! 1- Buly 1%%2)
T#ird Division, Francisco :' (J): 5 concur
&acts' Pag=asa "a&es ,nc' entered into a contract to transport mo&asses %rom t#e province o% Eegros to Mani&a
wit# $oastwise +ig#terage $orp', using t#e &atter?s dum arges' T#e arges were towed in tandem ! t#e
tugoat MT Marica, w#ic# is &ikewise owned ! $oastwise' Dpon reac#ing Mani&a 1a!, w#i&e approac#ing
Pier 1/, one o% t#e arges, ;$oastwise .<, struck an unknown sunken oAect' T#e %orward uo!anc!
compartment was damaged, and water gus#ed in t#roug# a #o&e ;8 inc#es wide and 88 inc#es &ong<' 7s a
conse9uence, t#e mo&asses at t#e cargo tanks were contaminated and rendered un%it %or t#e use it was
intended' T#is prompted t#e consignee, Pag=asa "a&es, ,nc' to reAect t#e s#ipment o% mo&asses as a tota& &oss'
T#erea%ter, Pag=asa "a&es, ,nc' %i&ed a %orma& c&aim wit# t#e insurer o% its &ost cargo, P#i&ippine 6enera&
,nsurance $ompan! (P#i&6en) and against t#e carrier, $oastwise +ig#terage' $oastwise +ig#terage denied t#e
c&aim and it was P#i&6en w#ic#' paid t#e consignee, Pag=asa "a&es t#e amount o% P022,222'22 representing
t#e va&ue o% t#e damaged cargo o% mo&asses'
,n turn, P#i&6en t#en %i&ed an action against $oastwise +ig#terage e%ore t#e :T$ o% Mani&a, seeking to
recover t#e amount o% P022,222'22 w#ic# it paid to Pag=asa "a&es %or t#e &atter?s &ost cargo P#i&6en now
c&aims to e surogated to a&& t#e contractua& rig#ts and c&aims w#ic# t#e consignee ma! #ave against t#e
carrier, w#ic# is presumed to #ave vio&ated t#e contract o% carriage' T#e :T$ (1ranc# 34) awarded t#e
amount pra!ed %or ! P#i&6en, i'e' t#e principa& amount o% P022,222'22 p&us interest t#ereon at t#e &ega& rate
computed %rom 8. Marc# 1./., t#e date t#e comp&aint was %i&ed unti& %u&&! paid and anot#er sum o%
P122,222'22 as attorne!?s %ees and costs'
(n $oastwise +ig#terage?s appea& to t#e $ourt o% 7ppea&s, t#e award was a%%irmed on 10 Decemer 1..3'
@ence, t#e petition %or review'
T#e "upreme $ourt denied t#e petition, and a%%irmed t#e appea&ed decision'
1. Lia$ility o, s)ipo.ner in contract o, a,,rei*)t#ent over vessels! as co##on carrier! re#ains in
t)e a$sence o, t)e stipulation
F#en t#e c#arter part! contract is one o% a%%reig#tment over t#e w#o&e vesse&s, rat#er t#an a demise,
t#e &iai&it! o% t#e s#ipowner %or acts or neg&igence o% its captain and crew, wou&d remain in t#e asence o%
stipu&ation' 7&t#oug# a c#arter part! ma! trans%orm a common carrier into a private one, t#e same #owever is
not true in a contract o% a%%reig#tment on account o% t#e distinctions etween a contract o% a%%reig#tment and a
areoat c#arter' @erein, Pag=asa "a&es on&! &eased t#ree o% $oastwise +ig#terage?s vesse&s, in order to carr!
cargo %rom one point to anot#er, ut t#e possession, command mid navigation o% t#e vesse&s remained wit#
$oastwise +ig#terage' T#e contract t#us entered into wit# t#e consignee was one o% a%%reig#tment'
-. <e#ise or $are$oat c)arter o, t)e vessel6 :uro#ines vs. C5
Dnder t#e demise or areoat c#arter o% t#e vesse&, t#e c#arterer wi&& genera&&! e regarded as t#e
owner %or t#e vo!age or service stipu&ated' T#e c#arterer mans t#e vesse& wit# #is own peop&e and ecomes
(ransportation La.! -""/ ( /% )
t#e owner pro #ac vice, suAect to &iai&it! to ot#ers %or damages caused ! neg&igence' To create a demise,
t#e owner o% a vesse& must comp&ete&! and e3c&usive&! re&in9uis# possession, command and navigation
t#ereo% to t#e c#arterer an!t#ing s#ort o% suc# a comp&ete trans%er is a contract o% a%%reig#tment (time or
vo!age c#arter part!) or not a c#arter part! a&&'
3. Contract o, a,,rei*)t#ent6 :uro#ines vs. C5
7 contract o% a%%reig#tment is one in w#ic# t#e owner o% t#e vesse& &eases part or a&& o% its space to
#au& goods %or ot#ers' ,t is a contract %or specia& service to e rendered ! t#e owner o% t#e vesse& and under
suc# contract t#e genera& owner retains t#e possession, command and navigation o% t#e s#ip, t#e c#arterer or
%reig#ter mere&! #aving use o% t#e space in t#e vesse& in return %or #is pa!ment or t#e c#arter #ire' 7n owner
w#o retains possession o% t#e s#ip t#oug# t#e #o&d is t#e propert! o% t#e c#arterer, remains &ia&e as carrier
and must answer %or an! reac# o% dut! as to t#e care, &oading and un&oading o% t#e cargo ' ' '<
/. :resu#ption o, ne*li*ence
T#e &aw and Aurisprudence on common carriers ot# #o&d t#at t#e mere proo% o% de&iver! o% goods in
good order to a carrier and t#e suse9uent arriva& o% t#e same goods at t#e p&ace o% destination in ad order
makes %or a prima %acie case against t#e carrier' ,t %o&&ows t#en t#at t#e presumption o% neg&igence t#at
attac#es to common carriers, once t#e goods it is sports are &ost, destro!ed or deteriorated, app&ies to
$oastwise +ig#terage' T#is presumption, w#ic# is overcome on&! ! proo% o% t#e e3ercise o% e3traordinar!
di&igence, remained unreutted in t#e present case' 7s a common carrier, $oastwise +ig#terage is &ia&e %or
reac# o% t#e contract o% carriage, #aving %ai&ed to overcome t#e presumption o% neg&igence wit# t#e &oss and
destruction o% goods it transported, ! proo% o% its e3ercise o% e3traordinar! di&igence'
2. 5rticle "% o, t)e Co+e o, Co##erce
7rtic&e >2. o% t#e $ode o% $ommerce, w#ic# susidiari&! governs common carriers (w#ic# are
primari&! governed ! t#e provisions o% t#e $ivi& $ode) provides t#at ;captains, masters, or patrons o% vesse&s
must e Fi&ipinos, #ave &ega& capacit! to contract in accordance wit# t#is code, and prove t#e ski&& capacit!
and 9ua&i%ications necessar! to command and direct t#e vesse&, as esta&is#ed ! marine and navigation &aws,
ordinances or regu&ations, and must not e dis9ua&i%ied according to t#e same %or t#e disc#arge o% t#e duties o%
t#e position'<
. Carrier re#ise+ in o$servance o, +uties6 Fnlicense+ patron presu#es lack o, skill an+ lack o,
,a#iliarity to usual an+ sa,e routes taken $y seasone+ an+ aut)oriJe+ ones
Far %rom #aving rendered service wit# t#e greatest ski&& and outmost %oresig#t, and eing %ree %rom
%au&t, t#e carrier was cu&pa&! remiss in t#e oservance o% its duties' For one, Jesus :' $onstantino, t#e patron
o% t#e vesse& ;$oastwise .< admitted t#at #e was not &icensed' $&ear&!, $oastwise +ig#terage?s emarking on
a vo!age wit# an un&icensed patron vio&ates 7rtic&e >2. o% t#e $ode o% $ommerce' ,t cannot sa%e&! c&aim to
#ave e3ercised e3traordinar! di&igence, ! p&acing a person w#ose navigationa& ski&&s are 9uestiona&e, at t#e
#e&m o% t#e vesse& w#ic# eventua&&! met t#e %ate%u& accident' ,t ma! a&so &ogica&&!, %o&&ow t#at a person
wit#out &icense to navigate, &acks not Aust t#e ski&& to do so, ut a&so t#e utmost %ami&iarit! wit# t#e usua& and
sa%e routes taken ! seasoned and &ega&&! aut#ori*ed ones' @ad t#e patron een &icensed #e cou&d e presumed
to #ave ot# t#e ski&& and t#e know&edge t#at wou&d #ave prevented t#e vesse&?s #itting t#e sunken dere&ict
s#ip t#at &a! on t#eir wa! to Pier 1/'
3. 5rticle --"3 7CC
7rtic&e 8820 o% t#e $ivi& $ode provides t#at ;,% t#e p&ainti%%?s propert! #as een insured, and #e #as
received indemnit! %rom t#e insurance compan! %or t#e inAur! or &oses arising out o% t#e wrong or reac# o%
contract comp&ained o% t#e insurance compan! s#a&& e surogated to t#e rig#ts o% t#e insured against t#e
wrongdoer or t#e person w#o vio&ated t#e contract'<
4. :rinciple o, su$ro*ation explaine+
7rtic&e 8820 E$$ containing t#e e9uita&e princip&e o% surogation #as een app&ied in a &ong &ine o%
cases inc&uding $ompania Maritima v' ,nsurance $ompan! o% Eort# 7mericaC Firesman?s Fund ,nsurance
$ompan! v' Jami&&a T $ompan!, ,nc', and Pan Ma&a!an ,nsurance $orporation v' $ourt o% 7ppea&s, w#erein
t#e $ourt e3p&ained t#at ;7rtic&e 8820 o% t#e $ivi& $ode is %ounded on t#e we&&=sett&ed princip&e o%
surogation' ,% t#e insured propert! is destro!ed or damaged t#roug# t#e %au&t or neg&igence o% a part! ot#er
t#an t#e assured, t#en t#e insurer, upon pa!ment to t#e assured wi&& e surogated to t#e rig#ts o% t#e assured
to recover %rom t#e wrongdoer to t#e e3tent t#at t#e insurer #as een o&igated to pa!' Pa!ment ! t#e insurer
to t#e assured operated as an e9uita&e assignment to t#e %ormer o% a&& remedies w#ic# t#e &atter ma! #ave
against t#e t#ird part! w#ose neg&igence or wrong%u& act caused t#e &oss' T#e rig#t o% surogation is not
dependent upon, nor does it grow out o%, an! private o% contract or upon written assignment o%, c&aim' ,t
accrues simp&! upon pa!ment o% t#e insurance c&aim ! t#e insurer'< @erein, $oastwise +ig#terage was &ia&e
%or reac# o% t#e contract o% carriage it entered into wit# t#e Pag=asa "a&es' @owever, %or t#e damage
sustained ! t#e &oss o% t#e cargo w#ic# t#e carrier was transporting, it was not t#e carrier w#ic# paid t#e
va&ue t#ereo% to Pag=asa "a&es ut t#e &atter?s insurer, P#i&6en' Dpon pa!ment ! insurer P#i&6en o% t#e
amount o% P022,222'22 to Pag=asa "a&es, t#e consignee o% t#e cargo o% mo&asses tota&&! damaged w#i&e eing
transported ! $oastwise +ig#terage, t#e %ormer was, surogated into a&& t#e rig#ts w#ic# Pag=asa "a&es ma!
#ave #ad against t#e carrier, $oastwise +ig#terage'
[1%]
Bene+icto vs. ;5C (GR 3"43! 1% Buly 1%%")
T#ird Division, Fe&iciano (J): 3 concur, 1 took no part
&acts' 6reen#i&&s Food ,ndustries $o' ,nc', a &umer manu%acturing %irm wit# usiness address at Dagupan
$it!, operates a sawmi&& in Madde&a, Nuirino' "ometime in Ma! 1./2, 6reen#i&&s Food ound itse&% to se&&
and de&iver to 1&ue "tar Ma#ogan!, ,nc', a compan! wit# usiness operations in Va&en*ue&a, 1u&acan 122,222
oard %eet o% sawn &umer wit# t#e understanding t#at an initia& de&iver! wou&d e made on 14 Ma! 1./2' To
e%%ect its %irst de&iver!, 6reen#i&&s Food?s resident manager in Madde&a, Dominador $ru*, contracted Virgi&io
+icuden, t#e driver o% a cargo truck earing P&ate 884 67 T@ to transport its sawn &umer to t#e consignee
1&ue "tar in Va&en*ue&a, 1u&acan' T#is cargo truck was registered in t#e name o% Ma' +uisa 1enedicto, t#e
proprietor o% Macoven Trucking, a usiness enterprise engaged in #au&ing %reig#t, wit# main o%%ice in 1'F'
@omes, Para)a9ue' (n 14 Ma! 1./2, $ru* in t#e presence and wit# t#e consent o% driver +icuden, supervised
t#e &oading o% 0,>.2 oard %eet o% sawn &umer wit# invoice va&ue o% P1>,.1/'22 aoard t#e cargo truck'
1e%ore t#e cargo truck &e%t Madde&a %or Va&en*ue&a, 1u&acan, $ru* issued to +icuden $#arge ,nvoices 384.
and 38>2 ot# o% w#ic# were initia&ed ! t#e &atter at t#e ottom &e%t corner' T#e %irst invoice was %or t#e
amount o% P11,/88'/2 representing t#e va&ue o% 4,305 oard %eet o% sawn &umer, w#i&e t#e ot#er set out t#e
amount o% P4,2.4'82 as t#e va&ue o% 8,31> oard %eet' $ru* instructed +icuden to give t#e origina& copies o%
t#e 8 invoices to t#e consignee upon arriva& in Va&en*ue&a, 1u&acan and to retain t#e dup&icate copies in order
t#at #e cou&d a%terwards c&aim t#e %reig#tage %rom 6reen#i&&s Food?s Mani&a o%%ice' (n 1> Ma! 1./2, t#e
Manager o% 1&ue "tar ca&&ed up ! &ong distance te&ep#one 6reen#i&&s Food? president, @enr! +ee $#u!,
in%orming #im t#at t#e sawn &umer on oard t#e suAect cargo truck #ad not !et arrived in Va&en*ue&a,
1u&acan' T#e &atter in turn in%ormed 6reen#i&&s Food? resident manager in its Madde&a sawmi&& o% w#at #ad
#appened' ,n a &etter dated 1/ Ma! 1./2, 1&ue "tar?s administrative and personne& manager, Manue& :'
1autista, %orma&&! in%ormed 6reen#i&&s Food? president and genera& manager t#at 1&ue "tar sti&& #ad not
received t#e sawn &umer w#ic# was supposed to arrive on 14 Ma! 1./2 and ecause o% t#is de&a!, ;t#e!
were constrained to &ook %or ot#er supp&iers'<
(n 84 June 1./2, a%ter con%irming t#e aove wit# 1&ue "tar and a%ter tr!ing vain&! to persuade it to continue
wit# t#eir contract, 6reen#i&&s Food %i&ed $rimina& $ase >>/ against driver +icuden %or esta%a' 6reen#i&&s
Food a&so %i&ed against 1enedicto $ivi& $ase D=482> %or recover! o% t#e va&ue o% t#e &ost sawn &umer p&us
damages e%ore t#e :T$ o% Dagupan $it!' ,n #er answer, 1enedicto denied &iai&it! a&&eging t#at s#e was a
comp&ete stranger to t#e contract o% carriage, t#e suAect truck #aving een ear&ier so&d ! #er to 1enAamin
Tee, on 8/ Feruar! 1./2 as evidenced ! a deed o% sa&e' "#e c&aimed t#at t#e truck #ad remained registered
in #er name notwit#standing its ear&ier sa&e to Tee ecause t#e &atter #ad paid #er on&! P42,222'22 out o% t#e
tota& agreed price o% P>/,222'22 @owever, s#e averred t#at Tee #ad een operating t#e said truck in $entra&
+u*on %rom t#at date (8/ Feruar! 1./2) onwards, and t#at, t#ere%ore, +icuden was Tee?s emp&o!ee and not
#ers' (n 82 June 1./3, ased on t#e %inding t#at petitioner 1enedicto was sti&& t#e registered owner o% t#e
suAect truck, and #o&ding t#at +icuden was #er emp&o!ee, t#e tria& court ordered 1enedicto to pa! t#e
6reen#i&&s Food, t#ru its President and 6enera& Manager, t#e amount o% P1>,21> cost o% t#e sawn &umer
&oaded on t#e cargo truck, wit# &ega& rate o% interest %rom t#e %i&ing o% t#e comp&aintC to pa! attorne!?s %ees in
t#e amount o% P8,222'22C and to pa! t#e costs o% t#e suit'
(n 32 Januar! 1./4, upon appea& ! 1enedicto, t#e ,ntermediate 7ppe&&ate $ourt a%%irmed t#e decision o% t#e
tria& court in toto' 1enedicto moved %or reconsideration, wit#out success' @ence, t#e petition %or review'
T#e "upreme $ourt denied t#e Petition %or :eview %or &ack o% meritC and a%%irmed t#e Decision o% t#e %ormer
,7$ dated 32 Januar! 1./4C wit# costs against 1enedicto'
1. Re*istere+ o.ner lia$le ,or conse9uences ,lo.in* ,ro# t)e operation o, t)e carrier! alt)ou*) t)e
speci,ic ve)icle )as $een trans,erre+ to anot)er person6 :u$lic Service La. as $asis
@erein, 1enedicto #as een #o&ding #erse&% out to t#e pu&ic as engaged in t#e usiness o% #au&ing or
transporting goods %or #ire or compensation' 1enedicto is, in rie%, a common carrier' T#e prevai&ing doctrine
on common carriers makes t#e registered owner &ia&e %or conse9uences %&owing %rom t#e operations o% t#e
carrier, even t#oug# t#e speci%ic ve#ic&e invo&ved ma! a&read! #ave een trans%erred to anot#er person' T#is
doctrine rests upon t#e princip&e t#at in dea&ing wit# ve#ic&es registered under t#e Pu&ic "ervice +aw, t#e
pu&ic #as t#e rig#t to assume t#at t#e registered owner is t#e actua& or &aw%u& owner t#ereo%' ,t wou&d e ver!
di%%icu&t and o%ten impossi&e as a practica& matter, %or memers o% t#e genera& pu&ic to en%orce t#e rig#ts o%
action t#at t#e! ma! #ave %or inAuries in%&icted ! t#e ve#ic&es eing neg&igent&! operated i% t#e! s#ou&d e
re9uired to prove w#o t#e actua& owner is' T#e registered owner is not a&&owed to den! &iai&it! ! proving t#e
identit! o% t#e a&&eged trans%eree'
-. Conclusive presu#ption6 Re*istere+ o.ner not allo.e+ to prove actual o.ner
@erein, 6reen#i&&s Food is not re9uired to go e!ond t#e ve#ic&e?s certi%icate o% registration to
ascertain t#e owner o% t#e carrier' ,n t#is regard, t#e &etter a&&eged&! written ! 1enAamin Tee admitting t#at
+icuden was #is driver, #ad no evidentiar! va&ue not on&! ecause 1enAamin Tee was not presented in court to
testi%! on t#is matter ut a&so ecause o% t#e aove doctrine' To permit t#e ostensi&e or registered owner to
prove w#o t#e actua& owner is, wou&d e to set at naug#t t#e purpose or pu&ic po&ic! w#ic# in%uses t#at
doctrine'
3. Bene+icto )as t)e le*al security +evice o, c)attel #ort*a*e6 Retention o, re*istere+ o.ners)ip
erroneous
@erein, assuming t#e trut# o% #er stor!, 1enedicto retained registered owners#ip o% t#e %reig#t truck
%or #er own ene%it and convenience, i'e' to secure t#e pa!ment o% t#e a&ance o% t#e se&&ing price o% t#e truck'
"#e ma! #ave een unaware o% t#e &ega& securit! device o% c#atte& mortgageC or s#e, or #er u!er, ma! #ave
een unwi&&ing to asor t#e e3penses o% registering a c#atte& mortgage over t#e truck' ,n eit#er case,
considerations ot# o% pu&ic po&ic! and o% e9uit! re9uire t#at s#e ear t#e conse9uences %&owing %rom
registered owners#ip o% t#e suAect ve#ic&e'
/. Dxtraor+inary +ili*ence re9uire+ o, co##on carriers6 :resu#ption o, ,ault or ne*li*ence!
exceptions
7 common carrier, ot# %rom t#e nature o% its usiness and %or insistent reasons o% pu&ic po&ic!, is
urdened ! t#e &aw wit# t#e dut! o% e3ercising e3traordinar! di&igence not on&! in ensuring t#e sa%et! o%
passengers ut a&so in caring %or goods transported ! it' T#e &oss or destruction or deterioration o% goods
turned over to t#e common carrier %or conve!ance to a designated destination, raises instant&! a presumption
o% %au&t or neg&igence on t#e part o% t#e carrier, save on&! w#ere suc# &oss, destruction or damage arises %rom
e3treme circumstances suc# as a natura& disaster or ca&amit! or act o% t#e pu&ic enem! in time o% war, or
%rom an act or omission o% t#e s#ipper #imse&% or %rom t#e c#aracter o% t#e goods or t#eir packaging or
container' T#e presumption ma! e overcome on&! ! proo% o% e3traordinar! di&igence on t#e part o% t#e
carrier'
2. Co##on carrier cannot $e per#itte+ to escape responsi$ility $y provin* prior sale o, ve)icle6
Reason
$&ear&!, to permit a common carrier to escape its responsii&it! %or t#e passengers or goods
transported ! it ! proving a prior sa&e o% t#e ve#ic&e or means o% transportation to an a&&eged vendee wou&d
e to attenuate drastica&&! t#e carrier?s dut! o% e3traordinar! di&igence' ,t wou&d a&so open wide t#e door to
co&&usion etween t#e carrier and t#e supposed vendee and to s#i%ting &iai&it! %rom t#e carrier to one wit#out
%inancia& capai&it! to respond %or t#e resu&ting damages' ,n ot#er words, t#e t#rust o% t#e pu&ic po&ic! #ere
invo&ved is as s#arp and rea& in t#e case o% carriage o% goods as it is in t#e transporting o% #uman eings'
@erein, to sustain 1enedicto?s contention, t#at is, to re9uire t#e s#ipper to go e#ind a certi%icate o%
registration o% a pu&ic uti&it! ve#ic&e, wou&d e utter&! suversive o% t#e purpose o% t#e &aw and doctrine'
. <river Licu+en )as i#plie+ aut)ority to contract carria*e o, *oo+s
@erein, 6reen#i&&s Food #ad no reason at a&& to dout t#e aut#orit! o% +icuden to enter into a contract
o% carriage on e#a&% o% t#e registered owner' ,t appears t#at, ear&ier, in t#e %irst week o% Ma! 1./2, 6reen#i&&s
Food #ad contracted +icuden w#o was t#en driving t#e same cargo truck to transport and carr! a &oad o%
sawn &umer %rom t#e Madde&a sawmi&& to Dagupan $it!' Eo one came %orward to 9uestion t#at contract or
t#e aut#orit! o% +icuden to represent t#e owner o% t#e carrier truck' Driver +icuden was entrusted wit#
possession and contro& o% t#e %reig#t truck ! t#e registered owner (and ! t#e a&&eged secret owner, %or t#at
matter)' Driver +icuden, under t#e circumstances, was c&ot#ed wit# at &east imp&ied aut#orit! to contract to
carr! goods and to accept de&iver! o% suc# goods %or carriage to a speci%ied destination'
3. Contract o, carria*e per,ecte+6 Bene+icto1s lia$ility to Green)ills Eoo+ ,ixe+! )as ri*)t to
procee+ a*ainst (ee an+ Licu+en ,or rei#$urse#ent or contri$ution
T#at t#e %reig#t to e paid ma! not #ave een %i3ed e%ore &oading and carriage, did not prevent t#e
contract o% carriage %rom arising, since t#e %reig#t was at &east determina&e i% not %i3ed ! t#e tari%% sc#edu&es
in 1enedicto?s main usiness o%%ice' Put in somew#at di%%erent terms, driver +icuden is in &aw regarded as t#e
emp&o!ee and agent o% 1enedicto, %or w#ose acts 1enedicto must respond' 7 contract o% carriage o% goods
was s#ownC t#e sawn &umer was &oaded on oard t#e %reig#t truckC &oss or non=de&iver! o% t#e &umer at 1&ue
"tar?s premises in Va&en*ue&a, 1u&acan was a&so provenC and 1enedicto #as not proven eit#er t#at s#e #ad
e3ercised e3traordinar! di&igence to prevent suc# &oss or non=de&iver! or t#at t#e &oss or non=de&iver! was due
to some casua&t! or %orce maAeure inconsistent wit# #er &iai&it!' 1enedicto?s &iai&it! to 6reen#i&&s Food was
t#us %i3ed and comp&ete, wit#out preAudice to #er rig#t to proceed against #er putative trans%eree 1enAamin
Tee and driver +icuden %or reimursement or contriution'
[-"]
(e?a =arketin* vs. ;5C (GR L>221"! % =arc) 1%43)
"econd Division, Paras (J): 4 concur, 1 took no part
&acts' (n . Ma! 1.04, Pedro E' Ea&e oug#t %rom TeAa Marketing (and-or 7nge& Jaucian) a motorc!c&e wit#
comp&ete accessories and a sidecar in t#e tota& consideration o% P/,222'22 as s#own ! ,nvoice 155' (ut o%
t#e tota& purc#ase price Ea&e gave a downpa!ment o% P1,022'22 wit# a promise t#at #e wou&d pa! p&ainti%% t#e
a&ance wit#in >2 da!s' Ea&e, #owever, %ai&ed to comp&! wit# #is promise and so upon #is own re9uest, t#e
period o% pa!ing t#e a&ance was e3tended to 1 !ear in mont#&! insta&&ments unti& Januar! 1.0> w#en #e
stopped pa!ing an!more' ,n t#is particu&ar transaction a c#atte& mortgage was constituted as a securit! %or t#e
pa!ment o% t#e a&ance o% t#e purc#ase price' T#e motorc!c&e so&d to Ea&e was %irst mortgaged to t#e TeAa
Marketing ! 7nge& Jaucian t#oug# t#e TeAa Marketing and 7nge& Jaucian are one and t#e same, ecause it
was made to appear t#at wa! on&! as Ea&e #ad no %ranc#ise o% #is own and #e attac#ed t#e unit to TeAa
Marketing?s M$@ +ine' T#e agreement was t#at TeAa Marketing undertake t#e !ear&! registration o% t#e
motorc!c&e wit# t#e +and Transportation $ommission (+T$)' Pursuant to t#e agreement and on 88 Feruar!
1.0>, Ea&e gave TeAa Marketing P.2'22, t#e P/'22 wou&d e %or t#e mortgage %ee and t#e P/8'22 %or t#e
registration %ee o% t#e motorc!c&e' TeAa Marketing, #owever, %ai&ed to register t#e motorc!c&e on t#at !ear on
t#e ground t#at Ea&e %ai&ed to comp&! wit# some re9uirements suc# as t#e pa!ment o% t#e insurance premiums
and t#e ringing o% t#e motorc!c&e to t#e +T$ %or stenci&ing' Furt#er, a&t#oug# t#e owners#ip o% t#e
motorc!c&e was a&read! trans%erred to Ea&e t#e ve#ic&e was sti&& mortgaged wit# t#e consent o% Ea&e to t#e
:ura& 1ank o% $ama&igan %or t#e reason t#at a&& motorc!c&e purc#ased %rom TeAa Marketing on credit was
rediscounted wit# t#e ank'
TeAa Marketing made demands %or t#e pa!ment o% t#e motorc!c&e ut Aust t#e same Ea&e %ai&ed to comp&!,
t#us %orcing TeAa Marketing to consu&t a &aw!er and %i&e an action %or damage e%ore t#e $it! $ourt o% Eaga
in t#e amount o% P45>'81 %or attorne!?s %ees and P122'22 %or e3penses o% &itigation' TeAa Marketing a&so
c&aimed t#at as o% 82 Feruar! 1.0/, t#e tota& account o% Ea&e was a&read! P8,031,24 as s#own in a statement
o% accountC inc&udes not on&! t#e a&ance o% P1,022'22 ut an additiona& 18I interest per annum on t#e said
a&ance %rom 8> Januar! 1.0> to 80 Feruar! 1.0/C a 8I service c#argeC and P45>'81 representing attorne!?s
%ees' (n #is part, Ea&e did not dispute t#e sa&e and t#e outstanding a&ance o% P1,022'22 sti&& pa!a&e to TeAa
MarketingC ut contends t#at ecause o% t#is %ai&ure o% TeAa Marketing to comp&! wit# #is o&igation to
register t#e motorc!c&e, Ea&e su%%ered damages w#en #e %ai&ed to c&aim an! insurance indemnit! w#ic# wou&d
amount to no &ess t#an P14,222'22 %or t#e more t#an 8 times t#at t#e motorc!c&e %igured in accidents aside
%rom t#e &oss o% t#e dai&! income o% P14'22 as oundar! %ee eginning (ctoer 1.0> w#en t#e motorc!c&e
was impounded ! t#e +T$ %or not eing registered' T#e $it! $ourt rendered Audgment in %avor o% TeAa
Marketing, dismissing t#e counterc&aim, and ordered Ea&e to pa! TeAa Marketing t#e sum o% P1,022'22
representing t#e unpaid a&ance o% t#e purc#ase price wit# &ega& rate o% interest %rom t#e date o% t#e %i&ing o%
t#e comp&aint unti& t#e same is %u&&! paidC t#e sum o% P45>'81 as attorne!?s %eesC t#e sum o% P822'22 as
e3penses o% &itigationC and t#e costs'
(n appea& to t#e $ourt o% First ,nstance o% $amarines "ur, t#e decision was a%%irmed in toto' Ea&e %i&ed a
petition %or review wit# t#e ,ntermediate 7ppe&&ate $ourt' (n 1/ Ju&! 1./3, t#e appe&&ate court set aside t#e
decision under review on t#e asis o% doctrine o% ;pari de&icto,< and according&!, dismissed t#e comp&aint o%
TeAa Marketing, as we&& as t#e counterc&aim o% Ea&eC wit#out pronouncements as to costs' @ence, t#e petition
%or review was %i&ed ! TeAa Marketing and-or 7nge& Jaucian'
T#e "upreme $ourt dismissed t#e petition %or &ack o% meritC and a%%irmed t#e assai&ed decision o% t#e
,ntermediate 7ppe&&ate $ourt (now t#e $ourt o% 7ppea&s)C wit#out costs'
1. 7ature o, t)e ka$it syste#
@erein, t#e parties operated under an arrangement, common&! known as t#e ;kait s!stem< w#ere! a
person w#o #as een granted a certi%icate o% pu&ic convenience a&&ows anot#er person w#o owns motor
ve#ic&es to operate under suc# %ranc#ise %or a %ee' 7 certi%icate o% pu&ic convenience is a specia& privi&ege
con%erred ! t#e government' 7use o% t#is privi&ege ! t#e grantees t#ereo% cannot e countenanced' T#e
;kait s!stem< #as een identi%ied as one o% t#e root causes o% t#e preva&ence o% gra%t and corruption in t#e
government transportation o%%ices'
-. 0a$it syste#! alt)ou*) not penaliJe+ as a cri#inal o,,ense! is contrary to pu$lic policy
7&t#oug# not outrig#t&! pena&i*ed as a crimina& o%%ense, t#e kait s!stem is invaria&! recogni*ed as
eing contrar! to pu&ic po&ic! and, t#ere%ore, void and ine3istent under 7rtic&e 152. o% t#e $ivi& $ode'
3. 5rticle 1/1- 7CC
,t is a %undamenta& princip&e t#at t#e court wi&& not aid eit#er part! to en%orce an i&&ega& contract, ut
wi&& &eave ot# w#ere it %inds t#em' Dpon t#is premise it wou&d e error to accord t#e parties re&ie% %rom t#eir
predicament' 7rtic&e 1518 o% t#e $ivi& $ode denies t#em suc# aid' ,t provides t#at ;,% t#e act in w#ic# t#e
un&aw%u& or %oridden cause consists does not constitute a crimina& o%%ense, t#e %o&&owing ru&es s#a&& e
oserved: (1) F#en t#e %au&t is on t#e part o% ot# contracting parties, neit#er ma! recover t#at #e #as given
! virtue o% t#e contract, or demand, t#e per%ormance o% t#e ot#er?s undertaking'<
/. ;nexistent contract cannot $e cure+ $y rati,ication nor $y prescription
T#e de%ect o% ine3istence o% a contract is permanent and cannot e cured ! rati%ication or !
prescription' T#e mere &apse o% time cannot give e%%icac! to contracts t#at are nu&& and void'
2. Dx pacto illicito non oritur actio
;GB3 pacto i&&icito? non oritur actio? (Eo action arises out o% i&&icit argain) is t#e time=#onored ma3im
t#at must e app&ied to t#e parties in t#e present case' @aving entered into an i&&ega& contract, neit#er can seek
re&ie% %rom t#e courts, and eac# must ear t#e conse9uences o% #is acts'< (+ita Bnterprises vs' ,7$, 18. "$:7
/1')
[-1]
B5 &inance vs. C5 (GR %4-32! 13 7ove#$er 1%%-)
T#ird Division, Me&o (J): 5 concur
&acts' (n > Marc# 1./3, an accident occurred invo&ving 17 Finance $orp'?s ,su*u ten=w#ee&er truck t#en
driven ! an emp&o!ee o% +ino $astro, :oge&io Vi&&ar ! 7mera, resu&ting in trip&e #omicide wit# mu&tip&e
p#!sica& inAuries wit# damage to propert!' Eeit#er +ino $astro nor t#e driver was connected wit# 17 Finance
$orp', as t#e truck was &eased ! 17 Finance to :ock $omponent P#i&ippines (nc'
7 crimina& suit was %i&ed against Vi&&ar' T#e tria& court o% 1u&acan (1ranc# >', :T$ Ma&o&os 1u&acan) %ound
Vi&&ar gui&t! e!ond reasona&e dout o% reck&ess imprudence resu&ting in trip&e #omicide wit# mu&tip&e
p#!sica& inAuries wit# damage to propert! on 1> Feruar! 1./5'
7 suit %or damages was %i&ed ! $ar&os (campo, et'a&', t#e inAured in t#e accident against driver Vi&&ar and 17
Finance, inasmuc# as t#e truck was registered in t#e name o% t#e &atter' (n 13 (ctoer 1.//, t#e tria& court
rendered a decision (1) ordering :ock $omponent P#i&ippines ,nc', 17 Finance and :oge&io Vi&&ar ! 7mare
Aoint&! and severa&&! to pa! (a) $ar&os (campo P181,>42'22, () Moises (campo P8./,422'22, (c) Eico&as
$ru* P145,052'22, and (d) ,nocencio Tur&a, "r''5/,222'22C (8) dismissing t#e case against +ino $astroC (3)
dismissing t#e t#ird=part! comp&aint against "trong#o&dC (5) dismissing a&& t#e counterc&aims o% Vi&&ar and 17
Finance and "trong#o&dC and (4) ordering :ock to reimurse 17 Finance t#e tota& amount o% P>88,/.2'22
w#ic# t#e &atter is adAudged to pa! to (campo, et' a&'

T#e $ourt o% 7ppea&s a%%irmed t#e appea&ed disposition in toto t#roug# Justice :asu&, wit# Justices De Pano,
Jr' and ,mperia& concurring, on practica&&! t#e same grounds arrived at ! t#e court a 9uo' B%%orts e3erted
towards re=eva&uation o% t#e adverse Audgment were %uti&e' @ence, t#e petition %or review on certiorari'
T#e "upreme $ourt dismissed t#e petition, and a%%irmed t#e decision under review, wit#out specia&
pronouncement as to costs'
1. Re*istere+ o.ner o, C:C lia$le to pu$lic ,or in?uries or +a#a*es su,,ere+ $y passen*ers or
t)ir+ persons6 Basis o, +octrine
T#e registered owner o% a certi%icate o% pu&ic convenience is &ia&e to t#e pu&ic %or t#e inAuries or
damages su%%ered ! passengers or t#ird persons caused ! t#e operation o% said ve#ic&e, even t#oug# t#e
same #ad een trans%erred to a t#ird person' T#e princip&e upon w#ic# t#is doctrine is ased is t#at in dea&ing
wit# ve#ic&es registered under t#e Pu&ic "ervice +aw, t#e pu&ic #as t#e rig#t to assume or presume t#at t#e
registered owner is t#e actua& owner t#ereo%, %or it wou&d e di%%icu&t %or t#e pu&ic to en%orce t#e actions t#at
t#e! ma! #ave %or inAuries caused to t#em ! t#e ve#ic&es eing neg&igent&! operated i% t#e pu&ic s#ou&d e
re9uired to prove w#o t#e actua& owner is'
-. <octrine +oes not i#ply t)at re*istere+ o.ner cannot recover
1! t#e doctrine, #owever, it is not imp&ied t#at t#e registered owner ma! not recover w#atever
amount #e #ad paid ! virtue o% #is &iai&it! to t#ird persons %rom t#e person to w#om #e #ad actua&&! so&d,
assigned or conve!ed t#e ve#ic&e'
3. Re*istere+ o.ner o, ve)icle pri#arily responsi$le to pu$lic an+ t)ir+ persons
Dnder t#e same princip&e t#e registered owner o% an! ve#ic&e, even i% not used %or a pu&ic service,
s#ou&d primari&! e responsi&e to t#e pu&ic or to t#ird persons %or inAuries caused t#e &atter w#i&e t#e ve#ic&e
is eing driven on t#e #ig#wa!s or streets' T#ere is a presumption t#at t#e owner o% t#e gui&t! ve#ic&e as #e is
t#e registered owner in t#e Motor Ve#ic&es (%%ice'
/. Revise+ =otor Ge)icles La.6 7o ve)icle use+ in pu$lic )i*).ay unless properly re*istere+
T#e :evised Motor ve#ic&es +aw (7ct 3..8, as amended) provides t#at no ve#ic&e ma! e used or
operated upon an! pu&ic #ig#wa! un&ess t#e same is proper&! registered' ,t #as een stated t#at t#e s!stem o%
&icensing and t#e re9uirement t#at eac# mac#ine must carr! a registration numer, conspicuous&! disp&a!ed, is
one o% t#e precautions taken to reduce t#e danger o% inAur! to pedestrians and ot#er trave&&ers %rom t#e
care&ess management o% automoi&es, and to %urnis# a means o% ascertaining t#e identit! o% persons vio&ating
t#e &aws and ordinances, regu&ating t#e speed and operation o% mac#ines upon t#e #ig#wa!s' Eot on&! are
ve#ic&es to e registered and t#at no motor ve#ic&es are to e used or operated wit#out eing proper&!
registered %or t#e current !ear, ut t#at dea&ers in motor ve#ic&es s#a&& %urnis# t#e Motor Ve#ic&es (%%ice a
report s#owing t#e name and address o% eac# purc#aser o% motor ve#ic&e during t#e previous mont# and t#e
manu%acturer?s seria& numer and motor numer' ("ection 4LcM, 7ct 3..8, as amended)'
2. Re*istration re9uire+! not as an operative act in .)ic) o.ners)ip is trans,erre+ in ve)icles $ut
per#it use o, ve)icle in )i*).ays
:egistration is re9uired not to make said registration t#e operative act ! w#ic# owners#ip in ve#ic&es
is trans%erred, as in &and registration cases, ecause t#e administrative proceeding o% registration does not ear
an! essentia& re&ation to t#e contract o% sa&e etween t#e parties ($#inc#i&&a vs' :a%ae& and Verdaguer, 3. P#i&'
///), ut to permit t#e use and operation o% t#e ve#ic&e upon an! pu&ic #ig#wa! (section 4 LaM, 7ct 3..8, as
amended)'
. =ain o, #otor ve)icle re*istration
T#e main aim o% motor ve#ic&e registration is to identi%! t#e owner so t#at i% an! accident #appens, or
t#at an! damage or inAur! is caused ! t#e ve#ic&e on t#e pu&ic #ig#wa!s, responsii&it! t#ere%or can e %i3ed
on a de%inite individua&, t#e registered owner' ,nstances are numerous w#ere ve#ic&es running on pu&ic
#ig#wa!s caused accidents or inAuries to pedestrians or ot#er ve#ic&es wit#out positive identi%ication o% t#e
owner or drivers, or wit# ver! scant means o% identi%ication' ,t is to %oresta&& t#ese circumstances, so
inconvenient or preAudicia& to t#e pu&ic, t#at t#e motor ve#ic&e registration is primari&! ordained, in t#e
interest o% t#e determination o% persons responsi&e %or damages or inAuries caused on pu&ic #ig#wa!s'
3. Court cannot entertain re*istrant1s +e,ense to avoi+ lia$ility! as it .ill t).art t)e purpose o, t)e
statute6 Re*istere+ not allo.e+ to prove ve)icle1s o.ners)ip
(ne o% t#e principa& purposes o% motor ve#ic&es &egis&ation is identi%ication o% t#e ve#ic&e and o% t#e
operator, in case o% accidentC and anot#er is t#at t#e know&edge t#at means o% detection are a&wa!s avai&a&e
ma! act as a deterrent %rom &a3 oservance o% t#e &aw and o% t#e ru&es o% conservative and sa%e operation'
F#atever purpose t#ere ma! e in t#ese statutes, it is suordinate at t#e &ast to t#e primar! purpose o%
rendering it certain t#at t#e vio&ator o% t#e &aw or o% t#e ru&es o% sa%et! s#a&& not escape ecause o% &ack o%
means to discover #im' T#e purpose o% t#e statute is t#warted, and t#e disp&a!ed numer ecomes a Gsnare
and de&usion,? i% an individua& or corporation s#ou&d e a&&owed to pace a ;midd&eman< etween t#em and t#e
pu&ic, and escape &iai&it! ! t#e manner in w#ic# t#e! recompense t#eir servants' 7 victim o% reck&essness
on t#e pu&ic #ig#wa!s is usua&&! wit#out means to discover or identi%! t#e person actua&&! causing t#e inAur!
or damage' @e #as no means ot#er t#an ! a recourse to t#e registration in t#e Motor Ve#ic&es (%%ice to
determine w#o is t#e owner' T#e protection t#at t#e &aw aims to e3tend to #im wou&d ecome i&&usor! were
t#e registered owner given t#e opportunit! to escape &iai&it! ! disproving #is owners#ip' ,% t#e po&ic! o% t#e
&aw is to e en%orced and carried out, t#e registered owner s#ou&d not e a&&owed to prove t#e contrar! to t#e
preAudice o% t#e person inAured, t#at is, to prove t#at a t#ird person or anot#er #as ecome t#e owner, so t#at
#e ma! t#ere! e re&ieved o% t#e responsii&it! to t#e inAured person'
4. :olicy an+ application o, la. not )ars)
T#e aove po&ic! and app&ication o% t#e &aw ma! appear 9uite #ars# and wou&d seem to con%&ict wit#
trut# and AusticeC ut actua&&! is not' 7 registered owner w#o #as a&read! so&d or trans%erred a ve#ic&e #as t#e
recourse to a t#ird=part! comp&aint, in t#e same action roug#t against #im to recover %or t#e damage or inAur!
done, against t#e vendee or trans%eree o% t#e ve#ic&e' T#e inconvenience o% t#e suit is no Austi%ication %or
re&ieving #im o% &iai&it!C said inconvenience is t#e price #e pa!s %or %ai&ure to comp&! wit# t#e registration
t#at t#e &aw demands and re9uires'
%. Cases o, <uavit vs. C5 an+ <u9uillo vs. Bayot not applica$le
T#e ru&ings in Duavit vs' $ourt o% 7ppea&s and in Du9ui&&o vs' 1a!ot is &ega&&! unpa&ata&e %or t#e
purpose o% t#e present discourse' T#e ve#ic&es adverted to in t#e two cases s#ared a common t#read, in t#at
t#e Aeep and t#e truck were driven in reck&ess %as#ion wit#out t#e consent or know&edge o% t#e respective
owners' ,n t#e case o% Duavit vs' $7, t#e $ourt was cogni*ant o% t#e incu&pator! testimon! spewed !
"ainiano w#en #e admitted t#at #e took t#e Aeep %rom t#e garage o% Duavit wit#out t#e consent or aut#orit!
o% t#e &atter' ,n t#e Du9ui&&o case, t#e de%endant t#erein cannot e #e&d &ia&e %or an!t#ing ecause o%
circumstances w#ic# indicated t#at t#e truck was driven wit#out t#e consent or know&edge o% t#e owner
t#ereo%'
L88M
4argas vs. Lang5a-
[-3]
7ocu# vs. La*una (aya$as Bus Co. (GR L>-3333! 31 8cto$er 1%%)
First Division, 1arredo (J): 0 concur, 1 concur in resu&t, 1 reserves vote
&acts' @erminio +' Eocum, a passenger in +aguna Ta!aas 1us $o'?s 1us 182, w#ic# was t#en making a trip
wit#in t#e arrio o% Dita, Municipa&it! o% 1a!, +aguna, was inAured as a conse9uence o% t#e e3p&osion o%
%irecrackers, contained in a o3, &oaded in said us and dec&ared to its conductor as containing c&ot#es and
misce&&aneous items ! a co=passenger'
Eocum %i&ed a case against +aguna Ta!aas 1us %or damages' T#e $F, o% 1atangas ($ivi& $ase /35)
sentenced +aguna Ta!aas to pa! Eocum t#e sum o% P1,341'22 %or actua& damages and P422'22 as attorne!?s
%ees, wit# &ega& interest %rom t#e %i&ing o% t#e comp&aint p&us costs' +aguna Ta!aas appea&ed'
T#e "upreme $ourt reversed t#e appea&ed Audgment o% t#e tria& court, and dismissed t#e case, wit#out costs'
1. 5rticle 1333 7CC
7rtic&e 1033 o% t#e $ivi& $ode provides t#at ;$ommon carriers, %rom t#e nature o% t#eir usiness and
%or reasons o% pu&ic po&ic!, are ound to oserve e3traordinar! di&igence in t#e vigi&ance over t#e goods and
%or t#e sa%et! o% t#e passengers transported ! t#em, according to a&& t#e circumstances o% eac# case' "uc#
e3traordinar! di&igence in t#e vigi&ance over t#e goods is %urt#er e3pressed in artic&es 1035, 1034, and 1054,
Eos' 4, >, and 0, w#i&e t#e e3traordinar! di&igence %or t#e sa%et! o% t#e passengers is %urt#er set %ort# in
artic&es 1044 and 104>'
-. 5rticle 1322 7CC
7rtic&e 1044 o% t#e $ivi& $ode provides t#at ;7 common carrier is ound to carr! t#e passengers
sa%e&! as %ar as #uman care and %oresig#t can provide, using t#e utmost di&igence o% ver! cautious persons,
wit# a due regard %or a&& t#e circumstances'
3. 5rticle 132 7CC
7rtic&e 104> o% t#e $ivi& $ode provides t#at ;,n case o% deat# o% or inAuries to passengers, common
carriers are presumed to #ave een at %au&t or to #ave acted neg&igent&!, un&ess t#e! prove t#at t#e! oserved
e3traordinar! di&igence as prescried in artic&es 1033 and 1044'<
/. 5rticle 1333 7CC not too exactin*6 Carrier not #an+ate+ to re9uire openin* o, $a**a*e
1e%ore t#e o3 containing t#e %irecrackers were a&&owed to e &oaded in t#e us ! t#e conductor,
in9uir! was made wit# t#e passenger carr!ing t#e same as to w#at was in it, since its ;opening was %o&ded and
tied wit# aaca'< 7ccording to t#e Audge o% t#e &ower court, ;i% proper and rigid inspection were oserved !
t#e de%endant, t#e contents o% t#e o3 cou&d #ave een discovered and t#e accident avoided' :e%usa& ! t#e
passenger to #ave t#e package opened was no e3cuse ecause, as stated ! Dispatc#er $ornista, emp&o!ees
s#ou&d ca&& t#e po&ice i% t#ere were packages containing artic&es against compan! regu&ations'< Bven it t#at
ma! e true, t#e &aw does not re9uire as muc#' 7rtic&e 1033 is not as unending, %or it reasona&! 9ua&i%ies t#e
e3traordinar! di&igence re9uired o% common carriers %or t#e sa%et! o% t#e passengers transported ! t#em to e
;according to a&& t#e circumstances o% eac# case'< ;,n %act, 7rtic&e 1044 repeats t#is same 9ua&i%ication: ;7
common carrier is ound to carr! t#e passengers sa%e&! as %ar as #uman care and %oresig#t can provide, using
t#e utmost di&igence o% ver! cautious persons, wit# due regard %or a&& t#e circumstances'<
2. :assen*ers presu#e+ t)at a passen*er t)at .ill not take .it) )i# anyt)in* +an*erous
F#i&e it is true t#e passengers o% +aguna Ta!aas? us s#ou&d not e made to su%%er %or somet#ing
over w#ic# t#e! #ad no contro&, %airness demands t#at in measuring a common carrier?s dut! towards its
passengers, a&&owance must e given to t#e re&iance t#at s#ou&d e reposed on t#e sense o% responsii&it! o% a&&
t#e passengers in regard to t#eir common sa%et!' ,t is to e presumed t#at a passenger wi&& not take wit# #im
an!t#ing dangerous to t#e &ives and &ims o% #is co=passengers, not to speak o% #is own'
. Ri*)t to privacy
Eot to e &ig#t&! considered e t#e rig#t to privac! to w#ic# eac# passenger is entit&ed' @e cannot e
suAected to an! unusua& searc#, w#en #e protests t#e innocuousness o% #is aggage and not#ing appears to
indicate t#e contrar!, as in t#e case at ar' ,n ot#er words, in9uir! ma! e vera&&! made as to t#e nature o% a
passenger?s aggage w#en suc# is not outward&! percepti&e, ut e!ond t#is, constitutiona& oundaries are
a&read! in danger o% eing transgressed' $a&&ing a po&iceman to #is aid in compe&&ing t#e passenger to sumit
to more rigid inspection, a%ter t#e passenger #ad a&read! dec&ared t#at t#e o3 contained mere c&ot#es and
ot#er misce&&anies, cou&d not #ave Austi%ied invasion o% a constitutiona&&! protected domain' Po&ice o%%icers
acting wit#out Audicia& aut#orit! secured in t#e manner provided ! &aw are not e!ond t#e pa&e o%
constitutiona& in#iitions designed to protect individua& #uman rig#ts and &ierties' Fit#a&, w#at must e
important&! considered is not so muc# t#e in%ringement o% t#e %undamenta& sacred rig#ts o% t#e particu&ar
passenger invo&ved, ut t#e constant t#reat an! contrar! ru&ing wou&d pose on t#e rig#t o% privac! o% a&&
passengers o% a&& common carriers, considering #ow easi&! t#e dut! to inspect can e made an e3cuse %or
misc#ie% and ause'
3. :roper un+erstan+in* o, t)e service #anual issue+ $y La*una (aya$as
F#en t#ere are su%%icient indications t#at t#e representations o% t#e passenger regarding t#e nature o%
#is aggage ma! not e true, in t#e interest o% t#e common sa%et! o% a&&, t#e assistance o% t#e po&ice aut#orities
ma! e so&icited, not necessari&! to %orce t#e passenger to open #is aggage, ut to conduct t#e needed
investigation consistent wit# t#e ru&es o% propriet! and, aove a&&, t#e constitutiona& rig#ts o% t#e passenger' ,t
is in t#is sense t#at t#e service manua& issued ! +aguna Ta!aas 1us $o' to its conductors must e
understood'
4. Resort to +ecisions o, ,orei*n ?uris+iction si#ilar tot t)e present one
Decisions in ot#er Aurisdictions evident&! ecause o% t#e paucit! o% &oca& precedents s9uare&! in point,
emp#asi*e t#at t#ere is need %or evidence o% circumstances indicating cause or causes %or appre#ension t#at
t#e passenger?s aggage is dangerous and t#at it is %ai&ure o% t#e common carrier?s emp&o!ee to act in t#e %ace
o% suc# evidence t#at constitutes t#e cornerstone o% t#e common carrier?s &iai&it! in cases simi&ar to t#e
present one'
%. :rinciple controllin* servants o, t)e carrier6 Clark vs. Louisville
T#e princip&e t#at must contro& t#e servants o% t#e carrier in a case is correct&! stated in t#e opinion in
t#e case o% $&arke v' +ouisvi&&e T E':' $o' (82 P! +' :ep' /3., 5. "'F' 1182)' ,n t#at case $&arke was a
passenger on t#e de%endant?s train' 7not#er passenger took a 9uantit! o% gaso&ine into t#e same coac# in
w#ic# $&arke was riding' ,t ignited and e3p&oded, ! reason o% w#ic# #e was severe&! inAured' T#e tria& court
peremptori&! instructed t#e Aur! to %ind %or t#e de%endant' ,n t#e opinion, a%%irming t#e Audgment, it is said: G,t
ma! e stated rie%&!, in assuming t#e &iai&it! o% a rai&road to its passengers %or inAur! done ! anot#er
passenger, on&! w#ere t#e conduct o% t#is passenger #ad een suc# e%ore t#e inAur! as to induce a reasona&!
prudent and vigi&ant conductor to e&ieve t#at t#ere was reasona&e ground to appre#end vio&ence and danger
to t#e ot#er passengers, and in t#at case asserting it to e t#e dut! o% t#e conductor o% t#e rai&road train to use
a&& reasona&e means to prevent suc# inAur!, and i% #e neg&ects t#is reasona&e dut!, and inAur! is done, t#at
t#en t#e compan! is responsi&eC t#at ot#erwise t#e rai&road is not responsi&e'
1". :rinciple controllin* servants o, t)e carrier6 Gul, vs. S)iel+s as cite+ in Clark vs. Louisville
;T#e opinion 9uotes wit# approva& %rom t#e case o% 6u&%, $' T "' F' :' $o' vs' "#ie&ds, . Te3' $iv'
7pp' >48, 8. "' F' >48, in w#ic# case t#e p&ainti%% was inAured ! a&co#o& w#ic# #ad een carried upon t#e
train ! anot#er passenger' ,n t#e opinion in t#at case it is said: G,t was ut a s#ort period o% time a%ter t#e
a&co#o& was spi&t w#en it was set on %ire and t#e accident occurred, and it was not s#own t#at appe&&ant?s
emp&o!ees knew t#at t#e Aug contained a&co#o&' ,n %act, it is not s#own t#at t#e conductor or an! ot#er
emp&o!ee knew t#at @arris #ad a Aug wit# #im unti& it %e&& out o% t#e sack, t#oug# t#e conductor #ad co&&ected
#is %are, and dout&ess knew t#at #e #ad t#e sack on t#e seat wit# #im' ,t cannot e success%u&&! denied t#at
@arris #ad t#e rig#t as a passenger to carr! aggage on t#e train, and t#at #e #ad a rig#t to carr! it in a sack i%
#e c#ose to do so' Fe t#ink it is e9ua&&! c&ear t#at, in t#e asence o% some intimation or circumstance
indicating t#at t#e sack contained somet#ing dangerous to ot#er passengers, it was not t#e dut! o% appe&&ant?s
conductor or an! ot#er emp&o!ee to open t#e sack and e3amine its contents' [6uinn v. Louisville 7 ). (. Co.
.* 8-. 331, 33 . 9. 703: 9ood v. Louisville 7 ). (. Co. 1!1 8-. 7!3, 03 . 9. 30.: Louisville 7 ). (. Co. v.
4incent, 3. 8-. L. (ep. 1!0., .+ . 9. *.*: Louisville 7 ). (. Co. v. (en2ro, 103 8-. /.!, 33 L. (. A. (). .)
133, 13/ . 9. 3++]
11. Dxplosive or <an*erous Contents
B3p&osive or Dangerous $ontents' H 7 carrier is ordinari&! not &ia&e %or inAuries to passengers %rom
%ires or e3p&osions caused ! artic&es roug#t into its conve!ances ! ot#er passengers, in t#e asence o% an!
evidence t#at t#e carrier, t#roug# its emp&o!ees, was aware o% t#e nature o% t#e artic&e or #ad an! reason to
anticipate danger t#ere%rom' (&ogard v. 'llinois C. ( Co. 100 8-. +0., 13. . 9. *//, 3+ L. (. A. [). .] 337:
Clar5e v. Louisville 7 ). (. Co. 1!1 8-. 30, 3. . 9. *0!, 3+ L. (. A. 133 [e;plosion o2 can o2 gasoline]: <ast
'ndian (. Co. v. =u5er>ee [1.!1] A. C. [<ng.] 3.+, 3 &. (. C. 03! ? P. C. [e;plosion o2 2irewor5s]:
Annotation@ 37 L. (. A. [). .] 73/.)
1-. Dxtraor+inary +ili*ence s)o.n6 Rulin* on ,ortuitous event not necessary
"ince t#e $ourt #o&ds t#at +aguna Ta!aas #as succeeded in reutting t#e presumption o% neg&igence
! s#owing t#at it #as e3ercised e3traordinar! di&igence %or t#e sa%et! o% its passengers, ;according to t#e
circumstances o% t#e case<, t#e $ourt deemed it unnecessar! to ru&e w#et#er or not t#ere was an! %ortuitous
event in t#e present case'
[-/]
(a#ayo vs. 59uino! et.al. (GR L>1-3/ M L>1-3-"! -% =ay 1%2%)
7&so :a!os vs' Tama!o, et' a&'
Bn 1anc, +arador (J): 0 concur
&acts' F#i&e Bpi%ania 6on*a&es was making a trip aoard truck wit# P&ate TPD=034, it umped against a
cu&vert on t#e side o% t#e road in 1uga&&on, Pangasinan' 7s a conse9uence o% t#is accident Bpi%ania 6on*a&es
was t#rown awa! %rom t#e ve#ic&e and two pieces o% wood emeded in #er sku&& as a resu&t o% w#ic# s#e died'
T#e impact o% t#e truck against t#e cu&vert was so vio&ent t#at t#e roo% o% t#e ve#ic&e was ripped o%% %rom its
od!, one %ender was smas#ed and t#e engine damaged e!ond repair'
,nocencio 79uino and #is c#i&dren roug#t an action against Jose 6' Tama!o, #o&der o% a certi%icate o% pu&ic
convenience to operate two trucks %or damages %or t#e deat# o% ,nocencio?s wi%e, Bpi%ania 6on*a&es, w#i&e
riding aoard Tama!o?s truck' T#e comp&aint was %or t#e recover! o% P12,222 as actua& damages, P12,222 as
mora& damages, and costs' Dpon eing summoned, Tama!o answered, a&&eging t#at t#e truck is owned !
"i&vestre :a!os so #e %i&ed a t#ird=part! comp&aint against t#e &atter, a&&eging t#at #e no &onger #ad an!
interest w#atsoever in t#e said truck, as #e #ad so&d t#e same e%ore t#e accident to :a!os' 7nswering t#e
t#ird=part! comp&aint, :a!os a&&eged t#at i% an! indemnit! is due, it s#ou&d come %rom Tama!o, ecause #e
did not #ave an! transaction wit# #im regarding suc# sa&e' T#e $F, %ound t#at t#e truck wit# p&ate TPD=034
was one o% t#e trucks o% Tama!o under a certi%icate o% pu&ic convenience issued to #imC t#at #e #ad so&d it to
:a!os in Marc# 1.43, ut did not in%orm t#e Pu&ic "ervice $ommission o% t#e sa&e unti& 32 June 1.43, one
mont# a%ter t#e accident' (n t#e asis o% said %acts, t#e $F, ordered Tama!o and :a!os to pa! 79uino Aoint&!
and severa&&! t#e sum o% P>,222 as compensator! damages, and anot#er sum o% P4,222 as mora& damages,
wit# interest, and aut#ori*ed Tama!o or :a!os, w#oever s#ou&d pa! t#e entire amount, to recover %rom t#e
ot#er an! sum in e3cess o% U o% t#e amount ordered to e paid, wit# interest' T#e court a&so dismissed t#e
t#ird=part! comp&aint'
7ppea& against t#e aove decision was made to t#e $ourt o% 7ppea&s' T#is court a%%irmed t#e Audgment o% t#e
$F, in a&& respects' Tama!o and :a!os %i&ed separate petitions %or certiorari e%ore t#e "upreme $ourt'
T#e "upreme $ourt modi%ied t#e Audgment appea&ed %rom, in t#at Tama!o was ordered to pa! to 79uino t#e
sum o% P>,222 as compensator! damages %or t#e deat# o% t#e deceased, ut t#at Tama!o #as t#e rig#t to e
indemni%ied ! :a!os o% t#e amount #e was ordered to pa!C wit# costs against Tama!o and :a!os'
(ransportation La.! -""/ ( " )
1. Re*istere+ o.ner o, pu$lic service ve)icle responsi$le ,or +a#a*es
7s #e&d in t#e cases o% Medina vs' $resencia (.. P#i&', 42>C 48 (%%' 6a*', L11M 5>2>)C Timo& vs'
(sias (./ P#i&', 538C 48 (%%' 6a*' L3M 13.8), Monto!a vs' ,gnacio (.5 P#i&', 1/8C 42 (%%' 6a*', 12/), and
:o9ue vs' Ma&ia! (+=/4>1, 1/ Eovemer 1.44), t#e registered owner o% a pu&ic service ve#ic&e is
responsi&e %or damages t#at ma! e caused to an! o% t#e passengers t#erein, even i% t#e said ve#ic&e #ad
a&read! een so&d, &eased or trans%erred to anot#er person w#o was, at t#e time o% t#e accident, actua&&!
operating t#e ve#ic&e' T#is princip&e was a&so rea%irmed in t#e case o% Bre*o vs' Jepte (128 P#i&', 123)'
-. Reason .)y lia$ility i#pose+ upon t)e re*istere+ o.ner o, t)e ve)icle un+er a certi,icate o,
pu$lic convenience6 DreJo vs. Bepte
T#e reason %or t#e &iai&it! imposed upon t#e registered owner o% t#e ve#ic&e under a certi%icate o%
pu&ic convenience is t#at ;t#e &aw, wit# its aim and po&ic! in mind, does not re&ieve #im direct&! o% t#e
responsii&it! t#at t#e &aw %i3es and p&aces upon #im as an incident or conse9uence o% registration' were a
registered owner a&&owed to evade responsii&it! ! proving w#o t#e supposed trans%eree or owner is, it
wou&d e eas! %or #im ! co&&usion wit# ot#ers or ot#erwise, to escape said responsii&it! and trans%er t#e
same to an inde%inite person, or to one w#o possesses no propert! wit# w#ic# to respond %inancia&&! %or t#e
damage or inAur! done' 7 victim o% reck&essness on t#e pu&ic #ig#wa!s is usua&&! wit#out means to discover
or identi%! t#e person actua&&! causing t#e inAur! or damage' @e #as no means ot#er t#an ! a recourse to t#e
registration in t#e Motor Ve#ic&es (%%ice to determine w#o is t#e owner' T#e protection t#at t#e &aw aims to
e3tend to #im wou&d ecome i&&usor! were t#e registered owner given t#e opportunit! to escape &iai&it! !
disproving #is owners#ip' ,% t#e po&ic! o% t#e &aw is to e en%orced and carried out, t#e registered owner
s#ou&d not e a&&owed to prove t#e contrar! to t#e preAudice o% t#e person inAured, t#at is, to prove t#at a t#ird
person or anot#er #as ecome t#e owner, so t#at #e ma! t#ere! e re&ieved o% t#e responsii&it! to t#e
inAured'<
3. Source o, o$li*ation $ase+ on $reac) o, contract! rat)er t)an 9uasi>+elict
T#e action instituted in t#e present case is one %or reac# o% contract, %or %ai&ure Tama!o to carr!
sa%et! t#e deceased to #er destination' T#e &iai&it! %or w#ic# #e is made responsi&e, i' e', %or t#e deat# o% t#e
passenger, ma! not e considered as arising %rom a 9uasi=de&ict' 7s t#e registered owner Tama!o and #is
tran%eree :a!os ma! not e #e&d gui&t! o% tort or a 9uasi=de&ictC t#eir responsii&it! is not so&idar! as provided
in 7rtic&e 81.5 E$$ (Aoint tort%easors)'
/. Responsi$ility o, t)e trans,eree (as a*ent o, t)e re*istere+ o.ner)6 :resent case
7s Tama!o is t#e registered owner o% t#e truck, #is responsii&it! to t#e pu&ic or to an! passenger
riding in t#e ve#ic&e or truck must e direct, %or t#e reasons given in t#e decision in t#e case o% Bre*o vs'
Jepte' 1ut as t#e trans%eree, w#o operated t#e ve#ic&e w#en t#e passenger died, is t#e one direct&! responsi&e
%or t#e accident and deat# #e s#ou&d in turn e made responsi&e to t#e registered owner %or w#at t#e &atter
ma! #ave een adAudged to pa!' ,n operating t#e truck wit#out trans%er t#ereo% #aving een approved ! t#e
Pu&ic "ervice $ommission, t#e trans%eree acted mere&! as agent o% t#e registered owner and s#ou&d e
responsi&e to #im (t#e registered owner), %or an! damages t#at #e ma! cause t#e &atter ! #is neg&igence'
Furt#er, inspite o% t#e %act t#at t#e agreement etween Tama!o and :a!os was %or :a!os to use t#e truck in
carr!ing o% gaso&ine, t#e &atter used t#e same in transporting passengers outside t#e route covered ! t#e
%ranc#ise o% Tama!o' For t#is additiona& reason, t#e agent or :a!os must e #e&d responsi&e to t#e registered
owner, to t#e e3tent t#at t#e &atter ma! su%%er damage ! reason o% t#e deat# caused during t#e accident'
2. Responsi$ility o, t)e trans,eree (as a*ent o, t)e re*istere+ o.ner)6 DreJo vs. Bepte
,n t#e case o% Bre*o vs' Jepte, t#e court #e&d t#at t#e registered owner (t#e de%endant appe&&ant
t#erein) is primari&! responsi&e %or t#e damage caused to t#e ve#ic&e o% t#e p&ainti%%=appe&&ee, ut #e
(de%endant=appe&&ant) #as a rig#t to e indemni%ied ! t#e rea& or actua& owner o% t#e amount t#at #e ma! e
re9uired to pa! as damage %or t#e inAur! caused to t#e p&ainti%%=appe&&ant'
. ()ir+ party co#plaint proper6 Rule 1- o, Rules o, Court
T#e procedura& means ! w#ic# t#e &iai&it! o% t#e trans%eree to t#e #o&der o% t#e certi%icate s#ou&d e
en%orced is t#at indicated in t#e case o% Bre*o vs' Jepte' @erein, t#is procedure was adopted ! Tama!o, w#en
#e presented t#ird=part! comp&aint against :a!os' T#e courts s#ou&d #ave adAudged t#e responsii&it! to make
indemnit! in accordance t#erewit#' T#e trans%eree is &ia&e to indemni%! t#e registered owner %or t#e damages
t#at t#e &atter ma! e re9uired to pa! %or t#e accident, #ence t#e remed! is ! t#ird=part! comp&aint ("ee :u&e
18, :u&es o% $ourt)'
3. 7o #oral +a#a*es +ue in culpa>contractual6 5rticle ---" 7CC
7s t#e responsii&it! o% Tama!o and #is agent :a!os is cu&pa=contractua&, no award o% mora& damages
can e given' T#e &aw on t#is matter is e3pressed in 7rtic&e 8882 o% t#e $ivi& $ode, w#ic# provides t#at
;wi&&%u& inAur! to propert! ma! e a &ega& ground %or awarding mora& damages i% t#e court s#ou&d %ind t#at,
under t#e circumstances, suc# damages are Aust&! due' T#e same ru&e app&ies to reac#es o% contract w#ere t#e
de%endant acted %raudu&ent&! or in ad %ait#'<
4. 7o $a+ ,ait) on part o, (a#ayo present to allo. a.ar+ o, #oral +a#a*es
T#e &aw e3press&! provides t#at award o% mora& damages can e made in a suit %or reac# o% contract
on&! w#en t#e de%endants acted %raudu&ent&! or in ad %ait#' @erein, t#e #o&der o% t#e certi%icate was not gui&t!
o% %raud or ad %ait#' T#ere appears to e no %raud at a&& in t#e trans%er' Trans%ers are pro#iited on&! i% made
wit#out approva& ! t#e Pu&ic "ervice $ommission' T#ere ma! #ave een a vio&ation o% t#e regu&ations
ecause Tama!o did not secure a previous aut#orit! to trans%er %rom said $ommission, ut #e actua&&! app&ied
%or and otained said permission or approva& aout a mont# a%ter t#e accident' 1esides, t#e truck was
trans%erred to :a!os wit# t#e understanding t#at t#e same was not to e used as a pu&ic convenience, so t#at
inso%ar as Tama!o is concerned, t#ere cou&d #ave een no s#ade or tint o% ad %ait# at a&&' $onse9uent&!, t#e
ground upon w#ic# mora& damages ma! e demanded %rom #im does not e3ist'
%. 7o $a+ ,ait)! only $reac) o, a*ree#ent! on part o, Rayos
T#ere was no %raud or ad %ait# committed on t#e part o% t#e trans%eree or agent eit#er' T#ere ma!
#ave een a reac# o% t#e agreement etween Tama!o and :a!os, ut t#is was not t#e immediate cause o% t#e
accident' ,t was t#e neg&igence o% t#e driver' F#at t#e &aw wou&d seem to consider as ad %ait# w#ic# ma!
%urnis# a ground %or t#e award o% mora& damages in t#e present case wou&d e ad %ait# in t#e securing and in
t#e e3ecution o% t#e contract and in t#e en%orcement o% its terms (7rtic&e 133/, $ivi& $ode), or an! ot#er kind
o% deceit w#ic# ma! #ave een used ! ot# de%endants' Eone can e said to #ave een present in t#e present
case' T#ere was no ad %ait# on t#e part o% t#e agent :a!os, t#ere was neg&igence o% t#e driver emp&o!ed !
#im, ut t#is is certain&! not ad %ait# as contemp&ated ! &aw'
[-2]
DreJo vs. Bepte (GR L>%"2! 3" Septe#$er 1%23)
First Division, +arador (J): 0 concur, 1 concur in resu&t
&acts' 7guedo Jepte is t#e registered owner o% a si3 ! si3 truck earing p&ate Eo' T$=1843' (n 7ugust .,
1.5., w#i&e t#e same was eing driven ! :odo&%o Bspino ! 6arcia, it co&&ided wit# a ta3ica at t#e
intersection o% "an 7ndres and Dakota "treets, Mani&a' 7s t#e truck went o%% t#e street, it #it Brnesto Bre*o
and anot#er, and t#e %ormer su%%ered inAuries, as a resu&t o% w#ic# #e died' T#e driver was prosecuted %or
#omicide t#roug# reck&ess neg&igence in crimina& case 12>>3 o% t#e $F, Mani&a' T#e accused p&eaded gui&t!
and was sentenced to su%%er imprisonment and to pa! t#e #eirs o% Brnesto Bre*o t#e sum o% P3,222'
7s t#e amount o% t#e Audgment cou&d not e en%orced against #im, 6audioso Bre*o, Brnesto?s %at#er, roug#t
t#e action against t#e registered owner o% t#e truck, Jepte' Jepte did not den! t#at at t#e time o% t#e %ata&
accident t#e cargo truck driven ! :odo&%o Bspino ! 6arcia was registered in #is name' @e, #owever, c&aims
t#at t#e ve#ic&e e&onged to t#e Port 1rokerage, o% w#ic# #e was t#e roker at t#e time o% t#e accident' T#e
tria& court #e&d t#at as Jepte represented #imse&% to e t#e owner o% t#e truck and t#e Motor Ve#ic&es (%%ice,
re&!ing on #is representation, registered t#e ve#ic&es in #is name, t#e 6overnment and a&& persons a%%ected !
t#e representation #ad t#e rig#t to re&! on #is dec&aration o% owners#ip and registration' ,t, t#ere%ore, #e&d t#at
Jepte is &ia&e ecause #e cannot e permitted to repudiate #is own dec&aration' @ence, t#e appea&'
T#e "upreme $ourt a%%irmed t#e Audgment appea&ed %rom, wit# costs against Jepte'
1. Re*istere+ o.ner o, C:C lia$le to pu$lic ,or in?uries an+ +a#a*es su,,ere+ $y passen*ers or
t)ir+ person cause+ $y )is ve)icle1s operation6 Rationale o, t)e la.6 Ri*)t o, recourse
T#e registered owner o% a certi%icate o% pu&ic convenience is &ia&e to t#e pu&ic %or t#e inAuries or
damages su%%ered ! passengers or t#ird persons caused ! t#e operation o% said ve#ic&e, even t#oug# t#e
same #ad een trans%erred to a t#ird person' (Monto!a vs' ,gnacio, .5 P#i&', 1/8, 42 (%%' 6a*', 12/C :o9ue vs'
Ma&ia! Transit ,nc', 1 6' :' Eo' +=/4>1, Eovemer 1/, 1.44C Vda' de Medina vs' $resencia, .. P#i&', 42>,
48 (%%' 6a*', L12M, 5>2>') T#e princip&e upon w#ic# t#is doctrine is ased is t#at in dea&ing wit# ve#ic&es
registered under t#e Pu&ic "ervice +aw, t#e pu&ic #as t#e rig#t to assume or presume t#at t#e registered
owner is t#e actua& owner t#ereo%, %or it wou&d e di%%icu&t %or t#e pu&ic to en%orce t#e actions t#at t#e! ma!
#ave %or inAuries caused to t#em ! t#e ve#ic&es eing neg&igent&! operated i% t#e pu&ic s#ou&d e re9uired to
prove w#o t#e actua& owner is' T#e doctrine #owever does not imp&! t#at t#e registered owner ma! not
recover w#atever amount #e #ad paid ! virtue o% #is &iai&it! to t#ird persons %rom t#e person to w#om #e
#ad actua&&! so&d, assigned or conve!ed t#e ve#ic&e'
-. Re*istere+ o.ner o, ve)icle pri#ary responsi$le even )e .as no lon*er o.ner o, ve)icle at ti#e
o, +a#a*e
Dnder t#e same princip&e t#e registered owner o% an! ve#ic&e, even i% not used %or a pu&ic service,
s#ou&d primari&! e responsi&e to t#e pu&ic or to t#ird persons %or inAuries caused t#e &atter w#i&e t#e ve#ic&e
is eing driven on t#e #ig#wa!s or streets'
3. =otor Ge)icles Re*istration6 Syste# o, licensin*! <uties o, #otor ve)icle +ealers
T#e :evised Motor Ve#ic&es +aw (7ct Eo' 3..8, as amended) provides t#at no ve#ic&e ma! e used
or operated upon an! pu&ic #ig#wa! un&ess t#e same is proper&! registered' ,t #as een stated t#at t#e s!stem
o% &icensing and t#e re9uirement t#at eac# mac#ine must carr! a registration numer, conspicuous&!
disp&a!ed, is one o% t#e precautions taken to reduce t#e danger o% inAur! to pedestrians and ot#er trave&&ers
%rom t#e care&ess management o% automoi&es, and to %urnis# a means o% ascertaining t#e identit! o% persons
vio&ating t#e &aws and ordinances, regu&ating t#e speed and operation o% mac#ines upon t#e #ig#wa!s (8 :' $'
+' 110>)' Eot on&! are ve#ic&es to e registered and t#at no motor ve#ic&es are to e used or operated wit#out
eing proper&! registered %or t#e current !ear, ut t#at dea&ers in motor ve#ic&es s#a&& %urnis# t#e Motor
Ve#ic&es (%%ice a report s#owing t#e name and address o% eac# purc#aser o% motor ve#ic&e during t#e previous
mont# and t#e manu%acturer?s seria& numer and motor numer' ("ection 4 LcM, 7ct Eo' 3..8, as amended')
/. 7ature o, #otor ve)icle re*istration
:egistration is re9uired not to make said registration t#e operative act ! w#ic# owners#ip in ve#ic&es
is trans%erred, as in &and registration cases, ecause t#e administrative proceeding o% registration does not ear
an! essentia& re&ation to t#e contract o% sa&e etween t#e parties ($#inc#i&&a vs' :a%ae& and Verdaguer, 3. P#i&'
///), ut to permit t#e use and operation o% t#e ve#ic&e upon an! pu&ic #ig#wa! (section 4 LaM, 7ct Eo' 3..8,
as amended)'
2. :urpose o, #otor ve)icle re*istration
(ne o% t#e principa& purposes o% motor ve#ic&es &egis&ation is identi%ication o% t#e ve#ic&e and o% t#e
operator, in case o% accidentC and anot#er is t#at t#e know&edge t#at means o% detection are a&wa!s avai&a&e
ma! act as a deterrent %rom &a3 oservance o% t#e &aw and o% t#e ru&es o% conservative and sa%e operation'
F#atever purpose t#ere ma! e in t#ese statutes, it is suordinate at t#e &ast to t#e primar! purpose o%
rendering it certain t#at t#e vio&ator o% t#e &aw or o% t#e ru&es o% sa%et! s#a&& not escape ecause o% &ack o%
means to discover #im' T#e purpose o% t#e statute is t#warted, and t#e disp&a!ed numer ecomes a ;snare
and de&usion'< Eo responsi&e person or corporation cou&d e #e&d &ia&e %or t#e most outrageous acts o%
neg&igence, i% t#e! s#ou&d e a&&owed to p&ace a ;midd&eman< etween t#em and t#e pu&ic, and escape
&iai&it! ! t#e manner in w#ic# t#e! recompense t#eir servants' T#e motor ve#ic&e registration is primari&!
ordained, in t#e interest o% t#e determination o% persons responsi&e %or damages or inAuries caused on pu&ic
#ig#wa!s'
. Re*istere+ o.ner not allo.e+ to prove actual an+ real o.ner
T#e &aw does not a&&ow t#e registered owner to prove w#o t#e actua& and rea& owner is at t#e tria&' T#e
&aw, wit# its aim and po&ic! in mind, does not re&ieve #im direct&! o% t#e responsii&it! t#at t#e &aw %i3es and
p&aces upon #im as an incident or conse9uence o% registration' Fere a registered owner a&&owed to evade
responsii&it! ! proving w#o t#e supposed trans%eree or owner is, it wou&d e eas! %or #im, ! co&&usion wit#
ot#ers or ot#erwise, to escape said responsii&it! and trans%er t#e same to an inde%inite person, or to one w#o
possesses no propert! wit# w#ic# to respond %inancia&&! %or t#e damage or inAur! done' 7 victim o%
reck&essness on t#e pu&ic #ig#wa!s is usua&&! wit#out means to discover or identi%! t#e person actua&&!
causing t#e inAur! or damage' @e #as no means ot#er t#an ! a recourse to t#e registration in t#e Motor
Ve#ic&es (%%ice to determine w#o is t#e owner' T#e protection t#at t#e &aw aims to e3tend to #im wou&d
ecome i&&usor! were t#e registered owner given t#e opportunit! to escape &iai&it! ! disproving #is
owners#ip' ,% t#e po&ic! o% t#e &aw is to e en%orced and carried out, t#e registered owner s#ou&d not e
a&&owed to prove t#e contrar! to t#e preAudice o% t#e person inAured, t#at is, to prove t#at a t#ird person or
anot#er #as ecome t#e owner, so t#at #e ma! t#ere! e re&ieved o% t#e responsii&it! to t#e inAured person'
3. 5pplication o, la. not in con,lict .it) trut) an+ ?ustice
T#e po&ic! and app&ication o% t#e &aw ma! appear 9uite #ars# and wou&d seem to con%&ict wit# trut#
and Austice, ut actua&&! is not' 7 registered owner w#o #as a&read! so&d or trans%erred a ve#ic&e #as t#e
recourse to a t#ird=part! comp&aint, in t#e same action roug#t against #im to recover %or t#e damage or inAur!
done, against t#e vendee or trans%eree o% t#e ve#ic&e' T#e inconvenience o% t#e suit is no Austi%ication %or
re&ieving #im o% &iai&it!C said inconvenience is t#e price #e pa!s %or %ai&ure to comp&! wit# t#e registration
t#at t#e &aw demands and re9uires'
4. Re*istere+ o.ner pri#ary responsi$le! .it) recourse a*ainst real or actual o.ner
@erein, Jepte s#ou&d e #e&d &ia&e to Bre*o %or t#e inAuries occasioned to t#e &atter ecause o% t#e
neg&igence o% t#e driver, even i% Jepte was no &onger t#e owner o% t#e ve#ic&e at t#e time o% t#e damage
ecause #e #ad previous&! so&d it to anot#er' T#e registered owner is primari&! responsi&e %or t#e damage
caused to t#e ve#ic&e o% Bre*o, ut Jepte #as a rig#t to e indemni%ied ! t#e rea& or actua& owner o% t#e
amount t#at #e ma! e re9uired to pa! as damage %or t#e inAur! caused to Bre*o'
[-]
Ia#$oan*a (ransportation Co. vs. C5 (GR L>-2-%-! -% 7ove#$er 1%%)
Bn 1anc, 1arredo (J): 0 concur, 8 took no part
&acts' ,n t#e evening o% 13 7ugust 1.44, t#e spouses :amon and Jose%ina Dagamanue& oarded a us at
Manica#an, Ramoanga $it!, to attend a ene%it dance at t#e 1unguiao B&ementar! "c#oo&, a&so in
Ramoanga $it!, w#ere Jose%ina was a pu&ic sc#oo& teac#er' 7%ter t#e dance, t#e coup&e oarded t#e same
us to return to Manica#an' 7t around 1 a'm' o% 15 7ugust 1.44, t#e us (1.44 TPD=1130), and driven !
Va&eriano Marcos, %e&& o%% t#e road and pinned to deat# t#e said spouses and severa& ot#er passengers'
Jose Mario Dagamanue&, t#e on&! c#i&d o% t#e deceased spouses, t#roug# #is materna& grandmot#er as
guardian ad=&item, Pascua&a Ju&ian de Pun*a&an, instituted an action against Ramoanga Transportation $o',
,nc' (Ramtanco) and t#e Ramoanga :apids $o', ,nc' (Ramraco) %or reac# o% contract o% carriage, a&&eging
t#at t#e accident was due to t#e %au&t and neg&igence o% t#e driver in operating t#e us and due to t#e
neg&igence o% t#e companies in t#eir supervision o% t#eir driver' Dagamanue& asks %or actua& or compensator!
damages in t#e sum o% P52,222, mora& damages in t#e sum o% P52,222, e3emp&ar! damages in t#e sum o%
P82,222, attorne!?s %ees in t#e sum o% P4,222 and costs' Ramtranco %i&ed a t#ird=part! comp&aint against t#e
driver Marcos' T#e Ramraco a&so %i&ed a t#ird=part! comp&aint against t#e driver' Finding t#at (1) t#e
Ramtranco and t#e Ramraco were under one management at t#e time o% t#e accidentC (8) t#e accident was
due to t#e neg&igence o% t#e driver w#o was under t#eir emp&o!C and (3) t#e sa&e made ! Marcos o% #is
propert! was done wit# intent to de%raud #is creditors, t#e tria& court rendered Audgment (1) sentencing t#e
t#ree, Aoint&! and severa&&!, to pa! t#e p&ainti%% P1>,222 %or t#e deat# o% t#e spouses, P5,222 as e3emp&ar!
damages, P8,222 as attorne!?s %ees, and costsC and (8) annu&&ing t#e deed o% sa&e e3ecuted ! Marcos'
Ramtranco, Ramraco and Marcos appea&ed' Marcos? appea& was &ater dismissedC #ence as to #im t#e
Audgment is a&read! %ina& and e3ecutor!' T#e appe&&ate court a%%irmed t#e Audgment o% t#e tria& court wit#
modi%ication as to t#e award o% damages, to wit, (1) P18,222 %or t#e deat# o% t#e spouses :amon and Jose%ina
Dagamanue&, (8) P11,482 %or t#e &oss o% earnings o% ot# spouses, (3) P4,222 as mora& damages, and (5)
P4,222 as e3emp&ar! damages, wit# costs against Ramtranco and Ramraco' T#e &atter moved %or
reconsideration, ut t#e same was denied' @ence, t#e appea& via a petition %or certiorari'
T#e "upreme $ourt a%%irmed t#e Audgment o% t#e $ourt o% 7ppea&s, wit# t#e modi%ication t#at as to damages,
Ramtranco and Ramraco are sentenced to pa! Aoint&! and severa&&! no more t#an t#e amounts o% damages
adAudged ! t#e tria& courtC wit# no costs in t#is instance'
1. 5pplication o, previous rulin*s as to lia$ilities o, parties .)ere C:C is trans,erre+ not
necessary as $ot) o.ners o, $us a+#it +river .as in t)eir e#ploy
F#i&e it is true t#at according to previous decisions o% t#e "upreme $ourt, trans%er o% a certi%icate o%
pu&ic convenience to operate a transportation service is not e%%ective and inding inso%ar as t#e responsii&it!
o% t#e grantee under t#e %ranc#ise in its re&ation to t#e pu&ic is concerned, wit#out t#e approva& o% t#e trans%er
! t#e Pu&ic "ervice $ommission re9uired ! t#e Pu&ic "ervice 7ct, and t#at in contemp&ation o% &aw, t#e
trans%eror o% suc# certi%icate continues to e t#e operator o% t#e service as &ong as t#e trans%er is not !et
approved, and as suc# operator, #e is t#e one responsi&e Aoint&! and severa&&! wit# #is driver %or damages
incurred ! passengers or t#ird persons in conse9uence o% inAuries or deat#s resu&ting %rom t#e operation o%
suc# service, t#e $ourt does not %ind an! need %or app&!ing t#ese ru&ings to t#e present case %or t#e simp&e
reason t#at in t#eir respective t#ird=part! comp&aints, t#e companies ot# admitted separate&! t#at t#e! are t#e
owners o% t#e us invo&ved in t#e incident in 9uestion and t#at Va&eriano Marcos, t#e driver o% said us at t#e
time o% said incident, was in t#eir emp&o!'
-. Ia#$raco appears to $e t)e re*istere+ o.ner! Ia#tranco .as in ,act t)e operator
T#ere is aundant evidence t#at a&t#oug# t#e Ramraco appears to e t#e registered owner,
Ramtranco was in %act t#e operator' To start wit#, t#ere is t#e testimon! o% Fi&oteo de &os :e!es, principa&
teac#er o% Jose%ina, to t#e e%%ect t#at %or t#e trip to and %rom 1unguiao w#ere t#e ene%it dance was #e&d, #e
contracted wit# Ramtranco at TetuanC t#at #e saw in 1unguiao t#e us sent ! RamtrancoC and t#at #e paid t#e
%are to t#e driver o% Ramtranco' T#is testimon! was never contradicted ! t#e companies, eit#er !
documentar! or testimonia& evidence'
3. Sale an+ #er*er o, Ia#$raco .it) Ia#tranco su$?ect o, application .it) :SC6 Ia#$raco
re#ains re*istere+ .it) Ia#$raco
TPD 1us 1380, w#ic# %igured in t#e accident t#at caused t#e deat# o% t#e spouses :amon
Dagamanue& and Jose%ina Pun*a&an, was registered in t#e name o% Ramraco in t#e !ear 1.44' 7t t#at time,
t#e sa&e and merger o% t#is Ramraco wit# t#e Ramtranco was to e t#e suAect o% app&ication wit# t#e Pu&ic
"ervice $ommission' Pending suc# approva&, t#e i&&=%ated us was again registered in t#e name o% t#e
Ramraco in t#e !ear 1.4>, according to t#e testimon! given at t#e tria& ! +eonardo 6a&ve*, t#en 7cting
:egistrar o% t#e Motor Ve#ic&e (%%ice in Ramoanga'
/. :revious rulin*s inapplica$le6 Re*istere+ o.ners +o not seek to pass on lia$ility to t)e actual
operators on t)e pretext t)at t)ey )a+ alrea+y sol+ or trans,erre+ t)eir units to t)e latter
T#ere is no app&ication o% t#e ru&ing in t#e previous cases to t#e present case' T#ere, t#e registered
owners invaria&! soug#t to pass on &iai&it! to t#e actua& operators on t#e prete3t t#at t#e! #ad a&read! so&d
or trans%erred t#eir units to t#e &atter, w#ereas in t#e present case, t#e registered owner, t#e Ramraco, admits
w#atever &iai&it! it #as and vigorous&! oAects to an! %inding t#at t#e actua& operator, t#e Ramtranco, is a&so
&ia&e wit# it, c&aiming t#at as registered owner, it a&one s#ou&d e adAudged &ia&e' Fe wou&d not in9uire into
t#e motive o% t#e Ramraco w#! instead o% s#aring w#atever &iai&it! it #as wit# t#e Ramtranco, it pre%ers to
s#ou&der it a&one' 1ut t#e %act stands out in o&d re&ie% t#at a&t#oug# sti&& t#e registered owner at t#e time o%
t#e accident, it #ad a&read! so&d t#e ve#ic&e to Ramtranco and t#e &atter was actua&&! operating it'
2. ;nterest o, pu$lic re9uires $ot) re*istere+ an+ actual operators to $e soli+arily lia$le .it)
+river
For t#e etter protection o% t#e pu&ic t#at ot# t#e owner o% record and t#e actua& operator, as #e&d !
t#e $ourt in t#e past, s#ou&d e adAudged Aoint&! and severa&&! &ia&e wit# t#e driver (see Di*on vs' (ctavio, et
a&', 41 ('6' Eo' /, 524.=52>1C $astanares vs' Pages, $7=6':' 81/2.=:, Marc# /, 1.>8C :edado vs' 1autista,
$7=6':' 1.8.4=:, "ept' 1., 1.>1C 1ering vs' Eoet#, $7=6':' 8/5/3=:, 7pri& 8., 1.>4)'
. <iscretion in ,ixin* #oral an+ exe#plary +a#a*es pri#arily lay in t)e trial court
T#e discretion in %i3ing mora& and e3emp&ar! damages primari&! &a! in t#e tria& court and t#e same
s#ou&d e respected' ($o&eongco vs' $&aparo&s, Eo' +=1/>1>, Marc# 31, 1.>5)' G,t is we&&=sett&ed ru&e t#at
w#enever an appea& is taken in a civi& case, an appe&&ee w#o #as not #imse&% appea&ed cannot otain %rom t#e
appe&&ate court an! a%%irmative re&ie% ot#er t#an t#e ones granted in t#e decision o% t#e court e&ow' 7n
appe&&ee, w#o is not appe&&ant, ma! assign errors in #is rie% w#ere #is purpose is to maintain t#e Audgment on
ot#er grounds, ut #e ma! not do so i% #is purpose is to #ave t#e Audgment modi%ied or reversed, %or, in suc# a
case, #e must appea&' @erein, Dagamanue& did not appea& and so it was error %or t#e $ourt o% 7ppea&s to
award #im a re&ie% not granted ! t#e &ower court' (D!, et a&' vs' Puison, +=1>>45, Eov' 32, 1.>1)'
3. C)il+ o, t)ree years cannot ,eel #ental an*uis) resultin* ,ro# parent1s +eat) to .arrant a.ar+
o, excessive #oral +a#a*es
7 c#i&d 3=!ear o&d, as Dagamanue& #erein was w#en #is parents died, cannot !et %ee& t#e menta&
anguis# resu&ting %rom t#eir deat#, as to warrant suc# e3cessive award o% P4,222'22 mora& damages' F#at
degree o% menta& torture cou&d #ave een possi&! endured ! a o! o% suc# tender ageS T#e measure o% mora&
damages, i% an!, must e commensurate wit# t#e menta& anguis# su%%ered ! t#e #eir' (Mercado, et a&' vs' +ira,
et a&', Eos' +=1338/=8. and +=1334/, "ept' 8., 1.>1')
4. 5.ar+ o, +a#a*es $y trial court not excessive
T#e Audgment o% t#e $ourt o% 7ppea&s in respect to t#e matter o% damages to e more in accordance
wit# t#e %acts, e3cept per#aps, as to t#e item o% mora& damages' T#e $ourt o% 7ppea&s proper&! interpreted t#e
P1>,222 awarded ! t#e tria& court as inc&uding not on&! damages %or t#e deceased coup&e ut a&so t#e ot#er
items o% recovera&e damages, &ike compensator! or actua&, etc' T#us viewed, t#e amounts awarded ! t#e
tria& court cannot e considered e3cessive'
[-3]
Santos vs. Si$o* (GR L>-412! - =ay 1%41)
(ransportation La.! -""/ ( )
First Division, Me&encio=@errera (J): 3 concur, 1 concur in resu&t, 1 designated to sit in %irst division, 1 on
&eave
&acts' Vicente D' Vidad was a du&! aut#ori*ed passenger Aeepne! operator, w#i&e 7do&%o +' "antos was t#e
owner o% a passenger Aeep, ut #e #ad no certi%icate o% pu&ic convenience %or t#e operation o% t#e ve#ic&e as a
pu&ic passenger Aeep' "antos t#en trans%erred #is Aeep to t#e name o% Vidad so t#at it cou&d e operated under
t#e &atter?s certi%icate o% pu&ic convenience' ,n ot#er words, "antos ecame w#at is known in ordinar!
par&ance as a kait operator' For t#e protection o% "antos, Vidad e3ecuted a re=trans%er document to t#e
%ormer, w#ic# was to e a private document presuma&! to e registered i% and w#en it was decided t#at t#e
passenger Aeep o% "antos was to e wit#drawn %rom t#e kait arrangement' (n 8> 7pri& 1.>3, 7ra#am "iug
was umped ! a passenger Aeepne! operated ! Vidad and driven ! "evero 6ragas'
7s a resu&t t#ereo%, "iug %i&ed a comp&aint %or damages against Vidad and 6ragas wit# t#e $ourt o% First
,nstance o% Mani&a (1ranc# JV,,, t#en presided ! @on' 7rsenio "o&idum)' (n 4 Decemer 1.>3, a Audgment
was rendered ! t#e tria& court sentencing Vidad and 6ragas, Aoint&! and severa&&!, to pa! "iug t#e sums o%
P42>'82 as actua& damagesC P3,222'22 as mora& damagesC P422'22 as attorne!?s %ees, and costs'
(n 12 7pri& 1.>5, t#e "#eri%% o% Mani&a &evied on a motor ve#ic&e (PDJ=353=>5), registered in t#e name o%
Vidad, and sc#edu&ed t#e pu&ic auction sa&e t#ereo% on / Ma! 1.>5' (n 11 7pri& 1.>5, "antos presented a
t#ird=part! c&aim wit# t#e "#eri%% a&&eging actua& owners#ip o% t#e motor ve#ic&e &evied upon, and stating t#at
registration t#ereo% in t#e name o% Vidad was mere&! to ena&e "antos to make use o% Vidad?s $erti%icate o%
Pu&ic $onvenience' 7%ter t#e t#ird=part! comp&aint was %i&ed, "iug sumitted to t#e "#eri%% a ond issued
! t#e P#i&ippine "uret! ,nsurance $ompan!, to save t#e "#eri%% %rom &iai&it! i% #e were to proceed wit# t#e
sa&e and i% "antos? t#ird=part! c&aim s#ou&d e u&timate&! up#e&d'
(n 88 7pri& 1.>5, e%ore t#e sc#edu&ed sa&e o% / Ma! 1.>5, "antos instituted an action %or Damages and
,nAunction wit# a pra!er %or Pre&iminar! Mandator! ,nAunction against "iugC VidadC and t#e "#eri%% ($ivi&
$ase 4>/58 o% 1ranc# J, o% t#e same $F, o% Mani&a)' T#e comp&aint was &ater amended to inc&ude t#e
P#i&ippine "uret! as a part! de%endant a&t#oug# its ond #ad not ecome e%%ective' Eo pu&ic sa&e was
conducted on / Ma! 1.>5' (n 11 Ma! 1.>5, 1ranc# J issued a :estraining (rder enAoining t#e "#eri%% %rom
conducting t#e pu&ic auction sa&e o% t#e motor ve#ic&e &evied upon' (n 15 (ctoer 1.>4, 1ranc# J a%%irmed
"antos? owners#ip o% t#e Aeepne! in 9uestion ased on t#e evidence adduced, and decreed t#at t#e "iug,
Vidad and t#e "#eri%% are enAoined %rom proceeding wit# t#e sa&e o% t#e ve#ic&e in 9uestion and ordering its
return to "antos and %urt#ermore sentencing "iug to pa! "antos t#e sum o% P14'22 a da! %rom 12 7pri& 1.>5
unti& t#e ve#ic&e is returned to #im, and P422'22 as attorne!?s %ees as we&& as t#e costs' T#is was suse9uent&!
amended on 4 Decemer 1.>4, upon motion %or reconsideration %i&ed ! "antos, to inc&ude t#e P#i&ippine
"uret! as Aoint&! and severa&&! &ia&e wit# "iug, provided t#at t#e &iai&it! o% t#e P#i&ippine "uret! s#a&& in no
case e3ceed P>,422'22' T#e $ourt %urt#er ordered "iug to pa! t#e P#i&ippine "uret!, t#e same sums it is
ordered to pa! under t#e decision'<
From t#e Audgment in t#e 1ranc# J case, "iug appea&ed' Meanw#i&e, "antos moved %or immediate
e3ecution' "iug opposed it on t#e ground t#at 1ranc# J #ad no Aurisdiction over t#e 1ranc# JV,, case, and
t#at 1ranc# J #ad no power to inter%ere ! inAunction wit# t#e Audgment o% 1ranc# JV,,, a $ourt o%
concurrent or coordinate Aurisdiction' (n 13 Eovemer 1.>4, 1ranc# J re&eased an (rder aut#ori*ing
immediate e3ecution on t#e t#eor! t#at t#e 1ranc# J case is ;principa&&! an action %or t#e issuance o% a writ
o% pro#iition to %orid t#e "#eri%% %rom se&&ing at pu&ic auction propert! not e&onging to t#e Audgment
creditor (sic) and t#ere eing no attempt in t#is case to inter%ere wit# t#e Audgment or decree o% anot#er court
o% concurrent Aurisdiction'<
Fit#out waiting %or t#e reso&ution o% #is Motion %or :econsideration, "iug soug#t re&ie% %rom t#e 7ppe&&ate
$ourt in a Petition %or $ertiorari wit# Pre&iminar! ,nAunction' (n 1/ Eovemer 1.>4, t#e $ourt o% 7ppea&s
enAoined t#e en%orcement o% t#e 1ranc# J Decision and t#e (rder o% e3ecution issued ! said 1ranc#' (n 8/
"eptemer 1.>>, t#e $ourt o% 7ppea&s rendered t#e #erein c#a&&enged Decision nu&&i%!ing t#e Audgment
rendered in t#e 1ranc# J $ase and permanent&! restraining 1ranc# J %rom taking cogni*ance o% t#e 1ranc#
J case %i&ed ! "antos' @ence, t#e petition %or review on certiorari %i&ed ! "antos on 15 Decemer 1.>>'
T#e "upreme $ourt dismissed t#e petition %or review on certiorari %i&ed ! "antos, wit# costs against "antos'
1. Restrainin* or+er .ron*,ully issue+ $y Branc) N
Dnder t#e provisions o% "ection 10, :u&e 3., t#e action taken ! t#e "#eri%% cannot e restrained !
anot#er $ourt or ! anot#er 1ranc# o% t#e same $ourt' T#e "#eri%% #as t#e rig#t to continue wit# t#e pu&ic
sa&e on #is own responsii&it!, or #e can desist %rom conducting t#e pu&ic sa&e un&ess t#e attac#ing creditor
%i&es a ond securing #im against t#e t#ird=part! c&aim' 1ut t#e decision to proceed or not wit# t#e pu&ic sa&e
&ies wit# #im'
-. :o.ers o, t)e s)eri,,6 Fy :iaoco vs. 8s#ena
7s said in D! Piaoco vs' (sme)a, . P#i&' 8.., 320, ;t#e powers o% t#e "#eri%% invo&ve ot#
discretiona& power and persona& &iai&it!'<
3. <iscretional po.er an+ personal lia$ility o, t)e s)eri,,6 :lanas vs. =a+ri*al
T#e discretiona& power and persona& &iai&it! #ave een %urt#er e&ucidated in P&anas and Verdon vs'
Madriga& T $o', et a&', .5 P#i&' 045, w#ere it was #e&d, ;t#e dut! o% t#e "#eri%% in connection wit# t#e
e3ecution and satis%action o% Audgment o% t#e court is governed ! :u&e 3. o% t#e :u&es o% $ourt' "ection 14
t#ereo% provides %or t#e procedure to e %o&&owed w#ere t#e propert! &evied on e3ecution is c&aimed ! a t#ird
person' ,% t#e t#ird=part! c&aim is su%%icient, t#e s#eri%%, upon receiving it, is not ound to proceed wit# t#e
&ev! o% t#e propert!, un&ess #e is given ! t#e Audgment creditor an indemnit! ond against t#e c&aim
(Mangaoang vs' Provincia& "#eri%%, .1 P#i&', 3>/)' (% course, t#e s#eri%% ma! proceed wit# t#e &ev! even
wit#out t#e indemnit! ond, ut in suc# case #e wi&& answer %or an! damages wit# #is own persona& %unds
(Faite vs' Peterson, et a&', / P#i&', 51.C 7&*ua, et a&' vs' Jo#nson, 81 P#i&', 32/C $onsu&ta Eo' 351 de &os
aogados de "mit#, 1e&& T $o', 5/ P#i&', 4>4)' 7nd t#e ru&e a&so provides t#at not#ing t#erein contained s#a&&
prevent a t#ird person %rom vindicating #is c&aim to t#e propert! ! an! proper action ("ec' 14 o% :u&e 3.)'<
/. 5ttac)in* cre+itor s)oul+ ,urnis) $on+6 ;, $on+ not ,ile+! +iscretion co#es in6 E)en s)eri,,
procee+s
,t appears %rom t#e aove t#at i% t#e attac#ing creditor s#ou&d %urnis# an ade9uate ond, t#e "#eri%%
#as to proceed wit# t#e pu&ic auction' F#en suc# ond is not %i&ed, t#en t#e "#eri%% s#a&& decide w#et#er to
proceed, or to desist %rom proceeding, wit# t#e pu&ic auction' ,% #e decides to proceed, #e wi&& incur persona&
&iai&it! in %avor o% t#e success%u& t#ird=part! c&aimant'
2. 7o court can inter,ere $y in?unction ?u+*#ent o, concurrent or coor+inate ?uris+iction!
exceptions6 5ra$ay vs. Salva+or
T#e $ourt, in 7raa!, ,nc' vs' @on' "era%in "a&vador, succinct&! #e&d t#at ;genera&&!, t#e ru&e, t#at no
court #as aut#orit! to inter%ere ! inAunction wit# t#e Audgments or decrees o% a concurrent or coordinate
Aurisdiction #aving e9ua& power to grant t#e inAunctive re&ie%, is app&ied in cases, w#ere no t#ird=part!
c&aimant is invo&ved, in order to prevent one court %rom nu&&i%!ing t#e Audgment or process o% anot#er court o%
t#e same rank or categor!, a power w#ic# devo&ves upon t#e proper appe&&ate court' 333 F#en t#e s#eri%%,
acting e!ond t#e ounds o% #is aut#orit!, sei*es a stranger?s propert!, t#e writ o% inAunction, w#ic# is issued
to stop t#e auction sa&e o% t#at propert!, is not an inter%erence wit# t#e writ o% e3ecution issued ! anot#er
court ecause t#e writ o% e3ecution was improper&! imp&emented ! t#e s#eri%%' Dnder t#e writ, #e cou&d
attac# t#e propert! o% t#e Audgment detor' @e is not aut#ori*ed to &ev! upon t#e propert! o% t#e t#ird=part!
c&aimant (Po&aris Marketing $orporation vs' P&an, +=52>>>, Januar! 88, 1.0>, >. "$:7 .3, .0C Mani&a
@era&d Pu&is#ing $o', ,nc' vs' :amos, // P#i&' .5, 128)'<
. Courts6 Buris+iction6 Courts .it)out po.er to inter,ere $y in?unction .it) ?u+*#ents or
+ecrees o, a court o, concurrent ?uris+iction (5$iera vs. C5)
;Eo court #as power to inter%ere ! inAunction wit# t#e Audgments or decrees o% a court o% concurrent
or coordinate Aurisdiction #aving e9ua& power to grant t#e re&ie% soug#t ! inAunction'<
3. Courts6 Buris+iction6 Courts .it)out po.er to inter,ere $y in?unction .it) ?u+*#ents or
+ecrees o, a court o, concurrent ?uris+iction6 E)en applica$le (5$iera vs. C5)
;For t#is doctrine to app&!, t#e inAunction issued ! one court must inter%ere wit# t#e Audgment or
decree issued ! anot#er court o% e9ua& or coordinate Aurisdiction and t#e re&ie% soug#t ! suc# inAunction
must e one w#ic# cou&d e granted ! t#e court w#ic# rendered t#e Audgment or issued t#e decree'<
4. Courts6 Buris+iction6 Courts .it)out po.er to inter,ere $y in?unction .it) ?u+*#ents or
+ecrees o, a court o, concurrent ?uris+iction6 Dxception6 Bu+*#ent ren+ere+ $y anot)er court in ,avor
o, a t)ir+ person .)o clai#s property levie+ upon on execution (5$iera vs. C5)
;Dnder "ection 10 o% :u&e 3. a t#ird person w#o c&aims propert! &evied upon on e3ecution ma!
vindicate suc# c&aim ! action' 7 Audgment rendered in #is %avor H dec&aring #im to e t#e owner o% t#e
propert! H wou&d not constitute inter%erence wit# t#e powers or processes o% t#e court w#ic# rendered t#e
Audgment to en%orce w#ic# t#e e3ecution was &evied' ,% t#at e so H and it is so ecause t#e propert!, eing
t#at o% a stranger, is not suAect to &ev! H t#en an inter&ocutor! order, suc# as inAunction, upon a c&aim and
prima %acie s#owing o% owners#ip ! t#e c&aimant, cannot e considered as suc# inter%erence eit#er'<
%. Dxecution6 E)ere property levie+ on clai#e+ $y t)ir+ person6 O5ction1 in section 13! Rule 3% o,
t)e Rules o, Court! interprete+ (5$iera vs. C5)
;T#e rig#t o% a person w#o c&aims to e t#e owner o% propert! &evied upon on e3ecution to %i&e a
t#ird=part! c&aim wit# t#e s#eri%% is not e3c&usive, and #e ma! %i&e an action to vindicate #is c&aim even i% t#e
Audgment creditor %i&es an indemnit! ond in %avor o% t#e s#eri%% to answer %or an! damages t#at ma! e
su%%ered ! t#e t#ird part! c&aimant' 1! Gaction? as stated in t#e :u&e, w#at is meant is a separate and
independent action'<
1". Santos )as ri*)t to vin+icate clai# o, o.ners)ip in a separate action6 ;nter,erence .it) s)eri,,1s
custo+y not an inter,erence .it) anot)er court1s or+er o, attac)#ent
,t was appropriate, as a matter o% procedure, %or "antos, as an ordinar! t#ird=part! c&aimant, to
vindicate #is c&aim o% owners#ip in a separate action under "ection 10 o% :u&e 3.' T#e Audgment rendered in
#is %avor ! 1ranc# J , dec&aring #im to e t#e owner o% t#e propert!, did not as a asic proposition,
constitute inter%erence wit# t#e powers or processes o% 1ranc# JV,, w#ic# rendered t#e Audgment, to en%orce
w#ic# t#e Aeepne! was &evied upon' 7nd t#is is so ecause propert! e&onging to a stranger is not ordinari&!
suAect to &ev!' F#i&e it is true t#at t#e ve#ic&e in 9uestion was in custodia &egis, and s#ou&d not e inter%ered
wit# wit#out t#e permission o% t#e proper $ourt, t#e propert! must e one in w#ic# t#e de%endant #as
proprietar! interest' F#ere t#e "#eri%% sei*es a stranger?s propert!, t#e ru&e does not app&! and inter%erence
wit# #is custod! is not inter%erence wit# anot#er $ourt?s (rder o% attac#ment'
11. Bu+*#ent o, Branc) N le*ally unpalata$le
T#e Audgment in t#e 1ranc# J case appears to e 9uite &ega&&! unpa&ata&e' For instance, since t#e
undertaking %urnis#ed to t#e "#eri%% ! t#e P#i&ippine "uret! did not ecome e%%ective %or t#e reason t#at t#e
Aeep was not so&d, t#e pu&ic sa&e t#ereo% #aving een restrained, t#ere was no reason %or promu&gating
Audgment against t#e P#i&ippine "uret!' ,t #as a&so een noted t#at t#e $omp&aint against Vidad was
dismissed' Most important o% a&&, t#e Audgment against "iug was ine9uita&e' ,n asserting #is rig#ts o%
owners#ip to t#e ve#ic&e in 9uestion, "antos candid&! admitted #is participation in t#e i&&ega& and pernicious
practice in t#e transportation usiness known as t#e kait s!stem'
1-. Section -" (*) o, t)e :u$lic Service 5ct
"ection 82 (g) o% t#e Pu&ic "ervice 7ct, t#en t#e app&ica&e &aw, speci%ica&&! provided t#at ;it s#a&& e
un&aw%u& %or an! pu&ic service or %or t#e owner, &essee or operator t#ereo%, wit#out t#e approva& and
aut#ori*ation o% t#e $ommission previous&! #ad H (g) to se&&, a&ienate, mortgage, encumer or &ease its
propert!, %ranc#ise, certi%icates, privi&eges, or rig#ts, or an! part t#ereo%'<
13. Re*istere+ o.nerCoperator an+ *rantee o, ,ranc)ise +irectly an+ pri#arily lia$le ,or +a#a*es
a*ainst Si$u*
@erein, "antos #ad %ictitious&! so&d t#e Aeepne! to Vidad, w#o #ad ecome t#e registered owner and
operator o% record at t#e time o% t#e accident' ,t is true t#at Vidad #ad e3ecuted a re=sa&e to "antos, ut t#e
document was not registered' 7&t#oug# "antos, as t#e kait, was t#e true owner as against Vidad, t#e &atter, as
t#e registered owner-operator and grantee o% t#e %ranc#ise, is direct&! and primari&! responsi&e and &ia&e %or
t#e damages caused to "iug, t#e inAured part!, as a conse9uence o% t#e neg&igent or care&ess operation o% t#e
ve#ic&e' T#is ru&ing is ased on t#e princip&e t#at t#e operator o% record is considered t#e operator o% t#e
ve#ic&e in contemp&ation o% &aw as regards t#e pu&ic and t#ird persons even i% t#e ve#ic&e invo&ved in t#e
accident #ad een so&d to anot#er w#ere suc# sa&e #ad not een approved ! t#e t#en Pu&ic "ervice
$ommission'
1/. :roperty levie+ not @stran*er1sA
+ega&&! speaking, it was not a ;stranger?s propert!< t#at was &evied upon ! t#e "#eri%% pursuant to
t#e Audgment rendered ! 1ranc# JV,,' T#e ve#ic&e was, in %act, registered in t#e name o% Vidad, one o% t#e
Audgment detors' 7nd w#at is more, t#e aspect o% pu&ic service, wit# its e%%ects on t#e riding pu&ic, is
invo&ved' F#atever &ega& tec#nica&ities ma! e invoked, t#e $ourt %inds t#e Audgment o% t#e $ourt o% 7ppea&s
to e in consonance wit# Austice' T#e u&timate conc&usion o% t#e appe&&ate court, nu&&i%!ing t#e Decision o%
1ranc# J, permanent&! enAoining t#e auction sa&e, s#ou&d e up#e&d'
12. 0a$it cannot $e allo.e+ to +e,eat levy o, )is ve)icle
For t#e same asic reason, as t#e ve#ic&e #ere in 9uestion was registered in Vidad?s name, t#e &ev! on
e3ecution against said ve#ic&e s#ou&d e en%orced so t#at t#e Audgment in t#e 1ranc# JV,, case ma! e
satis%ied, notwit#standing t#e %act t#at t#e secret owners#ip o% t#e ve#ic&e e&onged to anot#er' "antos, as t#e
kait, s#ou&d not e a&&owed to de%eat t#e &ev! on #is ve#ic&e and to avoid #is responsii&ities as a kait owner
%or #e #ad &ed t#e pu&ic to e&ieve t#at t#e ve#ic&e e&onged to Vidad' T#is is one wa! o% curing t#e
pernicious kait s!stem t#at %aci&itates t#e commission o% %raud against t#e trave&&ing pu&ic'
1. :roper re#e+y o, Santos6 DreJo case
7s indicated in t#e Bre*o case, "antos? remed!, as t#e rea& owner o% t#e ve#ic&e, is to go against
Vidad, t#e actua& operator w#o was responsi&e %or t#e accident, %or t#e recover! o% w#atever damages "antos
ma! su%%er ! reason o% t#e e3ecution' ,n %act, i% "antos, as t#e kait, #ad een imp&eaded as a part! de%endant
in t#e 1ranc# JV,, case, #e s#ou&d e #e&d Aoint&! and severa&&! &ia&e wit# Vidad and t#e driver %or damages
su%%ered ! "iug, as we&& as %or e3emp&ar! damages'
[-4]
:5L vs. 7LRC (GR L>-%1! - Septe#$er 1%43)
First Division, :e&ova (J): 5 concur
&acts' (n 3 Eovemer 1./2, "a&vador 6empis, a O"=11 pi&ot o% P#i&ippine 7ir&ines (P7+) wit# t#e rank o%
captain, %i&ed wit# t#e Ministr! o% +aor, Eationa& $apita& :egion, a comp&aint against P7+ %or i&&ega&
suspension and dismissa&' T#e ne3t da!, 5 Eovemer 1./2, P7+ %i&ed wit# t#e same o%%ice an app&ication %or
c&earance to terminate t#e emp&o!ment o% 6empis on t#e grounds o% (1) serious misconduct and (8) vio&ation
o% t#e &i9uor an and compan! po&icies' T#e c#arge o% P7+ and $apt' Jaime @' Man*ano against 6empis was
;serious misconduct (ause o% aut#orit!)< %or %orcing First (%%icers 7' 1arcea& and J' :anc#es to drink on 80
Feruar! 1./2, at 12:32 p'm' at t#e co%%ee s#op o% t#e Triton @ote& at $eu, > ott&es o% eer eac#, wit#in 32
minutes' Dna&e to consume t#e ott&es o% eer wit#in t#e time &imit set ! 6empis, t#e two pi&ots were
ordered to stand erect and were #it on t#e stomac# ! 6empis' T#e petition a&&eged t#at ;t#e incident occurred
wit# 6empis? %u&& know&edge t#at t#e 8 a%%ected co=pi&ots #ave %&ig#t duties t#e ne3t da! wit# initia&
assignments as ear&! as 0:12 a'm' and as &ate as 18:22 p'm' T#e +aor 7riter Teodorico Doge&io denied
P7+?s app&ication %or c&earance to terminate 6empis? services inasmuc# as t#e pena&t! o% > mont#s demotion
was enoug# to appear in 6empis? emp&o!ment %i&e and ordering P7+ to e%%ect 6empis? immediate
reinstatement as O"=11 $aptain, wit# ack wages %or a period o% > mont#s corresponding to t#e position' T#e
Eationa& +aor :e&ations $ommission a%%irmed t#e decision o% t#e +aor 7riter on 8. Eovemer 1./8'

T#e "upreme $ourt set aside t#e decision o% t#e E+:$ dated 8. Eovemer 1./8, and approved P7+?s
app&ication %or c&earance to terminate 6empis %rom emp&o!ment'
1. :ilot1s reinstate#ent *rossly un,air as pilot is a risk an+ lia$ility to t)e co##on carrier
,t wou&d e gross&! un%air to order P7+ to reinstate #im ack to #is work as pi&ot' T#e nature o%
emp&o!ment o% 6empis necessitates t#at #e s#ou&d not vio&ate t#e &i9uor an as provided %or in t#e 1asic
(perations Manua& in order to protect not on&! t#e interest o% t#e compan! ut t#e pu&ic as we&&' 6empis is a
risk and &iai&it! rat#er t#an an asset to P7+' 6empis and t#ose persons #e aused (F-(s 7' 1arcea& and J'
:anc#es) are pi&ots' T#e %oremost consideration ca&&ed %or ! t#eir position as pi&ots is t#e sa%et! o% t#e
passengers' T#is is so ecause t#e duties o% a pi&ot consist o% #and&ing contro&s o% t#e aircra%t and to ensure
t#at t#e %&ig#t is conducted sa%e&! and economica&&!'
-. <ue <ili*ence o, a *oo+ ,at)er o, a ,a#ily in t)e selection an+ supervision o, its e#ployees
T#e usiness o% P#i&ippine 7ir&ines is suc# t#at w#enever a passenger dies or is inAured t#e
presumption is, it is at %au&t notwit#standing t#e %act t#at it #as e3ercised due di&igence o% a good %at#er o% a
%ami&! in t#e se&ection and supervision o% its emp&o!ees' T#us, e3traordinar! measures and di&igence s#ou&d
e e3ercised ! it %or t#e sa%et! o% its passengers and t#eir e&ongings' Eeed&ess to state, a pi&ot must e soer
a&& t#e time %or #e ma! e ca&&ed upon to %&! a p&ane even e%ore #is regu&ar sc#edu&ed #ours, ot#erwise so
man! &ives wi&& e in danger i% #e is drunk' ,t wou&d e unAust %or an emp&o!er &ike petitioner P7+ to e
compe&&ed to continue wit# t#e emp&o!ment o% a person w#ose continuance in t#e service is ovious&!
inimica& to its interests'
[-%]
Gas9ueJ vs. C5 (GR L>/-%-! 13 Septe#$er 1%42)
First Division, Me&encio=@errera (J): > concur
&acts' F#en t#e interis&and vesse& MV GPioneer $eu? &e%t t#e Port o% Mani&a in t#e ear&! morning o% 14 Ma!
1.>> ound %or $eu, it #ad on oard t#e spouses 7&%onso Vas9ue* and Fi&ipinas 1agaipo and a 5=!ear o&d
o!, Mario Mar&on Vas9ue*, among #er passengers' T#e MV GPioneer $eu? encountered t!p#oon GP&aring?
and struck a ree% on t#e sout#ern part o% Ma&apascua ,s&and, &ocated somew#ere nort# o% t#e is&and o% $eu
and suse9uent&! sunk' "aid passengers were un#eard %rom since t#en'
Pedro Vas9ue* and "o&edad (rtega are t#e parents o% 7&%onso Vas9ue*' $&eto 1agaipo and 7gustina Virtudes
are t#e parents o% Fi&ipinas 1agaipo' :omeo Vas9ue* and Ma3imina $aina! are t#e parents Mario Mar&on
Vas9ue*' Due to t#e &oss o% t#eir c#i&dren, t#e! sued %or damages e%ore t#e $F, o% Mani&a ($ivi& $ase
>013.)' Fi&ipinas Pioneer +ines ,nc' de%ended on t#e p&ea o% %orce maAeure, and t#e e3tinction o% its &iai&it!
! t#e actua& tota& &oss o% t#e vesse&' 7%ter proper proceedings, t#e tria& $ourt awarded damages, ordering
Fi&ipinas Pioneer to pa! (a) Pedro Vas9ue* and "o&edad (rtega t#e sums o% P14,222'22 %or t#e &oss o% earning
capacit! o% t#e deceased 7&%onso Vas9ue*, P8,122'22 %or support, and P12,222'22 %or mora& damagesC ()
$&eto 1' 1agaipo and 7gustina Virtudes t#e sum o% P10,222'22 %or &oss o% earning capacit! o% deceased
Fi&ipinas 1agaipo, and P12,222'22 %or mora& damagesC and (c) :omeo Vas9ue* and Ma3imina $aina! t#e sum
o% P12,222'22 ! wa! o% mora& damages ! reason o% t#e deat# o% Mario Mar&on Vas9ue*'
(n appea&, t#e appe&&ate court reversed t#e Audgment and aso&ved Fi&ipinas Pioneer %rom an! and a&& &iai&it!'
@ence, t#e Petition %or :eview on $ertiorari'
T#e "upreme $ourt reversed t#e appea&ed Audgment, and reinstated t#e Audgment o% t#e t#en $F, o% Mani&a
(1ranc# V, $ivi& $ase >013.)C wit#out costs'
1. Circu#stances o, t)e last voya*e o, =G :ioneer Ce$u ca#e #ainly ,ro# &ilipinas :ioneer
Lines
T#e evidence on record as to t#e circumstances o% t#e &ast vo!age o% t#e MV GPioneer $eu? came
main&!, i% not e3c&usive&!, %rom Fi&ipinas Pioneer +ines' T#e MV GPioneer $eu? was owned and operated !
Fi&ipinas Pioneer and used in t#e transportation o% goods and passengers in t#e interis&and s#ipping'
"c#edu&ed to &eave t#e Port o% Mani&a at .:22 p'm' on 15 Ma! 1.>>, it actua&&! &e%t port at 4:22 a'm' t#e
%o&&owing da!, 14 Ma! 1.>>' ,t #ad a passenger capacit! o% 388 inc&uding t#e crew' ,t undertook t#e said
vo!age on a specia& permit issued ! t#e $o&&ector o% $ustoms inasmuc# as, upon inspection, it was %ound to
e wit#out an emergenc! e&ectrica& power s!stem' T#e specia& permit aut#ori*ed t#e vesse& to carr! on&! 8>2
passengers due to t#e said de%icienc! and %or &ack o% sa%et! devices %or 388 passengers' 7 #eadcount was
made o% t#e passengers on oard, resu&ting on t#e ta&&!ing o% 1>/ adu&ts and 82 minors, a&t#oug# t#e
passengers mani%est on&! &isted 12> passengers' ,t #as een admitted, #owever, t#at t#e #eadcount is not
re&ia&e inasmuc# as it was on&! done ! one man on oard t#e vesse&' F#en t#e vesse& &e%t Mani&a, its
o%%icers were a&read! aware o% t#e t!p#oon P&aring ui&ding up somew#ere in Mindanao' T#ere eing no
t!p#oon signa&s on t#e route %rom Mani&a to $eu, and t#e vesse& #aving een c&eared ! t#e $ustoms
aut#orities, t#e MV GPioneer $eu? &e%t on its vo!age to $eu despite t#e t!p#oon' F#en it reac#ed :om&on
,s&and, it was decided not to seek s#e&ter t#ereat, inasmuc# as t#e weat#er condition was sti&& good' 7%ter
passing :om&on and w#i&e near Jintoto&o is&and, t#e arometer sti&& indicated t#e e3istence o% good weat#er
condition continued unti& t#e vesse& approac#ed Tanguingui is&and' Dpon passing t#e &atter is&and, #owever,
t#e weat#er sudden&! c#anged and #eav! rains %e&&' Fearing t#at due to *ero visii&it!, t#e vesse& mig#t #it
$#oco&ate is&and group, t#e captain ordered a reversa& o% t#e course so t#at t#e vesse& cou&d Gweat#er out? t#e
t!p#oon ! %acing t#e winds and t#e waves in t#e open' Dn%ortunate&!, at aout noontime on 1> Ma! 1.>>,
t#e vesse& struck a ree% near Ma&apascua is&and, sustained &eaks and eventua&&! sunk, ringing wit# #er
$aptain F&oro Oap w#o was in command o% t#e vesse&'<
-. Re9uisites ,or caso ,ortuito
To constitute a caso %ortuito t#at wou&d e3empt a person %rom responsii&it!, it is necessar! t#at (1)
t#e event must e independent o% t#e #uman wi&&C (8) t#e occurrence must render it impossi&e %or t#e detor
to %u&%i&& t#e o&igation in a norma& mannerC and t#at (3) t#e o&igor must e %ree o% participation in, or
aggravation o%, t#e inAur! to t#e creditor'< ,n t#e &anguage o% t#e &aw, t#e event must #ave een impossi&e to
%oresee, or i% it cou&d e %oreseen, must #ave een impossi&e to avoid' T#ere must e an entire e3c&usion o%
#uman agenc! %rom t#e cause o% inAur! or &oss'
3. Cre. ,aile+ to o$serve extraor+inary +ili*ence (ut#ost +ili*ence re9uire+ o, very cautious
persons)
@erein, w#i&e t#e t!p#oon was an inevita&e occurrence, !et, #aving een kept posted on t#e course o%
t#e t!p#oon ! weat#er u&&etins at interva&s o% > #ours, t#e captain and crew were we&& aware o% t#e risk t#e!
were taking as t#e! #opped %rom is&and to is&and %rom :om&on up to Tanguingui' T#e! #e&d %re9uent
con%erences, and o&ivious o% t#e utmost di&igence re9uired o% ver! cautious persons, t#e! decided to take a
ca&cu&ated risk' ,n so doing, t#e! %ai&ed to oserve t#at e3traordinar! di&igence re9uired o% t#em e3p&icit&! !
&aw %or t#e sa%et! o% t#e passengers transported ! t#em wit# due regard %or a&& circumstances and
unnecessari&! e3posed t#e vesse& and passengers to t#e tragic mis#ap' T#e! %ai&ed to overcome t#at
presumption o% %au&t or neg&igence t#at arises in cases o% deat# or inAuries to passengers'
/. Construction o, @#oot an+ aca+e#icA rulin* o, t)e Boar+ o, =arine ;n9uiry6 Court +isa*rees
.it) Boar+1s conclusion
F#i&e t#e 1oard o% Marine ,n9uir!, w#ic# investigated t#e disaster, e3onerated t#e captain %rom an!
neg&igence, it was ecause it #ad considered t#e 9uestion o% neg&igence as ;moot and academic,< t#e captain
#aving ;&ived up to t#e true tradition o% t#e pro%ession'< F#i&e t#e $ourt is ound ! t#e 1oard?s %actua&
%indings, t#e $ourt disagreed wit# its conc&usion since it ovious&! #ad not taken into account t#e &ega&
responsii&it! o% a common carrier towards t#e sa%et! o% t#e passengers invo&ved'
2. Contention on li#ite+ lia$ility rule as per Han*co vs. Laserna
Fit# respect to t#e sumission t#at t#e tota& &oss o% t#e vesse& e3tinguis#ed its &iai&it! pursuant to
7rtic&e 4/0 o% t#e $ode o% $ommerce as construed in Oangco vs' +aserna, 03 P#i&' 332 L1.51M, su%%ice it to
state t#at even in said case, it was #e&d t#at t#e &iai&it! o% a s#ipowner is &imited to t#e va&ue o% t#e vesse& or
to t#e insurance t#ereon' Despite t#e tota& &oss o% t#e vesse& t#ere%ore, its insurance answers %or t#e damages
t#at a s#ipowner or agent ma! e #e&d &ia&e %or ! reason o% t#e deat# o% its passengers'
[3"] also [104]
<an*.a (ransportation vs. C5 (GR %224-! 3 8cto$er 1%%1)
"econd Division, :ega&ado (J): 5 concur
&acts' (n 84 Marc# 1./4 at Marivic, "apid, Manka!an, 1enguet, T#eodore M' +ardi*aa& was driving a
passenger us e&onging to Dangwa Transportation $o' in a reck&ess and imprudent manner and wit#out due
regard to tra%%ic ru&es and regu&ations and sa%et! to persons and propert!, it ran over its passenger, Pedrito
$udiamat' @owever, instead o% ringing Pedrito immediate&! to t#e nearest #ospita&, t#e said driver, in utter
ad %ait# and wit#out regard to t#e we&%are o% t#e victim, %irst roug#t #is ot#er passengers and cargo to t#eir
respective destinations e%ore ringing said victim to t#e +epanto @ospita& w#ere #e e3pired'
(n 13 Ma! 1./4, ,nocencia $udiamat, Bmi&ia $udiamat 1ando!, Fernando $udiamat, Marrieta $udiamat,
Eorma $udiamat, Dante $udiamat, "amue& $udiamat and +iga!a $udiamat (#eirs o% Pedrito $udiamat, and
represented ! ,nocencia $udiamat) %i&ed a comp&aint %or damages against petitioners %or t#e deat# o% Pedrito
$udiamat as a resu&t o% a ve#icu&ar accident w#ic# occurred' (n 8. Ju&! 1.//, t#e tria& court rendered a
decision, pronouncing t#at Pedrito $udiamat was neg&igent, w#ic# neg&igence was t#e pro3imate cause o% #is
deat#' Eonet#e&ess, +ardi*aa& and Dangwa Transportation, in e9uit!, were #ere! ordered to pa! t#e #eirs o%
Pedrito $udiamat t#e sum o% P12,222'22 w#ic# appro3imates t#e amount +ardi*aa& and Dangwa
Transportation initia&&! o%%ered said #eirs %or t#e amica&e sett&ement o% t#e caseC wit#out costs'
T#e $udiamats appea&ed to t#e $ourt o% 7ppea&s w#ic#, in a decision ($7=6: $V 1.425) promu&gated on 15
7ugust 1..2, set aside t#e decision o% t#e &ower court, and ordered Dangwa and +ardi*aa& to pa! t#e
$udiamats (1) t#e sum o% P32,222'22 ! wa! o% indemnit! %or deat# o% t#e victim Pedrito $udiamatC (8) t#e
sum o% P82,222'22 ! wa! o% mora& damagesC (3) t#e sum o% P8//,222'22 as actua& and compensator!
damagesC and (5) t#e costs o% t#e suit' Dangwa?s and +ardi*aa&?s motion %or reconsideration was denied !
t#e $ourt o% 7ppea&s in its reso&ution dated 5 (ctoer 1..2' @ence, t#e petition'
T#e "upreme $ourt a%%irmed t#e c#a&&enged Audgment and reso&ution o% t#e $ourt o% 7ppea&s, wit#
modi%ications'
1. &actual ,in+in*s o, t)e Court o, 5ppeals *enerally ,inal6 Dxceptions
,t is an esta&is#ed princip&e t#at t#e %actua& %indings o% t#e $ourt o% 7ppea&s as a ru&e are %ina& and
ma! not e reviewed ! t#is $ourt on appea&' @owever, t#is is suAect to sett&ed e3ceptions, one o% w#ic# is
w#en t#e %indings o% t#e appe&&ate court are contrar! to t#ose o% t#e tria& court, in w#ic# case a ree3amination
o% t#e %acts and evidence ma! e undertaken' @erein, t#e tria& court and t#e $ourt o% 7ppea&s #ave discordant
positions as to w#o etween Dangwa Transportation and t#e victim is gui&t! o% neg&igence' Per%orce, t#e
$ourt #as #ad to conduct an eva&uation o% t#e evidence in t#is case %or t#e proper ca&iration o% t#eir
con%&icting %actua& %indings and &ega& conc&usions'
-. &in+in*s o, t)e trial court
Pedrito $udiamat was neg&igent in tr!ing to oard a moving ve#ic&e, especia&&! wit# one o% #is #ands
#o&ding an umre&&aC and, wit#out #aving given t#e driver or t#e conductor an! indication t#at #e wis#es to
oard t#e us' Dangwa Transportation can a&so e %ound wanting o% t#e necessar! di&igence' ,n t#is
connection, it is sa%e to assume t#at w#en t#e deceased $udiamat attempted to oard t#e us, t#e ve#ic&e?s
door was open instead o% eing c&osed' T#is s#ou&d e so, %or it is #ard to e&ieve t#at one wou&d even attempt
to oard a ve#ic&e (i)n motion i% t#e door o% said ve#ic&e is c&osed' @ere &ies t#e de%endant?s &ack o% di&igence'
Dnder suc# circumstances, e9uit! demands t#at t#ere must e somet#ing given to t#e #eirs o% t#e victim to
assuage t#eir %ee&ings' T#is, a&so considering t#at initia&&!, t#e common carrier #ad made overtures to
amica&! sett&e t#e case' ,t did o%%er a certain monetar! consideration to t#e victim?s #eirs'
3. &in+in*s o, t)e appellate court
T#e suAect us was at %u&& stop w#en t#e victim Pedrito $udiamat oarded t#e same as it was
precise&! on t#is instance w#ere a certain Miss 7enoAa a&ig#ted %rom t#e us' Moreover, t#e victim did
indicate #is intention to oard t#e us w#en #e dec&ared t#at Pedrito $udiamat was no &onger wa&king and
made a sign to oard t#e us w#en t#e &atter was sti&& at a distance %rom #im' ,t was at t#e instance w#en
Pedrito $udiamat was c&osing #is umre&&a at t#e p&at%orm o% t#e us w#en t#e &atter made a sudden Aerk
movement as t#e driver commenced to acce&erate t#e us' T#e incident took p&ace due to t#e gross neg&igence
o% t#e driver in premature&! stepping on t#e acce&erator and in not waiting %or t#e passenger to %irst secure #is
seat especia&&! so w#en we take into account t#at t#e p&at%orm o% t#e us was at t#e time s&ipper! and wet
ecause o% a dri**&e' T#e compan! utter&! %ai&ed to oserve its dut! and o&igation as common carrier to t#e
end t#at t#e! s#ou&d oserve e3tra=ordinar! di&igence in t#e vigi&ance over t#e goods and %or t#e sa%et! o% t#e
passengers transported ! t#em according to t#e circumstances o% eac# case (7rtic&e 1033, Eew $ivi& $ode)'
/. &in+in*s o, t)e appellate court supporte+ $y .itnesses1 testi#ony6 <ecease+ not *uilty o,
ne*li*ence
T#e "upreme $ourt %inds no reason to distur t#e #o&ding o% t#e $ourt o% 7ppea&s' ,ts %indings are
supported ! t#e testimon! o% Dangwa Transportation?s own witnesses, Virginia 7a&os, and its t#e us
conductor, Martin 7ng&og' T#e testimonies s#ow t#at t#e p&ace o% t#e accident and t#e p&ace w#ere one o% t#e
passengers a&ig#ted were ot# etween 1unk#ouses 43 and 45, #ence t#e %inding o% t#e $ourt o% 7ppea&s t#at
t#e us was at %u&& stop w#en t#e victim oarded t#e same is correct' T#e! %urt#er con%irm t#e conc&usion t#at
t#e victim %e&& %rom t#e p&at%orm o% t#e us w#en it sudden&! acce&erated %orward and was run over ! t#e rear
rig#t tires o% t#e ve#ic&e, as s#own ! t#e p#!sica& evidence on w#ere #e was t#erea%ter %ound in re&ation to
t#e us w#en it stopped' Dnder suc# circumstances, it cannot e said t#at t#e deceased was gui&t! o%
neg&igence'
2. E)en $us not in #otion6 <uty o, +river an+ con+uctor
F#en t#e us is not in motion t#ere is no necessit! %or a person w#o wants to ride t#e same to signa&
#is intention to oard' 7 pu&ic uti&it! us, once it stops, is in e%%ect making a continuous o%%er to us riders'
@ence, it ecomes t#e dut! o% t#e driver and t#e conductor, ever! time t#e us stops, to do no act t#at wou&d
#ave t#e e%%ect o% increasing t#e peri& to a passenger w#i&e #e was attempting to oard t#e same' @erein, t#e
premature acce&eration o% t#e us was a reac# o% suc# dut!'
. <uty o, co##on carriers o, passen*ers
,t is t#e dut! o% common carriers o% passengers, inc&uding common carriers ! rai&road train, streetcar,
or motorus, to stop t#eir conve!ances a reasona&e &engt# o% time in order to a%%ord passengers an
opportunit! to oard and enter, and t#e! are &ia&e %or inAuries su%%ered ! oarding passengers resu&ting %rom
t#e sudden starting up or Aerking o% t#eir conve!ances w#i&e t#e! are doing so'
3. Dven assu#in* $us #ovin*! +ecease+ still not ne*li*ent
Bven assuming t#at t#e us was moving, t#e act o% t#e victim in oarding t#e same cannot e
considered neg&igent under t#e circumstances' ,t is not neg&igence per se, or as a matter o% &aw, %or one to
attempt to oard a train or streetcar w#ic# is moving s&ow&!' 7n ordinari&! prudent person wou&d #ave made
t#e attempt to oard t#e moving conve!ance under t#e same or simi&ar circumstances' T#e %act t#at
passengers oard and a&ig#t %rom a s&ow&! moving ve#ic&e is a matter o% common e3perience and ot# t#e
driver and conductor cou&d not #ave een unaware o% suc# an ordinar! practice'
4. E)en contractual o$li*ation o, co##on carrier starts
T#e victim #erein, ! stepping and standing on t#e p&at%orm o% t#e us, is a&read! considered a
passenger and is entit&ed to a&& t#e rig#ts and protection pertaining to suc# a contractua& re&ation' @ence, it #as
een #e&d t#at t#e dut! w#ic# t#e carrier o% passengers owes to its patrons e3tends to persons oarding t#e
cars as we&& as to t#ose a&ig#ting t#ere%rom'
%. <ili*ence re9uire+ o, co##on carriers
$ommon carriers, %rom t#e nature o% t#eir usiness and %or reasons o% pu&ic po&ic!, are ound to
oserve e3traordinar! di&igence %or t#e sa%et! o% t#e passengers transported ! t#em, according to a&& t#e
circumstances o% eac# case' 7 common carrier is ound to carr! t#e passengers sa%e&! as %ar as #uman care
and %oresig#t can provide, using t#e utmost di&igence o% ver! cautious persons, wit# a due regard %or a&& t#e
circumstances'
1". 7e*li*ence #ust $e prove+6 Dxception in ontract o, carria*e
,n an action ased on a contract o% carriage, t#e court need not make an e3press %inding o% %au&t or
neg&igence on t#e part o% t#e carrier in order to #o&d it responsi&e to pa! t#e damages soug#t ! t#e
passenger' 1! t#e contract o% carriage, t#e carrier assumes t#e e3press o&igation to transport t#e passenger to
#is destination sa%e&! and to oserve e3traordinar! di&igence wit# a due regard %or a&& t#e circumstances, and
an! inAur! t#at mig#t e su%%ered ! t#e passenger is rig#t awa! attriuta&e to t#e %au&t or neg&igence o% t#e
carrier' T#is is an e3ception to t#e genera& ru&e t#at neg&igence must e proved, and it is t#ere%ore incument
upon t#e carrier to prove t#at it #as e3ercised e3traordinar! di&igence as prescried in 7rtic&es 1033 and 1044
o% t#e $ivi& $ode'
11. &ailure to $rin* in?ure+ i##e+iately to )ospital patent proo, o, ne*li*ence
T#e circumstances under w#ic# t#e driver and t#e conductor %ai&ed to ring t#e grave&! inAured victim
immediate&! to t#e #ospita& %or medica& treatment is a patent and incontroverti&e proo% o% t#eir neg&igence' ,t
de%ies understanding and can even e stigmati*ed as ca&&ous indi%%erence' T#e evidence s#ows t#at a%ter t#e
accident t#e us cou&d #ave %ort#wit# turned at 1unk 4> and t#ence to t#e #ospita&, ut its driver instead opted
to %irst proceed to 1unk 02 to a&&ow a passenger to a&ig#t and to de&iver a re%rigerator, despite t#e serious
condition o% t#e victim'
1-. Rule as to a#ount recovera$le in tort
T#e ru&e is t#at t#e amount recovera&e ! t#e #eirs o% a victim o% a tort is not t#e &oss o% t#e entire
earnings, ut rat#er t#e &oss o% t#at portion o% t#e earnings w#ic# t#e ene%iciar! wou&d #ave received' ,n
ot#er words, on&! net earnings, not gross earnings, are to e considered, t#at is, t#e tota& o% t#e earnings &ess
e3penses necessar! in t#e creation o% suc# earnings or income and minus &iving and ot#er incidenta& e3penses'
13. 5ctual a.ar+ o, +a#a*es to $e *iven
T#e deducti&e &iving and ot#er e3pense o% t#e deceased ma! %air&! and reasona&! e %i3ed at
P422'22 a mont# or P>,222'22 a !ear' ,n adAudicating t#e actua& or compensator! damages, t#e appe&&ate court
%ound t#at t#e deceased was 5/ !ears o&d, in good #ea&t# wit# a remaining productive &i%e e3pectanc! o% 18
!ears, and t#en earning P85,222'22 a !ear' Dsing t#e gross annua& income as t#e asis, and mu&tip&!ing t#e
same ! 18 !ears, it according&! awarded P8//,222' 7pp&!ing t#e ru&e on computation ased on t#e net
earnings, said award must e recti%ied and reduced to P81>,222'22' @owever, in accordance wit# prevai&ing
Aurisprudence, t#e deat# indemnit! is #ere! increased to P42,222'22'
[31]
<elsan (ransport Lines vs. C5 (GR 1-34%3! 12 7ove#$er -""1)
"econd Division, De +eon Jr' (J): 5 concur
&acts' $a&te3 P#i&ippines entered into a contract o% a%%reig#tment wit# De&san Transport +ines, ,nc' %or a
period o% 1 !ear w#ere! t#e said common carrier agreed to transport $a&te3?s industria& %ue& oi& %rom t#e
1atangas=1ataan :e%iner! to di%%erent parts o% t#e countr!' Dnder t#e contract, petitioner took on oard its
vesse&, MT Ma!sun, 8,800'315 ki&o&iters o% industria& %ue& oi& o% $a&te3 to e de&ivered to t#e $a&te3 (i&
Termina& in Ramoanga $it!' T#e s#ipment was insured wit# 7merican @ome 7ssurance $orporation' (n 15
7ugust 1./>, MT Ma!sun set sai& %rom 1atangas %or Ramoanga $it!' Dn%ortunate&!, t#e vesse& sank in t#e
ear&! morning o% 1> 7ugust 1./> near Pana! 6u&% in t#e Visa!as taking wit# it t#e entire cargo o% %ue& oi&'
"use9uent&!, 7merican @ome 7ssurance paid $a&te3 t#e sum o% P4,2.>,>34'40 representing t#e insured
va&ue o% t#e &ost cargo' B3ercising its rig#t o% surogation under 7rtic&e 8820 o% t#e Eew $ivi& $ode,
7merican @ome 7ssurance demanded o% De&san Transport t#e same amount it paid to $a&te3'
Due to its %ai&ure to co&&ect %rom De&san Transport despite prior demand, 7merican @ome 7ssurance %i&ed a
comp&aint wit# t#e :T$ Makati $it!, 1ranc# 130, %or co&&ection o% a sum o% mone!' 7%ter t#e tria& and upon
ana&!*ing t#e evidence adduced, t#e tria& court rendered a decision on 8. Eovemer 1..2 dismissing t#e
comp&aint against De&san Transport wit#out pronouncement as to cost' T#e tria& court %ound t#at t#e vesse&,
MT Ma!sun, was seawort#! to undertake t#e vo!age as determined ! t#e P#i&ippine $oast 6uard per "urve!
$erti%icate :eport M4=21>=M@ upon inspection during its annua& dr!=docking and t#at t#e incident was
caused ! une3pected inc&ement weat#er condition or %orce maAeure, t#us e3empting t#e common carrier
%rom &iai&it! %or t#e &oss o% its cargo'
T#e decision o% t#e tria& court, #owever, was reversed, on appea&, ! t#e $ourt o% 7ppea&s on 1> June 1..>,
w#ic# gave credence to t#e weat#er report ! t#e P#i&ippine 7tmosp#eric, 6eop#!sica& and 7stronomica&
"ervices 7dministration (P767"7)' T#e suse9uent motion %or reconsideration o% De&san Transport was
denied ! t#e appe&&ate court on 81 Januar! 1..0' @ence, t#e petition %or review on certiorari'
T#e "upreme $ourt denied t#e instant petition, and a%%irmed t#e Decision dated 10 June 1..> o% t#e $ourt o%
7ppea&sC wit# costs against De&san Transport'
1. :5G5S5 Eeat)er report ,or 12 5u*ust 1%4
T#e weat#er report issued ! t#e P#i&ippine 7tmosp#eric, 6eop#!sica& and 7stronomica& "ervices
7dministration (P767"7 %or revit!) s#owed t#at %rom 8:22 o?c&ock to /:22 o?c&ock in t#e morning on
7ugust 1>, 1./>, t#e wind speed remained at 12 to 82 knots per #our w#i&e t#e waves measured %rom '0 to
two (8) meters in #eig#t on&! in t#e vicinit! o% t#e Pana! 6u&% w#ere t#e suAect vesse& sank, in contrast to
De&san Transport?s a&&egation t#at t#e waves were 82 %eet #ig#'
-. :ay#ent o, insure+ value o, lost car*o operates as .aiver to en,orce ter# o, i#plie+ .arranty
a*ainst Caltex! not an auto#atic a+#ission o, vessel1s sea.ort)iness
T#e pa!ment made ! 7merican @ome 7ssurance %or t#e insured va&ue o% t#e &ost cargo operates as
waiver o% its rig#t to en%orce t#e term o% t#e imp&ied warrant! against $a&te3 under t#e marine insurance
po&ic!' @owever, t#e same cannot e va&id&! interpreted as an automatic admission o% t#e vesse&?s
seawort#iness ! 7merican @ome 7ssurance as to %orec&ose recourse against t#e petitioner %or an! &iai&it!
under its contractua& o&igation as a common carrier' T#e %act o% pa!ment grants 7merican @ome 7ssurance
surogator! rig#t w#ic# ena&es it to e3ercise &ega& remedies t#at wou&d ot#erwise e avai&a&e to $a&te3 as
owner o% t#e &ost cargo against t#e petitioner common carrier'
3. Ri*)t o, Su$ro*ation6 5rticle --"3 7CC
7rtic&e 8820 o% t#e Eew $ivi& $ode provides t#at ;i% t#e p&ainti%%?s propert! #as een insured, and #e
#as received indemnit! %rom t#e insurance compan! %or t#e inAur! or &oss arising out o% t#e wrong or reac#
o% contract comp&ained o%, t#e insurance compan! s#a&& e surogated to t#e rig#ts o% t#e insured against t#e
wrongdoer or t#e person w#o #as vio&ated t#e contract' ,% t#e amount paid ! t#e insurance compan! does not
%u&&! cover t#e inAur! or &oss, t#e aggrieved part! s#a&& e entit&ed to recover t#e de%icienc! %rom t#e person
causing t#e &oss or inAur!'<
/. Rationale ,or ri*)t o, su$ro*ation
T#e rig#t o% surogation #as its roots in e9uit!' ,t is designed to promote and to accomp&is# Austice
and is t#e mode w#ic# e9uit! adopts to compe& t#e u&timate pa!ment o% a det ! one w#o in Austice and good
conscience oug#t to pa!' ,t is not dependent upon, nor does it grow out o%, an! privit! o% contract or upon
written assignment o% c&aim' ,t accrues simp&! upon pa!ment ! t#e insurance compan! o% t#e insurance
c&aim' @erein, t#e pa!ment made ! t#e insurer to t#e assured operates as an e9uita&e assignment to t#e
%ormer o% a&& t#e remedies w#ic# t#e &atter ma! #ave against t#e common carrier'
2. <ili*ence re9uire+ o, co##on carriers6 Lia$ility! exception6 :resu#ption o, ne*li*ence
From t#e nature o% t#eir usiness and %or reasons o% pu&ic po&ic!, common carriers are ound to
oserve e3traordinar! di&igence in t#e vigi&ance over t#e goods and %or t#e sa%et! o% passengers transported !
t#em, according to a&& t#e circumstances o% eac# case' ,n t#e event o% &oss, destruction or deterioration o% t#e
insured goods, common carriers s#a&& e responsi&e un&ess t#e same is roug#t aout, among ot#ers, !
%&ood, storm, eart#9uake, &ig#tning or ot#er natura& disaster or ca&amit!' ,n a&& ot#er cases, i% t#e goods are
&ost, destro!ed or deteriorated, common carriers are presumed to #ave een at %au&t or to #ave acted
neg&igent&!, un&ess t#e! prove t#at t#e! oserved e3traordinar! di&igence'
. Clai# o, ,orce #a?eure re$utte+ $y :5G5S5 report
@erein, %rom t#e testimonies o% Jaime Jarae and Francisco 1erina, captain and c#ie% mate,
respective&! o% t#e i&&=%ated vesse&, it appears t#at a sudden and une3pected c#ange o% weat#er condition
occurred in t#e ear&! morning o% 1> 7ugust 1./>C t#at at around 3:14 a'm' a s9ua&& (;unos<) carr!ing strong
winds wit# an appro3imate ve&ocit! o% 32 knots per #our and ig waves averaging 1/ to 82 %eet #ig#,
repeated&! u%%eted MT Ma!sun causing it to ti&t, take in water and eventua&&! sink wit# its cargo' T#is ta&e o%
strong winds and ig waves ! t#e said o%%icers o% De&san Transport #owever, was e%%ective&! reutted and
e&ied ! t#e weat#er report %rom P767"7, t#e independent government agenc! c#arged wit# monitoring
weat#er and sea conditions, s#owing t#at %rom 8:22 to /:22 a'm' on 1> 7ugust 1./>, t#e wind speed remained
at 12 to 82 knots per #our w#i&e t#e #eig#t o% t#e waves ranged %rom 2'0 to 8 meters in t#e vicinit! o% $u!o
Bast Pass and Pana! 6u&% w#ere t#e suAect vesse& sank' T#ere was no s9ua&& or ad weat#er or e3treme&!
poor sea condition in t#e vicinit! w#en t#e said vesse& sank'
3. S)ip captain not expecte+ to testi,y a*ainst interest o, e#ployer
@erein, De&san Transport?s witnesses, Jaime Jarae and Francisco 1erina, s#ip captain and c#ie%
mate, respective&!, o% t#e said vesse&, cou&d not e e3pected to testi%! against t#e interest o% t#eir emp&o!er,
t#e common carrier'
4. Dvi+ence certi,icates at ti#e o, +ry+ockin* an+ Coast Guar+ inspection not conclusive as to
con+ition o, vessel at t)e ti#e o, co##ence#ent o, voya*e6 Sea.ort)iness not esta$lis)e+ $y
certi,icates
Bvidence certi%icates, s#owing t#at at t#e time o% dr!=docking and inspection ! t#e P#i&ippine $oast
6uard t#e vesse& MT Ma!sun was %it %or vo!age, do not necessari&! take into account t#e actua& condition o%
t#e vesse& at t#e time o% t#e commencement o% t#e vo!age' 7t t#e time o% dr!=docking and inspection, t#e s#ip
ma! #ave appeared %it' T#e certi%icates issued, #owever, do not negate t#e presumption o% unseawort#iness
triggered ! an une3p&ained sinking' (% certi%icates issued in t#is regard, aut#orities are &ikewise c&ear as to
t#eir proative va&ue' "eawort#iness re&ates to a vesse&?s actua& condition' Eeit#er t#e granting o%
c&assi%ication or t#e issuance o% certi%icates esta&is#es seawort#iness'
%. Certi,icates o, sea.ort)iness +oes not satis,y t)e vessel o.ner1s o$li*ation
Di&igence in securing certi%icates o% seawort#iness does not satis%! t#e vesse& owner?s o&igation' 7&so
securing t#e approva& o% t#e s#ipper o% t#e cargo, or #is surve!or, o% t#e condition o% t#e vesse& or #er stowage
does not esta&is# due di&igence i% t#e vesse& was in %act unseawort#!, %or t#e cargo owner #as no o&igation in
re&ation to seawort#iness'
1". Dxoneration o, o,,icers $y Boar+ o, =arine ;n9uiry concerns only t)eir a+#inistrative lia$ility!
not civil lia$ililty
T#e e3oneration o% MT Ma!sun?s o%%icers and crew ! t#e 1oard o% Marine ,n9uir! mere&! concerns
t#eir respective administrative &iai&ities' ,t does not in an! wa! operate to aso&ve t#e petitioner common
carrier %rom its civi& &iai&it! arising %rom its %ai&ure to oserve e3traordinar! di&igence in t#e vigi&ance over
t#e goods it was transporting and %or t#e neg&igent acts or omissions o% its emp&o!ees, t#e determination o%
w#ic# proper&! e&ongs to t#e courts' @erein, De&san Transport is &ia&e %or t#e insured va&ue o% t#e &ost cargo
o% industria& %ue& oi& e&onging to $a&te3 %or its %ai&ure to reut t#e presumption o% %au&t or neg&igence as
common carrier occasioned ! t#e une3p&ained sinking o% its vesse&, MT Ma!sun, w#i&e in transit'
11. Su$ro*ation receipt #erely esta$lis) relations)ip o, parties t)ereto6 E)en ri*)t o, su$ro*ation
accrues
T#e presentation in evidence o% t#e marine insurance po&ic! is not indispensa&e in t#is case e%ore
t#e insurer ma! recover %rom t#e common carrier t#e insured va&ue o% t#e &ost cargo in t#e e3ercise o% its
surogator! rig#t' T#e surogation receipt, ! itse&%, is su%%icient to esta&is# not on&! t#e re&ations#ip o% t#e
insurer and t#e assured s#ipper o% t#e &ost cargo o% industria& %ue& oi&, ut a&so t#e amount paid to sett&e t#e
insurance c&aim' T#e rig#t o% surogation accrues simp&! upon pa!ment ! t#e insurance compan! o% t#e
insurance c&aim'
1-. Ho#e ;nsurance Corp. vs. C56 Lia$ility o, a )auler
,n t#e asence o% proo% o% stipu&ations to t#e contrar!, t#e #au&er can e &ia&e on&! %or an! damage
t#at occurred %rom t#e time it received t#e cargo unti& it %ina&&! de&ivered it to t#e consignee' (rdinari&!, it
cannot e #e&d responsi&e %or t#e #and&ing o% t#e cargo e%ore it actua&&! received it' T#e insurance contract,
w#ic# was not presented in evidence in t#at case wou&d #ave indicated t#e scope o% t#e insurer?s &iai&it!, i%
an!, since no evidence was adduced indicating at w#at stage in t#e #and&ing process t#e damage to t#e cargo
was sustained'
13. Ho#e ;nsurance Corp. vs. C5 not applica$le
T#e presentation o% t#e insurance po&ic! was necessar! in t#e case o% @ome ,nsurance $orporation v'
$7 ecause t#e s#ipment t#erein (#!drau&ic engines) passed t#roug# severa& stages wit# di%%erent parties
invo&ved in eac# stage' First, %rom t#e s#ipper to t#e port o% departureC second, %rom t#e port o% departure to
t#e M-" (rienta& "tatesmanC t#ird, %rom t#e M-" (rienta& "tatesman to t#e M-" Paci%ic $onve!orC %ourt#,
%rom t#e M-" Paci%ic $onve!or to t#e port o% arriva&C %i%t#, %rom t#e port o% arriva& to t#e arrastre operatorC
si3t#, %rom t#e arrastre operator to t#e #au&er, Mau#a! 1rokerage $o', ,nc'C and &ast&!, %rom t#e #au&er to t#e
consignee' @erein, t#e presentation o% t#e insurance po&ic! is not app&ica&e, %or t#ere is no dout t#at t#e
cargo o% industria& %ue& oi& e&onging to $a&te3 was &ost w#i&e on oard De&san Transport?s vesse&, MT
Ma!sun, w#ic# sank w#i&e in transit in t#e vicinit! o% Pana! 6u&% and $u!o Bast Pass in t#e ear&! morning o%
1> 7ugust 1./>'
[3-]
Loa+star S)ippin* vs. C5 (GR 131-1! -4 Septe#$er 1%%%)
First Division, Davide Jr' ($J): 5 concur
&acts' (n 1. Eovemer 1./5, +oadstar "#ipping $o' ,nc' received on oard its M-V ;$#erokee< (a) 024
a&es o% &awanit #ardwoodC () 80 o3es and crates o% ti&ewood assem&ies and ot#ersC and (c) 5. und&es o%
mou&dings : T F (3) 7pitong 1o&ideni*ed %or s#ipment' T#e goods, amounting to P>,2>0,10/, were insured
%or t#e same amount wit# t#e Mani&a ,nsurance $o' (M,$) against various risks inc&uding ;tota& &oss ! tota&
&oss o% t#e vesse&'< T#e vesse&, in turn, was insured ! Prudentia& 6uarantee T 7ssurance, ,nc' (P67,) %or P5
mi&&ion' (n 82 Eovemer 1./5, on its wa! to Mani&a %rom t#e port o% Easipit, 7gusan de& Eorte, t#e vesse&,
a&ong wit# its cargo, sank o%% +imasawa ,s&and' 7s a resu&t o% t#e tota& &oss o% its s#ipment, t#e consignee
made a c&aim wit# +oadstar w#ic#, #owever, ignored t#e same' 7s t#e insurer, M,$ paid P>,204,222 to t#e
insured in %u&& sett&ement o% its c&aim, and t#e &atter e3ecuted a surogation receipt t#ere%or'
(n 5 Feruar! 1./4, M,$ %i&ed a comp&aint against +oadstar and P67,, a&&eging t#at t#e sinking o% t#e vesse&
was due to t#e %au&t and neg&igence o% +oadstar and its emp&o!ees' ,t a&so pra!ed t#at P67, e ordered to pa!
t#e insurance proceeds %rom t#e &oss o% t#e vesse& direct&! to M,$, said amount to e deducted %rom M,$?s
c&aim %rom +oadstar' ,n its answer, +oadstar denied an! &iai&it! %or t#e &oss o% t#e s#ipper?s goods and
c&aimed t#at t#e sinking o% its vesse& was due to %orce maAeure' P67,, on t#e ot#er #and, averred t#at M,$
#ad no cause o% action against it, +oadstar eing t#e part! insured' ,n an! event, P67, was &ater dropped as a
part! de%endant a%ter it paid t#e insurance proceeds to +oadstar' (n 5 (ctoer 1..1, t#e tria& court (:T$ o%
Mani&a, 1ranc# 1>, $ivi& $ase /4=8.112) rendered Audgment in %avor o% M,$, ordering +oadstar to pa! M,$
t#e amount o% P>,2>0,10/, wit# &ega& interest %rom t#e %i&ing o% t#e comp&aint unti& %u&&! paid, P/,222 as
attorne!?s %ees, and t#e costs o% t#e suit'
+oadstar e&evated t#e matter to t#e $ourt o% 7ppea&s, w#ic#, #owever on 32 Januar! 1..0, agreed wit# t#e
tria& court and a%%irmed its decision in toto' +oadstar?s motion %or reconsideration was denied on 1.
Eovemer 1..0' @ence, t#e petition %or review on certiorari'
T#e "upreme $ourt denied t#e petition and a%%irmed t#e c#a&&enged decision o% t#e $ourt o% 7ppea&sC wit#
costs against +oadstar'
1. Ho#e ;nsurance vs. 5#erican Stea#s)ip! GalenJuela Har+.oo+ vs. C5! an+ 7ational Steel vs.
C5 not applica$le6 7o c)arter party in present case
,n t#e 1.>/ case o% @ome ,nsurance $o' v' 7merican "teams#ip 7gencies, ,nc', t#e $ourt #e&d t#at a
common carrier transporting specia& cargo or c#artering t#e vesse& to a specia& person ecomes a private
carrier t#at is not suAect to t#e provisions o% t#e $ivi& $ode' 7n! stipu&ation in t#e c#arter part! aso&ving t#e
owner %rom &iai&it! %or &oss due to t#e neg&igence o% its agent is void on&! i% t#e strict po&ic! governing
common carriers is up#e&d' "uc# po&ic! #as no %orce w#ere t#e pu&ic at &arge is not invo&ved, as in t#e case
o% a s#ip tota&&! c#artered %or t#e use o% a sing&e part!' T#e cases o% Va&en*ue&a @ardwood and ,ndustria&
"upp&!, ,nc' v' $ourt o% 7ppea&s and Eationa& "tee& $orp' v' $ourt o% 7ppea&s, up#e&d t#e @ome ,nsurance
doctrine' T#ese cases are not app&ica&e in t#e present case as t#e %actua& settings are di%%erent' T#e records do
not disc&ose t#at t#e M-V ;$#erokee< undertook to carr! a specia& cargo or was c#artered to a specia& person
on&!' T#ere was no c#arter part!' T#e i&&s o% &ading %ai&ed to s#ow an! specia& arrangement, ut on&! a
genera& provision to t#e e%%ect t#at t#e M-V ;$#erokee< was a ;genera& cargo carrier'< Furt#er, t#e are %act
t#at t#e vesse& was carr!ing a particu&ar t!pe o% cargo %or one s#ipper, w#ic# appears to e pure&!
coincidenta&, is not reason enoug# to convert t#e vesse& %rom a common to a private carrier, especia&&! w#ere
it was s#own t#at t#e vesse& was a&so carr!ing passengers'
-. Co##on Carriers +e,ine+6 5rticle 133- 7CC
7rtic&e 1038 o% t#e $ivi& $ode de%ines ;common carriers< as ;$ommon carriers are persons,
corporations, %irms or associations engaged in t#e usiness o% carr!ing or transporting passengers or goods or
ot#, ! &and, water, or air %or compensation, o%%ering t#eir services to t#e pu&ic'<
3. 5rticle 133- 7CC construe+6 <e GuJ#an vs. C5
7rtic&e 1038 makes no distinction etween one w#ose principa& usiness activit! is t#e carr!ing o%
persons or goods or ot#, and one w#o does suc# carr!ing on&! as an anci&&ar! activit! (in &oca& idiom, as ;a
side&ine<?' 7rtic&e 1038 a&so care%u&&! avoids making an! distinction etween a person or enterprise o%%ering
transportation service on a regu&ar or sc#edu&ed asis and one o%%ering suc# service on an occasiona&, episodic
or unsc#edu&ed asis' Eeit#er does 7rtic&e 1038 distinguis# etween a carrier o%%ering its services to t#e
;genera& pu&ic,< i'e', t#e genera& communit! or popu&ation, and one w#o o%%ers services or so&icits usiness
on&! %rom a narrow segment o% t#e genera& popu&ation' 7rtic&e 1033 de&ierate&! re%rained %rom making suc#
distinctions'
/. ;ssuance o, C:C not a prere9uisite ,or a co##on carrier6 <e GuJ#an vs. C5
7 certi%icate o% pu&ic convenience is not a re9uisite %or t#e incurring o% &iai&it! under t#e $ivi& $ode
provisions governing common carriers' T#at &iai&it! arises t#e moment a person or %irm acts as a common
carrier, wit#out regard to w#et#er or not suc# carrier #as a&so comp&ied wit# t#e re9uirements o% t#e
app&ica&e regu&ator! statute and imp&ementing regu&ations and #as een granted a certi%icate o% pu&ic
convenience or ot#er %ranc#ise' To e3empt t#e carrier %rom t#e &iai&ities o% a common carrier ecause #e #as
not secured t#e necessar! certi%icate o% pu&ic convenience, wou&d e o%%ensive to sound pu&ic po&ic!C t#at
wou&d e to reward private respondent precise&! %or %ai&ing to comp&! wit# app&ica&e statutor! re9uirements'
T#e usiness o% a common carrier impinges direct&! and intimate&! upon t#e sa%et! and we&& eing and
propert! o% t#ose memers o% t#e genera& communit! w#o #appen to dea& wit# suc# carrier' T#e &aw imposes
duties and &iai&ities upon common carriers %or t#e sa%et! and protection o% t#ose w#o uti&i*e t#eir services
and t#e &aw cannot a&&ow a common carrier to render suc# duties and &iai&ities mere&! %acu&tative ! simp&!
%ai&ing to otain t#e necessar! permits and aut#ori*ations'
2. Gessel not sea.ort)y as it .as not su,,iciently #anne+ .)en it e#$arke+ on its voya*e
T#e M-V ;$#erokee< was not seawort#! w#en it emarked on its vo!age on 1. Eovemer 1./5' T#e
vesse& was not even su%%icient&! manned at t#e time' ;For a vesse& to e seawort#!, it must e ade9uate&!
e9uipped %or t#e vo!age and manned wit# a su%%icient numer o% competent o%%icers and crew' T#e %ai&ure o% a
common carrier to maintain in seawort#! condition its vesse& invo&ved in a contract o% carriage is a c&ear
reac# o% its dut! prescried in 7rtic&e 1044 o% t#e $ivi& $ode'<
. <octrine o, li#ite+ lia$ility +oes not apply .)en t)ere .as ne*li*ence on part o, vessel o.ner or
a*ent
T#e doctrine o% &imited &iai&it! does not app&! w#ere t#ere was neg&igence on t#e part o% t#e vesse&
owner or agent' @erein, +oadstar was at %au&t or neg&igent in not maintaining a seawort#! vesse& and in #aving
a&&owed its vesse& to sai& despite know&edge o% an approac#ing t!p#oon' ,n an! event, it did not sink ecause
o% an! storm t#at ma! e deemed as %orce maAeure, inasmuc# as t#e wind condition in t#e area w#ere it sank
was determined to e moderate' "ince it was remiss in t#e per%ormance o% its duties, +oadstar cannot #ide
e#ind t#e ;&imited &iai&it!< doctrine to escape responsii&it! %or t#e &oss o% t#e vesse& and its cargo'
3. Stipulations in St. :aul &ire an+ 7ational Fnion &ire ;nsurance cases +i,,erent ,ro# present
one6 :resent stipulations voi+ as contrary to pu$lic policy
,n t#e cases o% "t' Pau& Fire T Marine ,ns' $o' v' Macondra! T $o', ,nc', and Eationa& Dnion Fire
,nsurance v' "to&t=Eie&sen P#i&s', ,nc', it was ru&ed t#at a%ter pa!ing t#e c&aim o% t#e insured %or damages
under t#e insurance po&ic!, t#e insurer is surogated mere&! to t#e rig#ts o% t#e assured, i'e' it can recover on&!
t#e amount t#at ma!, in turn, e recovered ! t#e &atter' "ince t#e rig#t o% t#e assured in case o% &oss or
damage to t#e goods is &imited or restricted ! t#e provisions in t#e i&&s o% &ading, a suit ! t#e insurer as
surogee is necessari&! suAect to t#e same &imitations and restrictions' T#ese cases invo&ved a &imitation on
t#e carrier?s &iai&it! to an amount %i3ed in t#e i&& o% &ading w#ic# t#e parties ma! enter into, provided t#at
t#e same was %ree&! and %air&! agreed upon (7rtic&es 105.=1042)' (n t#e ot#er #and, t#e stipu&ation in t#e
present case e%%ective&! reduces t#e common carrier?s &iai&it! %or t#e &oss or destruction o% t#e goods to a
degree &ess t#an e3traordinar! (7rtic&es 1055 and 1054), i'e' t#e carrier is not &ia&e %or an! &oss or damage to
s#ipments made at ;owner?s risk'< "uc# stipu&ation is ovious&! nu&& and void %or eing contrar! to pu&ic
po&ic!'
4. ()ree kin+s o, stipulations to li#it lia$ility! .)ic) are voi+ an+ .)ic) are vali+
T#ree kinds o% stipu&ations #ave o%ten een made in a i&& o% &ading' T#e %irst is one e3empting t#e
carrier %rom an! and a&& &iai&it! %or &oss or damage occasioned ! its own neg&igence' T#e second is one
providing %or an un9ua&i%ied &imitation o% suc# &iai&it! to an agreed va&uation' 7nd t#e t#ird is one &imiting
t#e &iai&it! o% t#e carrier to an agreed va&uation un&ess t#e s#ipper dec&ares a #ig#er va&ue and pa!s a #ig#er
rate o% %reig#t' 7ccording to an a&most uni%orm weig#t o% aut#orit!, t#e %irst and second kinds o% stipu&ations
are inva&id as eing contrar! to pu&ic po&ic!, ut t#e t#ird is va&id and en%orcea&e'
%. =;C su$ro*ate+ to ri*)t o, s)ipper
"ince t#e stipu&ation in 9uestion is nu&& and void, it %o&&ows t#at w#en M,$ paid t#e s#ipper, it was
surogated to a&& t#e rig#ts w#ic# t#e &atter #as against t#e common carrier, +oadstar'
1". 5ction )as not yet prescri$e+6 Stipulation re+ucin* 1 year perio+ voi+
@erein, M,$?s cause o% action #ad not !et prescried at t#e time it was concerned' ,nasmuc# as
neit#er t#e $ivi& $ode nor t#e $ode o% $ommerce states a speci%ic prescriptive period on t#e matter, t#e
$arriage o% 6oods ! "ea 7ct ($(6"7) H w#ic# provides %or a one=!ear period o% &imitation on c&aims %or
&oss o%, or damage to, cargoes sustained during transit H ma! e app&ied supp&etori&! to t#e present case' T#is
one=!ear prescriptive period a&so app&ies to t#e insurer o% t#e goods' @erein, t#e period %or %i&ing t#e action %or
recover! #as not !et e&apsed' Moreover, a stipu&ation reducing t#e one=!ear period is nu&& and voidC it must,
according&!, e struck down'
[33]
=etro =anila (ransit Corporation vs. C5 (GR 1"//"4! -1 Bune 1%%3)
"econd Division, :ega&ado (J): 8 concur, 1 on &eave
&acts' 7t aout >:22 a'm' o% 8/ 7ugust 1.0., p Eenita $ustodio oarded as a pa!ing passenger a pu&ic
uti&it! Aeepne! wit# p&ate Eo' D0 324 PDJ Pi&ipinas 1.0., t#en driven ! 7gudo $a&eag and owned !
Victorino +ama!o, ound %or #er work at D!netics ,ncorporated &ocated in 1icutan, Taguig, Metro Mani&a,
w#ere s#e t#en worked as a mac#ine operator earning P1>'84 a da!' F#i&e t#e passenger Aeepne! was
trave&&ing at a %ast c&ip a&ong D1P 7venue, 1icutan, Taguig, Metro Mani&a anot#er %ast moving ve#ic&e, a
Metro Mani&a Transit $orp' (MMT$) us earing p&ate 3R 320 PD1 (P#i&ippines) ?0. driven ! 6odo%redo
$' +eonardo was negotiating @one!dew :oad, 1icutan, Taguig, Metro Mani&a ound %or its termina& at
1icutan' 7s ot# ve#ic&es approac#ed t#e intersection o% D1P 7venue and @one!dew :oad t#e! %ai&ed to
s&ow down and s&acken t#eir speedC neit#er did t#e! &ow t#eir #orns to warn approac#ing ve#ic&es' 7s a
conse9uence, a co&&ision etween t#em occurred, t#e passenger Aeepne! ramming t#e &e%t side portion o% t#e
MMT$ us' T#e co&&ision impact caused $ustodio to #it t#e %ront winds#ie&d o% t#e passenger Aeepne! and
s#e was t#rown out t#ere%rom, %a&&ing onto t#e pavement unconscious wit# serious p#!sica& inAuries' "#e was
roug#t to t#e Medica& $it! @ospita& w#ere s#e regained consciousness on&! a%ter 1 week' T#ereat, s#e was
con%ined %or 85 da!s, and as a conse9uence, s#e was una&e to work %or 3 U mont#s'
7 comp&aint %or damages was %i&ed ! $ustodio, w#o eing t#en a minor was assisted ! #er parents, against
a&& o% t#erein named de%endants %o&&owing t#eir re%usa& to pa! t#e e3penses incurred ! t#e %ormer as a resu&t
o% t#e co&&ision' "aid de%endants denied a&& t#e materia& a&&egations in t#e comp&aint and pointed an accusing
%inger at eac# ot#er as eing t#e part! at %au&t' T#e reorgani*ed tria& court, in its decision o% 1 7ugust 1./.,
%ound ot# drivers o% t#e co&&iding ve#ic&es concurrent&! neg&igent %or non=oservance o% appropriate tra%%ic
ru&es and regu&ations and %or %ai&ure to take t#e usua& precautions w#en approac#ing an intersection' 7s Aoint
tort%easors, ot# drivers ($a&eag and +eonardo), as we&& as +ama!o, were #e&d so&idari&! &ia&e %or damages
sustained ! $ustodio, i'e' (a) t#e sum o% P12,222'22 ! wa! o% medica& e3pensesC () t#e sum o% P4,222'22
! wa! o% e3penses o% &itigationC (c) t#e sum o% P14,222'22 ! wa! o% mora& damagesC (d) t#e sum o%
P8,>08'22 ! wa! o% &oss o% earningsC (e) t#e sum o% P4,222'22 ! wa! o% e3emp&ar! damagesC (%) t#e sum o%
P>,222'22 ! wa! o% attorne!?s %eesC and (g) costs o% suit' MMT$, on t#e ases o% t#e evidence presented
was, #owever, aso&ved %rom &iai&it! %or t#e accident'
7s $ustodio?s motion to #ave t#at portion o% t#e tria& court?s decision aso&ving MMT$ %rom &iai&it!
reconsidered #aving een denied %or &ack o% merit, an appea& was %i&ed ! #er wit# appe&&ate court' 7%ter
consideration o% t#e appropriate p&eadings on appea& and %inding t#e appea& meritorious, t#e $ourt o% 7ppea&s
modi%ied t#e tria& court?s decision ! #o&ding MMT$ so&idari&! &ia&e wit# t#e ot#er de%endants %or t#e
damages awarded ! t#e tria& court ecause o% t#eir concurrent neg&igence' T#e $ourt o% 7ppea&s was reso&ute
in its conc&usion and denied t#e motions %or reconsideration o% $ustodio and MMT$ in a reso&ution dated 10
Feruar! 1./8, t#us prompting MMT$ to %i&e t#e present petition'
T#e "upreme $ourt a%%irmed t#e impugned decision o% t#e $ourt o% 7ppea&s'
1. &ilin* o, petition ti#ely6 Section 1! Rule /2 o, t)e Rules o, Court
T#e decision o% t#e $ourt o% 7ppea&s, dated 31 (ctoer 1..1, was received ! MMT$ on 1/
Eovemer 1..1 and it seasona&! %i&ed a motion %or t#e reconsideration t#ereo% on 8/ Eovemer 1..1' "aid
motion %or reconsideration was denied ! t#e court in its reso&ution dated 10 Feruar! 1..8, w#ic# in turn
was received ! MMT$ on . Marc# 1..8' T#ere%ore, it #ad, pursuant to "ection 1, :u&e 54 o% t#e :u&es o%
$ourt, 14 da!s t#ere%rom or up to 85 Marc# 1..8 wit#in w#ic# to %i&e a petition %or review on certiorari'
7nticipating, #owever, t#at it ma! not e a&e to %i&e said petition e%ore t#e &apse o% t#e reg&ementar! period
t#ere%or, MMT$ %i&ed a motion on 1. Marc# 1..8 %or an e3tension o% 32 da!s to %i&e t#e present petition, wit#
proo% o% service o% copies t#ereo% to t#e court and t#e adverse parties' T#e $ourt granted said motion, wit# t#e
e3tended period to e counted %rom t#e e3piration o% t#e reg&ementar! period' $onse9uent&!, it #ad 32 da!s
%rom 85 Marc# 1..8 wit#in w#ic# to %i&e its petition, or up to 83 7pri& 1..8, and t#e eventua& %i&ing o% said
petition on 15 7pri& 1..8 was we&& wit#in t#e period granted ! t#e $ourt'
-. Re*le#entary perio+ in a petition ,or revie. on certiorari6 D,,ect o, #otion ,or reconsi+eration
an+ #otion ,or extension o, ti#e
,n t#e case o% a petition %or review on certiorari %rom a decision rendered ! t#e $ourt o% 7ppea&s,
"ection 1, :u&e 54 o% t#e :u&es o% $ourt, w#ic# #as &ong since een c&ari%ied in +acsamana vs' T#e @on'
"econd "pecia& $ases Division o% t#e ,ntermediate 7ppe&&ate $ourt, et a&', a&&ows t#e same to e %i&ed ;wit#in
14 da!s %rom notice o% Audgment or o% t#e denia& o% t#e motion %or reconsideration %i&ed in due time, and
pa!ing at t#e same time t#e corresponding docket %ee'< ,n ot#er words, in t#e event a motion %or
reconsideration is %i&ed and denied, t#e period o% 14 da!s egins to run a&& over again %rom notice o% t#e denia&
reso&ution' (t#erwise put, i% a motion %or reconsideration is %i&ed, t#e reg&ementar! period wit#in w#ic# to
appea& t#e decision o% t#e $ourt o% 7ppea&s to t#e "upreme $ourt is reckoned %rom t#e date t#e part! w#o
intends to appea& received t#e order den!ing t#e motion %or reconsideration' Furt#ermore, a motion %or
e3tension o% time to %i&e a petition %or review ma! e %i&ed wit# t#is $ourt wit#in said reg&ementar! period,
pa!ing at t#e same time t#e corresponding docket %ee'
3. &actual ,in+in*s o, trial court #ay $e reverse+ $y Court o, 5ppeals
Factua& %indings o% t#e tria& court ma! e reversed ! t#e $ourt o% 7ppea&s, w#ic# is vested ! &aw
wit# t#e power to review ot# &ega& and %actua& issues, i% on t#e evidence o% record, it appears t#at t#e tria&
court ma! #ave een mistaken, particu&ar&! in t#e appreciation o% evidence, w#ic# is wit#in t#e domain o% t#e
$ourt o% 7ppea&s'
/. &in+in*s o, ,acts o, Court o, 5ppeals conclusive upon t)e Supre#e Court6 Dxceptions
T#e genera& ru&e &aid down in a p&et#ora o% cases is t#at suc# %indings o% %act ! t#e $ourt o% 7ppea&s
are conc&usive upon and e!ond t#e power o% review o% t#e "upreme $ourt' F#i&e t#e %indings o% %act o% t#e
$ourt o% 7ppea&s are entit&ed to great respect, and even %ina&it! at times, t#at ru&e is not in%&e3i&e and is
suAect to we&& esta&is#ed e3ceptions, to wit: (1) w#en t#e conc&usion is a %inding grounded entire&! on
specu&ation, surmises and conAecturesC (8) w#en t#e in%erence made is mani%est&! mistaken, asurd or
impossi&eC (3) w#ere t#ere is grave ause o% discretionC (5) w#en t#e Audgment is ased on a
misappre#ension o% %actsC (4) w#en t#e %indings o% %act are con%&ictingC (>) w#en t#e $ourt o% 7ppea&s, in
making its %indings, went e!ond t#e issues o% t#e case and t#e same are contrar! to t#e admissions o% ot#
appe&&ant and appe&&eeC (0) w#en t#e %indings o% t#e $ourt o% 7ppea&s are contrar! to t#ose o% t#e tria& courtC
(/) w#en t#e %indings o% %act are conc&usions wit#out citation o% speci%ic evidence on w#ic# t#e! are asedC
(.) w#en t#e %acts set %ort# in t#e petition, as we&& as in t#e petitioner?s main and rep&! rie%s, are not disputed
! t#e respondentsC and (12) w#en t#e %indings o% %act o% t#e $ourt o% 7ppea&s are premised on t#e supposed
asence o% evidence and are contradicted ! t#e evidence on record'
2. <rivers ne*li*ent! ?eepney o.ner soli+arily lia$le
T#ere is no dispute as to t#e %inding o% concurrent neg&igence on t#e part o% $a&eag, t#e driver o% t#e
passenger Aeepne!, and +eonardo, t#e us driver o% MMT$, ot# o% w#om were so&idari&! #e&d &ia&e wit#
+ama!o, t#e owner o% t#e Aeepne!, t#e $ourt is spared t#e necessit! o% determining t#e su%%icienc! o%
evidence esta&is#ing t#e %act o% neg&igence'
. :arty to prove )is o.n a,,ir#ative assertion6 :repon+erance o, evi+ence in civil cases
,t is procedura&&! re9uired %or eac# part! in a case to prove #is own a%%irmative assertion ! t#e
degree o% evidence re9uired ! &aw' ,n civi& cases, t#e degree o% evidence re9uired o% a part! in order to
support #is c&aim is preponderance o% evidence, or t#at evidence adduced ! one part! w#ic# is more
conc&usive and credi&e t#an t#at o% t#e ot#er part!' ,t is t#ere%ore, incument on t#e p&ainti%% w#o is c&aiming
a rig#t to prove #is case' $oro&&ari&!, de%endant must &ikewise prove its own a&&egation to uttress its c&aim
t#at it is not &ia&e' ,n %ine, t#e part!, w#et#er p&ainti%% or de%endant, w#o asserts t#e a%%irmative o% t#e issue
#as t#e urden o% presenting at t#e tria& suc# amount o% evidence re9uired ! &aw to otain a %avora&e
Audgment' ,t is entire&! wit#in eac# o% t#e parties discretion, consonant wit# t#e t#eor! o% t#e case it or #e
seeks to advance and suAect to suc# procedura& strateg! %o&&owed t#ere!, to present a&& avai&a&e evidence at
its or #is disposa& in t#e manner w#ic# ma! e deemed necessar! and ene%icia& to prove its or #is position,
provided on&! t#at t#e same s#a&& measure up to t#e 9uantum o% evidence re9uired ! &aw' ,n making proo% in
its or #is case, it is paramount t#at t#e est and most comp&ete evidence e %orma&&! entered'
3. 8ral evi+ence .it)out o$?ect or +ocu#entary evi+ence not su,,iciently persuasive proo,
F#i&e t#ere is no ru&e w#ic# re9uires t#at testimonia& evidence, to #o&d swa!, must e corroorated !
documentar! evidence, or even oAect evidence %or t#at matter, inasmuc# as t#e witnesses? testimonies dwe&t
on mere genera&ities, t#e $ourt cannot consider t#e same as su%%icient&! persuasive proo% t#at t#ere was
oservance o% due di&igence in t#e se&ection and supervision o% emp&o!ees' @erein, MMT$?s attempt to prove
its di&igentissimi patris %ami&ias in t#e se&ection and supervision o% emp&o!ees t#roug# ora& evidence must %ai&
as it was una&e to uttress t#e same wit# an! ot#er evidence, oAect or documentar!, w#ic# mig#t oviate t#e
apparent iased nature o% t#e testimon!'
4. ==(C s)ort o, re9uire+ evi+entiary 9uantu#6 Central (axica$ vs. Dx>=eralco D#ployees
(ransportation
T#e evidence %or MMT$ %a&&s s#ort o% t#e re9uired evidentiar! 9uantum as wou&d convincing&! and
undouted&! prove its oservance o% t#e di&igence o% a good %at#er o% a %ami&! #as its precursor in t#e
under&!ing rationa&e pronounced in t#e ear&ier case o% $entra& Ta3ica $orp' vs' B3=Mera&co Bmp&o!ees
Transportation $o', et a&', set amidst an a&most identica& %actua& setting' T#erein, it was #e&d t#at ;t#ere is no
#ard=and=%ast ru&e on t#e 9uantum o% evidence needed to prove due oservance o% a&& t#e di&igence o% a good
%at#er o% a %ami&! as wou&d constitute a va&id de%ense to t#e &ega& presumption o% neg&igence on t#e part o% an
emp&o!er or master w#ose emp&o!ee #as ! #is neg&igence, caused damage to anot#er' T#e %ai&ure o% t#e
compan! to produce in court an! ;record< or ot#er documentar! proo% tending to esta&is# t#at it #ad
e3ercised a&& t#e di&igence o% a good %at#er o% a %ami&! in t#e se&ection and supervision o% its drivers and
uses, notwit#standing t#e ca&&s t#ere%or ! ot# t#e tria& court and t#e opposing counse&, argues strong&!
against its pretensions'
%. Case covere+ $y 5rticles -13 an+ -133! in relation to 5rticle -14"! o, t)e Civil Co+e6 Dle#ents
o, 9uasi>+elicts
T#e present case is! wit#in t#e coverage o% 7rtic&es 810> and 8100, in re&ation to 7rtic&e 81/2, o% t#e
$ivi& $ode provisions on 9uasi=de&icts, as a&& t#e e&ements t#ereo% are present, to wit: (1) damages su%%ered !
t#e p&ainti%%, (8) %au&t or neg&igence o% t#e de%endant or some ot#er person %or w#ose act #e must respond, and
(3) t#e connection o% cause and e%%ect etween %au&t or neg&igence o% t#e de%endant and t#e damages incurred
! p&ainti%%'
1". 5rticle -14" 7CC
T#e pertinent parts o% 7rtic&e 81/2 provide t#at ;T#e o&igation imposed ! artic&e 810> is
demanda&e not on&! %or one?s own acts or omissions, ut a&so %or t#ose o% persons %or w#om one is
responsi&e' 333 Bmp&o!ers s#a&& e &ia&e %or damages caused ! t#eir emp&o!ees and #ouse#o&d #e&pers
acting wit#in t#e scope o% t#eir assigned tasks, even t#oug# t#e %ormer are not engaged in an! usiness or
industr!' 333 T#e responsii&it! treated o% in t#is artic&e s#a&& cease w#en t#e persons #erein mentioned prove
t#at t#e! oserved a&& t#e di&igence o% a good %at#er o% a %ami&! to prevent damage'<
11. Basis o, e#ployer1s vicarious lia$ility
T#e asis o% t#e emp&o!er?s vicarious &iai&it! #as een e3p&ained: ;T#e responsii&it! imposed !
t#is artic&e arises ! virtue o% a presumption Auris tantum o% neg&igence on t#e part o% t#e persons made
responsi&e under t#e artic&e, derived %rom t#eir %ai&ure to e3ercise due care and vigi&ance over t#e acts o%
suordinates to prevent t#em %rom causing damage' Eeg&igence is imputed to t#em ! &aw, un&ess t#e! prove
t#e contrar!' T#us, t#e &ast paragrap# o% t#e artic&e sa!s t#at suc# responsii&it! ceases i% it is proved t#at t#e
persons w#o mig#t e #e&d responsi&e under it e3ercised t#e di&igence o% a good %at#er o% a %ami&!
(di&igentissimi patris %ami&ias) to prevent damage' ,t is c&ear, t#ere%ore, t#at it is not representation, nor
interest, nor even t#e necessit! o% #aving someod! e&se answer %or t#e damages caused ! t#e persons
devoid o% persona&it!, ut it is t#e non=per%ormance o% certain duties o% precaution and prudence imposed
upon t#e persons w#o ecome responsi&e ! civi& ond uniting t#e actor to t#em, w#ic# %orms t#e %oundation
o% suc# responsii&it!'<
1-. <ili*entissi#i patris ,a#ilias applica$le .)en t)ere is an e#ployer>e#ployee relations)ip6
<ili*ence o, a *oo+ ,at)er o, ,a#ily un+er 5rticle -14" re,ers to +ue +ili*ence in selection an+
supervision o, e#ployees
T#e ru&e is app&ica&e on&! w#ere t#ere is an emp&o!er=emp&o!ee re&ations#ip, a&t#oug# it is not
necessar! t#at t#e emp&o!er e engaged in usiness or industr!' F#et#er or not engaged in an! usiness or
industr!, t#e emp&o!er under 7rtic&e 81/2 is &ia&e %or torts committed ! #is emp&o!ees wit#in t#e scope o%
t#eir assigned tasks' 1ut, it is necessar! %irst to esta&is# t#e emp&o!ment re&ations#ip' (nce t#is is done, t#e
p&ainti%% must s#ow, to #o&d t#e emp&o!er &ia&e, t#at t#e emp&o!ee was acting wit#in t#e scope o% #is assigned
task w#en t#e tort comp&ained o% was committed' ,t is on&! t#en t#at t#e de%endant, as emp&o!er, ma! %ind it
necessar! to interpose t#e de%ense o% due di&igence in t#e se&ection and supervision o% emp&o!ees' T#e
di&igence o% a good %at#er o% a %ami&! re9uired to e oserved ! emp&o!ers to prevent damages under 7rtic&e
81/2 re%ers to due di&igence in t#e se&ection and supervision o% emp&o!ees in order to protect t#e pu&ic'
1-. :resu#ption t)at e#ployer ne*li*ent .)en e#ployee causes +a#a*e +ue to )is o.n ne*li*ence
Fit# t#e a&&egation and suse9uent proo% o% neg&igence against t#e driver and o% an emp&o!er=
emp&o!ee re&ation etween #im and MMT$, t#e case is undouted&! ased on a 9uasi=de&ict under 7rtic&e
81/2' F#en t#e emp&o!ee causes damage due to #is own neg&igence w#i&e per%orming #is own duties, t#ere
arises t#e Auris tantum presumption t#at t#e emp&o!er is neg&igent, reutta&e on&! ! proo% o% oservance o%
t#e di&igence o% a good %at#er o% a %ami&!' For %ai&ure to reut suc# &ega& presumption o% neg&igence in t#e
se&ection and supervision o% emp&o!ees, t#e emp&o!er is &ikewise responsi&e %or damages, t#e asis o% t#e
&iai&it! eing t#e re&ations#ip o% pater %ami&ias or on t#e emp&o!er?s own neg&igence'
13. <rivers an+ ve)icle o.ners +irectly an+ soli+arily lia$le6 GutierreJ vs. GutierreJ
7s ear&! as t#e case o% 6utierre* vs' 6utierre*, and t#erea%ter, t#e $ourt #as consistent&! #e&d t#at
w#ere t#e inAur! is due to t#e concurrent neg&igence o% t#e drivers o% t#e co&&iding ve#ic&es, t#e drivers and
owners o% t#e said ve#ic&es s#a&& e primari&!, direct&! and so&idari&! &ia&e %or damages and it is immateria&
t#at one action is ased on 9uasi=de&ict and t#e ot#er on cu&pa contractua&, as t#e so&idarit! o% t#e o&igation is
Austi%ied ! t#e ver! nature t#ereo%'
1/. 5+#onition as to selection o, e#ployees6 Ca#$o vs. Ca#arote
T#e &ega& o&igation o% emp&o!ers to oserve due di&igence in t#e se&ection and supervision o%
emp&o!ees is not to e considered as an empt! p&a! o% words or a mere %orma&ism, as appears to e t#e
%as#ion o% t#e times, since t#e non=oservance t#ereo% actua&&! ecomes t#e asis o% t#eir vicarious &iai&it!
under 7rtic&e 81/2' (n t#e matter o% se&ection o% emp&o!ees, t#e case o% $amo vs' $amarote &a!s down t#e
admonition t#at ;in order t#at t#e owner o% a ve#ic&e ma! e considered as #aving e3ercised a&& di&igence o% a
good %at#er o% a %ami&!, #e s#ou&d not #ave een satis%ied wit# t#e mere possession o% a pro%essiona& driver?s
&icenseC #e s#ou&d #ave care%u&&! e3amined t#e app&icant %or emp&o!ment as to #is 9ua&i%ications, #is
e3perience and record o% service' T#ese steps t#e ve#ic&e owner %ai&ed to oserveC #e #as t#ere%ore, %ai&ed to
e3ercise a&& due di&igence re9uired o% a good %at#er o% a %ami&! in t#e c#oice or se&ection o% driver'<
12. Scope o, +ue +ili*ence in supervision o, e#ployees
Due di&igence in t#e supervision o% emp&o!ees inc&udes t#e %ormu&ation o% suita&e ru&es and
regu&ations %or t#e guidance o% emp&o!ees and t#e issuance o% proper instructions intended %or t#e protection
o% t#e pu&ic and persons wit# w#om t#e emp&o!er #as re&ations t#roug# #is or its emp&o!ees and t#e
imposition o% necessar! discip&inar! measures upon emp&o!ees in case o% reac# or as ma! e warranted to
ensure t#e per%ormance o% acts indispensa&e to t#e usiness o% and ene%icia& to t#eir emp&o!er' To t#is, t#e
$ourt adds t#at actua& imp&ementation and monitoring o% consistent comp&iance wit# said ru&es s#ou&d e t#e
constant concern o% t#e emp&o!er, acting t#roug# dependa&e supervisors w#o s#ou&d regu&ar&! report on t#eir
supervisor! %unctions'
1. E)en +e,ense o, +ue +ili*ence in selection an+ supervision o, e#ployees +ee#e+ su,,icient
,n order t#at t#e de%ense o% due di&igence in t#e se&ection and supervision o% emp&o!ees ma! e
deemed su%%icient and p&ausi&e, it is not enoug# to empti&! invoke t#e e3istence o% said compan! guide&ines
and po&icies on #iring and supervision' 7s t#e neg&igence o% t#e emp&o!ee gives rise to t#e presumption o%
neg&igence on t#e part o% t#e emp&o!er, t#e &atter #as t#e urden o% proving t#at it #as een di&igent not on&! in
t#e se&ection o% emp&o!ees ut a&so in t#e actua& supervision o% t#eir work' T#e mere a&&egation o% t#e
e3istence o% #iring procedures and supervisor! po&icies, wit#out an!t#ing more, is decided&! not su%%icient to
overcome suc# presumption'
13. Earnin* o, t)e Court to e#ployers
T#e $ourt emp#atica&&! reiterates its #o&ding, as a warning to a&& emp&o!ers, t#at ;t#e mere
%ormu&ation o% various compan! po&icies on sa%et! wit#out s#owing t#at t#e! were eing comp&ied wit# is not
su%%icient to e3empt petitioner %rom &iai&it! arising %rom neg&igence o% its emp&o!ees' ,t is incument upon
petitioner to s#ow t#at in recruiting and emp&o!ing t#e erring driver t#e recruitment procedures and compan!
po&icies on e%%icienc! and sa%et! were %o&&owed'< Pa!ing &ip=service to t#ese inAunctions or mere&! going
t#roug# t#e motions o% comp&iance t#erewit# wi&& warrant stern sanctions %rom t#e $ourt'
14. Rationale ,or t)e re9uire#ent o, )i*)est possi$le +e*ree o, +ili*ence ,ro# co##on carriers
T#e $ourt %ee&s it is necessar! to stress t#e %o&&owing rationa&e e#ind t#ese a&&=important statutor!
and Aurisprudentia& mandates, %or it #as een oserved t#at despite its pronouncement in Papa&aran 1us +ine
vs' $oronado, et a&', t#ere #as een &itt&e improvement in t#e transport situation in t#e countr!: ;,n re9uiring
t#e #ig#est possi&e degree o% di&igence %rom common carriers and creating a presumption o% neg&igence
against t#em, t#e &aw compe&s t#em to cur t#e reck&essness o% t#eir drivers' F#i&e t#e immediate
ene%iciaries o% t#e standard o% e3traordinar! di&igence are, o% course, t#e passengers and owners o% t#e cargo
carried ! a common carrier, t#e! are not t#e on&! persons t#at t#e &aw seeks to ene%it' For i% common
carriers care%u&&! oserve t#e statutor! standard o% e3traordinar! di&igence in respect o% t#eir own passengers,
t#e! cannot #e&p ut simu&taneous&! ene%it pedestrians and t#e owners and passengers o% ot#er ve#ic&es w#o
are e9ua&&! entit&ed to t#e sa%e and convenient use o% our roads and #ig#wa!s' T#e &aw seeks to stop and
prevent t#e s&aug#ter and maiming o% peop&e (w#et#er passengers or not) and t#e destruction o% propert!
(w#et#er %reig#t or not) on our #ig#wa!s ! uses, t#e ver! si*e and power o% w#ic# seem o%ten to in%&ame
t#e minds o% t#eir drivers' ' ' ''<
1%. 7o interest +ue as suc) )as not $een praye+ in t)e co#plaint6 5rticle --11 7CC
T#e appe&&ate court acted in t#e e3ercise o% sound discretion w#en it a%%irmed t#e tria& court?s award,
wit#out re9uiring t#e pa!ment o% interest t#ereon as an item o% damages Aust ecause o% de&a! in t#e
determination t#ereo%, especia&&! since $ustodio did not speci%ica&&! pra! t#ere%or in #er comp&aint' 7rtic&e
8811 o% t#e $ivi& $ode provides t#at in 9uasi=de&icts, interest as a part o% t#e damages ma! e awarded in t#e
discretion o% t#e court, and not as a matter o% rig#t' T#ere #ave een no intentiona& di&ator! maneuvers or an!
specia& circumstances w#ic# wou&d Austi%! t#at additiona& award'
[3/]
0apalaran Bus vs. Corona+o (GR 42331! -2 5u*ust 1%4%)
&acts' (n 8 7ugust 1./8, t#e Aeepne! driven ! +ope 6raAera was t#en coming %rom Pi&a, +aguna on its wa!
towards t#e direction o% "ta' $ru*, traversing t#e o&d #ig#wa!7s t#e Aeepne! reac#ed t#e intersection w#ere
t#ere is a tra%%ic sign ;!ie&d,< it stopped and cautious&! treated t#e intersection as a ;T#ru "top< street, w#ic#
it is not' T#e P1+ us, on t#e ot#er #and, was on its wa! %rom "ta' $ru*, +aguna, driven ! its regu&ar driver
Virgi&io +&amoso, on its wa! towards Mani&a' T#e regu&ar itinerar! o% t#e P1+ us is t#roug# t#e town proper
o% Pi&a, +aguna, ut at times it avoids t#is i% a us is a&read! %u&&! &oaded wit# passengers and can no &onger
accommodate additiona& passengers' 7s t#e P1+ us neared t#e intersection, Virgi&io +&amoso in9uired %rom
#is conductor i% t#e! cou&d sti&& accommodate passengers and &earning t#at t#e! were a&read! %u&&, #e decided
to !pass Pi&a and instead, to proceed a&ong t#e nationa& #ig#wa!' Virgi&io +&amoso admitted t#at t#ere was
anot#er motor ve#ic&e a#ead o% #im' 7tt!' $onrado +' Manicad, w#o was driving a Mustang car coming %rom
t#e direction o% "ta' $ru* and proceeding towards t#e direction o% Mani&a, stopped at t#e intersection to give
wa! to t#e Aeepne! driven ! 6raAera' 1e#ind Manicad were two ve#ic&es, a car o% #is c&ient and anot#er car'
7 +aguna Transit us #ad Aust entered t#e town o% Pi&a a#ead o% 7tt!' Manicad' T#e P1+ us ignored t#e
stopped ve#ic&es o% 7tt!' Manicad and t#e ot#er ve#ic&es e#ind 7tt!' Manicad and overtook ot# ve#ic&es at
t#e intersection, t#ere%ore, causing t#e accident' T#e P1+ us appeared to #ave een trave&&ing at a %ast rate
o% speed ecause, a%ter t#e co&&ision, it did not stopC it trave&&ed %or anot#er 42 meters and stopped on&! w#en
it #it an e&ectric post'
(n 15 "eptemer 1./8, Papa&aran, apparent&! e&ieving t#at t#e est de%ense was o%%ense, %i&ed a comp&aint
%or damage to propert! and p#!sica& inAuries t#roug# reck&ess imprudence against 7nge& $oronado and +ope
6raAera in t#e :egiona& Tria& $ourt, 1ranc# 80, "ta' $ru*, +aguna' $oronado and 6raAera answered wit# t#eir
own c&aims (counter=c&aims) %or damages' 7 t#ird=part! comp&aint and-or a comp&aint %or intervention was
a&so %i&ed in t#e same case against Papa&aran ! Aeepne! passenger Dionisio "#in!o' (n 14 (ctoer 1./>,
a%ter tria&, t#e tria& court rendered a Audgment in %avor o% $oronado, 6raAera and "#in!o and ordering
Papa&aran (a) to pa! 7nge& $oronado t#e sum o% P52,222'22 as compensation %or t#e tota&&! wrecked Aeepne!,
p&us t#e sum o% P4,222'22 as attorne!?s %ees and &itigation e3penses, and () to Dionisio "#in!o t#e sum o%
P34,222'22 representing t#e e3penses incurred ! said intervenor %or #is treatment inc&uding #is car=#ire, t#e
%urt#er sum o% P32,222'22 representing t#e e3penses said de%endant wi&& incur %or #is second operation to
remove t#e intramedu&ar! nai& %rom #is %emur, t#e additiona& sum o% P42,222'22 to serve as mora& damages
%or t#e pain and su%%ering in%&icted on said de%endant, p&us t#e sum o% P12,222'22 in t#e concept o% e3emp&ar!
damages to serve as a deterrent to ot#ers w#o, &ike t#e p&ainti%%, ma! e minded to induce accident victims to
perAure t#emse&ves in a sworn statement, and t#e sum o% P14,222'22 as attorne!?s %ees and &itigation e3penses'
From t#e aove Audgment, Papa&aran appea&ed to t#e $ourt o% 7ppea&s assai&ing t#e tria& court?s %indings on
t#e issue o% %au&t and t#e award o% damages'
T#e $ourt o% 7ppea&s, on 8/ June 1.//, a%%irmed t#e decision o% t#e tria& court ut modi%ied t#e award o%
damages ! setting aside t#e grant o% e3emp&ar! damages as we&& as t#e award o% attorne!?s %ee and &itigation
e3penses made to Dionisio "#in!o' 7 motion %or reconsideration ! Papa&aran #aving een denied ! t#e
appe&&ate court on 13 (ctoer 1.//' @ence, t#e petition %or :eview'
T#e "upreme $ourt denied t#e Petition %or :eview on $ertiorari %or &ack o% merit and a%%irmed t#e Decision
o% t#e $ourt o% 7ppea&s, e3cept (1) t#at t#e award o% e3emp&ar! damages to Dionisio "#in!o s#a&& e restored
and increased %rom P12,222'22 to P84,222'22, and (8) t#at t#e grant o% attorne!?s %ees and &itigation e3penses
in t#e sum o% P14,222'22 to Dionisio "#in!o s#a&& simi&ar&! e restored' $osts against Papa&aran'
1. General rules as to ri*)t>o,>.ay
T#e genera& ru&e is t#at t#e ve#ic&e on t#e nationa& #ig#wa! #as t#e rig#t=o%=wa! as against a %eeder
road' 7not#er genera& ru&e is t#at t#e ve#ic&e coming %rom t#e rig#t #as t#e rig#t=o%=wa! over t#e ve#ic&e
coming %rom t#e &e%t' T#e genera& ru&es on rig#t=o%=wa! ma! e invoked on&! i% ot# ve#ic&es approac# t#e
intersection at a&most t#e same time'
-. Supre#e Court not a trier o, ,acts
,t is not t#e %unction o% t#e "upreme $ourt to ana&!*e and weig# evidence presented ! t#e parties a&&
over again and t#at its Aurisdiction is in princip&e &imited to reviewing errors o% &aw t#at mig#t #ave een
committed ! t#e $ourt o% 7ppea&s' @erein, Papa&aran #as made no compe&&ing s#owing o% an!
misappre#ension o% %acts on t#e part o% t#e $ourt o% 7ppea&s t#at wou&d re9uire us to review and overturn t#e
%actua& %indings o% t#at court' (n t#e contrar!, e3amination o% t#e record s#ows t#at not on&! are t#e
conc&usions o% %act o% t#e $ourt o% 7ppea&s and t#e tria& court on w#o #ad acted neg&igent&! and was at %au&t in
t#e co&&ision o% t#eir ve#ic&es, amp&! supported ! t#e evidence o% record, ut a&so t#at Papa&aran?s us driver
was gross&! neg&igent and #ad acted wanton&! and in ovious disregard o% t#e app&ica&e ru&es on sa%et! on
t#e #ig#wa!'
3. Bus +river actually violatin* tra,,ic rules an+ re*ulations! presu#e+ ne*li*ent
Papa&aran?s driver #ad ecome aware t#at some ve#ic&es a#ead o% t#e us and trave&&ing in t#e same
direction #ad a&read! stopped at t#e intersection ovious&! to give wa! eit#er to pedestrians or to anot#er
ve#ic&e aout to enter t#e intersection' T#e us driver, w#o was driving at a speed too #ig# to e sa%e and
proper at or near an intersection on t#e #ig#wa!, and in an! case too #ig# to e a&e to s&ow down and stop
e#ind t#e cars w#ic# #ad preceded it and w#ic# #ad stopped at t#e intersection, c#ose to swerve to t#e &e%t
&ane and overtake suc# preceding ve#ic&es, entered t#e intersection and direct&! smas#ed into t#e Aeepne!
wit#in t#e intersection' ,mmediate&! e%ore t#e co&&ision, t#e us driver was actua&&! vio&ating t#e %o&&owing
tra%%ic ru&es and regu&ations, among ot#ers, in t#e +and Transportation and Tra%%ic $ode, :7 513>, as
amended' T#us, a &ega& presumption arose t#at t#e us driver was neg&igent, a presumption Papa&aran was
una&e to overt#row'
/. Section 32(a) o, R5 /13! Restriction as to spee+
"ection 34 (a) provides t#at ;an! person driving a motor ve#ic&e on a #ig#wa! s#a&& drive t#e same at
a care%u& and prudent speed, not greater nor &ess t#an is reasona&e and proper, #aving due regard %or t#e
tra%%ic, t#e widt# o% t#e #ig#wa!, and or an! ot#er condition t#en and t#ere e3istingC and no person s#a&& drive
an! motor ve#ic&e upon a #ig#wa! at suc# a speed as to endanger t#e &i%e, &im and propert! o% an! person,
nor at a speed greater t#an wi&& permit #im to ring t#e ve#ic&e to a stop wit#in t#e assured c&ear distance
a#ead'<
2. Section /1 (a) o, R5 /13! Restrictions on overtakin* an+ passin*
"ection 51 (a) provides t#at ;t#e driver o% a ve#ic&e s#a&& not drive to t#e &e%t side o% t#e center &ine o%
a #ig#wa! in overtaking or passing anot#er ve#ic&e, proceeding in t#e same direction, un&ess suc# &e%t side is
c&ear&! visi&e, and is %ree o% oncoming tra%%ic %or a su%%icient distance a#ead to permit suc# overtaking or
passing to e made in sa%et!'<
. Section /1 (c) o, R5 /13! Restrictions on overtakin* an+ passin*
"ection 51 (c) provides t#at ;t#e driver o% a ve#ic&e s#a&& not overtake or pass an! ot#er ve#ic&e
proceeding in t#e same direction, at an! rai&wa! grade crossing, or at an! intersection o% #ig#wa!s, un&ess
suc# intersection or crossing is contro&&ed ! tra%%ic signa&, or un&ess permitted to do so ! a watc#man or a
peace o%%icer, e3cept on a #ig#wa! #aving two or more &anes %or movement o% tra%%ic in one direction w#ere
t#e driver o% a ve#ic&e ma! overtake or pass anot#er ve#ic&e on t#e rig#t' Eot#ing in t#is section s#a&& e
construed to pro#iit a driver overtaking or passing, upon t#e rig#t, anot#er ve#ic&e w#ic# is making or aout
to make a &e%t turn'
3. Beepney +river )as ri*)t to assu#e ,urt)er ve)icles .oul+ stop
T#e Aeepne! driver, seeing t#e cars c&osest to t#e intersection on t#e opposite side o% t#e #ig#wa!
come to a stop to give wa! to #im, #ad t#e rig#t to assume t#at ot#er ve#ic&es %urt#er awa! and e#ind t#e
stopped cars wou&d simi&ar&! come to a stop and not seek i&&ega&&! to overtake t#e stopped ve#ic&es and come
careening into t#e intersection at an unsa%e speed' Papa&aran?s us was sti&& re&ative&! %ar awa! %rom t#e
intersection w#en t#e Aeepne! entered t#e sameC t#e us co&&ided #ead=on into t#e Aeepne! ecause t#e us #ad
een going at an e3cessive&! #ig# ve&ocit! immediate&! e%ore and at t#e time o% overtaking t#e stopped cars,
and so caug#t t#e Aeepne! wit#in t#e intersection'
4. Responsi$ility o, +river to see to it t)at le,t lane o, roa+ .as clear
,t was t#e responsii&it! o% t#e us driver to see to it, w#en it overtook t#e 8 cars a#ead w#ic# #ad
stopped at t#e intersection, t#at t#e &e%t &ane o% t#e road wit#in t#e intersection and e!ond was c&ear' T#e
point o% impact was on t#e &e%t side o% t#e intersection (t#e rig#t &ane so %ar as concerns t#e Aeepne! coming
%rom t#e opposite side), w#ic# was precise&! t#e &ane or side on w#ic# t#e Aeepne! #ad a rig#t to e'
%. <river1s *ross ne*li*ence raises presu#ption t)at 0apalaran *uilty o, ne*li*ence in selection
an+ supervision o, e#ployees6 Ri*)t o, recourse
T#e patent and gross neg&igence on t#e part o% Papa&aran?s driver raised t#e &ega& presumption t#at
Papa&aran as emp&o!er was gui&t! o% neg&igence eit#er in t#e se&ection or in t#e supervision o% its us drivers'
F#ere t#e emp&o!er is #e&d &ia&e %or damages, it #as o% course a rig#t o% recourse against its own neg&igent
emp&o!ee' ,% Papa&aran was interested in maintaining its rig#t o% recourse against or reimursement %rom its
own driver, it s#ou&d #ave appea&ed %rom t#at portion o% t#e tria& court?s decision w#ic# #ad %ai&ed to #o&d t#e
us driver responsi&e %or an! damage' $ontrar! to Papa&aran?s pretense, its &iai&it! %or t#e acts and
neg&igence o% its us driver is not ;mere&! susidiar!,< and is not &imited to cases w#ere t#e emp&o!ee ;cannot
pa! #is &iai&it!,< nor are $oronado, et' a&' compe&&ed %irst to proceed against t#e us driver' T#e &iai&it! o%
t#e emp&o!er under 7rtic&e 81/2 o% t#e $ivi& $ode is direct and immediateC it is not conditioned upon prior
recourse against t#e neg&igent emp&o!ee and a prior s#owing o% t#e inso&venc! o% suc# emp&o!ee'
1". 5.ar+ o, #oral +a#a*es in or+er6 S)inyo1s +eat)
T#e award o% mora& damages against Papa&aran is not on&! entire&! in orderC it is a&so 9uite modest
considering Dionisio "#in!o?s deat# during t#e pendenc! o% t#is petition, a deat# #astened !, i% not direct&!
due to, t#e grievous inAuries sustained ! #im in t#e vio&ent co&&ision'
11. Court entitle+ to take ?u+icial notice o, ne*li*ence
Papa&aran?s us driver was gross&! and ver! proa&! crimina&&! neg&igent in #is reck&ess disregard o%
t#e rig#ts o% ot#er ve#ic&es and t#eir passengers and o% pedestrians as we&&' T#e $ourt is entit&ed to take
Audicia& notice o% t#e gross neg&igence and t#e appa&&ing disregard o% t#e p#!sica& sa%et! and propert! o%
ot#ers so common&! e3#iited toda! ! t#e drivers o% passenger uses and simi&ar ve#ic&es on our #ig#wa!s'
1-. <ili*ence re9uire+ o, a co##on carrier
T#e &aw re9uires a common carrier to e3ercise e3traordinar! di&igence in carr!ing and transporting
t#eir passengers sa%e&! ;as %ar as #uman care and %oresig#t can provide, using t#e utmost di&igence o% ver!
cautious persons, wit# due regard %or a&& t#e circumstances'< ,n re9uiring t#e #ig#est possi&e degree o%
di&igence %rom common carriers and creating a presumption o% neg&igence against t#em, t#e &aw compe&s
t#em to cur t#e reck&essness o% t#eir drivers'
13. Bene,iciaries o, stan+ar+ o, extraor+inary +ili*ence
F#i&e t#e immediate ene%iciaries o% t#e standard o% e3traordinar! di&igence are, o% course, t#e
passengers and owners o% cargo carried ! a common carrier, t#e! are not t#e on&! persons t#at t#e &aw seeks
to ene%it' For i% common carriers care%u&&! oserved t#e statutor! standard o% e3traordinar! di&igence in
respect o% t#eir own passengers, t#e! cannot #e&p ut simu&taneous&! ene%it pedestrians and t#e owners and
passengers o% ot#er ve#ic&es w#o are e9ua&&! entit&ed to t#e sa%e and convenient use o% our roads and
#ig#wa!s' T#e &aw seeks to stop and prevent t#e s&aug#ter and maiming o% peop&e (w#et#er passengers or
not) and t#e destruction o% propert! (w#et#er %reig#t or not) on our #ig#wa!s ! uses, t#e ver! si*e and
power o% w#ic# seem o%ten to in%&ame t#e minds o% t#eir drivers'
1/. Dxe#plary +a#a*es6 5rticle --31 7CC
7rtic&e 8831 o% t#e $ivi& $ode e3p&icit&! aut#ori*es t#e imposition o% e3emp&ar! damages in cases o%
9uasi=de&icts ;i% t#e de%endant acted wit# gross neg&igence'< @erein, t#e award o% e3emp&ar! damages ! t#e
tria& court was 9uite proper, a&t#oug# granted %or t#e wrong reason, and s#ou&d not on&! e restored ut
augmented'
12. ;ssues not raise+ #ay $e consi+ere+ $y Court i, su$stantial ?ustice an+Cor pu$lic policy re9uire
it
,ssues w#ic# must e reso&ved i% sustantia& Austice is to e rendered to t#e parties, ma! and s#ou&d e
considered and decided ! t#e "upreme $ourt even i% t#ose issues #ad not een e3p&icit&! raised ! t#e part!
a%%ected' @erein, it is not on&! t#e demands o% sustantia& Austice ut a&so t#e compe&&ing considerations o%
pu&ic po&ic! noted aove, w#ic# impe& us to t#e conc&usion t#at t#e tria& court?s award o% e3emp&ar! damages
was erroneous&! de&eted and must e restored and roug#t more near&! to t#e &eve& w#ic# pu&ic po&ic! and
sustantia& Austice re9uire'
[32]
(rans>5sia S)ippin* Lines vs. C5 (GR 1141-! / =arc) 1%%)
T#ird Division, Davide Jr' (J): 5 concur
&acts' 7tt!' :enato 7rro!o, a pu&ic attorne!, oug#t a ticket Trans=7sia "#ipping +ines ,nc', a corporation
engaged in inter=is&and s#ipping, %or t#e vo!age o% M-V 7sia T#ai&and vesse& to $aga!an de (ro $it! %rom
$eu $it! on 18 Eovemer 1..1' 7t around 4:32p'm o% t#e said da!, 7rro!o oarded t#e M-V 7sia T#ai&and
vesse&' 7t t#at instance, 7rro!o noticed t#at some repair work were eing undertaken on t#e engine o% t#e
vesse&' T#e vesse& departed at around 11:22 p'm' wit# on&! 1 engine running' 7%ter an #our o% s&ow vo!age,
t#e vesse& stopped near Pawit ,s&and and dropped its anc#or t#ereat' 7%ter #a&% an #our o% sti&&ness, some
passengers demanded t#at t#e! s#ou&d e a&&owed to return to $eu $it! %or t#e! were no &onger wi&&ing to
continue t#eir vo!age to $aga!an de (ro $it!' T#e captain acceded LsicM to t#eir re9uest and t#us t#e vesse&
#eaded ack to $eu $it!' 7t $eu $it!, 7rro!o, toget#er wit# t#e ot#er passengers w#o re9uested to e
roug#t ack to $eu $it!, were a&&owed to disemark' T#erea%ter, t#e vesse& proceeded to $aga!an de (ro
$it!' 7rro!o, t#e ne3t da!, oarded t#e M-V 7sia Japan %or its vo!age to $aga!an de (ro $it!, &ikewise a
vesse& o% Trans=7sia'
(n account o% t#e %ai&ure o% Trans=7sia to transport #im to t#e p&ace o% destination on 18 Eovemer 1..1,
7rro!o %i&ed e%ore t#e tria& court a comp&aint %or damages against Trans=7sia' 7%ter due tria&, t#e tria& court
rendered its decision and ru&ed t#at t#e action was on&! %or reac# o% contract, wit# 7rtic&es 1102, 1108, and
1103 o% t#e $ivi& $ode as app&ica&e &aw H not 7rtic&e 81/2 o% t#e same $ode' T#e $ourt dismissed t#e
comp&aint as it did not appear t#at 7rro!o was &e%t in t#e Port o% $eu ecause o% t#e %au&t, neg&igence, ma&ice
or wanton attitude o% Trans=7sia?s emp&o!eesC and &ikewise dismissed Trans=7sia?s counterc&aim is &ikewise
dismissed it not appearing a&so t#at %i&ing o% t#e case ! 7rro!o was motivated ! ma&ice or ad %ait#'
Dnsatis%ied, 7rro!o appea&ed to t#e $ourt o% 7ppea&s ($7=6: $V 3..21)' ,n its decision o% 83 Eovemer
1..5, t#e $ourt o% 7ppea&s reversed t#e tria& court?s decision ! app&!ing 7rtic&e 1044 in re&ation to 7rtic&es
8821, 882/, 8810, and 8838 o% t#e $ivi& $ode and, according&!, awarded (1) P82,222'22 as mora& damagesC
(8) P12,222'22 as e3emp&ar! damagesC (3) P4,222'22 as attorne!?s %eesC and (5) $ost o% suit' Trans=7sia
instituted t#e petition %or review on certiorari'
T#e "upreme $ourt denied t#e petition, and a%%irmed t#e c#a&&enged decision o% t#e $ourt o% 7ppea&s, suAect
to t#e modi%ication as to t#e award %or attorne!?s %ees w#ic# is set asideC wit# costs against Trans=7sia'
1. La.s applica$le
Dndouted&!, t#ere was, etween Trans=7sia and 7rro!o, a contract o% common carriage' T#e &aws o%
primar! app&ication t#en are t#e provisions on common carriers under "ection 5, $#apter 3, Tit&e V,,,, 1ook
,V o% t#e $ivi& $ode, w#i&e %or a&& ot#er matters not regu&ated t#ere!, t#e $ode o% $ommerce and specia&
&aws'
-. 5rticle 1333 7CC! Dxtraor+inary +ili*ence6 5rticle 1322! Ft#ost +ili*ence o, very cautious
persons
Dnder 7rtic&e 1033 o% t#e $ivi& $ode, Trans=7sia was ound to oserve e3traordinar! di&igence in
ensuring t#e sa%et! o% 7rro!o' T#at meant t#at Trans=7sia was, pursuant to 7rtic&e 1044 o% t#e said $ode,
ound to carr! 7rro!o sa%e&! as %ar as #uman care and %oresig#t cou&d provide, using t#e utmost di&igence o%
ver! cautious persons, wit# due regard %or a&& t#e circumstances' @erein, Trans=7sia %ai&ed to disc#arge t#is
o&igation'
(ransportation La.! -""/ ( %" )
3. Gessel .as unsea.ort)y even $e,ore voya*e $e*an6 Fnsea.ort)iness +e,ine+! a clear $reac) o,
+uty o, carrier
1e%ore commencing t#e contracted vo!age, Trans=7sia undertook some repairs on t#e c!&inder #ead
o% one o% t#e vesse&?s engines' 1ut even e%ore it cou&d %inis# t#ese repairs, it a&&owed t#e vesse& to &eave t#e
port o% origin on on&! one %unctioning engine, instead o% two' Moreover, even t#e &one %unctioning engine was
not in per%ect condition as sometime a%ter it #ad run its course, it conked out' T#is caused t#e vesse& to stop
and remain adri%t at sea, t#us in order to prevent t#e s#ip %rom capsi*ing, it #ad to drop anc#or' P&ain&!, t#e
vesse& was unseawort#! even e%ore t#e vo!age egan' For a vesse& to e seawort#!?, it must e ade9uate&!
e9uipped %or t#e vo!age and manned wit# a su%%icient numer o% competent o%%icers and crew' T#e %ai&ure o% a
common carrier to maintain in seawort#! condition its vesse& invo&ved in a contract o% carriage is a c&ear
reac# o% is dut! prescried in 7rtic&e 1044 o% t#e $ivi& $ode'
/. 5rticle 13/ 7CC6 Lia$ility ,or +a#a*es
7s to its &iai&it! %or damages, 7rtic&e 10>5 o% t#e $ivi& $ode e3press&! provides t#at ;Damages in
cases comprised in t#is "ection s#a&& e awarded in accordance wit# Tit&e JV,,, o% t#is 1ook, concerning
Damages' 7rtic&e 882> s#a&& a&so app&! to t#e deat# o% a passenger caused ! t#e reac# o% contract !
common carrier' T#e damages comprised in Tit&e JV,,, o% t#e $ivi& $ode are actua& or compensator!, mora&,
nomina&, temperate or moderate, &i9uidated, and e3emp&ar!'<
2. 5ctual an+ co#pensatory +a#a*es
7ctua& or compensator! damages represent t#e ade9uate compensation %or pecuniar! &oss su%%ered
and %or pro%its t#e o&igee %ai&ed to otain'
. <a#a*es resultin* in contracts or 9uasi>contracts
,n contracts or 9uasi=contracts, t#e o&igor is &ia&e %or a&& t#e damages w#ic# ma! e reasona&!
attriuted to t#e non= per%ormance o% t#e o&igation i% #e is gui&t! o% %raud, ad %ait#, ma&ice, or wanton
attitude'
3. =oral +a#a*es
Mora& damages inc&ude mora& su%%ering, menta& anguis#, %rig#t, serious an3iet!, esmirc#ed
reputation, wounded %ee&ings, mora& s#ock, socia& #umi&iation, or simi&ar inAur!' T#e! ma! e recovered in t#e
cases enumerated in 7rtic&e 881. o% t#e $ivi& $ode, &ikewise, i% t#e! are t#e pro3imate resu&t o%, as #erein,
Trans=7sia?s reac# o% t#e contract o% carriage' 7nent a reac# o% a contract o% common carriage, mora&
damages ma! e awarded i% t#e common carrier acted %raudu&ent&! or in ad %ait#'
4. Dxe#plary +a#a*es6 not a #atter o, ri*)t
B3emp&ar! damages are imposed ! wa! o% e3amp&e or correction %or t#e pu&ic good, in addition to
mora&, temperate, &i9uidated or compensator! damages' ,n contracts and 9uasi=contracts, e3emp&ar! damages
ma! e awarded i% t#e de%endant acted in a wanton %raudu&ent, reck&ess, oppressive or ma&evo&ent manner' ,t
cannot, #owever, e considered as a matter o% rig#tC t#e court #aving to decide w#et#er or not t#e! s#ou&d e
adAudicated' 1e%ore t#e court ma! consider an award %or e3emp&ar! damages, t#e p&ainti%% must %irst s#ow t#at
#e is entit&ed to mora&, temperate or compensator! damagesC ut it is not necessar! t#at #e prove t#e monetar!
va&ue t#ereo%'
%. 5rticle 11% not applica$le
T#e $ourt o% 7ppea&s did not grant 7rro!o actua& or compensator! damages, reasoning t#at no de&a!
was incurred since t#ere was no demand, as re9uired ! 7rtic&e 11>. o% t#e $ivi& $ode' T#is artic&e, #owever,
%inds no app&ication in t#e case ecause, as t#ere was in %act no de&a! in t#e commencement o% t#e contracted
vo!age' ,% an! de&a! was incurred, it was a%ter t#e commencement o% suc# vo!age, more speci%ica&&!, w#en
(ransportation La.! -""/ ( %1 )
t#e vo!age was suse9uent&! interrupted w#en t#e vesse& #ad to stop near Pawit ,s&and a%ter t#e on&!
%unctioning engine conked out'
1". 5rticle %4 o, t)e Co+e o, Co##erce applies suppletorily to 5rticle 13 7CC6 Ri*)ts an+
+uties o, parties arisin* out o, +elay
7s to t#e rig#ts and duties o% t#e parties strict&! arising out o% suc# de&a!, t#e $ivi& $ode is si&ent'
@owever, as correct&! pointed out ! t#e petitioner, 7rtic&e >./ o% t#e $ode o% $ommerce speci%ica&&!
provides %or suc# a situation' ,t reads ;,n case a vo!age a&read! egun s#ou&d e interrupted, t#e passengers
s#a&& e o&iged to pa! t#e %are in proportion to t#e distance covered, wit#out rig#t to recover %or &osses and
damages i% t#e interruption is due to %ortuitous event or %orce maAeure, ut wit# a rig#t to indemnit! i% t#e
interruption s#ou&d #ave een caused ! t#e captain e3c&usive&!' ,% t#e interruption s#ou&d e caused ! t#e
disai&it! o% t#e vesse& and a passenger s#ou&d agree to await t#e repairs, #e ma! not e re9uired to pa! an!
increased price o% passage, ut #is &iving e3penses during t#e sta! s#a&& e %or #is own account'< T#is artic&e
app&ies supp&etori&! pursuant to 7rtic&e 10>> o% t#e $ivi& $ode'
11. 5rticle %4 o, t)e Co+e o, Co##erce #ust $e rea+ .it) 5rticles -1%%! --""! --"1! an+ --"4 in
relation to 5rticle -1 7CC6 5rroyo not entitle+ to actual or co#pensatory +a#a*es
T#e cause o% t#e de&a! or interruption was Trans=7sia?s %ai&ure to oserve e3traordinar! di&igence'
7rtic&e >./ must t#en e read toget#er wit# 7rtic&es 81.., 8822, 8821, and 882/ in re&ation to 7rtic&e 81 o%
t#e $ivi& $ode' ,n so reading, it means t#at Trans=7sia is &ia&e %or an! pecuniar! &oss or &oss o% pro%its w#ic#
7rro!o ma! #ave su%%ered ! reason t#ereo%' For 7rro!o, suc# wou&d e t#e &oss o% income i% una&e to report
to #is o%%ice on t#e da! #e was supposed to arrive were it not %or t#e de&a!' T#is, #owever, assumes t#at #e
sta!ed on t#e vesse& and was wit# it w#en it t#erea%ter resumed its vo!ageC ut #e did not' 7s #e and some
passengers reso&ved not to comp&ete t#e vo!age, t#e vesse& #ad to return to its port o% origin and a&&ow t#em to
disemark' 7rro!o t#en took Trans=7sia?s ot#er vesse& t#e %o&&owing da!, using t#e ticket #e #ad purc#ased
%or t#e previous da!?s vo!age' 7n! %urt#er de&a! t#en in 7rro!o?s arriva& at t#e port o% destination was caused
! #is decision to disemark' @ad #e remained on t#e %irst vesse&, #e wou&d #ave reac#ed #is destination at
noon o% 13 Eovemer 1..1, t#us een a&e to report to #is o%%ice in t#e a%ternoon' @e, t#ere%ore, wou&d #ave
&ost on&! t#e sa&ar! %or #a&% o% a da!' 1ut actua& or compensator! damages must e proved, w#ic# 7rro!o
%ai&ed to do' T#ere is no convincing evidence t#at #e did not receive #is sa&ar! %or 13 Eovemer 1..1 nor t#at
#is asence was not e3cused'
1-. (rans>5sia is lia$le ,or #oral an+ exe#plary +a#a*es
Trans=7sia is &ia&e %or mora& and e3emp&ar! damages' ,n a&&owing its unseawort#! M-V 7sia
T#ai&and to &eave t#e port o% origin and undertake t#e contracted vo!age, wit# %u&& awareness t#at it was
e3posed to peri&s o% t#e sea, it de&ierate&! disregarded its so&emn dut! to e3ercise e3traordinar! di&igence and
ovious&! acted wit# ad %ait# and in a wanton and reck&ess manner'
13. (rans>5sia1s assertion s)o.s lack o, *enuine concern ,or sa,ety o, passen*ers6 (rans>5sia
cannot expect passen*ers to act in #anner it +esire+
Trans=7sia?s assertions t#at t#e sa%et! o% t#e vesse& and passengers was never at stake ecause t#e sea
was ;ca&m< in t#e vicinit! w#ere it stopped as %ait#%u&&! recorded in t#e vesse&?s &og ook demonstrates
e!ond cavi& Trans=7sia?s &ack o% genuine concern %or t#e sa%et! o% its passengers' ,t was, per#aps, on&!
providentia& t#an t#e sea #appened to e ca&m' Bven so, Trans=7sia s#ou&d not e3pect its passengers to act in
t#e manner it desired' T#e passengers were not stoicsC ecoming a&armed, an3ious, or %rig#tened at t#e
stoppage o% a vesse& at sea in an un%ami&iar *one a nig#ttime is not t#e so&e prerogative o% t#e %aint=#earted'
More so in t#e &ig#t o% t#e man! tragedies at sea resu&ting in t#e &oss o% &ives o% #ope&ess passengers and
damage to propert! simp&! ecause common carriers %ai&ed in t#eir dut! to e3ercise e3traordinar! di&igence in
t#e per%ormance o% t#eir o&igations'
1/. 5rticle --"4 7CC
(ransportation La.! -""/ ( %- )
7rtic&e 882/ o% t#e $ivi& $ode provides t#at ; ,n t#e asence o% stipu&ation, attorne!? s %ees and
e3penses o% &itigation, ot#er t#an Audicia& costs cannot e recovered e3cept: (1) F#en e3emp&ar! damages are
awardedC (8) F#en t#e de%endant?s act or omission #as compe&&ed t#e p&ainti%% to &itigate wit# t#ird persons or
to incur e3penses to protect #is interest'<
12. 5.ar+ o, attorney1s ,ees not ?usti,ie+
Dnder 7rtic&e 882/ o% t#e $ivi& $ode, 7ttorne!?s %ees are recovera&e on&! in t#e concept o% actua&
damages, not as mora& damages nor Audicia& costs' @ence, to merit suc# an award, it is sett&ed t#at t#e amount
t#ereo% must e proven' Moreover, suc# must e speci%ica&&! pra!ed %or and ma! not e deemed incorporated
wit#in a genera& pra!er %or ;suc# ot#er re&ie% and remed! as t#e court ma! deem Aust and e9uita&e' T#e
statement t#at t#e ;p&ainti%% was %orced to &itigate in order t#at #e can c&aim mora& and e3emp&ar! damages %or
t#e su%%ering #e incurred< does not satis%! t#e enc#mark o% ;%actua&, &ega& and e9uita&e Austi%ication<
needed as asis %or an award o% attorne!?s %ees' ,n sum, %or &ack o% %actua& and &ega& asis, t#e award o%
attorne!?s %ees must e de&eted'
[3]! also [78] and [189]
Bel*ian 8verseas C)arterin* an+ S)ippin* vs. :)ilippine &irst ;nsurance Co. ;nc. (GR 1/3133! 2 Bune
-""-)
T#ird Division, Panganian (J): 8 concur, 1 on &eave
&acts' (n 13 June 1..2, $M$ Trading 7'6' s#ipped on oard t#e M-V G7nange& "k!? at @amurg, 6erman!
858 coi&s o% various Prime $o&d :o&&ed "tee& s#eets %or transportation to Mani&a consigned to t#e P#i&ippine
"tee& Trading $orporation' (n 8/ Ju&! 1..2, M-V 7nange& "k! arrived at t#e port o% Mani&a and, wit#in t#e
suse9uent da!s, disc#arged t#e suAect cargo' 5 coi&s were %ound to e in ad order (1( Ta&&! s#eet 145.05)'
Finding t#e 5 coi&s in t#eir damaged state to e un%it %or t#e intended purpose, t#e consignee P#i&ippine "tee&
Trading $orporation dec&ared t#e same as tota& &oss' Despite receipt o% a %orma& demand, 1e&gian (verseas
$#artering and "#ipping EV (1($"EV) and Jardine Davies Transport "ervices ,nc' (JDT",) re%used to
sumit to t#e consignee?s c&aim' $onse9uent&!, P#i&ippine First ,nsurance $o' ,nc' (PF,$) paid t#e consignee
P42>,2/>'42, and was surogated to t#e &atter?s rig#ts and causes o% action against 1($"EV and JDT",'
PF$, instituted a comp&aint %or recover! o% t#e amount paid ! t#em, to t#e consignee as insured' T#e
:egiona& Tria& $ourt o% Makati $it! (1ranc# 135) rendered Audgment, dismissing t#e comp&aint, as we&& as t#e
de%endants? counterc&aim'
(n appea&, and on 14 Ju&! 1../, reversed and set aside t#e decision o% t#e tria& court, and ordered 1($"EV
and JDT", Aoint&! and severa&&! pa! PF,$ P541,280'38 as actua& damages, representing t#e va&ue o% t#e
damaged cargo, p&us interest at t#e &ega& rate %rom t#e time o% %i&ing o% t#e comp&aint on 84 Ju&! 1..1, unti&
%u&&! paidC attorne!?s %ees amounting to 82I o% t#e c&aim, and costs o% suit' 1($"EV and JDT",?s motion %or
reconsideration was denied' @ence, t#e petition %or review'
T#e "upreme $ourt partia&&! granted t#e Petition, and modi%ied t#e assai&ed Decision' T#e $ourt reduced
1($"EV and JDT",?s &iai&it! is reduced to D"K8,222 p&us interest at t#e &ega& rate o% >I %rom t#e time o%
t#e %i&ing o% t#e $omp&aint on 84 Ju&! 1..1 unti& t#e %ina&it! o% t#is Decision, and 18I t#erea%ter unti& %u&&!
paid' Eo pronouncement as to costs'
1. Dxtraor+inary +ili*ence re9uire+ o, co##on carriers6 :erio+ as to .)en o$servance o,
extraor+inary responsi$ility lasts
Fe&&=sett&ed is t#e ru&e t#at common carriers, %rom t#e nature o% t#eir usiness and %or reasons o%
pu&ic po&ic!, are ound to oserve e3traordinar! di&igence and vigi&ance wit# respect to t#e sa%et! o% t#e
goods and t#e passengers t#e! transport' T#us, common carriers are re9uired to render service wit# t#e
greatest ski&& and %oresig#t and ;to use a&& reasona&e means to ascertain t#e nature and c#aracteristics o% t#e
goods tendered %or s#ipment, and to e3ercise due care in t#e #and&ing and stowage, inc&uding suc# met#ods as
t#eir nature re9uires'< T#e e3traordinar! responsii&it! &asts %rom t#e time t#e goods are unconditiona&&!
p&aced in t#e possession o% and received %or transportation ! t#e carrier unti& t#e! are de&ivered, actua&&! or
constructive&!, to t#e consignee or to t#e person w#o #as a rig#t to receive t#em'
-. Rationale .)y extraor+inary +ili*ence re9uire+
T#is strict re9uirement is Austi%ied ! t#e %act t#at, wit#out a #and or a voice in t#e preparation o% suc#
contract, t#e riding pu&ic enters into a contract o% transportation wit# common carriers' Bven i% it wants to, it
cannot sumit its own stipu&ations %or t#eir approva&' @ence, it mere&! ad#eres to t#e agreement prepared !
t#em'
3. Co##on carrier presu#e+ to )ave $een at ,ault or ne*li*ent6 Bur+en o, proo,
(wing to t#is #ig# degree o% di&igence re9uired o% t#em, common carriers, as a genera& ru&e, are
presumed to #ave een at %au&t or neg&igent i% t#e goods t#e! transported deteriorated or got &ost or destro!ed'
T#at is, un&ess t#e! prove t#at t#e! e3ercised e3traordinar! di&igence in transporting t#e goods' ,n order to
avoid responsii&it! %or an! &oss or damage, t#ere%ore, t#e! #ave t#e urden o% proving t#at t#e! oserved
suc# di&igence'
/. E)en presu#ption o, ,ault or ne*li*ence .ill not arise6 List exclusive
T#e presumption o% %au&t or neg&igence wi&& not arise i% t#e &oss is due to an! o% t#e %o&&owing causes:
(1) %&ood, storm, eart#9uake, &ig#tning, or ot#er natura& disaster or ca&amit!C (8) an act o% t#e pu&ic enem! in
war, w#et#er internationa& or civi&C (3) an act or omission o% t#e s#ipper or owner o% t#e goodsC (5) t#e
c#aracter o% t#e goods or de%ects in t#e packing or t#e containerC or (4) an order or act o% competent pu&ic
aut#orit!' T#is is a c&osed &ist' ,% t#e cause o% destruction, &oss or deterioration is ot#er t#an t#e enumerated
circumstances, t#en t#e carrier is &ia&e t#ere%or'
2. :ri#a ,acie case o, ,ault o, ne*li*ence
Mere proo% o% de&iver! o% t#e goods in good order to a common carrier and o% t#eir arriva& in ad
order at t#eir destination constitutes a prima %acie case o% %au&t or neg&igence against t#e carrier' ,% no
ade9uate e3p&anation is given as to #ow t#e deterioration, t#e &oss or t#e destruction o% t#e goods #appened,
t#e transporter s#a&& e #e&d responsi&e' @erein, (1) as stated in t#e 1i&& o% +ading, 1($"EV and JDT",
received t#e suAect s#ipment in good order and condition in @amurg, 6erman!C (8) prior to t#e un&oading
o% t#e cargo, an ,nspection :eport prepared and signed ! representatives o% ot# parties s#owed t#e stee&
ands roken, t#e meta& enve&opes rust=stained and #eavi&! uck&ed, and t#e contents t#ereo% e3posed and
rust!C (3) 1ad (rder Ta&&! "#eet 145.0. issued ! JDT",, stated t#at 5 coi&s were in ad order and condition'
Eorma&&!, a re9uest %or a ad order surve! is made in case t#ere is an apparent or a presumed &oss or damageC
(5) t#e $erti%icate o% 7na&!sis stated t#at, ased on t#e samp&e sumitted and tested, t#e stee& s#eets %ound in
ad order were wet wit# %res# waterC (4) 1($"EV and JDT", H in a &etter addressed to t#e P#i&ippine "tee&
$oating $orporation and dated 18 (ctoer 1..2 H admitted t#at t#e! were aware o% t#e condition o% t#e 5
coi&s %ound in ad order and condition' 7&& t#ese conc&usive&! prove t#e %act o% s#ipment in good order and
condition and t#e conse9uent damage to t#e 5 coi&s w#i&e in t#e possession o% petitioner, w#o nota&! %ai&ed to
e3p&ain w#!'
. Co##on carrier s)oul+ o$serve precaution to avoi+ +a#a*e or +estruction o, t)e *oo+s
entruste+ to it ,or sa,e carria*e an+ +elivery
T#e words ;meta& enve&opes rust stained and s&ig#t&! dented< were noted on t#e 1i&& o% +adingC
#owever, t#ere is no s#owing t#at 1($"EV and JDT", e3ercised due di&igence to %oresta&& or &essen t#e &oss'
@aving een in t#e service %or severa& !ears, t#e master o% t#e vesse& s#ou&d #ave known at t#e outset t#at
meta& enve&opes in t#e said state wou&d eventua&&! deteriorate w#en not proper&! stored w#i&e in transit'
B9uipped wit# t#e proper know&edge o% t#e nature o% stee& s#eets in coi&s and o% t#e proper wa! o%
(ransportation La.! -""/ ( %/ )
transporting t#em, t#e master o% t#e vesse& and #is crew s#ou&d #ave undertaken precautionar! measures to
avoid possi&e deterioration o% t#e cargo' 1ut none o% t#ese measures was taken' @aving %ai&ed to disc#arge
t#e urden o% proving t#at t#e! #ave e3ercised t#e e3traordinar! di&igence re9uired ! &aw, 1($"EV and
JDT", cannot escape &iai&it! %or t#e damage to t#e 5 coi&s'
3. ;#proper packin* +oes not relieve co##on carrier ,ro# lia$ility per se
Bven i% t#e %act o% improper packing was known to t#e carrier or its crew or was apparent upon
ordinar! oservation, it is not re&ieved o% &iai&it! %or &oss or inAur! resu&ting t#ere%rom, once it accepts t#e
goods notwit#standing suc# condition' T#us, 1($"EV and JDT", #ave not success%u&&! proven t#e
app&ication o% an! o% t#e e3ceptions in t#e present case'
4. Section 3! para*rap) C8GS56 7otice o, clai# nee+ not $e *iven at ti#e o, receipt i, su$?ect o,
a ?oint inspection or survey
"ection 3, paragrap# > o% $(6"7 provides t#at t#e notice o% c&aim need not e given i% t#e state o%
t#e goods, at t#e time o% t#eir receipt, #as een t#e suAect o% a Aoint inspection or surve!' @erein, prior to
un&oading t#e cargo, an ,nspection :eport as to t#e condition o% t#e goods was prepared and signed !
representatives o% ot# parties'
%. Section 3! para*rap) C8GS56 &ailure to ,ile notice o, clai# +oes not $ar recovery
7 %ai&ure to %i&e a notice o% c&aim wit#in t#ree da!s wi&& not ar recover! i% it is nonet#e&ess %i&ed
wit#in 1 !ear' T#is one=!ear prescriptive period a&so app&ies to t#e s#ipper, t#e consignee, t#e insurer o% t#e
goods or an! &ega& #o&der o% t#e i&& o% &ading'
1". Clai# not $arre+ $y prescription as lon* as 1 year perio+ not lapse+6 Loa+star S)ippin* vs. C5
,n +oadstar "#ipping $o', ,nc' v' $ourt o% 7ppea&s, t#e $ourt ru&ed t#at a c&aim is not arred !
prescription as &ong as t#e one=!ear period #as not &apsed' ,nasmuc# as neit#er t#e $ivi& $ode nor t#e $ode o%
$ommerce states a speci%ic prescriptive period on t#e matter, $(6"7 H w#ic# provides %or a one=!ear
period o% &imitation on c&aims %or &oss o%, or damage to, cargoes sustained during transit H ma! e app&ied
supp&etori&!'
11. &unctions o, $ill o, la+in*
7 i&& o% &ading serves two %unctions' First, it is a receipt %or t#e goods s#ipped' "econd, it is a
contract ! w#ic# t#ree parties H name&!, t#e s#ipper, t#e carrier, and t#e consignee H undertake speci%ic
responsii&ities and assume stipu&ated o&igations' ,n a nuts#e&&, t#e acceptance o% t#e i&& o% &ading ! t#e
s#ipper and t#e consignee, wit# %u&& know&edge o% its contents, gives rise to t#e presumption t#at it constituted
a per%ected and inding contract'
1-. Li#ite+ Lia$ility clause sanctione+ $y la.6 Con+itions re9uire+6 Rationale o, t)e rule
7 stipu&ation in t#e i&& o% &ading &imiting to a certain sum t#e common carrier?s &iai&it! %or &oss or
destruction o% a cargo H un&ess t#e s#ipper or owner dec&ares a greater va&ue H is sanctioned ! &aw' T#ere
are, #owever, two conditions to e satis%ied: (1) t#e contract is reasona&e and Aust under t#e circumstances,
and (8) it #as een %air&! and %ree&! agreed upon ! t#e parties' T#e rationa&e %or t#is ru&e is to ind t#e
s#ippers ! t#eir agreement to t#e va&ue (ma3imum va&uation) o% t#eir goods'
13. Civil Co+e +oes not li#it lia$ility o, t)e co##on carrier to a ,ixe+ a#ount per packa*e6
Suppletory application o, Co+e o, Co##erce an+ C8GS5
T#e $ivi& $ode does not &imit t#e &iai&it! o% t#e common carrier to a %i3ed amount per package' ,n a&&
matters not regu&ated ! t#e $ivi& $ode, t#e rig#t and t#e o&igations o% common carriers s#a&& e governed !
t#e $ode o% $ommerce and specia& &aws' T#us, t#e $(6"7, w#ic# is supp&etor! to t#e provisions o% t#e $ivi&
$ode, supp&ements t#e &atter ! esta&is#ing a statutor! provision &imiting t#e carrier?s &iai&it! in t#e asence
o% a s#ipper?s dec&aration o% a #ig#er va&ue in t#e i&& o% &ading' T#e provisions on &imited &iai&it! are as
muc# a part o% t#e i&& o% &ading as t#oug# p#!sica&&! in it and as t#oug# p&aced t#ere ! agreement o% t#e
parties'
1/. ()e insertion o, t)e .or+s @LCC %"C"-//3 cannot $e t)e $asis ,or B8CS7G an+ B<(S; Os
lia$ility
7 notation in t#e 1i&& o% +ading w#ic# indicated t#e amount o% t#e +etter o% $redit otained ! t#e
s#ipper %or t#e importation o% stee& s#eets did not e%%ect a dec&aration o% t#e va&ue o% t#e goods as re9uired !
t#e i&&' T#at notation was made on&! %or t#e convenience o% t#e s#ipper and t#e ank processing t#e +etter o%
$redit'
12. 0en* Hua :aper :ro+ucts vs. C56 Bill o, la+in* separate ,ro# ot)er letter o, cre+it
arran*e#ents
,n Peng @ua Paper Products v' $ourt o% 7ppea&s, t#e $ourt #e&d t#at a i&& o% &ading was separate
%rom t#e (t#er +etter o% $redit arrangements' T#erein, t#e contract o% carriage, as stipu&ated in t#e i&& o%
&ading, must e treated independent&! o% t#e contract o% sa&e etween t#e se&&er and t#e u!er, and t#e contract
o% issuance o% a &etter o% credit etween t#e amount o% goods descried in t#e commercia& invoice in t#e
contract o% sa&e and t#e amount a&&owed in t#e &etter o% credit wi&& not a%%ect t#e va&idit! and en%orceai&it! o%
t#e contract o% carriage as emodied in t#e i&& o% &ading' 7s t#e ank cannot e e3pected to &ook e!ond t#e
documents presented to it ! t#e se&&er pursuant to t#e &etter o% credit, neit#er can t#e carrier e e3pected to go
e!ond t#e representations o% t#e s#ipper in t#e i&& o% &ading and to veri%! t#eir accurac! vis=a=vis t#e
commercia& invoice and t#e &etter o% credit' T#us, t#e discrepanc! etween t#e amount o% goods indicated in
t#e invoice and t#e amount in t#e i&& o% &ading cannot negate t#e o&igation arising %rom t#e contract o%
transportation'
1. B8CS7G an+ B<(S;1s lia$ility s)oul+ $e co#pute+ $ase+ on FSP2"" per packa*e6 Dastern
S)ippin* Line vs. ;5C! #eanin* o, packa*e
1($"EV and JDT",?s &iai&it! s#ou&d e computed ased on D"K422 per package and not on t#e per
metric ton price dec&ared in t#e +etter o% $redit' ,n Bastern "#ipping +ines, ,nc' v' ,ntermediate 7ppe&&ate
$ourt, t#e $ourt e3p&ained t#e meaning o% package, i'e' ;w#en w#at wou&d ordinari&! e considered packages
are s#ipped in a container supp&ied ! t#e carrier and t#e numer o% suc# units is disc&osed in t#e s#ipping
documents, eac# o% t#ose units and not t#e container constitutes t#e Gpackage? re%erred to in t#e &iai&it!
&imitation provision o% $arriage o% 6oods ! "ea 7ct'< @erein, considering t#e ru&ing in Bastern "#ipping
+ines and t#e %act t#at t#e 1i&& o% +ading c&ear&! disc&osed t#e contents o% t#e containers, t#e numer o% units,
as we&& as t#e nature o% t#e stee& s#eets, t#e 5 damaged coi&s s#ou&d e considered as t#e s#ipping unit suAect
to t#e D"K422 &imitation'
[33]
Ho$i+o vs. C5 (GR 113""3! 13 8cto$er 1%%3)
T#ird Division, :omero (J): 5 concur
&acts' (n 8> 7pri& 1.//, spouses Tito and +en! Tumo! and t#eir minor c#i&dren named 7rdee and Jasmin,
oarded at Mangago!, "urigao de& "ur, a Ooido +iner us ound %or Davao $it!' 7&ong Picop :oad in Pm'
10, "ta' Maria, 7gusan de& "ur, t#e &e%t %ront tire o% t#e us e3p&oded' T#e us %e&& into a ravine around 3 %eet
%rom t#e road and struck a tree' T#e incident resu&ted in t#e deat# o% 8/=!ear=o&d Tito Tumo!, and p#!sica&
inAuries to ot#er passengers'
(n 81 Eovemer 1.//, a comp&aint %or reac# o% contract o% carriage, damages and attorne!?s %ees was %i&ed
! +en! and #er c#i&dren against 7&erta Ooido, t#e owner o% t#e us, and $resencio Ooido, its driver,
e%ore t#e :T$ o% Davao $it!' F#en t#e Ooidos %i&ed t#eir answer to t#e comp&aint, t#e! raised t#e
a%%irmative de%ense o% caso %ortuito' T#e! a&so %i&ed a t#ird=part! comp&aint against P#i&ippine P#oeni3 "uret!
and ,nsurance, ,nc' T#is t#ird=part! de%endant %i&ed an answer wit# compu&sor! counterc&aim' 7t t#e pre=tria&
con%erence, t#e parties agreed to a stipu&ation o% %acts' Dpon a %inding t#at t#e t#ird part! de%endant was not
&ia&e under t#e insurance contract, t#e &ower court dismissed t#e t#ird part! comp&aint' Eo amica&e
sett&ement #aving een arrived at ! t#e parties, tria& on t#e merits ensued' (n 8. 7ugust 1..1, t#e &ower
court rendered a decision dismissing t#e action %or &ack o% merit'
Dissatis%ied, t#e Tumo!s appea&ed to t#e $ourt o% 7ppea&s' (n 83 7ugust 1..3, t#e $ourt o% 7ppea&s
rendered t#e Decision reversing t#at o% t#e &ower court, ordering t#e Ooidos to pa! t#e Tumo!s t#e sum o%
P42,222'22 %or t#e deat# o% Tito Tumo!, P32,222'22 in mora& damages, and P0,222'22 %or %unera& and uria&
e3penses' T#e Ooidos %i&ed a motion %or reconsideration o% said decision w#ic# was denied on 5 Eovemer
1..3 ! t#e $ourt o% 7ppea&s' @ence, t#e petition %or review on certiorari'
T#e "upreme $ourt a%%irmed t#e Decision o% t#e $ourt o% 7ppea&s suAect to t#e modi%ication t#at t#e Ooidos
s#a&&, in addition to t#e monetar! awards t#erein, e &ia&e %or t#e award o% e3emp&ar! damages in t#e amount
o% P82,222'22C wit# costs against t#e Ooidos'
1. Rulin* o, t)e Court o, 5ppeals6 Dxplosion o, t)e tire not in itsel, a ,ortuitous event
T#e e3p&osion o% t#e tire is not in itse&% a %ortuitous event' T#e cause o% t#e &ow=out, i% due to a
%actor! de%ect, improper mounting, e3cessive tire pressure, is not an unavoida&e event' (n t#e ot#er #and,
t#ere ma! #ave een adverse conditions on t#e road t#at were un%oreseea&e and-or inevita&e, w#ic# cou&d
make t#e &ow=out a caso %ortuito' T#e %act t#at t#e cause o% t#e &ow=out was not known does not re&ieve t#e
carrier o% &iai&it!' (wing to t#e statutor! presumption o% neg&igence against t#e carrier and its o&igation to
e3ercise t#e utmost di&igence o% ver! cautious persons to carr! t#e passenger sa%e&! as %ar as #uman care and
%oresig#t can provide, it is t#e urden o% t#e de%endants to prove t#at t#e cause o% t#e &ow=out was a
%ortuitous event' ,t is not incument upon t#e p&ainti%% to prove t#at t#e cause o% t#e &ow=out is not caso
%ortuito' Proving t#at t#e tire t#at e3p&oded is a new 6ood!ear tire is not su%%icient to disc#arge de%endants?
urden' 7s enunciated in Eecesito vs' Paras, t#e passenger #as neit#er c#oice nor contro& over t#e carrier in
t#e se&ection and use o% its e9uipment and t#e good repute o% t#e manu%acturer wi&& not necessari&!, re&ieve t#e
carrier %rom &iai&it!' Moreover, t#ere is evidence t#at t#e us was moving %ast, and t#e road was wet and
roug#' T#e driver cou&d #ave e3p&ained t#at t#e &ow out t#at precipitated t#e accident t#at caused t#e deat#
o% t#e passenger cou&d not #ave een prevented even i% #e #ad e3ercised due care to avoid t#e same, ut #e
was not presented as witness'
-. &actual ,in+in*s #ay not $e revie.e+ on appeal $y t)e Supre#e Court6 Dxception
T#e $ourt did re=e3amine t#e %acts and evidence ecause o% t#e inapp&icai&it! o% t#e esta&is#ed
princip&e t#at t#e %actua& %indings o% t#e $ourt o% 7ppea&s are %ina& and ma! not e reviewed on appea& ! t#e
"upreme $ourt' T#is genera& princip&e is suAect to e3ceptions suc# as t#at t#e &ower court and t#e $ourt o%
7ppea&s arrived at diverse %actua& %indings' @erein, #owever, upon suc# re=e3amination, t#e $ourt %ound no
reason to overturn t#e %indings and conc&usions o% t#e $ourt o% 7ppea&s'
3. Carrier not an insurer o, sa,ety o, its passen*ers6 Ho.ever! .)en passen*er in?ure+ or +ies!
co##on carrier presu#e+ ne*li*ent
7s a ru&e, w#en a passenger oards a common carrier, #e takes t#e risks incidenta& to t#e mode o%
trave& #e #as taken' 7%ter a&&, a carrier is not an insurer o% t#e sa%et! o% its passengers and is not ound
aso&ute&! and at a&& events to carr! t#em sa%e&! and wit#out inAur!' @owever, w#en a passenger is inAured or
dies, w#i&e trave&ing, t#e &aw presumes t#at t#e common carrier is neg&igent'
/. 5rticle 1322 7CC6 <ili*ence re9uire+
7rtic&e 1044 provides t#at ;(a) common carrier is ound to carr! t#e passengers sa%e&! as %ar as
#uman care and %oresig#t can provide, using t#e utmost di&igence o% ver! cautious persons, wit# a due regard
%or a&& t#e circumstances'<
2. 5rticle 132 o, t)e Civil Co+e6 :resu#ption o, ne*li*ence
7rtic&e 104> o% t#e $ivi& $ode provides t#at ;,n case o% deat# or inAuries to passengers, common
. Culpa contractual6 <isputa$le presu#ption o, ne*li*ence! )o. to overco#e
,n cu&pa contractua&, once a passenger dies or is inAured, t#e carrier is presumed to #ave een at %au&t
or to #ave acted neg&igent&!' T#is disputa&e presumption ma! on&! e overcome ! evidence t#at t#e carrier
#ad oserved e3traordinar! di&igence as prescried ! 7rtic&es 1033, 1044 and 104> o% t#e $ivi& $ode or t#at
t#e deat# or inAur! o% t#e passenger was due to a %ortuitous event' $onse9uent&!, t#e court need not make an
e3press %inding o% %au&t or neg&igence on t#e part o% t#e carrier to #o&d it responsi&e %or damages soug#t !
t#e passenger'
3. C)aracteristics o, a ,ortuitous event
7 %ortuitous event is possessed o% t#e %o&&owing c#aracteristics: (a) t#e cause o% t#e un%oreseen and
une3pected occurrence, or t#e %ai&ure o% t#e detor to comp&! wit# #is o&igations, must e independent o%
#uman wi&&C () it must e impossi&e to %oresee t#e event w#ic# constitutes t#e caso %ortuito, or i% it can e
%oreseen, it must e impossi&e to avoidC (c) t#e occurrence must e suc# as to render it impossi&e %or t#e
detor to %u&%i&& #is o&igation in a norma& mannerC and (d) t#e o&igor must e %ree %rom an! participation in
t#e aggravation o% t#e inAur! resu&ting to t#e creditor'
4. 5rticle 113/ 7CC
7s 7rtic&e 1105 provides, no person s#a&& e responsi&e %or a %ortuitous event w#ic# cou&d not e
%oreseen, or w#ic#, t#oug# %oreseen, was inevita&e'
%. ()ere #ust $e an entire exclusion o, )u#an a*ency ,ro# t)e cause o, in?ury or loss
@erein, t#e e3p&osion o% t#e new tire ma! not e considered a %ortuitous event' T#ere are #uman
%actors invo&ved in t#e situation' T#e %act t#at t#e tire was new did not imp&! t#at it was entire&! %ree %rom
manu%acturing de%ects or t#at it was proper&! mounted on t#e ve#ic&e' Eeit#er ma! t#e %act t#at t#e tire oug#t
and used in t#e ve#ic&e is o% a rand name noted %or 9ua&it!, resu&ting in t#e conc&usion t#at it cou&d not
e3p&ode wit#in 4 da!s? use' 1e t#at as it ma!, it is sett&ed t#at an accident caused eit#er ! de%ects in t#e
automoi&e or t#roug# t#e neg&igence o% its driver is not a caso %ortuito t#at wou&d e3empt t#e carrier %rom
&iai&it! %or damages'
1". Co##on carrier not a$solve+ $y ,orce #a?eure alone! s)oul+ prove not ne*li*ent
7 common carrier ma! not e aso&ved %rom &iai&it! in case o% %orce maAeure or %ortuitous event
a&one' T#e common carrier must sti&& prove t#at it was not neg&igent in causing t#e deat# or inAur! resu&ting
%rom an accident'
11. Contra+ictory ,acts as to $us1 spee+ resolve+ in ,avor o, lia$ility +ue to presu#ption o,
ne*li*ence o, carrier
T#e Ooidos proved t#roug# t#e us conductor, "a&ce, t#at t#e us was running at ;>2=42< ki&ometers
per #our on&! or wit#in t#e prescried &aw%u& speed &imit' @owever, t#e! %ai&ed to reut t#e testimon! o% +en!
Tumo! t#at t#e us was running so %ast t#at s#e cautioned t#e driver to s&ow down' T#ese contradictor! %acts
must, t#ere%ore, e reso&ved in %avor o% &iai&it! in view o% t#e presumption o% neg&igence o% t#e carrier in t#e
&aw' $oup&ed wit# t#is is t#e esta&is#ed condition o% t#e road H roug#, winding and wet due to t#e rain' ,t
was incument upon t#e de%ense to esta&is# t#at it took precautionar! measures considering partia&&!
dangerous condition o% t#e road'
1-. Routinary c)eck>ups o, ve)icle1s parts part o, exercise o, extraor+inary +ili*ence o, t)e carrier
Proo% t#at t#e tire was new and o% good 9ua&it! is not su%%icient proo% t#at it was not neg&igent' T#e
Ooidos s#ou&d #ave s#own t#at it undertook e3traordinar! di&igence in t#e care o% its carrier, suc# as
conducting dai&! routinar! c#eck=ups o% t#e ve#ic&e?s parts' 7&t#oug# it ma! e impractica&e, to re9uire o%
carriers to test t#e strengt# o% eac# and ever! part o% its ve#ic&es e%ore eac# tripC due regard %or t#e carrier?s
o&igations toward t#e trave&ing pu&ic demands ade9uate periodica& tests to determine t#e condition and
strengt# o% t#ose ve#ic&e portions t#e %ai&ure o% w#ic# ma! endanger t#e sa%et! o% t#e passengers'
13. &ailure o, carrier to overt)ro. presu#ption o, ne*li*ence #akes it lia$le ,or +a#a*es
@aving %ai&ed to disc#arge its dut! to overt#row t#e presumption o% neg&igence wit# c&ear and
convincing evidence, t#e Ooidos #e&d &ia&e %or damages'
1/. 5#ount o, +a#a*es ,or +eat) o, passen*er
7rtic&e 10>5 in re&ation to 7rtic&e 882> o% t#e $ivi& $ode prescries t#e amount o% at &east P3,222 as
damages %or t#e deat# o% a passenger' Dnder prevai&ing Aurisprudence, t#e award o% damages under 7rtic&e
882> #as een increased to P42,222'22'
12. =oral +a#a*es
Mora& damages are genera&&! not recovera&e in cu&pa contractua& e3cept w#en ad %ait# #ad een
proven' @owever, t#e same damages ma! e recovered w#en reac# o% contract o% carriage resu&ts in t#e
deat# o% a passenger as in t#e present case'
1. Dxe#plary +a#a*es
B3emp&ar! damages, awarded ! wa! o% e3amp&e or correction %or t#e pu&ic good w#en mora&
damages are awarded, ma! &ikewise e recovered in contractua& o&igations i% t#e de%endant acted in wanton,
%raudu&ent, reck&ess, oppressive, or ma&evo&ent manner' @erein, ecause t#e Ooidos %ai&ed to e3ercise t#e
e3traordinar! di&igence re9uired o% a common carrier, w#ic# resu&ted in t#e deat# o% Tito Tumo!, it is
deemed to #ave acted reck&ess&!' 7s suc#, t#e Tumo!s s#a&& e entit&ed to e3emp&ar! damages'
[34]
Aan Lia% #rocer-. vs. "e La (a%a tea%ship
[39] "e #u$%an vs. CA , see [10]
[/"] also [48] and [195]
7ational <evelop#ent Co. vs. C5 (GR L>/%/"3! 1% 5u*ust 1%44)
Maritime $o' o% t#e P#i&ippines vs' $7 (6: +=5.5>.)
&acts' ,n accordance wit# a memorandum agreement entered into etween Eationa& Deve&opment
$orporation (ED$) and Maritime $orporation o% t#e P#i&ippines ,nc' (M$P) on 13 "eptemer 1.>8, ED$ as
t#e %irst pre%erred mortgagee o% t#ree ocean going vesse&s inc&uding one wit# t#e name GDo)a Eati? appointed
M$P as its agent to manage and operate said vesse& %or and in its e#a&% and account' T#us, on 8/ Feruar!
1.>5 t#e B' P#i&ipp $orporation o% Eew Oork &oaded on oard t#e vesse& GDo)a Eati? at "an Francisco,
$a&i%ornia, a tota& o% 1,822 a&es o% 7merican raw cotton consigned to t#e order o% Mani&a 1anking
$orporation, Mani&a and t#e Peop&e?s 1ank and Trust $ompan! acting %or and in e#a&% o% t#e Pan 7siatic
$ommercia& $ompan!, ,nc', w#o represents :iverside Mi&&s $orporation' 7&so &oaded on t#e same vesse& at
Tok!o, Japan, were t#e cargo o% P!okuto 1oekui, Paisa, +td', consigned to t#e order o% Mani&a 1anking
$orporation consisting o% 822 cartons o% sodium &aur!& su&%ate and 12 cases o% a&uminum %oi&' Bn route to
Mani&a t#e vesse& Do)a Eati %igured in a co&&ision at >:25 a'm' on 14 7pri& 1.>5 at ,se 1a!, Japan wit# a
Japanese vesse& G"" Oasus#ima Maru? as a resu&t o% w#ic# 442 a&es o% a%oresaid cargo o% 7merican raw
(ransportation La.! -""/ ( %% )
cotton were &ost and-or destro!ed, o% w#ic# 434 a&es as damaged were &anded and so&d on t#e aut#orit! o%
t#e 6enera& 7verage "urve!or %or O>,254,422 and 14 a&es were not &anded and deemed &ost' T#e damaged
and &ost cargoes was wort# P355,.00'/> w#ic# amount, t#e Deve&opment ,nsurance and "uret! $orporation
(D,"$) as insurer, paid to t#e :iverside Mi&&s $orporation as #o&der o% t#e negotia&e i&&s o% &ading du&!
endorsed' 7&so considered tota&&! &ost were t#e a%oresaid s#ipment o% P!okuto, 1oekui, Paisa +td', consigned
to t#e order o% Mani&a 1anking $orporation, Mani&a, acting %or 6ui&con, Mani&a' T#e tota& &oss was
P1.,.3/'22 w#ic# D,"$ as insurer paid to 6ui&con as #o&der o% t#e du&! endorsed i&& o% &ading' T#us, D,"$
#ad paid as insurer t#e tota& amount o% P3>5,.14'/> to t#e consignees or t#eir successors=in=interest, %or t#e
said &ost or damaged cargoes'
(n 88 7pri& 1.>4, D,"$ %i&ed e%ore t#e t#en $ourt o% First ,nstance o% Mani&a an action %or t#e recover! o%
t#e sum o% P3>5,.14'/> p&us attorne!?s %ees o% P12,222'22 against ED$ and M$P' (n 18 Eovemer 1.>.,
a%ter D,"$ and M$P presented t#eir respective evidence, t#e tria& court rendered a decision ordering M$P
and ED$ to pa! Aoint&! and so&idari&! to D,"$ t#e sum o% P3>5,.14'/> p&us t#e &ega& rate o% interest to e
computed %rom t#e %i&ing o% t#e comp&aint on 88 7pri& 1.>4, unti& %u&&! paid and attorne!?s %ees o%
P12,222'22' +ikewise, in said decision, t#e tria& court granted M$P?s cross=c&aim against ED$'
M$P interposed its appea& on 82 Decemer 1.>., w#i&e ED$ %i&ed its appea& on 10 Feruar! 1.02 a%ter its
motion to set aside t#e decision was denied ! t#e tria& court in its order dated 13 Feruar! 1.02' (n 10
Eovemer 1.0/, t#e $ourt o% 7ppea&s promu&gated its decision a%%irming in toto t#e decision o% t#e tria&
court' @ence, t#e appea&s ! certiorari' (n 84 Ju&! 1.0., t#e "upreme $ourt ordered t#e conso&idation o% t#e
aove cases'
T#e "upreme $ourt denied t#e suAect petitions %or &ack o% merit, and a%%irmed t#e assai&ed decision o% t#e
7ppe&&ate $ourt'
1. La. o, country o, +estination *overns lia$ility o, co##on carrier
7s #e&d in Bastern "#ipping +ines ,nc' v' ,7$ (142 "$:7 5>.=502 L1./0M) w#ere it was #e&d under
simi&ar circumstances t#at ;t#e &aw o% t#e countr! to w#ic# t#e goods are to e transported governs t#e
&iai&it! o% t#e common carrier in case o% t#eir &oss, destruction or deterioration< (7rtic&e 1043, $ivi& $ode)'
T#us, t#e ru&e was speci%ica&&! &aid down t#at %or cargoes transported %rom Japan to t#e P#i&ippines, t#e
&iai&it! o% t#e carrier is governed primari&! ! t#e $ivi& $ode and in a&& matters not regu&ated ! said $ode,
t#e rig#ts and o&igations o% common carrier s#a&& e governed ! t#e $ode o% $ommerce and ! specia& &aws
(7rtic&e 10>>, $ivi& $ode)' @ence, t#e $arriage o% 6oods ! "ea 7ct, a specia& &aw, is mere&! supp&etor! to
t#e provisions o% t#e $ivi& $ode'
-. 5ctual collision occurrin* in ,orei*n .aters i##aterial
@erein, it #as een esta&is#ed t#at t#e goods in 9uestion are transported %rom "an Francisco,
$a&i%ornia and Tok!o, Japan to t#e P#i&ippines and t#at t#e! were &ost or damaged due to a co&&ision w#ic#
was %ound to #ave een caused ! t#e neg&igence or %au&t o% ot# captains o% t#e co&&iding vesse&s' Dnder t#e
aove ru&ing, it is evident t#at t#e &aws o% t#e P#i&ippines wi&& app&!, and it is immateria& t#at t#e co&&ision
actua&&! occurred in %oreign waters, suc# as ,se 1a!, Japan'
3. Dxtraor+inary +ili*ence re9uire+ o, co##on carriers6 7e*li*ence presu#e+
Dnder 7rtic&e 1033 o% t#e $ivi& $ode, common carriers %rom t#e nature o% t#eir usiness and %or
reasons o% pu&ic po&ic! are ound to oserve e3traordinar! di&igence in t#e vigi&ance over t#e goods and %or
t#e sa%et! o% t#e passengers transported ! t#em according to a&& circumstances o% eac# case' 7ccording&!,
under 7rtic&e 1034 o% t#e same $ode, in a&& cases ot#er t#an t#ose mentioned is 7rtic&e 1035 t#ereo%, t#e
common carrier s#a&& e presumed to #ave een at %au&t or to #ave acted neg&igent&!, un&ess it proves t#at it
#as oserved t#e e3traordinar! di&igence re9uired ! &aw'
(ransportation La.! -""/ ( 1"" )
/. Collision +oes not ,all un+er #atters re*ulate+ $y Civil Co+e6 5pplication o, 5rticle 4- to 43%
o, t)e Co+e o, Co##erce proper
T#e co&&ision, #owever, %a&&s among matters not speci%ica&&! regu&ated ! t#e $ivi& $ode, so t#at no
reversi&e error can e %ound in t#e &ower court?s app&ication to t#e present case o% 7rtic&es /8> to /3., 1ook
T#ree o% t#e $ode o% $ommerce, w#ic# dea& e3c&usive&! wit# co&&ision o% vesse&s'
2. 5rticles 4- an+ 4-3 o, t)e Co+e o, Co##erce6 Lia$ility o, o.ner eit)er .)en i#puta$le to t)e
personnel o, t)e vessel or i#puta$le to $ot) vessels
7rtic&e /8> o% t#e $ode o% $ommerce provides t#at w#ere co&&ision is imputa&e to t#e personne& o% a
vesse&, t#e owner o% t#e vesse& at %au&t, s#a&& indemni%! t#e &osses and damages incurred a%ter an e3pert
appraisa&' 1ut more in point to t#e instant case is 7rtic&e /80 o% t#e same $ode, w#ic# provides t#at i% t#e
co&&ision is imputa&e to ot# vesse&s, eac# one s#a&& su%%er its own damages and ot# s#a&& e so&idari&!
responsi&e %or t#e &osses and damages su%%ered ! t#eir cargoes'
. :ri#ary lia$ility o, s)ipo.ner on occasion o, collision +ue to ,ault o, captain
Dnder t#e provisions o% t#e $ode o% $ommerce, particu&ar&! 7rtic&es /8> to /3., t#e s#ipowner or
carrier, is not e3empt %rom &iai&it! %or damages arising %rom co&&ision due to t#e %au&t or neg&igence o% t#e
captain' Primar! &iai&it! is imposed on t#e s#ipowner or carrier in recognition o% t#e universa&&! accepted
doctrine t#at t#e s#ipmaster or captain is mere&! t#e representative o% t#e owner w#o #as t#e actua& or
constructive contro& over t#e conduct o% t#e vo!age (Oeung "#eng B3c#ange and Trading $o' v' Drrutia T
$o', 18 P#i&' 041 L1.2.M)'
3. Co+e o, Co##erce applies $ot) to +o#estic an+ ,orei*n tra+e6 C8GS5 +oes not repeal nor
li#it Co+e o, Co##erce1s application
T#e $ode o% $ommerce app&ies not on&! to domestic trade ut a&so %oreign trade' 7side %rom t#e %act
t#at t#e $arriage o% 6oods ! "ea 7ct ($ommonwea&t# 7ct >4) does not speci%ica&&! provide %or t#e suAect
o% co&&ision, said 7ct in no uncertain terms, restricts its app&ication ;to a&& contracts %or t#e carriage o% goods
! sea to and %rom P#i&ippine ports in %oreign trade'< Dnder "ection 1 t#ereo%, it is e3p&icit&! provided t#at
;not#ing in t#is 7ct s#a&& e construed as repea&ing an! e3isting provision o% t#e $ode o% $ommerce w#ic# is
now in %orce, or as &imiting its app&ication'< 1! suc# incorporation, it is ovious t#at said &aw not on&!
recogni*es t#e e3istence o% t#e $ode o% $ommerce, ut more important&! does not repea& nor &imit its
app&ication'
4. <;SC a su$ro*ee! )as a ri*)t o, action a*ainst =C:
@erein, :iverside Mi&&s $orporation and 6ui&con, Mani&a are t#e #o&ders o% t#e du&! endorsed i&&s o%
&ading covering t#e s#ipments in 9uestion and an e3amination o% t#e invoices in particu&ar, s#ows t#at t#e
actua& consignees o% t#e said goods are t#e a%orementioned companies' Moreover, no &ess t#an M$P itse&%
issued a certi%ication attesting to t#is %act' 7ccording&!, as it is undisputed t#at t#e insurer, D,"$ paid t#e tota&
amount o% P3>5,.14'/> to said consignees %or t#e &oss or damage o% t#e insured cargo, it is evident t#at D,"$
#as a cause o% action to recover (w#at it #as paid) %rom M$P'
%. =C: an a*ent6 5*ency $roa+ enou*) to inclu+e s)ipa*ent in #ariti#e la.
T#e Memorandum 7greement o% 13 "eptemer 1.>8 s#ows t#at ED$ appointed M$P as 7gent, a
term road enoug# to inc&ude t#e concept o% "#ip=agent in Maritime +aw' ,n %act, M$P was even con%erred a&&
t#e powers o% t#e owner o% t#e vesse&, inc&uding t#e power to contract in t#e name o% t#e ED$' $onse9uent&!,
under t#e circumstances, M$P cannot escape &iai&it!'
1". 8.ner an+ a*ent o, o,,en+in* vessel lia$le .)en $ot) are i#plea+e+
,t is we&& sett&ed t#at ot# t#e owner and agent o% t#e o%%ending vesse& are &ia&e %or t#e damage done
w#ere ot# are imp&eaded (Philippine hipping Co. v. #arcia 4ergara, .+ Phil. 3*1 [1.!+]): t#at in case o%
co&&ision, ot# t#e owner and t#e agent are civi&&! responsi&e %or t#e acts o% t#e captain (Bueng heng
(ransportation La.! -""/ ( 1"1 )
<;change and Arading Co. v. Crrutia 7 Co., supra citing Article /*+ o2 the Code o2 Co%%erce: tandard Dil
Co. o2 )ew Bor5 v. Lope$ Castelo, 03 Phil. 3/+, 3+3 [1.31]): t#at w#i&e it is true t#at t#e &iai&it! o% t#e
naviero in t#e sense o% c#arterer or agent, is not e3press&! provided in 7rtic&e /8> o% t#e $ode o% $ommerce,
it is c&ear&! deduci&e %rom t#e genera& doctrine o% Aurisprudence under t#e $ivi& $ode ut more specia&&! as
regards contractua& o&igations in 7rtic&e 4/> o% t#e $ode o% $ommerce' Moreover, t#e $ourt #e&d t#at ot#
t#e owner and agent (Eaviero) s#ou&d e dec&ared Aoint&! and severa&&! &ia&e, since t#e o&igation w#ic# is
t#e suAect o% t#e action #ad its origin in a tortious act and did not arise %rom contract (4er$osa and (ui$,
(e%enteria - Cia v. Li%, 0/ Phil. 033 [1.33])' $onse9uent&!, t#e agent, even t#oug# #e ma! not e t#e owner
o% t#e vesse&, is &ia&e to t#e s#ippers and owners o% t#e cargo transported ! it, %or &osses and damages
occasioned to suc# cargo, wit#out preAudice, #owever, to #is rig#ts against t#e owner o% t#e s#ip, to t#e e3tent
o% t#e va&ue o% t#e vesse&, its e9uipment, and t#e %reig#t (&ehn, =e-er B Co. v. =c=ic5ing et al. 11 Phil. 37+
[1.!*]).
11. Galue o, *oo+s +eclare+ in $ills o, la+in*! lia$ility o, =C: not li#ite+ to :-"" per packa*e or
per $ale o, ra. cotton as state+ in para*rap) 13 o, $ill o, la+in*
T#e dec&ared va&ue o% t#e goods was stated in t#e i&&s o% &ading and corroorated no &ess ! invoices
o%%ered as evidence during t#e tria&' 1esides, common carriers, in t#e &anguage o% t#e court in Juan Osmae& T
$o', ,nc' v' 1arretto et a&', (41 P#i&' .2 L1.80M) ;cannot &imit its &iai&it! %or inAur! to a &ess o% goods w#ere
suc# inAur! or &oss was caused ! its own neg&igence'< Eeg&igence o% t#e captains o% t#e co&&iding vesse&
eing t#e cause o% t#e co&&ision, and t#e cargoes not eing Aettisoned to save some o% t#e cargoes and t#e
vesse&, t#e tria& court and t#e $ourt o% 7ppea&s acted correct&! in not app&!ing t#e &aw on averages (7rtic&es
/2> to /1/, $ode o% $ommerce)'
1-. 5ction not prescri$e+6 Section 3 ()
T#e i&&s o% &ading issued a&&ow trans=s#ipment o% t#e cargo, w#ic# simp&! means t#at t#e date o%
arriva& o% t#e s#ip Do)a Eati on 1/ 7pri& 1.>5 was mere&! tentative to give a&&owances %or suc# contingencies
t#at said vesse& mig#t not arrive on sc#edu&e at Mani&a and t#ere%ore, wou&d necessitate t#e trans=s#ipment o%
cargo, resu&ting in conse9uent de&a! o% t#eir arriva&' ,n %act, ecause o% t#e co&&ision, t#e cargo w#ic# was
supposed to arrive in Mani&a on 1/ 7pri& 1.>5 arrived on&! on June 18, 13, 1/, 82 and Ju&! 12, 13 and 14,
1.>5' @ence, #ad t#e cargoes in 9uestion een saved, t#e! cou&d #ave arrived in Mani&a on t#e said dates'
7ccording&!, t#e comp&aint was %i&ed on 88 7pri& 1.>4, i'e' &ong e%ore t#e &apse o% 1 !ear %rom t#e date t#e
&ost or damaged cargo ;s#ou&d #ave een de&ivered< in t#e &ig#t o% "ection 3, su=paragrap# (>) o% $(6"7'
[/1], also [58]
GanJon vs. C5 (GR L>/4323! 3" =ary 1%44)
"econd Division, "armiento (J): 3 concur
&acts' (n 8/ Eovemer 1.4>, 6e&acio Tumaming contracted t#e services o% Mauro 1' 6an*on to #au& 324
tons o% scrap iron %rom Marive&es, 1ataan, to t#e port o% Mani&a on oard t#e &ig#ter +$T ;1atman'< Pursuant
to t#is agreement, Mauro 1' 6an*on sent #is &ig#ter ;1atman< to Marive&es w#ere it docked in 3 %eet o% water'
(n 1 Decemer 1.4>, 6e&acio Tumaming de&ivered t#e scrap iron to Fi&omeno Ei*a, captain o% t#e &ig#ter,
%or &oading w#ic# was actua&&! egun on t#e same date ! t#e crew o% t#e &ig#ter under t#e captain?s
supervision' F#en aout #a&% o% t#e scrap iron was a&read! &oaded, Ma!or Jose 7dvincu&a o% Marive&es,
1ataan, arrived and demanded P4,222'22 %rom 6e&acio Tumaming' T#e &atter resisted t#e s#akedown and
a%ter a #eated argument etween t#em, Ma!or Jose 7dvincu&a drew #is gun and %ired at 6e&acio Tumaming'
T#e guns#ot was not %ata& ut Tumaming #ad to e taken to a #ospita& in 1a&anga, 1ataan, %or treatment'
7%ter sometime, t#e &oading o% t#e scrap iron was resumed' 1ut on 5 Decemer 1.4>, 7cting Ma!or 1asi&io
:u, accompanied ! 3 po&icemen, ordered captain Fi&omeno Ei*a and #is crew to dump t#e scrap iron w#ere
t#e &ig#ter was docked' T#e rest was roug#t to t#e compound o% E7""$(' +ater on 7cting Ma!or :u
issued a receipt stating t#at t#e Municipa&it! o% Marive&es #ad taken custod! o% t#e scrap iron'
(ransportation La.! -""/ ( 1"- )
Tumaming instituted in t#e $F, o% Mani&a an action against 6an*on %or damages ased on cu&pa contractua&'
T#e tria& court rendered a decision aso&ving 6an*on %rom &iai&it!' (n appea&, #owever, t#e appe&&ate court
reversed and set aside t#e decision appea&ed %rom, and entered a new one ordering 6an*on to pa! Tumaming
t#e sum o% P4,/.4'22 as actua& damages, t#e sum o% P4,222'22 as e3emp&ar! damages, and t#e amount o%
P8,222'22 as attorne!?s %eesC wit# costs against 6an*on' @ence, t#e petition %or review on certiorari'
T#e "upreme $ourt denied t#e petition, and a%%irmed t#e assai&ed decision o% t#e $ourt o% 7ppea&sC wit# costs
against 6an*onC t#e decision eing immediate&! e3ecutor!'
1. By +elivery! t)e scraps are place+ in t)e possession o, t)e co##on carrier6 Contract o, carria*e
per,ecte+6 <uties o, t)e carrier
1! t#e act o% de&iver!, t#e scraps were unconditiona&&! p&aced in t#e possession and contro& o% t#e
common carrier, and upon t#eir receipt ! t#e carrier %or transportation, t#e contract o% carriage was deemed
per%ected' $onse9uent&!, t#e carrier?s e3traordinar! responsii&it! %or t#e &oss, destruction, or determination o%
t#e goods commenced' Pursuant to 7rtic&e 103>, suc# e3traordinar! responsii&it! wou&d cease on&! upon t#e
de&iver!, actua& or constructive, ! t#e carrier to t#e consignee, or to t#e person w#o #as a rig#t to receive
t#em' T#e %act t#at part o% t#e s#ipment #ad not een &oaded on oard t#e &ig#ter did not impair t#e said
contract o% transportation as t#e goods remained in t#e custod! and contro& o% t#e carrier, a&eit sti&& un&oaded'
-. Loss not +ue to any cause enu#erate+ in 5rticle 133/ o, t)e Civil Co+e
@erein, 6an*on #as %ai&ed to s#ow t#at t#e &oss o% t#e scraps was due to an! o% t#e %o&&owing causes
enumerated in 7rtic&e 1035 o% t#e $ivi& $ode, name&!: (1) F&ood, storm, eart#9uake, &ig#tning, or ot#er
natura& disaster or ca&amit!C (8) 7ct o% t#e pu&ic enem! in war, w#et#er internationa& or civi&C (3) 7ct or
omission o% t#e s#ipper or owner o% t#e goodsC (5) T#e c#aracter o% t#e goods or de%ects in t#e packing or in
t#e containersC and (4) (rder or act o% competent pu&ic aut#orit!'
3. 7e*li*ence presu#e+6 Bur+en o, proo, to prove ot)er.ise
@erein, 6an*on is presumed to #ave een at %au&t or to #ave acted neg&igent&!' 1! reason o% t#is
presumption, t#e court is not even re9uired to make an e3press %inding o% %au&t or neg&igence e%ore it cou&d
#o&d 6an*on answera&e %or t#e reac# o% t#e contract o% carriage' "ti&&, 6an*on cou&d #ave een e3empted
%rom an! &iai&it! #ad #e een a&e to prove t#at #e oserved e3traordinar! di&igence in t#e vigi&ance over t#e
goods in #is custod!, according to a&& t#e circumstances o% t#e case, or t#at t#e &oss was due to an un%oreseen
event or to %orce maAeure' 7s it was, t#ere was #ard&! an! attempt on t#e part o% 6an*on to prove t#at #e
e3ercised suc# e3traordinar! di&igence'
/. 8r+er $y co#petent aut)ority #ust $e vali+! to allo. carrier1s a$solution ,ro# lia$ility as per
caso ,ortuito
1e%ore 6an*on cou&d e aso&ved %rom responsii&it! on t#e ground t#at #e was ordered !
competent pu&ic aut#orit! to un&oad t#e scrap iron, it must e s#own t#at 7cting Ma!or 1asi&io :u #ad t#e
power to issue t#e disputed order, or t#at it was &aw%u&, or t#at it was issued under &ega& process o% aut#orit!'
T#e appe&&ee %ai&ed to esta&is# t#is' ,ndeed, no aut#orit! or power o% t#e acting ma!or to issue suc# an order
was given in evidence' Eeit#er #as it een s#own t#at t#e cargo o% scrap iron e&onged to t#e Municipa&it! o%
Marive&es' F#at we #ave in t#e record is t#e stipu&ation o% t#e parties t#at t#e cargo o% scrap iron was
accumu&ated ! t#e appe&&ant t#roug# separate purc#ases #ere and t#ere %rom private individua&s' T#e %act
remains t#at t#e order given ! t#e acting ma!or to dump t#e scrap iron into t#e sea was part o% t#e pressure
app&ied ! Ma!or Jose 7dvincu&a to s#akedown Tumaming %or P4,222'22' T#e order o% t#e acting ma!or did
not constitute va&id aut#orit! %or 6an*on and #is representatives to carr! out'
2. ()e intervention o, t)e #unicipal o,,icials .as not o, a c)aracter t)at .oul+ ren+er i#possi$le
t)e ,ul,ill#ent $y t)e carrier o, its o$li*ation
T#e intervention o% t#e municipa& o%%icia&s was not o% a c#aracter t#at wou&d render impossi&e t#e
%u&%i&&ment ! t#e carrier o% its o&igation' @erein, 6an*on was not dut! ound to oe! t#e i&&ega& order to
dump into t#e sea t#e scrap iron' Moreover, t#ere is asence o% su%%icient proo% t#at t#e issuance o% t#e same
order was attended wit# suc# %orce or intimidation as to comp&ete&! overpower t#e wi&& o% t#e petitioner?s
emp&o!ees' T#e mere di%%icu&t! in t#e %u&%i&&ment o% t#e o&igation is not considered %orce maAeure' T#e scraps
cou&d #ave een proper&! un&oaded at t#e s#ore or at t#e E7""$( compound, so t#at a%ter t#e dispute wit#
t#e &oca& o%%icia&s concerned was sett&ed, t#e scraps cou&d t#en e de&ivered in accordance wit# t#e contract o%
carriage'
. 7o inco#pati$ility $et.een Civil Co+e provisions on co##on carriers an+ 5rticles 31 an+ 3-
o, t)e Co+e o, Co##erce6 5rticle 1333 7CC #o+i,ie+ 5rticle 32- as to +e*ree o, +ili*ence re9uire+ o,
carrier
T#ere is no incompatii&it! etween t#e $ivi& $ode provisions on common carriers and 7rtic&es 3>1
and 3>8 o% t#e $ode o% $ommerce w#ic# were t#e asis %or t#e $ourt?s ru&ing in 6overnment o% t#e
P#i&ippine ,s&ands vs' Onc#austi T $o' and w#ic# 6an*on invokes in t#e petition' For 7rtic&e 1034 o% t#e
$ivi& $ode, converse&! stated, means t#at t#e s#ipper wi&& su%%er t#e &osses and deterioration arising %rom t#e
causes enumerated in 7rtic&e 1035C and in t#ese instances, t#e urden o% proving t#at damages were caused !
t#e %au&t or neg&igence o% t#e carrier rests upon #im' @owever, t#e carrier must %irst esta&is# t#at t#e &oss or
deterioration was occasioned ! one o% t#e e3cepted causes or was due to an un%oreseen event or to %orce
maAeure' 1e t#at as it ma!, inso%ar as 7rtic&e 3>8 appears to re9uire o% t#e carrier on&! ordinar! di&igence, t#e
same is deemed to #ave een modi%ied ! 7rtic&e 1033 o% t#e $ivi& $ode'
3. &in+in*s on actual an+ exe#plary +a#a*es not +istur$e+
Finding t#e award o% actua& and e3emp&ar! damages to e proper, t#e same wi&& not e distured !
t#e "upreme $ourt' 1esides, t#ese were not su%%icient&! controverted ! 6an*on'
[/-]
=irasol vs. Ro$ert <ollar Co. (GR -%3-1! -3 =arc) 1%-%)
"econd Division, Jo#ns (J): 4 concur
&acts' 7mando Miraso& a&&eged t#at #e is t#e owner and consignee o% two cases o% ooks s#ipped in good
order and condition at Eew Oork, D"7, on oard :oert Do&&ar $o'?s steams#ip President 6ar%ie&d, %or
transport and de&iver! to Miraso& in t#e $it! o% Mani&a, a&& %reig#t c#arges paidC t#at t#e two cases arrived in
Mani&a on 1 "eptemer 1.80, in ad order and damaged condition, resu&ting in t#e tota& &oss o% one case and a
partia& &oss o% t#e ot#erC t#at t#e &oss in one case is P1,>32, and t#e ot#er P022, %or w#ic# #e %i&ed #is c&aims,
and :oert Do&&ar #as re%used and neg&ected to pa!, giving as its reason t#at t#e damage in 9uestion ;was
caused ! sea water<C t#at Miraso& never entered into an! contract wit# t#e :oert Do&&ar &imiting t#e &atter?s
&iai&it! as a common carrier, and w#en #e wrote t#e &etter o% 3 "eptemer 1.80, #e #ad not t#en ascertained
t#e contents o% t#e damaged case, and cou&d not determine t#eir va&ueC t#at #e never intended to rati%! or
con%irm an! agreement to &imit t#e &iai&it! o% t#e de%endantC and t#at on . "eptemer 1.80, w#en t#e ot#er
case was %ound, Miraso& %i&ed a c&aim %or t#e rea& damage o% t#e ooks t#erein named in t#e sum o% K304'
Miraso& pra!ed %or corresponding Audgment, wit# &ega& interest %rom t#e %i&ing o% t#e comp&aint and costs'
For answer, :oert Do&&ar made a genera& and speci%ic denia&, and as a separate and specia& de%ense a&&eged
t#at t#e steams#ip President 6ar%ie&d at a&& t#e times a&&eged was in a&& respects seawort#! and proper&!
manned, e9uipped and supp&ied, and %it %or t#e vo!ageC t#at t#e damage to :oert Do&&ar?s merc#andise, i%
an!, was not caused t#roug# t#e neg&igence o% t#e vesse&, its master, agent, o%%icers, crew, tack&e or
appurtenances, nor ! reason o% t#e vesse& eing unseawort#! or improper&! manned, ;ut t#at suc# damage,
i% an!, resu&ted %rom %au&ts or errors in navigation or in t#e management o% said vesse&'< 7s a second separate
and specia& de%ense, :oert Do&&ar a&&eged t#at in t#e i&& o% &ading, it was agreed in writing t#at :oert Do&&ar
(ransportation La.! -""/ ( 1"/ )
s#ou&d not e ;#e&d &ia&e %or an! &oss o%, or damage to, an! o% said merc#andise resu&ting %rom an! o% t#e
%o&&owing causes, to wit: 7cts o% 6od, peri&s o% t#e sea or ot#er waters,< and t#at Miraso&?s damage, i% an!,
was caused ! ;7cts o% 6od< or ;peri&s o% t#e sea'< 7s a t#ird specia& de%ense, :oert Do&&ar 9uoted c&ause 13
o% t#e i&& o% &ading, in w#ic# it is stated t#at in no case s#a&& it e #e&d &ia&e ;%or or in respect to said
merc#andise or propert! e!ond t#e sum o% 842 do&&ars %or an! piece package or an! artic&e not enc&osed in a
package, un&ess a #ig#er va&ue is stated #erein and ad va&orem %reig#t paid or assessed t#ereon,< and t#at t#ere
was no ot#er agreementC t#at on 3 "eptemer 1.80 Miraso& wrote :oert Do&&ar a &etter w#ic# reads
;T#ere%ore, , wis# to %i&e c&aim o% damage to t#e meager ma3imum va&ue t#at !our i&&s o% &ading wi&&
indemni%! me, t#at is K842 as per condition 13'< 7s a %ourt# specia& de%ense, :oert Do&&ar a&&eged t#at t#e
damage, i% an!, was caused ! ;sea water,< and t#at t#e i&& o% &ading e3empts de%endant %rom &iai&it! %or t#at
cause' T#at damage ! ;sea water< is a s#ipper?s risk, and t#at :oert Do&&ar is not &ia&e' 7s a resu&t o% t#e
tria& upon suc# issues, t#e &ower court rendered Audgment %or Miraso& %or P8,2/2, wit# &ega& interest t#ereon
%rom t#e date o% t#e %ina& Audgment, wit# costs' 1ot# parties appea&ed'
T#e "upreme $ourt modi%ied t#e Audgment o% t#e &ower court, so as to give Miraso& &ega& interest on t#e
amount o% #is Audgment %rom t#e date o% its rendition in t#e &ower court, and in a&& ot#er respects a%%irmed,
wit# costs'
1. =irasol entitle+ to :/""! not :3""! ,or )is Dncyclope+ia Britannica
T#e evidence s#ows t#at wit# t#e P522 (not P022 as c&aimed) w#ic# t#e court a&&owed, Miraso& cou&d
u! a new set o% Bnc!c&opedia 1ritannica w#ic# wou&d contain a&& o% t#e materia& and suAect matter o% t#e
one w#ic# #e &ost'
-. =irasol entitle+ to le*al interest ,ro# +ate o, ?u+*#ent ren+ere+ $y lo.er court
Dnder a&& o% t#e aut#orities, Miraso& is entit&ed to &ega& interest %rom t#e date o% #is Audgment rendered
in t#e &ower court and not t#e date w#en it ecomes %ina&'
3. Eort) o, +a#a*e sustaine+ $y evi+ence6 =anner o, provin* proper
T#e &ower court %ound t#at Miraso&?s damage was P8,2/2, and t#at %inding is sustained ! t#e
evidence' T#ere was a tota& &oss o% one case and a partia& &oss o% t#e ot#er, and in t#e ver! nature o% t#ings,
Miraso& cou&d not prove #is &oss in an! ot#er wa! or manner t#an #e did prove it, and t#e tria& court w#o
#eard #im testi%! must #ave een convinced o% t#e trut# o% #is testimon!'
/. =irasol not le*ally $oun+ $y clause li#itin* t)e carrier1s lia$ility
T#ere is no c&aim or pretense t#at Miraso& signed t#e i&& o% &ading or t#at #e knew o% its contents at
t#e time it was issued' ,n t#at situation #e was not &ega&&! ound ! t#e c&ause w#ic# purports to &imit :oert
Do&&ar?s &iai&it!' T#at 9uestion was s9uare&! met and decided ! t#e "upreme $ourt in anc in Juan Osmae&
T $o', vs' 6aino 1arretto T $o' (41 P#i&', .2C see numerous aut#orities t#ere cited)'
2. Restriction o, lia$ility o, stea#s)ip co#pany a*ainst o.n ne*li*ence a*ainst pu$lic policy6 Case
o, ()e 0esin*ton applies
:estrictions o% t#e &iai&it! o% a steams#ip compan! %or its own neg&igence or %ai&ure o% dut! toward a
passenger, eing against t#e pu&ic po&ic! en%orced ! t#e courts o% t#e Dnited "tates, wi&& not e up#e&d,
t#oug# t#e ticket was issued and accepted in a %oreign countr! and contained a condition making it suAect to
t#e &aw t#ereo%, w#ic# sustain suc# stipu&ations' 7 stipu&ation in a steams#ip passenger?s ticket, w#ic#
compe&s #im to va&ue #is aggage, at a certain sum, %ar &ess t#an it is wort#, or, in order to #ave a #ig#er va&ue
put upon it, to suAect it to t#e provisions o% t#e @arter 7ct, ! w#ic# t#e carrier wou&d e e3empted %rom a&&
&iai&it! t#ere%or %rom errors in navigation or management o% t#e vesse& or ot#er neg&igence, is unreasona&e
and in con%&ict wit# pu&ic po&ic!' 7n aritrar! &imitation o% 842 %rancs %or t#e aggage o% an! steams#ip
passenger, unaccompanied ! an! rig#t to increase t#e amount ! ade9uate and reasona&e proportiona&
pa!ment, is void as against pu&ic po&ic!'
. Goo+s! .)en +elivere+ to carrier! are un+er its control an+ supervision6 Bur+en o, proo, a*ainst
+a#a*es s)i,ts to carrier
"#ippers w#o are %orced to s#ip goods on an ocean &iner or an! ot#er s#ip #ave some &ega& rig#ts, and
w#en goods are de&ivered on oard s#ip in good order and condition, and t#e s#ipowner de&ivers t#em to t#e
s#ipper in ad order and condition, it t#en devo&ves upon t#e s#ipowner to ot# a&&ege and prove t#at t#e
goods were damaged ! reason o% some %act w#ic# &ega&&! e3empts #im %rom &iai&it!C ot#erwise, t#e s#ipper
wou&d e &e%t wit#out an! redress, no matter w#at ma! #ave caused t#e damage' @erein, :oert Do&&ar #aving
received t#e two o3es in good condition, its &ega& dut! was to de&iver t#em to Miraso& in t#e same condition
in w#ic# it received t#em' From t#e time o% t#eir de&iver! to :oert Do&&ar in Eew Oork unti& t#e! were
de&ivered to Miraso& in Mani&a, t#e o3es were under t#e contro& and supervision o% :oert Do&&ar and e!ond
t#e contro& o% Miraso&' :oert Do&&ar #aving admitted t#at t#e o3es were damaged w#i&e in transit and in its
possession, t#e urden o% proo% t#en s#i%ted, and it devo&ved upon :oert Do&&ar to ot# a&&ege and prove t#at
t#e damage was caused ! reason o% some %act w#ic# e3empted it %rom &iai&it!' 7s to #ow t#e o3es were
damaged, w#en or w#ere, was a matter pecu&iar&! and e3c&usive&! wit#in t#e know&edge o% :oert Do&&ar, and
in t#e ver! nature o% t#ings cou&d not e in t#e know&edge o% Miraso&' To re9uire Miraso& to prove as to w#en
and #ow t#e damage was caused wou&d %orce #im to ca&& and re&! upon t#e emp&o!ees o% :oert Do&&ar?s s#ip,
w#ic# in &ega& e%%ect wou&d e to sa! t#at #e cou&d not recover an! damage %or an! reason' T#at is not t#e &aw'
3. 5rticle 31 o, t)e Co+e o, Co##erce
Merc#andise s#a&& e transported at t#e risk and venture o% t#e s#ipper, i% t#e contrar! was not
e3press&! stipu&ated' T#ere%ore, a&& damages and impairment su%%ered ! t#e goods during t#e transportation,
! reason o% accident, %orce maAeure, or ! virtue o% t#e nature or de%ect o% t#e artic&es, s#a&& e %or t#e
account and risk o% t#e s#ipper' T#e proo% o% t#ese accidents is incument on t#e carrier'<
4. <a#a*e $y @sea .aterA not evi+ence t)at *oo+s +a#a*e+ $y ,orce #a?eure6 :erils o, sea
T#e %act t#at t#e cases were damaged ! ;sea water,< standing a&one and wit#in itse&%, is not evidence
t#at t#e! were damaged ! %orce maAeure or %or a cause e!ond t#e carrier?s contro&' T#e words ;peri&s o% t#e
sea< app&! to ;a&& kinds o% marine casua&ties, suc# as s#ipwreck, %oundering, stranding,< and among ot#er
t#ings, it is said: ;Tempest rocks, s#oa&s, iceergs and ot#er ostac&es are wit#in t#e e3pression,< and ;w#ere
t#e peri& is t#e pro3imate cause o% t#e &oss, t#e s#ipowner is e3cused'< ;"omet#ing %ortuitous and out o% t#e
ordinar! course is invo&ved in ot# words Gperi&? or Gaccident'?<
%. Govern#ent vs. Hnc)austi not in point
T#e case o% 6overnment o% t#e P#i&ippine ,s&ands vs' Onc#austi T $ompan! (52 P#i&', 81.) and t#e
present case are ver! di%%erent and, #ence, it is not in point' ,n t#e present case, t#ere is no c&aim or pretense
t#at t#e two cases were not in good order w#en received on oard t#e s#ip, and it is admitted t#at t#e! were in
ad order on t#eir arriva& at Mani&a' @ence, t#e! must #ave een damaged in transit' ,n t#e ver! nature o%
t#ings, i% t#e! were damaged ! reason o% a tempest, rocks, iceergs, %oundering, stranding or t#e peri&s o% t#e
sea, t#at wou&d e a matter e3c&usive&! wit#in t#e know&edge o% t#e o%%icers o% :oert Do&&ar?s s#ip, and in
t#e ver! nature o% t#ings wou&d not e wit#in Miraso&?s know&edge, and upon a&& o% suc# 9uestions, t#ere is a
%ai&ure o% proo%'
[/3]
Dastern S)ippin* Lines vs. ;5C (GR L>%"//! -% =ay 1%43)
Eastern S!""!n# $!nes vs. %!ss!n F!re and &ar!ne Ins'ran(e Co. )*+ $,71478-
&acts' ,n 6: >.255, sometime in or prior to June 1.00, t#e M-" 7",7T,$7, a vesse& operated ! Bastern
"#ipping +ines &oaded at Poe, Japan %or transportation to Mani&a, 4,222 pieces o% ca&ori*ed &ance pipes in 8/
packages va&ued at P84>,23.'22 consigned to P#i&ippine 1&ooming Mi&&s $o', ,nc', and 0 cases o% spare parts
va&ued at P.8,3>1'04, consigned to $entra& Te3ti&e Mi&&s, ,nc' 1ot# sets o% goods were insured against marine
risk %or t#eir stated va&ue wit# Deve&opment ,nsurance and "uret! $orporation' ,n 6: 0150/, during t#e same
period, t#e same vesse& took on oard 18/ cartons o% garment %arics and accessories, in 8 containers,
consigned to Marive&es 7ppare& $orporation, and two cases o% surve!ing instruments consigned to 7man
Bnterprises and 6enera& Merc#andise' T#e 18/ cartons were insured %or t#eir stated va&ue ! Eiss#in Fire T
Marine ,nsurance $o', %or D"K5>,4/3'22, and t#e 8 cases ! Dowa Fire T Marine ,nsurance $o', +td', %or
D"K11,3/4'22' Bnroute %or Poe, Japan, to Mani&a, t#e vesse& caug#t %ire and sank, resu&ting in t#e tota& &oss
o% s#ip and cargo' T#e respective ,nsurers paid t#e corresponding marine insurance va&ues to t#e consignees
concerned and were t#us surogated unto t#e rig#ts o% t#e &atter as t#e insured'
L6: >.255M (n 11 Ma! 1.0/, Deve&opment ,nsurance, #aving een surogated unto t#e rig#ts o% t#e two
insured companies, %i&ed suit against Bastern "#ipping %or t#e recover! o% t#e amounts it #ad paid to t#e
insured e%ore t#e t#en $ourt o% First ,nstance o% Mani&a (1ranc# JJJ, $ivi& $ase 11>2/0)' Bastern "#ipping
denied &iai&it! main&! on t#e ground t#at t#e &oss was due to an e3traordinar! %ortuitous event, #ence, it is not
&ia&e under t#e &aw' (n 31 7ugust 1.0., t#e Tria& $ourt rendered Audgment in %avor o% Deve&opment
,nsurance in t#e amounts o% P84>,23.'22 and P.8,3>1'04, respective&!, wit# &ega& interest, p&us P34,222'22 as
attorne!?s %ees and costs' Bastern "#ipping took an appea& to t#e t#en $ourt o% 7ppea&s w#ic#, on 15 7ugust
1./5, a%%irmed t#e decision o% t#e tria& court' Bastern "#ipping %i&ed a petition %or review on certiorari'
L6: 0150/M (n 1> June 1.0/, Eiss#in, and Dowa, as surogees o% t#e insured, %i&ed suit against Bastern
"#ipping %or t#e recover! o% t#e insured va&ue o% t#e cargo &ost wit# t#e t#en $ourt o% First ,nstance o% Mani&a
(1ranc# ,,, $ivi& $ase 11>141), imputing unseawort#iness o% t#e s#ip and non=oservance o% e3traordinar!
di&igence ! Bastern "#ipping' Bastern "#ipping denied &iai&it! on t#e principa& grounds t#at t#e %ire w#ic#
caused t#e sinking o% t#e s#ip is an e3empting circumstance under "ection 5(8) () o% t#e $arriage o% 6oods
! "ea 7ct ($(6"7)C and t#at w#en t#e &oss o% %ire is esta&is#ed, t#e urden o% proving neg&igence o% t#e
vesse& is s#i%ted to t#e cargo s#ipper' (n 14 "eptemer 1./2, t#e Tria& $ourt rendered Audgment in %avor o%
Eiss#in and Dowa in t#e amounts o% D"K5>,4/3'22 and D"K11,3/4'22, respective&!, wit# &ega& interest, p&us
attorne!?s %ees o% P4,222'22 and costs' (n appea& ! Bastern "#ipping, t#e t#en $ourt o% 7ppea&s on 12
"eptemer 1./5, a%%irmed wit# modi%ication t#e Tria& $ourt?s Audgment ! decreasing t#e amount recovera&e
! Dowa to D"K1,222'22 ecause o% K422 per package &imitation o% &iai&it! under t#e $(6"7' @ence, t#e
petition %or review on certiorari ! Bastern "#ipping'
1ot# Petitions were initia&&! denied %or &ack o% merit' 6: >.255 on 1> Januar! 1./4 ! t#e First Division, and
6: 0150/ on 84 "eptemer 1./4 ! t#e "econd Division' Dpon Bastern "#ipping?s Motion %or
:econsideration, #owever, 6: >.255 was given due course on 84 Marc# 1./4, and t#e parties were re9uired
to sumit t#eir respective Memoranda, w#ic# t#e! #ave done' (n t#e ot#er #and, in 6: 0150/, Bastern
"#ipping soug#t reconsideration o% t#e :eso&ution den!ing t#e Petition %or :eview and moved %or its
conso&idation wit# 6: >.255, w#ic# was t#en pending reso&ution wit# t#e First Division' T#e same was
grantedC t#e :eso&ution o% t#e "econd Division o% 84 "eptemer 1./4 was set aside and t#e Petition was given
due course'
T#e "upreme $ourt modi%ied t#e Audgment in 6: >.255, in t#at Bastern "#ipping s#a&& pa! t#e Deve&opment
,nsurance t#e amount o% P84>,23. %or t#e 8/ packages o% ca&ori*ed &ance pipes, and P01,452 %or t#e 0 cases o%
spare parts, wit# interest at t#e &ega& rate %rom t#e date o% t#e %i&ing o% t#e $omp&aint on 13 June 1.0/, p&us
P4,222 as attorne!?s %ees, and t#e costs' T#e $ourt, on t#e ot#er #and, in 6: 0150/, a%%irmed t#e Audgment'
1. 5+#ission o, Dastern S)ippin* as operator o, vessel
7s a genera& ru&e, t#e %acts a&&eged in a part!?s p&eading are deemed admissions o% t#at part! and
inding upon it' 7nd an admission in one p&eading in one action ma! e received in evidence against t#e
p&eader or #is successor=in=interest on t#e tria& o% anot#er action to w#ic# #e is a part!, in %avor o% a part! to
t#e &atter action' @erein, a&t#oug# Bastern "#ipping c&aimed t#at it is not t#e operator o% t#e M-" 7siatica ut
mere&! a c#arterer t#ereo%, it, in %act, stated in its petition in 6: >.255 t#at ;t#ere are aout 88 cases o% t#e
G7",7T,$7? pending in various courts w#ere various p&ainti%%s are represented ! various counse&
representing various consignees or insurance companies' T#e common de%endant in t#ese cases is petitioner
#erein, eing t#e operator o% said vesse&'< Bastern "#ipping s#ou&d t#us e #e&d ound to said admission'
-. La. 5pplica$le
T#e &aw o% t#e countr! to w#ic# t#e goods are to e transported governs t#e &iai&it! o% t#e common
carrier in case o% t#eir &oss, destruction or deterioration' @erein, as t#e cargoes in 9uestion were transported
%rom Japan to t#e P#i&ippines, t#e &iai&it! o% Bastern "#ipping is governed primari&! ! t#e $ivi& $ode'
@owever, in a&& matters not regu&ated ! said $ode, t#e rig#ts and o&igations o% common carrier s#a&& e
governed ! t#e $ode o% $ommerce and ! specia& &aws' T#us, t#e $arriage o% 6oods ! "ea 7ct, a specia&
&aw, is supp&etor! to t#e provisions o% t#e $ivi& $ode'
3. Co##on carriers lia$le ,or loss6 7atural +isaster or cala#ity an exception
Dnder t#e $ivi& $ode, common carriers, %rom t#e nature o% t#eir usiness and %or reasons o% pu&ic
po&ic!, are ound to oserve e3traordinar! di&igence in t#e vigi&ance over goods, according to a&& t#e
circumstances o% eac# case' $ommon carriers are responsi&e %or t#e &oss, destruction, or deterioration o% t#e
goods un&ess t#e same is due to an! o% t#e %o&&owing causes on&!: (1) F&ood, storm, eart#9uake, &ig#tning or
ot#er natura& disaster or ca&amit!C 333<
/. &ire not a natural +isaster or cala#ity
Baster "#ipping c&aims t#at t#e &oss o% t#e vesse& ! %ire e3empts it %rom &iai&it! under t#e p#rase
;natura& disaster or ca&amit!'< @owever, %ire ma! not e considered a natura& disaster or ca&amit!, as it arises
a&most invaria&! %rom some act o% man or ! #uman means' ,t does not %a&& wit#in t#e categor! o% an act o%
6od un&ess caused ! &ig#tning or ! ot#er natura& disaster or ca&amit!' ,t ma! even e caused ! t#e actua&
%au&t or privit! o% t#e carrier'
2. Construction o, 5rticle 14" as to ,ire as an extraor+inary ,ortuitous event
7rtic&e 1>/2 o% t#e $ivi& $ode, w#ic# considers %ire as an e3traordinar! %ortuitous event re%ers to
&eases o% rura& &ands w#ere a reduction o% t#e rent is a&&owed w#en more t#an one=#a&% o% t#e %ruits #ave een
&ost due to suc# event, considering t#at t#e &aw adopts a protective po&ic! towards agricu&ture'
. &ire not co#pre)en+e+ .it)in exceptions in 5rticle 133/6 Carrier presu#e+ at ,ault unless it
proves ot)er.ise
7s t#e peri& o% %ire is not compre#ended wit#in t#e e3ceptions in 7rtic&e 1035, 7rtic&e 1034 o% t#e
$ivi& $ode provides t#at in a&& cases ot#er t#an t#ose mentioned in 7rtic&e 1035, t#e common carrier s#a&& e
presumed to #ave een at %au&t or to #ave acted neg&igent&!, un&ess it proves t#at it #as oserved t#e
e3traordinar! di&igence re9uired ! &aw' @erein, t#e respective ,nsurers, as surogees o% t#e cargo s#ippers,
#ave proven t#at t#e transported goods #ave een &ost' Bastern "#ipping #as a&so proven t#at t#e &oss was
caused ! %ire' T#e urden t#en is upon Bastern "#ipping to prove t#at it #as e3ercised t#e e3traordinar!
di&igence re9uired ! &aw' @aving %ai&ed to disc#arge t#e urden o% proving t#at it #ad e3ercised t#e
e3traordinar! di&igence re9uired ! &aw, Bastern "#ipping cannot escape &iai&it! %or t#e &oss o% t#e cargo'
3. 7atural +isaster #ust $e proxi#ate an+ only cause o, t)e loss! an+ t)at carrier )as exercise+
+ue +ili*ence to prevent or #ini#iJe loss
Bven i% %ire were to e considered a ;natura& disaster< wit#in t#e meaning o% 7rtic&e 1035 o% t#e $ivi&
$ode, it is re9uired under 7rtic&e 103. o% t#e same $ode t#at t#e ;natura& disaster< must #ave een t#e
;pro3imate and on&! cause o% t#e &oss,< and t#at t#e carrier #as ;e3ercised due di&igence to prevent or
minimi*e t#e &oss e%ore, during or a%ter t#e occurrence o% t#e disaster'< @erein, Bastern "#ipping #as a&so
%ai&ed to esta&is# satis%actori&!'
4. Section / (-) o, C8GS56 Relie, in C8GS5 unavailin* as Dastern s)ippin* actually at ,ault +ue
to lack o, +ili*ence
"ection 5(8) o% $(6"7 provides t#at ;Eeit#er t#e carrier nor t#e s#ip s#a&& e responsi&e %or &oss or
damage arising or resu&ting %rom' 333 () Fire, un&ess caused ! t#e actua& %au&t or privit! o% t#e carrier' 333<
@erein, t#ere was ;actua& %au&t< o% t#e carrier s#own ! ;&ack o% di&igence< in t#at ;w#en t#e smoke was
noticed, t#e %ire was a&read! igC t#at t#e %ire must #ave started 85 #ours e%ore t#e same was noticedC< and
t#at ;a%ter t#e cargoes were stored in t#e #atc#es, no regu&ar inspection was made as to t#eir condition during
t#e vo!age'< T#e %oregoing su%%ices to s#ow t#at t#e circumstances under w#ic# t#e %ire originated and spread
are suc# as to s#ow t#at Bastern "#ipping or its servants were neg&igent in connection t#erewit#'
$onse9uent&!, t#e comp&ete de%ense a%%orded ! t#e $(6"7 w#en &oss resu&ts %rom %ire is unavai&ing to
Bastern "#ipping'
%. Section /(2) o, C8GS5
"ection 5(4) o% t#e $(6"7, reads:<(4) Eeit#er t#e carrier nor t#e s#ip s#a&& in an! event e or
ecome &ia&e %or an! &oss or damage to or in connection wit# t#e transportation o% goods in an amount
e3ceeding K422 per package &aw%u& mone! o% t#e Dnited "tates, or in case o% goods not s#ipped in packages,
per customar! %reig#t unit, or t#e e9uiva&ent o% t#at sum in ot#er currenc!, un&ess t#e nature and va&ue o% suc#
goods #ave een dec&ared ! t#e s#ipper e%ore s#ipment and inserted in i&& o% &ading' T#is dec&aration i%
emodied in t#e i&& o% &ading s#a&& e prima %acie evidence, ut a&& e conc&usive on t#e carrier' 1! agreement
etween t#e carrier, master or agent o% t#e carrier, and t#e s#ipper anot#er ma3imum amount t#an t#at
mentioned in t#is paragrap# ma! e %i3ed: Provided, T#at suc# ma3imum s#a&& not e &ess t#an t#e %igure
aove named' ,n no event s#a&& t#e carrier e &ia&e %or more t#an t#e amount o% damage actua&&! sustained'
333<
1". 5rticle 13/% 7CC
7rtic&e 105. o% t#e Eew $ivi& $ode a&so a&&ows t#e &imitations o% &iai&it! in t#is wise, ;7 stipu&ation
t#at t#e common carrier?s &iai&it! is &imited to t#e va&ue o% t#e goods appearing in t#e i&& o% &ading, un&ess
t#e s#ipper or owner dec&ares a greater va&ue, is inding'<
11. Civil Co+e +oes not li#it lia$ility o, co##on carrier6 C8GS5 suppletory to provisions o, Civil
Co+e
T#e $ivi& $ode does not o% itse&% &imit t#e &iai&it! o% t#e common carrier to a %i3ed amount per
package a&t#oug# t#e $ode e3press&! permits a stipu&ation &imiting suc# &iai&it!' T#us, t#e $(6"7, w#ic# is
supp&etor! to t#e provisions o% t#e $ivi& $ode, steps in and supp&ements t#e $ode ! esta&is#ing a statutor!
provision &imiting t#e carrier?s &iai&it! in t#e asence o% a dec&aration o% a #ig#er va&ue o% t#e goods ! t#e
s#ipper in t#e i&& o% &ading' T#e provisions o% t#e $arriage o% 6oods ! "ea 7ct on &imited &iai&it! are as
muc# a part o% a i&& o% &ading as t#oug# p#!sica&&! in it and as muc# a part t#ereo% as t#oug# p&aced t#erein
! agreement o% t#e parties'
1-. Dastern S)ippin*1s lia$ility s)oul+ not excee+ FSP2"" per packa*e
,n 6: >.255, t#ere is no stipu&ation in t#e respective 1i&&s o% +ading &imiting t#e carrier?s &iai&it! %or
t#e &oss or destruction o% t#e goods' Eor is t#ere a dec&aration o% a #ig#er va&ue o% t#e goods' @ence, Bastern
"#ipping?s &iai&it! s#ou&d not e3ceed D"K422 per package, or its peso e9uiva&ent, at t#e time o% pa!ment o%
t#e va&ue o% t#e goods &ost, ut in no case ;more t#an t#e amount o% damage actua&&! sustained'<
13. 5ctual lia$ility o, Dastern S)ippin* in GR %"//
,n 6: >.255, (1) t#e actua& tota& &oss %or t#e 4,222 pieces o% ca&ori*ed &ance pipes was P84>,23.,
w#ic# was e3act&! t#e amount o% t#e insurance coverage ! Deve&opment ,nsurance, and t#e amount a%%irmed
to e paid ! t#e $ourt' T#e goods were s#ipped in 8/ packages' Mu&tip&!ing 8/ packages ! K422 wou&d
resu&t in a product o% K15,222 w#ic#, at t#e current e3c#ange rate o% P82'55 to D"K1, wou&d e P8/>,1>2, or
(ransportation La.! -""/ ( 1"% )
;more t#an t#e amount o% damage actua&&! sustained'< $onse9uent&!, t#e amount o% P84>,23. s#ou&d e
up#e&d' (8) Fit# respect to t#e 0 cases o% spare parts, t#eir actua& va&ue was P.8,3>1'04, w#ic# is &ikewise t#e
insured va&ue o% t#e cargo and w#ic# amount was a%%irmed to e paid ! t#e $ourt' @owever, mu&tip&!ing 0
cases ! K422 per package at t#e present prevai&ing rate o% P82'55 to D"K1 (D"K3,422 3 P82'55) wou&d !ie&d
P01,452 on&!, w#ic# is t#e amount t#at s#ou&d e paid ! Bastern "#ipping %or t#ose spare parts, and not
P.8,3>1'04'
1/. 5ctual lia$ility o, Dastern S)ippin* in GR 31/34
,n 6: 0150/, in so %ar as t#e 8 cases o% surve!ing instruments are concerned, t#e amount awarded to
Dowa w#ic# was a&read! reduced to K1,222 ! t#e 7ppe&&ate $ourt %o&&owing t#e statutor! K422 &iai&it! per
package, is in order' ,n respect o% t#e s#ipment o% 18/ cartons o% garment %arics in 8 containers and insured
wit# Eiss#in, t#e 7ppe&&ate $ourt a&so &imited Bastern "#ipping?s &iai&it! to K422 per package and a%%irmed
t#e award o% K5>,4/3 to Eiss#in' ,t mu&tip&ied 18/ cartons (considered as $(6"7 packages) ! K422 to arrive
at t#e %igure o% K>5,222, and e3p&ained t#at ;since t#is amount is more t#an t#e insured va&ue o% t#e goods,
t#at is K5>,4/3, t#e Tria& $ourt was correct in awarding said amount on&! %or t#e 18/ cartons, w#ic# amount is
&ess t#an t#e ma3imum &imitation o% t#e carrier?s &iai&it!' T#e 18/ cartons and not t#e 8 containers s#ou&d e
considered as t#e s#ipping unit'
12. =itsui vs. 5#erican Dxport Lines
,n Mitsui T $o', +td' vs' 7merican B3port +ines, ,nc' >3> F 8d /20 (1./1), t#e consignees o% tin
ingots and t#e s#ipper o% %&oor covering roug#t action against t#e vesse& owner and operator to recover %or
&oss o% ingots and %&oor covering, w#ic# #ad een s#ipped in vesse&=supp&ied containers' T#e D'"' District
$ourt %or t#e "out#ern District o% Eew Oork rendered Audgment %or t#e p&ainti%%s, and t#e de%endant appea&ed'
T#e Dnited "tates $ourt o% 7ppea&s, "econd Division, modi%ied and a%%irmed #o&ding t#at: ;F#en w#at
wou&d ordinari&! e considered packages are s#ipped in a container supp&ied ! t#e carrier and t#e numer o%
suc# units is disc&osed in t#e s#ipping documents, eac# o% t#ose units and not t#e container constitutes t#e
Gpackage? re%erred to in &iai&it! &imitation provision o% $arriage o% 6oods ! "ea 7ct' [Carriage o2 #oods 1-
ea Act, 0(/), 0+ C..C.A. 13!0(/)]' Bven i% &anguage and purposes o% $arriage o% 6oods ! "ea 7ct &e%t
dout as to w#et#er carrier=%urnis#ed containers w#ose contents are disc&osed s#ou&d e treated as packages,
t#e interest in securing internationa& uni%ormit! wou&d suggest t#at t#e! s#ou&d not e so treated' [Carriage o2
#oods 1- ea Act, 0(/), 0+ C..C.A. 13!0(/)]' 7%ter 9uoting t#e statement in +eat#er?s 1est, supra, 541 F 8d
at /14, t#at treating a container as a package is inconsistent wit# t#e congressiona& purpose o% esta&is#ing a
reasona&e minimum &eve& o% &iai&it! [,udge &ee5s wrote, 010 E. upp. at .!7]'
1. Courts to construe an+ apply statute as enacte+6 Con*ress alone #ust $e t)e one to #o+erniJe
or reconstitute it
T#e approac# gives needed recognition to t#e responsii&it! o% t#e courts to construe and app&! t#e
statute as enacted, #owever great mig#t e t#e temptation to Gmoderni*e? or reconstitute it ! art%u& Audicia&
g&oss' ,% $(6"7?s package &imitation sc#eme su%%ers %rom interna& i&&ness, $ongress a&one must undertake t#e
surger!' T#ere is, in t#is regard, ovious wisdom in t#e Eint# $ircuit?s conc&usion in @art%ord t#at
tec#no&ogica& advancements, w#et#er or not %orseea&e ! t#e $(6"7 promu&gators, do not warrant a
distortion or arti%icia& construction o% t#e statutor! term Gpackage'? 7 ru&ing t#at t#ese &arge reusa&e meta&
pieces o% transport e9uipment 9ua&i%! as $(6"7 packages H at &east w#ere t#e! were carrier=owned and
supp&ied H wou&d amount to Aust suc# a distortion'
13. ;n+ivi+ual crates or cartons consi+ere+ packa*es alt)ou*) in a carrier1s containers
,% t#e individua& crates or cartons prepared ! t#e s#ipper and containing #is goods can rig#t&! e
considered Gpackages? standing ! t#emse&ves, t#e! do not sudden&! &ose t#at c#aracter upon eing s#owed in
a carrier?s container' T#ese containers are &ikened to detac#a&e stowage compartments o% t#e s#ip' T#e!
simp&! serve to divide t#e s#ip?s overa&& cargo stowage space into sma&&er, more servicea&e &oci' "#ippers?
packages are 9uite &itera&&! Gstowed? in t#e containers uti&i*ing stevedoring practices and materia&s ana&ogous
to t#ose emp&o!ed in traditiona& on oard stowage'
14. Hera#ex ;nternation vs. SS (an+o (FS)
,n Oerame3 ,nternationa& v' "'"' Tando, 1.00 7'M'$' 1/20 (B'D' Va'), rev?d on ot#er grounds, 4.4 F
8d .53 (5 $ir' 1.0.), anot#er district wit# man! maritime cases %o&&owed Judge 1eeks? reasoning in
Matsus#ita and simi&ar&! reAected t#e %unctiona& economics test' Judge Pe&&am #e&d t#at w#en ro&&s o%
po&!ester goods are packed into cardoard cartons w#ic# are t#en p&aced in containers, t#e cartons and not t#e
containers are t#e packages'
1%. S#it)*rey)oun+ vs. =CG Dury*enes (FS)
T#e case o% "mit#gre!#ound v' M-V Bur!genes %o&&owed t#e Mitsui test, #o&ding t#erein ;Bur!genes
concerned a s#ipment o% stereo e9uipment packaged ! t#e s#ipper into cartons w#ic# were t#en p&aced !
t#e s#ipper into a carrier=%urnis#ed container' T#e numer o% cartons was disc&osed to t#e carrier in t#e i&& o%
&ading' Bur!genes %o&&owed t#e Mitsui test and treated t#e cartons, not t#e container, as t#e $(6"7 packages'
@owever, Bur!genes indicated t#at a carrier cou&d &imit its &iai&it! to K422 per container i% t#e i&& o% &ading
%ai&ed to disc&ose t#e numer o% cartons or units wit#in t#e container, or i% t#e parties indicated, in c&ear and
unamiguous &anguage, an agreement to treat t#e container as t#e package'<
-". Bill o, la+in* +isclose+ contents o, containers6 =itsui an+ Dury*enes cases applie+
$onsidering t#at t#e 1i&& o% +ading c&ear&! disc&osed t#e contents o% t#e containers, t#e numer o%
cartons or units, as we&& as t#e nature o% t#e goods, and app&!ing t#e ru&ing in t#e Mitsui and Bur!genes cases
it is c&ear t#at t#e 18/ cartons, not t#e 8 containers s#ou&d e considered as t#e s#ipping unit suAect to t#e
K422 &imitation o% &iai&it!'
-1. @Say' (.o (-) Containers 8nlyA construe+6 8$scure .or+s or stipulations in contract
construe+ a*ainst party .)o cause+ o$scurity! especially in a contract o, a+)esion
,n &ig#t o% t#e stipu&ation in %ine print in t#e dorsa& side o% t#e 1i&& o% &ading (;LDse o% $ontainerM
F#ere t#e goods receipt o% w#ic# is acknow&edged on t#e %ace o% t#is 1i&& o% +ading are not a&read! packed
into containerLsM at t#e time o% receipt, t#e $arrier s#a&& e at &iert! to pack and carr! t#em in an! t!pe o%
containerLsM<), t#e use o% t#e estimate ;"a!: Two (8) $ontainers (n&!< in t#e 1i&& o% +ading, means t#at t#e
goods cou&d proa&! %it in 8 containers on&!' ,t cannot mean t#at t#e s#ipper #ad %urnis#ed t#e containers %or
i% so, ;Two (8) $ontainers< appearing as t#e %irst entr! wou&d #ave su%%iced and i% t#ere is an! amiguit! in
t#e 1i&& o% +ading, it is a cardina& princip&e in t#e construction o% contracts t#at t#e interpretation o% oscure
words or stipu&ations in a contract s#a&& not %avor t#e part! w#o caused t#e oscurit!' T#is app&ies wit# even
greater %orce in a contract o% ad#esion w#ere a contract is a&read! prepared and t#e ot#er part! mere&! ad#eres
to it, &ike t#e 1i&& o% +ading, w#ic# is drawn up ! t#e carrier'
--. 7o <enial o, 8pportunity to :resent <eposition o, ;ts Eitnesses (in GR %"// only)6 E)at +ue
process a$)ors
@erein, Bastern "#ipping was given %u&& opportunit! to present its evidence ut it %ai&ed to do so'
"ince a%ter > Eovemer 1.0/, to 80 7ugust 1.0., not to mention t#e time %rom 80 June 1.0/, w#en its
answer was prepared and %i&ed in $ourt, unti& 8> "eptemer 1.0/, w#en t#e pre=tria& con%erence was
conducted %or t#e &ast time, Bastern "#ipping #ad more t#an . mont#s to prepare its evidence' ,ts e&ated
notice to take deposition on written interrogatories o% its witnesses in Japan, served upon Deve&opment
,nsurance on 7ugust 84t#, Aust two da!s e%ore t#e #earing set %or 7ugust 80t#, knowing %u&&! we&& t#at it was
its undertaking on Ju&! 11t# t#at t#e deposition o% t#e witnesses wou&d e dispensed wit# i% ! ne3t time it
#ad not !et een otained, on&! proves t#e &ack o% merit o% Bastern "#ipping?s motion %or postponement, %or
w#ic# reason it deserves no s!mpat#! %rom t#e $ourt in t#at regard' Bastern "#ipping #as to&d t#e $ourt since
1> Feruar! 1.0., t#at it was going to take t#e deposition o% its witnesses in Japan' F#! did it take unti& 84
7ugust 1.0., or more t#an > mont#s, to prepare its written interrogatories' (n&! Bastern "#ipping itse&% is to
&ame %or its %ai&ure to adduce evidence in support o% its de%enses' T#us, Bastern "#ipping was a%%orded amp&e
time to present its side o% t#e case' ,t cannot comp&ain now t#at it was denied due process w#en t#e Tria&
$ourt rendered its Decision on t#e asis o% t#e evidence adduced' F#at due process a#ors is aso&ute &ack o%
opportunit! to e #eard'
-3. 5.ar+ o, 5ttorney1s &ees
$ourts eing vested wit# discretion in %i3ing t#e amount o% attorne!?s %ees, it is e&ieved t#at t#e
amount o% P4,222'22 wou&d e more reasona&e in 6: >.255' T#e award o% P4,222'22 in 6: 0150/ was
a%%irmed'
[//]
0ui :ai M Co. vs. <ollar Stea#s)ip Line (GR 3""1%! - =arc) 1%-%)
Bn 1anc, Jo#ns (J): 0 concur
&acts' Pui Pai T $o' (a &imited mercanti&e partners#ip) a&&eged t#at aout 18 7pri& 1.80, Mee @ing $#an o%
@ongkong s#ipped and de&ivered to Do&&ar "teams#ip (a %oreign corporation &icensed to do usiness in t#e
P#i&ippine ,s&ands and engaged in t#e operation o% ocean s#ips) in @ongkong on oard its s#ip President Ta%t,
goods, wares and merc#andise in good order and condition, consigned to Pui PaiC t#at Do&&ar "teams#op
received and accepted said merc#andise, %or w#ic# it issued t#e corresponding i&& o% &ading, and agreed to
de&iver it Pui Pai in Mani&a' Do&&ar "teams#ip %ai&ed and neg&ected to de&iver 8 cases o% t#e goodsC t#at Pui
Pai #as paid a&& %reig#t c#arges to Do&&ar "teams#ipC t#at it #as repeated&! demanded t#e de&iver! o% t#e
merc#andise, and t#at it #as never een de&iveredC t#at as s#own ! t#e records o% t#e Mani&a Termina&
$ompan! o% Mani&a, t#e two packages or cases &ost or missing were never &anded in Mani&a %rom t#e
President Ta%tC t#at t#roug# suc# &oss and %ai&ure to de&iver, Pui Pai #as een damaged in t#e sum o%
P11,035'14, w#ic# is t#e net invoice va&ue o% t#e goods, p&us %reig#t and pro%it, %or w#ic# demand #as een
made and pa!ment re%used' Pui Pai pra!s %or a corresponding Audgment, wit# interest %rom 7pri& 15,1.80,
and costs'
For answer, Do&&ar "teams#ip made a genera& and speci%ic denia&, and as a %irst specia& de%ense a&&eges t#at
aout 15 7pri& 1.80, in t#e $it! o% Mani&a, Do&&ar "teams#ip tendered to Pui Pai ;t#e si3 identica& cases
s#ipped ! Mee @ing $#an and covered ! t#e 1i&& o% +ading,< ut t#at Pui Pai accepted and took de&iver! o%
on&! 5, and re%used and re%uses to accept de&iver! o% t#e ot#er 8, and in its %ourt# specia& de%ense a&&eges t#at
at @ongkong on 18 7pri& 1.80, w#en t#e cases were roug#t aoard t#e President Ta%t, t#e! were measured
! t#e (%%icia& Measure?s (%%ice at @ongkong, w#ic# certi%ied t#at t#e 3 packages contained >/ cuic %eet,
and t#at t#e weig#t o% t#e 3 packages was ..> pounds on&!, and t#at t#e measurements o% t#e two cases o%
piece goods descried in t#e certi%icate, 3-> ! 3-4 ! 8-3, speci%ica&&! re%er to t#e identica& two cases now
c&aimed ! Pui Pai' Do&&ar "teams#ip p&eads 11 separate de%enses, t#e sustance o% w#ic# is t#at it tendered
to Pui Pai t#e identica& > cases w#ic# were p&aced on oard Do&&ar "teams#ip?s s#ip at @ongkong' 7s a resu&t
o% t#e tria& upon suc# issues, t#e &ower court rendered Audgment %or Do&&ar "teams#ip, %rom w#ic# Pui Pai
appea&ed'
T#e "upreme $ourt a%%irmed t#e Audgment o% t#e &ower court, wit# costs'
1. E)en lia$ility o, a carrier $e*ins
T#e &iai&it! o% t#e carrier s#a&& egin %rom t#e moment #e receives t#e merc#andise, in person or
t#roug# a person entrusted t#ereto in t#e p&ace indicated %or t#eir reception' (7rt' 344, $ode o% $ommerce')
-. Lia$ility (responsi$ility) o, a carrier
T#e carrier s#a&& e o&iged to de&iver t#e goods transported in t#e same condition in w#ic#,
according to t#e i&& o% &ading, t#e! were at t#e time o% t#eir receipt, wit#out an! detriment or impairment, and
s#ou&d #e not do so, #e s#a&& e o&iged to pa! t#e va&ue o% t#e goods not de&ivered at t#e point w#ere t#e!
s#ou&d #ave een and at t#e time t#e de&iver! s#ou&d #ave taken p&ace' (7rt' 3>3, $ode o% $ommerce)'
3. Dxceptions to lia$ility $y carrier
$onse9uent&! t#e &aw, proceeding on t#e mora& princip&e o% prudent prevention, cut o%% %rom t#e
carrier a&& temptation o% pecuniar! gain and made #im aso&ute&! &ia&e wit# t#e e3ception o% causes %or w#ic#
#e cou&d not e supposed to e responsi&e H name&! t#e act o% 6od or t#e pu&ic enem!' (5 :' $' +', 022')
/. E)en lia$ility o, a carrier en+s
T#e re&ation o% carrier endures %rom t#e s#ipment o% t#e goods unti& t#eir arriva& at t#eir destination,
and continues a%ter t#e arriva& o% t#e goods at t#eir destination unti& t#e! are read! to e de&ivered at t#e usua&
p&ace o% de&iver!, and t#e owner or consignee #as a reasona&e opportunit!, during t#e #ours w#en suc# goods
are usua&&! de&ivered t#ere, o% e3amining t#em su%%icient&! to Audge %rom t#eir outward appearance o% t#eir
identit!, and w#et#er t#e! are in proper condition, and to take t#em awa!' (5 :' $' +', 45/')
2. 5rticle 1"- 7CC
7rtic&e 1>28 o% t#e $ivi& $ode provides t#at ;$arriers are a&so &ia&e %or t#e &oss o% and damage to t#e
t#ings w#ic# t#e! receive, un&ess t#e! prove t#at t#e &oss or damage arose %rom a %ortuitous event or %orce
maAeure'<
. Boxes ten+ere+ to 0ui :ai
,t is conceded t#at si3 o3es or cases consigned to Pui Pai were de&ivered to Do&&ar "teams#ip in
@ongkong to e s#ipped to Mani&a' ,t is a&so conceded t#at at t#e time o% de&iver!, t#e o3es were measured
as to t#eir widt#, &engt# and dept#, and t#at t#e o3es w#ic# Do&&ar "teams#ip de&ivered and tendered to Pui
Pai are eac# e3act in t#eir respective measurements wit# t#ose w#ic# Do&&ar "teams#ip received on oard o%
its s#ip in @ongkong, and t#e tria& court %ound as a %act t#at t#e si3 o3es were origina&&! marked ;P' P',< and
t#at t#e marks on two o% t#em #ave een c#anged'
3. 0. :. #arkin*s c)an*e+ to R. B.6 5lteration evi+ent
T#e evidence is c&ear and convincing t#at t#e two identica& cases PP 3 and 5 were de&ivered %rom
#o&d . o% t#e s#ip on to pier 0 at Mani&a' T#ese two cases were o%%ered in evidence' (n eac#, t#e marks appear
on t#ree sides o% eac# caseC t#us t#ere are si3 separate and distinct marks on t#ese two e3#iits' T#e marks are
in green ink or paint' Fit#out t#e aid o% a magni%!ing g&ass ut ! ocu&ar inspection, it is per%ect&! c&ear and
indisputa&e t#at t#e si3 &etters P #ave een c#anged or a&tered to : and t#e &etters P to 1 and t#at t#e numera&
1 #as een p&aced in %ront o% t#e numera&s 3 and 5 so as to give t#em t#e appearance o% 13 and 15, ut it is to
e oserved t#at t#e numera& 1 is omitted %rom one o% t#e t#ree sides o% eac#' T#e c#anges or a&terations in t#e
&ettering and t#e addition o% t#e numera& 1 are ver! crude, to sa! t#e &east' T#e ink or paint used in making t#e
c#anges is not o% t#e same s#ade o% green as t#e origina& &etters and numera&s' Eo one can possi&! e
deceived ! t#e c#anges or a&terations and additions' T#e court is convinced t#at t#e origina& markings,
%ormer&! read PP, 3 and 5 and t#at t#e! were c#anged, a&tered and added to so as to now read :1 13 and 15,
e3cept, as previous&! oserved, t#at t#e numera& 1 is omitted on one side o% eac# o% said cases'
4. 7o port o, call $et.een Hon*kon* an+ =anila6 Car*o o, s)ip tallies .it) $ills o, la+in* issue+
,t is a matter o% common know&edge t#at t#ere is no port o% ca&& etween @ongkong and Mani&a, and it
appears %rom t#e records, w#ic# are con%irmed ! t#e testimon! o% t#e c#ecker at t#e time t#e s#ip was
un&oaded and t#at o% t#e Mani&a Termina& $ompan!, t#at t#e cargo o% t#e s#ip e3act&! ta&&ies wit# t#e i&&s o%
&ading w#ic# were issued ! Do&&ar "teams#ip, as to t#e numer o% pieces, o3es or cases in t#e cargo' T#at is
to sa!, t#at t#e numer o% pieces o% cargo on oard t#e s#ip, w#ic# were to e de&ivered at Mani&a, inc&uding
t#e two o3es in 9uestion, correspond e3act&! wit# t#e numer o% pieces or cargo %ound on t#e s#ip at t#e time
it was un&oaded in Mani&a' T#e evidence %or Pui Pai s#ows t#at t#e si3 o3es were p&aced in #o&d . o% t#e
s#ip in @ongkong, and t#at upon its arriva& in Mani&a, si3 o3es o% t#e same cuica& contents were taken out
o% t#at same #o&d' @ence, it must %o&&ow t#at, in t#e ver! nature o% t#ings, t#e contents o% two o% t#ose o3es
cou&d not e taken out and rep&aced wit# $#inese cigarette papers a%ter Do&&ar "teams#ip?s s#ip &e%t
@ongkong and w#i&e in transit to Mani&a, and t#at t#e s#ort c#ange artist must #ave appeared on t#e scene in
@ongkong'
[/2]! also [118]
Co#pania =ariti#a vs. ;nsurance Co. o, 7ort) 5#erica (GR L>14%2! 3" 8cto$er 1%/)
Bn 1anc, 1autista 7nge&o (J): 12 concur
&acts' "ometime in (ctoer, 1.48, Mac&eod and $ompan! o% t#e P#i&ippines contracted ! te&ep#one t#e
services o% t#e $ompa)ia Maritima, a s#ipping corporation, %or t#e s#ipment o% 8,>54 a&es o% #emp %rom t#e
%ormer?s "asa private pier at Davao $it! to Mani&a and %or t#eir suse9uent transs#ipment to 1oston,
Massac#usetts, D"7 on oard t#e "'"' "tee& Eavigator' T#is ora& contract was &ater on con%irmed ! a %orma&
and written ooking issued ! Mac&eod?s ranc# o%%ice in "asa and #and carried to $ompa)ia Maritima?s
ranc# o%%ice in Davao in comp&iance wit# w#ic# t#e &atter sent to Mac&eod?s private w#ar% +$T 1283 and
1284 on w#ic# t#e &oading o% t#e #emp was comp&eted on 8. (ctoer 1.48' T#ese two &ig#ters were manned
eac# ! a patron and an assistant patron' T#e patron o% ot# arges issued t#e corresponding carrier?s receipts
and t#at issued ! t#e patron o% 1arge 1284' T#erea%ter, t#e 8 &oaded arges &e%t Mac&eod?s w#ar% and
proceeded to and moored at t#e government?s margina& w#ar% in t#e same p&ace to await t#e arriva& o% t#e "'"'
1ow&ine Pnot e&onging to $ompa)ia Maritima on w#ic# t#e #emp was to e &oaded' During t#e nig#t o% 8.
(ctoer 1.48, or at t#e ear&! #ours o% (ctoer 32, +$T 1284 sank resu&ting in t#e damage or &oss o% 1,1>8
a&es o% #emp &oaded t#erein' (n 32 (ctoer 1.48, Mac&eod prompt&! noti%ied t#e carrier?s main o%%ice in
Mani&a and its ranc# in Davao advising it o% its &iai&it!' T#e damaged #emp was roug#t to (de&& P&antation
in Madaum, Davao, %or c&eaning, was#ing, reconditioning, and redr!ing' During t#e period %rom Eovemer 1=
14, 1.48, t#e carrier?s trucks and &ig#ters #au&ed %rom (de&& to Mac&eod at "asa a tota& o% 8,1.0'04 picu&s o%
t#e reconditioned #emp out o% t#e origina& cargo o% 1,1>8 a&es weig#ing 8,385 picu&s, w#ic# #ad a tota& o%
P11>,/34'22' 7%ter rec&assi%ication, t#e va&ue o% t#e reconditioned #emp was reduced to P/5,//0'8/, or a &oss
in va&ue o% P31,.50'08' 7dding to t#is &ast amount t#e sum o% P/,/>3'32 representing Mac&eod?s e3penses in
c#ecking, grading, rea&ing, and ot#er %ees %or was#ing, c&eaning and redr!ing in t#e amount o% P1.,>12'22,
t#e tota& &oss adds up to P>2,581'28' 7&& aaca s#ipments o% Mac&eod, inc&uding t#e 1,1>8 a&es &oaded on t#e
carrier?s +$T 1284, were insured wit# t#e ,nsurance $ompan! o% Eort# 7merica against a&& &osses and
damages' ,n due time, Mac&eod %i&ed a c&aim %or t#e &oss it su%%ered as aove stated wit# said insurance
compan!, and a%ter t#e same #ad een processed, t#e sum o% P>5,21/'44 was paid, w#ic# was noted down in a
document w#ic#, aside %rom eing a receipt o% t#e amount paid, was a surogation agreement etween
Mac&eod and t#e insurance compan! w#erein t#e %ormer assigned to t#e &atter its rig#ts over t#e insured and
damaged cargo'
@aving %ai&ed to recover %rom t#e carrier t#e sum o% P>2,581'281, w#ic# is t#e on&! amount supported !
receipts, t#e insurance compan! instituted t#e action on 8/ (ctoer 1.43' 7%ter tria&, t#e court a 9uo rendered
Audgment ordering t#e carrier to pa! t#e insurance compan! t#e sum o% P>2,581'28, wit# &ega& interest t#ereon
%rom t#e date o% t#e %i&ing o% t#e comp&aint unti& %u&&! paid, and t#e costs' T#is Audgment was a%%irmed ! t#e
$ourt o% 7ppea&s on 15 Decemer 1.>2' @ence, t#e petition %or review'
T#e "upreme $ourt a%%irmed t#e decision appea&ed %rom, wit# costs against $ompania Maritima'
1. Contract o, carria*e exists
@erein, Mac&eod and $ompan! contracted ! te&ep#one t#e services o% petitioner to s#ip t#e #emp in
9uestion %rom t#e %ormer?s private pier at "asa, Davao $it!, to Mani&a, to e suse9uent&! transs#ipped to
1oston, Massac#usetts, D'"'7', w#ic# ora& contract was &ater con%irmed ! a %orma& and written ooking
issued ! t#e s#ipper?s ranc# o%%ice, Davao $it!, in virtue o% w#ic# t#e carrier sent two o% its &ig#ters to
undertake t#e service' ,t a&so appears t#at t#e patrons o% said &ig#ters were emp&o!ees o% t#e carrier wit# due
aut#orit! to undertake t#e transportation and to sign t#e documents t#at ma! e necessar! t#ere%or so muc# so
t#at t#e patron o% +$T 1284 signed t#e receipt covering t#e cargo o% #emp &oaded t#erein'
-. ()e ,act t)at t)e carrier sent its li*)ters ,ree o, c)ar*e +oes not i#pair t)e contract o, carria*e
T#e %act t#at t#e carrier sent its &ig#ters %ree o% c#arge to take t#e #emp %rom Mac&eod?s w#ar% at "asa
preparator! to its &oading unto t#e s#ip 1ow&ine Pnot does not in an! wa! impair t#e contract o% carriage
a&read! entered into etween t#e $arrier and t#e s#ipper, %or t#at preparator! steps is ut a part and parce& o%
said contract o% carriage' T#e &ig#ters were mere&! emp&o!ed as t#e %irst step o% t#e vo!age, ut once t#at step
was taken and t#e #emp de&ivered to t#e carrier?s emp&o!ees, t#e rig#ts and o&igations o% t#e parties attac#ed
t#ere! suAecting t#em to t#e princip&es and usages o% t#e maritime &aw' ,n ot#er words, t#ere is a comp&ete
contract o% carriage t#e consummation o% w#ic# #as a&read! egun: t#e s#ipper de&ivering t#e cargo to t#e
carrier, and t#e &atter taking possession t#ereo% ! p&acing it on a &ig#ter manned ! its aut#ori*ed emp&o!ees,
under w#ic# Mac&eod ecame entit&ed to t#e privi&ege secured to #im ! &aw %or its sa%e transportation and
de&iver!, and t#e carrier to t#e %u&& pa!ment o% its %reig#t upon comp&etion o% t#e vo!age'
3. E)en contract o, carria*e $e*ins
T#e receipt o% goods ! t#e carrier #as een said to &ie at t#e %oundation o% t#e contract to carr! and
de&iver, and i% actua&&! no goods are received t#ere can e no contract' T#e &iai&it! and responsii&it! o% t#e
carrier under a contract %or t#e carriage o% goods commence on t#eir actua& de&iver! to, or receipt !, t#e
carrier or an aut#ori*ed agent and de&iver! to a &ig#ter in c#arge o% a vesse& %or s#ipment on t#e vesse&, w#ere
it is t#e custom to de&iver in t#at wa!, is a good de&iver! and inds t#e vesse& receiving t#e %reig#t, t#e &iai&it!
commencing at t#e time o% de&iver! to t#e &ig#ter and, simi&ar&!, w#ere t#ere is a contract to carr! goods %rom
one port to anot#er, and t#e! cannot e &oaded direct&! on t#e vesse&, and &ig#ters are sent ! t#e vesse& to
ring t#e goods to it, t#e &ig#ters are %or t#e time its sustitutes, so t#at t#e i&& o% &ading is app&ica&e to t#e
goods as soon as t#e! are p&aced on t#e &ig#ters'<
/. (est .)et)er relation o, s)ipper an+ carrier )a+ $een esta$lis)e+
T#e test as to w#et#er t#e re&ation o% s#ipper and carrier #ad een esta&is#ed is, #ad t#e contro& and
possession o% t#e cotton een comp&ete&! surrendered ! t#e s#ipper to t#e rai&road compan!S F#enever t#e
contro& and possession o% goods passes to t#e carrier and not#ing remains to e done ! t#e s#ipper, t#en it
can e said wit# certaint! t#at t#e re&ation o% s#ipper and carrier #as een esta&is#ed'
2. Contract o, a,,rei*)t#ent co##ence+ even i, t)e )e#p .as not actually loa+e+ on S.S. Bo.line
0not
T#e c&aim t#at t#ere can e no contract o% a%%reig#tment ecause t#e #emp was not actua&&! &oaded on
t#e s#ip t#at was to take it %rom Davao $it! to Mani&a is o% no moment, %or t#e de&iver! o% t#e #emp to t#e
carrier?s &ig#ter is in &ine wit# t#e contract' ,n %act, t#e receipt signed ! t#e patron o% t#e &ig#ter t#at carried
t#e #emp stated t#at #e was receiving t#e cargo ;in e#a&% o% "'"' 1ow&ine Pnot in good order and condition'
;
. Bill o, la+in* not in+ispensa$le to creation o, contract o, carria*e6 =artin on :)ilippine
Co##ercial La.s
T#e aut#orities are to t#e e%%ect t#at a i&& o% &ading is not indispensa&e %or t#e creation o% a contract
o% carriage' Martin (P#i&ippine $ommercia& +aws, Vo&' ,,, :evised Bdition, pp' 18=13) #as written t#at ;7s to
issuance o% a i&& o% &ading, a&t#oug# 7rtic&e, 342 o% t#e $ode o% $ommerce provides t#at Gt#e s#ipper as we&&
as t#e carrier o% merc#andise o% goods ma! mutua&&! demand t#at a i&& o% &ading e made,? sti&&, said i&& o%
&ading is not indispensa&e' G7s regards t#e %orm o% t#e contract o% carriage it can e said t#at provided t#at
t#ere is a meeting o% t#e minds and %rom suc# meeting arise rig#ts and o&igations, t#ere s#ou&d e no
&imitations as to %orm'? T#e i&& o% &ading is not essentia& to t#e contract, a&t#oug# it ma! ecome o&igator! !
reason o% t#e regu&ations o% rai&road companies, or as a condition imposed in t#e contract ! t#e agreement o%
t#e parties t#emse&ves' T#e i&& o% &ading is Auridica&&! a documentar! proo% o% t#e stipu&ations and conditions
agreed upon ! ot# parties' (De& Viso p' 315=314C :o&es vs' "antos, 55 ('6', 88>/)' ,n ot#er words, t#e
$ode does not demand, as necessar! re9uisite in t#e contract o% transportation, t#e de&iver! o% t#e i&& o%
&ading to t#e s#ipper, ut gives rig#t to ot# t#e carrier and t#e s#ipper to mutua&&! demand o% eac# ot#er t#e
de&iver! o% said i&&' ("p' "up' $t' Decision, Ma! >, 1/.4)'<
3. Bill o, la+in* not in+ispensa$le to creation o, contract o, carria*e6 13 C.B.S.! p. -44
T#e &iai&it! o% t#e carrier as common carrier egins wit# t#e actua& de&iver! o% t#e goods %or
transportation, and not mere&! wit# t#e %orma& e3ecution o% a receipt or i&& o% &adingC t#e issuance o% a i&& o%
&ading is not necessar! to comp&ete de&iver! and acceptance' Bven w#ere it is provided ! statute t#at &iai&it!
commences wit# t#e issuance o% t#e i&& o% &ading, actua& de&iver! and acceptance are su%%icient to ind t#e
carrier'
4. =is)ap +ue to lack o, a+e9uate precaution or #easures! not +ue to ,orce #a?eure
T#e mis#ap t#at caused t#e damage or &oss was due, not to %orce maAeure, ut to &ack o% ade9uate
precaution or measures taken ! t#e carrier to prevent t#e &oss' 7side %rom t#e %act t#at t#e i&&=%ated arge #ad
cracks on its ottom w#ic# admitted sea water in t#e same manner as rain entered ;t#ru tank man#o&es,<
(arge t#ere%ore was not seawort#!)C on t#e nig#t o% t#e nautica& accident t#ere was no storm, %&ood, or ot#er
natura& disaster or ca&amit!' T#e report o% marine surve!ors (:' J' de& Pan T $o', ,nc') attriutes t#e sinking o%
+$T 1284 to t#e non=watertig#t conditions o% various uo!anc! compartments'
%. E)at constitutes a stor#
7ccording to 1eau%ort?s wind sca&e, a storm #as wind ve&ocities o% %rom >5 to 04 mi&es per #ourC and
! P#i&ippine Feat#er 1ureau standards winds s#ou&d #ave a ve&ocit! o% %rom 44 to 05 mi&es per #our in order
to e c&assi%ied as a storm (Eort#ern 7ssurance $o', +td' vs' Visa!an "tevedore Transportation $o')' @erein,
winds o% 11 mi&es per #our, a&t#oug# stronger t#an t#e average 5'> mi&es per #our t#en prevai&ing in Davao on
8. (ctoer 1.48, cannot e c&assi%ied as storm'
1". ;nsurance co#pany su$ro*ate+ to ri*)t o, s)ipper6 Carrier cannot set up as a +e,ense any
+e,ect in t)e insurance policy as it .as not privy t)ereto
T#e insurance compan! can recover %rom t#e carrier as assignee o% t#e owner o% t#e cargo %or t#e
insurance amount it paid to t#e &atter under t#e insurance contract' "ince t#e $argo t#at was damaged was
insured wit# t#e insurance compan! and t#e &atter paid t#e amount represented ! t#e &oss, it is ut %air t#at it
e given t#e rig#t to recover %rom t#e part! responsi&e %or t#e &oss' T#e instant case, t#ere%ore, is not one
etween t#e insured and t#e insurer, ut one etween t#e s#ipper and t#e carrier, ecause t#e insurance
compan! mere&! stepped into t#e s#oes o% t#e s#ipper' 7nd since t#e s#ipper #as a direct cause o% action
against t#e carrier on account o% t#e damage o% t#e cargo, no va&id reason is seen w#! suc# action cannot e
asserted or avai&ed o% ! t#e insurance compan! as a surogee o% t#e s#ipper' Eor can t#e carrier set up as a
de%ense an! de%ect in t#e insurance po&ic! not on&! ecause it is not a priv! to it ut a&so ecause it cannot
avoid its &iai&it! to t#e s#ipper under t#e contract o% carriage w#ic# inds it to pa! an! &oss t#at ma! e
caused to t#e cargo invo&ved t#erein'
11. <esistance o, t)e carrier ,ro# pro+ucin* t)e $ooks o, accounts o, 8+ell :lantation i#plies an
a+#ission o, t)e correctness o, t)e state#ents o, accounts containe+ t)erein
T#e act o% $ompania Maritima in waiving its rig#t to #ave t#e ooks o% accounts o% (de&& P&antation
presented in $ourt is tantamount to an admission t#at t#e statements contained t#erein are correct and t#eir
veri%ication not necessar! ecause its main de%ense was t#at it is not &ia&e %or t#e &oss ecause t#ere was no
contract o% carriage etween it and t#e s#ipper and t#e &oss caused, i% an!, was due to a %ortuitous event'
@ence, under t#e carrier?s t#eor!, t#e correctness o% t#e account representing t#e &oss was not so materia& as
wou&d necessitate t#e presentation o% t#e ooks in 9uestion' 7t an! rate, even i% t#e ooks o% accounts were
not produced, t#e correctness o% t#e accounts cannot e disputed %or t#e same is supported ! t#e origina&
documents on w#ic# t#e entries in said ooks were ased w#ic# were presented ! t#e s#ipper as part o% its
evidence' T#ese documents a&one su%%icient&! esta&is# t#e award o% P>2,581'28 made in %avor o% respondent'
1-. ;nsurance co#pany )as ?uri+ical personality to ,ile suit
Fit# regard to t#e 9uestion concerning t#e persona&it! o% t#e insurance compan! to maintain t#e
action, t#e $ourt %inds t#e same o% no importance, %or t#e attorne! #imse&% o% t#e carrier admitted in open
court t#at it is a %oreign corporation doing usiness in t#e P#i&ippines wit# a persona&it! to %i&e t#e present
action'
[/] also [F a2ter 1/*]
Govern#ent vs. ;nc)austi (GR %23! 1/ &e$ruary 1%13)
First Division, Trent (J): 5 concur
&acts' (n 3 June 1.2., t#e 6overnment p&aced aoard ,nc#austi?s steamer Venus 422 arre&s o% cement
consigned to t#e district engineer o% t#e Province o% 7&a!, to e s#ipped to Taaco, 7&a!' T#e cement, w#en
p&aced aoard t#e steamer in Mani&a 1a!, was in good order and condition' (n arriva& o% t#e steamer at t#e
port o% Taaco, ,nc#austi, t#roug# its agents, un&oaded t#e 422 arre&s o% cement and received a receipt
t#ere%or %rom t#e consignee stating t#at t#e propert! #ad een received in good condition' "use9uent&!
t#ereto (t#e e3act time not a&&eged in t#e comp&aint) t#e consignee discovered t#at 58 arre&s #ad een roken
open and aout #a&% o% t#e cement in eac# arre& &ost, and it is a&&eged t#at t#is &oss was due to t#e care&ess
#and&ing on t#e part o% ,nc#austi?s agents' T#ere is no a&&egation in t#e comp&aint s#owing t#at eit#er t#e
6overnment or t#e consignee or an!one e&se representing t#em made an! comp&aint or demand on ,nc#austi
at an! time prior to t#e presentation o% t#e comp&aint, w#ic# was %i&ed on 1/ Feruar! 1.11, to e reimursed
%or t#e &oss o% t#e cement' T#e tria& court sustained ,nc#austi?s demurrer' @ence, t#e appea& ! t#e
6overnment'
T#e "upreme $ourt a%%irmed t#e order appea&ed %rom, wit# costs against t#e 6overnment'
7rtic&e 3>> o% t#e $ode o% $ommerce reads ;wit#in t#e twent!=%our #ours %o&&owing t#e receipt o% t#e
merc#andise a c&aim ma! e roug#t against t#e carrier on account o% damage or average %ound t#erein on
opening t#e packages, provided t#at t#e indications o% t#e damage or average giving rise to t#e c&aim cannot
e ascertained %rom t#e e3terior o% said packages, in w#ic# case said c&aim wou&d on&! e admitted on t#e
receipt o% t#e packages' 7%ter t#e periods mentioned #ave e&apsed, or a%ter t#e transportation c#arges #ave
een paid, no c&aim w#atsoever s#a&& e admitted against t#e carrier wit# regard to t#e condition in w#ic# t#e
goods transported were de&ivered'<
-. 5rticle %2- (-) o, t)e Co+e o, Co##erce
7rtic&e .48 (8) o% t#e $ode o% $ommerce reads ;t#e %o&&owing (actions) s#a&& prescrie a%ter one !ear:
333 (8) Gparagraph 1H T#e actions re&ating to t#e de&iver! o% t#e cargo in maritime or &and transportation or to
t#e indemnit! %or de&a!s and damages su%%ered ! t#e goods transported, t#e period o% t#e prescription to e
counted %rom t#e da! o% t#e de&iver! o% t#e cargo at t#e p&ace o% its destination, or %rom t#e da! on w#ic# it
s#ou&d #ave een de&ivered according to t#e conditions o% its transportation' Gparagraph 3H T#e actions %or
damages or de%au&ts cannot e roug#t i% at t#e time o% t#e de&iver! o% t#e respective s#ipments or wit#in t#e
twent!=%our #ours %o&&owing, w#en damages w#ic# do not appear on t#e e3terior o% t#e packages received are
in 9uestion, t#e proper protests or reservations s#ou&d not #ave een made'<
3. Section 3! 5ct 13%-
"ection >0 o% 7ct 10.8 reads ;F#en pu&ic %unds or propert! are s#ipped %rom one p&ace to anot#er
and t#e consignee w#et#er an agent o% t#e 6overnment or ot#erwise s#a&& accomp&is# t#e i&& o% &ading or
receipt t#ere%or wit#out notation t#ereon o% a s#ortage in or damage to t#e pu&ic propert! covered ! suc#
i&& o% &ading, suc# consignee s#a&& e #e&d %or t#e %u&& amount and va&ue o% suc# pu&ic propert! in de%au&t o%
competent evidence to t#e contrar! satis%actor! to t#e 7uditor, a district auditor, or ot#er committee appointed
under t#e provisions o% t#is 7ct: Provided, T#at evidence o% t#e opening or tampering wit# an! package o%
pu&ic propert! s#a&& ind t#e carrier %or an! s#ortage or damage t#at ma! appear t#erein, and w#en notation
is made upon t#e i&& o% &ading or receipt o% suc# evidence t#e urden o% proo% t#at t#e s#ortage or damage
occurred a%ter t#e s#ipment &e%t t#e carrier?s possession s#a&& e upon suc# carrier'<
/. &irst para*rap) o, clause - o, 5rticle %2- repeale+ $y Section /3 o, t)e Co+e o, Civil :roce+ure
"ection 53 o% t#e $ode o% $ivi& Procedure re&ates to t#e &imitation or prescription o% civi& actions
ot#er t#an %or t#e recover! o% rea& propert!' "uc# actions must e roug#t wit#in t#e periods t#erein set %ort#
a%ter t#e rig#t o% action accrues' T#e %irst paragrap# o% c&ause 8 o% artic&e .48 o% t#e $ode o% $ommerce
re&ates to t#e same matter as t#at covered ! section 53 o% 7ct 1.2, and ma! proper&! e said to #ave een
repea&ed ! said section 53'
2. 5rticle 3 an+ last para*rap) o, clause - o, 5rticle %2- not repeale+
7rtic&e 3>> and t#e &ast paragrap# o% c&ause 8 o% artic&e .48 o% t#e $ode o% $ommerce do not re&ate to
t#e prescription or &imitation o% actions' T#e! create conditions precedent to t#e accruing o% t#e rig#t o% action
against carriers %or damages caused to merc#andise, and #ave not een repea&ed ! section 53'
. ;, ri*)t action +epen+s upon a con+ition prece+ent! )e #ust alle*e an+ prove ,ul,ill#ent or
excuse ,or non,ul,ill#ent
,% t#e p&ainti%%?s rig#t o% action depends upon a condition precedent, #e must a&&ege and prove t#e
%u&%i&&ment o% t#e condition or a &ega& e3cuse %or its non%u&%i&&ment' 7nd i% #e omits suc# a&&egation #is
dec&aration, comp&aint, or petition wi&& e ad on demurrer' (. $!c', >.., and cases cited')
3. History o, Section 3! 5ct 13%-
"ection >0 %irst appeared as section 83 o% 7ct 814 under t#e #eading o% ;Transportation o% Propert!,<
t#e tit&e o% t#at 7ct eing ;7n 7ct esta&is#ing and regu&ating accountai&it! %or pu&ic propert! in t#e
P#i&ippine 7rc#ipe&ago'< T#e 7ct as a w#o&e re&ates so&e&! to t#e &iai&it! o% o%%icers o% t#e 6overnment !
reason o% t#e possession o% 6overnment %unds and ot#er propert!' T#is 7ct, inc&uding t#e section in 9uestion,
went t#roug# a series o% amendments unti& t#e section was %ina&&! inserted in its present %orm in t#e
7ccounting 7ct as section >0'
4. C)an*es #a+e $y Section 3! 5ct 13%-
"ection >0 #as made no c#ange w#atever in t#e e3isting &aw e3cept wit# respect to t#e &iai&it! o% t#e
consignee as an o%%icer or agent o% t#e 6overnment' 7 reading o% t#e section t#at t#e on&! part w#ic# can !
an! possii&it! e construed as a%%ecting t#e &iai&it! o% common carriers is t#at &iai&it! o% t#e consignee' T#e
&atter part o% t#is section makes t#e carrier &ia&e %or an! s#ortage in an! package o% pu&ic propert! or an!
damage t#ereto upon proo% o% t#e opening or tampering wit# suc# package, and w#en a notation is made upon
t#e i&& o% &ading or receipt o% suc# evidence, t#e urden o% proo% t#at t#e s#ortage or damage occurred a%ter
t#e s#ipment &e%t t#e carrier?s possession is upon t#e carrier'
4. Lia$ility o, carrier +ue to @openin*A o, packa*e or @ta#perin*A o, *oo+s $e,ore t)e passa*e o,
5ct 13%-
1e%ore t#e passage o% 7ct 10.8, evidence o% t#e ;opening< o% a package or ;tampering< wit# t#e
goods de&ivered to #im %or transportation made t#e carrier &ia&e %or t#e &oss, provided t#e re9uired notice was
given in time' 7nd w#en t#e %act t#at t#e packages in w#ic# goods #ave een received s#owed evidence o%
#aving een opened or tampered wit# t#e time o% de&iver!, and t#is %act was noted upon t#e i&& o% &ading, t#e
urden rested upon t#e carrier to s#ow t#at, a&t#oug# t#e package ma! #ave een roken at t#e time o%
de&iver!, t#e contents were intact'
%. Repetition o, a part o, t)e existin* la. cannot $e construe+ to repeal $y i#plication unrepeale+
parts o, t)e la.
T#e mere repetition in t#e 7ct or section o% a part o% t#e e3isting &aw on t#e suAect o% t#e &iai&it! o%
common carriers cannot e construed so as to #ave t#e e%%ect o% repea&ing ! imp&ication t#e unrepea&ed parts
o% t#at &aw in t#e asence o% a c&ear intention on t#e part o% t#e +egis&ature to e%%ect suc# repea&'
1". Bur+en o, proo, .)en t)ere is annotation o, receipt o, *oo+s in $a+ con+ition6 :rescription
T#e statement t#at an annotation o% t#e receipt o% goods in ad condition on t#e i&& o% &ading t#rows
t#e urden o% proo% on t#e carrier to s#ow t#at t#e! were in %act intact and in good condition at t#e time o%
de&iver! does invo&ve as a necessar! coro&&ar! t#e proposition t#at w#en t#e goods are received and receipted
%or as eing in good condition, t#at t#e s#ipper can ring an action against t#e carrier at an! time wit#in t#e
12 !ears a&&owed ! section 53 o% 7ct 1.2, wit#in w#ic# to sue on an o&igation arising %rom a contract in
writing and recover upon proo% t#at t#e goods, a&t#oug# receipted %or as eing in good condition, were rea&&!
received to t#e $ode o% $ommerce is to give t#e carrier an opportunit! to ascertain w#et#er t#e c&aim is a
we&&=%ounded one e%ore t#e goods &eave #is #ands wit# respect to damages w#ic# are oserva&e upon t#e
e3terior o% t#e goods or o% t#e packages in w#ic# t#e! are contained, and e%ore t#e goods #ave een
consumed or t#eir identit! destro!ed in cases in w#ic# it is a&&eged t#at t#e damage #as een discovered a%ter
t#e goods were received ! t#e consignee'
11. 5rticle 3 o, t)e Co+e o, Co##erce applica$le to #ariti#e transporation
7rtic&e 3>> o% t#e $ode o% $ommerce is app&ica&e to maritime transportation, as dec&ared in t#e case
o% $ordoa vs' Farner, 1arnes T $o' (1 P#i&' :ep', 0)' T#e court %inds no reason %or c#anging t#e doctrine
announced in t#at case'
[/3], also [185]
Sa#ar =inin* Co. vs. 7or+eutsc)er Lloy+ (GR L>-433! -3 8cto$er 1%4/)
"econd Division, $uevas (J): 5 concur, 1 concur in resu&t, 1 took no part
&acts' 7n importation was made ! "amar Mining $o' ,nc' o% 1 crate (ptima we&ded wedge wire sieves
t#roug# t#e M-" "c#waenstein, a vesse& owned ! Eordeutsc#er +&o!d, (represented in t#e P#i&ippines ! its
agent, $'F' "#arp T $o', ,nc'), w#ic# s#ipment is covered ! 1i&& o% +ading 1/ du&! issued to consignee
"amar Mining' Dpon arriva& o% t#e vesse& at t#e port o% Mani&a, t#e importation was un&oaded and de&ivered in
good order and condition to t#e onded ware#ouse o% 7M$O+' T#e goods were #owever never de&ivered to,
nor received !, t#e consignee at t#e port o% destination H Davao' F#en t#e &etters o% comp&aint sent to
Eordeutsc#er +&o!d %ai&ed to e&icit t#e desired response, "amar Mining %i&ed a %orma& c&aim %or P1,>.1'.3, t#e
e9uiva&ent o% K585'22 at t#e prevai&ing rate o% e3c#ange at t#at time, against t#e %ormer, ut neit#er paid'
"amar Mining %i&ed a suit to en%orce pa!ment' Eordeutsc#er +&o!d and $F "#arp T $o' roug#t in 7M$O+
as t#ird part! de%endant' T#e tria& court rendered Audgment in %avor o% "amar Mining, ordering Eordeutsc#er
+&o!d, et' a&' to pa! t#e amount o% P1,>.1'.3 p&us attorne!?s %ees and costs' @owever, t#e $ourt stated t#at
Eordeutsc#er +&o!d, et' a&' ma! recoup w#atever t#e! ma! pa! "amar Mining ! en%orcing t#e Audgment
against t#ird part! de%endant 7M$O+ w#ic# #ad ear&ier een dec&ared in de%au&t' Eordeutsc#er +&o!d and $F
"#arp T $o' appea&ed %rom said decision'
T#e "upreme $ourt reversed t#e appea&ed decision, and dismissed "amar Mining?s comp&aintC wit#out costs'
1. 7ature o, $ill o, la+in*
T#e nature o% t#e i&& o% &ading is t#at it operates ot# as a receipt %or t#e goodsC and more
important&!, as a contract to transport and de&iver t#e same as stipu&ated t#erein' 1eing a contract, it is t#e &aw
etween t#e parties t#ereto, w#o are ound ! its terms and conditions provided t#at t#ese are not contrar! to
&aw, mora&s, good customs, pu&ic order and pu&ic po&ic!'
-. Goo+s to $e transs)ippe+ at @port o, +isc)ar*e ,ro# s)ipA (=anila) to @port o, +isc)ar*e o,
*oo+sA (<avao)
1i&& o% +ading 1/ sets %ort# in page 8 t#ereo% t#at one (1) crate o% (ptima we&ded wedge wire sieves
was received ! t#e carrier E(:DBDT"$@B: ++(OD at t#e ;port o% &oading< w#ic# is 1remen, 6erman!,
w#i&e t#e %reig#t #ad een prepaid up to t#e port o% destination or t#e ;port o% disc#arge o% goods<, Davao, t#e
carrier undertook to transport t#e goods in its vesse&, M-" "$@F71BE"TB,E, on&! up to t#e ;port o%
disc#arge %rom s#ip< H Mani&a' T#erea%ter, t#e goods were to e transs#ipped ! t#e carrier to t#e port o%
destination or ;port o% disc#arge o% goods<' T#e stipu&ation is p&ain&! indicated on t#e %ace o% t#e i&& w#ic#
contains t#e %o&&owing p#rase printed e&ow t#e space provided %or t#e ;port o% disc#arge %rom s#ip<, t#us, ;i%
goods are to e transs#ipped at port o% disc#arge, s#ow destination under t#e co&umn %or Vdescription o%
contents'?<
3. Content o,A +escription o, contentsA in $ill o, la+in*
T#e %o&&owing words appeared t!pewritten under t#e co&umn %or ;description o% contents<: ;P(:T
(F D,"$@7:6B (F 6((D": D7V7( F:B,6@T P:BP7,D<
/. (ranss)ip +e,ine+
T#e word ;transs#ip< means ;to trans%er %or %urt#er transportation %rom one s#ip or conve!ance to
anot#er'<
2. Dxtent o, carrier1s responsi$ility or lia$ility in transs)ip#ent +elineate+ un+er Section 1
para*rap) 3 an+ Section 11 o, t)e Bill o, La+in*
T#e e3tent o% t#e carrier?s responsii&it! and-or &iai&it! in t#e transs#ipment o% t#e goods are spe&&ed
out and de&ineated under "ection 1, paragrap# 3 o% 1i&& o% +ading 1/, to wit ;T#e carrier s#a&& not e &ia&e in
an! capacit! w#atsoever %or an! de&a!, &oss or damage occurring e%ore t#e goods enter s#ip?s tack&e to e
&oaded or a%ter t#e goods &eave s#ip?s tack&e to e disc#arged, transs#ipped or %orwarded<C and in "ection 11
o% t#e same 1i&&, w#ic# provides t#at ;F#erever t#e carrier or master ma! deem it advisa&e or in an! case
w#ere t#e goods are p&aced at carrier?s disposa& at or consigned to a point w#ere t#e s#ip does not e3pect to
&oad or disc#arge, t#e carrier or master ma!, wit#out notice, %orward t#e w#o&e or an! part o% t#e goods e%ore
or a%ter &oading at t#e origina& port o% s#ipment, ' ' ' T#is carrier, in making arrangements %or an!
transs#ipping or %orwarding vesse&s or means o% transportation not operated ! t#is carrier s#a&& e considered
so&e&! t#e %orwarding agent o% t#e s#ipper and wit#out an! ot#er responsii&it! w#atsoever even t#oug# t#e
%reig#t %or t#e w#o&e transport #as een co&&ected ! #im' ' ' ' Pending or during %orwarding or transs#ipping
t#e carrier ma! store t#e goods as#ore or a%&oat so&e&! as agent o% t#e s#ipper and at risk and e3pense o% t#e
goods and t#e carrier s#a&& not e &ia&e %or detention nor responsi&e %or t#e acts, neg&ect, de&a! or %ai&ure to
act o% an!one to w#om t#e goods are entrusted or de&ivered %or storage, #and&ing or an! service incidenta&
t#ereto<
. Gali+ity o, stipulations exe#ptin* carrier ,ro# lia$ility ,or loss o, *oo+s not in its actual
custo+y6 :)oenix 5ssurance Co. vs. FS Lines
T#e va&idit! o% stipu&ations in i&&s o% &ading e3empting t#e carrier %rom &iai&it! %or &oss or damage to
t#e goods w#en t#e same are not in its actua& custod! #as een up#e&d ! t#e $ourt in P#oeni3 7ssurance $o'
+td' vs' Dnited "tates +ines, 88 "$:7 >05 (1.>/)' "aid case matc#es t#e present controvers! not on&! as to
t#e materia& %acts ut more important&!, as to t#e stipu&ations contained in t#e i&& o% &ading concerned' 7s i% to
under&ine t#eir awesome &ikeness, t#e goods in 9uestion in ot# cases were destined %or Davao, ut were
disc#arged %rom s#ip in Mani&a, in accordance wit# t#eir respective i&&s o% &ading'
3. 5pplica$le la.6 La. o, country o, +estination
(ransportation La.! -""/ ( 1-" )
T#e &iai&it! o% t#e common carrier %or t#e &oss, destruction or deterioration o% goods transported %rom a
%oreign countr! to t#e P#i&ippines is governed primari&! ! t#e Eew $ivi& $ode' ,n a&& matters not regu&ated
! said $ode, t#e rig#ts and o&igations o% common carriers s#a&& e governed ! t#e $ode o% $ommerce and
! specia& &aws'
4. 5rticle 133 7CC6 E)en responsi$ility o, co##on carrier lasts
7rtic&e 103> o% t#e $ivi& $ode provides t#at ;T#e e3traordinar! responsii&it! o% t#e common carrier
&asts %rom t#e time t#e goods are unconditiona&&! p&aced in t#e possession o%, and received ! t#e carrier %or
transportation unti& t#e same are de&ivered, actua&&! or constructive&!, ! t#e carrier to t#e consignee, or to t#e
person w#o #as a rig#t to receive t#em, wit#out preAudice to t#e provisions o% artic&e 103/'<
%. 5rticle 1334 7CC6 E)en lia$ility o, co##on carrier operative
7rtic&e 103/, re%erred to in 7rtic&e 103>, provides t#at ;T#e e3traordinar! &iai&it! o% t#e common
carrier continues to e operative even during t#e time t#e goods are stored in a ware#ouse o% t#e carrier at t#e
p&ace o% destination, unti& t#e consignee #as een advised o% t#e arriva& o% t#e goods and #as #ad reasona&e
opportunit! t#erea%ter to remove t#em or ot#erwise dispose o% t#em'<
1". 5rticle 1334 not applica$le
7rtic&e 103/ %inds no app&icai&it! to t#e present case, as it contemp&ates a situation w#ere t#e goods
#ad a&read! reac#ed t#eir p&ace o% destination and are stored in t#e ware#ouse o% t#e carrier' T#e suAect goods
were sti&& awaiting transs#ipment to t#eir port o% destination, and were stored in t#e ware#ouse o% a t#ird part!
w#en &ast seen and-or #eard o%'
11. 5rticle 133 applica$le
7rtic&e 103> is app&ica&e to t#e present case' Dnder said artic&e, t#e carrier ma! e re&ieved o% t#e
responsii&it! %or &oss or damage to t#e goods upon actua& or constructive de&iver! o% t#e same ! t#e carrier
to t#e consignee, or to t#e person w#o #as a rig#t to receive t#em' ,n sa&es, actua& de&iver! #as een de%ined as
t#e ceding o% corporea& possession ! t#e se&&er, and t#e actua& appre#ension o% corporea& possession ! t#e
u!er or ! some person aut#ori*ed ! #im to receive t#e goods as #is representative %or t#e purpose o%
custod! or disposa&' 1! t#e same token, t#ere is actua& de&iver! in contracts %or t#e transport o% goods w#en
possession #as een turned over to t#e consignee or to #is du&! aut#ori*ed agent and a reasona&e time is
given #im to remove t#e goods' @erein, t#e court a 9uo %ound t#at t#ere was actua& de&iver! to t#e consignee
t#roug# its du&! aut#ori*ed agent, t#e carrier'
1-. Relations)ip $et.een Sa#ar =inin* an+ t)e 7or+eutsc)er Lloy+ an+ S)arp as to t)e
transactions involvin* transport o, *oo+s an+ transs)ip#ent o, t)e sa#e
Two undertakings appeared emodied and-or provided %or in t#e 1i&& o% +ading' T#e %irst is F(: T@B
T:7E"P(:T (F 6((D" %rom 1remen, 6erman! to Mani&a' T#e second, T@B T:7E""@,PMBET (F
T@B "7MB 6((D" %rom Mani&a to Davao, wit# appe&&ant acting as agent o% t#e consignee' 7t t#e #iatus
etween t#ese two undertakings o% Eordeutsc#er +&o!d w#ic# is t#e moment w#en t#e suAect goods are
disc#arged in Mani&a, its persona&it! c#anges %rom t#at o% carrier to t#at o% agent o% t#e consignee' T#us, t#e
c#aracter o% t#e Eordeutsc#er +&o!d?s possession a&so c#anges, %rom possession in its own name as carrier,
into possession in t#e name o% consignee as t#e &atter?s agent' "uc# eing t#e case, t#ere was, in e%%ect, actua&
de&iver! o% t#e goods %rom Eordeutsc#er +&o!d as carrier to itse&% as agent o% t#e consignee' Dpon suc#
de&iver!, Eordeutsc#er +&o!d, as erstw#i&e carrier, ceases to e responsi&e %or an! &oss or damage t#at ma!
e%a&& t#e goods %rom t#at point onwards'
13. 5*ent not *uilty o, ne*li*ence! +eceit or ,rau+! cannot $e )el+ responsi$le ,or t)e ,ailure o, t)e
principal to acco#plis) t)e o$?ect o, t)e a*ency
Bven as agent o% t#e consignee, Eordeutsc#er +&o!d cannot e made answera&e %or t#e va&ue o% t#e
missing goods' ,t is true t#at t#e transs#ipment o% t#e goods, w#ic# was t#e oAect o% t#e agenc!, was not %u&&!
(ransportation La.! -""/ ( 1-1 )
per%ormed' @owever, Eordeutsc#er +&o!d #ad commenced said per%ormance, t#e comp&etion o% w#ic# was
aorted ! circumstances e!ond its contro&' 7n agent w#o carries out t#e orders and instructions o% t#e
principa& wit#out eing gui&t! o% neg&igence, deceit or %raud, cannot e #e&d responsi&e %or t#e %ai&ure o% t#e
principa& to accomp&is# t#e oAect o% t#e agenc!'
1/. 5rticle 144/ 7CC
7rtic&e 1//5 o% t#e $ivi& $ode provides t#at ;T#e agent is ound ! #is acceptance to carr! out t#e
agenc!, and is &ia&e %or t#e damages w#ic#, t#roug# #is non=per%ormance, t#e principa& ma! su%%er'<
12. 5rticle 144% 7CC
7rtic&e 1//. o% t#e $ivi& $ode provides t#at ;T#e agent s#a&& e &ia&e %or damages i%, t#ere eing a
con%&ict etween #is interests and t#ose o% t#e principa&, #e s#ou&d pre%er #is own'<
1. 5rticle 14%- 7CC
7rtic&e 1/.8 o% t#e $ivi& $ode provides t#at ;T#e agent ma! appoint a sustitute i% t#e principa& #as
not pro#iited #im %rom doing soC ut #e s#a&& e responsi&e %or t#e acts o% t#e sustitute: (1) F#en #e was
not given t#e power to appoint oneC (8) F#en #e was given suc# power ut wit#out designating t#e person
and t#e person appointed was notorious&! incompetent or inso&vent'<
13. 5rticle 1%"% 7CC
7rtic&e 1.2. o% t#e $ivi& $ode provides t#at ;T#e agent is responsi&e not on&! %or %raud, ut a&so %or
neg&igence w#ic# s#a&& e Audged wit# more or &ess rigor ! t#e courts, according to w#et#er t#e agenc! was
or was not %or a compensation'<
14. <isc)ar*e o, *oo+s in =anila an+ +elivery o, t)e sa#e to t)e $on+e+ .are)ouse in ,ull accor+
to stipulations in $ill o, la+in*6 Carrier not lia$le ,or loss o, *oo+s
,n disc#arging t#e goods %rom t#e s#ip at t#e port o% Mani&a, and de&ivering t#e same into t#e custod!
o% 7M$O+, t#e onded ware#ouse, t#e carriers were acting in %u&& accord wit# t#e contractua& stipu&ations
contained in 1i&& o% +ading 1/' T#e de&iver! o% t#e goods to 7M$O+ was part o% t#e carriers? dut! to
transs#ip t#e goods %rom Mani&a to t#eir port o% destination H Davao' T#e records %ai& to revea& proo% o%
neg&igence, deceit or %raud committed ! Eordeutsc#er +&o!d or ! its representative in t#e P#i&ippines'
Eeit#er is t#ere an! s#owing o% notorious incompetence or inso&venc! on t#e part o% 7M$O+ w#ic# acted as
appe&&ant?s sustitute in storing t#e goods awaiting transs#ipment' T#e actions o% t#e carrier and o% its
representative in t#e P#i&ippines eing in %u&& %ait# wit# t#e &aw%u& stipu&ations o% 1i&& o% +ading 1/ and in
con%ormit! wit# t#e provisions o% t#e Eew $ivi& $ode on common carriers, agenc! and contracts, t#e! incur
no &iai&it! %or t#e &oss o% t#e goods in 9uestion'
[/4]
=aca# vs. C5 (GR 1-22-/! -2 5u*ust 1%%%)
"econd Division, 1e&&osi&&o (J): 3 concur
&acts' (n 5 7pri& 1./., 1enito Macam, doing usiness under t#e name and st!&e 1en=Mac Bnterprises,
s#ipped on oard t#e vesse& Een Jiang, owned and operated ! $#ina (cean "#ipping $o', t#roug# &oca&
agent Fa&&em P#i&ippines "#ipping, ,nc' 3,422 o3es o% waterme&ons va&ued at D"K4,.42'22 covered ! 1i&&
o% +ading @P6 ..218 and e3ported t#roug# +etter o% $redit @P 1231-32 issued ! Eationa& 1ank o%
Pakistan, @ongkong and 1,>11 o3es o% %res# mangoes wit# a va&ue o% D"K15,803'5> covered ! 1i&& o%
+ading @P6 ..213 and e3ported t#roug# +etter o% $redit @P 1238-32 a&so issued ! Pakistan 1ank' T#e
1i&&s o% +ading contained t#e %o&&owing pertinent provision: ;(ne o% t#e 1i&&s o% +ading must e surrendered
du&! endorsed in e3c#ange %or t#e goods or de&iver! order'< T#e s#ipment was ound %or @ongkong wit#
Pakistan 1ank as consignee and 6reat Prospect $ompan! (6P$) o% Pow&oon, @ongkong as noti%! part!' (n
(ransportation La.! -""/ ( 1-- )
> 7pri& 1./., per &etter o% credit re9uirement, copies o% t#e i&&s o% &ading and commercia& invoices were
sumitted to Macam?s depositor! ank, $onso&idated 1anking $orporation ("o&id1ank), w#ic# paid Macam
in advance t#e tota& va&ue o% t#e s#ipment o% D"K82,883'5>' Dpon arriva& in @ongkong, t#e s#ipment was
de&ivered ! Fa&&em direct&! to 6P$, not to Pakistan 1ank, and wit#out t#e re9uired i&& o% &ading #aving
een surrendered' "use9uent&!, 6P$ %ai&ed to pa! Pakistan 1ank suc# t#at t#e &atter, sti&& in possession o% t#e
origina& i&&s o% &ading, re%used to pa! Macam t#roug# "o&id1ank' "ince "o&id1ank a&read! pre=paid Macam
t#e va&ue o% t#e s#ipment, it demanded pa!ment %rom respondent Fa&&em t#roug# 4 &etters ut was re%used'
Macam was t#us a&&eged&! constrained to return t#e amount invo&ved to "o&id1ank, t#en demanded pa!ment
%rom Fa&&em in writing ut to no avai&'
(n 84 "eptemer 1..1, Macam soug#t co&&ection o% t#e va&ue o% t#e s#ipment o% D"K82,883'5> or its
e9uiva&ent o% P45>,233'58 %rom $#ina (cean "#ipping and-or Fa&&em e%ore t#e :T$ o% Mani&a, ased on
de&iver! o% t#e s#ipment to 6P$ wit#out presentation o% t#e i&&s o% &ading and ank guarantee' (n 15 Ma!
1..3, t#e tria& court ordered $#ina (cean "#ipping and Fa&&em to pa!, Aoint&! and severa&&!, (1) P45>,233'58
p&us &ega& interest %rom > 7pri& 1./. unti& %u&& pa!mentC (8) P12,222'22 as attorne!?s %eesC and, (3) t#e costs'
T#e counterc&aims were dismissed %or &ack o% merit'
T#e $ourt o% 7ppea&s appreciated t#e evidence in a di%%erent manner' T#us, on 13 Marc# 1..>, t#e appe&&ate
court set aside t#e decision o% t#e tria& court and dismissed t#e comp&aint toget#er wit# t#e counterc&aims' (n
4 Ju&! 1..> reconsideration was denied' @ence, t#e petition %or review'
T#e "upreme $ourt denied t#e petitionC and a%%irmed t#e decision o% respondent $ourt o% 7ppea&s o% 13
Marc# 1..>, as we&& as its reso&ution o% 4 Ju&! 1..> den!ing reconsideration'
1. Content o, telex o, 2 5pril 1%4%
T#e te&e3 dated 4 7pri& 1./. conve!ing Macam?s re9uest read ;7" PB: "@P:?" :BNDB"T
P,ED+O 7::7E6B DB+,VB:O (F 7-M "@,PT T( :B"PB$T,VB $EBB" F,T@(DT P:B"BET7T,(E
(F (1-+ 8 and ank guarantee since %or prepaid s#ip o%rt c#arges a&read! %u&&! paid our end'<
-. Dxplanation ,or t)e +elivery .it)out presentation o, $ills o, la+in* an+ $ank *uarantee
T#e s#ipment was de&ivered to 6P$ wit#out presentation o% t#e i&&s o% &ading and ank guarantee per
re9uest o% Macam #imse&% ecause t#e s#ipment consisted o% peris#a&e goods' ,t is a standard maritime
practice, w#en immediate de&iver! is o% t#e essence, %or t#e s#ipper to re9uest or instruct t#e carrier to de&iver
t#e goods to t#e u!er upon arriva& at t#e port o% destination wit#out re9uiring presentation o% t#e i&& o%
&ading as t#at usua&&! takes time'
3. 5lle*ation o, co#plaint +oes not +eal .it) #is+elivery o, car*oes
T#e sumission o% Macam t#at ;t#e %act t#at t#e s#ipment was not de&ivered to t#e consignee as
stated in t#e 1i&& o% +ading or to a part! designated or named ! t#e consignee constitutes a misde&iver!
t#ereo%< is a deviation %rom #is cause o% action e%ore t#e tria& court' ,t is c&ear %rom t#e a&&egation in #is
comp&aint t#at it does not dea& wit# misde&iver! o% t#e cargoes ut o% de&iver! to 6P$ wit#out t#e re9uired
i&&s o% &ading and ank guarantee, i'e' ;(>) T#e goods arrived in @ongkong and were re&eased ! t#e
de%endant Fa&&em direct&! to t#e u!er-noti%! part!, 6reat Prospect $ompan! and not to t#e consignee, t#e
Eationa& 1ank o% Pakistan, @ongkong, wit#out t#e re9uired i&&s o% &ading and ank guarantee %or t#e re&ease
o% t#e s#ipment issued ! t#e consignee o% t#e goods'<
/. =is+elivery never an issue .)en =aca# .rote Ealle# ,or t)e pay#ent o, t)e value o, t)e
car*oes
@erein, w#en Macam wrote Fa&&em demanding pa!ment o% t#e va&ue o% t#e cargoes, misde&iver! o%
t#e cargoes did not come into t#e picture' T#e &etter, in part, states ;Fe are writing !ou on e#a&% o% our c&ient,
1en=Mac Bnterprises w#o in%ormed us t#at 1i&&s o% +ading Eo' ..218 and ..213 wit# a tota& va&ue o%
D"K82,883'5> were re&eased to 6reat Prospect, @ongkong wit#out t#e necessar! ank guarantee' Fe were
%urt#er in%ormed t#at t#e consignee o% t#e goods, Eationa& 1ank o% Pakistan, @ongkong, did not re&ease or
endorse t#e origina& i&&s o% &ading' 7s a resu&t t#ereo%, neit#er t#e consignee, Eationa& 1ank o% Pakistan,
@ongkong, nor t#e importer, 6reat Prospect $ompan!, @ongkong, paid our c&ient %or t#e goods'<
2. 5rticle 133 7CC
7rtic&e 103> o% t#e $ivi& $ode provides t#at ;T#e e3traordinar! responsii&it! o% t#e common carriers
&asts %rom t#e time t#e goods are unconditiona&&! p&aced in t#e possession o%, and received ! t#e carrier %or
transportation unti& t#e same are de&ivered, actua&&! or constructive&!, ! t#e carrier to t#e consignee, or to t#e
person w#o #as a rig#t to receive t#em, wit#out preAudice to t#e provisions o% artic&e 103/'<
. E)en contract o, carria*e en+s6 <elivery to party ot)er t)an actual consi*nee
T#e e3traordinar! responsii&it! o% t#e common carriers &asts unti& actua& or constructive de&iver! o%
t#e cargoes to t#e consignee or to t#e person w#o #as a rig#t to receive t#em' @erein, Pakistan 1ank was
indicated in t#e i&&s o% &ading as consignee w#ereas 6P$ was t#e noti%! part!' @owever, in t#e e3port
invoices 6P$ was c&ear&! named as u!er-importer' T#e de&iver! o% t#e cargoes to 6P$ as u!er-importer
w#ic#, con%orma&! wit# 7rtic&e 103> #ad, ot#er t#an t#e consignee, t#e rig#t to receive t#em was proper'
3. D,,ect o, tele*rap)ic trans,ers as to $ank *uarantee
T#e te&e3 o% 4 7pri& 1./. instructed de&iver! o% various s#ipments to t#e respective consignees
wit#out need o% presenting t#e i&& o% &ading and ank guarantee per t#e respective s#ipper?s re9uest since ;%or
prepaid s#ipt o%rt c#arges a&read! %u&&! paid'< Macam was named t#erein as s#ipper and 6P$ as consignee
wit# respect to 1i&& o% +ading @P6 ..218 and @P6 ..213' ,n transactions covered ! a &etter o% credit, ank
guarantee is norma&&! re9uired ! t#e s#ipping &ines prior to re&easing t#e goods' 1ut %or u!ers using
te&egrap#ic trans%ers, Macam dispenses wit# t#e ank guarantee ecause t#e goods are a&read! %u&&! paid'
4. :rior con+uct $et.een =aca# an+ G:C as to peris)a$le *oo+6 Bill o, La+in* not presente+
Macam #as een transacting wit# 6P$ as u!er-importer %or around 8 or 3 !ears a&read!' F#en
mangoes and waterme&ons are in season, #is s#ipment to 6P$ using t#e %aci&ities o% Fa&&em is twice or t#rice
a week' T#e goods are re&eased to 6P$' ,t #as een t#e practice o% Macam to re9uest t#e s#ipping &ines to
immediate&! re&ease peris#a&e cargoes suc# as waterme&ons and %res# mangoes t#roug# te&ep#one ca&&s !
#imse&% or #is ;peop&e'< ,n #is severa& !ears o% usiness re&ations#ip wit# 6P$ and Fa&&em, t#ere was not a
sing&e instance w#en t#e i&& o% &ading was %irst presented e%ore t#e re&ease o% t#e cargoes'
%. 8n account o, peris)a$le *oo+s as car*oes an+ prepay#ent $y $ank! =aca# re9ueste+ release
o, *oo+s
7gainst Macam?s c&aim o% ;not rememering< #aving made a re9uest %or de&iver! o% suAect cargoes
to 6P$ wit#out presentation o% t#e i&&s o% &ading and ank guarantee as re%&ected in t#e te&e3 o% 4 7pri& 1./.
are damaging disc&osures in #is testimon!' @e dec&ared t#at it was #is practice to ask t#e s#ipping &ines to
immediate&! re&ease s#ipment o% peris#a&e goods t#roug# te&ep#one ca&&s ! #imse&% or #is ;peop&e'< @e no
&onger re9uired presentation o% a i&& o% &ading nor o% a ank guarantee as a condition to re&easing t#e goods in
case #e was a&read! %u&&! paid' T#us, taking into account t#at suAect s#ipment consisted o% peris#a&e goods
and "o&id1ank pre=paid t#e %u&& amount o% t#e va&ue t#ereo%, it is not #ard to e&ieve t#e c&aim o% Fa&&em t#at
Macam indeed re9uested t#e re&ease o% t#e goods to 6P$ wit#out presentation o% t#e i&&s o% &ading and ank
guarantee'
1". G:C! not :akistan Bank! is t)e consi*nee re,erre+ in telex
T#e instruction in t#e te&e3 o% 4 7pri& 1./. was ;to de&iver t#e s#ipment to respective consignees'<
T#e origina&s o% t#e 8 suAect 1i&&s o% +ading are sti&& in t#e possession o% t#e Pakistani 1ank' $on%orma&!, to
imp&ement t#e said te&e3 instruction, t#e de&iver! o% t#e s#ipment must e to 6P$, t#e noti%! part! or rea&
importer-u!er o% t#e goods and not t#e Pakistani 1ank since t#e &atter can ver! we&& present t#e origina& 1i&&s
(ransportation La.! -""/ ( 1-/ )
o% +ading in its possession' +ikewise, i% it were t#e Pakistani 1ank to w#om t#e cargoes were to e strict&!
de&ivered, it wi&& no &onger e proper to re9uire a ank guarantee as a sustitute %or t#e 1i&& o% +ading' To
construe ot#erwise wi&& render meaning&ess t#e te&e3 instruction' 7%ter a&&, t#e cargoes consist o% peris#a&e
%res# %ruits and immediate de&iver! t#ereo% to t#e u!er-importer is essentia&&! a %actor to reckon wit#'
1esides, 6P$ is &isted as one among t#e severa& consignees in t#e te&e3 and t#e instruction in t#e te&e3 was to
arrange de&iver! o% 7-M s#ipment (not an! part!) to respective consignees wit#out presentation o% (1-+ and
ank guarantee'
11. Return o, #oney to $ank #ere acco##o+ation o, Soli+Bank $y =aca#
@erein, Macam %ai&ed to sustantiate #is c&aim t#at #e returned to "o&id1ank t#e %u&& amount o% t#e
va&ue o% t#e cargoes' ,t is not %ar=%etc#ed to entertain t#e notion t#at #e mere&! accommodated "o&id1ank in
order to recover t#e cost o% t#e s#ipped cargoes %rom Fa&&em' "o&id1ank initia&&! demanded pa!ment %rom
respondents t#roug# 4 &etters' "o&id1ank must #ave rea&i*ed t#e asence o% privit! o% contract etween itse&%
and Fa&&em' T#at is w#! Macam convenient&! took t#e cudge&s %or t#e ank'
[/%]
Salu+o vs. C5 (GR %223! -3 =arc) 1%%-)
&acts' 7%ter t#e deat# o% $rispina 6a&do "a&udo, mot#er o% 7niceto 6' "a&udo Jr', Maria "a&vacion "a&udo,
+eopo&do 6' "a&udo, and "aturnino 6' "a&udo, in $#icago, ,&&inois, on 83 (ctoer 1.0>, Pomierski and "on
Funera& @ome o% $#icago, made t#e necessar! preparations and arrangements %or t#e s#ipment o% t#e remains
%rom $#icago to t#e P#i&ippines' T#e %unera& #ome #ad t#e remains ema&med and secured a permit %or t#e
disposition o% dead #uman od! on 84 (ctoer 1.0>' P#i&ippine Vice $onsu& in $#icago, ,&&inois, 1ienvenido
M' +&aneta, at 3:22 p'm' on 8> (ctoer 1.0> at t#e Pomierski T "on Funera& @ome, sea&ed t#e s#ipping case
containing a #ermetica&&! sea&ed casket t#at is airtig#t and waterproo% w#erein was contained t#e remains o%
$rispina 6a&do "a&udo' (n t#e same date, 8> (ctoer 1.0>, Pomierski roug#t t#e remains to $'M'7'"'
($ontinenta& Mortuar! 7ir "ervices) at t#e airport ($#icago) w#ic# made t#e necessar! arrangements suc# as
%&ig#ts, trans%ers, etc'C $'M'7'"' is a nationa& service used ! undertakers t#roug#out t#e nation (D'"'7'), t#e!
%urnis# t#e air pouc# w#ic# t#e casket is enc&osed in, and t#e! see t#at t#e remains are taken to t#e proper air
%reig#t termina&' $'M'7'"' ooked t#e s#ipment wit# P7+ t#ru t#e carrier?s agent 7ir $are ,nternationa&, wit#
Pomierski F'@' as t#e s#ipper and Mario (Maria) "a&udo as t#e consignee' P7+ 7irwa! 1i&& 20.=211/2545
(rdinar! was issued w#erein t#e re9uested routing was %rom $#icago to "an Francisco on oard TF7 F&ig#t
131 o% 80 (ctoer 1.0>, and %rom "an Francisco to Mani&a on oard P7+ F&ig#t 120 o% t#e same date, and
%rom Mani&a to $eu on oard P7+ F&ig#t 15. o% 8. (ctoer 1.0>' ,n t#e meantime, Maria "a&vacion "a&udo
and "aturnino "a&udo, t#ru a trave& agent, were ooked wit# Dnited 7ir&ines %rom $#icago to $a&i%ornia, and
wit# P7+ %rom $a&i%ornia to Mani&a' "#e t#en went to t#e %unera& director o% Pomierski Funera& @ome w#o
#ad #er mot#er?s remains and s#e to&d t#e director t#at t#e! were ooked wit# Dnited 7ir&ines' 1ut t#e
director to&d #er t#at t#e remains were ooked wit# TF7 %&ig#t to $a&i%ornia' T#is upset #er, and s#e and #er
rot#er #ad to c#ange reservations %rom D7 to t#e TF7 %&ig#t a%ter s#e con%irmed ! p#one t#at #er mot#er?s
remains wou&d e on t#at TF7 %&ig#t' T#e! went to t#e airport and watc#ed %rom t#e &ook=out area' "#e saw
no od! eing roug#t' "o, s#e went to t#e TF7 counter again, and s#e was to&d t#ere was no od! on t#at
%&ig#t' :e&uctant&!, t#e! took t#e TF7 %&ig#t upon assurance o% #er cousin, 7ni 1antug, t#at #e wou&d &ook
into t#e matter and in%orm #er aout it on t#e p&ane or #ave it radioed to #er' 1ut no con%irmation %rom #er
cousin reac#ed #er t#at #er mot#er was on t#e Fest $oast' Dpon arriva& at "an Francisco at aout 4:22 p'm',
s#e went to t#e TF7 counter t#ere to in9uire aout #er mot#er?s remains' "#e was to&d t#e! did not know
an!t#ing aout it' "#e t#en ca&&ed Pomierski t#at #er mot#er?s remains were not at t#e Fest $oast termina&,
and Pomierski immediate&! ca&&ed $'M'7'"', w#ic# in a matter o% 12 minutes in%ormed #im t#at t#e remains
were on a p&ace to Me3ico $it!, t#at t#ere were two odies at t#e termina&, and some#ow t#e! were switc#edC
#e re&a!ed t#is in%ormation to Miss "a&udo in $a&i%orniaC &ater $'M'7'"' ca&&ed and to&d #im t#e! were
sending t#e remains ack to $a&i%ornia via Te3as' T#e %o&&owing da!, 8/ (ctoer 1.0>, t#e s#ipment or
remains o% $rispina "a&udo arrived in "an Francisco %rom Me3ico on oard 7merican 7ir&ines' T#is s#ipment
was trans%erred to or received ! P7+ at 0:54 p'm' T#is casket earing t#e remains o% $rispina "a&udo, w#ic#
was mistaken&! sent to Me3ico and was opened (t#ere), was resea&ed ! $rispin F' Padagas %or s#ipment to
t#e P#i&ippines' T#e s#ipment was immediate&! &oaded on P7+ %&ig#t %or Mani&a t#at same evening and
arrived in Mani&a on 32 (ctoer 1.0>, a da! a%ter its e3pected arriva& on 8. (ctoer 1.0>' ,n a &etter dated 14
Decemer 1.0>, t#e counse& o% t#e "a&udos in%ormed Trans For&d 7ir&ines (TF7) o% t#e miss#ipment and
eventua& de&a! in t#e de&iver! o% t#e cargo containing t#e remains o% t#e &ate $rispina "a&udo, and o% t#e
discourtes! o% its emp&o!ees to Maria "a&vacion "a&udo and "aturnino "a&udo' ,n a separate &etter on 12 June
1.00 addressed to P#i&ippine 7ir&ines (P7+), t#e "a&udos stated t#at t#e! were #o&ding P7+ &ia&e %or said
de&a! in de&iver! and wou&d commence Audicia& action s#ou&d no %avora&e e3p&anation e given' 1ot# TF7
and P7+ denied &iai&it!'
7 damage suit was %i&ed ! t#e "a&udos e%ore t#e t#en $ourt o% First ,nstance, 1ranc# ,,,, "out#ern +e!te,
pra!ing %or t#e award o% actua& damages o% P42,222'22, mora& damages o% P1,222,222'22, e3emp&ar!
damages, attorne!?s %ees and costs o% suit' T#e tria& court aso&ved t#e two air&ine companies o% &iai&it!'
T#e $ourt o% 7ppea&s a%%irmed t#e decision o% t#e &ower court in toto, and in a suse9uent reso&ution, denied
t#e "a&udos? motion %or reconsideration %or &ack o% merit' @ence, t#e petition %or review on certiorari'
T#e "upreme $ourt a%%irmed t#e appea&ed decision, wit# t#e modi%ication t#at an award or P52,222'22 as and
! wa! o% nomina& damages is granted in %avor o% t#e "a&udos to e paid ! TF7'
1. &actual ,in+in*s o, t)e Court o, 5ppeals $in+in* upon t)e Supre#e Court6 Dxceptions
(n&! 9uestions o% &aw ma! e raised in a petition %i&ed in t#e "upreme $ourt to review on certiorari
t#e decision o% t#e $ourt o% 7ppea&s' T#is eing so, t#e %actua& %indings o% t#e $ourt o% 7ppea&s are %ina& and
conc&usive and cannot e reviewed ! t#e "upreme $ourt' T#e ru&e, #owever, admits o% esta&is#ed
e3ceptions, to wit: (a) w#ere t#ere is grave ause o% discretionC () w#en t#e %inding is grounded entire&! on
specu&ations, surmises or conAecturesC (c) w#en t#e in%erence made is mani%est&! mistaken, asurd or
impossi&eC (d) w#en t#e Audgment o% t#e $ourt o% 7ppea&s was ased on a misappre#ension o% %actsC (e) w#en
t#e %actua& %indings are con%&ictingC (%) w#en t#e $ourt o% 7ppea&s, in making its %indings, went e!ond t#e
issues o% t#e case and t#e same are contrar! to t#e admissions o% ot# appe&&ant and appe&&eeC (g) w#en t#e
$ourt o% 7ppea&s mani%est&! over&ooked certain re&evant %acts not disputed ! t#e parties and w#ic#, i%
proper&! considered, wou&d Austi%! a di%%erent conc&usionC and (#) w#ere t#e %indings o% %act o% t#e $ourt o%
7ppea&s are contrar! to t#ose o% t#e tria& court, or are mere conc&usions wit#out citation o% speci%ic evidence,
or w#ere t#e %acts set %ort# ! t#e petitioner are not disputed ! t#e respondent, or w#ere t#e %indings o% %act
o% t#e $ourt o% 7ppea&s are premised on t#e asence o% evidence and are contradicted ! t#e evidence on
record'
-. <istinction $et.een 9uestion o, la. an+ 9uestion o, ,act6 (est to +eter#ine
7 9uestion o% &aw is one w#ic# invo&ves a dout or controvers! on w#at t#e &aw is on a certain state
o% %actsC and, a 9uestion o% %act, contrari&!, is one in w#ic# t#ere is a dout or di%%erence as to t#e trut# or
%a&se#ood o% t#e a&&eged %acts' (ne test, it #as een #e&d, is w#et#er t#e appe&&ate court can determine t#e
issue raised wit#out reviewing or eva&uating t#e evidence, in w#ic# case it is a 9uestion o% &aw, ot#erwise it
wi&& e a 9uestion o% %act'
3. ;ssues .arrant secon+ look at ,acts
"ince it is t#e soundness o% t#e in%erences or conc&usions t#at ma! e drawn %rom t#e %actua& issues
w#ic# are eing assa!ed, t#e $ourt %inds t#at t#e issues raised in t#e present petition indeed warrant a second
&ook i% t#is &itigation is to come to a reasona&e denouement' 7 discussion seriatim o% said issues wi&& %urt#er
revea& t#at t#e se9uence o% t#e events invo&ved is in e%%ect disputed' +ikewise to e sett&ed is w#et#er or not
t#e conc&usions o% t#e $ourt o% 7ppea&s suAect o% t#e review indeed %ind evidentiar! and &ega& support'
/. 7ature o, $ill o, la+in*
7 i&& o% &ading is a written acknow&edgment o% t#e receipt o% t#e goods and an agreement to transport
and de&iver t#em at a speci%ied p&ace to a person named or on #is order' T#e two=%o&d c#aracter o% a i&& o%
&ading is a&& too %ami&iar: it is a receipt as to t#e 9uantit! and description o% t#e goods s#ipped and a contract
to transport t#e goods to t#e consignee or ot#er person t#erein designated, on t#e terms speci%ied in suc#
instrument'
2. <esi*nation o, $ill o, la+in* i##aterial
T#e designation is immateria&' "uc# instrument ma! e ca&&ed a s#ipping receipt, %orwarder?s receipt
and receipt %or transportation' Freig#t tickets %or us companies as we&& as receipts %or cargo transported ! a&&
%orms o% transportation, w#et#er ! sea or &and, %a&& wit#in t#e de%inition' Dnder t#e Tari%% and $ustoms $ode,
a i&& o% &ading inc&udes airwa! i&&s o% &ading'
. E)en $ill o, la+in* issue+6 ;nverse or+er not pro)i$ite+ $y la.
"ince a i&& o% &ading acknow&edges receipt o% goods to e transported, de&iver! o% t#e goods to t#e
carrier norma&&! precedes t#e issuance o% t#e i&&C or, to some e3tent, de&iver! o% t#e goods and issuance o% t#e
i&& are regarded in commercia& practice as simu&taneous acts' @owever, e3cept as ma! e pro#iited ! &aw,
t#ere is not#ing to prevent an inverse order o% events, t#at is, t#e e3ecution o% t#e i&&, o% &ading even prior to
actua& possession and contro& ! t#e carrier o% t#e cargo to e transported' T#ere is no &aw w#ic# re9uires t#at
t#e de&iver! o% t#e goods %or carriage and t#e issuance o% t#e covering i&& o% &ading must coincide in point o%
time or, %or t#at matter, t#at t#e %ormer s#ou&d precede t#e &atter'
3. Receipt a pri#a ,acie evi+ence o, +elivery to carrier
(rdinari&!, a receipt is not essentia& to a comp&ete de&iver! o% goods to t#e carrier %or transportation
ut, w#en issued, is competent and prima %acie, ut not conc&usive, evidence o% de&iver! to t#e carrier' 7 i&&
o% &ading, w#en proper&! e3ecuted and de&ivered to a s#ipper, is evidence t#at t#e carrier #as received t#e
goods descried t#erein %or s#ipment' B3cept as modi%ied ! statute, it is a genera& ru&e as to t#e parties to a
contract o% carriage o% goods in connection wit# w#ic# a i&& o% &ading is issued reciting t#at goods #ave een
received %or transportation, t#at t#e recita& eing in essence a receipt a&one, is not conc&usive, ut ma! e
e3p&ained, varied or contradicted ! paro& or ot#er evidence'
4. Bill o, la+in* vis>Q>vis estoppel
7n airwa! i&& estops t#e carrier %rom den!ing receipt o% goods o% t#e 9uantit! and 9ua&it! descried
in t#e i&&' @owever, a i&& o% &ading ma! contain constituent e&ements o% estoppe& and t#us ecome somet#ing
more t#an a contract etween t#e s#ipper and t#e carrier' @owever, as etween t#e s#ipper and t#e carrier,
w#en no goods #ave een de&ivered %or s#ipment no recita&s in t#e i&& can estop t#e carrier %rom s#owing t#e
true %acts' 1etween t#e consignor o% goods and a receiving carrier, recita&s in a i&& o% &ading as to t#e goods
s#ipped raise on&! a reutta&e presumption t#at suc# goods were de&ivered %or s#ipment' 7s etween t#e
consignor and a receiving carrier, t#e %act must outweig# t#e recita&'

%. Dxplanation overco#in* presu#ption t)at re#ains .ere +elivere+ an+ receive+ $y (E5 an+
:5L
@erein, P#i&ippine Vice $onsu& in $#icago, ,&&inois, 1ienvenido M' +&aneta, at 3:22 p'm' on 8>
(ctoer 1.0> at t#e Pomierski T "on Funera& @ome, sea&ed t#e s#ipping case containing a #ermetica&&!
sea&ed casket t#at is airtig#t and waterproo% w#erein was contained t#e remains o% $rispina 6a&do "a&udo' (n
t#e same date, Pomierski roug#t t#e remains to $'M'7'"' ($ontinenta& Mortuar! 7ir "ervices) at t#e airport
($#icago) w#ic# made t#e necessar! arrangements suc# as %&ig#ts, trans%ers, etcC $'M'7'"' is a nationa&
service used ! undertakers t#roug#out t#e nation (D'"'7'), t#e! %urnis# t#e air pouc# w#ic# t#e casket is
enc&osed in, and t#e! see t#at t#e remains are taken to t#e proper air %reig#t termina&' $'M'7'"' ooked t#e
s#ipment wit# P7+ t#ru t#e carrier?s agent 7ir $are ,nternationa&, wit# Pomierski F'@' as t#e s#ipper and
Mario (Maria) "a&udo as t#e consignee' P7+ 7irwa! 1i&& 20.= 211/2545 (rdinar! was issued w#erein t#e
re9uested routing was %rom $#icago to "an Francisco on oard TF7 F&ig#t 131 o% 80 (ctoer 1.0>, and %rom
"an Francisco to Mani&a on oard P7+ F&ig#t 120 o% t#e same date, and %rom Mani&a to $eu on oard P7+
F&ig#t 15. o% 8. (ctoer 1.0>'
1". :5L1s explanation
(n 8> (ctoer 1.0> t#e cargo containing t#e casketed remains o% $rispina "a&udo was ooked %or
P7+ F&ig#t P:=120 &eaving "an Francisco %or Mani&a on 80 (ctoer 1.0>' P7+ 7irwa! 1i&& 20.=211/2545
was issued, not as evidence o% receipt o% de&iver! o% t#e $argo on 8> (ctoer 1.0>, ut mere&! as a
con%irmation o% t#e ooking t#us made %or t#e "an Francisco=Mani&a %&ig#t sc#edu&ed on 80 (ctoer 1.0>'
7ctua&&!, it was not unti& 8/ (ctoer 1.0> t#at P7+ received p#!sica& de&iver! o% t#e od! at "an Francisco,
as du&! evidenced ! t#e ,nter&ine Freig#t Trans%er Mani%est o% t#e 7merican 7ir&ine Freig#t "!stem and
signed %or ! Virgi&io :osa&es at 0:54 p'm' on said date'
11. 5rticle 133 7CC6 :erio+ .)ere extraor+inary responsi$ility o$serve+ $y co##on carrier6
E)en +elivery #a+e
B3p&icit is t#e ru&e under 7rtic&e 103> o% t#e $ivi& $ode t#at t#e e3traordinar! responsii&it! o% t#e
common carrier egins %rom t#e time t#e goods are de&ivered to t#e carrier' T#is responsii&it! remains in %u&&
%orce and e%%ect even w#en t#e! are temporari&! un&oaded or stored in transit, un&ess t#e s#ipper or owner
e3ercises t#e rig#t o% stoppage in transitu, and terminates on&! a%ter t#e &apse o% a reasona&e time %or t#e
acceptance o% t#e goods ! t#e consignee or suc# ot#er person entit&ed to receive t#em' 7nd, t#ere is de&iver!
to t#e carrier w#en t#e goods are read! %or and #ave een p&aced in t#e e3c&usive possession, custod! and
contro& o% t#e carrier %or t#e purpose o% t#eir immediate transportation and t#e carrier #as accepted t#em'
F#ere suc# a de&iver! #as t#us een accepted ! t#e carrier, t#e &iai&it! o% t#e common carrier commences
eo instanti'
1-. :5L an+ (E5 not lia$le ,or s.itc)in* o, caskets prior to t)eir receipt o, a*ree+ car*o
F#i&e t#e e3traordinar! di&igence statutori&! re9uired to e oserved ! t#e carrier instantaneous&!
commences upon de&iver! o% t#e goods t#ereto, %or suc# dut! to commence t#ere must in %act #ave een
de&iver! o% t#e cargo suAect o% t#e contract o% carriageC on&! w#en suc# %act o% de&iver! #as een
une9uivoca&&! esta&is#ed can t#e &iai&it! %or &oss, destruction or deterioration o% goods in t#e custod! o% t#e
carrier, asent t#e e3cepting causes under 7rtic&e 1035, attac# and t#e presumption o% %au&t o% t#e carrier
under 7rtic&e 1034 e invoked' @erein, t#e od! intended to e s#ipped as agreed upon was rea&&! p&aced in
t#e possession and contro& o% P7+ on 8/ (ctoer 1.0> and it was %rom t#at date t#at TF7 and P7+ ecame
responsi&e %or t#e agreed cargo under t#eir undertakings in P7+ 7irwa! 1i&& 20.=211/2545' $onse9uent&!,
%or t#e switc#ing o% caskets prior t#ereto w#ic# was not caused ! t#em', and suse9uent events caused
t#ere!, TF7 and P7+ cannot e #e&d &ia&e'
13. (E5 .it)out aut)ority! even pro)i$ite+! to veri,y contents o, casket
F#en t#e cargo was received %rom $'M'7'"' at t#e $#icago airport termina& %or s#ipment, w#ic# was
supposed to contain t#e remains o% $rispina "a&udo, 7ir $are ,nternationa& and-or TF7, #ad no wa! o%
determining its actua& contents, since t#e casket was #ermetica&&! sea&ed ! t#e P#i&ippine Vice=$onsu& in
$#icago and in an air pouc# o% $'M'7'"', to t#e e%%ect t#at 7ir $are ,nternationa& and-or TF7 #ad to re&! on
t#e in%ormation %urnis#ed ! t#e s#ipper regarding t#e cargo?s content' Eeit#er cou&d 7ir $are ,nternationa&
and-or TF7 open t#e casket %or %urt#er veri%ication, since t#e! were not on&! wit#out aut#orit! to do so, ut
even pro#iited'
1/. :o#ierski M Son +elivere+ casket to C=5S! an+ not to (E5
,t was not to TF7, ut to $'M'7'"' t#at t#e Pomierski T "on Funera& @ome de&ivered t#e casket
containing t#e remains o% $rispina "a&udo' TF7 wou&d #ave no know&edge t#ere%ore t#at t#e remains o%
$rispina "a&udo were not t#e ones inside t#e casket t#at was eing presented to it %or s#ipment' TF7 wou&d
#ave to re&! on t#e representations o% $'M'7'"' T#e casket was #ermetica&&! sea&ed and a&so sea&ed ! t#e
P#i&ippine Vice $onsu& in $#icago' TF7 or an! air&ine %or t#at matter wou&d not #ave opened suc# sea&ed
casket Aust %or t#e purpose o% ascertaining w#ose od! was inside and to make sure t#at t#e remains inside
were t#ose o% t#e particu&ar person indicated to e ! $'M'7'"' TF7 #ad to accept w#atever in%ormation was
eing %urnis#ed ! t#e s#ipper or ! t#e one presenting t#e casket %or s#ipment'7nd so as a matter o% %act,
TF7 carried to "an Francisco and trans%erred to de%endant P7+ a s#ipment covered ! or under P7+ 7irwa!
1i&& 20.=(:D=211/2545, t#e airwa! i&& %or t#e s#ipment o% t#e casketed remains o% $rispina "a&udo' (n&!, it
turned out &ater, w#i&e t#e casket was a&read! wit# P7+, t#at w#at was inside t#e casket was not t#e od! o%
$rispina "a&udo so muc# so t#at it #ad to e wit#drawn ! $'M'7'"' %rom P7+' T#e od! o% $rispina "a&udo
#ad een s#ipped to Me3ico' T#e casket containing t#e remains o% $rispina "a&udo was transs#ipped %rom
Me3ico and arrived in "an Francisco t#e %o&&owing da! on oard 7merican 7ir&ines' ,t was immediate&!
&oaded ! P7+ on its %&ig#t %or Mani&a' T#e %oregoing points at $'M'7'"' as t#e one responsi&e %or t#e
switc#ing or mi3=up o% t#e two odies at t#e $#icago 7irport termina&, and started a c#ain reaction o% t#e
miss#ipment o% t#e od! o% $rispina "a&udo and a one=da! de&a! in t#e de&iver! t#ereo% to its destination'
12. Ri*)t o, carrier to re9uire *oo+ ,ait) on part o, persons +eliverin* *oo+s6 Ri*)t o, carrier to
kno. contents .)en it )as reasona$le *roun+ to suspect *oo+s are +an*erous or o, ille*al c)aracter
,t is t#e rig#t o% t#e carrier to re9uire good %ait# on t#e part o% t#ose persons w#o de&iver goods to e
carried, and enter into contracts wit# it, and inasmuc# as t#e %reig#t ma! depend on t#e va&ue o% t#e artic&e to
e carried, t#e carrier ordinari&! #as t#e rig#t to in9uire as to its va&ue' (rdinari&!, too, it is t#e dut! o% t#e
carrier to make in9uir! as to t#e genera& nature o% t#e artic&es s#ipped and o% t#eir va&ue e%ore it consents to
carr! t#emC and its %ai&ure to do so cannot de%eat t#e s#ipper?s rig#t to recover! o% t#e %u&& va&ue o% t#e
package i% &ost, in t#e asence o% s#owing o% %raud or deceit on t#e part o% t#e s#ipper' ,n t#e asence o% more
de%inite in%ormation, t#e carrier #as t#e rig#t to accept s#ipper?s marks as to t#e contents o% t#e package
o%%ered %or transportation and is not ound to in9uire particu&ar&! aout t#em in order to take advantage o% a
%a&se c&assi%ication and w#ere a s#ipper e3press&! represents t#e contents o% a package to e o% a designated
c#aracter, it is not t#e dut! o% t#e carrier to ask %or a repetition o% t#e statement nor dise&ieve it and open t#e
o3 and see %or itse&%' @owever, w#ere a common carrier #as reasona&e ground to suspect t#at t#e o%%ered
goods are o% a dangerous or i&&ega& c#aracter, t#e carrier #as t#e rig#t to know t#e c#aracter o% suc# goods and
to insist on an inspection, i% reasona&e and practica& under t#e circumstances, as a condition o% receiving and
transporting suc# goods'
1. Co##on carrier entitle+ to ,air representation o, nature an+ value o, *oo+s to $e carrie+6
Ri*)t o, carrier to con+uct an inspection
7 common carrier is entit&ed to %air representation o% t#e nature and va&ue o% t#e goods to e carried,
wit# t#e concomitant rig#t to re&! t#ereon, and %urt#er noting at t#is Auncture t#at a carrier #as no o&igation to
in9uire into t#e correctness or su%%icienc! o% suc# in%ormation' T#e conse9uent dut! to conduct an inspection
t#ereo% arises in t#e event t#at t#ere s#ou&d e reason to dout t#e veracit! o% suc# representations' T#ere%ore,
to e suAected to unusua& searc#, ot#er t#an t#e routinar! inspection procedure customari&! undertaken, t#ere
must e3ist proo% t#at wou&d Austi%! cause %or appre#ension t#at t#e aggage is dangerous as to warrant
e3#austive inspection, or even re%usa& to accept carriage o% t#e sameC and it is t#e %ai&ure o% t#e carrier to act
according&! in t#e %ace o% suc# proo% t#at constitutes t#e asis o% t#e common carrier?s &iai&it!'
13. C=5S classi,ie+ as ,or.ar+er! is an a*ent o, t)e s)ipper an+ not o, t)e carrier
F#i&e t#e actua& participation o% $M7" #as een su%%icient&! and correct&! esta&is#ed, to #o&d t#at it
acted as agent %or TF7 and P7+ wou&d e ot# an inaccurate appraisa& and an unwarranted categori*ation o%
t#e &ega& position it #e&d in t#e entire transaction' ,t ears repeating t#at $M7" was #ired to #and&e a&& t#e
necessar! s#ipping arrangements %or t#e transportation o% t#e #uman remains o% $rispina "a&udo to Mani&a'
(ransportation La.! -""/ ( 1-% )
@ence, it was to $M7" t#at t#e Pomierski T "on Funera& @ome, as s#ipper, roug#t t#e remains o% "a&udo
%or s#ipment, wit# Maria "a&udo as consignee' T#erea%ter, $M7" ooked t#e s#ipment wit# P7+ t#roug# t#e
carrier?s agent, 7ir $are ,nternationa&' Fit# its %unctions, $M7" ma! according&! e c&assi%ied as a %orwarder
w#ic#, ! accepted commercia& practice, is regarded as an agent o% t#e s#ipper and not o% t#e carrier' 7s suc#,
it mere&! contracts %or t#e transportation o% goods ! carriers, and #as no interest in t#e %reig#t ut receives
compensation %rom t#e s#ipper as #is agent'
14. C=5S is actual culprit
T#e %acts o% t#e case wou&d point to $M7" as t#e cu&prit' B9ua&&! te&&ing o% t#e more &ike&!
possii&it! o% $M7"? &iai&it! is t#e "a&udos? &etter to and demanding an e3p&anation %rom $M7", regarding
t#e statement o% TF7 and P7+ &a!ing t#e &ame on $M7" %or t#e incident, c&ear&! a&&ude to $M7" as t#e
part! at %au&t' T#is is tantamount to an admission ! t#e "a&udos t#at t#e! consider TF7 and P7+ wit#out
%au&t, or is at t#e ver! &east indicative o% t#e %act t#at t#e "a&udos entertained serious douts as to w#et#er
TF7 and P7+ were responsi&e %or t#e un%ortunate turn o% events'
1%. Court cannot *rant +a#a*es at expense o, (E5 an+ :5L6 :ossi$le lia$ility o, C=5S $est
+e,erre+ to anot)er ti#e an+ a++resse+ to anot)er ,oru#
T#e "a&udos? grie% over t#e deat# o% t#eir mot#er was aggravated ! t#e unnecessar! inconvenience
and an3iet! t#at attended t#eir e%%orts to ring #er od! #ome %or a decent uria&' 1ut, as muc# as t#e $ourt
wou&d &ike to give t#em conso&ation %or t#eir undeserved distress, t#e $ourt is arred ! t#e ine9uit! o%
a&&owing recover! o% t#e damages pra!ed %or ! t#em at t#e e3pense o% TF7 and P7+ w#ose %au&t or
neg&igence in t#e ver! acts imputed to t#em #as not een convincing&! and &ega&&! demonstrated' Eeit#er was
t#e $ourt prepared to de&ve into, muc# &ess de%initive&! ru&e on, t#e possi&e &iai&it! o% $M7" as t#e
eva&uation and adAudication o% t#e same is not w#at is present&! at issue and is est de%erred to anot#er time
and addressed to anot#er %orum'
-". Carrier +i+ not un+ertake to carry car*o a$oar+ any speci,ie+ aircra,t
T#e carrier did not undertake to carr! t#e cargo aoard an! speci%ied aircra%t, in view o% t#e condition
on t#e ack o% t#e airwa! i&& w#ic# provides t#at ;,t is agreed t#at no time is %i3ed %or t#e comp&etion o%
carriage #ereunder and t#at $arrier ma! wit#out notice sustitute a&ternate carriers or aircra%t' $arrier assumes
no o&igation to carr! t#e goods ! an! speci%ied aircra%t or over an! particu&ar route or routes or to make
connection at an! point according to an! particu&ar sc#edu&e, and $arrier is #ere! aut#ori*ed to se&ect, or
deviate %rom t#e route or routes o% s#ipment, notwit#standing t#at t#e same ma! e stated on t#e %ace #ereo%'
T#e s#ipper guarantees pa!ment o% a&& c#arges and advances'< @ence, w#en TF7 s#ipped t#e od! on an
ear&ier %&ig#t and on a di%%erent aircra%t, it was acting we&& wit#in its rig#ts' TF7 can use sustitute aircra%t
even wit#out notice and wit#out t#e assumption o% an! o&igation w#atsoever to carr! t#e goods on an!
speci%ied aircra%t is c&ear&! sanctioned ! t#e contract o% carriage as speci%ica&&! provided %or under t#e
conditions t#ereo%'
-1. (er#s clear! no interpretation nee+e+
T#e terms are c&ear enoug# as to prec&ude t#e necessit! to proe e!ond t#e apparent intendment o%
t#e contractua& provisions' T#ere is no amiguit! in t#e terms o% t#e airwa! i&& to warrant t#e app&ication o%
t#e ru&es on interpretation o% contracts and documents'
--. ;nterpretation o, contracts
T#e #ornook ru&e on interpretation o% contracts consecrates t#e primac! o% t#e intention o% t#e
parties, t#e same #aving t#e %orce o% &aw etween t#em' F#en t#e terms o% t#e agreement are c&ear and
e3p&icit, t#at t#e! do not Austi%! an attempt to read into an! a&&eged intention o% t#e parties, t#e terms are to e
understood &itera&&! Aust as t#e! appear on t#e %ace o% t#e contract' T#e various stipu&ations o% a contract s#a&&
e interpreted toget#er and suc# a construction is to e adopted as wi&& give e%%ect to a&& provisions t#ereo%' 7
contract cannot e construed ! parts, ut its c&auses s#ou&d e interpreted in re&ation to one anot#er' T#e
w#o&e contract must e interpreted or read toget#er in order to arrive at its true meaning' $ertain stipu&ations
cannot e segregated and t#en made to contro&C neit#er do particu&ar words or p#rases necessari&! determine
t#e c#aracter o% a contract' T#e &ega& e%%ect o% t#e contract is not to e determined a&one ! an! particu&ar
provision disconnected %rom a&& ot#ers, ut in t#e ru&ing intention o% t#e parties as gat#ered %rom a&& t#e
&anguage t#e! #ave used and %rom t#eir contemporaneous and suse9uent acts'
-3. ;nterpretative rule in Rules o, Court applies only i, t)ere is inconsistency $et.een .ritten an+
printe+ .or+s
T#e interpretative ru&e in t#e :u&es o% $ourt t#at written words contro& printed words in documents
ma! e considered on&! w#en t#ere is inconsistenc! etween t#e written and printed words o% t#e contract' 7s
previous&! stated, t#ere was no amiguit! in t#e contract suAect o% t#is case t#at wou&d ca&& %or t#e
app&ication o% said ru&e' ,n an! event, t#e contract #as provided %or suc# a situation ! e3p&icit&! stating t#at
t#e condition remains e%%ective ;notwit#standing t#at t#e same (%i3ed time %or comp&etion o% carriage,
speci%ied aircra%t, or an! particu&ar route or sc#edu&e) ma! e stated on t#e %ace #ereo%'< @erein, t#e
t!pewritten speci%ications o% t#e %&ig#t, routes and dates o% departures and arriva&s on t#e %ace o% t#e airwa!
i&& does not constitute a specia& contract w#ic# modi%ies t#e printed conditions at t#e ack t#ereo%' T#e
t!pewritten provisions o% t#e contract are to e read and understood suAect to and in view o% t#e printed
conditions, %u&&! reconci&ing and giving e%%ect to t#e mani%est intention o% t#e parties to t#e agreement'
-/. State#ent on t)e ,ace o, t)e air.ay $ill
T#e statement on t#e %ace o% t#e airwa! i&& proper&! and comp&ete&! reads ;$arrier certi%ies goods
descried e&ow were received %or carriage suAect to t#e $onditions on t#e reverse #ereo% t#e goods t#en
eing in apparent good order and condition e3cept as noted #ereon'<
-2. Carrier not an insurer a*ainst +elay in transportation o, *oo+s in a$sence o, a special contract
T#e o%t=repeated ru&e regarding a carrier?s &iai&it! %or de&a! is t#at in t#e asence o% a specia&
contract, a carrier is not an insurer against de&a! in transportation o% goods' F#en a common carrier
undertakes to conve! goods, t#e &aw imp&ies a contract t#at t#e! s#a&& e de&ivered at destination wit#in a
reasona&e time, in t#e asence o% an! agreement as to t#e time o% de&iver!' 1ut w#ere a carrier #as made an
e3press contract to transport and de&iver propert! wit#in a speci%ied time, it is ound to %u&%i&& its contract and
is &ia&e %or an! de&a!, no matter %rom w#at cause it ma! #ave arisen' T#is resu&t &ogica&&! %o&&ows %rom t#e
we&&=sett&ed ru&e t#at w#ere t#e &aw creates a dut! or c#arge, and t#e part! is disa&ed %rom per%orming it
wit#out an! de%au&t in #imse&%, and #as no remed! over, t#en t#e &aw wi&& e3cuse #im, ut w#ere t#e part! !
#is own contract creates a dut! or c#arge upon #imse&%, #e is ound to make it good notwit#standing an!
accident or de&a! ! inevita&e necessit! ecause #e mig#t #ave provided against it ! contract' F#et#er or
not t#ere #as een suc# an undertaking on t#e part o% t#e carrier is to e determined %rom t#e circumstances
surrounding t#e case and ! app&ication o% t#e ordinar! ru&es %or t#e interpretation o% contracts'
-. =en+oJa vs. :5L6 <elaye+ +elivery o, air car*o
,n a simi&ar case o% de&a!ed de&iver! o% air cargo under a ver! simi&ar stipu&ation contained in t#e
airwa! i&& w#ic# reads: ;T#e carrier does not o&igate itse&% to carr! t#e goods ! an! speci%ied aircra%t or on
a speci%ied time' "aid carrier eing #ere! aut#ori*ed to deviate %rom t#e route o% t#e s#ipment wit#out an!
&iai&it! t#ere%ore,< t#e "upreme $ourt ru&ed t#at common carriers are not o&igated ! &aw to carr! and to
de&iver merc#andise, and persons are not vested wit# t#e rig#t to prompt de&iver!, un&ess suc# common
carriers previous&! assume t#e o&igation' "aid rig#ts and o&igations are created ! a speci%ic contract
entered into ! t#e parties (Mendo*a vs' P7+, .2 P#i&' /3>)'
-3. Speci,ication o, ,li*)ts +oes not constitute a special contract
To countenance a postu&ate t#at t#e speci%ication o% t#e %&ig#ts and dates o% departures and arriva&s
constitute a specia& contract (t#at wou&d prevai& over t#e printed stipu&ations at t#e ack o% t#e airwa! i&&)
wou&d undu&! urden t#e common carrier %or t#at wou&d #ave t#e e%%ect o% uni&atera&&! trans%orming ever!
sing&e i&& o% &ading or trip ticket into a specia& contract ! t#e simp&e e3pedient o% %i&&ing it up wit# t#e
particu&ars o% t#e %&ig#t, trip or vo!age, and t#ere! imposing upon t#e carrier duties and-or o&igations w#ic#
it ma! not #ave een read! or wi&&ing to assume #ad it een time&! advised t#ereo%'
-4. 8r+inary pru+ence re9uire+ o, person enterin* in contract
T#e %act t#at t#e c#a&&enged condition 4 was printed at t#e ack o% t#e airwa! i&& mi&itate against its
inding e%%ect on t#e "a&udos as parties to t#e contract, %or t#ere were su%%icient indications on t#e %ace o% said
i&& t#at wou&d a&ert t#em to t#e presence o% suc# additiona& condition to put t#em on t#eir guard' (rdinar!
prudence on t#e part o% an! person entering or contemp&ating to enter into a contract wou&d prompt even a
cursor! e3amination o% an! suc# conditions, terms and-or stipu&ations'
-%. 5cceptance o, $ill o, la+in* .it)out +issent raises presu#ption t)at all ter#s $rou*)t to
kno.le+*e o, s)ipper an+ a*ree+ to $y )i#
T#e acceptance o% a i&& o% &ading wit#out dissent raises a presumption t#at a&& terms t#erein were
roug#t to t#e know&edge o% t#e s#ipper and agreed to ! #im, and in t#e asence o% %raud or mistake, #e is
estopped %rom t#erea%ter den!ing t#at #e assented to suc# terms' T#is ru&e app&ies wit# particu&ar %orce w#ere
a s#ipper accepts a i&& o% &ading wit# %u&& know&edge o% its contents, and acceptance, under suc#
circumstances makes it a inding contract' ,n order t#at an! presumption o% assent to a stipu&ation in a i&& o%
&ading &imiting t#e &iai&it! o% a carrier ma! arise, it must appear t#at t#e c&ause containing t#is e3emption
%rom &iai&it! p&ain&! %ormed a part o% t#e contract contained in t#e i&& o% &ading' 7 stipu&ation printed on t#e
ack o% a receipt or i&& o% &ading or on papers attac#ed to suc# receipt wi&& e 9uite as e%%ective as i% printed
on its %ace, i% it is s#own t#at t#e consignor knew o% its terms' T#us, w#ere a s#ipper accepts a receipt w#ic#
states t#at its conditions are to e %ound on t#e ack, suc# receipt comes wit#in t#e genera& ru&e, and t#e
s#ipper is #e&d to #ave accepted and to e ound ! t#e conditions t#ere to e %ound'
3". E)en contract o, a+)esion voi+ an+ unen,orcea$le
7 contract o% ad#esion ma! e struck down as void and unen%orcea&e, %or eing suversive o% pu&ic
po&ic!, on&! w#en t#e weaker part! is imposed upon in dea&ing wit# t#e dominant argaining part! and is
reduced to t#e a&ternative o% taking it or &eaving it, comp&ete&! deprived o% t#e opportunit! to argain on e9ua&
%ooting'
31. 8n* Hiu vs. C56 Contracts o, a+)esion not entirely pro)i$ite+
T#e case o% (ng Oiu vs' $ourt o% 7ppea&s, et a&' instructs t#at contracts o% ad#esion are not entire&!
pro#iited' T#e one w#o ad#eres to t#e contract is in rea&it! %ree to reAect it entire&!C i% #e ad#eres, #e gives #is
consent' @erein, t#e "a&udos, %ar %rom eing t#e weaker part! in t#e situation, du&! signi%ied t#eir presumed
assent to a&& terms o% t#e contract t#roug# t#eir acceptance o% t#e airwa! i&& and are conse9uent&! ound
t#ere!' ,t cannot e gainsaid t#at t#e "a&udos were not wit#out severa& c#oices as to carriers in $#icago wit#
its numerous airwa!s and air&ines servicing t#e same'
3-. Con+ition serves as insulation to lia$ility .)en ,li*)t routes an+ sc)e+ules c)an*e6 C)an*es
s)oul+ $e ?usti,ie+
7&t#oug# $ondition 4 o% t#e airwa! i&& is inding upon t#e parties to and %u&&! operative in t#e
present transaction, it does not mean, t#at t#e carriers can at a&& times w#imsica&&! seek re%uge %rom &iai&it! in
t#e e3cu&pator! sanctuar! o% $ondition 4 or aritrari&! var! routes, %&ig#ts and sc#edu&es to t#e preAudice o%
t#eir customers' T#is condition on&! serves to insu&ate t#e carrier %rom &iai&it! in t#ose instances w#en
c#anges in routes, %&ig#ts and sc#edu&es are c&ear&! Austi%ied ! t#e pecu&iar circumstances o% a particu&ar case,
or ! genera& transportation practices, customs and usages, or ! contingencies or emergencies in aviation
suc# as weat#er turu&ence, mec#anica& %ai&ure, re9uirements o% nationa& securit! and t#e &ike' 7nd even as it
is conceded t#at speci%ic routing and ot#er navigationa& arrangements %or a trip, %&ig#t or vo!age, or variations
t#erein, genera&&! &ie wit#in t#e discretion o% t#e carrier in t#e asence o% speci%ic routing instructions or
directions ! t#e s#ipper, it is p&ain&! incument upon t#e carrier to e3ercise its rig#ts wit# due de%erence to
t#e rig#ts, interests and convenience o% its customers'
33. Co##on carrier )as i#plicit +uty to carry property .it)in reasona$le ti#e an+ *uar+ a*ainst
+elay6 Lia$ility o, carrier ,or unreasona$le +elay
7 common carrier undertaking to transport propert! #as t#e imp&icit dut! to carr! and de&iver it wit#in
a reasona&e time, asent an! particu&ar stipu&ation regarding time o% de&iver!, and to guard against de&a!' ,n
case o% an! unreasona&e de&a!, t#e carrier s#a&& e &ia&e %or damages immediate&! and pro3imate&! resu&ting
%rom suc# neg&ect o% dut!' @erein, t#e de&a! in t#e de&iver! o% t#e remains o% $rispina "a&udo, undenia&e and
regretta&e as it was, cannot e attriuted to t#e %au&t, neg&igence or ma&ice o% P7+ and TF7'
3/. (E5 kne. ur*ency o, s)ip#ent an+ actually carrie+ t)e re#ains on earlier ,li*)t
@erein, TF7 knew o% t#e urgenc! o% t#e s#ipment ! reason o% t#is notation on t#e &ower portion o%
t#e airwa! i&&: ;7&& documents #ave een certi%ied' @uman remains o% $ristina (sic) "a&udo' P&ease return
ag %irst avai&a&e %&ig#t to "F('< 7ccording&!, TF7 took it upon itse&% to carr! t#e remains o% $rispina
"a&udo on an ear&ier %&ig#t, w#ic# it cou&d do under t#e terms o% t#e airwa! i&&, to make sure t#at t#ere wou&d
e enoug# time %or &oading said remains on t#e trans%er %&ig#t on oard P7+'
32. 7o s)o.in* t)at personnel treate+ t)e Salu+os in )u#iliatin* or arro*ant #anner6 E)at
constitutes ru+e or +iscourteous con+uct
T#ere was no s#owing o% an! #umi&iating or arrogant manner wit# w#ic# t#e personne& o% ot# TF7
and P7+ treated t#e "a&udos' Bven t#eir a&&eged indi%%erence is not c&ear&! esta&is#ed' T#e initia& answer o%
t#e TF7 personne& at t#e counter t#at t#e! did not know an!t#ing aout t#e remains, and &ater, t#eir answer
t#at t#e! #ave not #eard an!t#ing aout t#e remains, and t#e inai&it! o% t#e TF7 counter personne& to in%orm
t#e "a&udos o% t#e w#ereaouts o% t#e remains, cannot e said to e tota& or comp&ete indi%%erence to t#e &atter'
7t an! rate, it is an! rude or discourteous conduct, ma&%easance or neg&ect, t#e use o% ausive or insu&ting
&anguage ca&cu&ated to #umi&iate and s#ame passenger or ad %ait# ! or on t#e part o% t#e emp&o!ees o% t#e
carrier t#at gives t#e passenger an action %or damages against t#e carrier, and none o% t#e aove is otaining in
t#e present case'
3. 5lt)ou*) not in $a+ ,ait)! actuations o, (E51s e#ployees leave #ust to $e +esire+
T#e manner in w#ic# TF7?s emp&o!ees dea&t wit# t#e "a&udos was not gross&! #umi&iating, arrogant
or indi%%erent as wou&d assume t#e proportions o% ma&ice or ad %ait# and &a! t#e asis %or an award o% t#e
damages c&aimed' ,t must #owever, e pointed out t#at t#e &amenta&e actuations o% TF7?s emp&o!ees &eave
muc# to e desired, particu&ar&! so in t#e %ace o% t#e "a&udos? grie% over t#e deat# o% t#eir mot#er, e3acerated
! t#e tension and an3iet! wroug#t ! t#e impasse and con%usion over t#e %ai&ure to ascertain over an
apprecia&e period o% time w#at #appened to #er remains'
33. 5irline co#panies a+#onis)e+ to re9uire personnel to $e #ore acco##o+atin* to.ar+s
custo#ers an+ *eneral pu$lic6 Contract o, carria*e +i,,erent ,ro# ot)er contractual relations! an+ is
not a #ere contract ,or transportation $ut also treat#ent .it) courtesy an+ consi+eration
7ir&ine companies are #ere! stern&! admonis#ed t#at it is t#eir dut! not on&! to cursori&! instruct ut
to strict&! re9uire t#eir personne& to e more accommodating towards customers, passengers and t#e genera&
pu&ic' 7%ter a&&, common carriers suc# as air&ine companies are in t#e usiness o% rendering pu&ic service,
w#ic# is t#e primar! reason %or t#eir en%ranc#isement and recognition in our &aw' 1ecause t#e passengers in a
contract o% carriage do not contract mere&! %or transportation, t#e! #ave a rig#t to e treated wit# kindness,
respect, courtes! and consideration' 7 contract to transport passengers is 9uite di%%erent in kind and degree
%rom an! ot#er contractua& re&ation, and generates a re&ation attended wit# pu&ic dut!' T#e operation o% a
common carrier is a usiness a%%ected wit# pu&ic interest and must e directed to serve t#e com%ort and
convenience o% passengers' Passengers are #uman eings wit# #uman %ee&ings and emotionsC t#e! s#ou&d not
e treated as mere numers or statistics %or revenue'
34. 5pat)y not le*ally repre)ensi$le $ut is #orally +eplora$le
@erein, t#e "a&udos were not to e rega&ed wit# e3tra specia& attention' T#e! were, #owever, entit&ed
to t#e understanding and #umane consideration ca&&ed %or ! and commensurate wit# t#e e3traordinar!
di&igence re9uired o% common carriers, and not t#e co&d insensitivit! to t#eir predicament' T#e air&ine?s
counter personne& were tota&&! #e&p&ess aout t#e situation' $ommon "ense cou&d and s#ou&d #ave dictated
t#at t#e! e3ert a &itt&e e3tra e%%ort in making a more e3tensive in9uir!, ! t#emse&ves or t#roug# t#eir
superiors, rat#er t#an Aust s#rug o%% t#e pro&em wit# a ca&&ous and uncaring remark t#at t#e! #ad no
know&edge aout it' Fit# a&& t#e modern communications e9uipment readi&! avai&a&e to t#em, w#ic# cou&d
#ave easi&! %aci&itated said in9uir! and w#ic# are used as a matter o% course ! air&ine companies in t#eir dai&!
operations, t#eir apat#etic stance w#i&e not &ega&&! repre#ensi&e is mora&&! dep&ora&e'
3%. 7o attri$ution o, +iscourtesy or in+i,,erence a*ainst :5L
Eo attriution o% discourtes! or indi%%erence #as een made against P7+ ! t#e "a&udos and, in %act,
Maria "a&udo testi%ied t#at it was to P7+ t#at t#e! repaired a%ter %ai&ing to receive proper attention %rom TF7'
,t was %rom P7+ t#at t#e! received con%irmation t#at t#eir mot#er?s remains wou&d e on t#e same %&ig#t to
Mani&a wit# t#em'
/". E)en #oral an+ exe#plary +a#a*es! or attorney1s ,ees! a.ar+e+
Mora& damages ma! e awarded %or wi&&%u& or %raudu&ent reac# o% contract or w#en suc# reac# is
attended ! ma&ice or ad %ait#' @owever, in t#e asence o% strong and positive evidence o% %raud, ma&ice or
ad %ait#, said damages cannot e awarded' Eeit#er can, t#ere e an award o% e3emp&ar! damages nor o%
attorne!?s %ees as an item o% damages in t#e asence o% proo% t#at de%endant acted wit# ma&ice, %raud or ad
%ait#'
/1. Censura$le con+uct o, (E5 e#ployees +o not approxi#ate +i#ensions o, ,rau+! #alice or *oo+
,ait)
T#e censura&e conduct o% TF7?s emp&o!ees cannot, #owever, e said to #ave appro3imated t#e
dimensions o% %raud, ma&ice or ad %ait#' ,t can e said to e more o% a &et#argic reaction produced and
engrained in some peop&e ! t#e mec#anica&&! routine nature o% t#eir work and a racia& or societa& cu&ture
w#ic# stu&ti%ies w#at wou&d #ave een t#eir accustomed #uman response to a #uman need under a %ormer and
di%%erent amience'
/-. 5.ar+ o, no#inal +a#a*es .arrante+6 5rticles ---1 an+ ---- 7CC
T#e %acts s#ow t#at t#e "a&udos? rig#t to e treated wit# due courtes! in accordance wit# t#e degree
o% di&igence re9uired ! &aw to e e3ercised ! ever! common carrier was vio&ated ! TF7 and t#is entit&es
t#em, at &east, to nomina& damages %rom TF7 a&one' 7rtic&es 8881 and 8888 o% t#e $ivi& $ode make it c&ear
t#at nomina& damages are not intended %or indemni%ication o% &oss su%%ered ut %or t#e vindication or
recognition o% a rig#t vio&ated or invaded' T#e! are recovera&e w#ere some inAur! #as een done ut t#e
amount o% w#ic# t#e evidence %ai&s to s#ow, t#e assessment o% damages eing &e%t to t#e discretion o% t#e
court according to t#e circumstances o% t#e case' ,n t#e e3ercise o% t#e $ourt?s discretion, t#e $ourt %ind an
award o% P52,222'22 as nomina& damages in %avor o% t#e "a&u%os to e a reasona&e amount under t#e
circumstances o% t#e present case'
[2"]
<el*a+o Bros. vs. C5 (GR L>122/! -% <ece#$er 1%")
"econd Division, 1autista 7nge&o (J): > concur
&acts' (n 10 Feruar! 1.4>, :ic#ard 7' P&eeper s#ipped on oard t#e "' "' President $&eve&and at
Ooko#ama, Japan one &i%t van under i&& o% &ading /8, containing persona& and #ouse#o&d e%%ects' T#e s#ip
arrived in t#e port o% Mani&a on 88 Feruar! 1.4> and w#i&e t#e &i%t van was eing un&oaded ! t#e gantr!
crane operated ! De&gado 1rot#ers, ,nc', it %e&& on t#e pier and its contents were spi&&ed and scattered' 7
surve! was made and t#e resu&t was t#at P&eeper su%%ered damages tota&&ing P>,08.'42 arising out o% t#e
reakage, denting and smas#ing o% t#e goods'
P&eeper roug#t t#e action e%ore t#e $F, Mani&a to recover t#e sum o% P>,08.'42 as damages, p&us t#e sum
o% P8,222'22 as sentimenta& va&ue o% t#e damaged goods and attorne!?s %ees' T#e tria& court, on 4 Eovemer
1.40, rendered decision ordering t#e s#ipping compan! (7merican President +ines +td') to pa! P&eeper t#e
sum o% P>,08.'42, va&ue o% t#e goods damaged, p&us P>22'22 as t#eir sentimenta& va&ue, wit# &ega& interest
%rom t#e %i&ing o% t#e comp&aint, and t#e sum o% P1,222'22 as attorne!?s %ees' T#e court ordered t#at, once t#e
Audgment is satis%ied, co=de%endant De&gado 1rot#ers, ,nc' s#ou&d pa! t#e s#ipping compan! t#e same
amounts ! wa! o% reimursement'
1ot# De&gado 1ros' and 7merican President +ines appea&ed to t#e $ourt o% 7ppea&s w#ic# a%%irmed in toto
t#e decision o% t#e tria& court' De&gado 1rot#ers, ,nc' interposed t#e present petition %or review'
T#e "upreme $ourt modi%ied t#e decision appea&ed %rom in t#e sense t#at De&gado 1rot#ers s#ou&d not e
made &ia&e %or t#e damage caused to t#e goods in 9uestion, wit#out pronouncement as to costs'
1. Contents o, Dx)i$it 1 RD Gantry crane6 5#erican :resi+ent Lines assu#e+ responsi$ility
T#e contract entered into etween t#e 7merican President +ines and De&gado 1ros' re&ative to t#e
gantr! crane owned ! De&gado 1ros' reads: ;P&ease %urnis# us (EB gantr! to e used on #atc# Eo' 8 o% t#e
"-" P:B"' $+BVB+7ED :eg' %rom 1322 #rs' to F,E,"@ #rs' on 88 Feruar! 1.44' Fe #ere! assume %u&&
responsii&it! and &iai&it! %or damages to cargoes, s#ip or ot#erwise arising %rom use o% said crane and we
wi&& not #o&d t#e De&gado 1rot#ers, ,nc' &ia&e or responsi&e in an! wa! t#ereo%' Fe #ere! agree to pa! t#e
corresponding c#arges %or aove re9uested services'< T#e $ourt cannot agree wit# t#e %inding t#at t#e
p#raseo&og! emp&o!ed in B3#iit 1 wou&d not ;induce a conc&usion t#at t#e 7merican President +ines, +td'
assumed responsii&it! %or t#e neg&igence o% t#e crane operator w#o was emp&o!ed ! De&gado 1rot#ers,
,nc'< and t#at %or t#at reason t#e &atter s#ou&d e &amed %or t#e conse9uence o% t#e neg&igent act o% its
operator, ecause in t#e $ourt?s opinion t#e p#raseo&og! t#us emp&o!ed conve!s precise&! t#at conc&usion'
-. Clause +eter#inative o, t)e responsi$ility ,or t)e use o, t)e crane
T#e c&ause determinative o% t#e responsii&it! %or t#e use o% t#e crane contains two parts, name&!: one
w#erein t#e s#ipping compan! assumes %u&& responsii&it! %or t#e use o% t#e crane, and t#e ot#er w#ere said
compan! agreed not to #o&d t#e De&gado 1rot#ers, ,nc' &ia&e in an! wa!' F#i&e it ma! e admitted t#at under
t#e %irst part t#e carrier ma! s#i%t responsii&it! to petitioner w#en t#e damage caused arises %rom t#e
neg&igence o% t#e crane operator ecause e3emption %rom responsii&it! %or neg&igence must e stated in
e3p&icit terms, #owever, it cannot do so under t#e second part w#en it e3press&! agreed to e3empt petitioner
%rom &iai&it! in an! wa! it ma! arise, w#ic# is a c&ear case o% assumption o% responsii&it! on t#e part o% t#e
carrier contrar! to t#e conc&usion reac#ed ! t#e $ourt o% 7ppea&s'
3. E)en exe#ption ,ro# lia$ility arisin* ,ro# ne*li*ence #ay $e *rante+
,n order t#at e3emption %rom &iai&it! arising %rom neg&igence ma! e granted, t#e contract ;must e
so c&ear as to &eave no room %or t#e operation o% t#e ordinar! ru&es o% &iai&it! consecrated ! e3perience and
sanctioned ! t#e e3press provisions o% &aw'<
/. =anila Railroa+ vs. La Co#pania (ransatlantica not in point
T#e case o% t#e Mani&a :ai&road $o' vs' +a $ompa)ia Trasat&antica, et a&', 3/ P#i&', /04, is not in
point' ,n t#e &atter case, t#e evidence adduced is not c&ear as to t#e e3emption o% responsii&it!' @ere t#e
contrar! appears' @ence, t#e doctrine t#erein &aid down is not contro&&ing'
2. Clause 13 o, t)e $ill o, la+in*6 S)ipper or consi*nee .)o takes $ill o, la+in* $eco#es $oun+ $y
all stipulation containe+ t)erein
$&ause 10, printed in red ink t#at appears on t#e ver! %ace o% t#e i&& o% &ading, reads: ;,E
7$$BPT,E6 T@," 1,++ (F +7D,E6 t#e s#ipper, consignee and owner o% t#e goods agree to e ound !
a&& its stipu&ations, e3ceptions, and conditions w#et#er written, printed, or stamped on t#e %ront or ack
#ereo%, an! &oca& customs or privi&eges to t#e contrar! notwit#standing'< T#e c&ause provides t#at a s#ipper or
consignee w#o accepts t#e i&& o% &ading ecomes ound ! a&& stipu&ations contained t#erein w#et#er on t#e
%ront or ack t#ereo%' T#e s#ipper cannot e&ude its provisions simp&! ecause t#e! preAudice #im and take
advantage o% t#ose t#at are ene%icia&' "econd&!, t#e %act t#at t#e s#ipper s#ipped #is goods on oard t#e s#ip
o% t#e s#ipping compan! and paid t#e corresponding %reig#t t#ereon s#ows t#at #e imp&ied&! accepted t#e i&&
o% &ading w#ic# was issued in connection wit# t#e s#ipment in 9uestion, and so it ma! e said t#at t#e same is
inding upon #im as i% it #as een actua&&! signed ! #im or ! an! ot#er person in #is e#a&%' T#is is more so
w#ere it is ot# t#e s#ipper and t#e consignee o% t#e goods in 9uestion' T#ese circumstances take t#is case out
o% our ru&ing in t#e Miraso& case (invoked ! t#e $ourt o% 7ppea&s) and p&ace it wit#in t#e doctrine in t#e case
o% Mendo*a vs' P#i&ippine 7ir +ines, ,nc', .2 P#i&', /3>'
. La. o, country o, +estination prevails6 ;, +estination is :)ilippines! C8GS5 #erely suppletory
to t)e provisions o, t)e Co+e
7rtic&e 1043 (Eew $ivi& $ode) provides t#at t#e &aw o% t#e countr! to w#ic# t#e goods are to e
transported s#a&& govern t#e &iai&it! o% t#e common carrier in case o% &oss, destruction or deterioration' T#is
means t#e &aw o% t#e P#i&ippines, or t#e new $ivi& $ode' Dnder 7rtic&e 10>>, G,n a&& matters not regu&ated !
t#is $ode, t#e rig#ts and o&igations o% common carriers s#a&& e governed ! t#e $ode o% $ommerce and !
specia& &aws,? i'e' provisions t#at govern said rig#ts and o&igations (7rtic&es 103>, 1030, and 103/)'
T#ere%ore, a&t#oug# "ection 5(4) o% t#e $arriage o% 6oods ! "ea 7ct states t#at t#e carrier s#a&& not e &ia&e
in an amount e3ceeding K422'22 per package un&ess t#e va&ue o% t#e goods #ad een dec&ared ! t#e s#ipper
and inserted in t#e i&& o% &ading, said section is mere&! supp&etor! to t#e provisions o% t#e $ivi& $ode'
[51] <astern hipping Lines vs. CA, see [+]
[2-]
Dastern S)ippin* Lines vs. C5 (GR 4"%3! 13 8cto$er 1%%")
T#ird Division, 6utierre* Jr' (J): 3 concur, 1 on &eave
&acts' (n 85 Feruar! 1./2, t#e Ean!o $orporation o% Poe, Japan s#ipped a cargo consisting o% 4 packages
o% supp&ies and materia&s %or ;1822 F 3 8422 +MM 7pron Feeder and 822 F 3 4/42 +MM 7pron Feeder,<
covered ! a i&& o% &ading' T#e cargo was &oaded on oard t#e "-" Bastern 7dventure destined %or Mani&a'
T#e vesse& is operated ! Bastern "#ipping +ines' T#e i&& o% &ading was consigned to ;"#ipper?s (rder<, wit#
;7ddress 7rriva& Eotice to $onso&idated Mines ,nc' >0.. 7!a&a 7venue, Makati, Metro Mani&a, P#i&ippines'<
T#e cargo arrived in Mani&a on 5 Marc# 1./2' 7 %ew da!s &ater, on t#e asis o% an Dndertaking %or De&iver!
o% $argo ut wit#out t#e surrender o% t#e origina& i&& o% &ading presented ! $onso&idated Mines ($M,),
Bastern "#ipping re&eased t#e s#ipment in 9uestion to $M,' ,n said guarant!, $M, undertook to indemni%!
Bastern "#ipping ;#arm&ess %rom a&& demands, c&aiming &iai&ities, actions and e3penses< 7out 4 U mont#s
&ater, or speci%ica&&! on 1. 7ugust 1./2, Bastern "#ipping received %rom @ongkong and "#ang#ai 1ank
(@"1$), a &etter stating t#at @"1$ #o&ds tit&e to t#e goods and #as possession o% t#e %u&& set o% origina& i&&s
o% &ading, and t#at it is una&e to &ocate t#e cargo and t#at it appeared t#at Bastern "#ipping #as re&eased it to
$M,' $onsidering t#at t#ere was no rep&! %rom Bastern "#ipping, @"1$ wrote anot#er demand &etter t#roug#
counse& dated 8. (ctoer 1./2 in contemp&ation o% a &ega& action against Bastern "#ipping s#ou&d it not make
good @"1$?s c&aim' (n 83 Decemer 1./2 $M, wrote a &etter to @"1$ admitting t#at t#e! received t#e
s#ipment in 9uestion due to a guarantee e3ecuted ! t#em, and re9uested @"1$ t#at &ega& action e #e&d o%%
%or at &east 32 da!s, promising to sett&e its account wit# @"1$ %rom t#e %unds it was e3pecting %rom 1enguet
$orporation' (n 15 Januar! 1./1, Bastern "#ipping wrote a rep&! to @"1$, stating t#erein t#at it regrets
re&easing t#e cargo wit#out t#e consent o% @"1$?s c&ient, ut t#at it was constrained to re&ease t#e same in
view o% t#e consignee?s strong representation and guarantee t#at t#e! wi&& sett&e t#eir o&igation wit# t#e ank'
Bastern "#ipping re9uested t#at @"1$ advise t#e %ormer i% t#e consignee e una&e to comp&! wit# its
re9uirement a%ter 32 da!s'
$M, #aving %ai&ed to %u&%i&& its promise, @"1$ %i&ed a comp&aint e%ore t#e t#en $F, o% :i*a& against Bastern
"#ipping pra!ing %or actua& and compensator! damages in t#e amount o% K1>/,481'1> representing t#e va&ue
o% t#e goods covered ! t#e 1i&& o% +ading, e3emp&ar! damage in t#e amount deemed Aust ! t#e court and
P42,222 attorne!?s %ees p&us e3penses o% &itigation and Audicia& costs' (n 14 7ugust 1./1, Bastern "#ipping
%i&ed a t#ird part! comp&aint against $M, seeking reimursement %rom t#e &atter o% w#atever pecuniar!
o&igations Bastern "#ipping ma! e &ia&e to @"1$, as we&& as mora& damages' During tria&, $M, %i&ed a
Motion to "ta! 7ction in view o% t#e pendenc! o% invo&untar! inso&venc! proceedings commenced against it
in t#e meantime ! its creditors w#ic# inc&uded @"1$' T#is motion was denied ! t#e tria& court' (n t#e
asis o% t#e evidence presented ! @"1$ and Bastern "#ipping, as $M, %ai&ed to present its evidence, t#e
court on 14 Januar! 1./4 rendered Audgment in %avor @"1$ and against Bastern "#ipping, ordering t#e &atter
to pa! t#e sum o% K1>/,481'1> or its e9uiva&ent in P#i&ippine $urrenc! representing t#e va&ue o% t#e goods
covered ! t#e 1i&& o% +ading p&us interest t#ereon %rom t#e %i&ing o% t#e comp&aint, unti& %u&&! paidC
P82,222'22 as and %or attorne!?s %ees and to pa! t#e costs' Fit# respect to t#e T#ird Part! $omp&aint, t#e
$ourt rendered Audgment in %avor o% Bastern "#ipping and against t#e $M, ordering t#e &atter to pa! a&& t#e
&iai&ities o% t#e %ormer in %avor o% @"1$ consisting o% t#e va&ue o% t#e goods covered ! t#e 1i&& o% +ading in
t#e sum o% K1>/,481'1> or its e9uiva&ent in P#i&ippine $urrenc! p&us interest %rom t#e %i&ing o% t#e t#ird part!
comp&aint unti& %u&&! paidC attorne!?s %ees o% P82,222'22 and to pa! t#e costs'
,ts motion %or reconsideration #aving een denied, Bastern "#ipping appea&ed to t#e $ourt o% 7ppea&s' (n 32
June 1./0, t#e $ourt o% 7ppea&s rendered t#e decision a%%irming t#e appea&ed decision in toto' Bastern
"#ipping %i&ed a motion %or reconsideration, ut t#e same was denied on 85 Eovemer 1./0' @ence, t#e
petition %or review'
T#e "upreme $ourt granted t#e petition, set aside t#e decision and order o% t#e $ourt o% 7ppea&s, dismissed
t#e comp&aint e%ore t#e tria& court %or &ack o% merit ut wit#out preAudice to @"1$ pursuing its c&aims
against $M, in t#e proper proceedings'
1. Bill o, la+in* re,er to C=;! not HSBC! as consi*nee
7t t#e outset, t#e 1i&& o% +ading w#ic# was issued ! t#e carrier ut contained artic&es %urnis#ed !
t#e "#ipper, s#ows on its %ace t#at t#e "#ipment is consigned ;T( "@,PPB:?" (:DB:< wit# ;7DD:B""
7::,V7+ E(T,$B T( $(E"(+,D7TBD M,EB" ,E$' >0.. 7O7+7 7VB' M7P7T,, MBT:( M7E,+7,
P@,+,PP,EB"'< Eow#ere did t#e 1i&& o% +ading re%er to @"1$ as t#e consignee or t#e one to e noti%ied' T#e
%oregoing in%ormation, wit#out more, in e%%ect makes $M, %or a&& practica& intents and purposes t#e part!
named and ordered to receive t#e goods'
-. Dastern S)ippin* not expecte+ to look $eyon+ ,ace o, $il o, la+in*
Bastern "#ipping, not eing priv! to an! transaction etween @"1$ and $M,, cannot e e3pected to
&ook e!ond w#at is contained on t#e %ace o% t#e i&& o% &ading and guess w#ic# o% t#e man! anks in Metro
Mani&a or some ot#er unrevea&ed corporation cou&d possi&! e t#e consignee' To consider ot#erwise wou&d
not e sound usiness practice as Bastern "#ipping wou&d e %orced to wait %or t#e rea& owner o% t#e goods to
s#ow up, per#aps in vain' T#e s#ipment consisted o% mac#iner! materia&s and supp&ies %or a mining compan!
named in t#e i&& o% &ading' ,n t#e asence o% contrar! instructions or at &east know&edge o% ot#er %acts, t#e
carrier is not ordinari&! e3pected to de&iver mining e9uipment to an unnamed or unknown part! &urking %or
severa& mont#s'
3. 7ature o, Bill o, la+in*6 =acon+ray vs. 5ctin* Co##issioner o, Custo#s! :)oenix 5ssurance
vs. FS Lines
,n Macondra! and $ompan! ,nc' v' 7cting $ommissioner o% $ustoms (>8 "$:7 580 L1.04M), it was
#e&d t#at a i&& o% &ading is ordinari&! mere&! a convenient commercia& instrument designed to protect t#e
importer or consignee' 7nd in P#oeni3 7ssurance $o', +td' v' Dnited "tates +ines (88 "$:7 >05 L1.>/M), it
was #e&d t#at as a receipt, a i&& o% &ading recites t#e p&ace and date o% s#ipment, descries t#e goods as to
9uantit!, weig#t, dimensions, identi%ication marks, condition, 9ua&it! and va&ue'
/. C=; o.ner o, *oo+s in 9uestion6 8t)er evi+ences
(1) @"1$ e3press&! admitted in its comp&aint t#at ;pursuant to t#e 1i&& o% &ading t#e s#ipment was
issued GTo "#ipper?s (rder'?< ,t never a&&eged t#erein t#at it was t#e consignee o% t#e s#ipment in 9uestion'
"imi&ar&!, ! @"1$?s own documentar! evidence, $M, is t#e u!er=owner o% t#e s#ipment' (8) t#e 1u!er
re%erred to in t#e $erti%icate issued ! t#e s#ipper Ean!o $orporation s#ou&d per%orce re%er to $M,, as t#at it
certi%ied t#at t#e (rigina& $onsu&ar ,nvoice #ad een airmai&ed direct&! to 1u!er, and certi%ied t#at advance
copies o% $ommercia& ,nvoice Packing +ist and 1i&& o% +ading were airmai&ed direct&! to 1u!er' (3) @"1$
#as esta&is#ed ! its own documentar! evidence, more particu&ar&!, t#e $onsu&ar ,nvoice dated 84 Feruar!
1./2, issued in Tok!o, Japan ! t#e Foreign "ervice o% t#e :epu&ic o% t#e P#i&ippines, t#at t#e consignee o%
t#e s#ipment in 9uestion is $M,' @ence, in view o% t#e admissions o% @"1$, e3ceptiona& circumstances a&&ow
a deviation %rom t#e genera& ru&e regarding t#e surrender o% t#e i&& o% &ading' T#e ru&e cannot a&wa!s e
aso&ute'
2. Section 3! Rule 1-4! Rules o, Court6 5+#issi$ility o, evi+ence
"ection 3, :u&e 18/, o% t#e :u&es o% $ourt provide t#at ;Bvidence is admissi&e w#en it is re&evant to
t#e issue and is not e3c&uded ! t#ese ru&es'<
. Section -! Rule 1-%! Rules o, Court6 Bu+icial a+#issions
"ection 8, :u&e 18., o% t#e :u&es o% $ourt provide t#at ;7dmissions made ! t#e parties in t#e
p&eadings, or in t#e course o% t#e tria& or ot#er proceedings do not re9uire proo% and cannot e contradicted
un&ess previous&! s#own to #ave een made t#roug# pa&pa&e mistakes'<
3. 5rticle 323 o, Co+e o, Co##erce
7ssuming t#at $M, ma! not e considered consignee, Bastern "#ipping cannot e %au&ted %or
re&easing t#e goods to $M, under t#e circumstances, due to its &ack o% know&edge as to w#o was t#e rea&
consignee in view o% $M,?s strong representations and &etter o% undertaking w#erein it stated t#at t#e i&& o%
&ading wou&d e presented &ater' T#is is precise&! t#e situation covered ! t#e &ast paragrap# o% 7rtic&e 343 o%
t#e $ode o% $ommerce, i'e' ;,% in case o% &oss or %or an! ot#er reason w#atsoever, t#e consignee cannot return
upon receiving t#e merc#andise t#e i&& o% &ading suscried ! t#e carrier, #e s#a&& give said carrier a receipt
o% t#e goods de&ivered t#is receipt producing t#e same e%%ects as t#e return o% t#e i&& o% &ading'<
4. State Bon+in* an+ ;nsurance vs. =anila :ort Service
,n "tate 1onding and ,ns' $o' ,nc' v' Mani&a Port "ervice, (11 "$:7 522 L1.>5M), it was #e&d t#at t#e
arriva& o% s#ipment is deemed admitted ! an a&&egation o% de&iver! to t#e consignee'
%. Dastern S)ippin* in *oo+ ,ait)
Dnder t#e specia& circumstances o% t#e present case, e9uit! %avors Bastern "#ipping w#ic# proved
t#at it was in good %ait# w#i&e ot# $M, and @"1$ cannot c&aim t#e same' F#i&e t#e goods in 9uestion were
re&eased on 5 Marc# 1./2 t#e records s#ow t#at @"1$ received t#e origina& i&& o% &ading, as per testimon! o%
its witness Bder&ina $risostomo, on&! on 7pri& 1./2 or &ong a%ter t#e goods #ad een re&eased' T#is
circumstance goes against t#e c&aims o% @"1$' T#us @"1$ in its origina& demand &etter stated, ;Fe are
una&e to &ocate t#e cargo and it wou&d appear t#at it #as een re&eased ! !ou to $onso&idated Mines, ,nc'<
T#is proves t#at it #ad %ore=know&edge o% t#e prior re&ease to $M,' 7nd to make t#ings worse, @"1$, despite
$M,?s admission t#at it received t#e goods, sued on&! Bastern "#ipping w#i&e at t#e same time c&aiming %or
t#e va&ue o% t#e goods in t#e invo&untar! inso&venc! proceedings o% $M, w#ic# t#e 1ank itse&%, toget#er wit#
ot#ers, initiated' (n&! &ater deve&opments &ed to t#e present case'
1". 5rticle 133 7CC6 5rticle uses con?unction @orA
7rtic&e 103> o% t#e $ivi& $ode o% t#e P#i&ippines w#ic# provides t#at ;t#e e3traordinar! responsii&it!
o% t#e common carrier &asts %rom t#e time t#e goods are unconditiona&&! p&aced in t#e possession o%, and
received ! t#e carrier %or transportation unti& t#e same are de&ivered, actua&&! or constructive&!, ! t#e carrier
to t#e consignee, or to t#e person w#o #as a rig#t to receive t#em, wit#out preAudice to t#e provisions o%
7rtic&e 103/'< @erein, @"1$ witting&! or unwitting&! over&ooked t#e %act t#at t#e same artic&e uses t#e
conAunction ;or< in re%erence to w#om t#e goods ma! e de&ivered, t#at is, to t#e consignee, or to t#e person
w#o #as a rig#t to receive t#em'
11. HSBC #ore ne*li*ent party as a*ainst Dastern S)ippin*
,t ecomes more evident t#at @"1$ is t#e more neg&igent part! as against Bastern "#ipping w#en
aside %rom #aving a&&owed $M, to e designed in t#e i&&s o% &ading, as t#e part! to e noti%ied, it a&&owed t#e
&atter to e designated as t#e consignee in t#e $onsu&ar ,nvoice, t#e origina& o% w#ic# was direct&! %urnis#ed
to $M, ! and as certi%ied to ! t#e s#ipper Ean!o $orporation' Fit# suc# vast powers, akin to an agent o%
@"1$, $M, acted wit#in its aut#orit!, and even i% it acted on its own'
1-. 5rticle 1443 7CC
;,% an agent acts in #is own name, t#e principa& #as no rig#t o% action against t#e persons wit# w#om
t#e agent #as contracted, neit#er #ave suc# persons against t#e principa&' ,n suc# case t#e agent is t#e one
direct&! ound in %avor o% t#e person wit# w#om #e #as contracted, as i% t#e transaction were #is own, e3cept
w#en t#e contract invo&ves t#ings e&onging to t#e principa&' T#e provisions o% t#is artic&e s#a&& e understood
to e wit#out preAudice to t#e actions etween t#e principa& and agent'<
13. Ba+ ,ait) $y $ot) HSBC an+ C=;
For a&most > mont#s %rom t#e arriva& o% t#e goods @"1$ did not do an!t#ing to c&aim t#e cargo' ,t
cou&d not possi&! e &e%t around &!ing id&e w#en on t#e %ace o% t#e i&& o% &ading, t#ere was a named owner to
e noti%ied' (n t#e ot#er #and, $M, secured t#e re&ease o% t#e goods t#roug# misrepresentation e%ore Bastern
"#ipping wit#out sett&ing its account wit# @"1$ and t#erea%ter did not ot#er to present evidence e%ore t#e
tria& court, &eaving Bastern "#ipping #o&ding an empt! ag as it were' T#ese circumstances a&so prove ad
%ait# on t#e part o% $M,' Dnder t#e e3ceptiona& circumstances and app&!ing especia&&! strong considerations
o% e9uit!, Bastern "#ipping did not commit an! %au&t su%%icient to render it &ia&e to @"1$' (n t#e contrar!, it
was @"1$ and $M, w#o were ovious&! in ad %ait# in dea&ing wit# Bastern "#ipping'
[23]
Li#pan*co Sons vs. Han*co Stea#s)ip (GR 1"-43! -2 Buly 1%1)
"econd Division, Per $uriam: 3 concur, 1 concur in resu&t, 1 dissent
&acts' (n 3 7ugust 1.13, +impangco "ons emp&o!ed Oangco "teams#ip $o' to tow %rom 6uagua to Mani&a
two cascos &oaded wit# 8,251'/2 picu&s o% sugar, propert! o% +impanggo "ons, o% t#e va&ue o% P11,88.'.2' (n
t#at date t#e cascos &e%t 6uagua towed ! t#e &aunc#es Ta#imic and Matu&in, e&onging to Oangco "teams#ip'
F#en t#e &aunc#es, toget#er wit# t#eir tows, arrived o%% t#e Ma&aon :iver, t#e patron o% t#e &aunc# Matu&in,
w#et#er o% #is own motion or w#et#er at t#e instance o% t#e patrones o% t#e cascos decided to &eave t#e cascos
in t#e Ma&aon :iver' T#e &aunc# Ta#imic towed t#e cascos into t#e Ma&aon :iver and t#e &aunc# Matu&in
continued t#e trip to Mani&a' T#e reason w#! t#is was done was t#at, at t#at time, t#e weat#er was
t#reatening, and t#at t#ere was suc# a sea on as to make it dangerous %or t#e cascos, #eavi&! &oaded as t#e!
were, to continue t#e vo!age to Mani&a' (n / 7ugust 1.13, t#e &aunc# Maturing was in t#e Ma&aon :iver
and t#e patron ta&ked to t#e men in c#arge o% t#e two cascos, w#ic# were at t#at time tied up at Tansa, and to&d
t#em t#at on t#e %o&&owing da!, at da!reak, #e wou&d await t#em o% t#e mout# o% t#e Ma&aon :iver, outside
t#e ar, and t#at, i% t#e weat#er was t#en %avora&e, #e wou&d tow t#em to Mani&a, ,t was agreed etween t#e
patron o% t#e Matu&in and t#e patrones o% t#e cascos t#at t#e &atter s#ou&d move out o% t#e river ! means o%
t#eir tikines or amoo po&es and, t#us prope&&ed, proceed to t#e p&ace w#ere t#e &aunc# Matu&in was to e
waiting %or t#em' (n t#e %o&&owing da!, t#e patron o% t#e Matu&in arrived wit# #is &aunc# o%% t#e mout# o% t#e
Ma&aon :iver and anc#ored outside o% t#e s#a&&ows, somet#ing &ike 1,422 meters %rom t#e mont# o% t#e
river' ,n accordance wit# t#e agreement wit# t#e patron o% t#e Matu&in and under #is instructions, t#e crews
po&ed t#eir cascos out o% t#e river %o&&owing t#e c#anne&' F#en t#e! passed t#e s#a&&ow water t#e! were met
wit# #ig# seas and strong winds' T#e amoo po&es were unavai&ing, and, %inding t#emse&ves in danger o%
eing was#ed as#ore and destro!ed, t#e! c&aim t#e! ca&&ed to t#e Matu&in, w#ic# was in p&ain sig#t, %or #e&p'
T#e patron o% t#e Matu&in, t#e! a&&ege, made no e%%ort to assist t#em and, ! reason o% t#e #ig# seas and
strong winds, t#e! were driven as#ore or on t#e s#oa&s and t#eir cargoes &ost' T#e patron o% t#e Matu&in
testi%ied t#at #e was una&e to render assistance to t#e cascos ! reason o% t#e s#a&&ow water in w#ic# t#e!
were at t#e time t#e! were caug#t ! t#e winds and waves and was#ed as#ore'
7n action %or neg&igence was %i&ed as a resu&t o% t#e &oss o% cargo w#i&e two cascos were towed %rom 6uagua
to Mani&a' IAhe trial court appeared to have rendered >udg%ent in 2avor o2 Bangco tea%ship. Ahe actual
dispositive portion o2 the >udg%ent is not 2ound in the 2actsJ T#e "upreme $ourt reversed t#e Audgment o% t#e
tria& court'
1. Gessel un+ertakin* to.a*e service lia$le ,or reasona$le care o, t)e to.6 =easure! +uration!
scope
7 vesse& w#ic# undertakes a towage service is &ia&e %or reasona&e care o% t#e tow, and t#at
reasona&e care is measured ! t#e dangers and #a*ards to w#ic# t#e tow is or ma! e e3posed, w#ic# it is t#e
dut! o% t#e master o% t#e tug to know and to guard against not on&! ! giving proper instructions %or t#e
management o% t#e tow, ut ! watc#ing #er w#en in a dangerous &oca&it!, to see t#at #is directions are
oe!ed' T#e dut! o% t#e tug to a tow is a continuous one %rom t#e time service commences unti& it is
comp&eted' ,ts responsii&it! inc&udes not on&! t#e proper and sa%e navigation o% t#e tug on t#e Aourne!, ut to
%urnis# sa%e, sound and reasona&e app&iances and instrumenta&ities %or t#e service to e per%ormed, as we&& as
t#e giving o% proper instructions as to t#e management o% t#e towC and i% t#e &oca&it! in w#ic# t#e tow %inds
itse&% at an! given time is more t#an ordinari&! dangerous, t#e tug is #e&d to a proportionate&! #ig#er degree o%
care and ski&&' ,t is we&& recogni*ed t#at in towing a oat ui&t on&! %or t#e s#a&&ow water o% an in&and stream,
suc# as t#e cascos are, greater care must necessari&! e used w#en venturing upon an ocean vo!age t#an wit#
a vesse& %itted %or deep waterC and t#is app&ies not on&! in t#e c#oice o% route, to se&ect t#e one #aving t#e
smoot#est water and a%%ording s#e&ter in storm! weat#er, ut in t#e #anding o% t#e tow'
-. Han*co ne*li*ent
Oangco "teams#ip direct&! or t#roug# t#e captain %ai&ed in ever! dut! &aid upon it ! t#e &aw' ,t
neg&ected to %urnis# suita&e app&iances and instrumenta&itiesC %or t#e tug itse&% was unsuita&e %or t#e purpose
in #and' ,t is neg&igence to &eave two #eavi&! &oaded cascos in Mani&a 1a! at t#e merc! o% weat#er &ike&! to
e3ist in t#e mont# o% 7ugust %or a distance o% 1,422 meters wit# no ot#er motive power t#an amoo po&es'
7&so t#e captain o% t#e Matu&in %ai&ed to give proper instructions to t#e tow' ,% it was neg&igence not to
provide #imse&% wit# app&iances ! w#ic# t#e cascos cou&d e protected w#i&e passing %rom t#e mout# o% t#e
river to t#e &aunc#, it was neg&igence %or #im to ask t#e cascos to move out into t#e open sea under suc#
circumstances'
3. <e*ree o, +ili*ence an+ care re9uire+6 Dxtraor+inary circu#stances
7&t#oug# t#e &aw re9uires t#e use o% on&! ordinar! di&igence and careC t#e &aw re9uired t#e e3ercise o%
more t#an ordinar! care under t#e circumstances e3isting at t#e time t#e cascos were &ost' T#e %act o% time o%
time and season and o% t#e proai&it! t#at in coming out o% t#e river t#e! wou&d e met wit# wind and wave
(ransportation La.! -""/ ( 1/" )
and wave and, in t#eir #e&p&ess condition, wou&d in a&& proai&it!, i% so met, e driven on t#e s#oa&s, made t#e
situation o% t#e cascos one o% more t#an ordinar! dangerC and t#e tug s#ou&d e #e&d to a proportionate #ig#er
degree o% care and ski&&'
/. Kuali,ication to .arrant exe#ption ,ro# lia$ility .)en proxi#ate or i##e+iate cause is 5ct o,
Go+
F#i&e t#e captain o% t#e Matu&in wou&d not #ave een responsi&e %or an act o% 6od ! w#ic# t#e
cascos were &ost, it was #is dut! to %oresee w#at t#e weat#er was &ike&! to e, and to take suc# precautions as
were necessar! to protect #is tow' ,t was not an act o% 6od ! w#ic# t#e cascos were &ostC it was t#e direct
resu&t o% t#e %ai&ure o% t#e captain o% t#e Matu&in to meet t#e responsii&ities w#ic# t#e occasion p&aced on
#im' To e e3empt %rom &iai&it! ecause o% an act o% 6od t#e tug must e %ree %rom an! previous neg&igence
or misconduct ! w#ic# t#at &oss or damage ma! #ave een occasioned' For, a&t#oug# t#e immediate or
pro3imate cause o% t#e &oss in an! given instance ma! #ave een w#at is termed an act o% 6od, !et, i% t#e tug
unnecessar! e3posed t#e two suc# accident ! an! cu&pa&e act or omission o% its own, it is not e3cused'
[2/], also [137] and [, a.ter 207]
G. =artini Lt+. vs. =acon+ray M Co. (GR 13%3-! -4 Buly 1%1%)
Bn 1anc, "treet (J): 0 concur
&acts' ,n "eptemer 1.1>, 6' Martini, +td' arranged wit# Macondra! T $o' ,nc', as agents o% t#e Bastern and
7ustra&ian "teams#ip $ompan!, %or t#e s#ipment o% 81. cases or packages o% c#emica& products %rom Mani&a,
P#i&ippine ,s&ands, to Poe, Japan' (n 14 "eptemer 1.1> (Frida!), Martini app&ied to Macondra! %or
necessar! space on t#e steams#ip Bastern, and received a s#ipping order, w#ic# constituted aut#orit! %or t#e
s#ip?s o%%icers to receive t#e cargo aoard' T#e mate?s receipt did not come to Martini?s #and unti& Monda!
nig#t, ut as Martini was desirous o% otaining t#e i&&s o% &ading on t#e "aturda! morning preceding in order
t#at #e mig#t negotiate t#em at t#e ank, a re9uest was made %or t#e de&iver! o% t#e i&&s o% &ading on t#at da!
To e%%ectuate t#is, Martini was re9uired to enter into t#e written o&igation, ca&&ing itse&% a ;&etter o%
guarantee'< ,n con%ormit! wit# t#e purpose o% t#is document t#e i&&s o% &ading were issued, and t#e
negotia&e copies were, upon t#e same da!, negotiated at t#e ank ! t#e p&ainti%% %or .2I o% t#e invoice
va&ue o% t#e goods' T#e i&&s o% &ading contained on t#eir %ace, conspicuous&! stenci&ed, t#e words ;on deck at
s#ipper?s risks'< T#e mate?s receipt, received ! t#e p&ainti%% two da!s &ater a&so ore t#e notation ;on deck at
s#ipper?s risk,< written wit# penci&, and evident&! ! t#e o%%icer w#o took t#e cargo on oard and signed t#e
receipt' Martini sa!s t#at upon seeing t#e stamped ;on deck at s#ipper?s risks<, #e at once ca&&ed t#e attention
o% "' $odina t#ereto, t#e &atter eing an emp&o!ee o% t#e #ouse w#ose dut! it was to attend to a&& s#ipments o%
merc#andise and w#o in %act #ad entire contro& o% a&& matters re&ating to t#e s#ipping o% t#e cargo' +etters !
Martini, warning Macondra! t#at it wou&d e #e&d &ia&e %or &oss or damage i% t#e goods were stowed on deck,
were dispatc#ed ! messenger, and upon receiving it, Macondra! ca&&ed $odina ! te&ep#one at aout 5'32
p'm' and, re%erring to t#e communication Aust received, to&d #im t#at Macondra! cou&d not accept t#e cargo
%or transportation ot#erwise t#an on deck and t#at i% Martini were dissatis%ied, t#e cargo cou&d e disc#arged
%rom t#e s#ip' T#e goods were emarked at Mani&a on t#e steams#ip Bastern and were carried to Poe on t#e
deck o% t#at s#ip, on 1> "eptemer 1.1>' Dpon arriva& at t#e port o% destination it was %ound t#at t#e
c#emica&s comprised in t#e s#ipment #ad su%%ered damage %rom t#e e%%ects o% ot# %res# and sa&t water'
7n action was instituted ! Martini to recover t#e amount o% t#e damage t#ere! occasioned' ,n t#e $ourt o%
First ,nstance Audgment was rendered in %avor o% Martini %or t#e sum o% P35,..0'4>, wit# interest %rom 85
Marc# 1.10, and costs o% t#e proceeding' From t#is Audgment, Macondra! appea&ed'
T#e "upreme $ourt reversed t#e Audgment appea&ed %rom and aso&ved Macondra! %rom t#e comp&aintC wit#
no e3press pronouncement wi&& e made as to t#e costs o% eit#er instance'
(ransportation La.! -""/ ( 1/1 )
1. <a#a*e .as cause+ $y .ater
T#e damage was caused ! water, eit#er %a&&ing in t#e %orm o% rain or sp&as#ing aoard ! t#e action
o% wind and waves'
-. :ara*rap) 1% o, t)e several $ills o, la+in* issue+ ,or transportation o, t)e car*o
Paragrap# 1. o% t#e severa& i&&s o% &ading issued %or transportation o% t#e cargo reads ;(1.) 6oods
signed %or on t#is i&& o% &ading as carried on deck are entire&! at s#ipper?s risk, w#et#er carried on deck or
under #atc#es, and t#e steamer is not &ia&e %or an! &oss or damage %rom an! cause w#atever' ;
3. S)ipper or+inarily pro+uce #ate1s receipt to a*ents o, s)ip1s co#pany
(rdinari&! t#e s#ipper is supposed to produce t#e mate?s receipt to t#e agents o% t#e s#ip?s compan!,
w#o t#ereupon issue t#e i&& o% &ading to t#e s#ipper' F#en, #owever, t#e s#ipper desires to procure t#e i&& o%
&ading e%ore #e otains t#e mate?s receipt, it is customar! %or #im to enter into a written o&igation, inding
#imse&%, among ot#er t#ings, to aide ! t#e terms o% t#e mate?s receipt' @erein,
/. Contents o, t)e @Letter o, GuaranteeA
T#e ;+etter o% 6uarantee< dated 1> "eptemer 1.1>, is o% t#e tenor ;,n consideration o% !our signing
us c&ean 1-+ %or t#e undermentioned cargo per aove steamer to e s#ipped on or under deck at s#ip?s option,
%or Poe wit#out production o% t#e mate?s receipt, we #ere! guarantee to #o&d !ou %ree %rom an!
responsii&it! ! !our doing so, and %or an! e3pense s#ou&d t#e w#o&e or part o% t#e cargo e s#ut out, or
ot#erwise, and to #and !ou said mate?s receipt as soon as it reac#es us and to aide ! a&& c&auses and
notations on t#e same'<
2. =artini +i+ not)in* to +isc)ar*e car*o
,n order to get t#e cargo o%% certain %orma&ities were necessar! w#ic# cou&d not e accomp&is#ed, as
%or instance, t#e return o% t#e mate?s receipt (w#ic# #ad not !et come to Martini?s #ands), t#e securing o% a
permit %rom t#e customs aut#orities, and t#e securing o% an order o% disc#arge %rom t#e steams#ip compan!'
,n view o% t#e %act t#at Martini did not#ing w#atever &ooking towards t#e disc#arge o% t#e cargo, not even so
muc# as to noti%! Macondra! t#at t#e cargo must come o%%, t#e proo% re&ative to t#e practicai&it! o% disc#arge
is inconc&usive' ,% Martini #ad prompt&! in%ormed Macondra! o% t#eir reso&ve to #ave t#e cargo disc#arged,
and t#e &atter #ad nevert#e&ess permitted t#e s#ip to sai& wit#out disc#arging it, t#ere wou&d #ave een some
ground %or Martini?s contention t#at its consent #ad not een given %or t#e goods to e carried on deck'
Eeed&ess to sa! t#e $ourt attac#ed no weig#t to t#e statement o% $odina t#at #e was una&e to get Macondra!
! te&ep#one in order to communicate directions %or t#e disc#arge o% t#e cargo'
. ;n,erre+ reasons .)y =artini allo.e+ car*o to $e carrie+ a.ay
,t is in%era&e t#at one reason w#! Martini a&&owed t#e cargo to e carried awa! wit#out eing
disc#arged, was t#at t#e i&&s #ad een discounted and to stop t#e s#ipment wou&d #ave entai&ed t#e necessit!
o% re%unding t#e mone! w#ic# t#e ank #ad advanced, wit# t#e inconveniences incident t#ereto' 7not#er
reason apparent&! was t#at Martini discerned, or t#oug#t #e discerned t#e possii&it! o% s#i%ting t#e risk so as
to make it %a&& upon t#e s#ip?s compan!'
3. Cor+ina not +eceive+ into si*nin* +ocu#ent6 Guaranty per#it sto.a*e eit)er on or un+er +eck
at s)ip1s option
T#ere was no space in t#e #o&d to take t#e cargo and it was unnecessar! to consider w#et#er t#e
c#emica&s to e s#ipped were o% an e3p&osive or in%&amma&e c#aracter, suc# as to re9uire stowage on deck'
1! reason o% t#e %act t#at t#e cargo #ad to e carried on deck at a&& events, i% carried at a&&, t#e guarant! was so
drawn as to permit stowage eit#er on or under deck at t#e s#ip?s optionC and t#e attention o% $odina must #ave
een drawn to t#is provision ecause Macondra! re%used to issue t#e i&&s o% &ading upon a guarant! signed !
$odina upon anot#er %orm, w#ic# contained no suc# provision' T#e messenger etween t#e two
(ransportation La.! -""/ ( 1/- )
esta&is#ments w#o was sent %or t#e i&&s o% &ading according&! #ad to make a second trip and go ack %or a
&etter o% guarant! signed upon t#e desired %orm'
4. =artini +uly noti,ie+ as to #anner in .)ic) car*o .as s)ippe+! ,aile+ to *ive necessary
instructions #ani,estin* ac9uiescence
7&t#oug# Martini wou&d #ave great&! pre%erred %or t#e cargo to e carried under t#e #atc#es, t#e!
nevert#e&ess consented %or it to go on deck' $odina, i% attentive to t#e interests o% #is #ouse, must #ave known
%rom t#e tenor o% t#e guarant! to w#ic# #is signature is a%%i3ed t#at Macondra! #ad reserved t#e rig#t to carr!
it on deck, and w#en t#e i&&s o% &ading were de&ivered to Martini t#e! p&ain&! s#owed t#at t#e cargo wou&d e
so carried' Martini was du&! a%%ected wit# notice as to t#e manner in w#ic# t#e cargo was s#ipped' Eo
comp&aint was made unti& a%ter t#e i&&s o% &ading #ad een negotiated at t#e ank' F#en t#e manager o%
Martini %irst #ad #is attention drawn to t#e %act t#at t#e cargo was eing carried on deck, #e ca&&ed $odina to
account, and t#e &atter %ound it to #is interest to %eign surprise and pretend t#at #e #ad een deceived !
Macondra!' Bven t#en t#ere was time to stop t#e s#ipment, ut Martini %ai&ed to give t#e necessar!
instructions, t#ere! mani%esting ac9uiescence in t#e accomp&is#ed %act' Martini must t#us e #e&d to #ave
assented to t#e s#ipment o% t#e cargo on deck and t#at t#e! are ound ! t#e i&&s o% &ading in t#e %orm in
w#ic# t#e! were issued'
%. Clean $ill o, la+in* an+ sto.a*e o, car*o on +eck .it)out consent6 ()e :ara*on
,% a c&ean i&& o% &ading #ad een issued and Martini #ad not consented %or t#e cargo to go on deck, t#e
s#ip?s compan! wou&d #ave een &ia&e %or a&& damage w#ic# resu&ted %rom t#e carriage on deck' ,n t#e case
o% T#e Paragon (1 Fare, 38>C 1/ Fed' $as' Eo' 1202/), decided in 1/3> in one o% t#e district courts o% t#e
Dnited "tates, it appeared t#at cargo was s#ipped %rom 1oston, Massac#usetts, to Port&and, Maine, upon w#at
is ca&&ed a c&ean i&& o% &ading, t#at is, one in t#e common %orm wit#out an! memorandum in t#e margin or on
its %ace s#owing t#at t#e goods are to e carried on deck' ,t was proved t#at t#e s#ipper #ad not given #is
consent %or carriage on deck' Eevert#e&ess, t#e master stowed t#e goods on deckC and a storm #aving arisen, it
ecame necessar! to Aettison t#em' Eone o% t#e cargo in t#e #o&d was &ost' ,t was t#us evident t#at a&t#oug#
t#e cargo in 9uestion was &ost ! peri& o% t#e sea, it wou&d not #ave een &ost e3cept %or t#e %act t#at it was
eing carried on deck' ,t was #e&d t#at t#e s#ip was &ia&e'
1". ()e :ara*on6 Loss $y ,ortuitous event! *eneral avera*e
T#e goods, #aving een &ost ! t#e dangers o% t#e seas, ot# t#e master and t#e vesse& are e3empted
%rom responsii&it! wit#in t#e common e3emption in i&&s o% &adingC and t#e goods #aving een t#rown
overoard %rom necessit!, and %or t#e sa%et! o% t#e vesse& and cargo, as we&& as t#e &ives o% t#e crew, t#at it
presents a case %or a genera& average or contriution, upon t#e common princip&e t#at w#en a sacri%ice is
made %or t#e ene%it o% a&&, t#at t#e &oss s#a&& e s#ared ! a&&' ,n ever! contract o% a%%reig#tment, &osses ! t#e
dangers o% t#e seas are e3cepted %rom t#e risks w#ic# t#e master takes upon #imse&%, w#et#er t#e e3ception is
e3pressed in t#e contract or not' T#e e3ception is made ! t#e &aw, and %a&&s wit#in t#e genera& princip&e t#at
no one is responsi&e %or %ortuitous events and accidents o% maAor %orce' $asus %ortuitous nemo praestat'
11. ()e :ara*on6 Loss $y ,ortuitous event! exceptions
T#e genera& &aw is suAect to an e3ception, t#at w#en t#e inevita&e accident is preceded ! a %au&t o%
t#e detor or person ound wit#out w#ic# it wou&d not #ave #appened, t#en #e ecomes responsi&e %or it'
T#us, t#e master is responsi&e %or t#e sa%e and proper stowage o% t#e cargo, and t#ere is no dout t#at ! t#e
genera& maritime &aw #e is ound to secure t#e cargo sa%e&! under deck' ,% t#e master carries goods on deck
wit#out t#e consent o% t#e s#ipper, #e does it at #is own risk' ,% t#e! are damaged or &ost in conse9uence o%
t#eir eing t#us e3posed, #e cannot protect #imse&% %rom responsii&it! ! s#owing t#at t#e! were damaged or
&ost ! t#e dangers o% t#e seas' F#en t#e s#ipper consents to #is goods eing carried on deck, #e takes t#e risk
upon #imse&% o% t#ese pecu&iar peri&s'
1-. Gan Horn vs. (aylor6 E)en s)ipper )a+ no notice o, car*o $ein* carrie+ on +eck
Van @orn vs' Ta!&or (8 +a' 7nn', 4/0C 5> 7m' Dec', 44/), was a case w#ere goods stowed on deck
were &ost in a co&&ision' T#e court %ound t#at t#e s#ip carr!ing t#ese goods was not at %au&t, and t#at t#e
s#ipper #ad notice o% t#e %act t#at t#e cargo was eing carried on deck' ,t was #e&d t#at t#e s#ip was not &ia&e'
"aid t#e court: ;,t is said t#at t#e p&ainti%%?s goods were improper&! stowed on deckC t#at t#e deck &oad on&!
was t#rown overoard ! t#e co&&ision, t#e cargo in t#e #o&d not eing inAured' T#e goods were t#us &aden
wit# t#e know&edge and imp&ied approation o% t#e p&ainti%%' @e was a passenger on oard t#e steamer, and
does not appear to #ave made an! oAection to t#e goods eing t#us carried, t#oug# t#e co&&ision occurred
severa& da!s a%ter t#e steamer commenced #er vo!age'<
13. ()e ()o#as :. ()orn6 Risk o, +a#a*e to s)ipper .)en contract is to carry upon +eck
,n t#e case o% T#e T#omas P' T#orn (/ 1en', 3C 83 Fed', $as' Eo' 13.80), decided in t#e District $ourt
in t#e "tate o% Eew Oork, it appeared t#at toacco was received upon a cana& oat, wit# t#e understanding t#at
it was to e carried on deck, covered wit# tarpau&ins' Dpon arriva& at its destination it was %ound damaged !
water, %or t#e most part on t#e top, and evident&! as a conse9uence o% rains' 7t t#e same time a 9uantit! o%
ma&t stowed e&ow deck on t#e same vo!age was uninAured' ,n discussing t#e 9uestion w#et#er upon a
contract to carr! on deck, t#e vesse& was &ia&e %or t#e wetting o% t#e toacco, t#e court said: ;,t is mani%est
t#at t#e inAur! to t#e toacco arose simp&! %rom t#e %act t#at it was carried on deck' T#e ma&t, carried e&ow,
a&t#oug# an artic&e easi&! inAured, received no damage, and t#e vo!age was per%ormed wit# usua& care, and
wit#out disaster' ,ndeed, t#ere is evidence o% a statement ! t#e &ie&ant, t#at toacco must o% necessit! e
inAured ! eing carried on deck' 1ut, under a contract to carr! upon deck, t#e risk o% an! damage resu&ting
%rom t#e p&ace o% carriage rests upon t#e s#ipper, and, wit#out proo% o% neg&igence causing t#e damage, t#ere
can e no recover!' @ere t#e evidence s#ows t#at a&& reasona&e care was taken o% t#e toacco during its
transportationC t#at t#e manner o% stowing and covering it was known to and assented to ! t#e s#ipperC and
t#e in%erence is warranted t#at t#e inAur! arose, wit#out %au&t o% t#e carrier, %rom rain, to w#ic# merc#andise
transported on deck must necessari&! e in some degree e3posed' 7n! &oss arising %rom damaged t#us
occasioned is to e orne ! t#e s#ipper'<
1/. La.rence vs. =inturn6 Goo+s sto.e+ on +eck .it) consent o, s)ipper ?ettisone+ +urin* stor#
entitle+ to *eneral avera*e
+awrence vs' Minturn (10 @ow LD'",M, 122C 14 + ed', 4/), was a case w#ere goods stowed on deck
wit# t#e consent o% t#e s#ipper were Aettisoned during a storm at sea' ,n discussing w#et#er t#is cargo was
entit&ed to genera& average, t#e "upreme $ourt o% t#e Dnited "tates said: ;T#e maritime codes and writers
#ave recogni*ed t#e distinction etween cargo p&aced on deck, wit# t#e consent o% t#e s#ipper, and cargo
under deck' T#ere is not one o% t#em w#ic# gives a recourse against t#e master, t#e vesse&, or t#e owners, i%
t#e propert! &ost #ad een p&aced on deck wit# t#e consent o% its owner, and t#e! a%%ord ver! #ig# evidence o%
t#e genera& and appropriate usages, in t#is particu&ar, o% merc#ants and s#ipowners' "o t#e courts o% t#is
countr! and Bng&and, and t#e writers on t#is suAect, #ave treated t#e owner o% goods on deck, wit# #is
consent, as not #aving a c&aim on t#e master or owner o% t#e s#ip in case o% Aettison' T#e received &aw, on t#e
point, is e3pressed ! $#ance&&or Pent, wit# #is usua& precision, in 3 $om', 852: GEor is t#e carrier in t#at
case (Jettison o% deck &oad) responsi&e to t#e owner, un&ess t#e goods were stowed on deck wit#out t#e
consent o% t#e owner, or a genera& custom inding #im, and t#en #e wou&d e c#argea&e wit# t#e &oss'?<
12. Goul+ vs. 8liver6 Goo+s loa+e+ on +eck .it) consent o, #erc)ant! =erc)ant )as no re#e+y
a*ainst s)ipper or #aster
,n 6ou&d vs' (&iver (5 1ing', E' $', 138), decided in t#e Bng&is# $ourt o% $ommon P&eas in 1/30,
Tinda&, $'J', said: ;F#ere t#e &oading on deck #as taken p&ace wit# t#e consent o% t#e merc#ant, it is ovious
t#at no remed! against t#e s#ipowner or master %or a wrong%u& &oading o% t#e goods on deck can e3ist' T#e
%oreign aut#orities are indeed e3pressC on t#at point' 7nd t#e genera& ru&e o% t#e Bng&is# &aw, t#at no one can
maintain an action %or a wrong, w#ere #e #as consented or contriuted to t#e act w#ic# occasioned #is &oss,
&eads to t#e same conc&usion'<
(ransportation La.! -""/ ( 1// )
1. E)en s)ipper consents to )ave *oo+s carrie+ on +eck! )e takes risks o, +a#a*e or loss
F#ere t#e s#ipper consents to #ave #is goods carried on deck #e takes t#e risks o% an! damage or &oss
sustained as a conse9uence o% t#eir eing so carried' ,n t#e present case it is indisputa&e t#at t#e goods were
inAured during t#e vo!age and so&e&! as a conse9uence o% t#eir eing on deck, instead o% in t#e s#ip?s #o&d'
T#e &oss must t#ere%ore %a&& on t#e owner' 7nd t#is wou&d e true, under t#e aut#orities, even t#oug#
paragrap# 1. o% t#e i&&s o% &ading #ad not een made a term o% t#e contract'
13. E)en s)ipo.ner #ay $e )el+ lia$le
Dpon genera& princip&e, and momentari&! ignoring paragrap# 1. o% t#ese i&&s o% &ading, t#e s#ip?s
owner mig#t e #e&d &ia&e %or an! damage direct&! resu&ting %rom a neg&igent %ai&ure to e3ercise t#e care
proper&! incident to t#e carriage o% t#e merc#andise on deck' For instance, i% it #ad een improper&! p&aced or
secured, and #ad een swept overoard as a pro3imate resu&t o% suc# &ack o% care, t#e s#ip wou&d e &ia&e, to
t#e same e3tent as i% t#e cargo #ad een de&ierate&! t#rown over wit#out Austi%ication' "o, i% it #ad een
s#own t#at, notwit#standing t#e stowage o% t#ese goods on deck, t#e damage cou&d #ave een prevented, !
t#e e3ercise o% proper ski&& and di&igence in t#e disc#arge o% t#e duties incument on t#e s#ip, t#e owner
mig#t sti&& e #e&d'
14. S)ip1s co#pany #ay $e lia$le ,or +a#a*e t)at #ay $e avoi+e+ $y use o, precaution
"upposed t#at a custom #ad een proved among mariners to protect deck cargo %rom t#e e&ements !
putting a tarpau&in over itC or approac#ing sti&& more to imagina&e conditions, supposed t#at t#e persons
c#arged wit# t#e dut! o% transporting t#e cargo, eing cogni*ant o% t#e proai&it! o% damage ! water, #ad
neg&igent&! and wit#out good reason %ai&ed to e3ercise reasona&e care to protect it ! covering it wit#
tarpau&ins' ,n suc# case it cou&d #ard&! e denied t#at t#e s#ip?s compan! s#ou&d e #e&d &ia&e %or suc#
damage as mig#t #ave een avoided ! t#e use o% suc# precaution'
1%. Bur+en o, proo,
,t is incument on Martini, i% #is cause o% action is %ounded on neg&igence o% t#is c#aracter, to a&&ege
and prove t#at t#e damage su%%ered was due to %ai&ure o% t#e persons in c#arge o% t#e cargo to use t#e
di&igence proper&! incident to carriage under t#ese conditions'
-". Clark vs. Barn.ell6 8nus pro$an+i
,n $&ark vs' 1arnwe&& (18 @ow' LD'"'M, 808C 13 +' ed', ./4), t#e "upreme $ourt distinguis#es wit#
great precision etween t#e situation w#ere t#e urden o% proo% is upon t#e s#ipowner to prove t#at t#e &oss
resu&ted %rom an e3cepted peri& and t#at w#ere t#e urden o% proo% is upon t#e owner o% t#e cargo to prove
t#at t#e &oss was caused ! neg&igence on t#e part o% t#e persons emp&o!ed in t#e conve!ance o% t#e goods'
T#e %irst two s!&&ai in $&ark vs' 1arnwe&& read as %o&&ows: ;F#ere goods are s#ipped and t#e usua& i&& o%
&ading given, Gpromising to de&iver t#em in good order, t#e dangers o% t#e seas e3cepted,? and t#e! are %ound
to e damaged t#e onus proandi is upon t#e owners o% t#e vesse&, to s#ow t#at t#e inAur! was occasioned !
one o% t#e e3cepted causes' 1ut, a&t#oug# t#e inAur! ma! #ave een occasioned ! one o% t#e e3cepted causes,
!et sti&& t#e owners o% t#e vesse& are responsi&e i% t#e inAur! mig#t #ave een avoided, ! t#e e3ercise o%
reasona&e ski&& and attention on t#e part o% t#e persons emp&o!ed in t#e conve!ance o% t#e goods' 1ut t#e
onus proandi t#en ecomes s#i%ted upon t#e s#ipper, to s#ow t#e neg&igence'
-1. Clark vs. Barn.ell6 <a#a*e +ue to +a#pness not t)e ,ault o, #aster or o.ners
Eotwit#standing t#e proo% was c&ear t#at t#e damage was occasioned ! t#e e%%ect o% t#e #umidit!
and dampness o% t#e vesse&, w#ic# is one o% t#e dangers o% navigation, it was competent %or t#e &ie&ants to
s#ow t#at t#e s#ipowner and master mig#t #ave prevented it ! proper ski&& and di&igence in t#e disc#arge o%
t#eir dutiesC ut no suc# evidence is %ound in t#e record' For caug#t t#at appears ever! precaution was taken
t#at is usua& or customar!, or known to s#ipmasters, to avoid t#e damage in 9uestion' ,t is to e attriuted
e3c&usive&! to t#e dampness o% t#e atmosp#ere o% t#e vesse&, wit#out neg&igence or %au&t on t#e part o% t#e
master or owners'
--. <a#a*e cause+ $y rain an+ sea .ater! =acon+ray not lia$le
@erein, t#e damage was caused ! rain and sea water H t#e risk o% w#ic# is in#erent&! incident to
carriage on deck H Macondra! cannot e #e&d &ia&e' ,t is not permissi&e %or t#e court, in t#e asence o% an!
a&&egation or proo% o% neg&igence, to attriute neg&igence to t#e s#ip?s emp&o!ees in t#e matter o% protecting
t#e goods %rom rains and storms' T#e comp&aint c&ear&! indicates t#at t#e damage done was due to t#e mere
%act o% carriage on deck, no ot#er %au&t or de&in9uenc! on t#e part o% an!od! eing a&&eged'
-3. :ara*rap) 1% o, $ills o, la+in* .oul+ not protect s)ip ,ro# lia$ility ,or conse9uences o,
ne*li*ent acts
1! t#e terms o% paragrap# 1. o% t#e i&&s o% &ading, t#e s#ip is not to e #e&d &ia&e, in t#e case o%
goods signed %or as carried on deck, %or an! &oss or damage %rom an! cause w#atever' T#is provision wou&d
not #ave protected t#e s#ip %rom &iai&it! %or t#e conse9uences o% neg&igent acts, i% neg&igence #ad een
a&&eged and proved' From t#e discussion in Mani&a :ai&road $o' vs' $ompania Transat&antica and 7t&antic,
6u&% T Paci%ic $o' (3/ P#i&' :ep', /04), it ma! e co&&ected t#at t#e carrier wou&d e #e&d &ia&e in suc# case,
notwit#standing t#e e3emption contained in paragrap# 1.' 1ut #owever t#at ma! e damages certain&! cannot
e recovered on t#e ground o% neg&igence, even %rom a carrier, w#ere neg&igence is neit#er a&&eged nor proved'
[22], also [150]
Heirs o, +e los Santos vs. C5 (GR 2112! -1 Bune 1%%")
First Division, Media&dea (J): 5 concur
&acts' (n 8 Eovemer 1.>0, Mauricio de &os "antos accompanied #is common=&aw wi%e, 7mparo de&os
"antos, and c#i&dren, name&!: :omeo, Josie, @ernani (12 !ears o&d), 7e&&a (0 !ears o&d), Maria +emia (4
!ears o&d) and Me&an! (4 mont#s o&d), to pier /, Eort# @aror, Mani&a, to oard t#e M-V GMindoro?, owned
! $ompania Maritima, ound %or 7k&an' 7mparo de&os "antos and t#e a%oresaid c#i&dren roug#t a&& t#eir
e&ongings, inc&uding #ouse#o&d utensi&s va&ued at P1,222'22, wit# t#e intention o% &iving in 7k&an
permanent&!' (n t#e ot#er #and, as to spouses Diego "a&im and Teresa Pamatian, Diego roug#t wit# #im
P822 in cas# and some e&ongings, w#i&e Teresa roug#t some cas# and persona& e&ongings wort# P842'
Diego oarded t#e vesse& even i% #e did not #ave !et a ticket' 7s to :uen :e!es, #e roug#t wit# #im
persona& e&ongings and cas# in t#e amount o% P8,.22' M-V GMindoro? sai&ed %rom pier / Eort# @aror,
Mani&a, at aout >:22 p'm' (s#ou&d #ave sai&ed at 8:22 p'm') o% said da! ound %or Eew Fas#ington, 7k&an,
wit# man! passengers aoard (aout 822)' 7mparo was not inc&uded in t#e mani%est as s#e oarded t#e oat
wit#out ticket, ut appeared to #ave purc#ased one in t#e vesse&' ,t appears t#at said vesse& met t!p#oon
GFe&ming? on t#e "iu!an "ea, 7k&an, at aout 4:22 a'm' o% 5 Eovemer 1.>0 causing t#e deat# o% man! o%
its passengers, inc&uding 7mparo de&os "antos and #er c#i&dren' (t#er drowned victims inc&ude spouses
Teresa Pamatian and Diego "a&im, and a&so Fe&i3 :e!es Jakusa&am' 13> survived t#e accident, inc&uding
:uen :e!es and B&iadora $risostomo de Justo' B&iandora was a&e to oard a a&sa, w#i&e :uen was a&e to
swim to an is&and and wit# ot#ers, rescued &ater on and roug#t to t#e #ospita&'
7 comp&aint was origina&&! %i&ed on 81 (ctoer 1.>/ and amended on 85 (ctoer 1.>/ ! t#e #eirs o% De&os
"antos and ot#ers as pauper &itigants against t#e $ompania Maritima, %or damages due to t#e deat# o% severa&
passengers as a resu&t o% t#e sinking o% t#e M-V GMindoro?' T#e tria& court, on 80 Marc# 1.05, adAudged t#e
case in %avor o% $ompania Maritima, dismissing t#e case due to &ack o% su%%icient evidence'
Fort#wit#, :e!es, and t#e #eirs o% t#e De&os "antos(es), Diego "a&im, and Teresa Pamatian roug#t an appea&
to t#e $ourt o% 7ppea&s' T#e appe&&ate court a%%irmed t#e decision on appea&'
T#e "upreme $ourt reversed t#e appea&ed decision, and rendered Audgment sentencing $ompania Maritima to
pa! t#e %o&&owing: (1) P32,222'22 as indemnit! %or deat# to t#e #eirs o% eac# o% t#e victimsC (8) P12,222'22 as
mora& damages to t#e #eirs o% eac# o% t#e victimsC (3) P>,/24'22 as actua& damages divided among t#e
petitioners as %o&&ows: #eirs o% 7mparo De&os "antos and #er deceased c#i&dren, P8,222'22C #eirs o% Teresa
Pamatian, P542'22C #eirs o% Diego "a&em, P522'22C and :uen :e!es, P8,.44'22C (5) P12,222'22 as
attorne!?s %eesC and (4) t#e costs'
7rtic&e 4/0 o% t#e $ode o% $ommerce provides t#at ;T#e s#ip agent s#a&& a&so e civi&&! &ia&e %or
indemnities in %avor o% t#ird persons w#ic# ma! arise %rom t#e conduct o% t#e captain in t#e care o% t#e goods
w#ic# #e &oaded on t#e vesse&, ut #e ma! e3empt #imse&% t#ere%rom ! aandoning t#e vesse& wit# a&& #er
e9uipment?s and t#e %reig#t it ma! #ave earned during t#e vo!age'<
-. Lia$ility o, s)ipo.ner or a*ent con,ine+ to .)ic) )e is entitle+ as to ri*)t to a$an+on
Dnder 7rtic&e 4/0 o% t#e $ode o% $ommerce, a s#ipowner or agent #as t#e rig#t o% aandonmentC and
! necessar! imp&ication, #is &iai&it! is con%ined to t#at w#ic# #e is entit&ed as o% rig#t to aandon H ;t#e
vesse& wit# a&& #er e9uipment?s and t#e %reig#t it ma! #ave earned during t#e vo!age< (Oangco v' +aserna, et
a&', 03 P#i&' 332, 338)'
3. 5rticle 243 o, t)e Co+e o, Co##erce still a *oo+ la.6 Reason
Eotwit#standing t#e passage o% t#e Eew $ivi& $ode, 7rtic&e 4/0 o% t#e $ode o% $ommerce is sti&&
good &aw' T#e reason &ies in t#e pecu&iar nature o% maritime &aw is w#ic# is ;e3c&usive&! rea& and #!pot#ecar!
t#at operates to &imit suc# &iai&it! to t#e va&ue o% t#e vesse&, or to t#e insurance t#ereon, i% an! (Oangco v'
+aserna, iid)' T#is ru&e is %ound necessar! to o%%set against t#e innumera&e #a*ards and peri&s o% a sea
vo!age and to encourage s#ipui&ding and marine commerce'
/. 5pplication o, t)e li#ite+ lia$ility +octrine
T#e &imited &iai&it! doctrine app&ies not on&! to t#e goods ut a&so in a&& cases &ike deat# or inAur! to
passengers w#erein t#e s#ipowner or agent ma! proper&! e #e&d &ia&e %or t#e neg&igent or i&&icit acts o% t#e
captain (Oangco v' +aserna, iid)' 7rtic&e 4/0 speaks on&! o% situations w#ere t#e %au&t or neg&igence is
committed so&e&! ! t#e captain' ,n cases w#ere t#e s#ipowner is &ikewise to e &amed, 7rtic&e 4/0 does not
app&! (see Mani&a "teams#ip $o', ,nc' v' 7du&#anan, et a&', 122 P#i&' 38, 3/)' "uc# a situation wi&& e
covered ! t#e provisions o% t#e Eew $ivi& $ode on $ommon $arriers'
2. Dxtraor+inary +ili*ence in vi*ilance over *oo+s an+ sa,ety o, passen*ers re9uire+ o, co##on
carriers6 Ft#ost +ili*ence o, very cautious persons in carryin* passen*ers6 :resu#ption o, ,ault
(wing to t#e nature o% t#eir usiness and %or reasons o% pu&ic po&ic!, common carriers are tasked to
oserve e3traordinar! di&igence in t#e vigi&ance over t#e goods and %or t#e sa%et! o% its passengers (7rtic&e
1033, Eew $ivi& $ode)' Furt#er, t#e! are ound to carr! t#e passengers sa%e&! as %ar as #uman care and
%oresig#t can provide, using t#e utmost di&igence o% ver! cautious persons, wit# a due regard %or a&& t#e
circumstances (7rtic&e 1044, Eew $ivi& $ode)' F#enever deat# or inAur! to a passenger occurs, common
carriers are presumed to #ave een at %au&t or to #ave acted neg&igent&! un&ess t#e! prove t#at t#e! oserved
e3traordinar! di&igence as prescried ! 7rtic&es 1033 and 1044 (7rtic&e 104>, Eew $ivi& $ode)'
. =o+ern tec)nolo*y $elie contention t)at =ariti#a +i+ not )ave in,or#ation as to typ)oon
Eel#in*
Modern tec#no&og! e&ie Maritima?s contention t#at it did not #ave an! in%ormation aout t!p#oon
GFe&ming? unti& a%ter t#e oat was a&read! at sea' T#e Feat#er 1ureau is now e9uipped wit# modern
apparatus w#ic# ena&es it to detect an! incoming atmosp#eric disturances' During t#e periods o% Eovemer
1=4, 1.>0, t#e 1ureau issued a tota& o% 10 warnings or advisories o% t!p#oon GFe&ming? to s#ipping
companies' $onsidering t#e t#e &ate departure o% t#e s#ip at >:22 p'm' (instead o% t#e sc#edu&ed 8:22 p'm'
departure) on 8 Eovemer 1.>0, it is #ig#&! improa&e t#at t#e Feat#er 1ureau #ad not !et issued an!
t!p#oon u&&etin at an! time during t#e da! to t#e s#ipping companies' Maritima sumitted no convincing
evidence to s#ow t#is omission'
3. S)ip1s captain a.are o, typ)oon! =ariti#a +uly in,or#e+6 =ariti#a +isplaye+ lack o, ,oresi*)t
an+ #ini#u# concern ,or sa,ety o, passen*ers
@erein, ,t cannot e true t#at #e was apprised o% t#e t!p#oon on&! at aout 11:22 a'm' on 3 Eovemer
1.>0 w#en t#e Feat#er report was transmitted to #im %rom t#e Feat#er 1ureau at w#ic# time #e p&otted its
position' For in #is radiogram sent to Maritima?s o%%ice in Mani&a as ear&! as /:20 a'm' o% 3 Eovemer 1.>0,
#e stated in t#e conc&uding portion ;sti&& oserving weat#er condition'< t#ere! imp&icit&! suggesting t#at #e
#ad known even e%ore departure o% t#e unusua& weat#er condition' ; ,% t#e captain knew o% t#e t!p#oon
e%ore#and, it is inconceiva&e %or Maritima to e tota&&! in t#e dark o% GFe&ming'? ,n a&&owing t#e s#ip to
depart &ate %rom Mani&a despite t#e t!p#oon advisories, Maritima disp&a!ed &ack o% %oresig#t and minimum
concern %or t#e sa%et! o% its passengers taking into account t#e surrounding circumstances o% t#e case'
4. =ariti#a s)ares e9ually in s)ip captain1s ne*li*ence
F#i&e t#e captain was neg&igent %or over&oading t#e s#ip, Maritima s#ares e9ua&&! in #is neg&igence'
F#i&e M-V Mindoro was a&read! c&eared ! t#e 1ureau o% $ustoms and t#e $oast 6uard %or departure at 8:22
p'm' t#e s#ip?s departure was, #owever, de&a!ed %or 5 #ours' Maritima cou&d not account %or t#e de&a! ecause
it neit#er c#ecked %rom t#e captain t#e reasons e#ind t#e de&a! nor sent its representative to in9uire into t#e
cause o% suc# de&a!' ,t was due to t#is interim t#at iindeed t#ere is a great proai&it! t#at unmani%ested cargo
(suc# as dump truck, 3 To!ota cars, stee& ars, and >,222 eer cases) and passengers (aout 851 more t#an t#e
aut#ori*ed 1.3 passengers) were &oaded during t#e 5 #our interva&'< Perc#ance, a c&oser supervision cou&d
#ave prevented t#e over&oading o% t#e s#ip' Maritima cou&d #ave directed t#e s#ip?s captain to immediate&!
depart in view o% t#e %act t#at as o% 11:20 a'm' o% 8 Eovemer 1.>0, t#e t!p#oon #ad a&read! attained sur%ace
winds o% aout 852 ki&ometers per #our' Veri&!, i% it were not %or t#is de&a!, t#e vesse& cou&d #ave reac#ed its
destination and t#ere! #ave avoided t#e e%%ects o% t#e storm' T#is conc&usion was uttressed ! evidence t#at
anot#er s#ip, M-V Mangaren, an inter is&and vesse&, sai&ed %or Eew Fas#ington, 7k&an on 8 Eovemer 1.>0,
a#ead o% M-V Mindoro and took t#e same route as t#e &atter ut it arrived sa%e&!'
%. Sea.ort)iness6 7ecessity o, installation o, a ra+ar
Maritima presents evidence o% t#e seawort#! condition o% t#e s#ip prior to its departure to prove t#at
it e3ercised e3traordinar! di&igence in t#is case' M-V Mindoro was dr!=docked %or aout a mont#' Eecessar!
repairs were made on t#e s#ip' +i%e saving e9uipment and navigationa& instruments were insta&&ed' Maritima,
#owever, cou&d not present evidence t#at it speci%ica&&! insta&&ed a radar w#ic# cou&d #ave a&&owed t#e vesse&
to navigate sa%e&! %or s#e&ter during a storm' $onse9uent&!, t#e vesse& was &e%t at t#e merc! o% GFe&ming? in
t#e open sea ecause a&t#oug# it was a&read! in t#e vicinit! o% t#e 7k&an river, it was una&e to enter t#e
mout# o% 7k&an :iver to get into Eew Fas#ington, 7k&an due to darkness and t#e F&oripon +ig#t#ouse at t#e
entrance o% t#e 7k&an :iver was not %unctioning or cou&d not e seen at a&&' Fit# t#e impending t#reat o%
GFe&ming,? an important device suc# as t#e radar cou&d #ave ena&ed t#e s#ip to pass t#roug# t#e river and to
sa%et!'
1". Stor#s an+ typ)oons not stran*e occurrences
"torms and t!p#oons are not strange occurrences' ,n 1.>0 a&one e%ore GFe&ming,? t#ere were aout
10 t!p#oons t#at #it t#e countr!, t#e &atest o% w#ic# was t!p#oon Dring w#ic# occurred on (ctoer 82=84,
w#ic# cost so muc# damage to &ives and properties'
11. =ariti#a1s ne*li*ence proxi#ate cause o, sinkin* o, =CG =in+oro
Maritima?s &ack o% e3traordinar! di&igence coup&ed wit# t#e neg&igence o% t#e captain were t#e
pro3imate causes o% t#e sinking o% M-V Mindoro' @ence, Maritima is &ia&e %or t#e deat#s and inAur! o% t#e
victims'
1-. (rial court *enerally ,ix a#ount o, +a#a*es6 Dxceptions
(rdinari&!, t#e "upreme $ourt wou&d remand t#e case to t#e tria& court %or t#e reception o% evidence'
$onsidering #owever, t#at t#e case #as een pending %or a&most 83 !ears and t#at since a&& t#e evidence #ad
a&read! een presented ! ot# parties and received ! t#e tria& court, t#e "upreme $ourt reso&ved to decide
t#e corresponding damages due to petitioners (see "ama& v' $ourt o% 7ppea&s, .. P#i&' 832C De& $asti&&o v'
Ja!ma&in, +=8/84>, Marc# 10, 1./8, 118 "$:7 >8.)'
13. 5#ount o, +a#a*es ,or t)e +eat) o, passen*er cause+ $y $reac) o, contract o, carria*e
Dnder 7rtic&e 10>5 in re&ation to 7rtic&e 882> o% t#e Eew $ivi& $ode, t#e amount o% damages %or t#e
deat# o% a passenger caused ! t#e reac# o% contract ! a common carrier is at &east P3,222'22' T#e
prevai&ing Aurisprudence #as increased t#e amount o% P3,222'22 to P32,222'22 (De +ima v' +aguna Ta!aas
$o', +=34>.0=.., 7pri& 14, 1.//, 1>2 "$:7 02)' $onse9uent&!, Maritima s#ou&d pa! t#e civi& indemnit! o%
P32,222'22 to t#e #eirs o% eac# o% t#e victims' For menta& anguis# su%%ered due to t#e deat#s o% t#eir re&atives,
Maritima s#ou&d a&so pa! to t#e #eirs t#e sum o% P12,222'22 eac# as mora& damages'
1/. 5ctual +a#a*es
,n addition, at t#e time o% deat#, (1) 7mparo de&os "antos #ad wit# #er cas# in t#e sum o% P1,222'22
and persona& e&ongings va&ued at P422'22C (8) Teresa Pamatian, cas# in t#e sum o% P842'22 and persona&
e&ongings wort# P822'22C and (3) Diego "a&em, cas# in t#e sum o% P822'22 and persona& e&ongings va&ued
at P122'22' +ikewise, t#e #eirs o% 7mparo de&os "antos and #er deceased c#i&dren incurred transportation and
incidenta& e3penses in connection wit# t#e tria& in t#e amount o% P422'22 w#i&e Dominador "a&em, son o%
victim Diego "a&em and nep#ew o% victim Teresa Pamatian spent aout P122'22 %or e3penses at t#e tria&' Fit#
respect to :e!es, t#e evidence s#ows t#at at t#e time o% t#e disaster, #e #ad in #is possession cas# in t#e sum
o% P8,.22'22 and persona& e&ongings wort# P122'22' Furt#er, due to t#e disaster, :e!es was una&e to work
%or 3 mont#s due to s#ock and #e was earning P.'42 a da! or in a tota& sum o% P/44'22' @e a&so spent aout
P122'22 %or court e3penses' For suc# &osses and incidenta& e3penses at t#e tria& o% t#e case, Maritima s#ou&d
pa! t#e amounts to t#e petitioners as actua& damages'
12. =oral +a#a*es not +ue6 Dxception to rule t)at #oral +a#a*es not recovera$le in action $ase+
on $reac) o, contract
:e!es? c&aim %or mora& damages cannot e granted inasmuc# as t#e same is not recovera&e in
damage action ased on t#e reac# o% contract o% transportation under 7rtic&es 881. and 8882 o% t#e Eew
$ivi& $ode e3cept (1) w#ere t#e mis#ap resu&ted in t#e deat# o% a passenger and (8) w#ere it is proved t#at t#e
carrier was gui&t! o% %raud or ad %ait#, even i% deat# does not resu&t (:e3 Ta3ica $o', ,nc' v' 1autista, 12.
P#i&' 018)' T#e e3ceptions do not app&! in t#e present case since :e!es survived t#e incident and no evidence
was presented to s#ow t#at Maritima was gui&t! o% ad %ait#' Mere care&essness o% t#e carrier does not per se
constitute or Austi%! an in%erence o% ma&ice or ad %ait# on its part (:e3 Ta3ica $o', ,nc' v' 1autista, supra)'
1. Dxe#plary +a#a*es not +ue
7nent t#e c&aim %or e3emp&ar! damages, t#e $ourt is not inc&ined to grant t#e same in t#e asence o%
gross or reck&ess neg&igence in t#is case'
13. 5ttorney1s ,ees
7s regards t#e c&aim %or attorne!?s %ees, t#e records revea& t#at t#e petitioners engaged t#e services o%
a &aw!er and agreed to pa! t#e sum o% P3,222'22 eac# on a contingent asis' ,n view t#ereo%, T#e $ourt %inds
t#e sum o% P12,222'22 as a reasona&e compensation %or t#e &ega& services rendered'
[2]
'nternational "epart%ent tore vs. ,a1ellana
(ransportation La.! -""/ ( 1/% )
[23]
Co#pania =ariti#a vs. C5 (GR L>3133%! -% 5u*ust 1%44)
T#ird Division, Fernan (J): 5 concur
&acts' Vicente B' $oncepcion, a civi& engineer doing usiness under t#e name and st!&e o% $onso&idated
$onstruction wit# o%%ice address at :oom 518, Don "antiago 1&dg', Ta%t 7venue, Mani&a, #ad a contract wit#
t#e $ivi& 7eronautics 7dministration ($77) sometime in 1.>5 %or t#e construction o% t#e airport in $aga!an
de (ro $it!, Misamis (rienta&' 1eing a Mani&a=ased contractor, $oncepcion #ad to s#ip #is construction
e9uipment to $aga!an de (ro $it!' @aving s#ipped some o% #is e9uipment t#roug# $ompania Maritima and
#aving sett&ed t#e a&ance o% P8,>8/'00 wit# respect to said s#ipment, $oncepcion negotiated anew wit#
$oncepcion, t#ru its co&&ector, Paci%ico Fernande*, on 8/ 7ugust 1.>5 %or t#e s#ipment to $aga!an de (ro
$it! o% 1 unit pa!&oader, 5 units >3> :eo trucks and 8 pieces o% water tanks' @e was issued 1i&& o% +ading 113
on t#e same date upon de&iver! o% t#e e9uipment at t#e Mani&a Eort# @aror' T#ese e9uipment were &oaded
aoard t#e MV $eu in its Vo!age 31>, w#ic# &e%t Mani&a on 32 7ugust 1.>5 and arrived at $aga!an de (ro
$it! in t#e a%ternoon o% 1 "eptemer .>5' T#e :eo trucks and water tanks were sa%e&! un&oaded wit#in a %ew
#ours a%ter arriva&, ut w#i&e t#e pa!&oader was aout 8 meters aove t#e pier in t#e course o% un&oading, t#e
swive& pin o% t#e #ee& &ock o% t#e port &ock o% @atc# 8 gave wa!, causing t#e pa!&oader to %a&&' T#e
pa!&oader was damaged and was t#erea%ter taken to $ompania Maritima?s compound in $aga!an de (ro $it!'
(n 0 "eptemer 1.>5, $onso&idated $onstruction, t#ru $oncepcion, wrote $ompania Maritima to demand a
rep&acement o% t#e pa!&oader w#ic# it was considering as a comp&ete &oss ecause o% t#e e3tent o% damage'
$onso&idated $onstruction &ikewise noti%ied $ompania Maritima o% its c&aim %or damages' Dna&e to e&icit
response, t#e demand was repeated in a &etter dated 8 (ctoer 1.>5' Meanw#i&e, $ompania Maritima s#ipped
t#e pa!&oader to Mani&a w#ere it was weig#ed at t#e "an Migue& $orporation' Finding t#at t#e pa!&oader
weig#ed 0'4 tons and not 8'4 tons as dec&ared in t#e 1i&& o% +ading, $ompania Maritima denied t#e c&aim %or
damages o% $onso&idated $onstruction in its &etter dated 0 (ctoer 1.>5, contending t#at #ad $oncepcion
dec&ared t#e actua& weig#t o% t#e pa!&oader, damage to t#eir s#ip as we&& as to #is pa!&oader cou&d #ave een
prevented' To rep&ace t#e damaged pa!&oader, $onso&idated $onstruction in t#e meantime oug#t a new one
at P54,222'22 %rom 1orma#eco, ,nc' on 3 Decemer 1.>5'
(n > Ju&! 1.>4, $oncepcion %i&ed an action %or damages against $ompania Maritima wit# t#e t#en $F, o%
Mani&a (1ranc# V,,, $ivi& $ase >1441), seeking to recover damages in t#e amount o% P51,884'22 a&&eged&!
su%%ered %or t#e period o% .0 da!s t#at #e was not a&e to emp&o! a pa!&oader in t#e construction Ao at t#e rate
o% P542'22 a da!C P35,222'22 representing t#e cost o% t#e damaged pa!&oaderC P11,222'22 representing t#e
di%%erence etween t#e cost o% t#e damaged pa!&oader and t#at o% t#e new pa!&oaderC P82,222'22 representing
t#e &osses su%%ered ! #im due to t#e diversion o% %unds to ena&e #im to u! a new pa!&oaderC P12,222'22 as
attorne!?s %eesC P4,222'22 as e3emp&ar! damagesC and cost o% t#e suit' 7%ter tria&, t#e t#en $F, dismissed on
85 7pri& 1.>/ t#e comp&aint wit# costs against $oncepcion, stating t#at t#e pro3imate cause o% t#e %a&& o% t#e
pa!&oader was $oncepcion?s act or omission in #aving misrepresented t#e weig#t o% t#e pa!&oader as 8'4 tons,
w#ic# underdec&aration was intended to de%raud $ompa)ia Maritima o% t#e pa!ment o% t#e %reig#t c#arges
and w#ic# &ikewise &ed t#e $#ie% (%%icer o% t#e vesse& to use t#e #ee& &ock o% #atc# 8 in un&oading t#e
pa!&oader'
From t#e adverse decision against #im, $oncepcion appea&ed to t#e $ourt o% 7ppea&s w#ic#, on 4 Decemer
1.>4 rendered a decision, reversing t#e tria& court, and ordering $ompania Maritima to pa! unto $oncepcion
t#e sum in damages o% P85,>48'20 wit# &ega& interest %rom t#e date t#e decision s#a&& #ave ecome %ina&C and
dec&ared t#e pa!&oader aandoned to $ompania MaritimaC wit# costs against t#e &atter' @ence, t#e petition %or
T#e "upreme $ourt denied t#e petitionC a%%irmed t#e decision o% t#e $ourt o% 7ppea&s in a&& respects wit#
costs against $ompania Maritima, and in view o% t#e &engt# o% time t#is case #as een pending, ordered t#at
t#e decision is immediate&! e3ecutor!'
1. 5rticle 133/ (3) 7CC
Paragrap# 3 o% 7rtic&e 1035 o% t#e $ivi& $ode provides t#at ;$ommon carriers are responsi&e %or t#e
&oss, destruction, or deterioration o% t#e goods, un&ess t#e same is due to an! o% t#e %o&&owing causes on&!: 333
;(3) 7ct or omission o% t#e s#ipper or owner o% t#e goods'<
-. General rule un+er 5rticles 1332 an+ 132- 7CC6 7e*li*ence presu#e+
T#e genera& ru&e under 7rtic&es 1034 and 1048 o% t#e $ivi& $ode is t#at common carriers are
presumed to #ave een at %au&t or to #ave acted neg&igent&! in case t#e goods transported ! t#em are &ost,
destro!ed or #ad deteriorated' To overcome t#e presumption o% &iai&it! %or t#e &oss, destruction or
deterioration o% t#e goods under 7rtic&e 1034, t#e common carriers must prove t#at t#e! oserved
e3traordinar! di&igence as re9uired in 7rtic&e 1033 o% t#e $ivi& $ode' T#e responsii&it! o% oserving
e3traordinar! di&igence in t#e vigi&ance over t#e goods is %urt#er e3pressed in 7rtic&e 1035 o% t#e same $ode'
3. Bur+en o, proo, incu#$ent on co##on carrier
$oro&&ar! is t#e ru&e t#at mere proo% o% de&iver! o% t#e goods in good order to a common carrier, and
o% t#eir arriva& at t#e p&ace o% destination in ad order, makes out prima %acie case against t#e common carrier,
so t#at i% no e3p&anation is given as to #ow t#e &oss, deterioration or destruction o% t#e goods occurred, t#e
common carrier must e #e&d responsi&e' (t#erwise stated, it is incument upon t#e common carrier to prove
t#at t#e &oss, deterioration or destruction was due to accident or some ot#er circumstances inconsistent wit#
its &iai&it!'
/. Rationale ,or t)e re9uire#ent o, extraor+inary +ili*ence6 5rticle 1333 7CC
B3traordinar! di&igence is re9uired o% common carriers in t#e vigi&ance over t#e goods transported !
t#em ! virtue o% t#e nature o% t#eir usiness, w#ic# is impressed wit# a specia& pu&ic dut!' 7rtic&e 1033 o%
t#e $ivi& $ode provides t#at ;$ommon carriers, %rom t#e nature o% t#eir usiness and %or reason o% pu&ic
po&ic!, are ound to oserve e3traordinar! di&igence in t#e vigi&ance over t#e goods and %or t#e sa%et! o% t#e
passengers transported ! t#em according to a&& t#e circumstances o% eac# case' "uc# e3traordinar! di&igence
in t#e vigi&ance over t#e goods is %urt#er e3pressed in 7rtic&es 1035, 1034 and 1054, Eos' 4, > and 0W<
2. :recaution re9uire+ o, co##on carrier to avoi+ +a#a*e or +estruction to *oo+s
T#e e3traordinar! di&igence in t#e vigi&ance over t#e goods tendered %or s#ipment re9uires t#e
common carrier to know and to %o&&ow t#e re9uired precaution %or avoiding damage to, or destruction o% t#e
goods entrusted to it %or sa%e carriage and de&iver!' ,t re9uires common carriers to render service wit# t#e
greatest ski&& and %oresig#t and ;to use a&& reasona&e means to ascertain t#e nature and c#aracteristic o% goods
tendered %or s#ipment, and to e3ercise due care in t#e #and&ing and stowage, inc&uding suc# met#ods as t#eir
nature re9uires'< Dnder 7rtic&e 103> o% t#e $ivi& $ode, t#e responsii&it! to oserve e3traordinar! di&igence
commences and &asts %rom t#e time t#e goods are unconditiona&&! p&aced in t#e possession o%, and received !
t#e carrier %or transportation unti& t#e same are de&ivered, actua&&! or constructive&!, ! t#e carrier to t#e
consignee, or to t#e person w#o #as t#e rig#t to receive t#em wit#out preAudice to t#e provisions o% 7rtic&e
103/'
. Co#pania =ariti#a ne*li*ent +ue to its laxity an+ carelessness in #et)o+ to ascertain .ei*)t o,
)eavy car*oes
@erein, t#ere was &a3it! and care&essness among $ompania Maritima?s crew in t#eir met#ods o%
ascertaining t#e weig#t o% #eav! cargoes o%%ered %or s#ipment e%ore &oading and un&oading t#em, as is
customar! among care%u& persons' T#e weig#t sumitted ! s#ipper $oncepcion as an addendum to t#e
origina& enumeration o% e9uipment to e s#ipped was entered into t#e i&& o% &ading ! $ompania Maritima,
t#ru Paci%ico Fernande*, a compan! co&&ector, wit#out seeing t#e e9uipment to e s#ipped' Mr' Mariano
6upana, assistant tra%%ic manager o% Maritima $ompania, con%irmed t#at t#e compan! never c#ecked t#e
in%ormation entered in t#e i&& o% &ading' Forse, t#e weig#t o% t#e pa!&oader as entered in t#e i&& o% &ading
was assumed to e correct ! Mr' Fe&i3 Pisang, $#ie% (%%icer o% MV $eu' T#e weig#ts stated in a i&& o%
&ading are prima %acie evidence o% t#e amount received and t#e %act t#at t#e weig#ing was done ! anot#er
wi&& not re&ieve t#e common carrier w#ere it accepted suc# weig#t and entered it on t#e i&& o% &ading' 1esides,
common carriers can protect t#emse&ves against mistakes in t#e i&& o% &ading as to weig#t ! e3ercising
di&igence e%ore issuing t#e same'
3. Co#pania =ariti#a ne*li*ent in usin* 2>ton capacity li,tin* apparatus to unloa+ payloa+er
@erein, $ompania Maritima %ai&ed to take t#e necessar! and ade9uate precautions %or avoiding
damage to, or destruction o%, t#e pa!&oader entrusted to it %or sa%e carriage and de&iver! to $aga!an de (ro
$it!' ,t used a 4=ton capacit! &i%ting apparatus to &i%t and un&oad a visi&! #eav! cargo &ike a pa!&oader' Mr'
Fe&i3 Pisang, $#ie% (%%icer o% t#e MV $eu, took t#e i&& o% &ading on its %ace va&ue and presumed t#e same to
e correct ! mere&! ;seeing? it' 7cknow&edging t#at t#ere was a ;Aumo< in t#e MV $eu w#ic# #as t#e
capacit! o% &i%ting 82 to 84 ton cargoes, Mr' Fe&i3 Pisang c#ose not to use it, ecause according to #im, since
t#e ordinar! oom #as a capacit! o% 4 tons w#i&e t#e pa!&oader was on&! 8'4 tons, #e did not ot#er to use t#e
;Aumo< an!more'
4. =is+eclaration as to .ei*)t not an excuse ,or co##on carrier to avoi+ lia$ility
@erein, $oncepcion?s act o% %urnis#ing $ompania Maritima wit# an inaccurate weig#t o% t#e
pa!&oader cannot e used ! t#e &atter as an e3cuse to avoid &iai&it! %or t#e damage caused, as t#e same cou&d
#ave een avoided #ad t#e &atter uti&i*ed t#e ;Aumo< &i%ting apparatus w#ic# #as a capacit! o% &i%ting 82 to 84
tons o% #eav! cargoes' ,t is a %act known to t#e $#ie% (%%icer o% MV $eu t#at t#e pa!&oader was &oaded
aoard t#e MV $eu at t#e Mani&a Eort# @aror on 8/ 7ugust 1.>5 ! means o% a termina& crane' Bven i%
$ompania Maritima c#ose not to take t#e necessar! precaution to avoid damage ! c#ecking t#e correct
weig#t o% t#e pa!&oader, e3traordinar! care and di&igence compe& t#e use o% t#e ;Aumo< &i%ting apparatus as
t#e most prudent course %or $ompania Maritima'
%. 5rticle 13/16 Contri$utory ne*li*ence
7rtic&e 1051 o% t#e $ode provides t#at ;,% t#e s#ipper or owner mere&! contriuted to t#e &oss,
destruction or deterioration o% t#e goods, t#e pro3imate cause t#ereo% eing t#e neg&igence o% t#e common
carrier, t#e &atter s#a&& e &ia&e in damages, w#ic# #owever, s#a&& e e9uita&! reduced'<
1". Contri$utory ne*li*ence o, s)ipper #iti*ates lia$ility o, co##on carrier
F#i&e $oncepcion?s act o% %urnis#ing $ompania Maritima wit# an inaccurate weig#t o% t#e pa!&oader
cannot success%u&&! e used as an e3cuse ! t#e &atter to avoid &iai&it! to t#e damage t#us caused, said act
constitutes a contriutor! circumstance to t#e damage caused on t#e pa!&oader, w#ic# mitigates t#e &iai&it!
%or damages o% t#e &atter'
11. 5.ar+ o, recovera$le a#ount o, +a#a*es re+uce+
T#e conc&usion o% t#e $ourt o% 7ppea&s Q reducing t#e recovera&e amount o% damages ! 82I or 1-4
o% t#e va&ue o% t#e pa!&oader, va&ued at P35,222'22, t#ere! reducing t#e recovera&e amount at /2I or 5-4 o%
P35,222'22 or t#e sum o% P80,822'22 Q was e9uita&e' $onsidering t#at t#e %reig#t c#arges %or t#e entire
cargoes s#ipped ! $oncepcion amounting to P8,31/'52 remained unpaid, t#e same wou&d e deducted %rom
t#e P80,222'22 p&us an additiona& deduction o% P88/'>3 representing t#e %reig#t c#arges %or t#e undec&ared
weig#t o% 4 tons (di%%erence etween 0'4 and 8'4 tons) &eaving, t#ere%ore, a %ina& recovera&e amount o%
damages o% P85,>48'.0 due to $oncepcion'
1-. 5ssi*n#ent o, errors $y appellee only to #aintain ?u+*#ent on ot)er *roun+s6 5ppeal re9uire+
to #o+i,y or reverse ?u+*#ent
,t is we&&=sett&ed t#at an appe&&ee, w#o is not an appe&&ant, ma! assign errors in #is rie% w#ere #is
purpose is to maintain t#e Audgment on ot#er grounds, ut #e ma! not do so i% #is purpose is to #ave t#e
Audgment modi%ied or reversed, %or, in suc# case, #e must appea&' @erein, since $oncepcion did not appea&
%rom t#e Audgment inso%ar as it &imited t#e award o% damages due #im, t#e reduction o% 82I or 1-4 o% t#e
va&ue o% t#e pa!&oader stands'
[58] #an$on vs. CA, see [01]
[2%]
HD Heacock vs. =acon+ray (GR 12%4! 3 8cto$er 1%-1)
"econd Division, Jo#nson (J): 5 concur
&acts' (n 4 June 1.1., @B @eacock caused to e de&ivered on oard t#e steams#ip 1o&ton $ast&e, t#en in t#e
#aror o% Eew Oork, 5 cases o% merc#andise one o% w#ic# contained 18 /=da! Bdmond c&ocks, proper&! o3ed
and marked %or transportation to Mani&a, and paid %reig#t on said c&ocks %rom Eew Oork to Mani&a in
advance' T#e said steams#ip arrived in t#e port o% Mani&a on or aout t#e 12 "eptemer 1.1., consigned to
Macondra! T $o' ,nc' as agent and representative o% said vesse& in said port' Eeit#er t#e master o% said vesse&
nor Macondra!, as its agent, de&ivered to @B @eacock t#e 18 /=da! Bdmond c&ocks, a&t#oug# demand was
made upon t#em %or t#eir de&iver!' T#e invoice va&ue o% t#e said 18 /=da! Bdmond c&ocks in t#e cit! o% Eew
Oork was P88 and t#e market va&ue o% t#e same in t#e $it! o% Mani&a at t#e time w#en t#e! s#ou&d #ave een
de&ivered to @B @eacock was P582' T#e case containing t#e 18 /=da! Bdmond c&ocks measured 3 cuic %eet,
and t#e %reig#t ton va&ue t#ereo% was K1,5/2' Eo greater va&ue t#an K422 per %reig#t ton was dec&ared ! @B
@eacock on t#e c&ocks, and no ad va&orem %reig#t was paid t#ereon' (n . (ctoer 1.1., Macondra! tendered
to @B @eacock P0>'3>, t#e proportionate %reig#t ton va&ue o% t#e a%oresaid 18 /=da! Bdmond c&ocks, in
pa!ment o% @B @eacock?s c&aim, w#ic# tender @B @eacock reAected'
@B @eacock commenced in t#e $Fi o% Mani&a an action to recover t#e sum o% P582 toget#er wit# interest
t#ereon' T#e &ower court rendered Audgment in %avor o% @B @eacock against Macondra! %or t#e sum o%
P88>'28, t#is eing t#e invoice va&ue o% t#e c&ocks in 9uestion p&us t#e %reig#t and insurance t#ereon, wit#
&ega& interest t#ereon %rom 82 Eovemer 1.1., t#e date o% t#e comp&aint, toget#er wit# costs' From t#at
Audgment ot# parties appea&ed to t#e "upreme $ourt'
T#e "upreme $ourt a%%irmed t#e Audgment appea&ed %rom, wit#out an! %inding as to costs'
1. Contents o, t)e Bill o, La+in*
T#e i&& o% &ading issued and de&ivered to @B @eacock ! t#e master o% t#e said steams#ip 1o&ton
$ast&e contained, among ot#ers, t#e %o&&owing c&auses: (1) ,t is mutua&&! agreed t#at t#e va&ue o% t#e goods
receipted %or aove does not e3ceed K422 per %reig#t ton, or, in proportion %or an! part o% a ton, un&ess t#e
va&ue e e3press&! stated #erein and ad va&orem %reig#t paid t#ereon' 333 (.) 7&so, t#at in t#e event o% c&aims
%or s#ort de&iver! o%, or damage to, cargo eing made, t#e carrier s#a&& not e &ia&e %or more t#an t#e net
invoice price p&us %reig#t and insurance &ess a&& c#arges saved, and an! &oss or damage %or w#ic# t#e carrier
ma! e &ia&e s#a&& e adAusted pro rata on t#e said asis'<
-. ()ree kin+s o, stipulations o,ten ,oun+ in a $ill o, la+in*
T#ree kinds o% stipu&ations #ave o%ten een made in a i&& o% &ading' T#e %irst is one e3empting t#e
carrier %rom an! and a&& &iai&it! %or &oss or damage occasioned ! its own neg&igence' T#e second is one
providing %or an un9ua&i%ied &imitation o% suc# &iai&it! to an agreed va&uation' 7nd t#e t#ird is one &imiting
t#e &iai&it! o% t#e carrier to an agreed va&uation un&ess t#e s#ipper dec&ares a #ig#er va&ue and pa!s a #ig#er
rate o% %reig#t' 7ccording to an a&most uni%orm weig#t o% aut#orit!, t#e %irst and second kinds o% stipu&ations
are inva&id as eing contrar! to pu&ic po&ic!, ut t#e t#ird is va&id and en%orcea&e'
3. 5ut)orities supportin* invali+ity o, a$solute exe#ption ,ro# lia$ility an+ un9uali,ie+
li#itation to an a*ree+ valuation
T#e @arter 7ct (7ct o% $ongress o% 13 Feruar! 1/.3), +ouisvi&&e :!' $o' vs' F!nn (// Tenn', 382),
and 6a&t vs' 7dams B3press $o' (5 Mc7r', 185C 5/ 7m' :ep', 058) support t#e proposition t#at t#e %irst and
second stipu&ations in a i&& o% &ading are inva&id w#ic# eit#er e3empt t#e carrier %rom &iai&it! %or &oss or
damage occasioned ! its neg&igences or provide %or an un9ua&i%ied &imitation o% suc# &iai&it! to an agreed
va&uation'
/. Hart vs. :ennsylvania RR Co.
,n t#e case o% @art vs' Penns!&vania :' :' $o', it was #e&d t#at ;w#ere a contract o% carriage, signed
! t#e s#ipper, is %air&! made wit# a rai&road compan!, agreeing on a va&uation o% t#e propert! carried, wit#
t#e rate o% %reig#t ased on t#e condition t#at t#e carrier assumes &iai&it! on&! to t#e e3tent o% t#e agreed
va&uation, even in case o% &oss or damage ! t#e neg&igence o% t#e carrier, t#e contract wi&& e up#e&d as
proper and &aw%u& mode o% recurring a due proportion etween t#e amount %or w#ic# t#e carrier ma! e
responsi&e and t#e %reig#t #e receives, and protecting #imse&% against e3travagant and %anci%u& va&uations'<
2. Fnion :aci,ic Rail.ay Co. vs. Burke
,n t#e case o% Dnion Paci%ic :ai&wa! $o' vs' 1urke, t#e court said: ;,n man! cases, %rom t#e decision
in @art vs' Penns!&vania :' :' $o' (118 D' "', 331C 8/ +' ed', 010C 4 "up' $t' :ep', 141, decided in 1//5), to
1oston T M' :' $o' vs' Piper (85> D' "', 53.C >8 +' ed', /82C 3/ "up' $t' :ep', 345C 7nn' $as' 1.1/ B, 5>.,
decided in 1.1/), it #as een dec&ared to e t#e sett&ed Federa& &aw t#at i% a common carrier gives to a s#ipper
t#e c#oice o% two rates, t#e &ower o% t#em conditioned upon #is agreeing to a stipu&ated va&uation o% #is
propert! in case o% &oss, even ! t#e carrier?s neg&igence, i% t#e s#ipper makes suc# a c#oice, understanding&!
and %ree&!, and names #is va&uation, #e cannot t#erea%ter recover more t#an t#e va&ue w#ic# #e t#us p&aces
upon #is propert! 7s a matter o% &ega& distinction, estoppe& is made t#e asis o% t#is ru&ing, H t#at, #aving
accepted t#e ene%it o% t#e &ower rate, in common #onest! t#e s#ipper ma! not repudiate t#e conditions on
w#ic# it was otained, H ut t#e ru&e and t#e e%%ect o% it are c&ear&! esta&is#ed'<
. Li#ite+ Lia$ility o, a Carrier! $ase+ upon an a*ree+ value! not contrary to pu$lic policy
7 carrier ma! not, ! a va&uation agreement wit# a s#ipper, &imit its &iai&it! in case o% t#e &oss !
neg&igence o% an interstate s#ipment to &ess t#an t#e rea& va&ue t#ereo%, un&ess t#e s#ipper is given a c#oice o%
rates, ased on va&uation' 7 &imitation o% &iai&it! ased upon an agreed va&ue to otain a &ower rate does not
con%&ict wit# an! sound princip&e o% pu&ic po&ic!C and it is not con%orma&e to p&ain princip&e o% Austice t#at a
s#ipper ma! understate va&ue in order to reduce t#e rate and t#en recover a &arger va&ue in case o% &oss'
3. Clauses 1 an+ % ,alls .it)in t)ir+ kin+ o, stipulation6 5rticle 1-22 7CC
7 reading o% c&auses 1 and . o% t#e i&& o% &ading c&ear&! s#ows t#at t#e present case %a&&s wit#in t#e
t#ird stipu&ation, to wit: T#at a c&ause in a i&& o% &ading &imiting t#e &iai&it! o% t#e carrier to a certain amount
un&ess t#e s#ipper dec&ares a #ig#er va&ue and pa!s a #ig#er rate o% %reig#t, is va&id and en%orcea&e' T#is
proposition is supported ! a uni%orm &ien o% decisions o% t#e "upreme $ourt o% t#e Dnited "tates rendered
ot# prior and suse9uent to t#e passage o% t#e @arter 7ct, %rom t#e case o% @art vs' Penns!&vania :' :' $o'
(decided Eov' 85, 1//5C 118 D' "', 331), to t#e case o% t#e Dnion Paci%ic :!' $o' vs' 1urke (decided Fe' 8/,
1.81, 7dvance (pinions, 1.82=1.81, p' 31/)' $&auses 1 and . are not contrar! to pu&ic order' 7rtic&e 1844 o%
t#e $ivi& $ode provides t#at ;t#e contracting parties ma! esta&is# an! agreements, terms and conditions t#e!
ma! deem advisa&e, provided t#e! are not contrar! to &aw, mora&s or pu&ic order'< "aid c&auses o% t#e i&& o%
&ading are, t#ere%ore, va&id and inding upon t#e parties t#ereto'
4. ;rreconcila$le con,lict $et.een Clauses 1 an+ % .it) re*ar+ to t)e #easure o, =acon+ray1s
lia$ility
F#ereas c&ause 1 contains on&! an imp&ied undertaking to sett&e in case o% &oss on t#e asis o% not
e3ceeding K422 per %reig#t ton, c&ause . contains an e3press undertaking to sett&e on t#e asis o% t#e net
invoice price p&us %reig#t and insurance &ess a&& c#arges saved' ;7n! &oss or damage %or w#ic# t#e carrier ma!
e &ia&e s#a&& e adAusted pro rata on t#e said asis,< c&ause . e3press&! provides' ,t seems t#at t#ere is an
irreconci&a&e con%&ict etween t#e two c&auses wit# regard to t#e measure o% Macondra!?s &iai&it!' ,t is
di%%icu&t to reconci&e t#em wit#out doing vio&ence to t#e &anguage used and reading e3ceptions and conditions
into t#e undertaking contained in c&ause . t#at are not t#ere'
%. 5 contract! in case o, +ou$t! $e interprete+ a*ainst t)e party .)o +re. t)e contract
T#e i&& o% &ading s#ou&d e interpreted against t#e carrier, w#ic# drew said contract' ;7 written
contract s#ou&d, in case o% dout, e interpreted against t#e part! w#o #as drawn t#e contract'< (> :' $' +',
/45') ,t is a we&&=known princip&e o% construction t#at amiguit! or uncertaint! in an agreement must e
construed most strong&! against t#e part! causing it' (> :' $' +', /44') T#ese ru&es are app&ica&e to contracts
contained in i&&s o% &ading' ;,n construing a i&& o% &ading given ! t#e carrier %or t#e sa%e transportation and
de&iver! o% goods s#ipped ! a consignor, t#e contract wi&& e construed most strong&! against t#e carrier, and
%avora&! to t#e consignor, in case o% dout in an! matter o% construction'< (7&aama, etc' :' :' $o' vs'
T#omas, /. 7&a', 8.5C 1/ 7m' "t' :ep', 11.')
["]
St. :aul &ire M =arine ;nsurance vs. =acon+ray (GR L>-33%2! -2 =arc) 1%3)
"econd Division, 7ntonio (J): 5 concur, 1 on &eave, 1 designated to sit in second division
&acts' (n 8. June 1.>2, Fint#rop Products, ,nc', o% Eew Oork, Eew Oork, D'"'7', s#ipped aoard t#e ""
;Tai Ping<, owned and operated ! Fi&#e&m Fi&#e&msen, 81/ cartons and drums o% drugs and medicine, wit#
t#e %reig#t prepaid, w#ic# were consigned to Fint#rop="teams, ,nc', Mani&a, P#i&ippines' 1arer "teams#ip
+ines, ,nc', agent o% Fi&#e&m Fi&#e&msen issued 1i&& o% +ading 35, in t#e name o% Fint#rop Products, ,nc' as
s#ipper, wit# arriva& notice in Mani&a to consignee Fint#rop="tearns, ,nc', Mani&a, P#i&ippines' T#e s#ipment
was insured ! t#e s#ipper against &oss and-or damage wit# t#e "t' Pau& Fire T Marine ,nsurance $ompan!
under its insurance "pecia& Po&ic! ($=1030>> dated 83 June 1.>2' (n 0 7ugust 1.>2, t#e "" ;Tai Ping<
arrived at t#e Port o% Mani&a and disc#arged its s#ipment into t#e custod! o% Mani&a Port "ervice, t#e arrastre
contractor %or t#e Port o% Mani&a' T#e said s#ipment was disc#arged comp&ete and in good order wit# t#e
e3ception o% 1 drum and severa& cartons w#ic# were in ad order condition' 1ecause consignee %ai&ed to
receive t#e w#o&e s#ipment and as severa& cartons o% medicine were received in ad order condition, t#e
consignee %i&ed t#e corresponding c&aim in t#e amount o% P1,12.'>0 representing t#e $','F' va&ue o% t#e
damaged drum and cartons o% medicine wit# t#e carrier, and t#e Mani&a Port "ervice' @owever, ot# re%used
to pa! suc# c&aim' $onse9uent&!, t#e consignee %i&ed its c&aim wit# t#e insurer, "t' Pau& Fire T Marine
,nsurance $o', and t#e insurance compan!, on t#e asis o% suc# c&aim, paid to t#e consignee t#e insured va&ue
o% t#e &ost and damaged goods, inc&uding ot#er e3penses in connection t#erewit#, in t#e tota& amount o%
K1,135'5>'
(n 4 7ugust 1.>1, as surogee o% t#e rig#ts o% t#e s#ipper and-or consignee, t#e insurer, "t' Pau& Fire T
Marine ,nsurance, instituted wit# t#e $F, o% Mani&a an action against Macondra! T $o', 1arer "teams#ip
+ines, Fi&#e&m Fi&#e&msen, Mani&a Port "ervice and-or Mani&a :ai&road $ompan! %or t#e recover! o% said
amount o% K1,135'5>, p&us costs' 7%ter due tria&, t#e &ower court, on 12 Marc# 1.>4 rendered Audgment
ordering Macondra! T $o', ,nc', 1arer "teams#ip +ines, ,nc' and Fi&#e&m Fi&#e&msen to pa! to t#e
insurance compan!, Aoint&! and severa&&!, t#e sum o% P322'22, wit# &ega& interest t#ereon %rom t#e %i&ing o% t#e
comp&aint unti& %u&&! paid, and Mani&a :ai&road $ompan! and Mani&a Port "ervice to pa! to t#e insurance
compan!, Aoint&! and severa&&!, t#e sum o% P/2.'>0, wit# &ega& interest t#ereon %rom t#e %i&ing o% t#e
comp&aint unti& %u&&! paid, t#e costs to e orne ! a&& t#e de%endants' (n 18 7pri& 1.>4, t#e insurance
compan!, contending t#at it s#ou&d recover t#e amount o% K1,135'5>, or its e9uiva&ent in pesos at t#e rate o%
P3'.2, instead o% P8'22, %or ever! D"K1'22, %i&ed a motion %or reconsideration, ut t#is was denied ! t#e
&ower court on 4 Ma! 1.>4' @ence, t#e appea&'
T#e $ourt o% 7ppea&s certi%ied t#e case to t#e "upreme $ourt on t#e ground t#at t#e appea& invo&ves pure&!
9uestions o% &aw' T#e "upreme $ourt a%%irmed t#e appea&ed decision, wit# costs against t#e insurance
compan!'
1. :urpose o, t)e $ill o, la+in*6 Li#ite+ Lia$ility o, Carrier
T#e purpose o% t#e i&& o% &ading is to provide %or t#e rig#ts and &iai&ities o% t#e parties in re%erence to
t#e contract to carr!' T#e stipu&ation in t#e i&& o% &ading &imiting t#e common carrier?s &iai&it! to t#e va&ue o%
t#e goods appearing in t#e i&&, un&ess t#e s#ipper or owner dec&ares a greater va&ue, is va&id and inding'
-. Li#ite+ Lia$ility clause sanctione+ $y ,ree+o# o, parties to stipulate6 Re9uisites ,or vali+ity
T#is &imitation o% t#e carrier?s &iai&it! is sanctioned ! t#e %reedom o% t#e contracting parties to
esta&is# suc# stipu&ations, c&auses, terms, or conditions as t#e! ma! deem convenient, provided t#e! are not
contrar! to &aw, mora&s, good customs and pu&ic po&ic!' 7 stipu&ation %i3ing or &imiting t#e sum t#at ma! e
recovered %rom t#e carrier on t#e &oss or deterioration o% t#e goods is va&id, provided it is (a) reasona&e and
Aust under t#e circumstances, and () #as een %air&! and %ree&! agreed upon'
3. Lia$ility li#ite+ to C;& value o, t)e *oo+s
@erein, t#e &iai&ities o% Macondra!, etc' wit# respect to t#e &ost or damaged s#ipments are e3press&!
&imited to t#e $','F' va&ue o% t#e goods as per contract o% sea carriage emodied in t#e i&& o% &ading, w#ic#
reads: ;F#enever t#e va&ue o% t#e goods is &ess t#an K422 per package or ot#er %reig#t unit, t#eir va&ue in t#e
ca&cu&ation and adAustment o% c&aims %or w#ic# t#e $arrier ma! e &ia&e s#a&& %or t#e purpose o% avoiding
uncertainties and di%%icu&ties in %i3ing va&ue e deemed to e t#e invoice va&ue, p&us %reig#t and insurance i%
paid, irrespective o% w#et#er an! ot#er va&ue is greater or &ess' T#e &imitation o% &iai&it! and ot#er provisions
#erein s#a&& inure not on&! to t#e ene%it o% t#e carrier, its agents, servants and emp&o!ees, ut a&so to t#e
ene%it o% an! independent contractor per%orming services inc&uding stevedoring in connection wit# t#e goods
covered #ereunder'< (Paragrap# 10)
/. S)ipper an+ consi*nee $oun+ $y stipulations
,t is not pretended t#at t#e conditions are unreasona&e or were not %ree&! and %air&! agreed upon' T#e
s#ipper and consignee are, t#ere%ore, ound ! suc# stipu&ations since it is e3press&! stated in t#e i&& o%
&ading t#at in ;accepting t#is 1i&& o% +ading, t#e s#ipper, owner and consignee o% t#e goods, and t#e #o&der o%
t#e 1i&& o% +ading agree to e ound ! a&& its stipu&ations, e3ceptions and conditions, w#et#er written,
stamped or printed, as %u&&! as i% t#e! were a&& signed ! suc# s#ipper, owner, consignee or #o&der'< ,t is
ovious&! %or t#is reason t#at t#e consignee %i&ed its c&aim against t#e Macondra!, etc' on t#e asis o% t#e
$','F' va&ue o% t#e &ost or damaged goods in t#e aggregate amount o% P1,12.'>0'
2. Ri*)t o, su$ro*ation
@erein, "t' Fau& Fire ,nsurance, as insurer, a%ter pa!ing t#e c&aim o% t#e insured %or damages under t#e
insurance, is surogated mere&! to t#e rig#ts o% t#e assured' 7s surogee, it can recover on&! t#e amount t#at
is recovera&e ! t#e &atter' "ince t#e rig#t o% t#e assured, in case o% &oss or damage to t#e goods, is &imited or
restricted ! t#e provisions in t#e i&& o% &ading, a suit ! t#e insurer as surogee necessari&! is suAect to &ike
&imitations and restrictions' T#e insurer a%ter pa!ing t#e c&aim o% t#e insured %or damages under t#e insurance
is surogated mere&! to t#e rig#ts o% t#e insured and t#ere%ore can necessari&! recover on&! t#at to w#at was
recovera&e ! t#e insured' Dpon pa!ment %or a tota& &oss o% goods insured, t#e insurance is on&! surogated
to suc# rig#ts o% action as t#e assured #as against 3rd persons w#o caused or are responsi&e %or t#e &oss' T#e
rig#t o% action against anot#er person, t#e e9uita&e interest in w#ic# passes to t#e insurer, eing on&! t#at
w#ic# t#e assured #as, it %o&&ows t#at i% t#e assured #as no suc# rig#t o% action, none passes to t#e insurer, and
i% t#e assured?s rig#t o% action is &imited or restricted ! &aw%u& contract etween #im and t#e person soug#t to
e made responsi&e %or t#e &oss, a suit ! t#e insurer, in t#e rig#t o% t#e assured, is suAect to &ike &imitations
or restrictions'
. 8$li*ation o, carrier co##ence+ on +ate it ,aile+ to +eliver s)ip#ent in *oo+ con+ition
T#e contention o% t#e insurance compan! Q t#at ecause o% e3traordinar! in%&ation, it s#ou&d e
reimursed %or its do&&ar pa!ments at t#e rate o% e3c#ange on t#e date o% t#e Audgment and not on t#e date o%
t#e &oss or damage Q is untena&e' T#e o&igation o% t#e carrier to pa! %or t#e damage commenced on t#e date
it %ai&ed to de&iver t#e s#ipment in good condition to t#e consignee' @erein, t#e $','F' Mani&a va&ue o% t#e
goods w#ic# were &ost or damaged, according to t#e c&aim o% t#e consignee dated 8> "eptemer 1.>2 is
K88>'30 (%or t#e pi&%erage) and K385'33 (s#ort&anded) or P54>'15 and P>43'43, respective&!' T#e peso
e9uiva&ent was ased ! t#e consignee on t#e e3c#ange rate o% P8'214 to K1'22 w#ic# was t#e rate e3isting at
t#at time' T#e tria& court committed no error in adopting t#e a%oresaid rate o% e3c#ange'
[1]
GalenJuela Har+.oo+ an+ ;n+ustrial vs. C5 (GR 1"-31! 3" Bune 1%%3)
&acts' (n 1> Januar! 1./5, Va&en*ue&a @ardwood and ,ndustria& "upp&!, ,nc' (V@,") entered into an
agreement wit# t#e "even 1rot#ers w#ere! t#e &atter undertook to &oad on oard its vesse& M-V "even
7massador t#e %ormer?s &auan round &ogs numering .52 at t#e port o% Maconacon, ,sae&a %or s#ipment to
Mani&a' (n 82 Januar! 1./5, V@," insured t#e &ogs against &oss and-or damage wit# "out# "ea "uret! and
,nsurance $o', ,nc' %or P8,222,222'22 and t#e &atter issued its Marine $argo ,nsurance Po&ic! /5-8588. %or
P8,222,222'22 on said date' (n 85 Januar! 1./5, V@," gave t#e c#eck in pa!ment o% t#e premium on t#e
insurance po&ic! to Mr' Victorio $#ua' ,n t#e meantime, t#e said vesse& M-V "even 7massador sank on 84
Januar! 1./5 resu&ting in t#e &oss o% V@,"? insured &ogs' (n 32 Januar! 1./5, a c#eck %or P4,>84'22 to cover
pa!ment o% t#e premium and documentar! stamps due on t#e po&ic! was tendered due to t#e insurer ut was
not accepted' ,nstead, t#e "out# "ea "uret! cance&&ed t#e insurance po&ic! it issued as o% t#e date o% t#e
inception %or non=pa!ment o% t#e premium due in accordance wit# "ection 00 o% t#e ,nsurance $ode' (n 8
Feruar! 1./5, V@," demanded %rom "out# "ea "uret! t#e pa!ment o% t#e proceeds o% t#e po&ic! ut t#e
&atter denied &iai&it! under t#e po&ic!' V@," &ikewise %i&ed a %orma& c&aim wit# "even 1rot#ers %or t#e va&ue
o% t#e &ost &ogs ut t#e &atter denied t#e c&aim'
:aised in t#e tria& court, t#e :egiona& Tria& $ourt o% Va&en*ue&a, Metro Mani&a (1ranc# 101), a%ter due
#earing and tria&, ordered "out# "ea "uret! to pa! V@," t#e sum P8,222,222'22 representing t#e va&ue o% t#e
po&ic! o% t#e &ost &ogs wit# &ega& interest t#ereon %rom t#e date o% demand on 8 Feruar! 1./5 unti& t#e
amount is %u&&! paid or in t#e a&ternative, "even 1rot#ers to pa! V@," t#e amount o% P8,222,222'22
representing t#e va&ue o% &ost &ogs p&us &ega& interest %rom t#e date o% demand on 85 7pri& 1./5 unti& %u&&
pa!ment t#ereo%C t#e reasona&e attorne!?s %ees in t#e amount e9uiva&ent to 4I o% t#e amount o% t#e c&aim and
t#e costs o% t#e suit' T#e $ourt a&so ordered V@," to pa! "even 1rot#ers t#e sum o% P832,222'22
representing t#e a&ance o% t#e stipu&ated %reig#t c#argesC and dismissed t#e counterc&aim o% "out# "ea "uret!'
1ot# "even 1rot#ers and "out# "ea "uret! appea&ed' T#e $ourt o% 7ppea&s, on 14 (ctoer 1..1, a%%irmed t#e
Audgment e3cept as to t#e &iai&it! o% "even 1rot#ers to V@,"'
"out# "ea "uret! and V@," %i&ed separate petitions %or review e%ore t#e "upreme $ourt' ,n a :eso&ution
dated 8 June 1..4, t#e "upreme $ourt denied t#e petition o% "out# "ea "uret!' T#ere t#e $ourt %ound no
reason to reverse t#e %actua& %indings o% t#e tria& court and t#e $ourt o% 7ppea&s t#at $#ua was indeed an
aut#ori*ed agent o% "out# "ea w#en #e received Va&en*ue&a?s premium pa!ment %or t#e marine cargo
insurance po&ic! w#ic# was t#us inding on t#e insurer' T#e present decision concerns itse&% to t#e petition %or
review %i&ed ! V@,"'
T#e "upreme $ourt denied t#e petition %or its utter %ai&ure to s#ow an! reversi&e error on t#e part o% t#e
appe&&ate court, and a%%irmed t#e assai&ed decision'
1. Gali+ity o, Stipulation is Lis =ota
T#e c#arter part! etween V@," and "even 1rot#ers stipu&ated t#at t#e ;owners s#a&& not e
responsi&e %or &oss, sp&it, s#ort=&anding, reakages and an! kind o% damages to t#e cargo'< T#e va&idit! o% t#is
stipu&ation is t#e &is mota o% t#e present case'
-. :roxi#ate cause o, sinkin* o, =CG Seven 5#$assa+ors
T#e pro3imate cause o% t#e sinking o% M-V "even 7massadors resu&ting in t#e &oss o% its cargo was
t#e ;snapping o% t#e iron c#ains and t#e suse9uent ro&&ing o% t#e &ogs to t#e portside due to t#e neg&igence o%
t#e captain in stowing and securing t#e &ogs on oard t#e vesse& and not due to %ortuitous event'<
3. 5rticle 13/2 7CC
7rtic&e 1054 o% t#e $ivi& $ode provides t#at ;an! o% t#e %o&&owing or simi&ar stipu&ations s#a&& e
considered unreasona&e, unAust and contrar! to pu&ic po&ic!: (1) T#at t#e goods are transported at t#e risk o%
t#e owner or s#ipperC (8) T#at t#e common carrier wi&& not e &ia&e %or an! &oss, destruction, or deterioration
o% t#e goodsC (3) T#at t#e common carrier need not oserve an! di&igence in t#e custod! o% t#e goodsC (5)
T#at t#e common carrier s#a&& e3ercise a degree o% di&igence &ess t#an t#at o% a good %at#er o% a %ami&!, or o% a
man o% ordinar! prudence in t#e vigi&ance over t#e mova&es transportedC (4) T#at t#e common carrier s#a&&
not e responsi&e %or t#e acts or omissions o% #is or its emp&o!eesC (>) T#at t#e common carrier?s &iai&it! %or
acts committed ! t#ieves, or o% roers w#o do not act wit# grave or irresisti&e t#reat, vio&ence or %orce, is
dispensed wit# or diminis#edC (0) T#at t#e common carrier is not responsi&e %or t#e &oss, destruction, or
deterioration o% goods on account o% t#e de%ective condition o% t#e car, ve#ic&e, s#ip, airp&ane or ot#er
e9uipment used in t#e contract o% carriage'<
3. Status o, Seven Brot)ers as a private carrier un+ispute+6 Co##on carriers provision #ay not
$e applie+ unless expressly stipulate+ in c)arter party
,t is undisputed t#at "even 1rot#ers #ad acted as a private carrier in transporting V@,"? &auan &ogs'
T#us, 7rtic&e 1054 and ot#er $ivi& $ode provisions on common carriers ma! not e app&ied un&ess e3press&!
stipu&ated ! t#e parties in t#eir c#arter part!' Dn&ike in a contract invo&ving a common carrier, private
carriage does not invo&ve t#e genera& pu&ic' @ence, t#e stringent provisions o% t#e $ivi& $ode on common
carriers protecting t#e genera& pu&ic cannot Austi%ia&! e app&ied to a s#ip transporting commercia& goods as
a private carrier' $onse9uent&!, t#e pu&ic po&ic! emodied t#erein is not contravened ! stipu&ations in a
c#arter part! t#at &essen or remove t#e protection given ! &aw in contacts invo&ving common carriers'
/. :arties #ay stipulate responsi$ility rests solely on c)arterer6 5rticle 13" 7CC
,n a contract o% private carriage, t#e parties ma! va&id&! stipu&ate t#at responsii&it! %or t#e cargo rests
so&e&! on t#e c#arterer, e3empting t#e s#ipowner %rom &iai&it! %or &oss o% or damage to t#e cargo caused even
! t#e neg&igence o% t#e s#ip captain' Pursuant to 7rtic&e 132> o% t#e $ivi& $ode, suc# stipu&ation is va&id
ecause it is %ree&! entered into ! t#e parties and t#e same is not contrar! to &aw, mora&s, good customs,
pu&ic order, or pu&ic po&ic!' ,ndeed, t#eir contract o% private carriage is not even a contract o% ad#esion' ,n a
contract o% private carriage, t#e parties ma! %ree&! stipu&ate t#eir duties and o&igations w#ic# per%orce wou&d
e inding on t#em'
2. Ho#e ;nsurance vs. 5#erican Stea#s)ip 5*encies6 E)ere t)e reason ,or t)e rule ceases! t)e
rule itsel, +oes not apply
,n @ome ,nsurance $o' vs' 7merican "teams#ip 7gencies, ,nc', t#e tria& court simi&ar&! nu&&i%ied a
stipu&ation identica& to t#at invo&ved in t#e present case %or eing contrar! to pu&ic po&ic! ased on 7rtic&e
1055 o% t#e $ivi& $ode and 7rtic&e 4/0 o% t#e $ode o% $ommerce' $onse9uent&!, t#e tria& court #e&d t#e
s#ipowner &ia&e %or damages resu&ting %rom t#e partia& &oss o% t#e cargo' T#is $ourt reversed t#e tria& court
and &aid down t#e we&&=sett&ed oservation and doctrine t#at ;t#e provisions o% our $ivi& $ode on common
carriers were taken %rom 7ng&o=7merican &aw' Dnder 7merican Aurisprudence, a common carrier undertaking
to carr! a specia& cargo or c#artered to a specia& person on&!, ecomes a private carrier' 7s a private carrier, a
stipu&ation e3empting t#e owner %rom &iai&it! %or t#e neg&igence o% its agent is not against pu&ic po&ic!, and
is deemed va&id'; T#e $ourt %inds suc# doctrine reasona&e' ;T#e $ivi& $ode provisions on common carriers
s#ou&d not e app&ied w#ere t#e carrier is not acting as suc# ut as a private carrier' T#e stipu&ation in t#e
c#arter part! aso&ving t#e owner %rom &iai&it! %or &oss due to t#e neg&igence o% its agent wou&d e void on&!
i% t#e strict pu&ic po&ic! governing common carriers is app&ied' "uc# po&ic! #as no %orce w#ere t#e pu&ic at
&arge is not invo&ved, as in t#is case o% a s#ip tota&&! c#artered %or t#e use o% a sing&e part!'<
. 7ature o, contract o, transportation $et.een pu$lic an+ co##on carriers6 :rivate c)arterer
not si#ilarly situate+ as pu$lic
T#e genera& pu&ic enters into a contract o% transportation wit# common carriers wit#out a #and or a
voice in t#e preparation t#ereo%' T#e riding pu&ic mere&! ad#eres to t#e contractC even i% t#e pu&ic wants to,
it cannot sumit its own stipu&ations %or t#e approva& o% t#e common carrier' T#us, t#e &aw on common
carriers e3tends its protective mant&e against one=sided stipu&ations inserted in tickets, invoices or ot#er
documents over w#ic# t#e riding pu&ic #as no understanding or, worse, no c#oice' $ompared to t#e genera&
pu&ic, a c#arterer in a contract o% private carriage is not simi&ar&! situated' ,t can, and in %act it usua&&! does,
enter into a %ree and vo&untar! agreement' ,n practice, t#e parties in a contract o% private carriage can stipu&ate
t#e carrier?s o&igations and &iai&ities over t#e s#ipment w#ic#, in turn, determine t#e price or consideration
o% t#e c#arter' T#us, a c#arterer, in e3c#ange %or convenience and econom!, ma! opt to set aside t#e
protection o% t#e &aw on common carriers' F#en t#e c#arterer decides to e3ercise t#is option, #e takes a
norma& usiness risk'
3. Ho#e ;nsurance case applica$le in present case
T#e case o% @ome ,nsurance speci%ica&&! dea&t wit# ;t#e &iai&it! o% t#e s#ipowner %or acts or
neg&igence o% its captain and crew< and a c#arter part! stipu&ation w#ic# ;e3empts t#e owner o% t#e vesse&
%rom an! &oss or damage or de&a! arising %rom an! ot#er source, even %rom t#e neg&ect or %au&t o% t#e captain
or crew or some ot#er person emp&o!ed ! t#e owner on oard, %or w#ose acts t#e owner wou&d ordinari&! e
&ia&e e3cept %or said paragrap#'< Dndouted&!, @ome ,nsurance is app&ica&e to t#e present case'
4. 5pplication o, 5#erican rule reasona$le! as )el+ in Ho#e ;nsurance6 Rulin* in Ho#e
;nsurance $in+in* $ase+ on +octrine o, stare +ecisis an+ 5rticle 4 7CC
T#e naked assertion o% t#at t#e 7merican ru&e enunciated in @ome ,nsurance is not t#e ru&e in t#e
P#i&ippines deserves scant consideration, as t#e $ourt t#ere categorica&&! #e&d t#at said ru&e was ;reasona&e<
and proceeded to app&! it in t#e reso&ution o% t#at case' V@," misera&! %ai&ed to s#ow suc# circumstances or
arguments w#ic# wou&d necessitate a departure %rom a we&&=sett&ed ru&e' $onse9uent&!, t#e ru&ing in said case
remains a inding Audicia& precedent ased on t#e doctrine o% stare decisis and 7rtic&e / o% t#e $ivi& $ode
w#ic# provides t#at ;Audicia& decisions app&!ing or interpreting t#e &aws or t#e $onstitution s#a&& %orm part o%
t#e &ega& s!stem o% t#e P#i&ippines'<
%. C)arter party .aives ri*)t un+er 5rticles 24 an+ 243! Co+e o, Co##erce
F#atever rig#ts petitioner ma! #ave under 7rtic&es 4/> and 4/0 o% t#e $ode o% $ommerce, w#ic#
con%er on t#e s#ipper t#e rig#t to recover damages %rom t#e s#ipowner and s#ip agent %or t#e acts or conduct
o% t#e captain, were waived w#en it entered into t#e c#arter part!'
1". Ri*)ts #ay $e .aive+6 5rticle 7CC
7rtic&e > o% t#e $ivi& $ode provides t#at ;rig#ts ma! e waived, un&ess t#e waiver is contrar! to &aw,
pu&ic order, pu&ic po&ic!, mora&s, or good customs, or preAudicia& to a person wit# a rig#t recogni*ed !
&aw'< 7s a genera& ru&e, patrimonia& rig#ts ma! e waived as opposed to rig#ts to persona&it! and %ami&! rig#ts
w#ic# ma! not e made t#e suAect o% waiver' @erein, eing patent&! and undouted&! patrimonia&, V@,"?s
rig#t con%erred under said artic&es ma! e waived' T#is, V@," did ! acceding to t#e contractua& stipu&ation
t#at it is so&e&! responsi&e %or an! damage to t#e cargo, t#ere! e3empting "even 1rot#ers %rom an!
responsii&it! %or &oss or damage t#ereto'
11. 5rticle 113" 7CC
7rtic&e 1102' o% t#e $ivi& $ode provides t#at ;T#ose w#o in t#e per%ormance o% t#eir o&igations are
gui&t! o% %raud, neg&igence, or de&a!, and t#ose w#o in an! manner contravene t#e tenor t#ereo%, are &ia&e %or
damages'<
1-. 5rticle 1133 7CC
7rtic&e 1103 o% t#e $ivi& $ode provides t#at ;T#e %au&t or neg&igence o% t#e o&igor consists in t#e
omission o% t#at di&igence w#ic# is re9uired ! t#e nature o% t#e o&igation and corresponds wit# t#e
circumstances o% t#e persons, o% t#e time and o% t#e p&ace' F#en neg&igence s#ows ad %ait#, t#e provisions o%
artic&es 1101 and 8821, s#a&& app&!' ,% t#e &aw does not state t#e di&igence w#ic# is to e oserved in #e
per%ormance, t#at w#ic# is e3pected o% a good %at#er o% a %ami&! s#a&& e re9uired'<
13. 5rticles 113" an+ 1133 not applica$le in present case
7rtic&es 1102 and 1103 are app&ica&e on&! to t#e o&igor or t#e one wit# an o&igation to per%orm'
@erein, "even 1rot#ers is not an o&igor in respect o% t#e cargo, %or t#is o&igation to ear t#e &oss was s#i%ted
to V@," ! virtue o% t#e c#arter part!' T#is s#i%ting o% responsii&it! is not void' T#e provisions cited !
V@," are, t#ere%ore, inapp&ica&e to t#e present case'
1/. Stan+ar+ o, or+inary +ili*ence in private carria*e6 5rticle 3- o, t)e Co+e o, Co##erce
T#e %actua& mi&ieu o% t#e present case does not Austi%! t#e app&ication o% t#e second paragrap# o%
7rtic&e 1103 o% t#e $ivi& $ode w#ic# prescries t#e standard o% di&igence to e oserved in t#e event t#e &aw
or t#e contract is si&ent' ,n @erein, 7rtic&e 3>8 o% t#e $ode o% $ommerce provides t#e standard o% ordinar!
di&igence %or t#e carriage o% goods ! a carrier' T#e standard o% di&igence under t#is statutor! provision ma!,
#owever, e modi%ied in a contract or private carriage as V@," and "even 1rot#ers #ad done in t#eir c#arter
part!'
12. S)e.ara# vs. :5L! an+ Hs#ael vs. Ga$ino Barreto not applica$le6 Co##on carriers
T#e cases o% "#ewaram and Osmae& ot# invo&ve a common carrierC t#us, t#e! necessari&! Austi%! t#e
app&ication o% suc# po&ic! considerations and concomitant&! stricter ru&es' T#e pu&ic po&ic! considerations
e#ind t#e rigorous treatment o% common carriers are asent in t#e case o% private carriers' @ence, t#e
stringent &aws app&ica&e to common carriers are not app&ied to private carriers'
1. =anila Railroa+ vs. Co#pania (ransatlantica not applica$le6 :ro#ise
T#e case o% Mani&a :ai&road is inapp&ica&e ecause t#e action %or damages t#ere does not invo&ve a
contract %or transportation' Furt#ermore, t#e de%endant t#erein made a ;promise to use due care in t#e &i%ting
operations< and, conse9uent&!, it was ;ound ! its undertaking<C esides, t#e e3emption was intended to
cover accidents due to #idden de%ects in t#e apparatus or ot#er un%orseea&e occurrences< not caused ! its
;persona& neg&igence'< T#is promise was t#us construed to make sense toget#er wit# t#e stipu&ation against
&iai&it! %or damages' @erein, "even 1rot#ers made no suc# promise' T#e agreement o% t#e parties to e3empt
t#e s#ipowner %rom responsii&it! %or an! damage to t#e cargo and p&ace responsii&it! over t#e same to V@,"
is t#e &one stipu&ation considered'
13. Stan+ar+ 8il o, 7e. Hork vs. LopeJ Castelo! S#it) vs. Ca+.alla+er Gi$son! 7( Has)i# vs.
Roc)a! 8)ta vs. Stea#s)ip! Li#pan*co Sons vs. Han*co not applica$le6 &actual #ilieu
@erein, V@," points to "tandard (i& $o' o% Eew Oork vs' +ope* $oste&o, Fa&ter 7' "mit# T $o' vs'
$adwa&&ader 6ison +umer $o', E' T ' @as#im and $o' vs' :oc#a and $o', (#ta Deve&opment $o' vs'
"teams#ip ;Pompe!< and +impangco "ons vs' Oangco "teams#ip $o' in support o% its contention t#at t#e
s#ipowner e #e&d &ia&e %or damages' 52 T#ese #owever are not on a&& %ours wit# t#e present case ecause
t#e! do not invo&ve a simi&ar %actua& mi&ieu or an identica& stipu&ation in t#e c#arter part! e3press&! e3empting
t#e s#ipowner %rom responsii&it! %or an! damage to t#e cargo'
14. D,,ect o, t)e Sout) Sea Resolution6 5**rieve+ party #ay recover +e,icient ,ro# person causin*
loss
7s t#e va&idit! o% t#e 9uestioned c#arter part! stipu&ation was up#e&d and as V@," ma! not recover
%rom "even 1rot#er, t#e issue w#et#er V@," #as a cause o% action against "even 1rot#er as t#e $ourt
a%%irmed t#e &iai&it! o% "out# "ea "uret! %or t#e &oss su%%ered ! V@,", is moot and academic' ,t su%%ices to
state t#at t#e :eso&ution o% t#e $ourt dated 8 June 1..4 a%%irming t#e &iai&it! o% "out# "ea does not, ! itse&%,
necessari&! prec&ude V@," %rom proceeding against "even 1rot#er' 7n aggrieved part! ma! sti&& recover t#e
de%icienc! %rom t#e person causing t#e &oss in t#e event t#e amount paid ! t#e insurance compan! does not
%u&&! cover t#e &oss'
1%. 5rticle --"3 7CC
7rtic&e 8820 o% t#e $ivi& $ode provides t#at ;,% t#e p&ainti%%?s propert! #as een insured, and #e #as
received indemnit! %rom t#e insurance compan! %or t#e inAur! or &oss arising out o% t#e wrong or reac# o%
contract comp&ained o%, t#e insurance compan! s#a&& e surogated to t#e rig#ts o% t#e insured against t#e
wrongdoer or t#e person w#o #as vio&ated t#e contract' ,% t#e amount paid ! t#e insurance compan! does not
%u&&! cover t#e inAur! or &oss, t#e aggrieved part! s#a&& e entit&ed to recover t#e de%icienc! %rom t#e person
causing t#e &oss or inAur!'<
[-]
S.eet Line vs. (eves (GR L>3332"! 1% =ay 1%34)
"econd Division, "antos (J): 3 concur, 1 reserves vote
&acts' 7tt!' +eovigi&do Tandog and :oge&io Tiro, a contractor ! pro%essions, oug#t tickets 221103> and
211030 %or Vo!age .2 on 31 Decemer 1.01 at t#e ranc# o%%ice o% "weet +ine, ,nc', a s#ipping compan!
transporting inter=is&and passengers and cargoes, at $aga!an de (ro $it!' Tandog and Tiro were to oard
"weet +ine?s vesse&, M-" ;"weet @ope< ound %or Tagi&aran $it! via t#e port o% $eu' Dpon &earning t#at
t#e vesse& was not proceeding to 1o#o&, since man! passengers were ound %or "urigao, Tandog and Tiro per
advice, went to t#e ranc# o%%ice %or proper re&ocation to M-" ;"weet Town<' 1ecause t#e said vesse& was
a&read! %i&ed to capacit!, t#e! were %orced to agree ;to #ide at t#e cargo section to avoid inspection o% t#e
o%%icers o% t#e P#i&ippine $oastguard'< Tandog and Tiro a&&eged t#at t#e! were, during t#e trip,< ;e3posed to
t#e scorc#ing #eat o% t#e sun and t#e dust coming %rom t#e s#ip?s cargo o% corn grits,< and t#at t#e tickets t#e!
oug#t at $aga!an de (ro $it! %or Tagi&aran were not #onored and t#e! were constrained to pa! %or ot#er
tickets'
,n view t#ereo%, Tandog and Tiro sued "weet +ine %or damages and %or reac# o% contract o% carriage in t#e
a&&eged sum o% P112,222'22 e%ore t#e $F, o% Misamis (rienta&' "weet +ine moved to dismiss t#e comp&aint
on t#e ground o% improper venue' T#e motion was denied ! t#e tria& court' "weet +ine moved to reconsider
t#e order o% denia&, ut to no avai&' @ence, t#e petition %or pro#iition wit# pre&iminar! inAunction'
T#e "upreme $ourt, in its reso&ution o% 82 Eovemer 1.03, restrained Judge Teves %rom proceeding %urt#er
wit# t#e case and re9uired Tandog and Tiro to comment' (n 1/ Januar! 1.05, t#e $ourt gave due course to
t#e petition and re9uired Tandog and Tiro to answer' T#erea%ter, t#e parties sumitted t#eir respective
memoranda in support o% t#eir respective contentions' T#e "upreme $ourt dismissed t#e petition %or
pro#iitionC and &i%ted and set aside t#e restraining order issued on 82 Eovemer 1.03C wit# costs against
"weet +ine'
1. Con+ition printe+ at $ack o, ticket! as to venue
$ondition 15 printed at t#e ack o% t#e tickets, reads ;,t is #ere! agreed and understood t#at an! and
a&& actions arising out o% t#e conditions and provisions o% t#is ticket, irrespective o% w#ere it is issued, s#a&& e
%i&ed in t#e competent courts in t#e $it! o% $eu'<
-. Gali+ contract o, carria*e exists6 (icket $est evi+ence o, contract
T#ere was a va&id contract o% carriage entered into ! "weet +ine and Tandog and Tiro and t#at t#e
passage tickets, upon w#ic# t#e &atter ased t#eir comp&aint, are t#e est evidence t#ereo%' 7&& t#e essentia&
e&ements o% a va&id contract, i'e', consent, cause or consideration and oAect, are present'
3. (icket issue+ )as all ele#ents o, a .ritten contract6 :eralta +e Guerrero! et al. v. =a+ri*al
S)ippin* Co.! ;nc.
,t is a matter o% common know&edge t#at w#enever a passenger oards a s#ip %or transportation %rom
one p&ace to anot#er #e is issued a ticket ! t#e s#ipper w#ic# #as a&& t#e e&ements o% a written contract,
Eame&!: (1) t#e consent o% t#e contracting parties mani%ested ! t#e %act t#at t#e passenger oards t#e s#ip
and t#e s#ipper consents or accepts #im in t#e s#ip %or transportationC (8) cause or consideration w#ic# is t#e
%are paid ! t#e passenger as stated in t#e ticketC (3) oAect, w#ic# is t#e transportation o% t#e passenger %rom
t#e p&ace o% departure to t#e p&ace o% destination w#ic# are stated in t#e ticket'<
/. Contracts o, a+)esion6 Gali+ity +eter#ine+ $y peculiar circu#stances o$tainin* in eac) case
Fit# respect to t#e 15 conditions printed at t#e ack o% t#e passage tickets, t#ese are common&!
known as ;contracts o% ad#esion,< t#e va&id&! and-or en%orceai&it! o% w#ic# wi&& #ave to e determined !
t#e pecu&iar circumstances otaining in eac# case and t#e nature o% t#e conditions or terms soug#t to e
en%orced' For, ;F#i&e genera&&!, stipu&ations in a contract come aout a%ter de&ierate dra%ting ! t#e parties
t#ereto, t#ere are certain contracts a&most a&& t#e provisions o% w#ic# #ave een dra%ted on&! ! one part!,
usua&&! a corporation' "uc# contracts are ca&&ed contracts o% ad#esion, ecause t#e on&! participation o% t#e
part! is t#e signing o% #is signature or #is Gad#esion? t#ereto' ,nsurance contracts, i&&s o% &ading, contracts o%
sa&e o% &ots on t#e insta&&ment p&an %a&& into t#is categor!'<
2. Gui+elines in +eter#ination o, vali+ity an+Cor en,orcea$ility o, contracts o, a+)esion6 Kua
C)ee Gan v. La. Fnion an+ Rock ;nsurance Co.! an+ &iel+#an ;nsurance v. Gar*as
T#e $ourt #e&d t#at ;t#e courts cannot ignore t#at nowada!s, monopo&ies, carte&s and concentration o%
capita&, endowed wit# overw#e&ming economic power, manage to impose upon parties dea&ing wit# t#em
cunning&! prepared Gagreements t#at t#e weaker part! ma! not c#ange one w#it, #is participation in t#e
Gagreement? eing reduced to t#e a&ternative Gto take it or &eave it,? &ae&&ed since :a!mond "a&ei&&es Gcontracts
! ad#erence? (contracts d? ad#esion) in contrast to t#ose entered into ! parties argaining on an e9ua&
%ooting' "uc# contracts (o% w#ic# po&icies o% insurance and internationa& i&& o% &ading are prime e3amp&es)
ovious&! ca&& %or greater strictness and vigi&ance on t#e part o% t#e courts o% Austice wit# a view to protecting
t#e weaker part! %rom auses and imposition, and prevent t#eir ecoming traps %or t#e unwar!'<
. :rotection o, +isa+vanta*e+ expressly en?oine+ $y t)e Civil Co+e
To t#e same e%%ect and import, and, in recognition o% t#e pecu&iar c#aracter o% contracts o% t#is kind,
t#e protection o% t#e disadvantaged is e3press&! enAoined ! t#e Eew $ivi& $ode ;in a&& contractua&, propert!
or ot#er re&ations, w#en one o% t#e parties is at a disadvantage on account o% #is mora& dependence, is
ignorance, indigence, menta& weakness, tender age and ot#er #andicap, t#e courts must e vigi&ant %or #is
protection'<
3. Con+ition 1/ voi+
$onsidered in t#e &ig#t o% t#e %oregoing norms and in t#e conte3t o% circumstances prevai&ing in t#e
inter=is&and s#ipping industr! in t#e countr!, t#e $ourt %inds and #o&ds t#at $ondition 15 printed at t#e ack o%
t#e passage tickets s#ou&d e #e&d as void and unen%orcea&e %or t#e reasons t#at (1) under circumstances
otaining in t#e inter=is&and s#ipping industr!, it is not Aust and %air to ind passengers to t#e terms o% t#e
conditions printed at t#e ack o% t#e passage tickets, on w#ic# $ondition 15 is printed in %ine &etters, and (8)
$ondition 15 suverts t#e pu&ic po&ic! on trans%er o% venue o% proceedings o% t#is nature, since t#e same wi&&
preAudice rig#ts and interests o% innumera&e passengers in di%%erent parts o% t#e countr! w#o, under
$ondition 15, wi&& #ave to %i&e suits against "weet +ine on&! in t#e $it! o% $eu'
4. State o, inter>islan+ s)ippin* o, pu$lic kno.le+*e6 Court take ?u+icial notice
,t is a matter o% pu&ic know&edge, o% w#ic# t#e $(urt can take Audicia& notice, t#at t#ere is a deart#
o% and acute s#ortage in inter=is&and vesse&s p&!ing etween t#e countr!?s severa& is&ands, and t#e %aci&ities
t#e! o%%er &eave muc# to e desired' T#us, even under ordinar! circumstances, t#e piers are congested wit#
passengers and t#eir cargo waiting to e transported, T#e conditions are even worse at peak and-or t#e rain!
seasons, w#en passengers &itera&&! scram&e to secure w#atever accommodations ma! e avai&ed o%, even
t#roug# circuitous routes, and-or at t#e risk o% t#eir sa%et! H t#eir immediate concern, %or t#e moment, eing
to e a&e to oard vesse&s wit# t#e #ope o% reac#ing t#eir destinations' T#e sc#edu&es are H as o%ten as not i%
not more so H de&a!ed or a&tered' T#is was precise&! t#e e3perience o% private respondents w#en t#e! were
re&ocated to M-" ;"weet Town< %rom M-" ;"weet @ope< and t#en a&&eged&! ;e3posed to t#e scorc#ing #eat o%
t#e sun and t#e dust coming %rom t#e s#ip?s cargo o% corn grits,< ecause even t#e &atter vesse& was %i&&ed to
capacit!'
%. :assen*ers not expecte+ to exa#ine tickets receive+ ,ro# con*este+ counters
Dnder t#e circumstances, it is #ard&! Aust and proper to e3pect t#e passengers to e3amine t#eir tickets
received %rom crowded-congested counters, more o%ten t#an not during rus# #ours, %or conditions t#at ma! e
printed t#ereon, muc# &ess c#arge t#em wit# #aving consented to t#e conditioner so printed, especia&&! i% t#ere
are a numer o% suc# conditions in %ine print'
1". Fnlike ,ine prints in insurance contract! passen*ers +o not )ave t)e sa#e c)ance to exa#ine
con+itions
$ondition 15 was prepared so&e&! at t#e instance o% "weet +ineC t#e passengers #ad no sa! in its
preparation' Eeit#er did t#e &atter #ave t#e opportunit! to take t#e same into account prior to t#e purc#ase o%
t#eir tickets' For, un&ike t#e sma&& print provisions o% insurance contracts H t#e common e3amp&e o% contracts
o% ad#erence H w#ic# are entered into ! t#e insured in %u&& awareness o% said conditions, since t#e insured is
a%%orded t#e opportunit! to e3amine and consider t#e same, passengers o% inter=is&and vesse&s do not #ave t#e
same c#ance, since t#eir a&&eged ad#esion is presumed on&! %rom t#e %act t#at t#e! purc#ased t#e passage
tickets'
11. S)ippin* co#panies (,ranc)ise )ol+ers o, C:C) possess virtual #onopoly over $usiness o,
transportin* passen*ers
"#ipping companies are %ranc#ise #o&ders o% certi%icates o% pu&ic convenience and, t#ere%ore, possess
a virtua& monopo&! over t#e usiness o% transporting passengers etween t#e ports covered ! t#eir %ranc#ise'
T#is eing so, s#ipping companies, engaged in inter=is&and s#ipping, #ave a virtua& monopo&! o% t#e usiness
o% transporting passengers and ma! t#us dictate t#eir terms o% passage, &eaving passengers wit# no c#oice ut
to u! t#eir tickets and avai& o% t#eir vesse&s and %aci&ities'
1-. Bu+icial notice t)at $ulk o, passen*ers ,ro# lo.>inco#e *roups
Fina&&!, Audicia& notice ma! e taken o% t#e %act t#at t#e u&k o% t#ose w#o oard t#ese inter=is&and
vesse&s come %rom t#e &ow=income groups and are &ess &iterate, and w#o #ave &itt&e or no c#oice ut to avai& o%
"weet +ine?s vesse&s'
13. Con+ition 1/ su$versive o, pu$lic policy on trans,ers o, venue o, actions6 Rule /! Section 3!
Rules o, Court
$ondition 15 is suversive o% pu&ic po&ic! on trans%ers o% venue o% actions' For, a&t#oug# venue ma!
e c#anged or trans%erred %rom one province to anot#er ! agreement o% t#e parties in writing pursuant to
:u&e 5, "ection 3, o% t#e :u&es o% $ourt, suc# an agreement wi&& not e #e&d va&id w#ere it practica&&! negates
t#e action o% t#e c&aimants' T#e p#i&osop#! under&!ing t#e provisions on trans%er o% venue o% actions is t#e
convenience o% "weet +ine as we&& as #is witnesses and to promote t#e ends o% Austice' $onsidering t#e
e3pense and trou&e a passenger residing outside o% $eu $it! wou&d incur to prosecute a c&aim in t#e $it! o%
$eu, #e wou&d most proa&! decide not to %i&e t#e action at a&&' T#e condition wi&& t#us de%eat, instead o%
en#ance, t#e ends o% Austice' Dpon t#e ot#er #and, "weet +ine #as ranc#es or o%%ices in t#e respective ports
o% ca&& o% its vesse&s and can a%%ord to &itigate in an! o% t#ese p&aces' @ence, t#e %i&ing o% t#e suit in t#e $F, o%
Misamis (rienta& wi&& not cause inconvience to, muc# &ess preAudice, "weet +ine'
1/. Con+ition 1/ su$versive o, t)e pu$lic *oo+ or interest
Pu&ic po&ic! is ;t#at princip&e o% t#e &aw w#ic# #o&ds t#at no suAect or citi*en can &aw%u&&! do t#at
w#ic# #as a tendenc! to e inAurious to t#e pu&ic or against t#e pu&ic good'< Dnder t#is princip&e ;%reedom
o% contract or private dea&ing is restricted ! &aw %or t#e good o% t#e pu&ic'< @erein, $ondition 15, i%
en%orced, wi&& e suversive o% t#e pu&ic good or interest, since it wi&& %rustrate in meritorious cases, actions
o% passenger c&aimants outside o% $eu $it!, t#us p&acing "weet +ine at a decided advantage over said
persons, w#o ma! #ave per%ect&! &egitimate c&aims against it' T#e said condition s#ou&d, t#ere%ore, e
dec&ared void and unen%orcea&e, as contrar! to pu&ic po&ic! H to make t#e courts accessi&e to a&& w#o ma!
#ave need o% t#eir services'
[3]
Dastern an+ 5ustralian Stea#s)ip vs. Great 5#erican ;nsurance (GR L>33"/! -3 8cto$er 1%41)
First Division, De $astro (J): 5 concur, 1 concur in resu&t
&acts' (n 12 Decemer 1.01, t#e Jackson and "pring ("!dne!) Pt!' +td' s#ipped %rom "!dne!, 7ustra&ia, 1
case o% impe&&ers %or warman pump on oard t#e "" ;$#itra&,< a vesse& owned and operated in t#e P#i&ippines
! Bastern T 7ustra&ian "teams#ip $o', +td', t#ru its agent F'B' Rue&&ig, ,nc' under 1i&& o% +ading 31, %or
de&iver! to Mani&a, P#i&ippines in %avor o% consignee 1enguet $onso&idated, ,nc' T#e s#ipment was insured
wit# 6reat 7merican ,nsurance, $o' %or P34,.81'/1 against a&& risks' (n 88 Decemer 1.01 t#e "" ;$#itra&<
arrived in Mani&a ut %ai&ed to disc#arge t#e s#ipment or an! part t#ereo%' Demand was made on Bastern T
7ustra&ian "teams#ip and FB Rue&&ig %or t#e de&iver! o% said s#ipment, ut #aving %ai&ed to make de&iver!, a
c&aim was presented against t#em %or t#e va&ue o% t#e s#ipment' Bastern T 7ustra&ian "teams#ip and RB
Rue&&ig, &ikewise, %ai&ed to make good t#e c&aim' 7s a conse9uence o% t#e &oss o% t#e s#ipment, 6reat
7merican ,nsurance $o' was compe&&ed to pa! t#e consignee P34,.81'/1'
7s surogee, t#e insurance compan! %i&ed a comp&aint dated 82 Eovemer 1.08 against Bastern T 7ustra&ian
"teams#ip and FB Rue&&ig %or recover! o% t#e said amount wit# &ega& interest and attorne!?s %ees' T#e $F, o%
Mani&a, on 84 Ju&! 1.03 (1ranc# J,,,, $ivi& $ase //./4) %ound Bastern T 7ustra&ian "teams#ip and Rue&&ig
&ia&e to 6reat 7merican ,nsurance $o' in t#e amount o% K422'22, or its peso e9uiva&ent o% P3,810'42, wit#
&ega& interest t#ereon %rom 82 Eovemer 1.08C and to %urt#er pa! an amount e9uiva&ent to 84I t#ereo% !
wa! o% damages as and %or attorne!?s %ees' @ence, t#e petition %or review on certiorari'
T#e "upreme $ourt reversed t#e decision o% t#e court, and entered anot#er one %inding Bastern T 7ustra&ian
"teams#ip and Rue&&ig &ia&e to 6reat 7merican ,nsurance $o' in t#e amount o% 122 "ter&ing or its peso
e9uiva&ent o% P1,455'52' Fit#out pronouncement as to costs'
1. Section / (2) o, C8GS5 an+ Clause 13 o, t)e Bill o, La+in* not inconsistent
T#ere is no inconsistenc! etween "ection 5 (4) o% t#e $arriage o% 6oods ! "ea 7ct and $&ause 10
o% t#e 1i&& o% +ading' T#e %irst part o% t#e provision o% "ection 5 (4) o% t#e $arriage o% 6oods ! "ea 7ct
&imits t#e ma3imum amount t#at ma! e recovered ! t#e s#ipper in t#e asence o% an agreement as to t#e
nature and va&ue o% goods s#ipped' "aid provision does not prescrie t#e minimum and #ence, it cou&d e an!
amount w#ic# is e&ow K422'22' $&ause 10 o% t#e 9uestioned 1i&& o% +ading a&so provides t#e ma3imum %or
w#ic# t#e carrier is &ia&e' ,t prescries t#at t#e carrier ma! on&! e #e&d &ia&e %or an amount not more t#an
122 "ter&ing w#ic# is e&ow t#e ma3imum &imit re9uired in t#e $arriage o% 6oods ! "ea 7ct' 1ot# t#e
$arriage o% 6oods ! "ea 7ct and $&ause 10 o% t#e 1i&& o% +ading a&&ow t#e pa!ment e!ond t#e respective
ma3imum &imit imposed t#erein, provided t#at t#e va&ue o% t#e goods #ave een dec&ared in t#e 1i&& o%
+ading'
-. Clause 13 cannot $e rea+ in t)e li*)t o, secon+ para*rap) o, Section / (2) o, C8GS5 as suc)
.oul+ ren+er ine,,ective t)e very intent o, t)e la.
T#e second paragrap# o% "ection 5 (4) o% t#e $arriage o% 6oods ! "ea 7ct prescriing t#e ma3imum
amount s#a&& not e &ess t#an K422'22 re%ers to a situation w#ere t#ere is an agreement ot#er t#an t#at set %ort#
in t#e 1i&& o% +ading providing %or a ma3imum #ig#er t#an K422'22 per package' $&ause 10 o% t#e 1i&& o%
+ading s#ou&d not e read in t#e &ig#t o% second paragrap# o% "ection 5 (4) o% t#e $arriage o% 6oods ! "ea
7ct, %or it wou&d render ine%%ective t#e ver! intent o% t#e &aw setting t#e sum o% K422'22 as t#e ma3imum
&iai&it! o% t#e vesse&-carrier, per package, in t#e asence o% a #ig#er va&uation o% t#e goods as indicated in t#e
1i&& o% +ading' 1! providing t#at K422'22 is t#e ma3imum &iai&it!, t#e &aw does not disa&&ow an agreement
%or &iai&it! at a &esser amount' @erein, it is apparent t#at t#ere #ad een no agreement etween t#e parties,
and #ence, $&ause 10 o% t#e 1i&& o% +ading s#a&& prevai&'
3. 5rticle 13/% 7CC
7rtic&e 105. o% t#e Eew $ivi& $ode e3press&! a&&ows t#e &imitation o% t#e carrier?s &iai&it!' ,t
provides t#at ;a stipu&ation t#at t#e common carrier?s &iai&it! is &imited to t#e va&ue o% t#e goods appearing in
t#e i&& o% &ading, un&ess t#e s#ipper or owner dec&ares a greater va&ue, is inding'<
/. Li#itation o, carrier1s lia$ility vali+
,n t#e case o% Eort#ern Motors, ,nc' vs' Prince +ine, t#e court #e&d t#at t#e $ourt ;#as #e&d as va&id
and inding a simi&ar provision in a i&& o% &ading &imiting t#e carrier?s &iai&it! to a speci%ic amount un&ess t#e
s#ipper e3press&! dec&ares a #ig#er va&uation and pa!s t#e corresponding rate t#ereon'< 7&so in P#oeni3
7ssurance $ompan! vs' Macondra! T $o', ,nc', t#e va&idit! o% a stipu&ation &imiting t#e carrier?s &iai&it!
was reiterated'
2. Ri*)t o, carrier to li#it lia$ility reco*niJe+ also in t)e Fnite+ States
T#e rig#t o% t#e carrier to &imit its &iai&it! #as een recogni*ed not on&! in P#i&ippine Aurisdiction ut
a&so in 7merican Aurisprudence' ,n one case, it was #e&d t#at ;a stipu&ation in a contract o% carriage t#at t#e
carrier wi&& not e &ia&e e!ond a speci%ied amount un&ess t#e s#ipper dec&ares t#e goods to #ave a greater
va&ue is genera&&! deemed to e va&id and wi&& operate to &imit t#e carrier?s &iai&it!, even i% t#e &oss or damage
resu&ts %rom t#e carrier?s neg&igence' Pursuant to suc# provision, w#ere t#e s#ipper is si&ent as to t#e va&ue o%
#is goods, t#e carrier?s &iai&it! %or &oss or damage t#ereto is &imited to t#e amount speci%ied in t#e contract o%
carriage and w#ere t#e s#ipper states t#e va&ue o% #is goods, t#e carrier?s &iai&it! %or &oss or damage t#ereto is
&imited to t#at amount' Dnder a stipu&ation suc# as t#is, it is t#e dut! o% t#e s#ipper to disc&ose, rat#er t#an t#e
carrier?s to demand t#e true va&ue o% t#e goods and si&ence on t#e part o% t#e s#ipper wi&& e su%%icient to &imit
recover! in case o% &oss to t#e amount stated in t#e contract o% carriage'<
[/], also [/7]
Sea>lan+ Service vs. ;5C (GR 32114! 31 5u*ust 1%43)
First Division, Earvasa (J): 5 concur
&acts' (n / Januar! 1./1, "ea=+and "ervice, ,nc', a %oreign s#ipping and %orwarding compan! &icensed to do
usiness in t#e P#i&ippines, received %rom "eaorne Trading $ompan! in (ak&and, $a&i%ornia a s#ipment
consigned to "en @iap @ing, t#e usiness name used ! Pau&ino $ue in t#e w#o&esa&e and retai& trade w#ic#
#e operated out o% an esta&is#ment &ocated on 1orromeo and P&aride& "treets, $eu $it!' T#e s#ipper not
#aving dec&ared t#e va&ue o% t#e s#ipment, no va&ue was indicated in t#e i&& o% &ading' T#e i&& descried t#e
s#ipment on&! as ;/ $TE" on 8 "P,D"=F,+B"'< 1ased on vo&ume measurements "ea=&and c#arged t#e
s#ipper t#e tota& amount o% D"K82.'8/ %or %reig#tage and ot#er c#arges' T#e s#ipment was &oaded on oard
t#e M" Patriot, a vesse& owned and operated ! "ea=+and, %or disc#arge at t#e Port o% $eu' T#e s#ipment
arrived in Mani&a on 18 Feruar! 1./1, and t#ere disc#arged in $ontainer 312..> into t#e custod! o% t#e
arrastre contractor and t#e customs and port aut#orities' "ometime etween Feruar! 13 and 1>, 1./1, a%ter
t#e s#ipment #ad een trans%erred, a&ong wit# ot#er cargoes to $ontainer 5214/ near Fare#ouse 3 at Pier 3 in
"out# @aror, Mani&a, awaiting trans=s#ipment to $eu, it was sto&en ! pi&%erers and #as never een
recovered' (n 12 Marc# 1./1, Pau&ino $ue, t#e consignee, made %orma& c&aim upon "ea=+and %or t#e va&ue
o% t#e &ost s#ipment a&&eged&! amounting to P10.,>53'5/' "ea=+and o%%ered to sett&e %or D"K5,222'22, or its
t#en P#i&ippine peso e9uiva&ent o% P32,>22'22' asserting t#at said amount represented its ma3imum &iai&it!
%or t#e &oss o% t#e s#ipment under t#e package &imitation c&ause in t#e covering i&& o% &ading'
$ue reAected t#e o%%er and t#erea%ter roug#t suit %or damages against "ea=+and in t#e t#en $ourt o% First
,nstance o% $eu, 1ranc# J' "aid $ourt, a%ter tria&, rendered Audgment in %avor o% $ue, sentencing "ea=+and
to pa! #im P1/>,25/'22 representing t#e P#i&ippine currenc! va&ue o% t#e &ost cargo, P44,/15'22 %or
unrea&i*ed pro%it wit# 1I mont#&! interest %rom t#e %i&ing o% t#e comp&aint unti& %u&&! paid, P84,222'22 %or
attorne!?s %ees and P8,222'22 as &itigation e3penses'
"ea=+and appea&ed to t#e ,ntermediate 7ppe&&ate $ourt' T#at $ourt #owever a%%irmed t#e decision o% t#e Tria&
$ourt in toto' "ea=+and t#ereupon %i&ed t#e present petition %or review'
T#e "upreme $ourt reversed and set aside t#e Decision o% t#e ,ntermediate 7ppe&&ate $ourt comp&ained o%,
#o&ding t#at (1) t#e stipu&ation in t#e 9uestioned i&& o% &ading &imiting "ea=+and?s &iai&it! %or &oss o% or
damage to t#e s#ipment covered ! said i&& to D"K422'22 per package is va&id and inding on Pau&ino $ueC
(8) "ea=+and is &ia&e in t#e aggregate amount o% D"K5,222'22 as t#ere was no 9uestion o% t#e %act t#at t#e
&ost s#ipment consisted o% / cartons or packagesC (3) "ea=+and was disc#arged o% t#at o&igation ! pa!ing
$ue t#e sum o% P38,222'22, t#e e9uiva&ent in P#i&ippine currenc! o% D"K5,222'22 at t#e conversion rate o%
P/'22 to K1'22' $osts against $ue'
1. Consi*nee in $ill o, la+in* )as ri*)t to recover ,ro# carrier alt)ou*) +ocu#ent +ra.n $y
consi*nor an+ carrier
,n princip&e, a consignee in a i&& o% &ading #as t#e rig#t to recover %rom t#e carrier or s#ipper %or &oss
o%, or damage to, goods eing transported under said i&&, a&t#oug# t#at document ma! #ave een H as in
practice it o%tentimes is H drawn up on&! ! t#e consignor and t#e carrier wit#out t#e intervention o% t#e
consignee'
-. =en+oJa vs. :5L6 E)en consi*nee $eco#es party to contract
T#erein, even i% t#e +VE Pictures ,nc' as consignor o% its own initiative, and acting independent&! o%
Mendo*a %or t#e time eing, made Mendo*a as consignee, a stranger to t#e contract i% t#at is possi&e,
nevert#e&ess w#en #e, Mendo*a appeared at t#e P#i& 7ir Port armed wit# t#e cop! o% t#e 7ir Fa! 1i&&
demanding t#e de&iver! o% t#e s#ipment to #im, #e t#ere! made #imse&% a part! to t#e contract o%
transportation' T#e rig#t o% t#e s#ipper to countermand t#e s#ipment terminates w#en t#e consignee or
&egitimate #o&der o% t#e i&& o% &ading appears wit# suc# i&& o% &ading e%ore t#e carrier and makes #imse&% a
part! to t#e contract' Prior to t#at time #e is a stranger to t#e contract'
3. =en+oJa vs. :5L6 Co##on carriers not o$li*ate+ to #ake pro#pt +elivery! unless suc)
o$li*ation is assu#e+
$ommon carriers are not o&igated ! &aw to carr! and to de&iver merc#andise, and persons are not
vested wit# t#e rig#t to prompt de&iver!, un&ess suc# common carriers previous&! assume t#e o&igation' "aid
rig#ts and o&igations are created ! a speci%ic contract entered into ! t#e parties'
/. =en+oJa vs. :5L6 5rticle 1323 para*rap) - o, ol+ Civil Co+e! no. 5rticle 1311! secon+
para*rap) 7CC
7rtic&e 1840, paragrap# 8, o% t#e o&d $ivi& $ode (now 7rtic&e 1311, second paragrap#) reads ;"#ou&d
t#e contract contain an! stipu&ation in %avor o% a t#ird person, #e ma! demand its %u&%i&&ment provided #e #as
given notice o% #is acceptance to t#e person ound e%ore t#e stipu&ation #as een revoked'<
2. Lia$ility o, co##on carrier *overne+ $y la.s o, country o, +estination
"ince t#e &iai&it! o% a common carrier %or &oss o% or damage to goods transported ! it under a
contract o% carriage is governed ! t#e &aws o% t#e countr! o% destination and t#e goods in 9uestion were
s#ipped %rom t#e Dnited "tates to t#e P#i&ippines, t#e &iai&it! o% "ea=+and to t#e consignee is governed
primari&! ! t#e $ivi& $ode, and as ordained ! t#e said $ode, supp&etori&!, in a&& matters not determined
t#ere!, ! t#e $ode o% $ommerce and specia& &aws' (ne o% t#ese supp&etor! specia& &aws is t#e $arriage o%
6oods ! "ea 7ct, D'"' Pu&ic 7ct Eo' 481 w#ic# was made app&ica&e to a&& contracts %or t#e carriage o%
goods ! sea to and %rom P#i&ippine ports in %oreign trade ! $ommonwea&t# 7ct >4, approved on 88 (ctoer
1.3>'
. Section / (2) o, C8GS5
"ection 5(4) o% $ommonwea&t# 7ct >4, in part, reads ;(4) Eeit#er t#e carrier nor t#e s#ip s#a&& in an!
event e or ecome &ia&e %or an! &oss or damage to or in connection wit# t#e transportation o% goods in an
amount e3ceeding K422 per package &aw%u& mone! o% t#e Dnited "tates, or in case o% goods not s#ipped in
packages, per customar! %reig#t unit, or t#e e9uiva&ent o% t#at sum in ot#er currenc!, un&ess t#e nature and
va&ue o% suc# goods #ave een dec&ared ! t#e s#ipper e%ore s#ipment and inserted in t#e i&& o% &ading' T#is
dec&aration, i% emodied in t#e i&& o% &ading, s#a&& e prima %acie evidence, ut s#a&& not e conc&usive on t#e
carrier' 1! agreement etween t#e carrier, master, or agent o% t#e carrier, and t#e s#ipper anot#er ma3imum
amount t#an t#at mentioned in t#is paragrap# ma! e %i3ed: ProvidedC T#at suc# ma3imum s#a&& not e &ess
t#an t#e %igure aove named' ,n no event s#a&& t#e carrier e &ia&e %or more t#an t#e amount o% damage
actua&&! sustained' 333<
3. Clause --! ,irst para*rap) o, t)e lon*>,or# $ill o, la+in*
$&ause 88, %irst paragrap#, o% t#e &ong=%orm i&& o% &ading customari&! issued ! "ea=+and to its
s#ipping c&ients is a virtua& cop! o% t#e %irst paragrap# o% t#e %oregoing provision' ,t sa!s: ;(88)
V7+D7T,(E' ,n t#e event o% an! &oss, damage or de&a! to or in connection wit# goods e3ceeding in actua&
va&ue K422 per package, &aw%u& mone! o% t#e Dnited "tates, or in case o% goods not s#ipped in packages, per
customar! %reig#t unit, t#e va&ue o% t#e goods s#a&& e deemed to e K422 per package or per customar!
%reig#t unit, as t#e case ma! e, and t#e carrier?s &iai&it!, i% an!, s#a&& e determined on t#e asis o% a va&ue o%
K422 per package or customar! %reig#t unit, un&ess t#e nature and a #ig#er va&ue s#a&& e dec&ared ! t#e
s#ipper in writing e%ore s#ipment and inserted in t#is 1i&& o% +ading'<
4. Clause --! secon+ para*rap) o, t)e lon*>,or# $ill o, la+in*
7nd in its second paragrap#, t#e i&& states t#at ;,% a va&ue #ig#er t#an K422 s#a&& #ave een dec&ared
in writing ! t#e s#ipper upon de&iver! to t#e carrier and inserted in t#is i&& o% &ading and e3tra %reig#t paid, i%
re9uired and in suc# case i% t#e actua& va&ue o% t#e goods per package or per customar! %reig#t unit s#a&&
e3ceed suc# dec&ared va&ue, t#e va&ue s#a&& nevert#e&ess e deemed to e dec&ared va&ue and t#e carrier?s
&iai&it!, i% an!, s#a&& not e3ceed t#e dec&ared va&ue and an! partia& &oss or damage s#a&& e adAusted pro rata
on t#e asis o% suc# dec&ared va&ue'<
%. 7ot)in* in Civil Co+e .)ic) pro)i$its a*ree#ents as to li#itation o, carrier1s lia$ility
7rtic&e 10>> o% t#e $ivi& $ode e3press&! suAects t#e rig#ts and o&igations o% common carriers to t#e
provisions o% t#e $ode o% $ommerce and o% specia& &aws in matters not regu&ated ! said ($ivi&) $ode' T#ere
is not#ing in t#e $ivi& $ode w#ic# aso&ute&! pro#iits agreements etween s#ipper and carrier &imiting t#e
&atter?s &iai&it! %or &oss o% or damage to cargo s#ipped under contracts o% carriageC it is a&so 9uite c&ear t#at
said $ode in %act #as agreements o% suc# c#aracter in contemp&ation in providing, in its 7rtic&es 105. and
1042'
1". 5rticle 13/% 7CC
7rtic&e 105. o% t#e $ivi& $ode provides t#at ;7 stipu&ation t#at t#e common carrier?s &iai&it! is
&imited to t#e va&ue o% t#e goods appearing in t#e i&& o% &ading, un&ess t#e s#ipper or owner dec&ares a greater
va&ue, is inding'<
11. 5rticle 132" 7CC
7rtic&e 1042 o% t#e $ivi& $ode provides t#at ;7 contract %i3ing t#e sum t#at ma! e recovered ! t#e
owner or s#ipper %or t#e &oss, destruction, or deterioration o% t#e goods is va&id, i% it is reasona&e and Aust
under t#e circumstances, and #as een %air&! and %ree&! agreed upon'<
1-. 7ot)in* in Section / (2) o, C8GS5 is repu*nant or inconsistent .it) 5rticles 13/% an+ 132"
7CC
Eot#ing contained in section 5(4) o% t#e $arriage o% 6oods ! "ea 7ct is repugnant to or inconsistent
wit# an! o% t#e provisions o% t#e $ivi& $ode' "aid section mere&! gives more %&es# and greater speci%icit! to
t#e rat#er genera& terms o% 7rtic&e 101. (wit#out doing an! vio&ence to t#e p&ain intent t#ereo%) and o% 7rtic&e
1042, to give e%%ect to Aust agreements &imiting carriers? &iai&it! %or &oss or damage w#ic# are %ree&! and %air&!
entered into'
13. Li#ite+ lia$ility clause vali+ even .it)out Section / (2) o, C8GS5
Bven i% section 5(4) o% t#e $arriage o% 6oods ! "ea 7ct did not e3ist, t#e va&idit! and inding e%%ect
o% t#e &iai&it! &imitation c&ause in t#e i&& o% &ading are nevert#e&ess %u&&! sustaina&e on t#e asis a&one o% t#e
$ivi& $ode provisions' T#at said stipu&ation is Aust and reasona&e is argua&e %rom t#e %act t#at it ec#oes
7rtic&e 1042 itse&% in providing a &imit to &iai&it! on&! i% a greater va&ue is not dec&ared %or t#e s#ipment in t#e
i&& o% &ading' To #o&d ot#erwise wou&d amount to 9uestioning t#e Austice and %airness o% t#at &aw itse&%'
1/. <eter#ination o, ?ust an+ reasona$le c)aracter o, stipulation as to lia$ility li#itation clause
1ut over and aove t#at consideration, t#e Aust and reasona&e c#aracter o% suc# stipu&ation is imp&icit
in it giving t#e s#ipper or owner t#e option o% avoiding accrua& o% &iai&it! &imitation ! t#e simp&e and sure&!
%ar %rom onerous e3pedient o% dec&aring t#e nature and va&ue o% t#e s#ipment in t#e i&& o% &ading' 7nd since
t#e s#ipper #ere #as not een #eard to comp&aint o% #aving een ;rus#ed,< imposed upon or deceived in an!
signi%icant wa! into agreeing to s#ip t#e cargo under a i&& o% &ading carr!ing suc# a stipu&ation H in %act, it
does not appear t#at said part! #as een #eard %rom at a&& inso%ar as t#is dispute is concerned H t#ere is
simp&! no ground %or assuming t#at its agreement t#ereto was not as t#e &aw wou&d re9uire, %ree&! and %air&!
soug#t and given'
12. Ri*)t o, consi*nee sprin*s ,ro# eit)er relation o, a*ency .it) consi*nor! or status as a stran*er
in .)ose ,avor so#e stipulation is #a+e in sai+ contract
@erein, $ue #ad no direct part or intervention in t#e e3ecution o% t#e contract o% carriage etween t#e
s#ipper and t#e carrier as set %ort# in t#e i&& o% &ading in 9uestion' 7s pointed out in Mendo*a vs' P7+, t#e
rig#t o% a part! to recover %or &oss o% a s#ipment consigned to #im under a i&& o% &ading drawn up on&! ! and
etween t#e s#ipper and t#e carrier, springs %rom eit#er a re&ation o% agenc! t#at ma! e3ist etween #im and
t#e s#ipper or consignor, or #is status as a stranger in w#ose %avor some stipu&ation is made in said contract,
and w#o ecomes a part! t#ereto w#en #e demands %u&%i&&ment o% t#at stipu&ation, i'e' t#e de&iver! o% t#e
goods or cargo s#ipped'
1. &ree a*ree#ent not vitiate+ $y ,ine printe+ provisions
,n neit#er capacit! can #e assert persona&&!, in ar to an! provision o% t#e i&& o% &ading, t#e a&&eged
circumstance t#at %air and %ree agreement to suc# provision was vitiated ! its eing in suc# %ine print as to e
#ard&! reada&e' Parent#etica&&!, it ma! e oserved t#at in one comparative&! recent case w#ere t#e $ourt
%ound t#at a simi&ar package &imitation c&ause was ;(printed in t#e sma&&est t!pe on t#e ack o% t#e i&& o%
&ading,< it nonet#e&ess ru&ed t#at t#e consignee was ound t#ere! on t#e strengt# o% aut#orit! #o&ding t#at
suc# provisions on &iai&it! &imitation are as muc# a part o% a i&& o% &ading as t#oug# p#!sica&&! in it and as
t#oug# p&aced t#erein ! agreement o% t#e parties'
13. 5*ree+ li#ite+ lia$ility o, carrier vali+ an+ en,orcea$le
T#ere can e no dout or e9uivocation aout t#e va&idit! and en%orceai&it! o% %ree&!=agreed=upon
stipu&ations in a contract o% carriage or i&& o% &ading &imiting t#e &iai&it! o% t#e carrier to an agreed va&uation
un&ess t#e s#ipper dec&ares a #ig#er va&ue and inserts it into said contract or i&&' T#is proposition, moreover,
rests upon an a&most uni%orm weig#t o% aut#orit!'
14. Clause 13 o, Bill o, La+in*
$&ause 13 o% t#e i&& o% &ading w#ic# e3press&! aut#ori*es transs#ipment o% t#e goods at an! point in
t#e vo!age in t#ese terms: ;13' T@:(D6@ $7:6( 7ED T:7E""@,PMBET' T#e carrier or master, in t#e
e3ercise o% its or #is discretion and a&t#oug# transs#ipment or %orwarding o% t#e goods ma! not #ave een
contemp&ated or provided %or #erein, ma! at port o% disc#arge or an! ot#er p&ace w#atsoever transs#ip or
%orward t#e goods or an! part t#ereo% ! an! means at t#e risk and e3pense o% t#e goods and at an! time,
w#et#er e%ore or a%ter &oading on t#e s#ip named #erein and ! an! route, w#et#er wit#in or outside t#e
scope o% t#e vo!age or e!ond t#e port o% disc#arge or destination o% t#e goods and wit#out notice to t#e
s#ipper or consignee' T#e carrier or master ma! de&a! suc# transs#ipping or %orwarding %or an! reason,
inc&uding ut not &imited to awaiting a vesse& or ot#er means o% transportation w#et#er ! t#e carrier or
ot#ers'<
1%. 5*ree#ents as to transs)ip#ent (+eviation) reco*niJe+ $y la.
$&ause 13 o% t#e i&& o% &ading oviates t#e necessit! to o%%er an! ot#er Austi%ication %or o%% &oading t#e
s#ipment in 9uestion in Mani&a %or transs#ipment to $eu $it!, t#e port o% destination stipu&ated in t#e i&& o%
&ading' Eonet#e&ess, t#e $ourt takes note o% "ea=+and?s e3p&anation t#at it on&! direct&! serves t#e Port o%
Mani&a %rom aroad in t#e usua& course o% vo!age o% its carriers, #ence its maintenance o% arrangements wit#
a &oca& %orwarder' 7oiti* and $ompan!, %or de&iver! o% its imported cargo to t#e agreed %ina& point o%
destination wit#in t#e P#i&ippines, suc# arrangements not eing pro#iited, ut in %act recogni*ed, ! &aw'
-". C8GS5 applica$le up to ,inal port o, +estination
T#e $arriage o% 6oods ! "ea 7ct is app&ica&e up to t#e %ina& port o% destination and t#at t#e %act t#at
transs#ipment was made on an interis&and vesse& did not remove t#e contract o% carriage o% goods %rom t#e
operation o% said 7ct'
-1. :rovisions o, C8GS5 on packa*e li#itation a part o, $ill o, la+in* alt)ou*) place+ actually
t)erein $y t)e parties
T#e provisions o% t#e $arriage o% 6oods ! "ea 7ct on package &imitation Lsec' 5(4) o% t#e 7ctM are as
muc# a part o% a i&& o% &ading as t#oug# actua&&! p&aced t#erein ! agreement o% t#e parties'
--. Cue $oun+ $y stipulations in $ill o, la+in*
$ue, ! making c&aim %or &oss on t#e asis o% t#e i&& o% &ading, to a&& intents and purposes accepted
said i&&' @aving done so, #e ecomes ound ! a&& stipu&ations contained t#erein w#et#er on t#e %ront or t#e
ack t#ereo%' @e cannot e&ude its provisions simp&! ecause t#e! preAudice #im and take advantage o% t#ose
t#at are ene%icia&' "econd&!, t#e %act t#at #e s#ipped #is goods on oard t#e s#ip o% "ea=+and and paid t#e
corresponding %reig#t t#ereon s#ows t#at #e imp&ied&! accepted t#e i&& o% &ading w#ic# was issued in
connection wit# t#e s#ipment in 9uestion, and so it ma! e said t#at t#e same is %inding upon #im as i% it #ad
een actua&&! signed ! #im or ! an! ot#er person in #is e#a&%'
-3. Sea>Lan+1s +ollar o$li*ation s)oul+ $e converti$le at t)e rate o, :4 to P1
@erein, $ue admits t#at as ear&! as on 88 7pri& 1./1, "ea=+and #ad o%%ered to sett&e #is c&aim %or
D"K5,222'22, t#e &imit o% said carrier?s &iai&it! %or &oss o% t#e s#ipment under t#e i&& o% &ading' "aid sum is
a&& t#at is Aust&! due $ue, it does not appear Aust or e9uita&e t#at "ea=+and, w#ic# o%%ered t#at amount in good
%ait# as ear&! as > !ears ago, s#ou&d, ! eing made to pa! at t#e current conversion rate o% t#e do&&ar to t#e
peso, ear %or its own account a&& o% t#e increase in said rate since t#e time o% t#e o%%er o% sett&ement' T#e
decision o% t#e :egiona& Tria& $ourt awarding $ue P1/>,25/'22 as t#e peso va&ue o% t#e &ost s#ipment is
c&ear&! ased on a conversion rate o% P/'22 to D"K1'22, $ue #aving c&aimed a do&&ar va&ue o% K83,84>'22 %or
said s#ipment' 7&& circumstances considered, it is Aust and %air t#at "ea=+and?s do&&ar o&igation e converti&e
at t#e same rate'
[2]
5$oitiJ S)ippin* vs. C5 (GR 4%323! 5u*ust 1%%")
First Division, 6anca!co (J): 5 concur
&acts' (n (ctoer 8/, 1./2, t#e vesse& M-V ;P' 7oiti*< took on oard in @ongkong %or s#ipment to Mani&a
some cargo consisting o% 1 82=%ooter container #o&ding 801 ro&&s o% goods %oe appare& covered ! 1i&& o%
+ading 414=M and 1 52=%ooter container #o&ding 550 ro&&s, 12 u&k and .4 cartons o% goods %or appare&
covered ! 1i&& o% +anding 424=M' T#e tota& va&ue, inc&uding invoice va&ue, %reig#tage, customs duties, ta3es
and simi&ar imports amount to D"K3.,//4 %or t#e %irst s#ipment w#i&e t#at o% t#e second s#ipment amounts to
D"K.5,1.2'44' 1ot# s#ipments were consigned to t#e P#i&ippine 7ppare&, ,nc' and insured wit# t#e 6enera&
7ccident Fire and +i%e 7ssurance $orporation, +td' (67F+7$)' T#e vesse& is owned and operated ! 7oiti*
"#ipping $orporation' (n 31 (ctoer 1./2 on its wa! to Mani&a t#e vesse& sunk and it was dec&ared &ost wit#
a&& its cargoes' 67F+7$ paid t#e consignee t#e amounts D"K3.,//4'/4 or P31.,2/>'/2 and D"K.5,1.2'44 or
P043,485'52 %or t#e &ost cargo'
7s 67F+7$ was surogated to a&& t#e rig#ts, interests and actions o% t#e consignee against 7oiti*, it %i&ed an
action %or damages against 7oiti* in t#e :egiona& Tria& $ourt o% Mani&a a&&eging t#at t#e &oss was due to t#e
%au&t and neg&igence o% 7oiti* and t#e master and crew o% its vesse& in t#at t#e! did not oserve t#e
e3traordinar! di&igence re9uired ! &aw as regards common carriers' 7%ter t#e issues were Aoined and t#e tria&
on t#e merits a decision was rendered ! t#e tria& court on 8. June 1./4, ordering 7oiti* to pa! 67F+7$
actua& damages in t#e sum o% P1,208,>11'82 p&us &ega& interest %rom t#e date o% t#e %i&ing o% t#e comp&aint on
8/ (ctoer 1./1, unti& %u&& pa!ment t#ereo%, attorne!?s %ees in t#e amount o% 82I o% t#e tota& c&aim and to pa!
t#e costs'
Eot satis%ied t#erewit#, 7oiti* appea&ed to t#e $ourt o% 7ppea&s w#erein in due course a decision was
rendered on . Marc# 1./. a%%irming in toto t#e appea&ed decision, wit# costs against 7oiti*' 7 motion %or
reconsideration o% said decision %i&ed ! 7oiti* was denied in a reso&ution dated 14 7ugust 1./.'' @ence, t#e
T#e "upreme $ourt dismissed t#e petition, wit# costs against 7oiti*'
1. &in+in* o, a+#inistrative $o+ies not al.ays $in+in* upon t)e court
T#e sinking o% t#e vesse& M-V ;P' 7oiti*< was t#e suAect o% an administrative investigation
conducted ! t#e 1oard o% Marine ,n9uir! (1M,) w#ere! in a decision dated 8> Decemer 1./5, it was
%ound t#at t#e sinking o% t#e vesse& ma! e attriuted to %orce maAeure on account o% a t!p#oon' T#e tria& court
did not err in not giving weig#t to t#e %inding o% t#e 1M, t#at t#e vesse& sank due to a %ortuitous event as
%indings o% administrative odies are not a&wa!s inding on courts' T#is is especia&&! so in t#e present case
w#ere 67F+7$ was not a part! in t#e 1M, proceedings and w#ic# proceeding was not adversar! in
c#aracter'
-. General rule as to a+#inistrative ,in+in*s o, ,acts
7s a genera& ru&e, administrative %indings o% %acts are not distured ! t#e courts w#en supported !
sustantia& evidence un&ess it is tainted wit# un%airness or aritrariness t#at wou&d amount to ause o%
discretion or &ack o% Aurisdiction' Bven in Vas9ue* vs' $ourt o% 7ppea&s, t#e $ourt ru&ed t#at it nevert#e&ess
disagree wit# t#e conc&usion o% t#e 1M, e3onerating t#e captain %rom an! neg&igence ;since it ovious&! #ad
not taken into account t#e &ega& responsii&it! o% a common carrier towards t#e securit! o% t#e passengers
invo&ved'<
3. (rial court not in,or#e+ o, parallel a+#inistrative investi*ation $ein* con+ucte+ $y B=;6
G5&L5C cannot $e $oun+ $y ,in+in*s an+ conclusions o, B=;
T#e present case was roug#t to court on 8/ (ctoer 1./1' T#e tria& court was never in%ormed o% a
para&&e& administrative investigation t#at was eing conducted ! t#e 1M, in an! o% t#e p&eadings o% 7oiti*'
,t was on&! on 88 Marc# 1./4 w#en 7oiti* revea&ed to t#e tria& court t#e decision o% t#e 1M, dated 8>
Decemer 1./5' T#e said decision appears to #ave een rendered over 3 !ears a%ter t#e case was roug#t to
court' "aid administrative investigation was conducted uni&atera&&!' 67F+7$ was not noti%ied or given an
opportunit! to participate t#erein' ,t cannot t#ere! e ound ! said %indings and conc&usions o% t#e 1M,'
/. Eeat)er con+ition prevailin* un+er .in+ ,orce o, 1" to 12 knots usual an+ ,oreseea$le
T#e wind %orce w#en t#e i&&=%ated s#ip %oundered was 12 to 14 knots' 7ccording to t#e 1eau %ort
"ca&e (B3#iit ;,<), w#ic# is admitted&! an accurate re%erence %or measuring wind ve&ocit!, t#e wind %orce o%
12 to 14 knots is c&assi%ied as sca&e Eo' 5 and descried as Gmoderate ree*e,? sma&& waves, ecoming &onger,
%air&! %re9uent w#ite #orses'? T#e weat#er condition prevai&ing under said wind %orce is usua& and %oreseea&e'
T#e vesse& M-V ;7oiti*< and its cargo were not &ost due to %ortuitous event or %orce maAeure'
2. Co##on carrier $oun+ to o$serve extraor+inary +ili*ence (5rticle 133- 7CC)6 :resu#ption o,
ne*li*ence! $ur+en o, proo,
,n accordance wit# 7rtic&e 1038 o% t#e $ivi& $ode, t#e common carrier, %rom t#e nature o% its usiness
and %or reasons o% pu&ic po&ic!, is ound to oserve e3traordinar! di&igence in t#e vigi&ance over t#e goods
and %or t#e sa%et! o% t#e passengers transported ! it according to a&& t#e circumstances o% eac# case' F#i&e
t#e goods are in t#e possession o% t#e carrier, it is ut %air t#at it e3ercise e3traordinar! di&igence in protecting
t#em %rom &oss or damage, and i% &oss occurs, t#e &aw presumes t#at it was due to t#e carrier?s %au&t or
neg&igenceC t#at is necessar! to protect t#e interest o% t#e s#ipper w#ic# is at t#e merc! o% t#e carrier (7rtic&e
10(>, $ivi& $odeC 7nuran vs' Puno, 10 "$:7 885C Eocum vs' +aguna Ta!aas 1us $o', 32 "$:7 >.C
+andigan vs' Pangasinan Transportation $ompan!, // "$:7 8/5)'< @erein, 7oiti* %ai&ed to prove t#at t#e
&oss o% t#e suAect cargo was not due to its %au&t or neg&igence'
. Li#ite+ lia$ility clause6 Dxception
F#i&e it is true t#at in t#e i&& o% &ading t#ere is suc# stipu&ation t#at t#e &iai&it! o% t#e carrier is
D"K422'22 per package-container-customar! %reig#t, t#ere is an e3ception, t#at is, w#en t#e nature and va&ue
o% suc# goods #ave een dec&ared ! t#e s#ipper e%ore s#ipment and inserted in t#e i&& o% &ading' @erein, t#e
description o% t#e nature and t#e va&ue o% t#e goods s#ipped are dec&ared and re%&ected in t#e i&&s o% &ading'
T#us, it is t#e asis o% t#e &iai&it! o% t#e carrier as t#e actua& va&ue o% t#e &oss'
3. Section / (2) C8GS5
"ection 5(4) o% t#e $arriage o% 6oods ! "ea 7ct provides t#at ;(4) Eeit#er t#e carrier nor t#e s#ip
s#a&& in an! event e or ecome &ia&e %or an! &oss or damage to or in connection wit# t#e transportation o%
goods in an amount e3ceeding K422 per package o% &aw%u& mone! o% t#e Dnited "tates, or in case o% goods not
s#ipped in packages, per customar! %reig#t unit, or t#e e9uiva&ent o% t#at sum in ot#er currenc!, un&ess t#e
nature and va&ue o% suc# goods #ave een inserted in t#e i&& o% &ading' T#is dec&aration, i% emodied in t#e
i&& o% &ading, s#a&& e prima %acie evidence, ut s#a&& not e conc&usive on t#e carrier' 1! agreement etween
t#e carrier, master or agent o% t#e carrier, and t#e s#ipper anot#er ma3imum amount t#an t#at mentioned in
t#is paragrap# ma! e %i3ed: Provided, t#at suc# ma3imum s#a&& not e &ess t#an t#e %igure aove named' ,n
no event s#a&& t#e carrier e &ia&e %or more t#an t#e amount o% damage actua&&! sustained' Eeit#er t#e carrier
nor t#e s#ip s#a&& e responsi&e in an! event %or &oss or damage to or in connection wit# t#e transportation o%
t#e goods i% t#e nature or va&ue t#ereo% #as een knowing&! and %raudu&ent&! mis=stated ! t#e s#ipper in t#e
i&& o% &ading'<
4. @ContainerA construe+6 7oscitur a sociis
,t is asurd to interpret ;container,< as provided in t#e i&& o% &ading to e va&ued at D"K422'22 eac#,
to re%er to t#e container w#ic# is t#e modern sustitute %or t#e #o&d o% t#e vesse&' T#e package-container
contemp&ated ! t#e &aw to &imit t#e &iai&it! o% t#e carrier s#ou&d e sensi&! re&ated to t#e unit in w#ic# t#e
s#ipper packed t#e goods and descried t#em, not a &arge meta& oAect, %unctiona&&! a part o% t#e s#ip, in
w#ic# t#e carrier caused t#em to e contained' "uc# ;container< must e given t#e same meaning and
c&assi%ication as a ;package< and ;customar! %reig#t unit'< 1! t#e ru&e o% noscitur a sociis, t#e word
Gcontainer? must e given t#e same meaning as Gpackage? and Gcustomar! %reig#t unit? and t#ere%ore cannot
possi&! re%er to modern containers w#ic# are used %or s#ipment o% goods in u&k'
%. 5llie+ Guarantee ;nsurance Co. ;nc. vs. 5$oitiJ S)ippin* Corporation! (C5 GR CG "/1-1! -3
=arc)1%43)6 Li#ite+ lia$ility clause #ust $e reasona$le an+ ,reely a*ree+ upon
6enera&&! speaking, a stipu&ation, &imiting t#e common carrier?s &iai&it! to t#e va&ue o% t#e goods
appearing in t#e i&& o% &ading, un&ess t#e s#ipper or owner dec&ares a greater va&ue, is va&id' ($ivi& $ode, 7rt'
105.)' "uc# stipu&ation, #owever, must e reasona&e and Aust under t#e circumstances and must #ave een
%air&! and %ree&! agreed upon' ("t' Pau& Fire T Marine ,nsurance $o' vs' Macondra! $o', 02 "$:7 188, 18>=
180 (1.0>) @erein, t#e goods s#ipped on t#e M-V ;P' 7oiti*< were insured %or P80/,432'42, w#ic# ma! e
taken as t#eir va&ue' To &imit t#e &iai&it! o% t#e carrier to K422'22 wou&d ovious&! put it in its power to #ave
taken t#e w#o&e cargo'
1". Hs#ael vs .Ga$ino Barreto6 Li#itation o, lia$ility inapplica$le .)en loss cause+ $y o.n
ne*li*ence
,n Juan Osmae& T $o' vs' 6aino 1arreto T $o', 41 P#i&' .2 (1.80), it was #e&d t#at a stipu&ation
&imiting t#e carrier?s &iai&it! to K422'22 per package o% si&k w#en t#e va&ue o% suc# package was P8,422'22
un&ess t#e true va&ue #ad een dec&ared and t#e corresponding %reig#t paid was Gvoid as against pu&ic po&ic!'?
T#at ru&ing app&ies to t#e present case' 1! t#e weig#t o% modern aut#orit!, a carrier cannot &imit its &iai&it!
%or inAur! or &oss o% goods s#ipped w#ere suc# inAur! or &oss was caused ! its own neg&igence' (Juan Osmae&
T $o' v' 6aino 1arreto T $o', supra) @ere to &imit t#e &iai&it! o% 7oiti* "#ipping to K422'22 wou&d nu&&i%!
t#e po&ic! o% t#e &aw imposing on common carriers t#e dut! to oserve e3traordinar! di&igence in t#e carriage
o% goods'
11. ;ssuance o, execution pen+in* appeal6 &ilin* o, superse+eas $on+ to stay execution
T#e purpose o% "ection 8, :u&e 3., o% t#e :u&es o% $ourt wou&d not e ac#ieved or e3ecution pending
appea& wou&d not e ac#ieved i% inso&venc! wou&d sti&& e awaited' T#e remed! is avai&a&e to petitioner under
"ection 3 :u&e 3. o% t#e :u&es o% $ourt ut to p&ace inso&venc! as a condition to issuance o% a writ o%
e3ecution pending appea& wou&d render it i&&usor! and ine%%ectua&' @erein, 7oiti* is %acing man! &aw suits
arising %rom said sinking o% its vesse& invo&ving cargo &oss o% no &ess t#an P42 mi&&ion, in some cases o% w#ic#
Audgment #ad een rendered against 7oiti*, and considering t#at its insurer is now ankrupt, &eaving 7oiti*
a&one to %ace and answer t#e suits, w#ic# ma! render an! Audgment %or 67F+7$ ine%%ectua&, t#at t#e appea&
is interposed mani%est&! %or de&a! and t#e wi&&ingness o% 67F+7$ to put up a ond certain&! are cogent ases
%or t#e issuance o% an order o% e3ecution pending appea&' T#e statutor! undertaking o% posting a supersedeas
ond wi&& ac#ieve a t#ree=pronged direction o% Austice, (1) it wi&& cast no dout on t#e so&venc! o% t#e
de%endantC (8) it wi&& not de%eat or render p#!rric a Aust reso&ution o% t#e case w#ic#ever part! prevai&s in t#e
end or in t#e main case on appea&, since ot# o% t#eir c&aims are secured ! t#eir corresponding ondsC and (3)
it wi&& put to e9uita&e operation "ec' 3 :u&e 3. o% t#e :evised :u&es o% $ourt'
1-. 5$oitiJ vs. C5 (GR 4412%6 13 7ove#$er1%4%)6 <octrine o, pri#ary a+#inistrative ?uris+iction
not applica$le
,n a simi&ar case %or damages arising %rom t#e same incident entit&ed 7oiti* "#ipping $orporation vs'
@onora&e $ourt o% 7ppea&s and 7&&ied 6uaranteed ,nsurance $ompan!, ,nc', 6':' Eo' //14., t#e $ourt in a
reso&ution dated 13 Eovemer 1./. dismissed t#e petition %or &ack o% merit' T#erein t#is $ourt #e&d in part
t#at t#e cause o% sinking o% t#e vesse& was due to its unseawort#iness and t#e %ai&ure o% its crew and t#e master
to e3ercise e3traordinar! di&igence' T#erein, t#e decision and reso&ution o% t#e appe&&ate court s#ows t#at t#e
same took into consideration not on&! t#e %indings o% t#e &ower court ut a&so t#e %indings o% t#e 1M,' T#us,
t#e appe&&ate court stated t#at t#e decision o% t#e 1oard was ased simp&! on its %inding t#at t#e P#i&ippine
$oast 6uard #ad certi%ied t#e vesse& to e seawort#! and t#at it sank ecause it was e3posed &ater to an
oncoming t!p#oon p&otted wit#in t#e radius w#ere t#e vesse& was positioned' T#is genera&i*ation certain&!
cannot prevai& over t#e detai&ed e3p&anation o% t#e tria& court in t#e case as asis %or its contrar! conc&usion'
T#e $ourt %ound t#erein no cogent reason to deviate %rom t#e %actua& %indings o% t#e appe&&ate court and ru&e
t#at t#e doctrine o% primar! administrative Aurisdiction is not app&ica&e in said case'
13. 5$oitiJ vs. C5 (GR 4412%6 13 7ove#$er1%4%)6 Li#itation o, lia$ility .oul+ ren+er ine,,icacious
t)e extraor+inary +ili*ence re9uire+ $y la. o, co##on carriers
6enera&&! speaking an! stipu&ation, &imiting t#e common carrier?s &iai&it! to t#e va&ue o% t#e goods
appearing in t#e i&& o% &ading, un&ess t#e s#ipper or owner dec&ares a greater va&ue is va&id' ($ivi& $ode, 7rt'
105.) "uc# stipu&ation, #owever, must e reasona&e and Aust under t#e circumstances and must #ave een
%air&! and %ree&! agreed upon' ("t' Pau& Fire T Marine ,nsurance $o' v' Macondra! T $o', 02 "$:7 188,
18>=180 L1.0>M' T#erein, t#e goods s#ipped on t#e M-V GP' 7oiti*? were insured %or P80/,43>'42, w#ic# ma!
e taken as t#eir va&ue' To &imit t#e &iai&it! o% t#e carrier to K422'22 wou&d ovious&! put in its power to #ave
taken t#e w#o&e cargo' ,n Juan Osmae& T $o' v' 6aino 1arretto T $o', 41 P#i&' .2 L1.80M, it was #e&d t#at a
stipu&ation &imiting t#e carrier?s &iai&it! to P322'22 per package o% si&k, w#en t#e va&ue o% suc# package was
P8,422'22, un&ess t#e true va&ue #ad een dec&ared and t#e corresponding %reig#t paidC was void as against
pu&ic po&ic!' T#at ru&ing app&ies to said case'
1/. 5$oitiJ vs. C5 (GR 4412%6 13 7ove#$er1%4%) ,inal an+ executory
T#e motion %or reconsideration %or t#e $ourt?s :eso&ution in 6: //14. %i&ed ! 7oiti* was denied
wit# %ina&it! in a reso&ution dated Januar! /, 1..2' "aid reso&ution o% t#e case #ad ecome %ina& and e3ecutor!,
entr! o% Audgment #aving een made and t#e records remanded %or e3ecution on 88 Marc# 1..2' "aid case is
t#e &aw o% t#e case app&ica&e to t#e present petition'
[]
Dverett Stea#s)ip Corp. vs. C5 (GR 1--/%/! 4 8cto$er 1%%4)
"econd Division, Martine* (J): 5 concur
&acts' @ernande* Trading $o' ,nc' imported t#ree crates o% us spare parts marked as M7:$( $-Eo' 18,
M7:$( $-Eo' 13 and M7:$( $-Eo' 15, %rom its supp&ier, Maruman Trading $ompan!, +td' (Maruman
Trading), a %oreign corporation ased in ,na*awa, 7ic#i, Japan' T#e crates were s#ipped %rom Eago!a, Japan
to Mani&a on oard ;7DB+F7BVB:BTTB,< a vesse& owned ! Bverett "teams#ip $orporation?s principa&,
Bverett (rient +ines' T#e said crates were covered ! 1i&& o% +ading E6(43ME' Dpon arriva& at t#e port o%
Mani&a, it was discovered t#at t#e crate marked M7:$( $-Eo' 15 was missing' T#is was con%irmed and
admitted ! Bverett "teams#ip in its &etter o% 13 Januar! 1..8 addressed to @ernande* Trading, w#ic#
t#erea%ter made a %orma& c&aim upon petitioner %or t#e va&ue o% t#e &ost cargo amounting to O 1,448,422'22
Oen, t#e amount s#own in an ,nvoice MTM=.51, dated 15 Eovemer 1..1' @owever, Bverett "teams#ip
o%%ered to pa! O122,222'22, t#e ma3imum amount stipu&ated under $&ause 1/ o% t#e covering i&& o% &ading
w#ic# &imits t#e &iai&it! o% Bverett "teams#ip'
@ernande* Trading reAected t#e o%%er and t#erea%ter instituted a suit %or co&&ection ($ivi& $ase $=14438),
against Bverett "#ipping e%ore t#e :T$ o% $a&oocan $it! (1ranc# 18>)' 7t t#e pre=tria& con%erence, ot#
parties mani%ested t#at t#e! #ave no testimonia& evidence to o%%er and agreed instead to %i&e t#eir respective
memoranda' (n 1> Ju&! 1..3, t#e tria& court rendered Audgment in %avor o% @ernande* Trading, ordering
Bverett "teams#ip to pa!: (a) O1,448,422'22C () O82,222'22 or its peso e9uiva&ent representing t#e actua&
va&ue o% t#e &ost cargo and t#e materia& and packaging costC (c) 12I o% t#e tota& amount as an award %or and
as contingent attorne!?s %eesC and (d) to pa! t#e cost o% t#e suit'
(n appea&, and on 15 June 1..4, t#e $ourt o% 7ppea&s de&eted t#e award o% attorne!?s %ees ut a%%irmed t#e
tria& court?s %indings wit# t#e additiona& oservation t#at @ernande* Trading can not e ound ! t#e terms
and conditions o% t#e i&& o% &ading ecause it was not priv! to t#e contract o% carriage' Bverett "teams#ip
%i&ed a petition %or review'
T#e "upreme $ourt reversed and set aside t#e decision o% t#e $ourt o% 7ppea&s'
1. Li#ite+ lia$ility clause sanctione+ $y la.
7 stipu&ation in t#e i&& o% &ading &imiting t#e common carrier?s &iai&it! %or &oss or destruction o% a
cargo to a certain sum, un&ess t#e s#ipper or owner dec&ares a greater va&ue, is sanctioned ! &aw, particu&ar&!
7rtic&es 105. and 1042 o% t#e $ivi& $ode'
-. 5rticle 13/% 7CC
7rtic&e 105. o% t#e $ivi& $ode provides t#at ;7 stipu&ation t#at t#e common carrier?s &iai&it! is
&imited to t#e va&ue o% t#e goods appearing in t#e i&& o% &ading, un&ess t#e s#ipper or owner dec&ares a greater
va&ue, is inding'<
3. 5rticle 132" 7CC
7rtic&e 1042 o% t#e $ivi& $ode provides t#at ;7 contract %i3ing t#e sum t#at ma! e recovered ! t#e
owner or s#ipper %or t#e &oss, destruction, or deterioration o% t#e goods is va&id, i% it is reasona&e and Aust
under t#e circumstances, and #as een %ree&! and %air&! agreed upon'<
/. Li#ite+ lia$ility clause up)el+ $y Court6 Sea Lan+ vs. ;5C
"uc# &imited=&iai&it! c&ause #as a&so een consistent&! up#e&d ! t#is $ourt in a numer o% cases'
T#us, in "ea +and "ervice, ,nc' vs' ,7$, t#e $ourt ru&ed t#at ;,t seems c&ear t#at even i% said section 5 (4) o%
t#e $arriage o% 6oods ! "ea 7ct did not e3ist, t#e va&idit! and inding e%%ect o% t#e &iai&it! &imitation c&ause
in t#e i&& o% &ading #ere are nevert#e&ess %u&&! sustaina&e on t#e asis a&one o% t#e cited $ivi& $ode
Provisions' T#at said stipu&ation is Aust and reasona&e is argua&e %rom t#e %act t#at it ec#oes 7rtic&e 1042
itse&% in providing a &imit to &iai&it! on&! i% a greater va&ue is not dec&ared %or t#e s#ipment in t#e i&& o%
&ading' To #o&d ot#erwise wou&d amount to 9uestioning t#e Austness and %airness o% t#e &aw itse&%, and t#is t#e
private respondent does not pretend to do' 1ut over and aove t#at consideration, t#e Aust and reasona&e
c#aracter o% suc# stipu&ation is imp&icit in it giving t#e s#ipper or owner t#e option o% avoiding accrua& o%
&iai&it! &imitation ! t#e simp&e and sure&! %ar %rom onerous e3pedient o% dec&aring t#e nature and va&ue o%
t#e s#ipment in t#e i&& o% &ading ' ' '<
2. Con+itions ,or t)e vali+ity o, li#ite+ lia$ility clause
Pursuant to t#e provisions o% &aw, it is re9uired t#at t#e stipu&ation &imiting t#e common carrier?s
&iai&it! %or &oss must e ;reasona&e and Aust under t#e circumstances, and #as een %ree&! and %air&! agreed
upon'<
. Contents o, $ill o, la+in* (clause 14)
T#e i&& o% &ading speci%ica&&! provides, among ot#ers, ;(1/) 7&& c&aims %or w#ic# t#e carrier ma! e
&ia&e s#a&& e adAusted and sett&ed on t#e asis o% t#e s#ipper?s net invoice cost p&us %reig#t and insurance
premiums, i% paid, and in no event s#a&& t#e carrier e &ia&e %or an! &oss o% possi&e pro%its or an!
conse9uentia& &oss' T#e carrier s#a&& not e &ia&e %or an! &oss o% or an! damage to or in an! connection wit#,
goods in an amount e3ceeding (ne @undred T#ousand Oen in Japanese $urrenc! (O122,222'22) or its
e9uiva&ent in an! ot#er currenc! per package or customar! %reig#t unit (w#ic#ever is &east) un&ess t#e va&ue o%
t#e goods #ig#er t#an t#is amount is dec&ared in writing ! t#e s#ipper e%ore receipt o% t#e goods ! t#e
carrier and inserted in t#e 1i&& o% +ading and e3tra %reig#t is paid as re9uired'<
3. Stipulations are reasona$le an+ ?ust
T#e stipu&ations are reasona&e and Aust' ,n t#e i&& o% &ading, t#e carrier made it c&ear t#at its &iai&it!
wou&d on&! e up to O122,222'22' @owever, t#e s#ipper, Maruman Trading, #ad t#e option to dec&are a #ig#er
va&uation i% t#e va&ue o% its cargo was #ig#er t#an t#e &imited &iai&it! o% t#e carrier' $onsidering t#at t#e
s#ipper did not dec&are a #ig#er va&uation, it #ad itse&% to &ame %or not comp&!ing wit# t#e stipu&ations'
4. Contracts o, a+)esion not invali+ per se6 :5L vs. C5
7s ru&ed in P7+, ,nc' vs' $ourt o% 7ppea&s, t#e ;Aurisprudence on t#e matter revea&s t#e consistent
#o&ding o% t#e court t#at contracts o% ad#esion are not inva&id per se and t#at it #as on numerous occasions
up#e&d t#e inding e%%ect t#ereo%'<
%. Contracts o, a+)esion6 Consent $y a+)erin*
,n P#i&ippine 7merican 6enera& ,nsurance $o', ,nc' vs' "weet +ines, ,nc' t#e $ourt #e&d t#at ;(ng
Oiu vs' $ourt o% 7ppea&s, et a&', instructs us t#at Gcontracts o% ad#esion w#erein one part! imposes a read!=
made %orm o% contract on t#e ot#er ' ' ' are contracts not entire&! pro#iited' T#e one w#o ad#eres to t#e
contract is in rea&it! %ree to reAect it entire&!C i% #e ad#eres #e gives #is consent' ' ' Eot even an a&&egation o%
ignorance o% a part! e3cuses non=comp&iance wit# t#e contractua& stipu&ations since t#e responsii&it! %or
ensuring %u&& compre#ension o% t#e provisions o% a contract o% carriage devo&ves not on t#e carrier ut on t#e
owner, s#ipper, or consignee as t#e case ma! e'<
1". Contract o, a+)esion6 8n* Hiu vs. C5
7s %urt#er e3p&ained in (ng Oiu vs' $ourt o% 7ppea&s, stipu&ations in contracts o% ad#esion are va&id
and inding' F#i&e it ma! e true t#at t#e p&ane ticket was not signed' ' ', #e is nevert#e&ess ound ! t#e
provisions t#ereo%' "uc# provisions #ave een #e&d to e a part o% t#e contract o% carriage, and va&id and
inding upon t#e passenger regard&ess o% t#e &atter?s &ack o% know&edge or assent to t#e regu&ation' ,t is w#at
is known as a contract o% <ad#esion,< in regards w#ic# it #as een said t#at contracts o% ad#esion w#erein one
part! imposes a read!=made %orm o% contract on t#e ot#er, as t#e p&ane ticket in t#e case at ar, are contracts
not entire&! pro#iited' T#e one w#o ad#eres to t#e contract is in rea&it! %ree to reAect it entire&!C i% #e ad#eres,
#e gives #is consent' ' ' ', a contract &imiting &iai&it! upon an agreed va&uation does not o%%end against t#e
po&ic! o% t#e &aw %oridding one %rom contracting against #is own neg&igence'
11. Greater vi*ilance re9uire+ o, courts .)en +ealin* .it) contracts o, a+)esion6 5rticle -/ 7CC
6reater vigi&ance, #owever, is re9uired o% t#e courts w#en dea&ing wit# contracts o% ad#esion in t#at
t#e said contracts must e care%u&&! scrutini*ed ;in order to s#ie&d t#e unwar! (or weaker part!) %rom
deceptive sc#emes contained in read!=made covenants,< suc# as t#e i&& o% &ading' T#e stringent re9uirement
w#ic# t#e courts are enAoined to oserve is in recognition o% 7rtic&e 85 o% t#e $ivi& $ode w#ic# mandates t#at
;in a&& contractua&, propert! or ot#er re&ations, w#en one o% t#e parties is at a disadvantage on account o% #is
mora& dependence, ignorance, indigence, menta& weakness, tender age or ot#er #andicap, t#e courts must e
vigi&ant %or #is protection'<
1-. S)ipper extensively en*a*e+ in tra+in* $usiness! cannot $e sai+ to $e i*norant o, transactions as
to s)ip#ent
T#e s#ipper, Maruman Trading, #as een e3tensive&! engaged in t#e trading usiness' ,t can not e
said to e ignorant o% t#e usiness transactions it entered into invo&ving t#e s#ipment o% its goods to its
customers' T#e s#ipper cou&d not #ave known, or s#ou&d know t#e stipu&ations in t#e i&& o% &ading and t#ere it
s#ou&d #ave dec&ared a #ig#er va&uation o% t#e goods s#ipped' Moreover, Maruman Trading #as not een
#eard to comp&ain t#at it #as een deceived or rus#ed into agreeing to s#ip t#e cargo in Bverett "teams#ip?s
vesse&' ,n %act, it was not even imp&eaded in t#e case'
13. Consi*nee #ay $e $oun+ $y contract o, carria*e alt)ou*) not a si*natory t)ereto (5*ency)6 Sea
Lan+ vs. ;5C
,n "ea=+and "ervice, ,nc' vs' ,7$, t#e $ourt #e&d t#at even i% t#e consignee was not a signator! to t#e
contract o% carriage etween t#e s#ipper and t#e carrier, t#e consignee can sti&& e ound ! t#e contract' To
egin wit#, t#ere is no 9uestion o% t#e rig#t, in princip&e, o% a consignee in a i&& o% &ading to recover %rom t#e
carrier or s#ipper %or &oss o%, or damage to goods eing transported under said i&&, a&t#oug# t#at document
ma! #ave een H as in practice it o%tentimes is=drawn up on&! ! t#e consignor and t#e carrier wit#out t#e
intervention o% t#e consignee' ' ' ' ' ' ' t#e rig#t o% a part! to recover %or &oss o% a s#ipment consigned to #im
under a i&& o% &ading drawn up on&! ! and etween t#e s#ipper and t#e carrier, springs %rom eit#er a re&ation
o% agenc! t#at ma! e3ist etween #im and t#e s#ipper or consignor, or #is status as stranger in w#ose %avor
some stipu&ation is made in said contract, and w#o ecomes a part! t#ereto w#en #e demands %u&%i&&ment o%
t#at stipu&ation, suc# as t#e de&iver! o% t#e goods or cargo s#ipped'
1/. Consi*nee #ay $e $oun+ $y contract o, carria*e alt)ou*) not a si*natory t)ereto an+ even i,
stipulations in ,ine print6 :)oenix 5ssurance Co. vs. =acon+ray
,n neit#er capacit! can #e assert persona&&!, in ar to an! provision o% t#e i&& o% &ading, t#e a&&eged
circumstance t#at %air and %ree agreement to suc# provision was vitiated ! its eing in suc# %ine print as to e
#ard&! reada&e' Parent#etica&&!, it ma! e oserved t#at in one comparative&! recent case (P#oeni3 7ssurance
$ompan! vs' Macondra! T $o', ,nc', >5 "$:7 14) w#ere t#e $ourt %ound t#at a simi&ar package &imitation
c&ause was ;printed in t#e sma&&est t!pe on t#e ack o% t#e i&& o% &ading,< it nonet#e&ess ru&ed t#at t#e
consignee was ound t#ere! on t#e strengt# o% aut#orit! #o&ding t#at suc# provisions on &iai&it! &imitation
are as muc# a part o% a i&& o% &ading as t#oug# p#!sica&&! in it and as t#oug# p&aced t#erein ! agreement o%
t#e parties'
12. 5ct o, consi*nee t)at e,,ecte+ acceptance o, provisions o, contract o, carria*e
F#en @ernande* Trading %orma&&! c&aimed reimursement %or t#e missing goods %rom Bverett
"teams#ip and suse9uent&! %i&ed a case against t#e &atter ased on t#e ver! same i&& o% &ading, t#e %ormer
accepted t#e provisions o% t#e contract and t#ere! made itse&% a part! t#ereto, or at &east #as come to court to
en%orce it' T#us, @ernande* Trading cannot now reAect or disregard t#e carrier?s &imited &iai&it! stipu&ation in
t#e i&& o% &ading' ,n ot#er words, @ernande* Trading is ound ! t#e w#o&e stipu&ations in t#e i&& o% &ading
and must respect t#e same'
1. Bill o, la+in* proves carrier una.are o, contents! 9uantity an+ value o, crates
T#e i&& o% &ading con%irms t#e %act t#at Bverett "teams#ip t#at it does not know o% t#e contents,
9uantit! and va&ue o% ;t#e s#ipment w#ic# consisted o% t#ree pre=packed crates descried in 1i&& o% +ading
E6(=43ME ($ases "pare Parts)' To de%eat t#e carrier?s &imited &iai&it!, $&ause 1/ o% t#e i&& o% &ading
re9uires t#at t#e s#ipper s#ou&d #ave dec&ared in writing a #ig#er va&uation o% its goods e%ore receipt t#ereo%
! t#e carrier and insert t#e said dec&aration in t#e i&& o% &ading, wit# t#e e3tra %reig#t paid' T#ese
re9uirements in t#e i&& o% &ading were never comp&ied wit# ! t#e s#ipper, #ence, t#e &iai&it! o% t#e carrier
under t#e &imited &iai&it! c&ause stands' T#e commercia& ,nvoice MTM=.51 does not in itse&% su%%icient&! and
convincing&! s#ow t#at Bverett "teams#ip #as know&edge o% t#e va&ue o% t#e cargo as contended !
@ernande* Trading'
[/7] eaFLand ervice vs. 'AC, see [+0]
[>]! also [234]
S)e.ara# vs. :5L (GR L>-""%%! 3 Buly 1%)
Bn 1anc, Ra&divar (J): / concur
&acts' P#i&ippine 7ir&ines (P7+) is a common carrier engaged in air &ine transportation in t#e P#i&ippines,
o%%ering its services to t#e pu&ic to carr! and transport passengers and cargoes %rom and to di%%erent points in
t#e P#i&ippines' Parmanand "#ewaram was, on 83 Eovemer 1.4., a pa!ing passenger wit# ticket 5=32.0>,
on P7+?s aircra%t %&ig#t .0>-.12 %rom Ramoanga $it! ound %or Mani&a' (n said date, #e c#ecked in 3 pieces
o% aggages H a suitcase and two 8 ot#er pieces, T#e suitcase was mistagged ! P7+?s personne& in
Ramoanga $it!, as ,'6'E' (%or ,&igan) wit# c&aim c#eck 1=3//3, instead o% ME+ (%or Mani&a)' F#en
"#ewaram arrived in Mani&a on t#e same date, #is suitcase did not arrive wit# #is %&ig#t ecause it was sent to
,&igan' @e made a c&aim wit# P7+?s personne& in Mani&a airport and anot#er suitcase simi&ar to #is own w#ic#
was t#e on&! aggage &e%t %or t#at %&ig#t, t#e rest #aving een c&aimed and re&eased to t#e ot#er passengers o%
said %&ig#t, was given to "#ewaram %or #im to take de&iver! ut #e did not and re%used to take de&iver! o% t#e
same on t#e ground t#at it was not #is, a&&eging t#at a&& #is c&ot#es were w#ite and t#e Eationa& transistor 0
and a :o&&%&e3 camera were not %ound inside t#e suitcase, and moreover, it contained a pisto& w#ic# #e did not
#ave nor p&aced inside #is suitcase (t#e suitcase e&onged to a certain De& :osario)' 7%ter in9uiries made !
P7+?s personne& in Mani&a %rom di%%erent airports w#ere t#e suitcase in 9uestion must #ave een sent, it was
%ound to #ave reac#ed ,&igan and t#e station agent o% t#e P7+ in ,&igan caused t#e same to e sent to Mani&a
%or de&iver! to Mr' "#ewaram and w#ic# suitcase e&onging to "#ewaram arrived in Mani&a airport on 85
Eovemer 1.4.' F#en "#ewaram?s suitcase arrived in Mani&a, #e was in%ormed ! Mr' Tomas 1&anco, Jr',
t#e acting station agent o% t#e Mani&a airport o% t#e arriva& o% #is suitcase ut o% course minus #is Transistor
:adio 0 and t#e :o&&%&e3 camera' "#ewaram made demand %or t#ese 8 items or %or t#e va&ue t#ereo% ut t#e
same was not comp&ied wit# ! P7+'
1e%ore t#e municipa& court o% Ramoanga $it!, "#ewaram instituted an action to recover damages su%%ered !
#im due to t#e a&&eged %ai&ure o% P7+ to oserve e3traordinar! di&igence in t#e vigi&ance and carriage o% #is
&uggage' 7%ter tria& t#e municipa& court o% Ramoanga $it! rendered Audgment ordering P7+ to pa!
"#ewaram P303'22 as actua& damages, P122'22 as e3emp&ar! damages, P142'22 as attorne!?s %ees, and t#e
costs o% t#e action'
P7+ appea&ed to t#e $F, o% Ramoanga $it!' 7%ter #earing t#e $F, o% Ramoanga $it! modi%ied t#e
Audgment o% t#e in%erior court ! ordering P7+ to pa! "#ewaram on&! t#e sum o% P303'22 as actua& damages,
wit# &ega& interest %rom > Ma! 1.>2, and t#e sum o% P142'22 as attorne!?s %ees, e&iminating t#e award o%
e3emp&ar! damages' From t#e decision o% t#e $F, o% Ramoanga $it!, P7+ appea&s to t#e "upreme $ourt on
a 9uestion o% &aw'
T#e "upreme $ourt a%%irmed t#e decision appea&ed %rom, wit# costs against P7+'
1. Dxtraor+inary +ili*ence re9uire+ o, co##on carrier
P7+ is a common carrier' 7s suc# common carrier P7+, %rom t#e nature o% its usiness and %or
reasons o% pu&ic po&ic!, is ound to oserve e3traordinar! di&igence in t#e vigi&ance over t#e goods and %or
t#e sa%et! o% t#e passengers transported ! it according to t#e circumstances o% eac# case' @erein, T#e
suitcase o% "#ewaram was tampered, and t#e transistor radio and t#e camera contained t#erein were &ost' 7s
t#e &oss o% t#e transistor radio and t#e camera o% "#ewaram, costing P303'22 (T#e transistor radio costs
P1.0'22 and t#e camera costs P10>'22), was due to t#e neg&igence o% t#e emp&o!ees o% P7+, it is c&ear t#at
P7+ s#ou&d e #e&d &ia&e %or t#e pa!ment o% said &oss'
-. Con+ition o, carria*e printe+ at t)e $ack o, plane ticket stu$
T#e conditions o% carriage printed at t#e ack o% t#e p&ane ticket stu, w#ic# conditions are emodied
in Domestic Tari%% :egu&ations 8, w#ic# was %i&ed wit# t#e $ivi& 7eronautics 1oard' (ne o% t#ose conditions,
provides as %o&&ows: ;T#e &iai&it!, i% an!, %or &oss or damage to c#ecked aggage or %or de&a! in t#e de&iver!
t#ereo% is &imited to its va&ue and, un&ess t#e passenger dec&ares in advance a #ig#er va&uation and pa! an
additiona& c#arge t#ere%or, t#e va&ue s#a&& e conc&usive&! deemed not to e3ceed P122'22 %or eac# ticket'<
3. 5rticle 132" 7CC
7rtic&e 1042 o% t#e Eew $ivi& $ode provides t#at ;7 contract %i3ing t#e sum t#at ma! e recovered
! t#e owner or s#ipper %or t#e &oss, destruction, or deterioration o% t#e goods is va&id, i% it is reasona&e and
Aust under t#e circumstances, and #as een %air&! and %ree&! agreed upon'< ,n accordance wit# 7rtic&e 1042 o%
t#e Eew $ivi& $ode, t#e pecuniar! &iai&it! o% a common carrier ma!, ! contract, e &imited to a %i3ed
amount' ,t is re9uired, #owever, t#at t#e contract must e ;reasona&e and Aust under t#e circumstances and
#as een %air&! and %ree&! agreed upon'<
/. Re9uire#ents o, 5rticle 132" #ust $e co#plie+ .it) $e,ore co##on carrier #ay clai#
li#itation o, lia$ility
T#e re9uirements provided in 7rtic&e 1042 o% t#e Eew $ivi& $ode must e comp&ied wit# e%ore a
common carrier can c&aim a &imitation o% its pecuniar! &iai&it! in case o% &oss, destruction or deterioration o%
t#e goods it #as undertaken to transport' @erein, t#e re9uirements o% said artic&e #ave not een met' ,t can not
e said t#at "#ewaram #ad actua&&! entered into a contract wit# P7+, emod!ing t#e conditions as printed at
t#e ack o% t#e ticket stu t#at was issued ! P7+ to "#ewaram' T#e %act t#at t#ose conditions are printed at
t#e ack o% t#e ticket stu in &etters so sma&& t#at t#e! are #ard to read wou&d not warrant t#e presumption t#at
"#ewaram was aware o% t#ose conditions suc# t#at #e #ad ;%air&! and %ree&! agreed< to t#ose conditions'
,nasmuc# as passengers do not sign t#e ticket, muc# &ess did "#ewaram sign #is ticket w#en #e made t#e
%&ig#t on 83 Eovemer 1.4., "#ewaram is not, and can not e, ound ! t#e conditions o% carriage %ound at
t#e ack o% t#e ticket stu issued to #im w#en #e made t#e %&ig#t on P7+?s p&ane'
2. 5rticle 133/ 7CC
7rtic&e 1035 o% t#e $ivi& $ode provides t#at ;$ommon carriers are responsi&e %or t#e &oss,
destruction, or deterioration o% t#e goods, un&ess t#e same is due to an! o% t#e %o&&owing causes on&!: (1)
F&ood, storm, eart#9uake, or ot#er natura& disaster or ca&amit!C (8) 7ct o% t#e pu&ic enem! in war, w#et#er
internationa& or $ivi&C (3) 7ct or omission o% t#e s#ipper or owner o% t#e goodsC (5) T#e c#aracter o% t#e goods
or de%ects in t#e packing or in t#e containersC and (4) (rder or act o% competent pu&ic aut#orit!'<
. 5rticle 1332 7CC
7rtic&e 1034' o% t#e $ivi& $ode provides t#at ;,n a&& cases ot#er t#an t#ose mentioned in Eos' 1, 8, 3,
5, and 4 o% t#e preceding artic&e, i% t#e goods are &ost, destro!ed or deteriorated, common carriers are
presumed to #ave een at %au&t or to #ave acted neg&igent&!, un&ess t#e! prove t#at t#e! oserved
e3traordinar! di&igence as re9uired in 7rtic&e 1033'<
3. Carrier cannot li#it lia$ility ,or in?ury cause+ $y its o.n ne*li*ence
,n t#e case o% Osmae& and $o' vs' 1arretto, 41 P#i&' .2, t#e $ourt #ad &aid down t#e ru&e t#at t#e
carrier can not &imit its &iai&it! %or inAur! to or &oss o% goods s#ipped w#ere suc# inAur! or &oss was caused !
its own neg&igence'
4. Corpus Buris! volu#e 1"! p. 12/6 :ara*rap) 1%/.! Reasona$leness o, Li#itation
Paragrap# 1.5'>' (:easona&eness o% +imitation) provides t#at ;T#e va&idit! o% stipu&ations &imiting
t#e carrier?s &iai&it! is to e determined ! t#eir reasona&eness and t#eir con%ormit! to t#e sound pu&ic
po&ic!, in accordance wit# w#ic# t#e o&igations o% t#e carrier to t#e pu&ic are sett&ed' ,t cannot &aw%u&&!
stipu&ate %or e3emption %rom &iai&it!, un&ess suc# e3emption is Aust and reasona&e, and un&ess t#e contract is
%ree&! and %air&! made' Eo contractua& &imitation is reasona&e w#ic# is suversive o% pu&ic po&ic!'<
%. Corpus Buris! volu#e 1"! p. 12/6 :ara*rap) 1%2.3(a)! E)at Li#itations o, Lia$ility :er#issi$le!
7e*li*ence
Paragrap# 1.4' 0 (F#at +imitations o% +iai&it! Permissi&e) provides t#at ;a' Eeg&igence H (1) :u&e
in 7merica H (a) ,n 7sence o% (rganic or "tatutor! Provisions :egu&ating "uAect H aa' MaAorit! :u&e' H
,n t#e asence o% statute, it is sett&ed ! t#e weig#t o% aut#orit! in t#e Dnited "tates, t#at w#atever &imitations
against its common=&aw &iai&it! are permissi&e to a carrier, it cannot &imit its &iai&it! %or inAur! to or &oss o%
goods s#ipped, w#ere suc# inAur! or &oss is caused ! its own neg&igence' T#is is t#e common &aw doctrine
and it makes no di%%erence t#at t#ere is no statutor! pro#iition against contracts o% t#is c#aracter'<
1". Corpus Buris! volu#e 1"! p. 12/6 :ara*rap) 1%.$$! Consi+erations on .)ic) Rule Base+
Paragrap# 1.>' ($onsiderations on w#ic# :u&e 1ased) provides t#at ;T#e ru&e, it is said, rests on
considerations o% pu&ic po&ic!' T#e undertaking is to carr! t#e goods, and to re&ieve t#e s#ipper %rom a&&
&iai&it! %or &oss or damage arising %rom neg&igence in per%orming its contract is to ignore t#e contract itse&%'
T#e natura& e%%ect o% a &imitation o% &iai&it! against neg&igence is to induce want o% care on t#e part o% t#e
carrier in t#e per%ormance o% its dut!' T#e s#ipper and t#e common carrier are not on e9ua& termsC t#e s#ipper
must send #is %reig#t ! t#e common carrier, or not at a&&C #e is t#ere%ore entire&! at t#e merc! o% t#e carrier
un&ess protected ! t#e #ig#er power o% t#e &aw against eing %orced into contracts &imiting t#e carrier?s
&iai&it!' "uc# contracts are wanting in t#e e&ement o% vo&untar! assent'<
11. Corpus Buris! volu#e 1"! p. 12/6 :ara*rap) 1%3.cc! 5pplication an+ Dxtent o, Rule! 7e*li*ence
o, servants
Paragrap# 1.0'cc (7pp&ication and B3tent o% :u&e) provides t#at ;(aa) Eeg&igence o% "ervants' H
T#e ru&e pro#iiting &imitation o% &iai&it! %or neg&igence is o%ten stated as a pro#iition o% an! contract
re&ieving t#e carrier %rom &oss or damage caused ! its own neg&igence or mis%easance, or t#at o% its servantsC
and it #as ean speci%ica&&! decided in man! cases t#at no contract &imitation wi&& re&ieve t#e carrier %rom
responsii&it! %or t#e neg&igence, unski&&%u&ness, or care&essness o% its emp&o!ees'?<
[4]! also [85]
8n* Hiu vs. C5 (GR L>/"2%3! -% Bune 1%3%)
&acts' (n 8> 7ugust 1.>0, 7ugusto 1' (ng Oiu was a %are pa!ing passenger o% P#i&ippine 7ir +ines, ,nc'
(P7+), on oard F&ig#t 5>3=:, %rom Mactan, $eu, ound %or 1utuan $it!' @e was sc#edu&ed to attend t#e
tria& o% $ivi& $ase 1224 and "pecia& Proceedings 1184 in t#e $ourt o% First ,nstance, 1ranc# ,,, set %or #earing
on 7ugust 8/=31, 1.>0' 7s a passenger, #e c#ecked in one piece o% &uggage, a &ue ;ma&eta< %or w#ic# #e was
issued $&aim $#eck 812>=:' T#e p&ane &e%t Mactan 7irport, $eu, at aout 1:22 p'm', and arrived at 1ancasi
airport, 1utuan $it!, at past 8:22 p'm', o% t#e same da!' Dpon arriva&, (ng Oiu c&aimed #is &uggage ut it
cou&d not e %ound' 7ccording to (ng Oiu, it was on&! a%ter reacting indignant&! to t#e &oss t#at t#e matter
was attended to ! t#e porter c&erk, Ma3imo 6ome*, w#ic#, #owever, t#e &atter denies' 7t aout 3:22 p'm',
P7+ 1utuan, sent a message to P7+, $eu in9uiring aout t#e missing &uggage, w#ic# message was, in turn,
re&a!ed in %u&& to t#e Mactan 7irport te&et!pe operator at 3:54 p'm' ,t must #ave een transmitted to Mani&a
immediate&!, %or at 3:4. p'm', P7+ Mani&a wired P7+ $eu advising t#at t#e &uggage #ad een overcarried to
Mani&a aoard F&ig#t 14> and t#at it wou&d e %orwarded to $eu on F&ig#t 354 o% t#e same da!' ,nstructions
were a&so given t#at t#e &uggage e immediate&! %orwarded to 1utuan $it! on t#e %irst avai&a&e %&ig#t' 7t
4:22 p'm' o% t#e same a%ternoon, P7+ $eu sent a message to P7+ 1utuan t#at t#e &uggage wou&d e
%orwarded on F&ig#t .>3 t#e %o&&owing da!, 80 7ugust 1.>0' @owever, t#is message was not received ! P7+
1utuan as a&& t#e personne& #ad a&read! &e%t since t#ere were no more incoming %&ig#ts t#at a%ternoon' ,n t#e
meantime, (ng Oiu was worried aout t#e missing &uggage ecause it contained vita& documents needed %or
tria& t#e ne3t da!' 7t 12:22 p'm', (ng Oiu wired P7+ $eu demanding t#e de&iver! o% #is aggage e%ore
noon t#e ne3t da!, ot#erwise, #e wou&d #o&d P7+ &ia&e %or damages, and stating t#at P7+?s gross neg&igence
#ad caused #im undue inconvenience, worr!, an3iet! and e3treme emarrassment' T#is te&egram was received
! t#e $eu P7+ supervisor ut t#e &atter %e&t no need to wire (ng Oiu t#at #is &uggage #ad a&read! een
%orwarded on t#e assumption t#at ! t#e time t#e message reac#ed 1utuan $it!, t#e &uggage wou&d #ave
arrived' Bar&! in t#e morning o% t#e ne3t da!, 80 7ugust 1.>0, (ng Oiu went to t#e 1ancasi 7irport to in9uire
aout #is &uggage' @e did not wait, #owever, %or t#e morning %&ig#t w#ic# arrived at 12:22 a'm', and w#ic#
carried t#e missing &uggage' T#e porter c&erk, Ma3imo 6ome*, paged (ng Oiu, ut t#e &atter #ad a&read! &e%t'
7 certain Bmi&io Dagorro, a driver o% a ;co&orum< car, w#o a&so used to drive %or (ng Oiu, vo&unteered to take
t#e &uggage to (ng Oiu' 7s Ma3imo 6ome* knew Dagorro to e t#e same driver used ! (ng Oiu w#enever
t#e &atter was in 1utuan $it!, 6ome* took t#e &uggage and p&aced it on t#e counter' Dagorro e3amined t#e
&ock, pressed it, and it opened' 7%ter ca&&ing t#e attention o% Ma3imo 6ome*, t#e ;ma&eta< was opened,
6ome* took a &ook at its contents, ut did not touc# t#em' Dagorro t#en de&ivered t#e ;ma&eta< to (ng Oiu,
wit# t#e in%ormation t#at t#e &ock was open' Dpon inspection, (ng Oiu %ound t#at a %o&der containing certain
e3#iits, transcripts and private documents in $ivi& $ase Eo' 1224 and "p' Procs' Eo' 118> were missing,
aside %rom two gi%t items %or #is parents=in=&aw' (ng Oiu re%used to accept t#e &uggage' Dagorro returned it to
t#e porter c&erk, Ma3imo 6ome*, w#o sea&ed it and %orwarded t#e same to P7+ $eu' Meanw#i&e, (ng Oiu
asked %or postponement o% t#e #earing o% $ivi& $ase 1224 due to &oss o% #is documents, w#ic# was granted !
t#e $ourt' (ng Oiu returned to $eu $it! on 8/ 7ugust 1.>0' ,n a &etter dated 8. 7ugust 1.>0 addressed to
P7+, $eu, (ng Oiu ca&&ed attention to #is te&egram, demanded t#at #is &uggage e produced intact, and t#at
#e e compensated in t#e sum o% P842,222'22 %or actua& and mora& damages wit#in 4 da!s %rom receipt o% t#e
&etter, ot#erwise, #e wou&d e &e%t wit# no a&ternative ut to %i&e suit' (n 31 7ugust 1.>0, Messrs' de +eon,
Eavarsi, and 7gustin, a&& o% P7+ $eu, went to (ng Oiu?s o%%ice to de&iver t#e ;ma&eta<' ,n t#e presence o%
Mr' Jose Oap and 7tt!' Manue& Maranga, t#e contents were &isted and receipted %or ! (ng Oiu' (n 4
"eptemer 1.>0, (ng Oiu sent a tracer &etter to P7+ $eu in9uiring aout t#e resu&ts o% t#e investigation
w#ic# Messrs' de +eon, Eavarsi and 7gustin #ad promised to conduct to pinpoint responsii&it! %or t#e
unaut#ori*ed opening o% t#e ;ma&eta<'
(n 13 "eptemer 1.>0, (ng Oiu %i&ed a $omp&aint against P7+ %or damages %or reac# o% contract o%
transportation wit# t#e $F, o% $eu (1ranc# V, $ivi& $ase :=121//), w#ic# P7+ traversed' 7%ter due tria&, t#e
&ower $ourt %ound P7+ to #ave acted in ad %ait# and wit# ma&ice and dec&ared petitioner entit&ed to mora&
damages in t#e gum o% P/2,222'22, e3emp&ar! damages o% P32,222'22, attorne!?s %ees o% P4,222'22, and
costs'
1ot# parties appea&ed to t#e $ourt o% 7ppea&s' (n 88 7ugust 1.05, t#e $ourt o% 7ppea&s, %inding t#at P7+
was gui&t! on&! o% simp&e neg&igence, reversed t#e Audgment o% t#e tria& $ourt granting (ng Oiu mora& and
e3emp&ar! damages, ut ordered P7+ to pa! (ng Oiu t#e sum o% P122'22, t#e aggage &iai&it! assumed ! it
under t#e condition o% carriage printed at t#e ack o% t#e ticket' @ence, t#e Petition %or :eview ! $ertiorari,
%i&ed on 8 Ma! 1.04'
(n 1> Ju&! 1.04, t#e "upreme $ourt gave due course to t#e Petition' T#e "upreme $ourt denied t#e petition
%or &ack o% merit, and a%%irmed t#e Audgment soug#t to e reviewed in totoC wit#out costs'
1. Ba+ ,ait) +e,ine+
1ad %ait# means a reac# o% a known dut! t#roug# some motive o% interest or i&& wi&&' ,t was t#e dut!
o% P7+ to &ook %or (ng Oiu?s &uggage w#ic# #ad een miscarriedC and P7+ e3erted due di&igence in
comp&!ing wit# suc# dut!' P7+ #ad not acted in ad %ait#'
-. &ailure o, :5L Ce$u to reply to 8n* Hiu1s rus) tele*ra# +oes not in+icate $a+ ,ait)
T#e %ai&ure o% P7+ $eu to rep&! to (ng Oiu?s rus# te&egram is not indicative o% ad %ait#' T#e
te&egram was dispatc#ed ! petitioner at around 12:22 p'm' o% 8> 7ugust 1.>0' T#e P7+ supervisor at Mactan
7irport was noti%ied o% it on&! in t#e morning o% t#e %o&&owing da!' 7t t#at time t#e &uggage was a&read! to e
%orwarded to 1utuan $it!' T#ere was no ad %ait# in t#e assumption made ! said supervisor t#at t#e p&ane
carr!ing t#e ag wou&d arrive at 1utuan ear&ier t#an a rep&! te&egram' @ad (ng Oiu waited or caused someone
to wait at t#e 1ancasi airport %or t#e arriva& o% t#e morning %&ig#t, #e wou&d #ave een a&e to retrieve #is
&uggage sooner'
3. 5rticle --13 7CC
7rtic&e 8810 o% t#e $ivi& $ode provides t#at ;Mora& damages inc&ude p#!sica& su%%ering, menta&
anguis#, %rig#t, serious an3iet!, esmirc#ed reputation, wounded %ee&ings, mora& s#ock, socia& #umi&iation,
and simi&ar inAur!' T#oug# incapa&e o% pecuniar! computation, mora& damages ma! e recovered i% t#e! are
t#e pro3imate resu&t o% t#e de%endant?s wrong%u& act o% omission'<
/. 5rticle ---" 7CC
7rtic&e 8882 o% t#e $ivi& $ode provides t#at ;Fi&&%u& inAur! to propert! ma! e a &ega& ground %or
awarding mora& damages i% t#e court s#ou&d %ind t#at, under t#e circumstances, suc# damages are Aust&! due'
T#e same ru&e app&ies to reac#es o% contract w#ere t#e de%endant acted %raudu&ent&! or in ad %ait#'<
2. 8n* Hiu not entitle+ to #oral +a#a*es! nor exe#plary +a#a*es
,n t#e asence o% a wrong%u& act or omission or o% %raud or ad %ait#, (ng Oiu is not entit&ed to mora&
damages' (ng Ou is neit#er entit&ed to e3emp&ar! damages' ,n contracts, as provided %or in 7rtic&e 8838 o% t#e
$ivi& $ode, e3emp&ar! damages can e granted i% t#e de%endant acted in a wanton, %raudu&ent, reck&ess,
oppressive, or ma&evo&ent manner, w#ic# #as not een proven in t#e present case'
. Con+ition o, carria*e printe+ at $ack o, plane ticket
T#e pertinent $ondition o% $arriage printed at t#e ack o% t#e p&ane ticket reads ;/' 176676B
+,71,+,TO ' ' ' T#e tota& &iai&it! o% t#e $arrier %or &ost or damaged aggage o% t#e passenger is +,M,TBD
T( P122'22 %or eac# ticket un&ess a passenger dec&ares a #ig#er va&uation in e3cess o% P122'22, ut not in
e3cess, #owever, o% a tota& va&uation o% P1,222'22 and additiona& c#arges are paid pursuant to $arrier?s
tari%%s'<
3. Contract o, a+)esion
F#i&e it ma! e true t#at (ng Oiu #ad not signed t#e p&ane ticket, #e is nevert#e&ess ound ! t#e
provisions t#ereo%' ;"uc# provisions #ave een #e&d to e a part o% t#e contract o% carriage, and va&id and
inding upon t#e passenger regard&ess o% t#e &atter?s &ack o% know&edge or assent to t#e regu&ation<' ,t is w#at
is known as a contract o% ;ad#esion<, in regards w#ic# it #as een said t#at contracts o% ad#esion w#erein one
part! imposes a read! made %orm o% contract on t#e ot#er, as t#e p&ane ticket in t#e present case, are contracts
not entire&! pro#iited' T#e one w#o ad#eres to t#e contract is in rea&it! %ree to reAect it entire&!C i% #e ad#eres,
#e gives #is consent'
4. Li#itation o, lia$ility to a*ree+ valuation not contrary to la.6 Ran+olp) vs. 5#erican 5irlines
7nd as #e&d in :ando&p# v' 7merican 7ir&ines, 123 (#io 7pp' 108, 155 E'B' 8d /0/C :osenc#ein vs'
Trans For&d 7ir&ines, ,nc', 35. "'F' 8d 5/3, ;a contract &imiting &iai&it! upon an agreed va&uation does not
o%%end against t#e po&ic! o% t#e &aw %oridding one %rom contracting against #is own neg&igence'<
%. 7o +eclaration o, *reater value nor pay#ent o, tari,, ,or value o, lu**a*e
T#e &iai&it! o% P7+ %or t#e &oss, in accordance wit# t#e stipu&ation written on t#e ack o% t#e ticket is
&imited to P122'22 per aggage' (ng Oiu not #aving dec&ared a greater va&ue, and not #aving ca&&ed t#e
attention o% P7+ on its true va&ue and paid t#e tari%% t#ere%or' T#e va&idit! o% t#e stipu&ation is not 9uestioned
! (ng Oiu' T#e! are printed in reasona&! and %air&! ig &etters, and are easi&! reada&e' Moreover, (ng Oiu
#ad een a %re9uent passenger o% P7+ %rom $eu to 1utuan $it! and ack, and #e, eing a &aw!er and
usinessman, must e %u&&! aware o% t#ese conditions' $onsidering, t#ere%ore, t#at (ng Oiu #ad %ai&ed to
dec&are a #ig#er va&ue %or #is aggage, #e cannot e permitted a recover! in e3cess o% P122'22' 1esides,
passengers are advised not to p&ace va&ua&e items inside t#eir aggage ut ;to avai& o% our V=cargo service'<
,t is &ikewise to e noted t#at t#ere is not#ing in t#e evidence to s#ow t#e actua& va&ue o% t#e goods a&&eged&!
&ost ! (ng Oiu'
1". (ec)nicality yiel+s to t)e interests o, su$stantial ?ustice
(n 85 (ctoer 1.05 or two mont#s a%ter t#e promu&gation o% t#e Decision o% t#e appe&&ate $ourt,
(ng Oiu?s widow %i&ed a Motion %or "ustitution c&aiming t#at (ng Oiu died on > Januar! 1.05 and t#at s#e
on&! came to know o% t#e adverse Decision on 83 (ctoer 1.05 w#en (ng Oiu?s &aw partner in%ormed #er
t#at #e received cop! o% t#e Decision on 8/ 7ugust 1.05' 7ttac#ed to #er Motion was an 7%%idavit o% (ng
Oiu?s &aw partner reciting %acts constitutive o% e3cusa&e neg&igence' T#e appe&&ate $ourt noting t#at a&&
p&eadings #ad een signed ! (ng Oiu #imse&% a&&owed t#e widow ;to take suc# steps as s#e or counse& ma!
deem necessar!'< "#e t#en %i&ed a Motion %or :econsideration over t#e opposition o% P7+ w#ic# a&&eged t#at
t#e $ourt o% 7ppea&s Decision, promu&gated on 88 7ugust 1.05, #ad a&read! ecome %ina& and e3ecutor!
since no appea& #ad een interposed t#ere%rom wit#in t#e reg&ementar! period' Dnder t#e circumstances,
considering t#e demise o% (ng Oiu #imse&%, w#o acted as #is own counse&, it is est t#at tec#nica&it! !ie&ds to
t#e interests o% sustantia& Austice' 1esides, in t#e &ast ana&!sis, no serious preAudice #as een caused P7+'
[%]
Britis) 5ir.ays vs. C5 (GR 1-14-/! -% Banuary 1%%4)
T#ird Division, :omero (J): 3 concur, 1 concur in resu&t
&acts' (n 1> 7pri& 1./., 6(P Ma#tani decided to visit #is re&atives in 1oma!, ,ndia' ,n anticipation o% #is
visit, #e otained t#e services o% a certain Mr' 6umar to prepare #is trave& p&ans' T#e &atter, in turn, purc#ased
a ticket %rom 1ritis# 7irwa!s (17) w#ere t#e %o&&owing itinerar! was indicated (Mani&a LME+M, P: 312O, 1>
7pri&, 1032@, "tatus (PC @ongkong L@P6M 17 82M, 1> 7pri&, 8122@, "tatus (PC 1oma! L1(MM, 17
1.M, 83 7pri&, 2/52@, "tatus (PC @ongkong L@P6M, P: 311 OC Mani&a LME+M'< "ince 17 #ad no direct
%&ig#ts %rom Mani&a to 1oma!, Ma#tani #ad to take a %&ig#t to @ongkong via P#i&ippine 7ir&ines (P7+), and
upon arriva& in @ongkong #e #ad to take a connecting %&ig#t to 1oma! on oard 17' Prior to #is departure,
Ma#tani c#ecked in at t#e P7+ counter in Mani&a #is two pieces o% &uggage containing #is c&ot#ings and
persona& e%%ects, con%ident t#at upon reac#ing @ongkong, t#e same wou&d e trans%erred to t#e 17 %&ig#t
ound %or 1oma!'Dn%ortunate&!, w#en Ma#tani arrived in 1oma! #e discovered t#at #is &uggage was
missing and t#at upon in9uir! %rom t#e 17 representatives, #e was to&d t#at t#e same mig#t #ave een
diverted to +ondon' 7%ter patient&! waiting %or #is &uggage %or one week, 17 %ina&&! advised #im to %i&e a
c&aim ! accomp&is#ing t#e ;Propert! ,rregu&arit! :eport'<
1ack in t#e P#i&ippines, speci%ica&&! on 11 June 1..2, Ma#tani %i&ed #is comp&aint %or damages and attorne!?s
%ees against 17 and Mr' 6umar e%ore t#e tria& court ($ivi& $ase $B1=.20>)' 7%ter appropriate proceedings
and tria&, on 5 Marc# 1..3, t#e tria& court rendered its decision in %avor o% Ma#tani, ordering 17 to pa!
Ma#tani t#e sum o% P0,222'22 %or t#e va&ue o% t#e two (8) suit casesC D"K522'22 representing t#e va&ue o% t#e
contents o% Ma#tani?s &uggageC P42,222'22 Pesos %or mora& and actua& damages and 82I o% t#e tota& amount
imposed against 17 %or attorne!?s %ees and costs o% t#e action' T#e $ourt dismissed 17?s t#ird part!
comp&aint against P7+'
Dissatis%ied, 17 appea&ed to t#e $ourt o% 7ppea&s, w#ic# #owever, on 0 "eptemer 1..4, a%%irmed t#e tria&
court?s %indings in toto, wit# costs against 17' @ence, t#e appea& ! certiorar!'
T#e "upreme $ourt modi%ied t#e decision o% t#e $ourt o% 7ppea&s, reinstating t#e t#ird=part! comp&aint %i&ed
! 1ritis# 7irwa!s dated . Eovemer 1..2 against P#i&ippine 7ir&ines' Eo costs'
1. 7ature o, airline1s contract o, carria*e
T#e nature o% an air&ine?s contract o% carriage partakes o% two t!pes, name&!: a contract to de&iver a
cargo or merc#andise to its destination and a contract to transport passengers to t#eir destination' 7 usiness
intended to serve t#e trave&&ing pu&ic primari&!, it is imued wit# pu&ic interest, #ence, t#e &aw governing
common carriers imposes an e3acting standard' Eeg&ect or ma&%easance ! t#e carrier?s emp&o!ees cou&d
predicta&! %urnis# ases %or an action %or damages'
-. Culpa$ility o, airline ,or lost +a#a*es6 Clai#ant #ust prove existence o, ,actual $asis ,or
+a#a*es
7s in a numer o% cases, t#e $ourt #as assessed t#e air&ines? cu&pai&it! in t#e %orm o% damages %or
reac# o% contract invo&ving misp&aced &uggage' ,n determining t#e amount o% compensator! damages in t#is
kind o% cases, it is vita& t#at t#e c&aimant satis%actori&! prove during t#e tria& t#e e3istence o% t#e %actua& asis
o% t#e damages and its causa& connection to de%endant?s acts'
3. <eclaration o, )i*)er value nee+e+ to recover *reater a#ount6 5rticle -- (1) o, t)e Earsa.
Convention
,n a contract o% air carriage a dec&aration ! t#e passenger o% a #ig#er va&ue is needed to recover a
greater amount' 7rtic&e 88(8) o% t#e Farsaw $onvention provides t#at ;,n t#e transportation o% c#ecked
aggage and goods, t#e &iai&it! o% t#e carrier s#a&& e &imited to a sum o% 842 %rancs per ki&ogram, un&ess t#e
consignor #as made, at t#e time t#e package was #anded over to t#e carrier, a specia& dec&aration o% t#e va&ue
at de&iver! and #as paid a supp&ementar! sum i% t#e case so re9uires' ,n t#at case t#e carrier wi&& e &ia&e to
pa! a sum not e3ceeding t#e dec&ared sum, un&ess #e proves t#at t#e sum is greater t#an t#e actua& va&ue to t#e
consignor at de&iver!'<
/. Carrier not lia$le ,or loss o, $a**a*e in a#ount in excess o, li#its speci,ie+ in tari,,
7merican Aurisprudence provides t#at an air carrier is not &ia&e %or t#e &oss o% aggage in an amount
in e3cess o% t#e &imits speci%ied in t#e tari%% w#ic# was %i&ed wit# t#e proper aut#orities, suc# tari%% eing
inding on t#e passenger regard&ess o% t#e passenger?s &ack o% know&edge t#ereo% or assent t#ereto' T#is
doctrine is recogni*ed in t#is Aurisdiction'
2. 7o $lin+ reliance on a+)esion contracts6 Bene,its o, li#ite+ lia$ility su$?ect to .aiver
T#e $ourt, #owever, #as ru&ed against &ind re&iance on ad#esion contracts w#ere t#e %acts and
circumstances Austi%! t#at t#e! s#ou&d e disregarded' Furt#er, ene%its o% &imited &iai&it! are suAect to
waiver suc# as w#en t#e air carrier %ai&ed to raise time&! oAections during t#e tria& w#en 9uestions and
answers regarding t#e actua& c&aims and damages sustained ! t#e passenger were asked' @erein, given t#e
%oregoing postu&ates, t#e inescapa&e conc&usion is t#at 17 #ad waived t#e de%ense o% &imited &iai&it! w#en it
a&&owed Ma#tani to testi%! as to t#e actua& damages #e incurred due to t#e misp&acement o% #is &uggage,
wit#out an! oAection'
. Ri*)t to o$?ect actually a #ere privile*e t)at can $e .aive+6 8$?ection #ust $e #a+e at earliest
opportunity
,t is a we&&=sett&ed doctrine t#at w#ere t#e proponent o%%ers evidence deemed ! counse& o% t#e
adverse part! to e inadmissi&e %or an! reason, t#e &atter #as t#e rig#t to oAect' @owever, suc# rig#t is a
mere privi&ege w#ic# can e waived' Eecessari&!, t#e oAection must e made at t#e ear&iest opportunit!, &est
si&ence w#en t#ere is opportunit! to speak ma! operate as a waiver o% oAections' @erein, 17 #as precise&!
%ai&ed in t#is regard'
3. :roper ti#e to o$?ect6 5$renica vs. Gon+a
,n t#e ear&! case o% 7renica v' 6onda, t#at court ru&ed t#at ;it #as een repeated&! &aid down as a ru&e
o% evidence t#at a protest or oAection against t#e admission o% an! evidence must e made at t#e proper time,
and t#at i% not so made it wi&& e understood to #ave een waived' T#e proper time to make a protest or
oAection is w#en, %rom t#e 9uestion addressed to t#e witness, or %rom t#e answer t#ereto, or %rom t#e
presentation o% proo%, t#e inadmissii&it! o% evidence is, or ma! e in%erred'< @erein, to compound matters %or
17, its counse& %ai&ed not on&! to interpose a time&! oAection ut even conducted #is own cross=e3amination
as we&&'
4. &actual ,in+in*s o, trial court entitle+ to *reat respect
Eeed&ess to sa!, %actua& %indings o% t#e tria& court, as a%%irmed ! t#e $ourt o% 7ppea&s, are entit&ed to
great respect' @erein, since t#e actua& va&ue o% t#e &uggage invo&ved appreciation o% evidence, a task wit#in
t#e competence o% t#e $ourt o% 7ppea&s, its ru&ing regarding t#e amount is assured&! a 9uestion o% %act, t#us, a
%inding not reviewa&e ! t#e "upreme $ourt'
%. 7ature o, t)ir+ party co#plaint6 &irestone (ire Ru$$er vs. (e#pen*ko
T#e t#ird=part! comp&aint is a procedura& device w#ere! a Gt#ird part!? w#o is neit#er a part! nor
priv! to t#e act or deed comp&ained o% ! t#e p&ainti%%, ma! e roug#t into t#e case wit# &eave o% court, !
t#e de%endant, w#o acts as t#ird=part! p&ainti%% to en%orce against suc# t#ird=part! de%endant a rig#t %or
contriution, indemnit!, surogation or an! ot#er re&ie%, in respect o% t#e p&ainti%%?s c&aim' T#e t#ird=part!
comp&aint is actua&&! independent o% and separate and distinct %rom t#e p&ainti%%?s comp&aint' Fere it not %or
t#is provision o% t#e :u&es o% $ourt, it wou&d #ave to e %i&ed independent&! and separate&! %rom t#e origina&
comp&aint ! t#e de%endant against t#e t#ird=part!' 1ut t#e :u&es permit de%endant to ring in a t#ird=part!
de%endant or so to speak, to &itigate #is separate cause o% action in respect o% p&ainti%%?s c&aim against a t#ird=
part! in t#e origina& and principa& case wit# t#e oAect o% avoiding circuitr! o% action and unnecessar!
pro&i%eration o% &aw suits and o% disposing e3peditious&! in one &itigation t#e entire suAect matter arising %rom
one particu&ar set o% %acts'
1". :5L a su$contractor or a*ent o, B5
T#e contract o% air transportation was e3c&usive&! etween Ma#tani and 17, t#e &atter mere&!
endorsing t#e Mani&a to @ongkong &eg o% t#e %ormer?s Aourne! to P7+, as its sucontractor or agent' ,n %act,
t#e %ourt# paragrap# o% t#e ;$onditions o% $ontracts< o% t#e ticket 38 issued ! 17 to Ma#tani con%irms t#at
t#e contract was one o% continuous air transportation %rom Mani&a to 1oma! (;5' carriage to e per%ormed
#ereunder ! severa& successive carriers is regarded as a sing&e operation'<) ,t is undisputed t#at P7+, in
transporting Ma#tani %rom Mani&a to @ongkong acted as t#e agent o% 17'
11. 5*ent responsi$le ,or any ne*li*ence in per,or#ance o, its ,unction! an+ lia$le ,or +a#a*es
.)ic) principal #ay su,,er
,t is a we&&=sett&ed ru&e t#at an agent is a&so responsi&e %or an! neg&igence in t#e per%ormance o% its
%unction and is &ia&e %or damages w#ic# t#e principa& ma! su%%er ! reason o% its neg&igent act' @ence, t#e
$ourt o% 7ppea&s erred w#en it opined t#at 17, eing t#e principa&, #ad no cause o% action against P7+, its
agent or su=contractor'
1-. Contractual relations)ip $et.een B5 an+ :5L! $ot) #e#$ers o, t)e ;5(5! is one o, a*ency
1ot# 17 and P7+ are memers o% t#e ,nternationa& 7ir Transport 7ssociation (,7T7), w#erein
memer air&ines are regarded as agents o% eac# ot#er in t#e issuance o% t#e tickets and ot#er matters pertaining
to t#eir re&ations#ip' T#ere%ore, #erein, t#e contractua& re&ations#ip etween 17 and P7+ is one o% agenc!, t#e
%ormer eing t#e principa&, since it was t#e one w#ic# issued t#e con%irmed ticket, and t#e &atter t#e agent'
13. B5 is principal6 :ronounce#ent consistent .it) Lu,t)ansa vs. C5
T#e pronouncement t#at 17 is t#e principa& is consistent wit# t#e ru&ing in +u%t#ansa 6erman
7ir&ines v' $ourt o% 7ppea&s' ,n t#at case, +u%t#ansa issued a con%irmed ticket to Tirso 7ntiporda covering
%ive=&eg trip aoard di%%erent air&ines' Dn%ortunate&!, 7ir Pen!a, one o% t#e air&ines w#ic# was to carr!
7ntiporda to a speci%ic destination ;umped< #im o%%' 7n action %or damages was %i&ed against +u%t#ansa
w#ic#, #owever, denied an! &iai&it!, contending t#at its responsii&it! towards its passenger is &imited to t#e
occurrence o% a mis#ap on its own &ine' $onse9uent&!, w#en 7ntiporda trans%erred to 7ir Pen!a, its o&igation
as a principa& in t#e contract o% carriage ceasedC %rom t#ere on, it mere&! acted as a ticketing agent %or 7ir
Pen!a: ,n reAecting +u%t#ansa?s argument, t#e court ru&ed t#at ;,n t#e ver! nature o% t#eir contract, +u%t#ansa
is c&ear&! t#e principa& in t#e contract o% carriage wit# 7ntiporda and remains to e so, regard&ess o% t#ose
instances w#en actua& carriage was to e per%ormed ! various carriers' T#e issuance o% con%irmed +u%t#ansa
ticket in %avor o% 7ntiporda covering #is entire %ive=&eg trip aoard successive carriers concrete&! attest to
t#is'<
1/. =a)tani can sue B5 alone! not :5L6 :5L )o.ever not relieve+ ,ro# lia$ility
"ince t#e present petition was ased on reac# o% contract o% carriage, Ma#tani can on&! sue 17
a&one, and not P7+, since t#e &atter was not a part! to t#e contract' @owever, t#is is not to sa! t#at P7+ is
re&ieved %rom an! &iai&it! due to an! o% its neg&igent acts' ,n $#ina 7ir +ines, +td' v' $ourt o% 7ppea&s, w#i&e
not e3act&! in point, t#e case, #owever, i&&ustrates t#e princip&e w#ic# governs t#e particu&ar situation' ,n t#at
case, t#e $ourt recogni*ed t#at a carrier (P7+), acting as an agent o% anot#er carrier, is a&so &ia&e %or its own
neg&igent acts or omission in t#e per%ormance o% its duties'
12. :rocee+in*s in t)ir+ party co#plaint in accor+ .it) +octrine a*ainst #ultiplicity o, suits
To den! 17 t#e procedura& remed! o% %i&ing a t#ird=part! comp&aint against P7+ %or t#e purpose o%
u&timate&! determining w#o was primari&! at %au&t as etween t#em, is wit#out &ega& asis' 7%ter a&&, suc#
proceeding is in accord wit# t#e doctrine against mu&tip&icit! o% cases w#ic# wou&d entai& receiving t#e same
or simi&ar evidence %or ot# cases and en%orcing separate Audgments t#ere%or' ,t must e orne in mind t#at t#e
purpose o% a t#ird=part! comp&aint is precise&! to avoid de&a! and circuit! o% action and to ena&e t#e
controvers! to e disposed o% in one suit' ,t is ut &ogica&, %air and e9uita&e to a&&ow 17 to sue P7+ %or
indemni%ication, i% it is proven t#at t#e &atter?s neg&igence was t#e pro3imate cause o% Ma#tani?s un%ortunate
e3perience, instead o% tota&&! aso&ving P7+ %rom an! &iai&it!'
[70],Eastern S!""!n# vs. IAC, also [43]
[31]
:5L vs. C5 (GR %-2"1! =arc) 1%%-)
First Division, 6rino=79uino (J): 8 concur, 1 took no part
&acts' 7t aout 4:32 a'm' on 10 7pri& 1./4, ,sidro $o, accompanied ! #is wi%e and son, arrived at t#e
Mani&a ,nternationa& 7irport aoard t#e air&ine?s P7+ F&ig#t 120 %rom "an Francisco, $a&i%ornia, D'"'7' "oon
a%ter emarking, $o proceeded to t#e aggage retrieva& area to c&aim #is . pieces o% c#ecked=in &uggage wit#
t#e corresponding c&aim c#ecks in #is possession' $o %ound eig#t o% #is &uggage, ut despite di&igent searc#,
#e %ai&ed to &ocate t#e .t# &uggage, wit# c&aim c#eck numer 08.113' $o?s &ost &uggage was a "amsonite
suitcase measuring aout >8 inc#es in &engt#, wort# aout D" K822'22 and containing various persona& e%%ects
purc#ased ! $o and #is wi%e during t#eir sta! in t#e Dnited "tates and simi&ar ot#er items sent ! t#eir
%riends aroad to e given as presents to re&atives in t#e P#i&ippines' $o?s invoices evidencing t#eir purc#ases
s#ow t#eir missing persona& e%%ects to e wort# D" K1,853'21, in addition to t#e presents entrusted to t#em !
t#eir %riends w#ic# $o testi%ied to e wort# aout D" K422'22 to D" K>22'22' $o t#en immediate&! noti%ied
P7+ t#roug# its emp&o!ee, Fi&&! 6uevarra, w#o was t#en in c#arge o% t#e P7+ c&aim counter at t#e airport'
Fi&&! 6uevarra %i&&ed up a printed %orm known as a Propert! ,rregu&arit! :eport, acknow&edging one o% t#e
$o?s &uggages to e missing, and signed it a%ter asking $o #imse&% to sign t#e same document' ,n accordance
wit# #is procedure in cases o% t#is nature, Fi&&! 6uevarra asked $o to surrender to #im t#e nine c&aim c#ecks
corresponding to t#e nine &uggages, i'e', inc&uding t#e one t#at was missing' $o, on severa& occasions,
unre&enting&! ca&&ed at P7+?s o%%ice in order to pursue #is comp&aint aout #is missing &uggage ut to no avai&'
T#us, on 14 7pri& 1./4, $o t#roug# #is &aw!er wrote a demand &etter to P7: t#roug# :eecca V' "antos, its
manager %or $entra& 1aggage "ervices' (n 10 7pri& 1./4, :eecca "antos rep&ied to t#e demand &etter
acknow&edging Gt#at to date we #ave een una&e to &ocate !our c&ient?s aggage despite our care%u& searc#<
and re9uesting $o?s counse& to ;p&ease e3tend to #im our sincere apo&ogies %or t#e inconvenience #e was
caused ! t#is un%ortunate incident<' Despite t#e &etter, #owever, P7+ never %ound $o?s missing &uggage or
paid its corresponding va&ue'
(n 3 Ma! 1./4, $o %i&ed a comp&aint against P7+ %or damages' T#e :egiona& Tria& $ourt o% Pasa! $it! %ound
P7+ &ia&e, and rendered Audgment on 3 June 1./>, sentencing P7+ to pa! $o t#e amounts o% (1) P58,0>>'28
! wa! o% actua& damagesC (8) P82,222'22 ! wa! o% e3emp&ar! damagesC (3) P12,222'22 as attorne!?s %eesC
a&& in addition to t#e costs or t#e suit'< T#e court a&so dismissed P7+?s counterc&aim %or &ack o% merit'
(n appea&, and on 1. Ju&! 1./., t#e $ourt o% 7ppea&s a%%irmed in toto t#e tria& court?s award' @ence, t#e
T#e "upreme $ourt denied t#e petition %or review %or &ack o% meritC wit# costs against P7+'
1. :ro$ative value o, :5L1s retrieval report
T#e proative va&ue o% P7+?s retrieva& report was passed upon ! t#e :egiona& Tria& $ourt o% Pasa!
$it!, w#ose %inding was a%%irmed ! t#e $ourt o% 7ppea&s' 7&t#oug# t#e passenger s#ou&d produce #is c&aim
tag i% #e #ad not surrendered it ecause t#ere was no aggage receivedC it wou&d appear t#at t#e passenger
surrendered a&& t#e . c&aim c#ecks corresponding to t#e . &uggages, inc&uding t#e one t#at was missing, to t#e
P7+ o%%icer a%ter accomp&is#ing t#e Propert! ,rregu&arit! :eport, and t#us, it cou&d not e possi&e %or t#e
passenger to produce t#e same in court' ,t is now %or t#e carrier to produce t#e veracit! o% t#eir 1aggage
:etrieva& :eport ! corroorating evidence ot#er t#an testimonies o% t#eir emp&o!ees' "uc# document is
wit#in t#e contro& o% P7+ and necessari&! re9uires ot#er corroorative evidence'
-. :urely ,actual issues not revie.a$le $y t)e court
7ssignments o% error, w#ic# raise pure&! %actua& issues, are not reviewa&e ! t#e "upreme $ourt
("ec' 8, :u&e 54, :u&es o% $ourt)' T#e $ourt reviews on&! 9uestions o% &aw w#ic# must e distinct&! set %ort#
in t#e petition' (@odges vs' Peop&e, >/ P#i&' 10/') F#et#er or not t#e &ost &uggage was ever retrieved ! t#e
passenger, and w#et#er or not t#e actua& and e3emp&ar! damages awarded ! t#e court to #im are reasona&e,
are %actua& issues w#ic# we ma! not pass upon in t#e asence o% specia& circumstances re9uiring a review o%
t#e evidence'
3. Earsa. Convention6 5litalia vs. ;5C not applica$le
,n 7&ita&ia vs' ,7$ (1.8 "$:7 ., 1/, citing Pan 7merican For&d 7irwa!s, ,nc' vs' ,7$, 1>5 "$:7
8>/), t#e Farsaw $onvention &imiting t#e carrier?s &iai&it! was app&ied ecause o% a simp&e &oss o% aggage
wit#out an! improper conduct on t#e part o% t#e o%%icia&s or emp&o!ees o% t#e air&ine, or ot#er specia& inAur!
sustained ! t#e passengers' T#e petitioner t#erein did not dec&are a #ig#er va&ue %or #is &uggage, muc# &ess
did #e pa! an additiona& transportation c#arge'
/. La. o, +estination6 Sa#ar =inin* vs. 7or+eutsc)er Lloy+
,n "amar Mining $ompan!, ,nc' vs' Eordeutsc#er +&o!d (138 "$:7 48.), t#e $ourt ru&ed t#at ;t#e
&iai&it! o% t#e common carrier %or t#e &oss, destruction or deterioration o% goods transported %rom a %oreign
countr! to t#e P#i&ippines is governed primari&! ! t#e Eew $ivi& $ode' ,n a&& matters not regu&ated ! said
$ode, t#e rig#ts and o&igations o% common carriers s#a&& e governed ! t#e $ode o% $ommerce and !
"pecia& +aws'< @erein, since t#e passenger?s destination was t#e P#i&ippines, P#i&ippine &aw governs t#e
&iai&it! o% t#e carrier %or t#e &oss o% t#e passenger?s &uggage'
2. 5rticle 1333 7CC
7rtic&e 1033 provides t#at ;$ommon carriers, %rom t#e nature o% t#eir usiness and %or reasons o%
pu&ic po&ic!, are ound to oserve e3traordinar! di&igence in t#e vigi&ance over t#e goods and %or t#e sa%et!
o% t#e passengers transported ! t#em, according to a&& t#e circumstances o% eac# case'<
. 5rticle 1332 7CC
7rtic&e 1034 provides t#at ;,n a&& cases ot#er t#an t#ose mentioned in Eos' 1, 8, 3, 5 and 4 o% t#e
preceding artic&e i% t#e goods are &ost, destro!ed or deteriorated, common carriers are presumed to #ave een
at %au&t or to #ave acted neg&igent&!, un&ess t#e! prove t#at t#e! oserved e3traordinar! di&igence as re9uired
in artic&e 1033'
3. 5rticle 1323 7CC
7rtic&e 1043 provides t#at ;T#e &aw o% t#e countr! to w#ic# t#e goods are to e transported s#a&&
govern t#e &iai&it! o% t#e common carrier %or t#eir &oss, destruction or deterioration'<
4. 7o error in +isre*ar+in* li#its o, lia$ility un+er Earsa. Convention
@erein, P7+ %ai&ed to overcome, not on&! t#e presumption, ut more important&!, $o?s evidence,
proving t#at t#e carrier?s neg&igence was t#e pro3imate cause o% t#e &oss o% #is aggage' Furt#ermore, P7+
acted in ad %ait# in %aking a retrieva& receipt to ai& itse&% out o% #aving to pa! $o?s c&aim' T#e appe&&ate cout
t#ere%ore did not err in disregarding t#e &imits o% &iai&it! under t#e Farsaw $onvention'
%. 5.ar+ o, exe#plary +a#a*es an+ attorney1s ,ees ?usti,ie+
T#e award o% e3emp&ar! damages and attorne!?s %ees to $o was Austi%ied' ,n t#e cases o% ,mperia&
,nsurance, ,nc' vs' "imon, 188 P#i&' 1/. and 1ert (sme)a and 7ssociates vs' $7, 182 "$:7 3.>, t#e
appe&&ant was awarded attorne!?s %ees ecause o% appe&&ee?s %ai&ure to satis%! t#e %ormer?s Aust and va&id
demanda&e c&aim w#ic# %orced t#e appe&&ant to &itigate' +ikewise, in t#e case o% P#i&' "uret! and ,ns' $o',
,nc' vs' :o!a& (i& Products, 128 P#i&' 38>, t#e $ourt Austi%ied t#e grant o% e3emp&ar! damages and attorne!?s
%ees %or t#e petitioner?s %ai&ure, even re%usa&, to pa! t#e private respondent?s va&id c&aim'
[>], also [133]
(o1les vs. antos
[3-]
Kuisu#$in* vs. C5 (GR 2""3! 1/ Septe#$er 1%%")
&acts' Eorerto Nuisuming, "r' and 6unt#er +oe%%&er were among t#e passengers o% P7+?s Fokker
GFriends#ip? P,$=43> p&ane in its %&ig#t o% > Eovemer 1.>/ w#ic# &e%t Mactan $it! at aout 0:32 in t#e
evening wit# Mani&a %or its destination' 7%ter t#e p&ane #ad taken o%%, F&orencio (' Vi&&arin, a "enior E1,
7gent w#o was a&so a passenger o% t#e said p&ane, noticed a certain GRa&d!,? a suspect in t#e ki&&ing o% Judge
Va&de*, seated at t#e %ront seat near t#e door &eading to t#e cockpit o% t#e p&ane' 7 c#eck ! Vi&&arin wit# t#e
passenger?s ticket in t#e possession o% %&ig#t "tewardess 7nnie 1ontigao, w#o was seated at t#e &ast seat rig#t
row revea&ed t#at GRa&d!? #ad used t#e name G$ardente,? one o% #is a&iases known to Vi&&arin' Vi&&arin a&so
came to know %rom t#e stewardess t#at GRa&d! #ad t#ree companions on oard t#e p&ane' Vi&&arin t#en
scri&ed a note addressed to t#e pi&ot o% t#e p&ane re9uesting t#e &atter to contact E1, dut! agents in Mani&a
%or t#e said agents to ask t#e Director o% t#e E1, to send aout > E1, agents to meet t#e p&ane ecause t#e
suspect in t#e ki&&ing o% Judge Va&de* was on oard' T#e said note was #anded ! Vi&&arin to t#e stewardess
w#o in turn gave t#e same in t#e pi&ot' 7%ter receiving t#e note, w#ic# was aout 14 minutes a%ter take o%%, t#e
pi&ot o% t#e p&ane, $apt' +uis 1onnevie, Jr', came out o% t#e cockpit and sat eside Vi&&arin at t#e rear portion
o% t#e p&ane and e3p&ained t#at #e cou&d not send t#e message ecause it wou&d e #eard ! a&& ground aircra%t
stations' Vi&&arin, #owever, to&d t#e pi&ot o% t#e danger o% commission o% vio&ent acts on oard t#e p&ane ! t#e
notorious GRa&d! and #is t#ree companions' F#i&e t#e pi&ot and Vi&&arin were ta&king, GRa&d!? and one o% #is
companions wa&ked to t#e rear and stood e#ind t#em' $apt' 1onnevie t#en stood up and went ack to t#e
cockpit' GRa&d!? and #is companions returned to t#eir seats, ut a%ter a %ew minutes t#e! moved ack to t#e
rear t#rowing ug&! &ooks at Vi&&arin w#o, sensing danger, stood up and went ack to #is origina& seat across
t#e ais&e on t#e second to t#e &ast seat near t#e window' GRa&d!? and #is companion &ikewise went ack to t#eir
respective seats in %ront'? "oon t#erea%ter an e3c#ange o% guns#ots ensued etween Vi&&arin and GRa&d!? and
t#e &atter?s companions' GRa&d!? announced to t#e passengers and t#e pi&ots in t#e cockpit t#at it was #o&d=up
and ordered t#e pi&ot not to send an! "("' T#e #o&d=uppers divested t#e passengers o% t#eir e&ongings'
"peci%ica&&!, Eorerto Nuisuming, "r' was divested o% Aewe&ries and cas# in t#e tota& amount o% P1/,>42'22
out o% w#ic# recoveries were made amounting to P5,442'22' 6unt#er +oe%%&er was divested o% a wrist watc#,
cas# and a wa&&et in t#e tota& amount o% P1,022'22' 7s a resu&t o% t#e incident, Nuisuming, "r' su%%ered
s#ock, ecause a gun #ad een pointed at #im ! one o% t#e #o&d=uppers' Dpon &anding at t#e Mani&a
,nternationa& 7irport, Ra&d! and #is t#ree companions succeeded in escaping' Demands were t#erea%ter made
on P7+ ! Nuisuming and +oe%%&er ;to indemni%! t#em on t#eir &oss, ut P7+ re%used averring t#at it is not
&ia&e to t#em in &aw or in %act'
Nuisuming and +oe%%&er roug#t suit against P7+ in t#e $Fi o% :i*a&, to recover t#e va&ue o% t#e propert!
&ost ! t#em to t#e roers as we&& as mora& and e3emp&ar! damages, attorne!?s %ees and e3penses o%
&itigation' 7%ter tria&, t#e $F, rendered Audgment dismissing Nuisuming?s and +oe%%&er?s comp&aint wit#
costs against t#em'
Nuisuming and +oe%%&er appea&ed to t#e $ourt o% 7ppea&s' T#e $ourt a%%irmed t#e tria& court?s Audgment'
,nsisting t#at t#e evidence demonstrates neg&igence on t#e part o% t#e P7+ crew ;occurring e%ore and
e3posing t#em to #iAacking,< Nuisuming and +oe%%&er #ave come up to t#e "upreme $ourt pra!ing t#at t#e
Audgments o% t#e tria& $ourt and t#e $ourt o% 7ppea&s e reversed and anot#er rendered in t#eir %avor'
T#e "upreme $ourt denied t#e petition, and a%%irmed t#e appea&ed Decision o% t#e $ourt o% 7ppea&s, wit#
costs against Nuisuming and +oe%%&er'
1. =o+ern +isplay o, irresisti$le ,orce $y )i?ackers
T#e #iAackers do not oard an airp&ane t#roug# a &atant disp&a! o% %irepower and vio&ent %ur!'
Firearms, #and=grenades, d!namite, and e3p&osives are introduced into t#e airp&ane surreptitious&! and wit#
t#e utmost cunning and stea&t#, a&t#oug# t#ere is an occasiona& use o% innocent #ostages w#o wi&& e co&d&!
murdered un&ess a p&ane is given to t#e #iAackers? comp&ete disposa&' T#e oAective o% modern=da! #iAackers is
to disp&a! t#e irresisti&e %orce amounting to %orce maAeure on&! w#en it is most e%%ective and t#at is w#en t#e
Aet&iner is winging its wa! at @ima&a!an a&titudes and i&&=advised #eroics ! eit#er crew or passengers wou&d
send t#e mu&ti=mi&&ion peso airp&ane and t#e price&ess &ives o% a&& its occupants into certain deat# and
destruction'
-. Security #easures #ay #ini#iJe )i?ackin*s $ut #ay prove ine,,ective a*ainst truly +eter#ine+
)i?ackers
T#e mandator! use o% t#e most sop#isticated e&ectronic detection devices and magnetometers, t#e
imposition o% severe pena&ties, t#e deve&opment o% screening procedures, t#e compi&ation o% #iAacker
e#aviora& pro%i&es, t#e assignment o% sk! mars#a&s, and t#e weig#t o% outraged wor&d opinion ma! #ave
minimi*ed #iAackings ut a&& t#ese #ave proved ine%%ective against tru&! determined #iAackers' For&d
e3perience s#ows t#at i% a group o% armed #iAackers want to take over a p&ane in %&ig#t, t#e! can e&ude t#e
&atest comined government and air&ine industr! measures' 7s our own e3perience in Ramoanga $it!
i&&ustrates, t#e use o% %orce to overcome #iAackers, resu&ts in t#e deat# and inAur! o% innocent passengers and
crew memers' T#is does not suggest, #owever, t#at t#e P#i&ippine 7ir&ines s#ou&d not do ever!t#ing #uman&!
possi&e to protect passengers %rom #iAackers? acts'
3. 5cts o, airline an+ cre.! .)ile co#plyin* .it) re9uire#ents o, *overn#ent a*encies! cannot $e
,aulte+ as ne*li*ence
F#ere t#e air&ine #as %ait#%u&&! comp&ied wit# t#e re9uirements o% government agencies and ad#ered
to t#e esta&is#ed procedures and precautions o% t#e air&ine industr! at an! particu&ar time, its %ai&ure to take
certain steps t#at a passenger in #indsig#t e&ieves s#ou&d #ave een taken is not t#e neg&igence or
misconduct w#ic# ming&es wit# %orce maAeure as an active and cooperative cause' @erein, t#e acts o% t#e
air&ine and its crew cannot e %au&ted as neg&igence' T#e #iAackers #ad a&read! s#own t#eir wi&&ingness to ki&&
one passenger was in %act ki&&ed and anot#er survived guns#ot wounds' T#e &ives o% t#e rest o% t#e passengers
and crew were more important t#an t#eir properties' $ooperation wit# t#e #iAackers unti& t#e! re&eased t#eir
#ostages at t#e runwa! end near t#e "out# "uper#ig#wa! was dictated ! t#e circumstances'
/. Fn+er t)e ,acts! @t)e )i*)?ackin*>ro$$ery .as ,orce #a?eureA
T#e evidence does %ai& to prove an! want o% di&igence on t#e part o% P7+, or t#at, more speci%ica&&!, it
#ad %ai&ed to comp&! wit# app&ica&e regu&ations or universa&&! accepted and oserved procedures to prec&ude
#iAackingC and t#at t#e particu&ar acts sing&ed out ! Nuisuming and +oe%%&er as supposed&! demonstrative o%
neg&igence were, in t#e &ig#t o% t#e circumstances o% t#e case, not in trut# neg&igent acts ;su%%icient to
overcome t#e %orce maAeure nature o% t#e armed roer!'<
[33]
:an5# Eorl+ 5ir.ays vs. Rapa+as (GR "33! 1% =ay 1%%-)
T#ird Division, 6utierre* Jr' (J): 5 concur
&acts' (n 1> Januar! 1.04, Jose P' :apadas #e&d Passenger Ticket and 1aggage $&aim $#eck 28>=
3.5/322/5=4 %or Pan 7merican For&d 7irwa!s ,nc'?s (Pan7m) F&ig#t /51 wit# t#e route %rom 6uam to
Mani&a' F#i&e standing in &ine to oard t#e %&ig#t at t#e 6uam airport, :apadas was ordered ! Pan7m?s
#andcarr! contro& agent to c#eck=in #is "amsonite attac#e case' :apadas protested pointing to t#e %act t#at
ot#er co=passengers were permitted to #andcarr! u&kier aggages' @e stepped out o% t#e &ine on&! to go ack
again at t#e end o% it to tr! i% #e can get t#roug# wit#out #aving to register #is attac#e case' @owever, t#e
same man in c#arge o% #andcarr! contro& did not %ai& to notice #im and ordered #im again to register #is
aggage' For %ear t#at #e wou&d miss t#e p&ane i% #e insisted and argued on persona&&! taking t#e va&ise wit#
#im, #e acceded to c#ecking it in' @e t#en gave #is attac#e case to #is rot#er w#o #appened to e around and
w#o c#ecked it in %or #im, ut wit#out dec&aring its contents or t#e va&ue o% its contents' @e was given a
1aggage $&aim Tag P=05.=013' Dpon arriving in Mani&a on t#e same date, 1> Januar! 1.04, :apadas c&aimed
and was given a&& #is c#ecked=in aggages e3cept t#e attac#e case' "ince :apadas %e&t i&& on #is arriva&, #e
sent #is son, Jorge :apadas to re9uest %or t#e searc# o% t#e missing &uggage' Pan7m e3erted e%%orts to &ocate
t#e &uggage t#roug# t#e Pan 7merican For&d 7irwa!s=Mani&a ,nternationa& 7irport (P7E 7M=M,7) 1aggage
"ervice' (n 32 Januar! 1.04, Pan7m re9uired t#e :apadas to put t#e re9uest in writing' :apadas %i&&ed in a
1aggage $&aim 1&ank Form' T#erea%ter, :apadas persona&&! %o&&owed up #is c&aim' For severa& times, #e
ca&&ed up Mr' Panue&os, t#e #ead o% t#e 1aggage "ection o% P7E 7M' @e a&so sent &etters demanding and
reminding t#e petitioner o% #is c&aim' :apadas received a &etter %rom Pan7m?s counse& dated 8 7ugust 1.04
o%%ering to sett&e t#e c&aim %or t#e sum o% K1>2'22 representing Pan7m?s a&&eged &imit o% &iai&it! %or &oss or
damage to a passenger?s persona& propert! under t#e contract o% carriage etween :apadas and P7E7M'
:e%using to accept t#is kind o% sett&ement, :apadas %i&ed t#e instant action %or damages on 1 (ctoer 1.04'
:apadas a&&eged t#at Pan7m discriminated or sing&ed #im out in ordering t#at #is &uggage e c#ecked in' @e
a&so a&&eged t#at Pan7m neg&ected its dut! in t#e #and&ing and sa%ekeeping o% #is attac#e case %rom t#e point
o% emarkation in 6uam to #is destination in Mani&a' @e p&aced t#e va&ue o% t#e &ost attac#e case and its
contents at D"K58,523'.2' 7ccording to #im, t#e &oss resu&ted in #is %ai&ure to pa! certain monetar!
o&igations, %ai&ure to remit mone! sent t#roug# #im to re&atives, inai&it! to enAo! t#e %ruits o% #is retirement
and vacation pa! earned %rom working in Tonga $onstruction $ompan! (#e retired in 7ugust 1.05) and
inai&it! to return to Tonga to comp&! wit# t#en e3isting contracts' T#e &ower court ru&ed in %avor o%
comp&ainant :apadas a%ter %inding no stipu&ation giving notice to t#e aggage &iai&it! &imitation' T#e court
reAected t#e c&aim o% Pan7m t#at its &iai&it! under t#e terms o% t#e passenger ticket is on&! up to K1>2'22'
@owever, it scrutini*ed a&& t#e c&aims o% :apadas' ,t discredited insu%%icient evidence to s#ow discriminator!
acts or ad %ait# on t#e part o% Pan7m' T#e tria& court ordered Pan7m to pa! :apadas ! wa! o% actua&
damages t#e e9uiva&ent peso va&ue o% t#e amount o% K4,88/'.2 and 122 paengs (Tongan mone!), nomina&
damages in t#e amount o% P82,222'22 and attorne!?s %ees o% P4,222'22, and t#e costs o% t#e suit' T#e tria&
court a&so dismissed Pan7m?s counterc&aim'
(n appea&, t#e $ourt o% 7ppea&s a%%irmed t#e tria& court decision' @ence, t#e petition %or review'
T#e "upreme $ourt granted t#e petition, and reversed and set aside t#e decision o% t#e $ourt o% 7ppea&s' T#e
$ourt ordered Pan7m to pa! :apadas damages in t#e amount o% D"K522'22 or its e9uiva&ent in P#i&ippine
$urrenc! at t#e time o% actua& pa!ment, P12,222'22 in attorne!?s %ees, and costs o% t#e suit'
1. 7otice o, li#ite+ lia$ility in airline ticket
@erein, t#ere was suc# a Eotice appearing on page two (8) o% t#e air&ine ticket stating t#at t#e Farsaw
$onvention governs in case o% deat# or inAur! to a passenger or o% &oss, damage or destruction to a
passenger?s &uggage' T#e Eotice states t#at ;,% t#e passenger?s Aourne! invo&ves an u&timate destination or
stop in a countr! ot#er t#an t#e countr! o% departure t#e Farsaw $onvention ma! e app&ica&e and t#e
$onvention governs and in most cases &imits t#e &iai&it! o% carriers %or deat# or persona& inAur! and in respect
o% &oss o% or damage to aggage' "ee a&so notice #eaded ;7dvice to ,nternationa& Passengers on +imitation o%
+iai&it!'< (T#e &atter notice re%ers to &imited &iai&it! %or deat# or persona& inAur! to passengers wit# proven
damages not e3ceeding D" K04,222 per passenger)' Furt#ermore, paragrap# 8 o% t#e ;$onditions o%
$ontracts< a&so appearing on page 8 o% t#e ticket states t#at ;(8) $arriage #ereunder is suAect to t#e ru&es and
&imitations re&ating to &iai&it! esta&is#ed ! t#e Farsaw $onvention un&ess suc# carriage is not Ginternationa&
carriage? as de%ined ! t#at $onvention'<
-. :ara*rap) - o, Con+itions o, Contract su,,icient notice o, applica$ility o, Earsa. li#itations
@erein, t#e origina& o% t#e Passenger Ticket and 1aggage $#eck 28>=3.5/322/5=4 itse&% was not
presented as evidence as it was among t#ose returned to Mr' Faupu&a (o% t#e Dnion "team "#ip $ompan! o%
Eew Rea&and, +td', TongaC w#o %aci&itated t#e issuance o% t#e tickets on credit)' T#us, apart %rom t#e evidence
o%%ered ! t#e air&ine, t#e &ower court #ad no ot#er asis %or determining w#et#er or not t#ere was actua&&! a
stipu&ation on t#e speci%ic amounts Pan7m #ad e3pressed itse&% to e &ia&e %or &oss o% aggage' 7&t#oug# t#e
tria& court reAected t#e evidence o% t#e Pan7m o% a stipu&ation particu&ar&! speci%!ing w#at amounts it #ad
ound itse&% to pa! %or &oss o% &uggage, t#e Eotice and paragrap# 8 o% t#e ;$onditions o% $ontract< s#ou&d e
su%%icient notice s#owing t#e app&icai&it! o% t#e Farsaw &imitations'
3. Earsa. Convention! 5rticle 1! para*rap) -
T#e Farsaw $onvention, as amended, speci%ica&&! provides t#at it is app&ica&e to internationa&
carriage w#ic# it de%ines in 7rtic&e 1, par' 8 as %o&&ows, ;(8) For t#e purposes o% t#is $onvention, t#e
e3pression Ginternationa& carriage? means an! carriage in w#ic#, according to t#e agreement etween t#e
parties, t#e p&ace o% departure and t#e p&ace o% destination, w#et#er or not t#ere e a reac# in t#e carriage or
a transs#ipment, are situated eit#er wit#in t#e territories o% two @ig# $ontracting Parties or wit#in t#e
territor! o% a sing&e @ig# $ontracting Part! i% t#ere is an agreed stopping p&ace wit#in t#e territor! o% anot#er
"tate, even i% t#at "tate is not a @ig# $ontracting Part!' $arriage etween two points wit#in t#e territor! o% a
(ransportation La.! -""/ ( 1%" )
sing&e @ig# $ontracting Part! wit#out an agreed stopping p&ace wit#in t#e territor! o% anot#er "tate is not
internationa& carriage %or t#e purposes o% t#is $onvention'< (;@ig# $ontracting Part!< re%ers to a state w#ic#
#as rati%ied or ad#ered to t#e $onvention, or w#ic# #as not e%%ective&! denounced t#e $onvention L7rtic&e
527 (1)M)<
/. 7o +etaile+ notice o, $a**a*e lia$ility re9uire+6 5rticle -- (-) o, Convention
Eow#ere in t#e Farsaw $onvention, as amended, is suc# a detai&ed notice o% aggage &iai&it!
&imitations re9uired' Eevert#e&ess, it s#ou&d ecome a common, sa%e and practica& custom among air carriers
to indicate e%ore#and t#e precise sums e9uiva&ent to t#ose %i3ed ! 7rtic&e 88 (8) o% t#e $onvention'
2. :assen*er ticket co#plies .it) 5rticle 3! para*rap) 1(c) o, t)e Earsa. Convention
T#e $onvention governs t#e avai&ment o% t#e &iai&it! &imitations w#ere t#e aggage c#eck is
comined wit# or incorporated in t#e passenger ticket w#ic# comp&ies wit# t#e provisions o% 7rtic&e 3, par'
1(c)' (7rtic&e 5, par' 8) @erein, t#e aggage c#eck is comined wit# t#e passenger ticket in one document o%
carriage' T#e passenger ticket comp&ies wit# 7rtic&e 3, par' 1(c) w#ic# provides: ;(1) ,n respect o% t#e carriage
o% passengers a ticket s#a&& e de&ivered containing: 333 (c) a notice to t#e e%%ect t#at, i% t#e passenger?s
Aourne! invo&ves an u&timate destination or stop in a countr! ot#er t#an t#e countr! o% departure, t#e Farsaw
$onvention ma! e app&ica&e and t#at t#e $onvention governs and in most cases &imits t#e &iai&it! o%
carriers %or deat# or persona& inAur! and in respect o% &oss o% or damage to aggage'<
. Contracts o, a+)esion6 8n* Hiu vs. C5! an+ :an5# vs. ;5C
7s #e&d in t#e case o% (ng Oiu v' $ourt o% 7ppea&s, supra, and reiterated in Pan 7merican For&d
7irwa!s v' ,ntermediate 7ppe&&ate $ourt (1>5 "$:7 8>/ L1.//M) t#at ;,t (p&ane ticket) is w#at is known as a
contract o% Gad#esion?, in regards w#ic# it #as een said t#at contracts o% ad#esion w#erein one part! imposes
a read! made %orm o% contract on t#e ot#er, as t#e p&ane ticket in t#e case at ar, are contracts not entire&!
pro#iited' T#e one w#o ad#eres to t#e contract is in rea&it! %ree to reAect it entire&!C i% #e ad#eres, #e gives #is
consent' 7nd as #e&d in :ando&p# v' 7merican 7ir&ines, 123 (#io 7pp' 108, 155 E'B' 8d /0/C :osenc#ein v'
Trans For&d 7ir&ines, ,nc', 35. "'F' 8d 5/3, Ga contract &imiting &iai&it! upon an agreed va&uation does not
o%%end against t#e po&ic! o% t#e &aw %oridding one %rom contracting against #is own neg&igence'?<
3. Contracts o, a+)esion not pro)i$ite+6 Blin+ reliance not encoura*e+
F#i&e contracts o% ad#esion are not entire&! pro#iited, neit#er is a &ind re&iance on t#em
encouraged' ,n t#e %ace o% %acts and circumstances s#owing t#e! s#ou&d e ignored ecause o% t#eir asica&&!
one sided nature, t#e $ourt does not #esitate to ru&e out &ind ad#erence to t#eir terms' ("ee "weet +ines, ,nc'
v' Teves, /3 "$:7 3>1, 3>/=3>. L1.0/M)
4. :assen*er expecte+ to $e vi*ilant inso,ar as )is lu**a*e is concerne+
T#e provisions in t#e p&ane ticket su%%icient to govern t#e &imitations o% &iai&ities o% t#e air&ine %or
&oss o% &uggage' T#e passenger, upon contracting wit# t#e air&ine and receiving t#e p&ane ticket, was e3pected
to e vigi&ant inso%ar as #is &uggage is concerned' ,% t#e passenger %ai&s to adduce evidence to overcome t#e
stipu&ations, #e cannot avoid t#e app&ication o% t#e &iai&it! &imitations' @erein, :apadas actua&&! re%used to
register t#e attac#e case and c#ose to take it wit# #im despite #aving een ordered ! t#e Pan7m agent to
c#eck it in' ,n attempting to avoid registering t#e &uggage ! going ack to t#e &ine, :apadas mani%ested a
disregard o% air&ine ru&es on a&&owa&e #andcarried aggages' Prudence o% a reasona&! care%u& person a&so
dictates t#at cas# and Aewe&r! s#ou&d e removed %rom c#ecked=in=&uggage and p&aced in one?s pockets or in a
#andcarried Mani&a=paper or p&astic enve&ope'
%. 5lle*e+ lack o, enou*) ti#e to #ake +eclaration o, )i*)er value an+ pay#ent o, c)ar*es not a
+e,ense
T#e a&&eged &ack o% enoug# time %or #im to make a dec&aration o% a #ig#er va&ue and to pa! t#e
corresponding supp&ementar! c#arges cannot Austi%! #is %ai&ure to comp&! wit# t#e re9uirement t#at wi&&
(ransportation La.! -""/ ( 1%1 )
e3c&ude t#e app&ication o% &imited &iai&it!' @ad #e not wavered in #is decision to register #is &uggage, #e
cou&d #ave #ad enoug# time to disc&ose t#e true wort# o% t#e artic&es in it and to pa! t#e e3tra c#arges or
remove t#em %rom t#e c#ecked=in=&uggage' Moreover, an airp&ane wi&& not depart meantime t#at its own
emp&o!ee is asking a passenger to comp&! wit# a sa%et! regu&ation'
1". 7o proo, o, ar$itrary $e)avior6 Carrier not lia$le ,or +iscri#ination or #istreat#ent
Passengers are a&so a&&owed one #andcarried ag eac# provided it con%orms to certain prescried
dimensions' ,% Mr' :apadas was not a&&owed to #andcarr! t#e &ost attac#e case, it can on&! mean t#at #e was
carr!ing more t#an t#e a&&owa&e weig#t %or a&& #is &uggages or more t#an t#e a&&owa&e numer o%
#andcarried items or more t#an t#e prescried dimensions %or t#e ag or va&ise' T#e evidence on an! aritrar!
e#avior o% a Pan 7m emp&o!ee or ine3cusa&e neg&igence on t#e part o% t#e carrier is not c&ear %rom t#e
petition' 7sent suc# proo%, t#e $ourt cannot #o&d t#e carrier &ia&e ecause o% aritrariness, discrimination, or
mistreatment'
11. Reason $e)in+ li#ite+ lia$ility clauses
1! no means is it suggested t#at passengers are a&wa!s ound to t#e stipu&ated amounts printed on a
ticket, %ound in a contract o% ad#esion, or printed e&sew#ere ut re%erred to in #andouts or %orms' T#e $ourt
simp&! recogni*e t#at t#e reasons e#ind stipu&ations on &iai&it! &imitations arise %rom t#e di%%icu&t!, i% not
impossii&it!, o% esta&is#ing wit# a c&ear preponderance o% evidence t#e contents o% a &ost va&ise or suitcase'
Dn&ess t#e contents are dec&ared, it wi&& a&wa!s e t#e word o% a passenger against t#at o% t#e air&ine' ,% t#e
&oss o% &i%e or propert! is caused ! t#e gross neg&igence or aritrar! acts o% t#e air&ine or t#e contents o% t#e
&ost &uggage are proved ! satis%actor! evidence ot#er t#an t#e se&%=serving dec&arations o% one part!, t#e
$ourt wi&& not #esitate to disregard t#e %ine print in a contract o% ad#esion' ("ee "weet +ines ,nc' v' Teves,
supra) (t#erwise, t#e $ourt is constrained to ru&e t#at it #as to en%orce t#e contract as it is t#e on&! reasona&e
asis to arrive at a Aust award'
1-. (rial Court1s ,in+in* on t)e a#ount lost is #ore o, a pro$a$ility t)an a prove+ conclusion
T#e conc&usion o% t#e tria& court does not arise %rom t#e %acts' T#at t#e attac#e case was origina&&!
#andcarried does not eg t#e conc&usion t#at t#e amount o% K5,042'22 in cas# cou&d #ave een p&aced inside'
,t ma! e noted t#at out o% a c&aim %or D"K58,523'.2 as t#e amount &ost, t#e tria& court %ound %or on&!
D"K4,88/'.2 and 122 paengs' T#e court #ad douts as to t#e tota& c&aim'
13. Lost lu**a*e consi+ere+ as unc)ecke+ lu**a*e6 P/""."" instea+ o, P1"
T#e &ost &uggage was dec&ared as weig#ing around 1/ pounds or appro3imate&! / ki&ograms' 7t
K82'22 per ki&ogram, Pan 7m o%%ered to pa! K1>2'22 as a #ig#er va&ue was not dec&ared in advance and
additiona& c#arges were not paid' T#e $ourt notes, #owever, t#at an amount o% K522'22 per passenger is
a&&owed %or unc#ecked &uggage' "ince t#e c#ecking=in was against t#e wi&& o% :apadas, t#e $ourt treats t#e
&ost ag as partaking o% invo&untari&! and #urried&! c#ecked=in &uggage and continuing its ear&ier status as
unc#ecked &uggage' T#e %air &iai&it! under Pan7m?s own printed terms is K522'22'
1/. <a#a*es not supporte+ $y ,actual $asis
"ince t#e tria& court ru&ed out discriminator! acts or ad %ait# on t#e part o% Pan 7m or ot#er reasons
warranting damages, t#ere is no %actua& asis %or t#e grant o% P82,222'22 damages'
12. Earsa. convention +oes not preclu+e a.ar+ o, attorney1s ,ees
,t is Aust and e9uita&e %or :apadas to recover e3penses %or &itigation in t#e amount o% P4,222'22'
7rtic&e 88 (5) o% t#e Farsaw $onvention, as amended does not prec&uded an award o% attorne!?s %ees' T#at
provision states t#at t#e &imits o% &iai&it! prescried in t#e instrument ;s#a&& not prevent t#e court %rom
awarding, in accordance wit# its own &aw, in addition, t#e w#o&e or part o% t#e court costs and ot#er e3penses
o% &itigation incurred ! t#e p&ainti%%'< T#e $ourt, #owever, raise t#e award to P12,222'22 considering t#e
resort to t#e $ourt o% 7ppea&s and t#e "upreme $ourt'
(ransportation La.! -""/ ( 1%- )
[3/]
:5L vs. C5 (GR 1-"--! 13 Buly 1%%3)
"econd Division, :ega&ado (J): 8 concur, 1 took no part, 1 on &eave
&acts' (n 83 (ctoer 1.//, +eovigi&do 7' PanteAo, t#en $it! Fisca& o% "urigao $it!, oarded a P7+ p&ane in
Mani&a and disemarked in $eu $it! w#ere #e was supposed to take #is connecting %&ig#t to "urigao $it!'
@owever, due to t!p#oon (sang, t#e connecting %&ig#t to "urigao $it! was cance&&ed' To accommodate t#e
needs o% its stranded passengers, P7+ initia&&! gave out cas# assistance o% P 122'22 and, t#e ne3t da!,
P822'22, %or t#eir e3pected sta! o% 8 da!s in $eu' PanteAo re9uested instead t#at #e e i&&eted in a #ote& at
t#e P7+?s e3pense ecause #e did not #ave cas# wit# #im at t#at time, ut P7+ re%used' T#us, PanteAo was
%orced to seek and accept t#e generosit! o% a co=passenger, an engineer named 7ndoni Dum&ao, and #e s#ared
a room wit# t#e &atter at "k! View @ote& wit# t#e promise to pa! #is s#are o% t#e e3penses upon reac#ing
"urigao' (n 84 (ctoer 1.// w#en t#e %&ig#t %or "urigao was resumed, PanteAo came to know t#at t#e #ote&
e3penses o% #is co=passengers, one "uperintendent Brnesto 6on*a&es and a certain Mrs' 6&oria :oc#a, an
7uditor o% t#e P#i&ippine Eationa& 1ank, were reimursed ! P7+' 7t t#is point, PanteAo in%ormed (scar
Jere*a, P7+?s Manager %or Departure "ervices at Mactan 7irport and w#o was in c#arge o% cance&&ed %&ig#ts,
t#at #e was going to sue t#e air&ine %or discriminating against #im' ,t was on&! t#en t#at Jere*a o%%ered to pa!
PanteAo P322'22 w#ic#, due to t#e ordea& and anguis# #e #ad undergone, t#e &atter dec&ined'
PanteAo %i&ed a suit %or damages against P7+ wit# t#e :T$ o% "urigao $it! (1ranc# 32)' (n 1/ Marc# 1..1,
t#e tria& court rendered Audgment, ordering P7+ to pa! PanteAo P322'22 %or actua& damages, P142,222'22 as
mora& damages, P122,222'22 as e3emp&ar! damages, P14,222'22 as attorne!?s %ees, and >I interest %rom t#e
time o% t#e %i&ing o% t#e comp&aint unti& said amounts s#a&& #ave een %u&&! paid, p&us costs o% suit'
(n appea&, and 8. Decemer 1..5, t#e appe&&ate court a%%irmed t#e decision o% t#e court a 9uo, ut wit# t#e
e3c&usion o% t#e award o% attorne!?s %ees and &itigation e3penses' @ence, t#e appea& ! certiorari'
T#e "upreme $ourt a%%irmed t#e c#a&&enged Audgment o% $ourt o% 7ppea&s, suAect to t#e modi%ication
regarding t#e computation o% t#e >I &ega& rate o% interest on t#e monetar! awards granted t#erein to PanteAo'
1. Contract to transport passen*er +i,,erent ,or any ot)er contractual relation
7 contract to transport passengers is 9uite di%%erent in kind and degree %rom an! ot#er contractua&
re&ation, and t#is is ecause o% t#e re&ation w#ic# an air carrier sustains wit# t#e pu&ic' ,ts usiness is main&!
wit# t#e trave&&ing pu&ic' ,t invites peop&e to avai& o% t#e com%orts and advantages it o%%ers' T#e contract o%
air carriage, t#ere%ore, generates a re&ation attended wit# a pu&ic dut!' Eeg&ect or ma&%easance o% t#e carrier?s
emp&o!ees natura&&! cou&d give ground %or an action %or damages'
-. Circu#stance taken into consi+eration ,or lo.er court to +eclare $a+ ,ait) existe+
,n dec&aring t#at ad %ait# e3isted, t#e appe&&ate court took into consideration t#e %o&&owing %actua&
circumstances: (1) $ontrar! to P7+?s c&aim t#at cas# assistance was given instead ecause o% non=avai&ai&it!
o% rooms in #ote&s w#ere P7+ #ad e3isting tie=ups, t#e evidence s#ows t#at "k! View @ote&, w#ere PanteAo
was i&&eted, #ad p&ent! o% rooms avai&a&e' (8) ,t is not true t#at t#e P322'22 paid to Brnesto 6on*a&es, a co=
passenger o% PanteAo, was a re%und %or #is p&ane ticket, t#e trut# eing t#at it was a reimursement %or #ote&
and mea& e3penses' (3) ,t is &ikewise not denied t#at said 6on*a&es and PanteAo came to know aout t#e
reimursements on&! ecause anot#er passenger, Mrs' :oc#a, in%ormed t#em t#at s#e was a&e to otain t#e
re%und %or #er own #ote& e3penses' (5) P7+ o%%ered to pa! P322'22 to PanteAo on&! a%ter #e #ad con%ronted t#e
air&ine?s manager aout t#e discrimination committed against #im, w#ic# t#e &atter rea&i*ed was an actiona&e
wrong' (4) "ervice Vouc#er 1..341, presented ! P7+ to prove t#at it gave cas# assistance to its passengers,
was ased mere&! on t#e &ist o% passengers a&read! given cas# assistance and was purported&! prepared at
around 12:22 7'M' o% 83 (ctoer 1.//' T#is was 8 #ours e%ore PanteAo came to know o% t#e cance&&ation o%
#is %&ig#t to "urigao, #ence PanteAo cou&d not #ave possi&! re%used t#e same'
3. &actual ,in+in*s o, lo.er courts $in+in* upon t)e Supre#e Court
1ot# t#e tria& court and t#e $ourt o% 7ppea&s %ound t#at P7+ acted in ad %ait# in re%using to provide
#ote& accommodations %or PanteAo or to reimurse #im %or #ote& e3penses incurred despite and in contrast to
t#e %act t#at ot#er passengers were so %avored' T#ese %actua& %indings, w#ic# are supported ! sustantia&
evidence, are inding, %ina& and conc&usive upon t#e "upreme $ourt asent an! reason, and t#e $ourt %ind
none, w#! t#is sett&ed evidentia& ru&e s#ou&d not app&!'
/. 5ssu#in* )otel acco##o+ations or cas) assistance #erely privile*e! no reason ,or
+iscri#inatory an+ pre?u+icial con+uct
7ssuming arguendo t#at t#e #ote& accommodations or cas# assistance given in case a %&ig#t is
cance&&ed is in t#e nature o% an amenit! and is mere&! a privi&ege t#at ma! e e3tended at its own discretion,
ut never a rig#t t#at ma! e demanded ! its passengers, and t#at t#e air&ine passengers #ave no vested rig#t
to t#e amenities in case a %&ig#t is cance&&ed due to %orce maAeure, w#at makes P7+ &ia&e %or damages in t#e
present case and under t#e %acts otaining #erein is its &atant re%usa& to accord t#e so=ca&&ed amenities e9ua&&!
to a&& its stranded passengers w#o were ound %or "urigao $it!' Eo compe&&ing or Austi%!ing reason was
advanced %or suc# discriminator! and preAudicia& conduct'
2. Stan+ar+ co#pany policy as to cas) assistance an+ )otel acco##o+ations6 (esti#ony relatin*
to sai+ ,act
,t #as een su%%icient&! esta&is#ed t#at it is P7+?s standard compan! po&ic!, w#enever a %&ig#t #as
een cance&&ed, to e3tend to its #ap&ess passengers cas# assistance or to provide t#em accommodations in
#ote&s wit# w#ic# it #as e3isting tie=ups' (1) P7+?s Mactan 7irport Manager %or departure services, (scar
Jere*a, admitted t#at t#e P7+ #as an e3isting arrangement wit# #ote& to accommodate stranded passengers,
and t#at t#e #ote& i&&s o% Brnesto 6on*a&es were reimursed ovious&! pursuant to t#at po&ic!' (8) Two
witnesses presented ! PanteAo, Teresita 7*arcon and Eerie 1o&, testi%ied t#at sometime in Eovemer, 1.//,
w#en t#eir %&ig#t %rom $eu to "urigao was cance&&ed, t#e! were i&&eted at :aAa# @ote& %or two nig#ts and
t#ree da!s at t#e e3pense o% P7+' T#is was never denied ! P7+' (3) Brnesto 6on*a&es, PanteAo?s co=
passenger on t#at %ate%u& %&ig#t, testi%ied t#at ased on #is previous e3perience #ote& accommodations were
e3tended ! P7+ to its stranded passengers eit#er in Mage&&an or :aAa# @ote&s, or even in $eu P&a*a' T#us,
t#e $ourt views as impressed wit# duiet! P7+?s present attempt to represent suc# emergenc! assistance as
eing mere&! e3 gratia and not e3 deito'
. :assen*ers not +uly in,or#e+6 ;n,erior 9uality o, service an+ pro,essionalis#
F#i&e P7+ insists t#at t#e passengers were du&! in%ormed t#at t#e! wou&d e reimursed %or t#eir
#ote& e3penses, it misera&! and signi%icant&! %ai&ed to e3p&ain w#! t#e ot#er passengers were given
reimursements w#i&e PanteAo was not' 7&t#oug# 6on*a&es was suse9uent&! given a re%und, t#is was on&! so
ecause #e came to know aout it ! accident t#roug# Mrs' :oc#a' P7+ cou&d on&! o%%er t#e strained and
%&ims! prete3t t#at possi&! t#e passengers were not &istening w#en t#e announcement was made' T#is is
asurd ecause w#en PanteAo came to know t#at #is %&ig#t #ad een cance&&ed, #e immediate&! proceeded to
P7+?s o%%ice and re9uested %or #ote& accommodations' @e was not on&! re%used accommodations, ut #e was
not even in%ormed t#at #e ma! &ater on e reimursed %or #is #ote& e3penses' T#is e3p&ains w#! #is co=
passenger, 7ndoni Dum&ao, o%%ered to answer %or PanteAo?s #ote& i&& and t#e &atter promised to pa! #im w#en
t#e! arrive in "urigao' @ad ot# known t#at t#e! wou&d e reimursed ! t#e air&ine, suc# arrangement wou&d
not #ave een necessar!'T#ere%ore, t#e re%und o% #ote& e3penses was surreptitious&! and discriminatori&! made
! P7+ since t#e same was not made known to ever!one, e3cept t#roug# word o% mout# to a #and%u& o%
passengers' T#is is a sad commentar! on t#e 9ua&it! o% service and pro%essiona&ism o% an air&ine compan!,
w#ic# is t#e countr!?s %&ag carrier at t#at'
(ransportation La.! -""/ ( 1%/ )
3. :5L acte+ in $a+ ,ait)
@erein, P7+ acted in ad %ait# in disregarding its duties as a common carrier to its passengers and in
discriminating against PanteAo' ,t was even o&ivious to t#e %act t#at PanteAo was e3posed to #umi&iation and
emarrassment especia&&! ecause o% #is government position and socia& prominence, w#ic# a&toget#er
necessari&! suAected #im to ridicu&e, s#ame and anguis#' ,t remains uncontroverted t#at at t#e time o% t#e
incident, PanteAo was t#en t#e $it! Prosecutor o% "urigao $it!, and t#at #e is a memer o% t#e P#i&ippine
Ja!cee "enate, past +t' 6overnor o% t#e Piwanis $&u o% "urigao, a past Master o% t#e Mount Diwata +odge
o% Free Masons o% t#e P#i&ippines, memer o% t#e P#i&ippine Eationa& :ed $ross, "urigao $#apter, and past
$#airman o% t#e 1o! "cout o% t#e P#i&ippines, "urigao de& Eorte $#apter'
4. Re,usal o, :ante?o o, o,,ere+ a#ount ?usti,ie+
@erein, PanteAo #ad ever! rig#t to make suc# re%usa& since it evident&! cou&d not meet #is needs and
t#at was a&& t#at P7+ c&aimed it cou&d o%%er' @is re%usa& to accept t#e P322'22 pro%%ered as an a%tert#oug#t
w#en #e t#reatened suit was Austi%ied ! #is resentment w#en #e e&ated&! %ound out t#at #is co=passengers
were reimursed %or #ote& e3penses and #e was not' Forse, #e wou&d not even #ave known aout it were it
not %or a co=passenger w#o vera&&! to&d #im t#at s#e was reimursed ! t#e air&ine %or #ote& and mea&
e3penses' ,t ma! even e said t#at t#e amounts, t#e time and t#e circumstances under w#ic# t#ose amounts
were o%%ered cou&d not so&ve t#e mora& wounds in%&icted ! P7+ on PanteAo ut even appro3imated insu&t
added to inAur!'
%. <iscri#inatory act #akes :5L lia$le ,or #oral +a#a*es6 5litalia 5ir.ays vs. C5
T#e discriminator! act o% P7+ against PanteAo ine&udi&! makes t#e %ormer &ia&e %or mora& damages
under 7rtic&e 81 in re&ation to 7rtic&e 881. (12) o% t#e $ivi& $ode' 7s #e&d in 7&ita&ia 7irwa!s vs' $7, et a&',
suc# inattention to and &ack o% care ! t#e air&ine %or t#e interest o% its passengers w#o are entit&ed to its
utmost consideration, particu&ar&! as to t#eir convenience, amount to ad %ait# w#ic# entit&es t#e passenger to
t#e award o% mora& damages'
1". :urpose o, #oral +a#a*es
Mora& damages are emp#atica&&! not intended to enric# a p&ainti%% at t#e e3pense o% t#e de%endant'
T#e! are awarded on&! to a&&ow t#e %ormer to otain means, diversion, or amusements t#at wi&& serve to
a&&eviate t#e mora& su%%ering #e #as undergone due to t#e de%endant?s cu&pa&e action and must, per%orce, e
proportiona& to t#e su%%ering in%&icted' @owever, sustantia& damages do not trans&ate into e3cessive damages'
@erein, e3cept %or attorne!?s %ees and costs o% suit, it wi&& e noted t#at t#e $ourts o% 7ppea&s a%%irmed point
! point t#e %actua& %indings o% t#e &ower court upon w#ic# t#e award o% damages #ad een ased'
11. 5.ar+s ,or actual! #oral an+ exe#plary +a#a*es ?ust an+ e9uita$le6 (ravellin* pu$lic s)oul+
$e a,,or+e+ protection an+ +uties o, co##on carriers en,orce+
Dnder t#e pecu&iar circumstances o% t#e case, t#e awards %or actua&, mora& and e3emp&ar! damages
granted in t#e Audgment o% t#e &ower court, %or t#e reasons meticu&ous&! ana&!*ed and t#oroug#&! e3p&ained in
its decision, are Aust and e9uita&e' ,t is #ig# time t#at t#e trave&&ing pu&ic is a%%orded protection and t#at t#e
duties o% common carriers, &ong detai&ed in our previous &aws and Aurisprudence and t#erea%ter co&&ated and
specia&&! cata&ogued in our $ivi& $ode in 1.42, e en%orced t#roug# appropriate sanctions'
1-. ;nterest co#pute+ ,ro# +ate o, ren+ition o, ?u+*#ent an+ not ,ro# ,ilin* o, co#plaint6 Dastern
S)ippin* Lines vs. C5
T#e interest o% >I imposed ! t#e court s#ou&d e computed %rom t#e date o% rendition o% Audgment
and not %rom t#e %i&ing o% t#e comp&aint' T#e ru&e #as een &aid down in Bastern "#ipping +ines, ,nc' vs'
$ourt o% 7ppea&s, et a&' t#at ;w#en an o&igation, not constituting a &oan or %orearance o% mone!, is reac#ed,
an interest on t#e amount o% damages awarded ma! e imposed at t#e discretion o% t#e court at t#e rate o% >I
per annum' Eo interest, #owever, s#a&& e adAudged on un&i9uidated c&aims or damages e3cept w#en or unti&
t#e demand can e esta&is#ed wit# reasona&e certaint!' 7ccording&!, w#ere t#e demand is esta&is#ed wit#
reasona&e certaint!, t#e interest s#a&& egin to run %rom t#e time t#e c&aim is made Audicia&&! or
e3traAudicia&&! (7rt' 11>., $ivi& $ode) ut w#en suc# certaint! cannot e so reasona&! esta&is#ed at t#e time
t#e demand is made, t#e interest s#a&& egin to run on&! %rom t#e date t#e Audgment o% t#e court is made (at
w#ic# time t#e 9uanti%ication o% damages ma! e deemed to #ave een reasona&! ascertained)' T#e actua&
ase %or t#e computation o% &ega& interest s#a&&, in an! case, e on t#e amount %ina&&! adAudged'< T#is is
ecause at t#e time o% t#e %i&&ing o% t#e comp&aint, t#e amount o% t#e damages to w#ic# PanteAo ma! e
entit&ed remains un&i9uidated and not known, unti& it is de%inite&! ascertained, assessed and determined ! t#e
court, and on&! a%ter t#e presentation o% proo% t#ereon'
[32]
Bali.a* (ransit vs. C5 (GR 1111"! 12 =ay 1%%)
"econd Division, Puno (J): 5 concur
&acts' (n 31 Ju&! 1./2, +eticia 6arcia, and #er 4=!ear o&d son, 7&&an 6arcia, oarded 1a&iwag Transit 1us
823> ound %or $aanatuan $it! driven ! Jaime "antiago' T#e! took t#e seat e#ind t#e driver' 7t aout
0:32 p'm', in Ma&ima, 6apan, Eueva BciAa, t#e us passengers saw a cargo truck, owned ! 7 T J Trading,
parked at t#e s#ou&der o% t#e nationa& #ig#wa!' ,ts &e%t rear portion Autted to t#e outer &ane, as t#e s#ou&der o%
t#e road was too narrow to accommodate t#e w#o&e truck' 7 kerosene &amp appeared at t#e edge o% t#e road
ovious&! to serve as a warning device' T#e truck driver, Ju&io :econti9ue, and #is #e&per, 7rturo Bsca&a, were
t#en rep&acing a %&at tire' 1us driver "antiago was driving at an inordinate&! %ast speed and %ai&ed to notice t#e
truck and t#e kerosene &amp at t#e edge o% t#e road' "antiago?s passengers urged #im to s&ow down ut #e
paid t#em no #eed' "antiago even carried animated conversations wit# #is co=emp&o!ees w#i&e driving' F#en
t#e danger o% co&&ision ecame imminent, t#e us passengers s#outed ;1aangga ta!oX<' "antiago stepped on
t#e rake, ut it was too &ate' @is us rammed into t#e sta&&ed cargo truck' ,t caused t#e instant deat# o%
"antiago and Bsca&a, and inAur! to severa& ot#ers' +eticia and 7&&an 6arcia were among t#e inAured
passengers' +eticia su%%ered a %racture in #er pe&vis and rig#t &eg' T#e! rus#ed #er to t#e provincia& #ospita& in
$aanatuan $it! w#ere s#e was given emergenc! treatment' 7%ter 3 da!s, s#e was trans%erred to t#e Eationa&
(rt#opedic @ospita& w#ere s#e was con%ined %or more t#an a mont#' "#e underwent an operation %or partia&
#ip prost#esis' 7&&an, on t#e ot#er #and, roke a &eg' @e was a&so given emergenc! treatment at t#e provincia&
#ospita&'
"pouses 7ntonio and +eticia 6arcia sued 1a&iwag Transit, ,nc', 7 T J Trading and Ju&io :econti9ue %or
damages in t#e :T$ o% 1u&acan' +eticia sued as an inAured passenger o% 1a&iwag and as mot#er o% 7&&an' 7t
t#e time o% t#e comp&aint, 7&&an was a minor, #ence, t#e suit initiated ! #is parents in #is %avor' 7%ter
#earing, t#e tria& court %ound 1a&iwag Transit, ,nc' &ia&e %or #aving %ai&ed to de&iver 6arcia and #er son to
t#eir point o% destination sa%e&! in vio&ation o% 6arcia?s and 1a&iwag Transit?s contractua& re&ationC and
&ikewise %ound 7 T J and Ju&io :econti9ue &ia&e %or %ai&ure to provide its cargo truck wit# an ear&! warning
device in vio&ation o% t#e Motor Ve#ic&e +aw' T#e tria& court ordered 1a&iwag, 7 T J Trading and :econti9ue
to pa! Aoint&! and severa&&! t#e 6arcia spouses (1) P84,222'22 #ospita&i*ation and medication %ee, (8)
P542,222'22 &oss o% earnings in eig#t (/) !ears, (3) P8,222'22 %or t#e #ospita&i*ation o% t#eir son 7&&an 6arcia,
(5) P42,222'22 mora& damages, and (4) P32,222'22 attorne!?s %ee'
(n appea&, t#e $ourt o% 7ppea&s modi%ied t#e tria& court?s Decision ! aso&ving 7 T J Trading %rom &iai&it!
and ! reducing t#e award o% attorne!?s %ees to P12,222'22 and &oss o% earnings to P322,222'22, respective&!'
@ence, t#e petition %or certiorari'
T#e "upreme $ourt a%%irmed t#e Decision o% t#e $ourt o% 7ppea&s ($7=6: $V=3185>) wit# t#e modi%ication
reducing t#e actua& damages %or #ospita&i*ation and medica& %ees to P4,210'05C wit#out costs'
1. <uty o, a co##on carrier6 <ili*ence re9uire+6 :resu#ption o, ne*li*ence6 Bur+en o, :roo,
7s a common carrier, 1a&iwag reac#ed its contract o% carriage w#en it %ai&ed to de&iver its
passengers, +eticia and 7&&an 6arcia to t#eir destination sa%e and sound' 7 common carrier is ound to carr!
its passengers sa%e&! as %ar as #uman care and %oresig#t can provide, using t#e utmost di&igence o% a ver!
cautious person, wit# due regard %or a&& t#e circumstances' ,n a contract o% carriage, it is presumed t#at t#e
common carrier was at %au&t or was neg&igent w#en a passenger dies or is inAured' Dn&ess t#e presumption is
reutted, t#e court need not even make an e3press %inding o% %au&t or neg&igence on t#e part o% t#e common
carrier' T#is statutor! presumption ma! on&! e overcome ! evidence t#at t#e carrier e3ercised e3traordinar!
di&igence as prescried in 7rtic&es 1033 and 1044 o% t#e $ivi& $ode'
-. Bali.a* +i+ not exercise extraor+inary +ili*ence6 <river .as reckless
T#e records are ere%t o% an! proo% to s#ow t#at 1a&iwag e3ercised e3traordinar! di&igence' (n t#e
contrar!, t#e evidence demonstrates its driver?s reck&essness' +eticia 6arcia testi%ied t#at t#e us was running
at a ver! #ig# speed despite t#e dri**&e and t#e darkness o% t#e #ig#wa!' T#e passengers p&eaded %or its driver
to s&ow down, ut t#eir p&ea was ignored' +eticia a&so revea&ed t#at t#e driver was sme&&ing o% &i9uor' "#e
cou&d sme&& #im as s#e was seated rig#t e#ind t#e driver' 7not#er passenger, Fe&i3 $ru* testi%ied t#at
immediate&! e%ore t#e co&&ision, t#e us driver was conversing wit# a co=emp&o!ee' 7&& t#ese prove t#e us
driver?s wanton disregard %or t#e p#!sica& sa%et! o% #is passengers, w#ic# makes 1a&iwag as a common carrier
&ia&e %or damages under 7rtic&e 104. o% t#e $ivi& $ode'
3. 5rticle 132%! 7CC
7rtic&e 104. o% t#e $ivi& $ode provides t#at ;$ommon carriers are &ia&e %or t#e deat# o% or inAuries
to passengers t#roug# t#e neg&igence or wi&&%u&& acts o% t#e %ormer?s emp&o!ees, a&t#oug# suc# emp&o!ees
ma! #ave acted e!ond t#e scope o% t#eir aut#orit! or in vio&ation o% t#e orders o% t#e common carriers' T#is
&iai&it! o% t#e common carriers do not cease upon proo% t#at t#e! e3ercised a&& t#e di&igence o% a good %at#er
o% a %ami&! in t#e se&ection or supervision o% t#eir emp&o!ees'<
/. Section 3/ (*) o, t)e Lan+ (ransportation an+ (ra,,ic Co+e
"ection 35 (g) o% t#e +and Transportation and Tra%%ic $ode provides ;+ig#ts and re%&ector w#en
parked or disa&ed' H 7ppropriate parking &ig#ts or %&ares visi&e one #undred meters awa! s#a&& e disp&a!ed
at t#e corner o% t#e ve#ic&e w#enever suc# ve#ic&e is parked on #ig#wa!s or in p&aces t#at are not we&&=&ig#ted
or, is p&aced in suc# manner as to endanger passing tra%%ic' Furt#ermore, ever! motor ve#ic&e s#a&& e
provided at a&& times wit# ui&t=in re%&ectors or ot#er simi&ar warning devices eit#er pasted, painted or attac#ed
at its %ront and ack w#ic# s#a&& &ikewise e visi&e at nig#t at &east one #undred meters awa!' Eo ve#ic&e not
provided wit# an! o% t#e re9uirements mentioned in t#is susection s#a&& e registered' ;
/. Fse o, kerosene la#p a su$stantial co#pliance o, la. as to early .arnin* +evice
@erein, 1a&iwag cannot evade its &iai&it! ! insisting t#at t#e accident was caused so&e&! ! t#e
neg&igence o% 7 T J Trading and Ju&io :econti9ue, %or t#e a&&eged non use o% an ear&! warning device (as
testi%ied to ! $o&' Demetrio de&a $ru*, t#e station commander o% 6apan, Eueva BciAa w#o investigated t#e
incident, and Francisco :omano, t#e us conductor)' T#e records do not ear out 1a&iwag?s contention' $o&'
de&a $ru* and :omano testi%ied t#at t#e! did not see an! ear&! warning device at t#e scene o% t#e accident'
T#e! were re%erring to t#e triangu&ar re%&ectori*ed p&ates in red and !e&&ow issued ! t#e +and Transportation
(%%ice' @owever, t#e evidence s#ows t#at :econti9ue and Bca&a p&aced a kerosene &amp or torc# at t#e edge
o% t#e road, near t#e rear portion o% t#e truck to serve as an ear&! warning device' T#is sustantia&&! comp&ies
wit# "ection 35 (g) o% t#e +and Transportation and Tra%%ic $ode' T#e &aw c&ear&! a&&ows t#e use not on&! o% an
ear&! warning device o% t#e triangu&ar re%&ectori*ed p&ates variet! ut a&so parking &ig#ts or %&ares visi&e 122
meters awa!' ,ndeed, $o&' de&a $ru* #imse&% admitted t#at a kerosene &amp is an accepta&e sustitute %or t#e
re%&ectori*ed p&ates' Eo neg&igence, t#ere%ore, ma! e imputed to 7 T J Trading and its driver, :econti9ue'
2. (esti#ony o, in?ure+ passen*ers an+ +isintereste+ .itnesses a*ainst testi#ony o, $us con+uctor
T#e testimonies o% inAured passengers w#o ma! we&& e considered as disinterested witness appear to
e natura& and more proa&e t#an t#e testimon! given ! Francisco :omano w#o is undouted&! interested in
t#e outcome o% t#e case, eing t#e conductor o% 1a&iwag Transit ,nc' T#us, among t#e testimonies o%%ered !
t#e witnesses w#o were present at t#e scene o% t#e accident, t#e a%%irmative testimonies given ! t#e two
inAured passengers must e up#e&d and &ess credence must e given to t#e testimon! o% t#e us conductor w#o
so&e&! testi%ied t#at no suc# ear&! warning device e3ists'
. (esti#ony supportin* parke+ truck notice+ in +riJJly an+ +ark ni*)t +ue to kerosene la#p
T#e situation t#en prevai&ing at t#e time o% t#e accident was admitted&! dri**&! and a&& dark' T#is
eing so, it wou&d e improa&e and per#aps impossi&e on t#e part o% t#e truck #e&per wit#out t#e torc# nor
t#e kerosene to remove t#e %&at tires o% t#e truck' Moreover, witness inc&uding t#e us conductor #imse&%
admitted t#at t#e passengers s#outed, t#at t#e! are going to ump e%ore t#e co&&ision w#ic# conse9uent&!
caused t#e us driver to app&! t#e rake 3 to 5 meters awa! %rom t#e truck' 7gain, wit#out t#e kerosene nor
t#e torc# in %ront o% t#e truck, it wou&d e improa&e %or t#e driver, more so t#e passengers to notice t#e truck
to e umped ! t#e us considering t#e darkness o% t#e p&ace at t#e time o% t#e accident'
3. (esti#ony o, investi*atin* o,,icer o, little pro$ative value
7&t#oug# t#at t#e investigating o%%icer testi%ied t#at #e %ound no ear&! warning device at t#e time o%
#is investigation, t#e $ourt gives &ess credence to suc# testimon! inso%ar as #e #imse&% admitted on cross
e3amination t#at #e did not notice t#e presence o% an! kerosene &amp at t#e ack o% t#e truck ecause w#en #e
arrived at t#e scene o% t#e accident, t#ere were a&read! man! peop&e surrounding t#e p&ace' @e %urt#er
admitted t#at t#ere e3ists a proai&it! t#at t#e &ig#ts o% t#e truck ma! #ave een smas#ed ! t#e us at t#e
time o% t#e accident considering t#e &ocation o% t#e truck w#ere its rear portion was connected wit# t#e %ront
portion o% t#e us' ,nvestigator?s testimon! t#ere%ore did not con%irm nor den! t#e e3istence o% suc# warning
device, making #is testimon! o% &itt&e proative va&ue'
4. 5.ar+ o, :-2!""" as )ospitaliJation an+ #e+ical ,ees not supporte+ $y evi+ence6 Re+uce+ to
:2!"13.3/
T#e award o% P84,222'22, as #ospita&i*ation and medica& %ees, is not supported ! t#e evidence on
record' T#e 6arcias presented receipts ut t#eir tota& amounted on&! to P4,210'05' To e sure, +eticia testi%ied
as to t#e e3tra amount spent %or #er medica& needs ut wit#out more re&ia&e evidence, #er &one testimon!
cannot Austi%! t#e award o% P84,222'22' To prove actua& damages, t#e est evidence avai&a&e to t#e inAured
part! must e presented' T#e court cannot re&! on uncorroorated testimon! w#ose trut# is suspect, ut must
depend upon competent proo% t#at damages #ave een actua&&! su%%ered' T#us, #erein, t#e $ourt reduced t#e
actua& damages %or medica& and #ospita&i*ation e3penses to P4,210'05'
%. 5.ar+ ,or a#ount representin* lost earnin*s reasona$le
T#e award o% P322,222'22 representing +eticia?s &ost earnings is reasona&e' 1e%ore t#e accident,
+eticia was engaged in emroider!, earning P4,222'22 per mont#' @er inAuries %orced #er to stop working'
$onsidering t#e nature and e3tent o% #er inAuries and t#e &engt# o% time it wou&d take #er to recover, t#e $ourt
%ound it proper t#at 1a&iwag s#ou&d compensate #er &ost income %or 4 !ears'
1". 5.ar+ o, #oral +a#a*es in accor+ .it) la.
T#e award o% mora& damages is in accord wit# &aw' ,n a reac# o% contract o% carriage, mora& damages
are recovera&e i% t#e carrier, t#roug# its agent, acted %raudu&ent&! or in ad %ait#' T#e evidence s#ows t#e
gross neg&igence o% t#e driver o% 1a&iwag us w#ic# amounted to ad %ait#' Fit#out dout, +eticia and 7&&an
e3perienced p#!sica& su%%ering, menta& anguis# and serious an3iet! ! reason o% t#e accident' +eticia
underwent an operation to rep&ace #er roken #ip one wit# a meta& p&ate' "#e was con%ined at t#e Eationa&
(rt#opedic @ospita& %or 54 da!s' T#e !oung 7&&an was a&so con%ined in t#e #ospita& %or #is %oot inAur!'
$ontrar! to t#e contention o% 1a&iwag, t#e award o% mora& damages to 7ntonio and +eticia 6arcia was not in
t#eir capacit! as parents o% 7&&an' +eticia was given mora& damages as an inAured part!' 7&&an was a&so
granted mora& damages as an inAured part! ut ecause o% #is minorit!, t#e award in #is %avor #as to e given
to #is %at#er w#o represented #im in t#e suit'
11. 5.ar+ o, attorney1s ,ees ?usti,ie+
T#e award o% attorne!?s %ees is Austi%ied' T#e comp&aint %or damages was instituted ! t#e 6arcia
spouses on 14 Decemer 1./8, %o&&owing t#e unAusti%ied re%usa& o% 1a&iwag to sett&e t#eir c&aim' T#e Decision
was promu&gated ! t#e tria& court on&! on 8. Januar! 1..1 or aout . !ears &ater' Eumerous p&eadings were
%i&ed e%ore t#e tria& court, t#e appe&&ate court and to t#e "upreme $ourt' 6iven t#e comp&e3it! o% t#e case and
t#e amount o% damages invo&ved, t#e award o% attorne!?s %ee %or P12,222'22 is Aust and reasona&e'
[3]
=ecenas vs. C5 (GR 44"2-! 1/ <ece#$er 1%4%)
&acts' 7t >:82 a'm' o% 88 7pri& 1./2, t#e M-T ;Tac&oan $it!,< a arge=t!pe oi& tanker o% P#i&ippine registr!,
wit# a gross tonnage o% 1,851'>/ tons, owned ! t#e P#i&ippine Eationa& (i& $ompan! (PE($) and operated
! t#e PE($ "#ipping and Transport $orporation (PE($ "#ipping), #aving un&oaded its cargo o% petro&eum
products, &e%t 7m&an, Eegros (ccidenta&, and #eaded towards 1ataan' 7t aout 1:22 p'm' o% t#at same da!, t#e
M-V ;Don Juan,< an inter=is&and vesse&, a&so o% P#i&ippine registr!, o% 8,3.1'31 tons gross weig#t, owned and
operated ! t#e Eegros Eavigation $o', ,nc' (Eegros Eavigation) &e%t Mani&a ound %or 1aco&od wit# 042
passengers &isted in its mani%est, and a comp&ete set o% o%%icers and crew memers' 7t aout 12:32 p'm', t#e
;Tac&oan $it!< and t#e ;Don Juan< co&&ided at t#e Ta&as "trait near Maestra de (campo ,s&and in t#e
vicinit! o% t#e is&and o% Mindoro' F#en t#e co&&ision occurred, t#e sea was ca&m, t#e weat#er %air and
visii&it! good' 7s a resu&t o% t#is co&&ision, t#e M-V ;Don Juan< sank and #undreds o% its passengers
peris#ed' 7mong t#e i&&=%ated passengers were t#e spouses Per%ecto Mecenas and "o%ia Mecenas, w#ose
odies were never %ound despite intensive searc# ! t#eir c#i&dren, Jose, :omeo, +i&ia, (r&ando, Vio&eta
(7cervo), +u*viminda, and (%e&ia (Javier)'
(n 8. Decemer 1./2, t#e Mecenas %i&ed a comp&aint in t#e t#en $ourt o% First ,nstance o% Nue*on $it!
($ivi& $ase N=31484), against Eegros Eavigation and $apt' :oger "antistean, t#e captain o% t#e ;Don Juan<
wit#out, #owever, imp&eading eit#er PE($ or PE($ "#ipping' T#e c#i&dren pra!ed %or actua& damages o%
not &ess t#an P122,222'22 as we&& as mora& and e3emp&ar! damages in suc# amount as t#e $ourt ma! deem
reasona&e to award to t#em' 7not#er comp&aint ($ivi& $ase N=33.38), was %i&ed in t#e same court ! +i&ia
$iocon c&aiming damages against Eegros Eavigation, PE($ and PE($ "#ipping %or t#e deat# o% #er
#usand Manue& $iocon, anot#er o% t#e &uck&ess passengers o% t#e ;Don Juan'< Manue& $iocon?s od!, too,
was never %ound' T#e 8 cases were conso&idated and #eard Aoint&! ! t#e :egiona& Tria& $ourt o% Nue*on $it!,
1ranc# /8' (n 10 Ju&! 1./>, a%ter tria&, t#e tria& court rendered a decision, ordering (a) Eegros Eavigation
and $apt' "antistean Aoint&! and severa&&! &ia&e to pa! t#e Mecenas, t#e sum o% P522,222'22 %or t#e deat# o%
t#eir parents, Per%ecto 7' Mecenas and "o%ia P' MecenasC to pa! t#e Mecenas t#e sum o% P14,222'22 as and
%or attorne!?s %eesC p&us costs o% t#e suitC () eac# o% Eegros Eavigation PE($-PE($ "#ipping to pa!
$iocon t#e sum o% P122,222'22 %or t#e deat# o% Manue& $iocon, to pa! $iocon Aoint&! and severa&&!, t#e sum
o% P14,222'22 as and %or attorne!?s %ees, p&us costs o% t#e suit'
Eegros Eavigation, $apt' "antistean, PE($ and PE($ "#ipping appea&ed t#e tria& court?s decision to t#e
$ourt o% 7ppea&s' +ater, PE($ and PE($ "#ipping wit#drew t#eir appea& citing a compromise agreement
reac#ed ! t#em wit# Eegros EavigationC t#e $ourt o% 7ppea&s granted t#e motion ! a reso&ution dated 4
"eptemer 1.//, suAect to t#e reservation made ! +i&ia $iocon t#at s#e cou&d not e ound ! t#e
compromise agreement and wou&d en%orce t#e award granted #er ! t#e tria& court' ,n time, t#e $ourt o%
7ppea&s rendered a decision dated 8> Januar! 1./., a%%irming t#e decision o% t#e &ower court wit#
modi%ication wit# respect to $ivi& $ase 31484, w#erein Eegros Eavigation and $apt' "antistean are #e&d
(ransportation La.! -""/ ( 1%% )
Aoint&! and severa&&! &ia&e to pa! t#e Mecenas t#e amount o% P122,222'22 as actua& and compensator!
damages and P14,222'22 as attorne!?s %ees and t#e cost o% t#e suit' T#e Mecenas %i&ed a petition %or review in
&ig#t o% t#e reduction o% t#e amount o% damages awarded'
T#e "upreme $ourt granted t#e Petition %or :eview on $ertiorari, reversed and set aside t#e Decision o% t#e
$ourt o% 7ppea&s inso%ar as it reduced t#e amount o% damages awarded to t#e Mecenas to P122,222'22C
restored t#e award granted ! t#e tria& court and augmented as %o&&ows: (a) P18>,222'22 %or actua& damagesC
() P>2,222'22 as compensator! damages %or wrong%u& deat#C (c) P320,222'22 as mora& damagesC (d)
P320,222'22 as e3emp&ar! damages making a tota& o% P/22,222'22C and (e) P14,222'22 as attorne!?s %ees' T#e
$ourt a&so ordered t#e Mecenas to pa! t#e additiona& %i&ing %ees proper&! due and pa!a&e in view o% t#e
award made, w#ic# %ees s#a&& e computed ! t#e $&erk o% $ourt o% t#e tria& court, and s#a&& constitute a &ien
upon t#e Audgment awardedC wit# costs against Eegros Eavigation and $apt' "antistean'
1. =ecenas suit $ase+ on $reac) o, contract o, carria*e! not 9uasi>+elict
1ot# t#e tria& court and t#e $ourt o% 7ppea&s considered t#e action ($ivi& $ase N=31484) roug#t !
t#e sons and daug#ters o% t#e deceased Mecenas spouses against Eegros Eavigation as ased on 9uasi=de&ict'
T#e action, #owever, is more appropriate&! regarded as grounded on contract, t#e contract o% carriage etween
t#e Mecenas spouses as regu&ar passengers w#o paid %or t#eir oat tickets and Eegros EavigationC t#e
surviving c#i&dren w#i&e not t#emse&ves passengers are in e%%ect suing t#e carrier in representation o% t#eir
deceased parents'
-. Ciocon suit $ase+ on $ot) contract (7e*ros 7avi*ation) an+ 9uasi>+elict (:78C an+ :78C
S)ippin*)
T#e suit ($ivi& $ase N=33.38) %i&ed ! t#e widow +i&ia $iocon was correct&! treated ! t#e tria& and
appe&&ate courts as ased on contract (vis=a=vis Eegros Eavigation) and as we&& on 9uasi=de&ict (vis=a=vis
PE($ and PE($ "#ipping)'
3. Lia$ility o, co##on carrier in action $ase+ upon $reac) o, contract o, carria*e
,n an action ased upon a reac# o% t#e contract o% carriage, t#e carrier under our civi& &aw is &ia&e %or
t#e deat# o% passengers arising %rom t#e neg&igence or wi&%u& act o% t#e carrier?s emp&o!ees a&t#oug# suc#
emp&o!ees ma! #ave acted e!ond t#e scope o% t#eir aut#orit! or even in vio&ation o% t#e instructions o% t#e
carrier, w#ic# &iai&it! ma! inc&ude &iai&it! %or mora& damages'
/. 5rticle --3- 7CC
7rtic&e 8338 o% t#e $ivi& $ode provides t#at ;,n contracts and 9uasi=contracts, t#e court ma! award
e3emp&ar! damages i% t#e de%endant acted in a wanton, %raudu&ent, reck&ess, oppressive or ma&evo&ent
manner'<
2. Bot) vessels at ,ault
T#e t#en $ommandant o% t#e P#i&ippine $oast 6uard, $ommodore 1'$' (c#oco, in a decision dated
8 Marc# 1./1, #e&d t#at t#e ;Tac&oan $it!< was ;primari&! and so&e&! LsicM at %au&t and responsi&e %or t#e
co&&ision'< ,nitia&&!, t#e Minister o% Eationa& De%ense up#e&d t#e decision o% $ommodore (c#oco' (n Motion
%or :econsideration, #owever, t#e Minister o% Eationa& De%ense reversed #imse&% and #e&d t#at ot# vesse&s
#ad een at %au&t' T#e tria& court, a%ter a review o% t#e evidence sumitted during t#e tria&, arrived at t#e same
conc&usion t#at t#e Minister o% Eationa& De%ense #ad reac#ed t#at ot# t#e ;Tac&oan $it!< and t#e ;Don
Juan< were at %au&t in t#e co&&ision' T#e tria& court %ound t#at ;M-V Don Juan and Tac&oan $it! ecame
aware o% eac# ot#er?s presence in t#e area ! visua& contact at a distance o% somet#ing &ike > mi&es %rom eac#
ot#er' T#e! were %u&&! aware t#at i% t#e! continued on t#eir course, t#e! wi&& meet #ead on' Don Juan steered
to t#e rig#tC Tac&oan $it! continued its course to t#e &e%t' T#ere can e no e3cuse %or t#em not to rea&i*e t#at,
wit# suc# maneuvers, t#e! wi&& co&&ide' T#e! e3ecuted maneuvers inade9uate, and too &ate, to avoid
co&&ision'< T#e! are t#us e9ua&&! neg&igent and are &ia&e %or damages' T#e $ourt o% 7ppea&s, %or its part,
(ransportation La.! -""/ ( -"" )
reac#ed t#e same conc&usion' T#ere is, t#ere%ore, no 9uestion t#at t#e ;Don Juan< was at &east as neg&igent as
t#e M-T ;Tac&oan $it!< in t#e events &eading up to t#e co&&ision and t#e sinking o% t#e ;Don Juan'<
. &act pointin* to ne*li*ence reac)in* level o, recklessness or *ross ne*li*ence6 Captain an+ cre.
playin* #a)?on*
T#e report o% t#e P#i&ippine $oast 6uard $ommandant set out t#at t#ere #ad een %au&t or neg&igence
on t#e part o% $apt' "antistean and #is o%%icers and crew e%ore t#e co&&ision and immediate&! a%ter contact o%
t#e 8vesse&s' T#e decision o% $ommodore (c#oco said ;M" Don Juan?s Master, $apt' :oge&io "antistean,
was p&a!ing ma#Aong e%ore and up to t#e time o% co&&ision' Moreover, a%ter t#e co&&ision, #e %ai&ed to institute
appropriate measures to de&a! t#e sinking o% M" Don Juan and to supervise proper&! t#e e3ecution o% #is
order o% aandons#ip' 7s regards t#e o%%icer on watc#, "enior 3rd Mate :oge&io Devera, #e admitted t#at #e
%ai&ed or did not ca&& or in%orm $apt' "antistean o% t#e imminent danger o% co&&ision and o% t#e actua&
co&&ision itse&% ' 7&so, #e %ai&ed to assist #is master to prevent t#e %ast sinking o% t#e s#ip' T#e record a&so
indicates t#at 7u3i&iar! $#ie% Mate 7ntonio +aordo disp&a!ed &a3it! in maintaining order among t#e
passengers a%ter t#e co&&ision'< T#e e#aviour o% t#e captain o% t#e ;Don Juan< in t#is instance H p&a!ing
ma#Aong ;e%ore and up to t#e time o% co&&ision< H constitutes e#aviour t#at is simp&! unaccepta&e on t#e
part o% t#e master o% a vesse& to w#ose #ands t#e &ives and we&%are o% at &east 042 passengers #ad een
entrusted'
3. 7o suc) t)in* as @o,,>+utyA )ours ,or #aster o, a vessel
F#et#er or not $apt' "antistean was ;o%%=dut!< or ;on=dut!< at or around t#e time o% actua& co&&ision
is 9uite immateria&C t#ere is, ot# rea&istica&&! speaking and in contemp&ation o% &aw, no suc# t#ing as ;o%%=
dut!< #ours %or t#e master o% a vesse& at sea t#at is a common carrier upon w#om t#e &aw imposes t#e dut! o%
e3traordinar! di&igence, i'e' ;t#e dut! to carr! t#e passengers sa%e&! as %ar as #uman care and %oresig#t can
provide, using t#e utmost di&igence o% ver! cautious persons, wit# a due regard %or a&& t#e circumstances'< T#e
record does not s#ow t#at was t#e %irst or on&! time t#at $apt' "antistean #ad entertained #imse&% during a
vo!age ! p&a!ing ma#Aong wit# #is o%%icers and passengersC Eegros Eavigation in permitting, or in %ai&ing to
discover and correct suc# e#aviour, must e deemed gross&! neg&igent'
4. Captain ,aile+ to #aintain sea.ort)iness o, @<on BuanA
$apt' "antistean was a&so %au&ted in t#e P#i&ippine $oast 6uard decision %or %ai&ing a%ter t#e
co&&ision, ;to institute appropriate measures to de&a! t#e sinking o% M-V Don Juan'< T#is appears to us to e a
eup#emism %or %ai&ure to maintain t#e seawort#iness or t#e water=tig#t integrit! o% t#e ;Don Juan'< T#e record
s#ows t#at t#e ;Don Juan< sank wit#in 12 to 14 minutes a%ter initia& contact wit# t#e ;Tac&oan $it!'< F#i&e
t#e %ai&ure o% $apt' "antistean to supervise #is o%%icers and crew in t#e process o% aandoning t#e s#ip and
#is %ai&ure to avai& o% measures to prevent t#e too rapid sinking o% #is vesse& a%ter co&&ision, did not cause t#e
co&&ision ! t#emse&ves, suc# %ai&ures dout&ess contriuted materia&&! to t#e conse9uent &oss o% &i%e and,
moreover, were indicative o% t#e kind and &eve& o% di&igence e3ercised ! $apt' "antistean in respect o% #is
vesse& and #is o%%icers and men prior to actua& contact etween t#e 8 vesse&s' T#e o%%icer=on=watc# in t#e
;Don Juan< admitted t#at #e #ad %ai&ed to in%orm $apt' "antistean not on&! o% t#e ;imminent danger o%
co&&ision< ut even o% ;t#e actua& co&&ision itse&%'<
%. @<on BuanA carryin* #ore passen*ers t)an .)at it is certi,ie+ to carry
T#e ;Don Juan< was carr!ing more passengers t#an s#e #ad een certi%ied as a&&owed to carr!' T#e
$erti%icate o% ,nspection, dated 80 7ugust 1.0., issued ! t#e P#i&ippine $oast 6uard $ommander at ,&oi&o
$it!, t#e Don Juan?s #ome port, states ;Passengers a&&owed: /12, Tota& Persons 7&&owed: />5'< T#e report o%
t#e P#i&ippine $oast 6uard stated t#at t#e ;Don Juan< #ad een ;o%%icia&&! c&eared wit# /0/ passengers on=
oard w#en s#e sai&ed %rom t#e port o% Mani&a on 88 7pri& 1./2 at aout 1:22 p'm'< T#is #ead=count o% t#e
passengers ;did not inc&ude t#e 18> crew memers, c#i&dren e&ow 3 !ears o&d and 8 #a&%=pa!ing passengers<
w#ic# #ad een counted as one adu&t passenger' T#us, t#e tota& numer o% persons on oard t#e ;Don Juan<
on t#at i&&=starred nig#t o% 88 7pri& 1./2 was 1,225, or 152 persons more t#an t#e ma3imum numer t#at
(ransportation La.! -""/ ( -"1 )
cou&d e sa%e&! carried ! t#e ;Don Juan,< per its own $erti%icate o% ,nspection' ,n addition, t#at on&! 042
passengers #ad een &isted in its mani%est %or its %ina& vo!ageC in ot#er words, at &east 18/ passengers on oard
#ad not even een entered into t#e ;Don Juan?s< mani%est' T#e ;Don Juan?s< $erti%icate o% ,nspection s#owed
t#at s#e carried &i%e oat and &i%e ra%t accommodations %or on&! />5 persons, t#e ma3imum numer o% persons
s#e was permitted to carr!C in ot#er words, s#e did not carr! enoug# oats and &i%e ra%ts %or a&& t#e persons
actua&&! on oard t#at tragic nig#t o% 88 7pri& 1./2'
1". @<on BuanA *rossly ne*li*ent
T#e grossness o% t#e neg&igence o% t#e ;Don Juan< is underscored ! t#e %acts: (1) T#e ;Don Juan<
was more t#an twice as %ast as t#e ;Tac&oan $it!'< T#e ;Don Juan?s< top speed was 10 knotsC w#i&e t#at o%
t#e ;Tac&oan $it!< was >'3' knots' (8) T#e ;Don Juan< carried t#e %u&& comp&ement o% o%%icers and crew
memers speci%ied %or a passenger vesse& o% #er c&ass' (3) T#e ;Don Juan< was e9uipped wit# radar w#ic#
was %unctioning t#at nig#t' (5) T#e ;Don Juan?s< o%%icer on=watc# #ad sig#ted t#e ;Tac&oan $it!< on #is
radar screen w#i&e t#e &atter was sti&& 5 nautica& mi&es awa!' Visua& con%irmation o% radar contact was
esta&is#ed ! t#e ;Don Juan< w#i&e t#e ;Tac&oan $it!< was sti&& 8'0 mi&es awa!' ,n t#e tota& set o%
circumstances w#ic# e3isted, t#e ;Don Juan,< #ad it taken serious&! its dut! o% e3traordinar! di&igence, cou&d
#ave easi&! avoided t#e co&&ision wit# t#e ;Tac&oan $it!'< ,ndeed, t#e ;Don Juan< mig#t we&& #ave avoided
t#e co&&ision even i% it #ad e3ercised ordinar! di&igence mere&!'
11. Rule 14 o, t)e ;nternational Rules o, t)e Roa+ are not to $e o$eye+ an+ construe+ .it)out
re*ar+ to all circu#stances atten+ant
,t is true t#at t#e ;Tac&oan $it!< %ai&ed to %o&&ow :u&e 1/ o% t#e ,nternationa& :u&es o% t#e :oad
w#ic# re9uires 8 power=driven vesse&s meeting end on or near&! end on eac# to a&ter #er course to staroard
(rig#t) so t#at eac# vesse& ma! pass on t#e port side (&e%t) o% t#e ot#er' T#e ;Tac&oan $it!,< w#en t#e 8
vesse&s were on&! 2'3 o% a mi&e apart, turned (%or t#e second time) 143 to port side w#i&e t#e ;Don Juan<
veered #ard to staroard' T#is circumstance, w#i&e it ma! #ave made t#e co&&ision immediate&! inevita&e,
cannot, #owever, e viewed in iso&ation %rom t#e rest o% t#e %actua& circumstances otaining e%ore and up to
t#e co&&ision' ,n an! case, :u&e 1/ &ike a&& ot#er ,nternationa& :u&es o% t#e :oad, are not to e oe!ed and
construed wit#out regard to a&& t#e circumstances surrounding a particu&ar encounter etween 8 vesse&s'
1-. Route o$servance o, ;nternational Rules o, Roa+ +oes not per se relieve vessel ,ro#
responsi$ility
,n ordinar! circumstances, a vesse& disc#arges #er dut! to anot#er ! a %ait#%u& and &itera& oservance
o% t#e :u&es o% Eavigation, and s#e cannot e #e&d at %au&t %or so doing even t#oug# a di%%erent course wou&d
#ave prevented t#e co&&ision' T#is ru&e, #owever, is not to e app&ied w#ere it is apparent t#at #er captain was
gui&t! o% neg&igence or o% a want o% seamans#ip in not perceiving t#e necessit! %or, or in so acting as to create
suc# necessit! %or, a departure %rom t#e ru&e and acting according&!' ,n ot#er words, ;route oservance< o% t#e
,nternationa& :u&es o% t#e :oad wi&& not re&ieve a vesse& %rom responsii&it! i% t#e co&&ision cou&d #ave een
avoided ! proper care and ski&& on #er part or even ! a departure %rom t#e ru&es'
13. ;ntention o, @(aclo$an CityA si*nale+ to @<on BuanA
@erein, t#e ;Don Juan< #aving sig#ted t#e ;Tac&oan $it!< w#en it was sti&& a &ong wa! o%% was
neg&igent in %ai&ing to take ear&! preventive action and in a&&owing t#e 8 vesse&s to come to suc# c&ose 9uarters
as to render t#e co&&ision inevita&e w#en t#ere was no necessit! %or passing so near to t#e ;Tac&oan $it!< as
to create t#at #a*ard or inevitai&it!, %or t#e ;Don Juan< cou&d c#oose its own distance' T#e ;Tac&oan $it!,<
upon turning #ard to port s#ort&! e%ore t#e moment o% co&&ision, signa&ed its intention to do so ! giving 8
s#ort &asts wit# its #orn' T#e ;Don Juan< gave no answering #orn &ast to signa& its own intention and
proceeded to turn #ard to staroard'
1/. =anc)ester <evelop#ent Corp. vs. C5 cannot $e *iven retroactive e,,ect
(ransportation La.! -""/ ( -"- )
T#e Manc#ester doctrine, w#ic# #as een modi%ied and c&ari%ied in suse9uent decision ! t#e $ourt
in "un ,nsurance (%%ice, +td' (",(+), et a&' v' 7suncion, et a&' cannot e app&ied in t#e present case so as to
work a striking out o% t#at portion o% t#e tria& court?s award w#ic# cou&d e deemed notiona&&! to constitute an
award o% mora& and e3emp&ar! damages' Manc#ester was promu&gated ! t#e $ourt on 0 Ma! 1./0' $ircu&ar
0 o% t#e "upreme $ourt, w#ic# emodied t#e doctrine in Manc#ester, is dated 85 Marc# 1.//' Dpon t#e ot#er
#and, t#e comp&aint in t#e present case was %i&ed on 8. Decemer 1./2, t#at is, &ong e%ore eit#er Manc#ester
or $ircu&ar 0 o% 85 Marc# 1.// emerged' T#e decision o% t#e tria& court was itse&% promu&gated on 10 Ju&!
1./>, again, e%ore Manc#ester and $ircu&ar 0 were promu&gated' Manc#ester s#ou&d not e app&ied
retroactive&! to t#e present case w#ere a decision on t#e merits #ad a&read! een rendered ! t#e tria& court,
even t#oug# suc# decision was t#en under appea& and #ad not !et reac#ed %ina&it!' T#ere is no indication at a&&
t#at t#e Mecenas #ere soug#t simp&! to evade pa!ment o% t#e court?s %i&ing %ees or to mis&ead t#e court in t#e
assessment o% t#e %i&ing %ees' ,n an! event, #erein, t#e $ourt app&ies Manc#ester as c&ari%ied and amp&i%ied !
"un ,nsurance (%%ice +td' (",(+), ! #o&ding t#at t#e Mecenas s#a&& pa! t#e additiona& %i&ing %ee t#at is
proper&! pa!a&e given t#e award speci%ied e&ow, and t#at suc# additiona& %i&ing %ee s#a&& constitute a &ien
upon t#e Audgment'
12. <isa**re*ation o, ori*inal a.ar+ o, +a#a*es
T#e amount o% damages H compensator!, mora& and e3emp&ar! H were proper&! imposa&e upon
Eegros Eavigation and $apt' "antistean' T#e origina& award o% t#e tria& court o% P522,222'22 cou&d we&&
#ave een disaggregated ! t#e tria& court and t#e $ourt o% 7ppea&s in t#e %o&&owing manner: (1) actua& or
compensator! damages proved in t#e course o% tria& consisting o% actua& e3penses incurred ! petitioners in
t#eir searc# %or t#eir parents? odies H 18>,222'22C (8) actua& or compensator! damages in case o% wrong%u&
deat# (P32,222'22 3 8) H P >2,222'22C (3) mora& damages H P120,222'22C (5) e3emp&ar! damages H
P120,222'22C or a tota& o% P522,222'22'
1. 5++itional #oral +a#a*es o, :-""!""" reasona$le
$onsidering t#at t#e &egitimate c#i&dren o% t#e deceased spouses Mecenas, are 0 in numer and t#at
t#e! &ost ot# %at#er and mot#er in one %e&& &ow o% %ate, and considering t#e pain and an3iet! t#e! dout&ess
e3perienced w#i&e searc#ing %or t#eir parents among t#e survivors and t#e corpses recovered %rom t#e sea or
was#ed as#ore, t#e $ourt e&ieves t#at an additiona& amount o% P822,222'22 %or mora& damages, making a
tota& o% P320,222'22 as mora& damages, wou&d e 9uite reasona&e'
13. Bu+icial notice o, +rea+,ul re*ularity o, #ariti#e +isasters
T#e $ourt wi&& take Audicia& notice o% t#e dread%u& regu&arit! wit# w#ic# grievous maritime disasters
occur in our waters wit# massive &oss o% &i%e' T#e u&k o% our popu&ation is too poor to a%%ord domestic air
transportation' "o it is t#at notwit#standing t#e %re9uent sinking o% passenger vesse&s in our waters, crowds o%
peop&e continue to trave& ! sea'
14. :urpose o, exe#plary +a#a*es6 5s to co##on carriers
B3emp&ar! damages are designed ! our civi& &aw to permit t#e courts to res#ape e#aviour t#at is
socia&&! de&eterious in its conse9uence ! creating negative incentives or deterrents against suc# e#aviour' ,n
re9uiring comp&iance wit# t#e standard o% e3traordinar! di&igence, a standard w#ic# is in %act t#at o% t#e
#ig#est possi&e degree o% di&igence, %rom common carriers and in creating a presumption o% neg&igence
against t#em, t#e &aw seeks to compe& t#em to contro& t#eir emp&o!ees, to tame t#eir reck&ess instincts and to
%orce t#em to take ade9uate care o% #uman eings and t#eir propert!' T#e $ourt is prepared to use t#e
instruments given to it ! t#e &aw %or securing t#e ends o% &aw and pu&ic po&ic!' (ne o% t#ose instruments is
t#e institution o% e3emp&ar! damagesC one o% t#ose ends, o% specia& importance in an arc#ipe&agic state &ike t#e
P#i&ippines, is t#e sa%e and re&ia&e carriage o% peop&e and goods ! sea' @erein, considering t#e %oregoing, an
additiona& award in t#e amount o% P822,222'22 as e3emp&ar! damages, making a tota& award o% P320,222'22
as e3emp&ar! damages, is 9uite modest'
1%. Court #ay consi+er an+ resolve all issues to ren+er su$stantial ?ustice
T#e Mecenas #erein mere&! asked %or t#e restoration o% t#e P522,222'22 award o% t#e tria& court' T#e
$ourt underscore once more, #owever, t#e %irm&! sett&ed doctrine t#at t#e $ourt ma! consider and reso&ve a&&
issues w#ic# must e decided in order to render sustantia& Austice to t#e parties, inc&uding issues not
e3p&icit&! raised ! t#e part! a%%ected' ,n t#e present case, as in Papa&aran 1us +ine v' $oronado, et a&', ot#
t#e demands o% sustantia& Austice and t#e imperious re9uirements o% pu&ic po&ic! compe& t#e $ourt to t#e
conc&usion t#at t#e tria& court?s imp&icit award o% mora& and e3emp&ar! damages was erroneous&! de&eted and
must e restored and augmented and roug#t more near&! to t#e &eve& re9uired ! pu&ic po&ic! and
sustantia& Austice'
[33]
:5L vs. C5 (GR L>/224! 31 Buly 1%41)
First Division, 6uerrero (J): 8 concur, 8 concur in resu&t
&acts' (n / Januar! 1.41, Jesus V' "amson %&ew as co=pi&ot on a regu&ar %&ig#t %rom Mani&a to +egaspi wit#
stops at Daet, $amarines Eorte and Pi&i, $amarines "ur, wit# $aptain De&%in 1ustamante as commanding
pi&ot o% a $=50 p&ane e&onging to P#i&ippine 7ir +ines, ,nc' (P7+)' (n attempting to &and t#e p&ane at Daet
airport, $apt' 1ustamante due to #is ver! s&ow reaction and poor Audgment overs#ot t#e air%ie&d and as a
resu&t, notwit#standing t#e di&igent e%%orts o% t#e co=pi&ot to avert an accident, t#e airp&ane cras#&anded e!ond
t#e runwa!C t#at t#e Ao&t caused t#e #ead o% "amson to #it and reak t#roug# t#e t#ick %ront winds#ie&d o% t#e
airp&ane causing #im severe rain concussion, wounds and arasions on t#e %ore#ead wit# intense pain and
su%%ering' T#erea%ter, instead o% giving "amson e3pert and proper medica& treatment ca&&ed %or ! t#e nature
and severit! o% #is inAuries, P7+ simp&! re%erred #im to a compan! p#!sician, a genera& medica& practitioner,
w#o &imited t#e treatment to t#e e3terior inAuries wit#out e3amining t#e severe rain concussion o% "amson'
"evera& da!s a%ter t#e accident, P7+ ca&&ed ack "amson to active dut! as co=pi&ot, and inspite o% t#e &atter?s
repeated re9uest %or e3pert medica& assistance, P7+ #ad not given #im an!' 7s a conse9uence o% t#e rain
inAur! sustained ! p&ainti%% %rom t#e cras#, #e #ad een #aving periodic di**! spe&&s and #ad een su%%ering
%rom genera& dei&it! and nervousness' P7+ instead o% sumitting "amson to e3pert medica& treatment,
disc#arged t#e &atter %rom its emp&o! on 81 Decemer 1.43 on grounds o% p#!sica& disai&it!, t#ere! causing
"amson not on&! to &ose #is Ao ut to ecome p#!sica&&! un%it to continue as aviator due to P7+?s neg&igence
in not giving #im t#e proper medica& attention'
Jesus %i&ed a comp&aint against P7+ on 1 Ju&! 1.45, pra!ing %or damages in t#e amount o% P1/2,222'22
representing #is unearned income, P42,222'22 as mora& damages, P82,222'22 as attorne!?s %ees and P4,222'22
as e3penses, or a tota& o% P844,222'22' (n 84 Marc# 1.4/, P7+%i&ed a Motion to Dismiss on t#e ground t#at
t#e comp&aint is essentia&&! a Forkmen?s $ompensation c&aim, stating a cause o% action not cogni*a&e wit#in
t#e genera& Aurisdiction o% t#e court' T#e Motion to Dismiss was denied in t#e order o% 15 7pri& 1.4/' 7%ter
t#e reception o% evidence, t#e tria& court rendered on 14 Januar! 1.03 its decision ordering P7+ to pa!
"amson P1.//,222'22 as unearned income or damagesC P42,222'22 %or mora& damagesC P82,222'22 as
attorne!?s %ees and P4,222'22 as e3penses o% &itigation, or a tota& o% P803,222'22C wit# costs against P7+'
P7+ appea&ed t#e decision to t#e $ourt o% 7ppea&s' (n 1/ 7pri& 1.00, t#e $ourt o% 7ppea&s rendered its
decision a%%irming t#e Audgment o% t#e &ower court ut modi%ied t#e award o% damages ! imposing &ega& rate
o% interest on t#e P1./,222'22 unearned income %rom t#e %i&ing o% t#e comp&aint, citing "ection /, :u&e 41 o%
t#e :u&es o% $ourt' ,ts motion %or reconsideration o% t#e aove Audgment #aving een denied, P7+ %i&ed a
petition %or certiorari'
T#e "upreme $ourt a%%irmed t#e Audgment o% t#e appe&&ate court wit# s&ig#t modi%ication in t#at t#e correct
amount o% compensator! damages is P825,222'22& wit# costs against P7+'
(ransportation La.! -""/ ( -"/ )
1. Fncontroverte+ ,acts
@erein, t#e %o&&owing %acts are not t#e suAect o% controvers!: (1) First, t#at %rom Ju&! 1.42 to 81
Decemer 1.43, p&ainti%% was emp&o!ed wit# de%endant compan! as a %irst o%%icer or co=pi&ot and served in
t#at capacit! in de%endant?s domestic servicesC (8) t#at on Januar! 1.41, p&ainti%% did %&! on de%endant?s P,=$
.5, as %irst o%%icer or co=pi&ot, wit# t#e &ate $apt' De&%in 1ustamante in command as pi&otC t#at w#i&e making a
&anding at t#e Daet airport on t#at date, P,=$ .5 did meet an accident as stated aoveC (3) t#at at or aout t#e
time o% t#e disc#arge %rom de%endant compan!, p&ainti%% #ad comp&ained o% ;spe&&s o% di**iness,< ;#eadac#es<
and ;nervousness<, ! reason o% w#ic# #e was grounded %rom %&ig#t dut!' ,n s#ort, t#at at t#at time, or
appro3imate&! %rom Eovemer 1.43 up to t#e date o% #is disc#arge on 81 Decemer 1.43, p&ainti%% was
actua&&! p#!sica&&! un%it to disc#arge #is duties as pi&otC (5) t#at p&ainti%%?s un%itness %or %&ig#t dut! was
proper&! esta&is#ed a%ter a t#oroug# medica& e3amination ! competent medica& e3perts'
-. <iJJy spells! )ea+ac)e an+ *eneral +e$ility o, Sa#son .as an a,ter>e,,ect o, t)e cras)>lan+in*6
(esti#ony o, :5L1s +octors +iscounte+
@erein, P7+ wou&d imp&! t#at "amson su%%ered on&! super%icia& wounds w#ic# were treated and not
rain inAur!' ,t wou&d, ! t#e opinion o% its compan! doctors, Dr' 1ernardo and Dr' :e!es, attriute t#e di**!
spe&&s and #eadac#e to organic or as p#!c#osomatic, neurast#enic or ps!c#ogenic, w#ic# we %ind out&andis#&!
e3aggerated' T#at "amson?s condition as ps!c#osomatic rat#er t#an organic in nature is a&&eged&! con%irmed
! t#e %act t#at on > separate occasions a%ter t#e accident #e passed t#e re9uired $77 p#!sica& e3amination
%or airman?s certi%icate' T#e $ourt noticed, #owever, t#at t#ere were ot#er simi&ar p#!sica& e3aminations
conducted ! t#e $77 on t#e person o% "amson t#e report on w#ic# were not presented in evidence'
(vious&!, on&! t#ose w#ic# suited P7+?s cause were #and=picked and o%%ered in evidence' T#e $ourt
#esitated to accept t#e opinion o% P7+?s two p#!sicians, considering t#at Dr' 1ernardo admitted&! re%erred to
Dr' :e!es ecause #e cou&d not determine t#e cause o% t#e di**! spe&&s and #eadac#e and t#e &atter admitted
t#at it is e3treme&! #ard to e certain o% t#e cause o% #is di**! spe&&s, and suggested a possii&it! t#at it was
due to postraumatic s!ndrome, evident&! due to t#e inAuries su%%ered ! "amson in #itting t#e %ore#ead against
t#e winds#ie&d o% t#e p&ane during t#e accident'
3. <iJJy spells! )ea+ac)e an+ *eneral +e$ility o, Sa#son .as an a,ter>e,,ect o, t)e cras)>lan+in*6
(esti#ony o, Sa#son1s +octors $elieve+
@erein, Dr' Mora&es, a surgeon, %ound t#at &ood was coming %rom "amson?s ears and nose' @e
testi%ied t#at "amson was su%%ering %rom cerera& concussion as a resu&t o% traumatic inAur! to t#e rain caused
! #is #ead #itting on t#e winds#ie&d o% t#e p&ane during t#e cras#=&anding' Dr' $onrado 7rami&, a neuro&ogist
and ps!c#iatrist wit# e3perience in two #ospita&s aroad, %ound anorma&it! re%&ected ! t#e
e&ectroencep#a&ogram e3amination in t#e %ronta& area on ot# sides o% "amson?s #ead' T#e opinion o% t#ese
two specia&ist renders unnecessar! t#at o% "amson?s wi%e w#o is a p#!sician in #er own rig#t and ecause o%
#er re&ation to "amson, #er testimon! and opinion ma! not e discussed, a&t#oug# #er testimon! is
cr!sta&&i*ed ! t#e opinions o% Dr' 7dor Dionisio, Dr' Mar9ue*, Dr' Jose (' $#an, Dr' Oamao and Dr'
"andico'
/. :5L *rossly ne*li*ent ,or allo.in* Capt. Busta#ante to ,ly as ,irst pilot (not co>pilot)
not.it)stan+in* t)at t)e latter )as a tu#or o, t)e nasop)arynx
T#e imputation o% gross neg&igence ! t#e court to P7+ %or #aving a&&owed $apt' De&%in 1ustamante
to %&! on t#at %ate%u& da! o% t#e accident as t#e same is du&! supported ! sustantia& evidence, c&ear&!
esta&is#ed and cited in t#e decision o% said court' T#e pi&ot was sick' @e admitted&! #ad tumor o% t#e
nasop#ar!n3 (nose)' T#e spot is ver! near t#e rain and t#e e!es' Tumor on t#e spot wi&& a%%ect t#e sinus, t#e
reat#ing, t#e e!es w#ic# are ver! near it' Eo one wi&& certi%! t#e %itness to %&! a p&ane o% one su%%ering %rom
t#e disease' T#e %act First Pi&ot 1ustamante #as a &ong standing tumor o% t#e Easop#ar!n3 %or w#ic# reason
#e was grounded since Eovemer 1.50 is admitted in t#e &etter o% Dr' 1ernardo to t#e Medica& Director o% t#e
$77 re9uesting waiver o% p#!sica& standards' T#e re9uest %or waiver o% p#!sica& standards is itse&% a positive
proo% t#at t#e p#!sica& condition o% $apt' 1ustamante is s#ort o% t#e standard set ! t#e $77' T#e Deput!
7dministrator o% t#e $77 granted t#e re9uest re&!ing on t#e representation and recommendation made ! Dr'
1ernardo' 7&t#oug# t#e re9uest sa!s t#at ;it is e&ieved t#at #is continuing to %&! as a co=pi&ot does not invo&ve
an! #a*ard,< %&!ing as a First (%%icer entai&s a ver! di%%erent responsii&it! t#an %&!ing as a mere co=pi&ot' P7+
re9uested t#e $77 to a&&ow $apt' 1ustamante to %&! mere&! as a co=pi&ot and it is sa%e to conc&ude t#at t#e
$77 approved t#e re9uest t#us a&&owing 1ustamante to %&! on&! as a co=pi&ot' For #aving a&&owed 1ustamante
to %&! as a First (%%icer on / Januar! 1.41, P7+ is gui&t! o% gross neg&igence and t#ere%ore s#ou&d e made
&ia&e %or t#e resu&ting accident'
2. =e+ical con+ition o, Capt. Busta#ante a,,ectin* skills in ,lyin*
$apt' 1ustamante used to get treatments %rom Dr' "!cangco' @e used to comp&ain o% pain in t#e %ace
more particu&ar&! in t#e nose w#ic# caused #im to #ave s&eep&ess nig#ts' "amson?s oservation o% t#e pi&ot
was reported to t#e $#ie% Pi&ot w#o did not#ing aout it' $aptain $arone& o% P7+ corroorated "amson o%
t#is matter' T#e comp&aint against t#e s&ow reaction o% t#e pi&ot at &east proved t#e oservation' T#e %act t#at
t#e comp&aint was not in writing does not detract an!t#ing %rom t#e seriousness t#ereo%, considering t#at a
misca&cu&ation wou&d not on&! cause t#e deat# o% t#e crew ut a&so o% t#e passengers' (ne mont# prior to t#e
cras#=&anding, w#en t#e pi&ot was preparing to &and in Daet, p&ainti%% warned #im t#at t#e! were not in t#e
vicinit! o% Daet ut aove t#e town o% +igao' T#e p&ane #it outside t#e airstrip' ,n anot#er instance, t#e pi&ot
wou&d #it t#e Ma!on Vo&cano #ad not p&ainti%% warned #im' T#ese more t#an prove w#at p&ainti%% #ad
comp&ained o%' Disregard t#ereo% ! de%endant is condemna&e'
. Supre#e Court not a trier o, ,acts! cannot enter into a cali$ration o, t)e evi+ence
,t is not t#e task o% t#e "upreme $ourt to disc#arge t#e %unctions o% a trier o% %acts muc# &ess to enter
into a ca&iration o% t#e evidence, notwit#standing P7+?s wai& t#at t#e Audgment o% t#e appe&&ate court is ased
entire&! on specu&ations, surmises and conAectures' T#e "upreme $ourt is convinced t#at t#e &ower court?s
Audgment is supported ! strong, c&ear and sustantia& evidence'
3. :5L a co##on carrier6 Co##on carrier re9uire+ o, )i*)est +e*ree o, care in +isc)ar*e o, +uty
an+ $usiness
P7+ is a common carrier engaged in t#e usiness o% carr!ing or transporting passengers or goods or
ot#, ! &and, water, or air, %or compensation, o%%ering t#eir services to t#e pu&ic, as de%ined in 7rt' 1038,
Eew $ivi& $ode' T#e &aw is c&ear in re9uiring a common carrier to e3ercise t#e #ig#est degree o% care in t#e
disc#arge o% its dut! and usiness o% carriage and transportation under 7rts' 1033, 1044 and 104> o% t#e Eew
$ivi& $ode'
4. 5rticle 1333 7CC
%or t#e sa%et! o% t#e passengers transported ! t#em, according to a&& t#e circumstances o% eac# case' "uc#
e3traordinar! di&igence in t#e vigi&ance over t#e goods is %urt#er e3pressed in 7rtic&es 1035, and 1054, Eos' 4,
>, and 0, w#i&e t#e e3traordinar! di&igence %or t#e sa%et! o% t#e passengers is %urt#er set %ort# in artic&es 1044
and 104>'<
%. 5rticle 1322 7CC
7rtic&e 1044 o% t#e $ivi& $ode provides t#at ;7 common carrier is ound to carr! t#e passenger
wit# a due regard %or a&& t#e circumstances'<
1". 5rticle 132 7CC
e3traordinar! di&igence as prescried in 7rtic&es 1033 and 1044'<
11. <uty to exercise ut#ost +ili*ence ,or passen*ers an+ #e#$ers o, t)e cre.
T#e dut! to e3ercise t#e utmost di&igence on t#e part o% common carriers is %or t#e sa%et! o%
passengers as we&& as %or t#e memers o% t#e crew or t#e comp&ement operating t#e carrier, t#e airp&ane in t#e
present case' 7nd t#is must e so %or an! omission, &apse or neg&ect t#ereo% wi&& certain&! resu&t to t#e
damage, preAudice, na! inAuries and even deat# to a&& aoard t#e p&ane, passengers and crew memers a&ike'
1-. Court a,,ir#s a.ar+ o, +a#a*es un+er provision o, 5rticles 1311 an+ 131- 7CC
@aving a%%irmed t#e gross neg&igence o% P7+ in a&&owing $apt' De&%in 1ustamante to %&! t#e p&ane to
Daet on / Januar! 1.41 w#ose s&ow reaction and poor Audgment was t#e cause o% t#e cras#=&anding o% t#e
p&ane w#ic# resu&ted in "amson #itting #is #ead against t#e winds#ie&d and causing #im inAuries %or w#ic#
reason P7+ terminated #is services and emp&o!ment as pi&ot a%ter re%using to provide #im wit# t#e necessar!
medica& treatment o% P7+?s periodic spe&&s, #eadac#e and genera& dei&it! produced %rom said inAuries, t#e
$ourt must necessari&! a%%irm &ikewise t#e award o% damages or compensation under t#e provisions o%
7rtic&es 1011 and 1018 o% t#e Eew $ivi& $ode'
13. 5rticle 1311 7CC
7rtic&e 1011 o% t#e $ivi& $ode provides t#at ;(wners o% enterprises and ot#er emp&o!ers are o&iged
to pa! compensation %or t#e deat# or inAuries to t#eir &aorers, workmen, mec#anics or ot#er emp&o!ees, even
t#oug# t#e event ma! #ave een pure&! accidenta& or entire&! due to a %ortuitous cause, i% t#e deat# or persona&
inAur! arose out o% and in t#e course o% t#e emp&o!ment' T#e emp&o!er is a&so &ia&e %or compensation i% t#e
emp&o!ee contracts an! i&&ness or disease caused ! suc# emp&o!ment or as t#e resu&t o% t#e nature o% t#e
emp&o!ment' ,% t#e mis#ap was due to t#e emp&o!ee?s own notorious neg&igence, or vo&untar! act, or
drunkenness, t#e emp&o!er s#a&& not e &ia&e %or compensation' F#en t#e emp&o!ee?s &ack o% due care
contriuted to #is deat# or inAur!, t#e compensation s#a&& e e9uita&! reduced'<
1/. 5rticle 131- 7CC
7rtic&e 1018 o% t#e $ivi& $ode provides t#at ;,% t#e deat# or inAur! is due to t#e neg&igence o% a
%e&&ow=worker, t#e &atter and t#e emp&o!er s#a&& e so&idari&! &ia&e %or compensation' ,% a %e&&ow=worker?s
intentiona& or ma&icious act is t#e on&! cause o% t#e deat# or inAur!, t#e emp&o!er s#a&& not e answera&e,
un&ess it s#ou&d e s#own t#at t#e &atter did not e3ercise due di&igence in t#e se&ection or supervision o% t#e
p&ainti%%s %e&&ow=worker'<
12. Grant o, co#pensatory +a#a*es s)oul+ $e :-"/!""" not :1%4!"""
T#e grant o% compensator! damages to "amson made ! t#e tria& court and a%%irmed ! t#e appe&&ate
court ! computing #is asic sa&ar! per annum at P042'22 a mont# as asic sa&ar! and P322'22 a mont# %or
e3tra pa! %or e3tra %&!ing time inc&uding onus given in Decemer ever! !ear is Austi%ied' T#e correct
computation #owever s#ou&d e P042 p&us P322 3 18 mont#s Y P18,>22 per annum 3 12 !ears Y P18>,222'22
(not P182,222'22 as computed ! t#e court a 9uo)' T#e %urt#er grant o% increase in t#e asic pa! o% t#e pi&ots
to P18,222 annua&&! %or 1.>5 to 1.>/ tota&&ing P>2,222'22 and anot#er P1/,222'22 as onuses and e3tra pa!
%or e3tra %&!ing time at t#e same rate o% P322'22 a mont# tota&s P0/,222'22' 7dding P18>,222'22 (1.>5 to
1.>/ compensation) makes a grand tota& o% P825,222'22 (not P1./,222'22 as origina&&! computed)'
1. Grant o, #oral +a#a*es up)el+6 Kuasi>+elict (5rticle --1% [-] 7CC)
T#e $ourt approve t#e grant o% mora& damages in t#e sum o% P42,222'22 inasmuc# as t#ere is ad
%ait# on t#e part o% P7+' T#e act o% P7+ in unAust&! re%using "amson?s demand %or specia& medica& service
aroad %or t#e reason t#at "amson?s deteriorating p#!sica& condition was not due to t#e accident vio&ates t#e
provisions o% 7rtic&e 1. o% t#e $ivi& $ode on #uman re&ations ;to act wit# Austice, give ever!one #is due, and
oserve #onest! and good %ait#'< Dnder t#e %acts %ound ! t#e tria& court and a%%irmed ! t#e appe&&ate court
and under t#e &aw and Aurisprudence cited and app&ied, t#e grant o% mora& damages in t#e amount o%
P42,222'22 is proper and Austi%ied' T#e %act t#at "amson su%%ered p#!sica& inAuries in t#e #ead w#en t#e p&ane
cras#=&anded due to t#e neg&igence o% $apt' 1ustamante is undenia&e' T#e neg&igence o% t#e &atter is c&ear&! a
9uasi=de&ict and t#ere%ore 7rtic&e 881., (8) Eew $ivi& $ode is app&ica&e, Austi%!ing t#e recover! o% mora&
damages'
13. Grant o, #oral +a#a*es up)el+6 Ba+ ,ait) or #alice (5rticle ---" 7CC)
Bven %rom t#e standpoint o% P7+ t#at t#ere is an emp&o!er=emp&o!ee re&ations#ip etween it and
"amson arising %rom t#e contract o% emp&o!ment, "amson is sti&& entit&ed to mora& damages in view o% t#e
%inding o% ad %ait# or ma&ice ! t#e appe&&ate court, and a%%irmed ! t#e "upreme $ourt app&!ing t#e
provisions o% 7rtic&e 8882, Eew $ivi& $ode w#ic# provides t#at wi&&%u& inAur! to propert! ma! e a &ega&
ground %or awarding mora& damages i% t#e court s#ou&d %ind t#at, under t#e circumstances, suc# damages are
Aust&! due' T#e same ru&e app&ies to reac#es o% contract w#ere t#e de%endant acted %raudu&ent&! or in ad
%ait#'
14. Grant o, #oral +a#a*es up)el+6 Ba+ ,ait) (5rticle 1% 7CC)
T#e Austi%ication in t#e award o% mora& damages under 7rtic&e 1. o% t#e Eew $ivi& $ode on @uman
:e&ations w#ic# re9uires t#at ever! person must, in t#e e3ercise o% #is rig#ts and in t#e per%ormance o% #is
duties, act wit# Austice, give ever!one #is due, and oserve #onest! and good %ait#, as app&ied ! appe&&ate
court is a&so we&&=taken'
1%. 5.ar+ o, attorney1s ,ees correct
Fit# respect to t#e award o% attorne!?s %ees in t#e sum o% P82,222'22 t#e same is &ikewise correct'
"amson is entit&ed to attorne!?s %ees ecause #e was %orced to &itigate in order to en%orce #is va&id c&aim
(6anaan vs' 1a!&e, 32 "$:7 3>4C De &a $ru* vs' De &a $ru*, 88 "$:7 33C and man! ot#ers)C P7+ acted in
ad %ait# in re%using "amson?s va&id c&aim (Fi&ipino Pipe Foundr! $orporation vs' $entra& 1ank, 83 "$:7
1255)C and "amson was dismissed and was %orced to go to court to vindicate #is rig#t (Eadura vs' 1enguet
$onso&idated, ,nc', 4 "$:7 /0.)'
-". :ay#ent o, le*al interest ,ro# +ate ?u+icial +e#an+ .as #a+e $y Sa#son
7rtic&es 11>., 882. and 8818 o% t#e $ivi& $ode govern w#en interest s#a&& e computed' T#ereunder
interest egins to accrue upon demand, e3traAudicia& or Audicia&' 7 comp&aint is a Audicia& demand
($aarroguis vs' Vicente, 120 P#i&' 352)' Dnder 7rtic&e 8818 o% t#e $ivi& $ode, interest due s#a&& earn &ega&
interest %rom t#e time it is Audicia&&! demanded, a&t#oug# t#e o&igation ma! e si&ent upon t#is point'< ($7
:eso&ution, pp' 143=145, :ecords)' T#e correct amount o% compensator! damages upon w#ic# &ega& interest
s#a&& accrue %rom t#e %i&ing o% t#e comp&aint is P825,222'22 as #erein computed and not P1./,222'22'
[78] &elgian Chartering vs. PE'C, see [3+]
[79] "e #u$%an vs. CA, see [10]
[4"]
:ilapil vs. C5 (GR 2-12%! -- <ece#$er 1%4%)
"econd Division, Padi&&a (J): 3 concur, 1 took no part
&acts' Jose Pi&api&, a pa!ing passenger, oarded 7&atco Transportation $o'?s us earing numer 52. at "an
Eico&as, ,riga $it! on 1> "eptemer 1.01 at aout >:22 P'M' F#i&e said us 52. was in due course
negotiating t#e distance etween ,riga $it! and Eaga $it!, upon reac#ing t#e vicinit! o% t#e cemeter! o% t#e
Municipa&it! o% 1aao, $amarines "ur, on t#e wa! to Eaga $it!, an unidenti%ied man, a !stander a&ong said
nationa& #ig#wa!, #ur&ed a stone at t#e &e%t side o% t#e us, w#ic# #it Pi&api& aove #is &e%t e!e' 7&atco?s
personne& &ost no time in ringing Pi&api& to t#e provincia& #ospita& in Eaga $it! w#ere #e was con%ined and
treated' $onsidering t#at t#e sig#t o% #is &e%t e!e was impaired, Pi&api& was taken to Dr' Ma&aanan o% ,riga
$it! w#ere #e was treated %or anot#er week' "ince t#ere was no improvement in #is &e%t e!e?s vision, Pi&api&
went to V' +una @ospita&, Nue*on $it! w#ere #e was treated ! Dr' $apu&ong' Despite t#e treatment accorded
to #im ! Dr' $apu&ong, Pi&api& &ost partia&&! #is &e%t e!e?s vision and sustained a permanent scar aove t#e
&e%t e!e'
T#ereupon, Pi&api& instituted e%ore t#e $F, o% $amarines "ur, 1ranc# , an action %or recover! o% damages
sustained as a resu&t o% t#e stone=t#rowing incident' 7%ter tria&, t#e court a 9uo rendered Audgment ordering t#e
transportation compan! to pa! Pi&api& t#e sum o% P12,222'22, representing actua& and materia& damages %or
causing a permanent scar on t#e %ace and inAuring t#e e!e=sig#t o% Pi&api&C ordering %urt#er t#e transportation
compan! to pa! t#e sum o% P4,222'22, to Pi&api& as mora& and e3emp&ar! damagesC and ordering %urt#ermore,
t#e transportation compan! to reimurse Pi&api& t#e sum o% P322'22 %or #is medica& e3penses and attorne!?s
%ees in t#e sum o% P1,222'22C and to pa! t#e costs'
From t#e Audgment, 7&atco Transportation appea&ed to t#e $ourt o% 7ppea&s ($7=6: 40345=:)' (n 1.
(ctoer 1.0., t#e $ourt o% 7ppea&s, in a "pecia& Division o% Five, rendered Audgment reversing and setting
aside t#e Audgment o% t#e court a 9uo' @ence, t#e petition to review on certiorari'
T#e "upreme $ourt a%%irmed t#e Audgment appea&ed %rom'
1. <ili*ence re9uire+ o, a co##on carrier! an+ presu#ption o, ne*li*ence6 5rticles 1333 an+ 1322
7CC
Dnder 7rtic&e 1033 o% t#e $ivi& $ode, common carriers are re9uired to oserve e3traordinar!
di&igence %or t#e sa%et! o% t#e passenger transported ! t#em, according to a&& t#e circumstances o% eac# case'
T#e re9uirement o% e3traordinar! di&igence imposed upon common carriers is restated in 7rtic&e 1044: ;7
common carrier is ound to carr! t#e passengers sa%e&! as %ar as #uman care and %oresig#t can provide, using
t#e utmost di&igence o% ver! cautious persons, wit# due regard %or a&& t#e circumstances'< Furt#er, in case o%
deat# o% or inAuries to passengers, t#e &aw presumes said common carriers to e at %au&t or to #ave acted
neg&igent&!'
-. 5rticle 1322 7CC
7rtic&e 1044 o% t#e $ivi& $ode 9ua&i%ies t#e dut! o% e3traordinar! care, vigi&ance and precaution in t#e
carriage o% passengers ! common carriers to on&! suc# as #uman care and %oresig#t can provide' F#at
constitutes comp&iance wit# said dut! is adAudged wit# due regard to a&& t#e circumstances'
3. 5rticle 132 7CC
7rtic&e 104> o% t#e $ivi& $ode, in creating a presumption o% %au&t or neg&igence on t#e part o% t#e
common carrier w#en its passenger is inAured, mere&! re&ieves t#e &atter, %or t#e time eing, %rom introducing
evidence to %asten t#e neg&igence on t#e %ormer, ecause t#e presumption stands in t#e p&ace o% evidence'
1eing a mere presumption, #owever, t#e same is reutta&e ! proo% t#at t#e common carrier #ad e3ercised
e3traordinar! di&igence as re9uired ! &aw in t#e per%ormance o% its contractua& o&igation, or t#at t#e inAur!
su%%ered ! t#e passenger was so&e&! due to a %ortuitous event'
/. ;ntention o, t)e Co+e
,n%erring %rom t#e &aw, t#e intention o% t#e $ode $ommission and $ongress was to cur t#e
reck&essness o% drivers and operators o% common carriers in t#e conduct o% t#eir usiness'
2. Co##on carrier not an insurer o, all risks to passen*er an+ *oo+s
,n consideration o% t#e rig#t granted to it ! t#e pu&ic to engage in t#e usiness o% transporting
passengers and goods, a common carrier does not give its consent to ecome an insurer o% an! and a&& risks to
passengers and goods' ,t mere&! undertakes to per%orm certain duties to t#e pu&ic as t#e &aw imposes, and
#o&ds itse&% &ia&e %or an! reac# t#ereo%' F#i&e t#e &aw re9uires t#e #ig#est degree o% di&igence %rom
common carriers in t#e sa%e transport o% t#eir passengers and creates a presumption o% neg&igence against
t#em, it does not, #owever, make t#e carrier an insurer o% t#e aso&ute sa%et! o% its passengers' Eeit#er t#e
(ransportation La.! -""/ ( -"% )
&aw nor t#e nature o% t#e usiness o% a transportation compan! makes it an insurer o% t#e passenger?s sa%et!,
ut t#at its &iai&it! %or persona& inAuries sustained ! its passenger rests upon its neg&igence, its %ai&ure to
e3ercise t#e degree o% di&igence t#at t#e &aw re9uires
. :resu#ption o, ,ault or ne*li*ence #erely a +isputa$le presu#ption
T#e presumption o% %au&t or neg&igence against t#e carrier is on&! a disputa&e presumption' ,t gives in
w#ere contrar! %acts are esta&is#ed proving eit#er t#at t#e carrier #ad e3ercised t#e degree o% di&igence
re9uired ! &aw or t#e inAur! su%%ered ! t#e passenger was due to a %ortuitous event' @erein, w#ere t#e inAur!
sustained ! Pi&api& was in no wa! due to an! de%ect in t#e means o% transport or in t#e met#od o% transporting
or to t#e neg&igent or wi&&%u& acts o% 7&atco?s emp&o!ees, and t#ere%ore invo&ving no issue o% neg&igence in its
dut! to provide sa%e and suita&e cars as we&& as competent emp&o!ees, wit# t#e inAur! arising w#o&&! %rom
causes created ! strangers over w#ic# t#e carrier #ad no contro& or even know&edge or cou&d not #ave
prevented, t#e presumption is reutted and t#e carrier is not and oug#t not to e #e&d &ia&e'
3. Stan+ar+ o, extraor+inary +ili*ence +oes not +eter#ine lia$ility .)en acts o, stran*ers +irectly
cause+ t)e in?ury
F#i&e as a genera& ru&e, common carriers are ound to e3ercise e3traordinar! di&igence in t#e sa%e
transport o% t#eir passengers, it wou&d seem t#at t#is is not t#e standard ! w#ic# its &iai&it! is to e
determined w#en intervening acts o% strangers direct&! cause t#e inAur!, w#i&e t#e contract o% carriage e3ists'
4. 5rticle 133 7CC
7rtic&e 10>3 provides t#at ;a common carrier is responsi&e %or inAuries su%%ered ! a passenger on
account o% t#e wi&%u& acts or neg&igence o% ot#er passengers or o% strangers, i% t#e common carrier?s
emp&o!ees t#roug# t#e e3ercise o% t#e di&igence o% a good %at#er o% a %ami&! cou&d #ave prevented or stopped
t#e act or omission'<
%. 5rticle 133 explaine+
7 tort committed ! a stranger w#ic# causes inAur! to a passenger does not accord t#e &atter a cause
o% action against t#e carrier' T#e neg&igence %or w#ic# a common carrier is #e&d responsi&e is t#e neg&igent
omission ! t#e carrier?s emp&o!ees to prevent t#e tort %rom eing committed w#en t#e same cou&d #ave een
%oreseen and prevented ! t#em' Furt#er, under t#e same provision, it is to e noted t#at w#en t#e vio&ation o%
t#e contract is due to t#e wi&%u& acts o% strangers t#e degree o% care essentia& to e e3ercised ! t#e common
carrier %or t#e protection o% its passenger is on&! t#at o% a good %at#er o% a %ami&!'
1". Rule o, or+inary care an+ pru+ence is not exactin* to re9uire exercise o, +ou$t,ul or
unreasona$le precautions
7&t#oug# t#e suggested precaution, i'e' mes#=work gri&&s covering windows o% t#e us, cou&d #ave
prevented t#e inAur! comp&ained o%, t#e ru&e o% ordinar! care and prudence is not so e3acting as to re9uire one
c#arged wit# its e3ercise to take dout%u& or unreasona&e precautions to guard against un&aw%u& acts o%
strangers' T#e carrier is not c#arged wit# t#e dut! o% providing or maintaining ve#ic&es as to aso&ute&!
prevent an! and a&& inAuries to passengers' F#ere t#e carrier uses cars o% t#e most approved t!pe, in genera&
use ! ot#ers engaged in t#e same occupation, and e3ercises a #ig# degree o% care in maintaining t#em in
suita&e condition, t#e carrier cannot e c#arged wit# neg&igence in t#is respect'
11. Con*ress1 role
@erein, Pi&api& contends t#at it is to t#e greater interest o% t#e "tate i% a carrier were made &ia&e %or
suc# stone=t#rowing incidents rat#er t#an #ave t#e us riding pu&ic &ose con%idence in t#e transportation
s!stem' "ad to sa!, t#e court is not in a position to so #o&d' "uc# a po&ic! wou&d e etter &e%t to t#e
consideration o% $ongress w#ic# is empowered to enact &aws to protect t#e pu&ic %rom t#e increasing risks
and dangers o% &aw&essness in societ!'
(ransportation La.! -""/ ( -1" )
[41]
&ortune Dxpress vs. C5 (GR 11%32! 14 =arc) 1%%%)
"econd Division, Mendo*a (J): 3 concur, 1 aroad on o%%icia& usiness
&acts' Fortune B3press ,nc' is a us compan! in nort#ern Mindanao' (n 1/ Eovemer 1./., Fortune
B3press? us %igured in an accident wit# a Aeepne! in Pauswagan, +anao de& Eorte, resu&ting in t#e deat# o%
severa& passengers o% t#e Aeepne!, inc&uding two Maranaos' $risanto 6enera&ao, a vo&unteer %ie&d agent o% t#e
$onstau&ar! :egiona& "ecurit! Dnit (J), conducted an investigation o% t#e accident' @e %ound t#at t#e owner
o% t#e Aeepne! was a Maranao residing in De&aa!an, +anao de& Eorte and t#at certain Maranaos were
p&anning to take revenge on Fortune B3press ! urning some o% its uses' 6enera&ao rendered a report on #is
%indings to "gt' :e!na&do 1astasa o% t#e P#i&ippine $onstau&ar! :egiona& @ead9uarters at $aga!an de (ro'
Dpon t#e instruction o% "gt' 1astasa #e went to see Diosdado 1ravo, operations manager o% petitioner, at its
main o%%ice in $aga!an de (ro $it!' 1ravo assured #im t#at t#e necessar! precautions to insure t#e sa%et! o%
&ives and propert! wou&d e taken' 7t aout >:54 p'm' on 88 Eovemer 1./., 3 armed Maranaos w#o
pretended to e passengers, sei*ed a us o% Fortune B3press at +inamon, +anao de& Eorte w#i&e on its wa! to
,&igan $it!' 7mong t#e passengers o% t#e us was 7tt!' Ta&i $aorong' T#e &eader o% t#e Maranaos, identi%ied
as one 1as#ier Mananggo&o, ordered t#e driver, 6odo%redo $aatuan, to stop t#e us on t#e side o% t#e
#ig#wa!' Mananggo&o t#en s#ot $aatuan on t#e arm, w#ic# caused #im to s&ump on t#e steering w#ee&' T#en
one o% t#e companions o% Mananggo&o started pouring gaso&ine inside t#e us, as t#e ot#er #e&d t#e
passengers at a! wit# a #andgun' Mananggo&o t#en ordered t#e passengers to get o%% t#e us' T#e
passengers, inc&uding 7tt!' $aorong, stepped out o% t#e us and went e#ind t#e us#es in a %ie&d some
distance %rom t#e #ig#wa!' @owever, 7tt!' $aorong returned to t#e us to retrieve somet#ing %rom t#e
over#ead rack' 7t t#at time, one o% t#e armed men was pouring gaso&ine on t#e #ead o% t#e driver' $aatuan,
w#o #ad meantime regained consciousness, #eard 7tt!' $aorong p&eading wit# t#e armed men to spare t#e
driver as #e was innocent o% an! wrong doing and was on&! tr!ing to make a &iving' T#e armed men were,
#owever, adamant as t#e! repeated t#eir warning t#at t#e! were going to urn t#e us a&ong wit# its driver'
During t#is e3c#ange etween 7tt!' $aorong and t#e assai&ants, $aatuan c&imed out o% t#e &e%t window o%
t#e us and craw&ed to t#e cana& on t#e opposite side o% t#e #ig#wa!' @e #eard s#ots %rom inside t#e us'
+arr! de &a $ru*, one o% t#e passengers, saw t#at 7tt!' $aorong was #it' T#en t#e us was set on %ire' "ome o%
t#e passengers were a&e to pu&& 7tt!' $aorong out o% t#e urning us and rus# #im to t#e Merc! $ommunit!
@ospita& in ,&igan $it!, ut #e died w#i&e undergoing operation'
Pau&ie $aorong, t#e widow o% 7tt!' $aorong, and t#eir minor c#i&dren Oasser Ping, :ose @einni, and Prince
7&e3ander roug#t a suit %or reac# o% contract o% carriage in t#e :egiona& Tria& $ourt o% ,&igan $it! (1ranc#
V,)' ,n its decision, dated 8/ Decemer 1..2, t#e tria& court dismissed t#e comp&aint, and t#e corresponding
counterc&aimC wit#out costs'
(n appea&, #owever, and on 8. Ju&! 1..5, t#e $ourt o% 7ppea&s reversed t#e decision o% t#e tria& court, and
rendered anot#er one ordering Fortune B3press to pa! t#e $aorongs (1) P3,3..,>5.'82 as deat# indemnit!C (8)
P42,222'22 and P422'22 per appearance as attorne!?s %eesC and costs against Fortune B3press' @ence, t#e
appea& ! petition %or review on certiorari'
T#e "upreme $ourt a%%irmed t#e decision o% t#e $ourt o% 7ppea&s wit# modi%ication t#at Fortune B3press is
ordered to pa! Pau&ie, Oasser Ping, :ose @einni, and Prince 7&e3ander $aorong (1) deat# indemnit! in t#e
amount o% P42,222'22C (8) actua& damages in t#e amount o% P32,222'22C (3) mora& damages in t#e amount o%
P122,222'22C (5) e3emp&ar! damages in t#e amount o% P122,222'22C (4) attorne!?s %ees in t#e amount o%
P42,222'22C (>) compensation %or &oss o% earning capacit! in t#e amount o% P8,181,525'.2C and (0) costs o%
suits'
1. 5rticle 133 7CC6 Co##on carrier lia$le ,or in?uries su,,ere+ $y passen*er on account o,
.ill,ul acts o, ot)er passen*er
7rtic&e 10>3 o% t#e $ivi& $ode provides t#at a common carrier is responsi&e %or inAuries su%%ered ! a
passenger on account o% t#e wi&%u& acts o% ot#er passengers, i% t#e emp&o!ees o% t#e common carrier cou&d
#ave prevented t#e act t#roug# t#e e3ercise o% t#e di&igence o% a good %at#er o% a %ami&!'
-. &ortune Dxpress ne*li*ent6 7o precautions .as un+ertaken
@erein, it is c&ear t#at ecause o% t#e neg&igence o% Fortune B3press? emp&o!ees, t#e sei*ure o% t#e us
! Mananggo&o and #is men was made possi&e' Despite warning ! t#e P#i&ippine $onstau&ar! at $aga!an
de (ro t#at t#e Maranaos were p&anning to take revenge on Fortune B3press ! urning some o% its uses and
t#e assurance o% petitioner?s operation manager, Diosdado 1ravo, t#at t#e necessar! precautions wou&d e
taken, Fortune B3press did not#ing to protect t#e sa%et! o% its passengers' @ad Fortune B3press and its
emp&o!ees een vigi&ant t#e! wou&d not #ave %ai&ed to see t#at t#e ma&e%actors #ad a &arge 9uantit! o% gaso&ine
wit# t#em' Dnder t#e circumstances, simp&e precautionar! measures to protect t#e sa%et! o% passengers, suc#
as %risking passengers and inspecting t#eir aggages, pre%era&! wit# non=intrusive gadgets suc# as meta&
detectors, e%ore a&&owing t#em on oard cou&d #ave een emp&o!ed wit#out vio&ating t#e passenger?s
constitutiona& rig#ts' 7s t#e $ourt intimated in 6aca& v' P#i&ippine 7ir +ines, ,nc', a common carrier can e
#e&d &ia&e %or %ai&ing to prevent a #iAacking ! %risking passengers and inspecting t#eir aggages'
3. 5rticle 113/ o, t)e Civil Co+e (&ortuitous event +e,ine+)6 Ho$i+o vs. C5! .)en un,oreseen event
consi+ere+ a ,orce #a?eure
7rtic&e 1105 o% t#e $ivi& $ode de%ines a %ortuitous event as an occurrence w#ic# cou&d not e
%oreseen or w#ic# t#oug# %oreseen, is inevita&e' ,n Ooido v' $ourt o% 7ppea&s, t#e $ourt #e&d t#at to e
considered as %orce maAeure, it is necessar! t#at: (1) t#e cause o% t#e reac# o% t#e o&igation must e
independent o% t#e #uman wi&&C (8) t#e event must e eit#er un%oreseea&e or unavoida&eC (3) t#e occurrence
must e suc# as to tender it impossi&e %or t#e detor to %u&%i&& t#e o&igation in a norma& mannerC and (5) t#e
o&igor must e %ree o% participation in, or aggravation o%, t#e inAur! to t#e creditor' T#e asence o% an! o% t#e
re9uisites mentioned aove wou&d prevent t#e o&igor %rom eing e3cused %rom &iai&it!'
/. Gas9ueJ vs. C56 Co##on carrier lia$le ,or ,ailure to take necessary precautions
,n Vas9ue* v' $ourt o% 7ppea&s, it was #e&d t#at t#e common carrier was &ia&e %or its %ai&ure to take
t#e necessar! precautions against an approac#ing t!p#oon, o% w#ic# it was warned, resu&ting in t#e &oss o% t#e
&ives o% severa& passengers' T#e event was %oreseea&e, and, t#us, t#e second re9uisite mentioned aove was
not %u&%i&&ed' T#is ru&ing app&ies ! ana&og! to t#e present case' @erein, despite t#e report o% P$ agent
6enera&ao t#at t#e Maranaos were going to attack its uses, Fortune B3press took no steps to sa%eguard t#e
&ives and properties o% its passengers' T#e sei*ure o% t#e us o% Fortune B3press was %oreseea&e and,
t#ere%ore, was not a %ortuitous event w#ic# wou&d e3empt Fortune B3press %rom &iai&it!'
2. 5rticle 1322 7CC
7rtic&e 1044 o% t#e $ivi& $ode provides t#at ;a common carrier is ound to carr! t#e passengers as %ar
as #uman care and %oresig#t can provide, using t#e utmost di&igence o% ver! cautious persons, wit# due regard
%or a&& t#e circumstances'<
. :ilapil vs. C5 an+ <e GuJ#an vs. C5 +o not apply
,n Pi&api& v' $ourt o% 7ppea&s, it was #e&d t#at a common carrier is not &ia&e %or %ai&ing to insta&&
window gri&&s on its uses to protect passengers %rom inAuries caused ! rocks #ur&ed at t#e us ! &aw&ess
e&ements' (n t#e ot#er #and, in De 6u*man v' $ourt o% 7ppea&s, it was ru&ed t#at a common carrier is not
responsi&e %or goods &ost as a resu&t o% a roer! w#ic# is attended ! grave or irresisti&e t#reat, vio&ence, or
%orce' ,t is c&ear t#at t#e cases o% Pi&api& and De 6u*man do not app&! to t#e present case' ,n Pi&api& and De
6u*man, t#e respondents t#erein were not neg&igent in %ai&ing to take specia& precautions against t#reats to t#e
sa%et! o% passengers w#ic# cou&d not e %oreseen, suc# as tortious or crimina& acts o% t#ird persons' @erein,
(ransportation La.! -""/ ( -1- )
t#is %actor o% un%oreseeai&it! (t#e second re9uisite %or an event to e considered %orce maAeure) is &acking, i'e'
despite t#e report o% P$ agent 6enera&ao t#at t#e Maranaos were p&anning to urn some o% petitioner?s uses
and t#e assurance o% Fortune B3press? operations manager (Diosdado 1ravo) t#at t#e necessar! precautions
wou&d e taken, not#ing was rea&&! done ! Fortune B3press to protect t#e sa%et! o% passengers'
3. <ecease+ not *uilty o, contri$utory ne*li*ence! let alone recklessness
@erein, 7tt!' $aorong did not act reck&ess&!' T#e intended targets o% t#e vio&ence were Fortune
B3press and its emp&o!ees, not its passengers' T#e assai&ant?s motive was to reta&iate %or t#e &oss o% &i%e o% two
Maranaos as a resu&t o% t#e co&&ision etween Fortune B3press? us and t#e Aeepne! in w#ic# t#e two
Maranaos were riding' Mananggo&o, t#e &eader o% t#e group w#ic# #ad #iAacked t#e us, ordered t#e
passengers to get o%% t#e us as t#e! intended to urn it and its driver' T#e armed men actua&&! a&&owed 7tt!'
$aorong to retrieve somet#ing %rom t#e us' F#at apparent&! angered t#em was #is attempt to #e&p t#e driver
o% t#e us ! p&eading %or #is &i%e' @e was p&a!ing t#e ro&e o% t#e good "amaritan' $ertain&!, t#is act cannot e
considered an act o% neg&igence, &et a&one reck&essness'
4. &ortune Dxpress lia$le ,or +a#a*es (;n+e#nity ,or +eat))6 5rticle 13/ in relation to 5rticle
--" 7CC
7rtic&e 10>5 o% t#e $ivi& $ode, in re&ation to 7rtic&e 882> t#ereo%, provides %or t#e pa!ment o%
indemnit! %or t#e deat# o% passengers caused ! t#e reac# o% contract o% carriage ! a common carrier'
,nitia&&! %i3ed in 7rtic&e 882> at P3,222'22, t#e amount o% t#e said indemnit! %or deat# #as t#roug# t#e !ears
een gradua&&! increased in view o% t#e dec&ining va&ue o% t#e peso' ,t is present&! %i3ed at P42,222'22' T#e
$aorongs are entit&ed to t#is amount'
%. &ortune Dxpress lia$le ,or +a#a*es (5ctual +a#a*es)6 5rticle -1%% 7CC
7rtic&e 81.. o% t#e $ivi& $ode provides t#at ;e3cept as provided ! &aw or ! stipu&ation, one is
entit&ed to an ade9uate compensation on&! %or suc# pecuniar! &oss su%%ered ! #im as #e #as du&! proved'<
T#e tria& court %ound t#at t#e $aorongs spent P32,222'22 %or t#e wake and uria& o% 7tt!' $aorong' "ince
Fortune B3press does not 9uestion said %inding o% t#e tria& court, it is &ia&e to t#e $aorongs in t#e said amount
as actua& damages'
1". &ortune Dxpress lia$le ,or +a#a*es (=oral +a#a*es)6 5rticle --" 7CC
Dnder 7rtic&e 882> o% t#e $ivi& $ode, t#e ;spouse, &egitimate and i&&egitimate descendants and
ascendants o% t#e deceased ma! demand mora& damages %or menta& anguis# ! reason o% t#e deat# o% t#e
deceased'< T#e tria& court %ound t#at Pau&ie $aorong su%%ered pain %rom t#e deat# o% #er #usand and worr!
on #ow to provide support %or t#eir minor c#i&dren, Oasser Ping, :ose @einni, and Prince 7&e3ander' Fortune
B3press &ikewise does not 9uestion said %inding o% t#e tria& court' T#us, in accordance wit# recent decisions o%
t#e $ourt, t#e $ourt #o&d t#at Fortune B3press is &ia&e to t#e $aorongs in t#e amount o% P122,222'22 as
mora& damages %or t#e deat# o% 7tt!' $aorong'
11. &ortune Dxpress lia$le ,or +a#a*es (Dxe#plary +a#a*es)6 5rticle --3- 7CC
7rtic&e 8838 o% t#e $ivi& $ode provides t#at ;in contracts and 9uasi=contracts, t#e court ma! award
e3emp&ar! damages i% t#e de%endant acted in a wanton, %raudu&ent, reck&ess, oppressive, or ma&evo&ent
manner'< @erein, Fortune B3press acted in a wanton and reck&ess manner' Despite warning t#at t#e Maranaos
were p&anning to take revenge against Fortune B3press ! urning some o% its uses, and contrar! to t#e
assurance made ! its operations manager t#at t#e necessar! precautions wou&d e taken, Fortune B3press and
its emp&o!ees did not#ing to protect t#e sa%et! o% passengers' Dnder t#e circumstances, t#e $ourt deems it
reasona&e to award private respondents e3emp&ar! damages in t#e amount o% P122,222'22'
1-. &ortune Dxpress lia$le ,or +a#a*es (5ttorney1s ,ees)6 5rticle --"4 7CC
Pursuant to 7rtic&e 882/, attorne!?s %ees ma! e recovered w#en e3emp&ar! damages are awarded' n
t#e recent case o% "u&picio +ines, ,nc' v' $ourt o% 7ppea&s, t#e $ourt #e&d an award o% P42,222'22 as
attorne!?s %ees to e reasona&e' @ence, t#e $aorongs are entit&ed to attorne!?s %ees in t#at amount'
13. &ortune Dxpress lia$le ,or +a#a*es (Co#pensation ,or loss o, earnin* capacity)6 5rticle 13/ in
relation to 5rticle --" 7CC
7rtic&e 10>5 o% t#e $ivi& $ode, in re&ation to 7rtic&e 882> t#ereo%, provides t#at in addition to t#e
indemnit! %or deat# arising %rom t#e reac# o% contract o% carriage ! a common carrier, t#e ;de%endant s#a&&
e &ia&e %or t#e &oss o% t#e earning capacit! o% t#e deceased, and t#e indemnit! s#a&& e paid to t#e #eirs o%
t#e &atter'<
1/. &or#ula ,or co#putin* net earnin* capacity
+i%e e3pectanc! is e9uiva&ent to two t#irds (8-3) mu&tip&ied ! t#e di%%erence o% /2 and t#e age o% t#e
deceased' @erein, "ince 7tt!' $aorong was 30 !ears o&d at t#e time o% #is deat#, #e #ad a &i%e e3pectanc! o%
8/ 8-3 more !ears' @is proAected gross annua& income, computed ased on #is mont#&! sa&ar! o% P11,3/4'22
83 as a &aw!er in t#e Department o% 7grarian :e%orm at t#e time o% #is deat#, was P15/,224'22' 7&&owing %or
necessar! &iving e3penses o% 42I o% #is proAected gross annua& income, #is tota& earning capacit! amounts to
P8,181,525'.2' @ence, Fortune B3press is &ia&e to t#e $aorongs in t#e said amount as compensation %or &oss
o% earning capacit!'
[4-]
Lan+in*in vs. :an*asinan (ransportation (GR L>-4"1/>12! -% =ay 1%3")
Bn 1anc, Vi&&amor (J): / concur, 1 on &eave
&acts' ,n t#e morning o% 82 7pri& 1.>3, +eoni&a +andingin, daug#ter o% Marce&o +andigin and :ac9ue&
1ocasas, and Bstre&&a 6arcia, daug#ter o% Pedro 6arcia and Bu%racia +andingin, were among t#e passengers
in t#e us driven ! Marce&o (&igan and owned and operated ! Pantranco on an e3cursion trip %rom
Dagupan $it! to 1aguio $it! and ack' Dpon reac#ing t#e up#i&& point at $amp /, a sudden snapping or
reaking o% meta& e&ow t#e %&oor o% t#e us was #eard, and t#e us arupt&! stopped, ro&&ing ack a %ew
moments &aterC t#at as a resu&t, some o% t#e passengers Aumped out o% t#e us, w#i&e ot#ers stepped down' T#e
driver maneuvered t#e us sa%e&! to and against t#e side o% t#e mountain w#ere its rear end was made to rest,
ensuring t#e sa%et! o% t#e man! passengers sti&& inside t#e us' F#i&e t#e driver was steering t#e us towards
t#e mountainside, #e advised t#e passengers not to Aump, ut to remain seated' +eoni&a and Bstre&&a were not
t#rown out o% t#e us, ut t#at t#e! panicked and Aumped out' +eoni&a and Bstre&&a su%%ered serious inAuries as
a resu&t o% w#ic# +eoni&a and Bstre&&a died at t#e #ospita& on t#e same da!'
,n connection wit# t#e incident, #owever, t#e driver #ad een c#arged wit# and convicted o% mu&tip&e
#omicide and mu&tip&e s&ig#t p#!sica& inAuries on account o% t#e deat# o% +eoni&a and Bstre&&a and o% t#e
inAuries su%%ered ! %our ot#ers' "aid crimina& case, #owever, is pending appea& in a #ig#er court'
$ivi& $ases D=15>/ and D=1502 were %i&ed ! t#e spouses +andingin and spouses 6arcia %or damages
su%%ered ! t#em in connection wit# t#e deat# o% t#eir respective daug#ters, +eoni&a and Bstre&&a, due to t#e
a&&eged neg&igence o% Pangasinan Transport $o' and Marce&o (&igan and-or reac# o% contract o% carriage' 1!
agreement o% t#e parties, t#e two cases were tried Aoint&!' (n 10 (ctoer 1.>>, t#e court a 9uo rendered its
decision t#erein conc&uding t#at t#e accident was caused ! a %ortuitous event or an act o% 6od roug#t aout
! some e3tra=ordinar! circumstances independent o% t#e wi&& o% t#e Pantranco or its emp&o!ees' T#e $ourt
t#us aso&ved t#e de%endants %rom an! &iai&it! on account o% neg&igence on t#eir part and t#ere%ore
dismissing t#e comp&aints in t#e two cases' @owever, it ordered Pantranco to pa! to t#e spouses Marce&o
+andingin and :ac9ue& 1ocasas in $ivi& $ase D=15>/ t#e amount o% P>,422'22C and t#e amount o% P3,422'22
to t#e spouses Pedro 6arcia and Bu%racia +andingin in $ivi& $ase D=1502, not in pa!ment o% &iai&it! ecause
(ransportation La.! -""/ ( -1/ )
o% an! neg&igence on t#e part o% t#e de%endants ut as an e3pression o% s!mpat#! and goodwi&&' Pantranco
appea&ed'
T#e "upreme $ourt modi%ied t#e Audgment appea&ed %rom, and ordered P7ET:7E$( to pa! t#e spouses
+andingin and spouses 6arcia t#e amounts stated in t#e Audgment appea&ed %rom, as damages %or reac# o%
contracts, wit# interest t#ereon at t#e &ega& rate %rom t#e date o% t#e %i&ing o% t#e comp&aintsC wit# costs against
P7ET:7E$('
1. :57(R57C8 *uilty o, $reac) o, contract o, carria*e
T#e argument Q t#e court s#ou&d not #ave ordered t#em to assume an! pecuniar! &iai&it! inasmuc# as
it #as %ound t#em to e aso&ute&! %ree %rom %au&t or neg&igence, and #aving in %act dismissed t#e comp&aints
against t#em Q wou&d #ave een meritorious i% not %or t#e %act t#at P7ET:7E$( was gui&t! o% reac# o%
contract o% carriage' Bac# o% t#e two comp&aints averred t#at two uses, inc&uding t#e one in w#ic# t#e two
deceased gir&s were riding, were #ired to transport t#e e3cursionist passengers %rom Dagupan $it! to 1aguio
$it!, and return, and t#at t#e said two passengers did not reac# destination sa%e&!'
-. <uty o, a co##on carrier
7s a common carrier, P7ET:7E$( was dut! ound to carr! its passengers ;sa%e&! as %ar as #uman
care and %oresig#t can provide, using t#e utmost di&igence o% ver! cautious persons, wit# a due regard %or a&&
t#e circumstances'< (7rtic&e 1044, $ivi& $ode')
3. :antranco +i+ not #easure up to t)e +e*ree o, care an+ ,oresi*)t re9uire+ it un+er t)e
circu#stances
T#e cross=Aoint o% t#e us in w#ic# t#e deceased were riding roke, w#ic# caused t#e ma&%unctioning
o% t#e motor, w#ic# in turn resu&ted in panic among some o% t#e passengers' ,n +asam vs' "mit# (54 P#i&'
>>2), t#e $ourt #e&d t#at an accident caused ! de%ects in t#e automoi&e is not a caso %ortuito' T#e rationa&e
o% t#e carrier?s &iai&it! is t#e %act t#at ;t#e passenger #as neit#er t#e c#oice nor contro& over t#e carrier in t#e
se&ection and use o% t#e e9uipment and app&iances in use ! t#e carrier'< (Eecesito, et a&' vs' Paras, et a&', 125
P#i&' 04)
/. Conclusion o, @act o, Go+A con?ectural an+ speculative
T#e &ower court?s conc&usion t#at ;t#e accident was caused ! a %ortuitous event or an act o% 6od
roug#t aout ! some e3traordinar! circumstances independent o% t#e wi&& o% t#e Pantranco or its
emp&o!ees,< is in &arge measure conAectura& and specu&ative, and was arrived at wit#out due regard to a&& t#e
circumstances, as re9uired ! 7rtic&e 1044'
2. :resu#ption o, ne*li*ence .)en a passen*er +ies or is in?ure+
F#en a passenger dies or is inAured, t#e presumption is t#at t#e common carrier is at %au&t or t#at it
acted neg&igent&! (7rtic&e 104>)' T#is presumption is on&! reutted ! proo% on t#e carrier?s part t#at it
oserved t#e ;e3traordinar! di&igence< re9uired in 7rtic&e 1033 and t#e ;utmost di&igence o% ver! cautious
persons< re9uired in 7rtic&e 1044 (7rtic&e 104>)'
. Carrier s)oul+ *ive +ue re*ar+ ,or all circu#stances in connection .it) inspection
T#e &ower court considered t#e presumption reutted on t#e strengt# o% Pantranco?s evidence t#at
on&! t#e da! e%ore t#e incident, t#e cross=Aoint in 9uestion was du&! inspected and %ound to e in order' ,t
does not appear, #owever, t#at t#e carrier gave due regard %or a&& t#e circumstances in connection wit# t#e
said inspection' T#e us in w#ic# t#e deceased were riding was #eavi&! &aden wit# passengers, and it wou&d
e traversing mountainous, circuitous and ascending roads' T#us t#e entire us, inc&uding its mec#anica&
parts, wou&d natura&&! e ta3ed more #eavi&! t#an it wou&d e under ordinar! circumstances' T#e mere %act
t#at t#e us was inspected on&! recent&! and %ound to e in order wou&d not e3empt t#e carrier %rom &iai&it!
un&ess it is s#own t#at t#e particu&ar circumstances under w#ic# t#e us wou&d trave& were a&so considered'
[43]
Cali,ornia Lines vs. +e los Santos (GR L>13-2/! 3" <ece#$er 1%1)
First Division, Di*on (J): 0 concur, 8 took no part
&acts' ,n $ivi& $ase 80.2> o% t#e $F, o% Mani&a (1ranc# JV,,), Josep#ine F' :ega&ado soug#t to recover
%rom $a&i%ornia +ines, ,nc', a domestic corporation engaged in t#e usiness o% operating passenger uses,
and-or t#e :ica&inda 1us, damages and attorne!?s %ees in t#e tota& sum o% P8/,222'22' T#e damages were
c&aimed to #ave een t#e resu&t o% p#!sica& inAuries sustained ! #er w#i&e on oard a passenger us o% t#e
$a&i%ornia +ines, ,nc' w#ic# co&&ided wit# anot#er e&onging to :ica&inda 1us' ,n its answer to t#e comp&aint
t#e $a&i%ornia +ines, ,nc' interposed a cross=c&aim against its co=de%endant, :ica&inda 1us' "use9uent&!,
upon %inding t#at t#e :ica&inda 1us #ad no Auridica& persona&it! ecause it was a mere trade name, t#e
$a&i%ornia +ines %i&ed a t#ird=part! comp&aint against t#e owner o% t#e ot#er us in t#e accident, 7mparo de
&os "antos, toget#er wit# #er #usand, Victor de &os "antos, and #er driver, $e&edonio E' Morta, in order to
#o&d t#em &ia&e %or an! amount w#ic# :ega&ado ma! e entit&ed to co&&ect upon #er comp&aint' 7%ter t#e
#earing o% $ivi& $ase 80.2> #ad started, :ega&ado and de &os "antos entered into an amica&e sett&ement, %or
w#ic# reason t#e tria& court dismissed t#e case on 11 Decemer 1.4>C wit#out pronouncement as to costs' (n
15 Januar! 1.40, t#e $a&i%ornia +ines, as de%endants and t#ird=part! p&ainti%%, %i&ed a motion %or t#e
amendment o% t#e court?s order so as to make t#e dismissa& wit#out preAudice inso%ar as its t#ird=part!
comp&aint was concernedC w#ic# was granted ! t#e &ower court on 8 Feruar! 1.4>'
(n 12 7pri& 1.40, t#e $a&i%ornia +ines commenced $ivi& $ase 388./ against 7mparo de &os "antos, Victor de
&os "antos and $e&edonio E' Morta in t#e $F, o% Mani&a (1ranc# 1) to recover damages su%%ered ! it as a
resu&t o% t#e co&&ision' ,n t#eir answer %i&ed on 8 Ma! 1.40, de &os "antos, et' a&' a&&eged t#at t#e damages, i% at
a&&, caused to $a&i%ornia +ines? us were due to t#e reck&essness and &ack o% prudence and precaution o% its
own driver, and %i&ed a counterc&aim t#erein %or mora& damages in t#e sum o% P12,222'22, %or e3emp&ar! or
corrective damages in t#e sum o% P4,222'22, %or &oss o% usiness goodwi&& o% t#e :ica&inda 1us in t#e sum o%
P12,222'22 and %or attorne!?s %ees in t#e sum o% P4,222'22' 4 da!s t#erea%ter, de%endants %i&ed a motion to
dismiss t#e comp&aint on t#e ground t#at t#ere was anot#er action pending etween t#e same parties %or t#e
same cause, a&&eging t#at t#e t#ird=part! comp&aint %i&ed ! t#e $a&i%ornia +ines in $ivi& $ase 80.2> was sti&&
pending adAudication in 1ranc# JV,, o% t#e $F, o% Mani&a, and t#at t#e parties and cause o% action t#erein
invo&ved are t#e same as t#ose in $ivi& $ase 388./' ,n spite o% t#e opposition %i&ed ! t#e $a&i%ornia +ines,
t#e &ower court, in its order o% 10 Ju&! 1.40, granted t#e motion to dismiss t#e comp&aint, upon t#e ground
re&ied upon in support t#ereo%' (n 18 7ugust 1.40 $a&i%ornia +ines %i&ed a motion in $ivi& $ase 80.2> %or t#e
c&ari%ication o% t#e order o% dismissa& dated 8 Feruar! 1.40, ut t#e same was denied ! t#e court on t#e
ground t#at said order was a&read! su%%icient&! c&ear' Dpon denia& o% t#e motion %or reconsideration %i&ed !
t#e $a&i%ornia +ines on 88 7ugust 1.40, said part! took t#e present appea&'
T#e "upreme $ourt reversed and set aside t#e order o% dismissa& appea&ed %rom, and remanded t#e case to t#e
&ower court %or %urt#er proceedings in accordance wit# &awC wit# costs'
1. Civil case -3%" +is#isse+ .it)out pre?u+ice
$ivi& $ase 80.2> was de%inite&! terminated in its entiret! ! t#e order o% dismissa& dated 11
Decemer 1.4>, as amended ! t#e ot#er issued on 8 Feruar! 1.4>' T#e %ormer provided %or t#e dismissa&
o% ;t#is case< H meaning a&& t#e c&aims, counterc&aims, cross=c&aims and t#ird=part! comp&aint invo&ved in
t#e case H and t#is was reiterated in t#e order o% 8 Feruar!, w#ic# mere&! made t#e dismissa& o% t#e t#ird=
part! comp&aint wit#out preAudice' T#at t#e w#o&e case was deemed terminated is a&so c&ear&! in%era&e %rom
t#e %act t#at on 82 7ugust 1.40, a%ter unsuccess%u&&! seeking a c&ari%ication o% t#e origina& order o% dismissa&,
$a&i%ornia +ines %i&ed a motion to set #is t#ird=part! comp&aint %or tria&, ut t#e court denied t#e motion'
-. Clai#s $y Cali,ornia Lines
T#e pertinent a&&egations o% $a&i%ornia +ines? comp&aint regarding damages are as %o&&ows: (V,,) T#at
as a resu&t o% t#e :ica&inda 1us #itting and striking p&ainti%%?s passenger us mentioned in paragrap# ,V
#ereo%, t#e &atter us was damaged and was roug#t to E'$' Mercado %or repairs, t#e amount o% t#e damage
and va&ue o% t#e repairs eing P1,022'22, more or &ess' (V,,,) T#at ecause o% t#e damage to said p&ainti%%?s
passenger us and ecause o% t#e needed repairs, t#e said us was &aid up and was not and cou&d not e
operated ! p&ainti%% in its regu&ar and ordinar! usiness %rom 8. 7ugust 1.44 to / (ctoer 1.44 w#en t#e
needed repairs on t#e said us were %inis#ed and comp&eted, as a resu&t o% w#ic# p&ainti%% su%%ered damages,
t#e amount o% damages eing P34'22 a da!, more or &ess, %rom 8. 7ugust 1.44 to / (ctoer 1.44, or a tota&
o% P1,534'22, t#e said sum o% P34'22 eing t#e average dai&! net earning and pro%it in t#e operation o% said
passenger us ! p&ainti%%' (,J) T#at as a resu&t o% t#e gross neg&igence o% de%endants in t#e maintenance,
supervision and operation o% said :ica&inda 1us, t#e p&ainti%% is entit&ed to co&&ect e3emp&ar! or corrective
damages %rom de%endants'<
3. ()ir+ party co#plaint actually a cross>clai#
T#e t#ird=part! comp&aint was, in rea&it!, a cross=c&aim ecause it soug#t to otain Audgment ordering
7mparo de &os "antos principa&&!, as owner o% t#e :ica&inda 1us ve#ic&e t#at co&&ided wit# t#e one owned !
t#e $a&i%ornia +ines, ,nc', to pa! to t#e &atter w#atever damages it ma! e sentenced to pa! its passenger
Josep#ine F' :ega&ado' F#en t#e $a&i%ornia +ines discovered t#at t#e :ica&inda 1us was a mere trade name
and #ad no Auridica& persona&it!, it otained &eave o% court to %i&e and actua&&! %i&ed a t#ird=part! comp&aint
against 7mparo de &os "antos, #er #usand and t#eir driver' T#ese t#ird=part! de%endants sett&ed t#e c&aim o%
:ega&ado %or damages, t#us &eaving not#ing in t#is respect to t#e $a&i%ornia +ines to recover %rom t#em'
/. Clai# asserte+ is +i,,erent ,ro# t)at in t)ir+ party co#plaint
F#et#er it was proper&! a cross=c&aim or a t#ird=part! comp&aint is o% &itt&e moment in t#e decision o%
t#e appea&' T#e %act is t#at t#e c&aim asserted t#erein was %or reimursement o% w#atever damages t#e
$a&i%ornia +ines mig#t e sentenced to pa! its passenger, and it is ovious t#at said c&aim is entire&! di%%erent
%rom, and does not cover nor is it covered ! t#e c&aim suAect matter o% $ivi& $ase 388./, name&!, recover!
o% t#e damages su%%ered ! t#e $a&i%ornia +ines' ,t is ovious, t#ere%ore, t#at t#e &ower court erred in
dismissing t#e &atter case on t#e ground t#at t#ere was a&read! anot#er action pending etween t#e same
parties upon t#e same or simi&ar causes o% action'
[4/]
Dstra+a vs. Consolacion (GR L>/"%/4! -% Bune 1%3)
"econd Division, 7ntonio (J): 8 concur, 1 on &eave, 1 designated to sit in t#e second division
&acts: (n 1 Januar! 1.04, 6regorio Bstrada?s wi%e, "imeona Bstrada, was a passenger o% t#e 7$ Jeep (RB=
421), owned and operated ! $ora*on :amire* D! and driven ! +ucio 6a&aura, w#i&e said Aeep was cruising
a&ong $&aro M' :ecto 7venue, #eading towards t#e direction o% t#e Jones $irc&e, Davao $it! t#e driver
(6a&aura) ;wit#out regard %or t#e sa%et! o% Bstrada?s wi%e w#o was among #is passengers and wit#out taking
t#e necessar! precaution< in accordance wit# t#e situation, umped a Ford pick=up truckC as a conse9uence o%
t#e incident Bstrada?s wi%e sustained a %ractured &e%t #umerus (pu&monar!) emo&ism and s#ock due to
respirator! %ai&ureC s#e was roug#t to t#e "an Pedro @ospita& w#ere s#e died'
(n 15 Feruar! 1.04, 6regorio Bstrada %i&ed a comp&aint %or damages against D! and 6a&aura %or reac# o%
t#eir o&igations as a common carrier, in view o% t#e deat# o% #is wi%e w#i&e s#e was a passenger o% t#e
ve#ic&e' De%endants, in t#eir answer, w#i&e admitting t#at Bstrada?s wi%e was a passenger and t#at s#e died as
a resu&t o% t#e accident, a&&eged t#at t#e pro3imate and on&! cause o% t#e accident was t#e neg&igence o% t#ird
persons (t#e drivers, Dani&o 7ng and :odo&%o D' Bndino, o% a To!ota pick=up truck LT:D 881M, and a Ford
pick=up truck LT:D 582M)' De%endants &ikewise set up a counterc&aim %or damages ! reason o% Bstrada?s
institution o% t#e c&ear&! un%ounded suit against t#em' (n 1> 7pri& 1.04, de%endants %i&ed a motion %or
summar! Audgment against Bstrada on t#e ground t#at t#ere is no genuine issue as to an! materia& %act in t#e
case e3cept as to t#e amount o% damages de%endants are seeking %rom Bstrada ! wa! o% counterc&aim' (n 82
Ma! 1.04, t#e $F, o% Davao ($ivi& $ase /03.) decreed t#at de%endants #ave Audgment summari&! against t#e
Bstrada %or suc# amount as ma! e %ound due t#em %or damages' 7 motion %or reconsideration o% t#e order
was denied . June 1.04 %or &ack o% merit' Bstrada %i&ed a petition %or certiorari wit# pro#iition e%ore t#e
"upreme $ourt'
T#e "upreme $ourt dismissed t#e petition %or certiorari wit# pro#iition, wit#out specia& pronouncement as to
costs'
1. 5nnexes to ans.er in support o, #otion ,or su##ary ?u+*#ent
,n support o% t#e de%endant?s motion %or summar! Audgment, certain anne3es to t#e answer were
incorporated t#erein, i'e' (a) T#e sketc# o% t#e accident made ! Tra%%ic ,nvestigator J'"' Forme&o*a o% t#e
Davao $it! Po&ice Department, marked as 7nne3 G3? o% t#e de%endants answer' () "aid investigator?s
a%%idavit detai&ing #is %indings upon investigation stating t#at t#e pick=up wit# p&ate Eo' T=:D=582 upon
reac#ing t#e intersection o% :ecto and 1oni%acio "treets co&&ided wit# t#e pick=up wit# p&ate Eo' T=:D=881,
and t#at upon impact, t#e &atter pick=up co&&ided wit# t#e Aeep driven ! +ucio 6a&aura t#at was coming %rom
t#e opposite directionC (c) T#e respective sworn statements o% t#e drivers o% t#e two pick=ups (Dani&o 7ng and
:odo&%o Bndino) taken ! t#e Tra%%ic Division o% t#e Davao $it! Po&ice Department a%ter t#e accident,
marked as 7nne3es G4? and o% t#e de%endants? answer w#erein eac# driver respective&! c&aimed t#at #e
e3ercised due care ut attriuted to t#e ot#er neg&igence as t#e cause o% t#e co&&isionC and (d) T#e sworn
statement o% de%endant driver (+ucio 6a&aura) o% said 7' $' Jeep, &ikewise taken ! t#e Tra%%ic Division o% t#e
Davao $it! Po&ice Department detai&ing w#at #e did in order to prevent or minimi*e damages to #is ve#ic&e
and #is passengers, marked as 7nne3 G0? o% de%endants? answer' 1! means o% t#e anne3es, D! and 6a&aura
soug#t to prove t#at t#e! were re&ieved o% an! &iai&it! to petitioner inasmuc# as t#e accident w#ic# caused
t#e deat# o% petitioner?s wi%e ;resu&ted %rom t#e neg&igence o% t#ird persons over w#om de%endants #ad no
supervision or contro&, name&!, t#e drivers o% t#e two pick=up trucks w#ic# co&&ided at t#e intersection o% $'
M' :ecto 7ve' and 1oni%acio "t', Davao $it!, as a resu&t o% w#ic# co&&ision, one o% t#em was deviated %rom
course to t#e &ane w#ere de%endants? 7'$'=Jeep was t#en trave&&ing, w#ere it a&so co&&ided wit# t#e &atter'<
-. Section -! Rule 3/ o, t)e Revise+ Rules
Pursuant to "ection 8, :u&e 35, o% t#e :evised :u&es, ;7 part! against w#om a c&aim, counterc&aim,
or crossc&aim is asserted or a dec&arator! re&ie% is soug#t ma!, at an! time, move wit# supporting a%%idavits %or
a summar! Audgment in #is %avor as to a&& or an! part t#ereo%'< T#e de%endant w#o e&ieves t#at #e is untit&ed
to a Audgment eit#er on t#e p&eadings or on t#e asis o% e3trinsic %acts esta&is#ed ! a%%idavits or depositions
ma! move %or summar! Audgment in #is %avor' ,n ot#er words, w#en t#e moving part! is a de%ending part!,
#is p&eadings, depositions or a%%idavits must s#ow t#at #is de%enses or denia&s arc su%%icient to de%eat t#e
c&aimant?s c&aim'
3. Su##ary ?u+*#ent6 :roce+ure
T#e a%%idavit sumitted ! t#e part! moving %or summar! Audgment s#a&& e ! persons #aving
persona& know&edge o% t#e %actsC it s#a&& recite a&& materia& %acts and s#ow t#at t#ere is no de%ense to t#e cause
o% actions or t#at t#e cause o% action #as no merits' T#is motion s#a&& e served on t#e adverse part! at &east
12 da!s prior to t#e time speci%ied in t#e #earing' T#e adverse part! ma! a&so, prior to said date, serve
opposing a%%idavits T#e opposing papers, inc&uding p&eadings, depositions, and a%%idavits must esta&is# a
genuine issue o% %act in order to de%eat a motion %or summar! Audgment' 7%ter #earing, t#e motion %or
summar! Audgment s#a&& e granted i%, on t#e asis o% a&& t#e papers and proo%s sumitted, t#e cause o% action
or de%ense s#a&& e esta&is#ed su%%icient&! to warrant t#e court as a matter o% &aw in directing Audgment in
%avor o% an! part!' T#e motion s#a&& e denied i% an! part! s#a&& s#ow %acts su%%icient to re9uire a tria& o% an!
issue o% %act ot#er t#an an issue as to t#e amount or e3tent o% t#e damages'
/. Su##ary ?u+*#ent6 :urpose
T#is "ummar! Judgment or 7cce&erated Judgment is a device %or weeding out s#am c&aims or
de%enses at an ear&! stage o% t#e &itigation, t#ere! avoiding t#e e3pense and &oss o% time invo&ved in a tria&'
T#e ver! oAect is to separate w#at is %orma& or pretended in denia& or averment %rom w#at is genuine and
sustantia&, so t#at on&! t#e &atter ma! suAect a suitor to t#e urden o% a tria&'
2. =otion ,or su##ary ?u+*#ent +eals on .)et)er t)ere are tria$le issues o, ,acts6 (est
,n conducting t#e #earing, t#e purpose o% t#e Audge is not to tr! t#e issue, ut mere&! to determine
w#et#er t#ere is a meritorious issue to e tried' F#ere a motion is made %or summar! Audgment, suc# motion
is not directed to t#e p&eadings and dea&s on&! wit# t#e 9uestion o% w#et#er t#ere are tria&e issues o% %acts and
w#ere suc# issues e3ist summar! Audgment must e denied' "ummar! Audgment s#ou&d not e granted w#ere
is %air&! appears t#at t#ere is a tria&e issue to e tried' ;T#e $ourt s#ou&d not pass, on 9uestions o% credii&it!
or weig#t o% evidence, and t#at t#e summar! Audgment procedure Gs#ou&d not e perverted to t#e tria& o%
disputed 9uestions o% %act upon a%%idavits<' T#e test, t#ere%ore, o% a motion %or summar! Audgment is H
w#et#er t#e p&eadings, a%%idavits and e3#iits in support o% t#e motions are su%%icient to overcome t#e
opposing papers and to Austi%! a %inding as a matter o% &aw t#at t#ere is no de%ense to t#e action or t#e c&aim is
c&ear&! meritorious'
. :rocee+in*s ,or su##ary ?u+*#ent6 Bur+en o, proo,
,n proceedings %or summar! Audgment, t#e urden o% proo% is upon t#e p&ainti%% to prove t#e cause o%
action and to s#ow t#at t#e de%ense is interposed so&e&! %or t#e purpose o% de&a!' 7%ter p&ainti%%?s urden #as
een disc#arged, de%endant #as t#e urden to s#ow %acts su%%icient to entit&e #im to de%end'
3. <uty o, carrier un+er t)e contract o, carria*e6 :resu#ption o, ne*li*ence6 <ili*ence re9uire+
Dnder t#e contract o% carriage, D! and 6a&aura assumed t#e e3press o&igation to transport Bstrada?s
wi%e to #er destination sa%e&! and to oserve e3tra ordinar! di&igence wit# due regard %or a&& t#e
circumstances, and t#at an! inAur! su%%ered ! #er in t#e course t#ereo%, is immediate&! attriuta&e to t#e
neg&igence o% t#e carrier' To overcome suc# presumption, it must e s#own t#at t#e carrier #ad oserved t#e
re9uired e3traordinar! di&igence, w#ic# means t#at t#e carrier must s#ow t#e ;utmost di&igence o% ver!
cautious persons as %ar as #uman care and %oresig#t can provide<, or t#at t#e accident was caused ! a
%ortuitous event'
4. E)at constitutes caso ,ortuito
,n order to constitute a case %ortuito t#at wou&d e3empt a person %rom responsii&it!, it is necessar!
t#at (1) t#e event must e independent o% t#e #uman wi&&C (8) t#e occurrence must render it impossi&e %or t#e
o&igor to %u&%i&& #is o&igation m a norma& mannerC and (3) t#e o&igor must e %ree o% a concurrent or
contriutor! %au&t or neg&igence'
%. :urpose o, su$#ission o, t)e a,,i+avit6 5,,i+avit pri#a ,acie proo,! sai+ proo, .as unre$utte+
,t was precise&! ecause o% t#e &ega& presumption t#at once a passenger in t#e course o% trave& is
inAured or does not reac# #is destination sa%e&!, t#e carrier and t#e driver are presumed to e at %au&t, t#at D!
and 6a&aura sumitted a%%idavits to prove t#at t#e accident w#ic# resu&ted in t#e deat# o% Bstrada?s wi%e was
due to t#e %au&t or neg&igence o% t#e drivers o% t#e two pickup trucks over w#om t#e carrier #ad no supervision
or contro&' @aving, t#ere%ore, s#own prima %acie t#at t#e accident was due to a caso %ortuito and t#at t#e
driver was %ree o% concurrent or contriutor! %au&t or neg&igence, it was incument upon Bstrada to reut suc#
proo%' @aving %ai&ed to do so, t#e de%ense o% t#e carrier t#at t#e pro3imate cause o% t#e accident was a caso
%ortuito remains unreuted'
1". Kuestions o, ,acts not yet resolve+
(ransportation La.! -""/ ( -1% )
F#et#er a carrier used suc# reasona&e precautions to avoid t#e accident as wou&d ordinari&! e used
! care%u&, prudent persons under &ike circumstances is a 9uestion essentia&&! one o% %act and, t#ere%ore,
ordinari&! suc# issue must e decided at t#e tria&' 1ut w#ere, as #erein, Bstrada #as not sumitted opposing
a%%idavits to controvert D!?s and 6a&aura?s evidence t#at t#e driver o% t#e passenger Aeepne! was %ree o%
contriutor! %au&t as #e stopped t#e Aeepne! to avoid t#e accident, ut in spite o% suc# precaution t#e accident
occurred, t#e Judge did not, t#ere%ore, act aritrari&! in dec&aring in #is (rder t#at ;t#ere is no genuine issue
to an! materia& %act and no controversia& 9uestion o% %act to e sumitted to t#e tria& court'<
11. 8r+er #erely an interlocutory or+er
T#is was, #owever, a mere inter&ocutor! order directing t#at a #earing e conducted %or t#e purpose o%
ascertaining t#e amount or t#e assessment o% damages w#ic# ma! e adAudged in %avor o% t#e prevai&ing part!'
,t is a determination o% t#e court o% a pre&iminar! point or directing some steps in t#e proceedings, ut not a
disposition o% t#e merits' ;Dpon t#e rendering o% t#e assessment, t#e $ourt s#a&& direct t#e entr! %ort#wit# o%
t#e appropriate summar! Audgment'<
1-. 8r+er o, ?u+*e cannot $e consi+ere+ a ?u+*#ent! in t)e a$sence o, any ,in+in*s o, ,act an+
conclusions o, la.
,n t#e asence o% an! %indings o% %act and conc&usions o% &aw, t#e order o% t#e Judge cannot e
considered a Audgment' ,t #as een #e&d t#at ;a tria& court in granting summar! Audgment s#ou&d %i&e %indings
o% %act and conc&usion o% &aw or a memorandum opinion so as to disc&ose grounds upon w#ic# t#e tria& court
reac#ed its determination'< ,n t#is Aurisdiction, pursuant to "ection . o% 7rtic&e J o% t#e $onstitution and t#e
procedura& ru&es, a&& Audgments determining t#e merits o% cases s#ou&d state c&ear&! and distinct&! t#e %acts and
t#e &aw on w#ic# it is ased'
13. :resent petition pre#ature
T#ere eing no Audgment, t#e present petition is, t#ere%ore, premature' $ertain&!, Bstrada cou&d move
%or t#e setting aside o% t#e (rder o% 82 Ma! 1.04 ! t#e presentation o% opposing a%%idavits s#owing t#at,
ot#er t#an t#e issue as to t#e amount or e3tent o% damages, t#ere is a genuine issue o% %act on t#e carrier?s
&iai&it!'
[85] Dng Biu vs. CA, see [+*]
[4]
Lara vs. Galencia (GR L>%%"3! 3" Bune 1%24)
&acts' Demetrio +ara went to t#e &umer concession o% 1rigido :' Va&encia in Parang, $otaato upon
instructions o% #is c#ie% in order to c&assi%! t#e &ogs o% de%endant w#ic# were t#en read! to e e3ported and to
e &oaded on a s#ip anc#ored in t#e port o% Parang' ,t took +ara > da!s to do #is work during w#ic# #e
contracted ma&aria %ever and %or t#at reason #e evinced a desire to return immediate&! to Davao' 7t t#at time,
t#ere was no avai&a&e us t#at cou&d take #im ack to Davao and so #e re9uested Va&encia i% #e cou&d take
#im in #is own pick=up' Va&encia agreed and, toget#er wit# +ara, ot#er passengers tagged a&ong, most o% t#em
were emp&o!ees o% t#e 6overnment' Va&encia mere&! accommodated t#em and did not c#arge t#em an! %ee
%or t#e service' ,t was a&so t#eir understanding t#at upon reac#ing arrio "amoa!, t#e passengers wou&d a&ig#t
and trans%er to a us t#at regu&ar&! makes t#e trip to Davao ut un%ortunate&! t#ere was none avai&a&e at t#e
time and so t#e same passengers, inc&uding +ara, again re9uested Va&encia to drive t#em to Davao' Va&encia
again accommodated t#em and upon reac#ing Pm' .>, +ara accidenta&&! %e&& su%%ering %ata& inAuries'
7n action %or damages was roug#t ! +ourdes J' +ara, et' a&' against Va&encia in t#e $F, o% Davao %or t#e
deat# o% one Demetrio +ara, "r' a&&eged&! caused ! t#e neg&igent act o% Va&encia' Va&encia denied t#e c#arge
o% neg&igence and set up certain a%%irmative de%enses and a counterc&aim' T#e court a%ter #earing rendered
(ransportation La.! -""/ ( --" )
Audgment ordering Va&encia to pa! +ara, et' a&' t#e %o&&owing amount: (a) P12,222 as mora& damagesC ()
P3,222 as e3emp&ar! damagesC and (c) P1,222 as attorne!?s %ees, in addition to t#e costs o% action' 1ot#
parties appea&ed to t#e "upreme $ourt ecause t#e damages c&aimed in t#e comp&aint e3ceed t#e sum o%
P42,222'
T#e "upreme $ourt reversed t#e decision appea&ed %rom, wit#out pronouncement as to costs'
1. Lara! et. al. #erely acco##o+ation passaen*ers .)o pai+ not)in* ,or service6 <e*ree o,
+ili*ence re9uire+ o, o.ner o, ve)icle
T#e deceased, as we&& as #is companions w#o rode in t#e pick=up o% Va&encia, were mere&!
accommodation passengers w#o paid not#ing %or t#e service and so t#e! can e considered as invited guests
wit#in t#e meaning o% t#e &aw' 7s accommodation passengers or invited guests, Va&encia as owner and driver
o% t#e pick=up owes to t#em mere&! t#e dut! to e3ercise reasona&e care so t#at t#e! ma! e transported sa%e&!
to t#eir destination' T#us, ;T#e ru&e is esta&is#ed ! t#e weig#t o% aut#orit! t#at t#e owner or operator o% an
automoi&e owes t#e dut! to an invited guest to e3ercise reasona&e care in its operation, and not
unreasona&! to e3pose #im to danger and inAur! ! increasing t#e #a*ard o% trave&' T#is ru&e, as %re9uent&!
stated ! t#e courts, is t#at an owner o% an automoi&e owes a guest t#e dut! to e3ercise ordinar! or
reasona&e care to avoid inAuring #im' "ince one riding in an automoi&e is no &ess a guest ecause #e asked
%or t#e privi&ege o% doing so, t#e same o&igation o% care is imposed upon t#e driver as in t#e case o% one
e3press&! invited to ride< Va&encia, t#ere%ore, is on&! re9uired to oserve ordinar! care, and is not in dut!
ound to e3ercise e3traordinar! di&igence as re9uired o% a common carrier ! P#i&ippine &aw'
-. Galencia )a+ +one .)at a reasona$le pru+ent #an .oul+ )ave +one
Va&encia was not in dut! ound to take t#e deceased in #is own pick=up to Davao ecause %rom
Parang to $otaato t#ere was a &ine o% transportation t#at regu&ar&! makes trips %or t#e pu&ic, and i% Va&encia
agreed to take t#e deceased in #is own car, it was on&! to accommodate #im considering #is %everis# condition
and #is re9uest t#at #e e so accommodated' T#e passengers w#o rode in t#e pick=up o% Va&encia took t#eir
respective seats t#erein at t#eir own c#oice and not upon indication o% Va&encia wit# t#e particu&arit! t#at
Va&encia invited t#e deceased to sit wit# #im in t#e %ront seat ut w#ic# invitation t#e deceased dec&ined' T#e
reason %or t#is can on&! e attriuted to #is desire to e at t#e ack so t#at #e cou&d sit on a ag and trave& in a
rec&ining position ecause suc# was more convenient %or #im due to #is %everis# condition' 7&& t#e
circumstances t#ereo% c&ear&! indicate t#at Va&encia #ad done w#at a reasona&e prudent man wou&d #ave
done under t#e circumstances'
3. &in+in* as to spee+ not supporte+ $y evi+ence6 else! spee+ not unreasona$le
T#e %inding o% t#e tria& court t#at t#e pick=up was running at more t#an 52 ki&ometers per #our is not
supported ! evidence' T#is is a mere surmise made ! t#e tria& court considering t#e time t#e pick= up &e%t
arrio "amoa! and t#e time t#e accident occurred in re&ation to t#e distance covered ! t#e pick=up' 7nd even
i% t#is is correct, sti&& we sa! t#at suc# speed is not unreasona&e considering t#at t#e! were trave&&ing on a
nationa& road and t#e tra%%ic t#en was not #eav!'
/. ;n?ury to passen*er )as $een proxi#ately cause+ $y o.n ne*li*ence
T#e incident ma! e attriuted to &ack o% care on t#e part o% t#e deceased considering t#at t#e pick=up
was open and #e was t#en in crouc#ing position' ,ndeed t#e &aw provides t#at ;7 passenger must oserve t#e
di&igence o% a good %at#er o% a %ami&! to avoid inAur! to #imse&%< (7rtic&e 10>1, new $ivi& $ode), w#ic#
means t#at i% t#e inAur! to t#e passenger #as een pro3imate&! caused ! #is own neg&igence, t#e carrier
cannot e #e&d &ia&e'
2. Fn,ortunate )appenin* +ue to un,oreseen acci+ent
T#ere is ever! reason to e&ieve t#at t#e un%ortunate #appening was on&! due to an un%oreseen
accident caused ! t#e %act at t#e time t#e deceased was #a&% as&eep and must #ave %a&&en %rom t#e pick=up
(ransportation La.! -""/ ( --1 )
w#en it ran into some stones causing it to Aerk considering t#at t#e road was t#en ump!, roug# and %u&& o%
stones' 7&& t#ings considered, t#e accident occurred not due to t#e neg&igence o% Va&encia ut to circumstances
e!ond #is contro& and so #e s#ou&d e e3empt %rom &iai&it!'
[43]
Bayasen vs. C5 (GR L>-2342! - &e$ruary 1%41)
First Division, Fernande* (J): 5 concur
&acts' (n t#e morning o% 14 7ugust 1.>3, "aturnino 1a!asen, t#e :ura& @ea&t# P#!sician in "agada,
Mountain Province, went to arrio 7masing to visit a patient' Two nurses %rom t#e "aint T#eodore?s @ospita&
in "agada, vi*', B&ena 7wic#en and Do&ores 1a&cita, rode wit# #im in t#e Aeep assigned %or t#e use o% t#e
:ura& @ea&t# Dnit as t#e! #ad re9uested %or a ride to 7masing' +ater, at 7masing, t#e gir&s, w#o wanted to
gat#er %&owers, again asked i% t#e! cou&d ride wit# #im up to a certain p&ace on t#e wa! to arrio "u!o w#ic#
#e intended to visit an!wa!' Dr' 1a!asen again a&&owed t#em to ride, B&ena sitting #erse&% etween #im and
Do&ores' (n t#e wa!, at arrio +angtiw, t#e Aeep went over a precipice' 7out / %eet e&ow t#e road, it was
&ocked ! a pine tree' T#e t#ree, were t#rown out o% t#e Aeep' B&ena was %ound &!ing in a creek %urt#er e&ow'
7mong ot#er inAuries, s#e su%%ered a sku&& %racture w#ic# caused #er deat#' "aturnino 1a!asen was c#arged in
Decemer 1.>3 ! t#e Provincia& Fisca& o% Mountain Province o% t#e crime o% @omicide T#ru :eck&ess
,mprudence' 7%ter tria&, t#e $F, o% Mountain Province ("econd Judicia& District, $rimina& $ase 124>) %ound
1a!asen gui&t! o% t#e c#arge and sentenced t#e &atter to an indeterminate pena&t! o% 5 Mont#s and 1 Da! o%
arresto ma!or as minimum, to 1 Oear, 0 Mont#s and 12 Da!s o% prision correcciona&, as ma3imum, to
indemni%! t#e #eirs o% t#e deceased B&ena 7wic#en t#e amount o% P3,222'22 as compensator! damages, and
P1,222'22 as %ees o% t#e attorne! contracted ! t#e said #eirs and P1,//>'22 %or uria& e3penses o% t#e
deceased, and to pa! t#e costs'
From t#is decision, 1a!asen appea&ed to t#e $ourt o% 7ppea&s, w#ic#, on 10 Eovemer 1.>4, a%%irmed t#e
decision o% t#e tria& court wit# t#e modi%ications t#at t#e indemnit! was increased to P>,222'22C t#e award o%
attorne!?s %ees was set asideC and t#at t#e ma3imum o% t#e prison term was raised to 1 Oear, 0 Mont#s, and 10
Da!s o% prision correcciona&' T#e motion %or reconsideration o% 1a!asen was denied' @ence, t#e petition %or
T#e "upreme $ourt set aside t#e decision o% t#e $ourt o% 7ppea&s soug#t to e reviewed, and ac9uitted
1a!asen o% t#e crime c#arged in t#e in%ormation in $rimina& $ase 124> o% t#e $F, o% Mountain Province,
wit# costs de o%icio'
1. :rosecution1s evi+ence not le*ally su,,icient to s)o. accuse+ .as ne*li*ent in +rivin* )is ?eep
7 care%u& e3amination o% t#e evidence introduced ! t#e prosecution s#ows no ;&ega&&! su%%icient<
proo% t#at t#e accused was neg&igent in driving #is Aeep' T#e star witness o% t#e prosecution, Do&ores 1a&cita
w#o was one o% t#e passengers in t#e Aeep, testi%ied t#at "aturnino 1a!asen was driving #is Aeep moderate&!
Aust e%ore t#e accident and categorica&&! stated t#at s#e did not know w#at caused t#e Aeep to %a&& into t#e
precipice' F#en asked w#et#er t#e Aeep #it an!t#ing e%ore it %e&& into t#e precipice, t#e witness answered t#at
s#e did not %ee& an! ump or Ao&t' ,t is c&ear %rom t#e &ast part o% t#e testimon! o% t#e witness, Do&ores 1a&cita,
t#at t#ere was no conversation etween t#e passengers in t#e Aeep t#at cou&d #ave distracted t#e attention o%
t#e accused w#i&e driving t#e Aeep' 7s to t#e condition o% t#e Aeep itse&%, t#e same witness testi%ied t#at s#e
;did not notice an!t#ing wrong< wit# it %rom t#e time t#e! drove %rom "agada to 7masing, and %rom t#ere to
t#e p&ace w#ere t#e Aeep %e&& o%% t#e road' :egarding t#e road, s#e said t#at it was %air enoug# to drive on, ut
t#at it was moist or wet, and t#e weat#er was %air, too' 7s to w#et#er 1a!asen was under t#e in%&uence o%
&i9uor at t#e time o% t#e accident, s#e testi%ied t#at #e was not' ,n t#e &ig#t o% t#e testimon! o% Do&ores 1a&cita,
t#e e!ewitness o% t#e accident presented ! t#e prosecution, t#ere is aso&ute&! no evidence on record to s#ow
t#at t#e accused was neg&igent in driving #is Aeep'
(ransportation La.! -""/ ( --- )
-. 5ccuse+1s reason ,or ,allin* into t)e precipice
@erein, 1a!asen testi%ied t#at e%ore reac#ing t#e portion o% t#e road w#ere t#e Aeep %e&&, #e noticed
t#at t#e rear w#ee& skidded, w#i&e driving %rom / to 12 ki&ometers per #ourC t#at as a precautionar! measure,
#e directed t#e Aeep towards t#e side o% t#e mountain, a&ong t#e side o% t#e mountain, ut not touc#ing t#e
mountainC t#at w#i&e doing so, t#e &ate B&ena 7wic#en sudden&! #e&d t#e steering w#ee& and #e %e&t t#at #er
%oot stepped on #is rig#t %oot w#ic# was pressed t#en on t#e acce&eratorC and t#at immediate&! a%ter, t#e Aeep
sudden&! swerved to t#e rig#t and went o%%'
3. :ositive testi#ony o, $etter cre+i$ility t)an ne*ative or e9uivocal testi#ony
T#e testimon! o% a credi&e witness t#at #e saw or #eard at a particu&ar time and p&ace is more re&ia&e
t#an t#at o% an e9ua&&! credi&e witness w#o wit# t#e same opportunities, testi%ies t#at #e did not see or #ear
t#e same t#ing at t#e same time and p&ace' @erein, Do&ores 1a&cita ;did not see< w#at B&ena 7wic#en
sudden&! did, and s#e ;did not %ee& an! movement %rom (#er) side'< T#ese answers o% Do&ores 1a&cita are a&&
in t#e negative and e9uivoca&' T#e! do not den! or prec&ude t#e trut# o% t#e positive testimon! o% t#e accused'
@ence, as to t#e re&ative weig#t to e given to t#e positive and consistent testimon! o% 1a!asen and to t#e
negative and e9uivoca& answers o% Do&ores 1a&cita, t#e %ormer is more wort#! o% credence'
/. (esti#ony o, #ayor o, Sa*a+a! =ountain :rovince6 Beep in secon+ *ear
T#e statement o% Do&ores 1a&cita t#at t#e accused was driving at moderate speed and not ;an
unreasona&e speed< is o&stered ! t#e testimon! o% Pa&o +i*ardo, t#en ma!or o% "agada, Mountain
Province, w#o %ound t#e Aeep at second gear w#en #e e3amined it not &ong a%ter t#e incident' "uc# %act s#ows
t#at 1a!asen cou&d not #ave een driving t#e Aeep at a %ast rate o% speed'
2. :roxi#ate cause o, tra*e+y
T#e pro3imate cause o% t#e traged! was t#e skidding o% t#e rear w#ee&s o% t#e Aeep and not t#e
;unreasona&e speed< o% 1a!asen ecause t#ere is no evidence on record to prove or support t#e %inding t#at
1a!asen was driving at ;an unreasona&e speed<'
. Ski++in* #ay )appen .it)out necessary i#plyin* ne*li*ence
,t is a we&& known p#!sica& %act t#at cars ma! skid on greas! or s&ipper! roads wit#out %au&t on
account o% t#e manner o% #and&ing t#e car' "kidding means partia& or comp&ete &oss o% contro& o% t#e car under
circumstances not necessari&! imp&!ing neg&igence' ,t ma! occur wit#out %au&t' @erein, under t#e particu&ar
circumstances, 1a!asen w#o skidded cou&d not e regarded as neg&igent, t#e skidding eing an un%oreseen
event, so t#at 1a!asen #ad a va&id e3cuse %or #is departure %rom #is regu&ar course'
3. Guilt not proven $eyon+ reasona$le +ou$t
T#e neg&igence o% 1a!asen #as not #aving een su%%icient&! esta&is#ed, #is gui&t o% t#e crime c#arged
#as not een proven e!ond reasona&e dout' @e is, t#ere%ore, entit&ed to ac9uitta&'
[44]
Cervantes vs. C5 (GR 1-2134! - =arc) 1%%%)
T#ird Division, Purisima (J): 8 concur, 1 on &eave, 1 aroad on o%%icia& usiness
&acts' (n 80 Marc# 1./., P#i&ippines 7ir +ines (P7+) issued to Eic#o&as $ervantes a round trip p&ane ticket
%or Mani&a=@ono&u&u=+os 7nge&es=@ono&u&u=Mani&a, w#ic# ticket e3press&! provided an e3pir! o% date o% one
!ear %rom issuance, i'e', unti& 80 Marc# 1..2' T#e issuance o% t#e said p&ane ticket was in comp&iance wit# a
$ompromise 7greement entered into etween t#e contending parties in two previous suits ($ivi& $ase 33.8
and 3541 e%ore t#e :T$ in "urigao $it!)' (n 83 Marc# 1..2, 5 da!s e%ore t#e e3pir! date o% suAect ticket,
$ervantes used it' Dpon #is arriva& in +os 7nge&es on t#e same da!, #e immediate&! ooked #is +os 7nge&es=
Mani&a return ticket wit# t#e P7+ o%%ice, and it was con%irmed %or t#e 8 7pri& 1..2 %&ig#t' Dpon &earning t#at
t#e same P7+ p&ane wou&d make a stop=over in "an Francisco, and considering t#at #e wou&d e t#ere on 8
7pri& 1..2, $ervantes made arrangements wit# P7+ %or #im to oard t#e %&ig#t in "an Francisco instead o%
oarding in +os 7nge&es' (n 8 7pri& 1..2, w#en $ervantes c#ecked in at t#e P7+ counter in "an Francisco,
#e was not a&&owed to oard' T#e P7+ personne& concerned marked t#e %o&&owing notation on #is ticket:
;T,$PBT E(T 7$$BPTBD DDB BJP,:7T,(E (F V7+,D,TO'<
7ggrieved, $ervantes %i&ed a $omp&aint %or Damages, %or reac# o% contract o% carriage e%ore t#e :T$ o%
"urigao de& Eorte in "urigao $it! (1ranc# 38, $ivi& $ase 3/20), ut t#e said comp&aint was dismissed %or
&ack o% merit'
(n 82 "eptemer 1..3, $ervantes interposed an appea& to t#e $ourt o% 7ppea&s, w#ic# came out wit# a
Decision, on 84 Ju&! 1..4, up#o&ding t#e dismissa& o% t#e case' (n 88 Ma! 1..>, $ervantes came to t#e
"uprame $ourt via t#e Petition %or :eview'
T#e "upreme $ourt denied t#e petition, and a%%irmed in toto t#e decision o% t#e $ourt o% 7ppea&s dated 84
Ju&! 1..4C wit#out pronouncement as to costs'
1. Conclusion an+ ,in+in*s o, ,acts o, lo.er courts s)oul+ not $e +istur$e+ unless ,or co*ent
reasons
7s a ru&e, conc&usions and %indings o% %act arrived at ! t#e tria& court are entit&ed to great weig#t on
appea& and s#ou&d not e distured un&ess %or strong and cogent reasons'
-. :lane ticket expire+
T#e p&ane ticket itse&% provides t#at it is not va&id a%ter 80 Marc# 1..2' ,t is a&so stipu&ated in
paragrap# / o% t#e $onditions o% $ontract t#at ;t#is ticket is good %or carriage %or one !ear %rom date o% issue,
e3cept as ot#erwise provided in t#is ticket, in carrier?s tari%%s, conditions o% carriage, or re&ated regu&ations'
T#e %are %or carriage #ereunder is suAect to c#ange prior to commencement o% carriage' $arrier ma! re%use
transportation i% t#e app&ica&e %are #as not een paid'<
3. Lu,t)ansa vs. Court o, 5ppeals
,n +u%t#ansa vs' $ourt o% 7ppea&s, t#e To&entinos were issued %irst c&ass tickets on 3 7pri& 1./8,
w#ic# wi&& e va&id unti& 12 7pri& 1./3' (n 12 June 1./8, t#e! c#anged t#eir accommodations to econom!
c&ass ut t#e rep&acement tickets sti&& contained t#e same restriction' (n 0 Ma! 1./3, To&entino re9uested t#at
suAect tickets e e3tended, w#ic# re9uest was re%used ! +u%t#ansa on t#e ground t#at t#e said tickets #ad
a&read! e3pired' T#e non=e3tension o% t#eir tickets prompted t#e To&entinos to ring a comp&aint %or reac# o%
contract o% carriage against t#e petitioner' ,n ru&ing against t#e award o% damages, t#e $ourt #e&d t#at t#e
;ticket constitute t#e contract etween t#e parties' ,t is a3iomatic t#at w#en t#e terms are c&ear and &eave no
dout as to t#e intention o% t#e contracting parties, contracts are to e interpreted according to t#eir &itera&
meaning'<
/. 5rticle 14%46 5cts o, a*ent $eyon+ scope o, aut)ority +oes not $in+ principal
Dnder 7rtic&e 1/./ o% t#e Eew $ivi& $ode, t#e acts o% an agent e!ond t#e scope o% #is aut#orit! do
not ind t#e principa&, un&ess t#e &atter rati%ies t#e same e3press&! or imp&ied&!' Furt#ermore, w#en t#e t#ird
person knows t#at t#e agent was acting e!ond #is power or aut#orit!, t#e principa& cannot e #e&d &ia&e %or
t#e acts o% t#e agent' ,% t#e said t#ird person is aware o% suc# &imits o% aut#orit!, #e is to &ame, and is not
entit&ed to recover damages %rom t#e agent, un&ess t#e &atter undertook to secure t#e principa&?s rati%ication'
2. Con,ir#ation o, ,li*)ts $y :5L1s a*ents +i+ not exten+ li,eti#e o, ticket6 5$sence o, aut)ority
T#e con%irmation ! t#e P7+?s agents in +os 7nge&es and "an Francisco o% $ervantes? %&ig#ts did not
e3tend t#e va&idit! or &i%etime o% t#e ticket, as ot# #ad no aut#orit! to do so' $ervantes knew t#is %rom t#e
(ransportation La.! -""/ ( --/ )
ver! start w#en #e ca&&ed up t#e +ega& Department o% appe&&ee in t#e P#i&ippines e%ore #e &e%t %or t#e D"7'
@e #ad %irst #and know&edge t#at t#e ticket in 9uestion wou&d e3pire on 80 Marc# 1..2 and t#at to secure an
e3tension, #e wou&d #ave to %i&e a written re9uest %or e3tension at t#e P7+?s o%%ice in t#e P#i&ippines' Despite
t#is know&edge, $ervantes persisted to use t#e ticket in 9uestion' "ince t#e P7+ agents are not priv! to t#e
said 7greement and $ervantes knew t#at a written re9uest to t#e &ega& counse& o% P7+ was necessar!, #e
cannot use w#at t#e P7+ agents did to #is advantage' T#e said agents acted wit#out aut#orit! w#en t#e!
con%irmed t#e %&ig#ts o% $ervantes'
. Rule 1"! Section 2! 1%%3 Rules o, Civil :roce+ure6 5#en+#ent to con,or# or aut)oriJe
presentation o, evi+ence
:u&e 12, "ection 4 (7mendment to con%orm or aut#ori*e presentation o% evidence) o% t#e 1..0 :u&es
o% $ivi& Procedure provides t#at ;w#en issues not raised ! t#e p&eadings are tried wit# e3press or imp&ied
consent o% t#e parties, as i% t#e! #ad een raised in t#e p&eadings' "uc# amendment o% t#e p&eadings as ma! e
necessar! to cause t#em to con%orm to t#e evidence and to raise t#ese issues ma! e made upon motion o% an!
part! at an! time, even a%ter AudgmentC ut %ai&ure to amend does not a%%ect t#e resu&t o% t#e tria& o% t#ese
issues'<
3. <e,ense o, lack o, aut)ority on t)e part o, t)e :5L e#ployees .as not +ee#e+ .aive+
Dnder :u&e ., "ection 8 o% t#e :evised :u&es o% $ourt, %ai&ure o% a part! to put up de%enses in t#eir
answer or in a motion to dismiss is a waiver t#ereo%' @erein, a&t#oug# t#e a&&eged &ack o% aut#orit! o% t#e P7+
emp&o!ees was neit#er raised in t#e answer nor in t#e motion to dismiss, t#e records s#ow t#at t#e 9uestion o%
w#et#er t#ere was aut#orit! on t#e part o% t#e P7+ emp&o!ees was on&! acted upon ! t#e tria& court w#en
Eic#o&as $ervantes was presented as a witness and t#e depositions o% t#e P7+ emp&o!ees, 6eorgina M' :e!es
and :ut# Vi&&anueva, were presented' @owever, notwit#standing P7+?s %ai&ure to raise t#e de%ense o% &ack o%
aut#orit! o% t#e said P7+ agents in its answer or in a motion to dismiss, t#e omission was cured since t#e said
issue was &itigated upon, as s#own ! t#e testimon! o% $ervantes in t#e course o% tria&' T#us, ;w#en evidence
is presented ! one part!, wit# t#e e3press or imp&ied consent o% t#e adverse part!, as to issues not a&&eged in
t#e p&eadings, Audgment ma! e rendered va&id&! as regards t#e said issue, w#ic# s#a&& e treated as i% t#e!
#ave een raised in t#e p&eadings' T#ere is imp&ied consent to t#e evidence t#us presented w#en t#e adverse
part! %ai&s to oAect t#ereto'<
4. 7o #oral +a#a*es +ue
,n awarding mora& damages %or reac# o% contract o% carriage, t#e reac# must e wanton and
de&ierate&! inAurious or t#e one responsi&e acted %raudu&ent&! or wit# ma&ice or ad %ait#' @erein, $ervantes
knew t#ere was a strong possii&it! t#at #e cou&d not use t#e suAect ticket, so muc# so t#at #e oug#t a ack=
up ticket to ensure #is departure' "#ou&d t#ere e a %inding o% ad %ait#, it s#ou&d e on $ervantes' F#at t#e
emp&o!ees o% P7+ did was one o% simp&e neg&igence' Eo inAur! resu&ted on t#e part o% $ervantes ecause #e
#ad a ack=up ticket s#ou&d P7+ re%use to accommodate #im wit# t#e use o% suAect ticket'
%. 7o exe#plary +a#a*es +ue
B3emp&ar! damages are imposed ! wa! o% e3amp&e or correction %or t#e pu&ic good, and t#e
e3istence o% ad %ait# is esta&is#ed' T#e wrong%u& act must e accompanied ! ad %ait#, and an award o%
damages wou&d e a&&owed on&! i% t#e gui&t! part! acted in a wanton, %raudu&ent, reck&ess or ma&evo&ent
manner' @erein, t#ere is no s#owing t#at P7+ acted in suc# a manner' T#e c&aim %or e3emp&ar! damages
cannot e up#e&d'
[4%]
<e Gillaco vs. =anila Railroa+ Co. (GR L>4"3/! 14 7ove#$er 1%22)
"econd Division, :e!es J1+ (J): 0 concur
&acts' (n 1 7pri& 1.5>, 0:32 a'm', +t' Tomas 6i&&aco, #usand o% $orne&ia 7' de 6i&&aco, was a passenger in
t#e ear&! morning train o% t#e Mani&a :ai&road $ompan! %rom $a&ama, +aguna to Mani&a' F#en t#e train
reac#ed t#e Paco :ai&road station, Bmi&io Devesa, a train guard o% t#e Mani&a :ai&road $ompan! assigned in
t#e Mani&a="an Fernando, +a Dnion +ine, #appened to e in said station waiting %or t#e same train w#ic#
wou&d take #im to Tutuan "tation, w#ere #e was going to report %or dut!' Devesa?s tour o% dut! on t#at da!
was %rom .:22 a'm', unti& t#e train to w#ic# #e was assigned reac#ed +a Dnion at 0:22 p'm' o% t#e same da!'
Devesa #ad a &ong standing persona& grudge against Tomas 6i&&aco, same dating ack during t#e Japanese
occupation' 7nd ecause o% t#is persona& grudge, Devesa s#ot 6i&&aco wit# t#e carine %urnis#ed to #im !
t#e Mani&a :ai&road $ompan! %or #is use as suc# train guard, upon seeing #im inside t#e train coac#' Tomas
6i&&aco died as a resu&t o% t#e wou&d w#ic# #e sustained %rom t#e s#ot %ired ! Devesa' Devesa was convicted
o% #omicide ! %ina& Audgment o% t#e $ourt o% 7ppea&s'
$orne&ia 7' de 6i&&aco %i&ed an action against t#e Mani&a :ai&road $ompan! wit# t#e $F, +aguna' T#e tria&
court sentenced t#e rai&road compan! to pa! P5,222 damages to t#e de 6i&&acos, t#e widow and c#i&dren o%
t#e &ate Tomas 6i&&aco s#ot ! an emp&o!ee o% said compan!' T#e rai&road compan! appea&ed'
T#e "upreme $ourt reversed t#e Audgment appea&ed %rom, and dismissed t#e comp&aint, wit#out costs'
1. 8$li*ation to transport passen*er sa,ely to +estination6 Dxception' un,oreseen event
7 passenger is entit&ed to protection %rom persona& vio&ence ! t#e carrier or its agents or emp&o!ees,
since t#e contract o% transportation o&igates t#e carrier to transport a passenger sa%e&! to #is destination' 1ut
under t#e &aw o% t#e case, t#is responsii&it! e3tends on&! to t#ose t#at t#e carrier cou&d %oresee or avoid
t#roug# t#e e3ercise o% t#e degree o% care and di&igence re9uired o% it' 7s #e&d in +asam vs' "mit#, t#at !
entering into t#at contract t#e carrier ound #imse&% to carr! t#e p&ainti%% sa%e&! and secure&! to t#eir
destinationC and t#at #aving %ai&ed to do so #e is &ia&e in damages un&ess #e s#ows t#at t#e %ai&ure to %u&%i&& #is
o&igation was due to causes mentioned in artic&e 1124 o% t#e $ivi& $ode, w#ic# reads as %o&&ows: GEo one
s#a&& e &ia&e %or events w#ic# cou&d not e %oreseen or w#ic#, even i% %oreseen, were inevita&e, wit# t#e
e3ception o% t#e cases in w#ic# t#e &aw e3press&! provides ot#erwise and t#ose in w#ic# t#e o&igation itse&%
imposes suc# &iai&it!'? ;
-. 5ct o, <evesa entirely un,oreseen $y railroa+ co#pany
T#e act o% guard Devesa in s#ooting passenger 6i&&aco (ecause o% a persona& grudge nurtured against
t#e &atter since t#e Japanese occupation) was entire&! un%orseea&e ! t#e Mani&a :ai&road $o' T#e &atter #ad
no means to ascertain or anticipate t#at t#e two wou&d meet, nor cou&d it reasona&! %oresee ever! persona&
rancor t#at mig#t e3ist etween eac# one o% its man! emp&o!ees and an! one o% t#e t#ousands o% eventua&
passengers riding in its trains' T#e s#ooting in 9uestion was t#ere%ore ;caso %ortuito< wit#in t#e de%inition o%
artic&e 1124 o% t#e o&d $ivi& $ode, eing ot# un%oreseea&e and inevita&e under t#e given circumstancesC
and pursuant to esta&is#ed doctrine, t#e resu&ting reac# o% Mani&a :ai&road?s contract o% sa%e carriage wit#
t#e &ate Tomas 6i&&aco was e3cused t#ere!'
3. <e*ree o, care an+ +ili*ence o, a co##on carrier
7 common carrier is #e&d to a ver! #ig# degree o% care and di&igence in t#e protection o% its
passengersC ut, considering t#e vast and comp&e3 activities o% modern rai& transportation, to re9uire t#e
rai&roadcompan! t#at it s#ou&d guard against a&& possi&e misunderstanding etween eac# and ever! one o% its
emp&o!ees and ever! passenger t#at mig#t c#ance to ride in its conve!ances at an! time, strikes as demanding
di&igence e!ond w#at #uman care and %oresig#t can provide'
/. Lia$ility o, a carrier as an insurer not reco*niJe+ in :)ilippine Buris+iction6 Civil Co+e o, 144%
T#e asis o% a carrier?s &iai&it! was under t#e o&d $ivi& $ode o% 1//. (w#ic# was in %orce in 1.5>,
w#en 6i&&aco was s#ot), and t#at it can e in%erred %rom t#e previous Aurisprudence o% t#e $ourt, t#e $ivi&
$ode o% 1//. did not impose aso&ute &iai&it! (+asam vs' "mit#, supra)' 7&t#oug# 7merican aut#orities #o&d
carriers to e insurers o% t#e sa%et! o% t#eir passengers against wi&&%u& assau&t and intentiona& i&&=treatment on
t#e part o% t#eir servants, it eing immateria& t#at t#e act s#ou&d e one o% private retriution on t#e part o% t#e
servant, impe&&ed ! persona& ma&ice toward t#e passenger, t#e &iai&it! o% a carrier as an insurer was not
recogni*ed in t#is Aurisdiction'
2. Railroa+ co#pany *uar+ )a+ no +uties to +isc)ar*e in connection .it) t)e transportation o,
t)e +ecease+6 7o $reac) o, contract o, transportation $y e#ployee o, carrier
F#en t#e crime took p&ace, t#e guard Devesa #ad no duties to disc#arge in connection wit# t#e
transportation o% t#e deceased %rom $a&ama to Mani&a' T#e stipu&ation o% %acts is c&ear t#at w#en Devesa
s#ot and ki&&ed 6i&&aco, Devesa was assigned to guard t#e Mani&a="an Fernando (+a Dnion) trains, and #e was
at Paco "tation awaiting transportation to Tutuan, t#e starting point o% t#e train t#at #e was engaged to guard'
,n %act, #is tour o% dut! was to start at .:22 a'm', two #ours a%ter t#e commission o% t#e crime' Devesa was
t#ere%ore under no o&igation to sa%eguard t#e passengers o% t#e $a&ama=Mani&a train, w#ere t#e deceased
was ridingC and t#e ki&&ing o% 6i&&aco was not done in &ine o% dut!' T#e position o% Devesa at t#e time was t#at
o% anot#er wou&d e passenger, a stranger a&so awaiting transportation, and not t#at o% an emp&o!ee assigned
to disc#arge an! o% t#e duties t#at t#e :ai&road #ad assumed ! its contract wit# t#e deceased' 7s a resu&t,
Devesa?s assau&t cannot e deemed in &aw a reac# o% 6i&&aco?s contract o% transportation ! a servant or
emp&o!ee o% t#e carrier'
. Rationale .)y carrier is #a+e responsi$le $y #iscon+uct o, e#ployees
T#e on&! good reason %or making t#e carrier responsi&e %or t#e misconduct o% t#e servant perpetrated
in #is own interest, and not in t#at o% #is emp&o!er, or ot#erwise wit#in t#e scope o% #is emp&o!ment, is t#at
t#e servant is c&ot#ed wit# t#e de&egated aut#orit!, and c#arged wit# t#e dut! ! t#e carrier, to e3ecute #is
undertaking wit# t#e passenger' 7nd it cannot e said t#at t#ere is an! suc# de&egation to t#e emp&o!ees at a
station wit# re%erence to passengers emarking at anot#er or trave&ing on t#e train' (% course, t#is speaks on&!
o% t#e princip&e w#ic# #o&ds a carrier responsi&e %or wrongs done to passengers ! servants acting in t#eir
own interest, and not in t#at o% t#e emp&o!er' T#at princip&e is not t#e ordinar! ru&e, respondent superior, !
w#ic# t#e emp&o!er is #e&d responsi&e on&! %or acts or omissions o% t#e emp&o!ee in t#e scope o% #is
emp&o!mentC ut t#e on&! reason in our opinion %or a roader &iai&it! arises %rom t#e %act t#at t#e servant, in
mistreating t#e passenger w#o&&! %or some private purpose o% #is own, in t#e ver! act, vio&ates t#e contractua&
o&igation o% t#e emp&o!er %or t#e per%ormance o% w#ic# #e #as put t#e emp&o!ee in #is p&ace' T#at reason
does not e3ist w#ere t#e emp&o!ee w#o committed t#e assau&t was never in a position in w#ic# it ecame #is
dut! to #is emp&o!er to represent #im in disc#arging an! dut! o% t#e &atter towards t#e passenger' T#e
proposition t#at t#e carrier c&ot#es ever! emp&o!ee engaged in t#e transportation usiness wit# t#e
compre#ensive dut! o% protecting ever! passenger wit# w#om #e ma! in an! wa! come in contact, and
t#ere! makes #imse&% &ia&e %or ever! assau&t committed ! eac# servant, wit#out regard to t#e in9uir!
w#et#er or not t#e passenger #as come wit#in t#e sp#ere o% dut! o% t#at servant as indicated ! t#e
emp&o!ment, is regarded as not on&! not sustained ! t#e aut#orities, ut as eing unsound and oppressive
ot# to t#e emp&o!er and t#e emp&o!ee'
[%"]
=aranan vs. :ereJ (GR L>--3-! - Bune 1%3)
Bn 1anc, 1eng*on JP (J): 0 concur
&acts' :oge&io $orac#ea, on 1/ (ctoer 1.>2, was a passenger in a ta3ica owned and operated ! Pascua&
Pere* w#en #e was staed and ki&&ed ! t#e driver, "imeon Va&en*ue&a' Va&en*ue&a was prosecuted %or
#omicide in t#e $F, o% 1atangas' Found gui&t!, #e was sentenced to su%%er imprisonment and to indemni%! t#e
#eirs o% t#e deceased in t#e sum o% P>,222' 7ppea& %rom said conviction was taken to t#e $ourt o% 7ppea&s'
(n > Decemer 1.>1, w#i&e appea& was pending in t#e $ourt o% 7ppea&s, 7ntonia Maranan, :oge&io?s mot#er,
%i&ed an action in t#e $F, o% 1atangas to recover damages %rom Pere* and Va&en*ue&a %or t#e deat# o% #er son'
Pere*, et' a&' asserted t#at t#e deceased was ki&&ed in se&%=de%ense, since #e %irst assau&ted t#e driver !
staing #im %rom e#ind' Pere* c&aimed t#at t#e deat# was a caso %ortuito %or w#ic# t#e carrier was not
&ia&e' T#e court, a%ter tria&, %ound %or Maranan and awarded #er P3,222 as damages against Pere*' T#e c&aim
against Va&en*ue&a was dismissed'
From t#is ru&ing, ot# Maranan and Pere* appea&ed to t#e "upreme $ourt, t#e %ormer asking %or more
damages and t#e &atter insisting on non=&iai&it!' "use9uent&!, t#e $ourt o% 7ppea&s a%%irmed t#e Audgment o%
conviction ear&ier mentioned, during t#e pendenc! o% t#e #erein appea&, and on 1. Ma! 1.>5, %ina& Audgment
was entered t#erein'
T#e "upreme $ourt a%%irmed t#e Audgment appea&ed %rom wit# t#e modi%ication o% increasing t#e award o%
actua& damages in Maranan?s %avor to P>,222, p&us P3,222 mora& damages, wit# &ega& interest on ot# %rom
t#e %i&ing o% t#e comp&aint on > Decemer 1.>1 unti& t#e w#o&e amount is paidC no costs'
1. Gilaco case not controllin*6 0illin* #a+e outsi+e scope an+ course o, +uty o, *uilty e#ployee
,n 6i&&aco vs' Mani&a :ai&road $o', .0 P#i&' //5, it was #e&d t#at t#e carrier is under no aso&ute
&iai&it! %or assau&ts o% its emp&o!ees upon t#e passengers' T#e attendant %acts and contro&&ing &aw o% t#at case
and t#e present one are ver! di%%erent #owever' ,n t#e 6i&&aco case, t#e passenger was ki&&ed outside t#e scope
and t#e course o% dut! o% t#e gui&t! emp&o!ee' @erein, t#e ki&&ing was perpetrated ! t#e driver o% t#e ver! ca
transporting t#e passenger, in w#ose #ands t#e carrier #ad entrusted t#e dut! o% e3ecuting t#e contract o%
carriage' ,n ot#er words, un&ike t#e 6i&&aco case, t#e ki&&ing o% t#e passenger #ere took p&ace in t#e course o%
dut! o% t#e gui&t! emp&o!ee and w#en t#e emp&o!ee was acting wit#in t#e scope o% #is duties'
-. Gilaco case not controllin*6 Case +eci+e+ un+er provisions o, t)e Civil Co+e o, 144%
Moreover, t#e 6i&&aco case was decided under t#e provisions o% t#e $ivi& $ode o% 1//. w#ic#, un&ike
t#e present $ivi& $ode, did not impose upon common carriers aso&ute &iai&it! %or t#e sa%et! o% passengers
against wi&%u& assau&ts or neg&igent acts committed ! t#eir emp&o!ees' T#e deat# o% t#e passenger in t#e
6i&&aco case was tru&! a %ortuitous event w#ic# e3empted t#e carrier %rom &iai&it!' ,t is true t#at 7rt' 1124 o%
t#e o&d $ivi& $ode on %ortuitous events #as een sustantia&&! reproduced in 7rtic&e 1105 o% t#e $ivi& $ode o%
t#e P#i&ippines ut ot# artic&es c&ear&! remove %rom t#eir e3empting e%%ect t#e case w#ere t#e &aw e3press&!
provides %or &iai&it! in spite o% t#e occurrence o% %orce maAeure' 7nd #erein signi%icant&! &ies t#e statutor!
di%%erence etween t#e o&d and present $ivi& $odes, in t#e ackdrop o% t#e %actua& situation o% t#e present
case, w#ic# %urt#er accounts %or a di%%erent resu&t in t#e 6i&&aco case'
3. 7e. Civil Co+e expressly #akes co##on carrier lia$le ,or intentional assaults co##itte+ $y its
e#ployees upon its passen*ers
Dn&ike t#e o&d $ivi& $ode, t#e new $ivi& $ode o% t#e P#i&ippines e3press&! makes t#e common carrier
&ia&e %or intentiona& assau&ts committed ! its emp&o!ees upon its passengers, ! t#e wording o% 7rtic&e 104.
w#ic# categorica&&! states t#at ;$ommon carriers are &ia&e %or t#e deat# o% or inAuries to passengers a&t#oug#
t#e neg&igence or wi&%u& acts o% t#e %ormer?s emp&o!ees, a&t#oug# suc# emp&o!ees ma! #ave acted e!ond t#e
scope o% t#eir aut#orit! or in vio&ation o% t#e orders o% t#e common carriers'<
/. Source o, provisions on Co##on Carriers6 Basis o, carrier1s lia$ility ,or assaults
T#e $ivi& $ode provisions on t#e suAect o% $ommon $arriers are new and were taken %rom 7ng&o=
7merican +aw' T#ere, t#e asis o% t#e carrier?s &iai&it! %or assau&ts on passengers committed ! its drivers
rests eit#er on (1) t#e doctrine o% respondent superior or (8) t#e princip&e t#at it is t#e carrier?s imp&ied dut! to
transport t#e passenger sa%e&!'
2. <octrine o, respon+ent superior
Dnder t#e Doctrine o% :espondent "uperior, w#ic# is t#e minorit! view, t#e carrier is &ia&e on&!
w#en t#e act o% t#e emp&o!ee is wit#in t#e scope o% #is aut#orit! and dut!' ,t is not su%%icient t#at t#e act e
wit#in t#e course o% emp&o!ment on&!'
. :rinciple o, Carrier1s i#plie+ +uty to transport t)e passen*er sa,ely
Dnder t#e princip&e t#at it is t#e carrier?s imp&ied dut! to transport t#e passenger sa%e&!, up#e&d ! t#e
maAorit! and a&so ! t#e &ater cases, it is enoug# t#at t#e assau&t #appens wit#in t#e course o% t#e emp&o!ee?s
dut!' ,t is no de%ense %or t#e carrier t#at t#e act was done in e3cess o% aut#orit! or in disoedience o% t#e
carrier?s orders' T#e carrier?s &iai&it! #ere is aso&ute in t#e sense t#at it practica&&! secures t#e passengers
%rom assau&ts committed ! its own emp&o!ees'
3. 5rticle 132% 7CC ,ollo.s t)e rule $ase+ on t)e vie. t)at it is carrier1s i#plie+ +uty to
transport t)e passen*er sa,ely6 Reasons (see (exas =i+lan+ R.R. vs. =onroe! 11" (ex. %3! -1 S.E. 344!
34%>3%" an+ Haver vs. Central Railroa+ Co.! /3 LR5 4/! 42)
7s can e g&eaned %rom 7rtic&e 104., t#e $ivi& $ode o% t#e P#i&ippines evident&! %o&&ows t#e ru&e
ased on t#e view t#at it is carrier?s imp&ied dut! to transport t#e passenger sa%e&!' 7t &east t#ree ver! cogent
reasons under&ie t#is ru&e: (1) t#e specia& undertaking o% t#e carrier re9uires t#at it %urnis# its passenger t#at
%u&& measure o% protection a%%orded ! t#e e3ercise o% t#e #ig# degree o% care prescried ! t#e &aw, inter a&ia
%rom vio&ence and insu&ts at t#e #ands o% strangers and ot#er passengers, ut aove a&&, %rom t#e acts o% t#e
carrier?s own servants c#arged wit# t#e passenger?s sa%et!C (8) said &iai&it! o% t#e carrier %or t#e servant?s
vio&ation o% dut! to passengers, is t#e resu&t o% t#e %ormer?s con%iding in t#e servant?s #ands t#e per%ormance
o% #is contract to sa%e&! transport t#e passenger, de&egating t#erewit# t#e dut! o% protecting t#e passenger wit#
t#e utmost care prescried ! &awC and (3) as etween t#e carrier and t#e passenger, t#e %ormer must ear t#e
risk o% wrong%u& acts or neg&igence o% t#e carrier?s emp&o!ees against passengers, since it, and not t#e
passengers, #as power to se&ect and remove t#em'
4. Carrier1s strict o$li*ation to select its +rivers
,t is t#e carrier?s strict o&igation to se&ect its drivers and simi&ar emp&o!ees wit# due regard not on&!
to t#eir tec#nica& competence and p#!sica& ai&it!, ut a&so, no &ess important, to t#eir tota& persona&it!,
inc&uding t#eir patterns o% e#avior, mora& %iers, and socia& attitude'
%. 5ction pre+icate+ on $reac) o, contract o, carria*e .)ere t)e ca$ +river .as not a party
t)ereto
T#e dismissa& o% t#e c&aim against t#e driver was correct' Maranan?s action was predicated on reac#
o% contract o% carriage and t#e ca driver was not a part! t#ereto' @is civi& &iai&it! is covered in t#e crimina&
case w#erein #e was convicted ! %ina& Audgment'
1". 5.ar+ o, co#pensatory +a#a*es
,n connection wit# t#e award o% damages, t#e &ower court granted on&! P3,222, w#ic# is t#e minimum
compensator! damages amount recovera&e under 7rtic&e 10>5 in connection wit# 7rtic&e 882> o% t#e $ivi&
$ode w#en a reac# o% contract resu&ts in t#e passenger?s deat#' 7s #as een t#e po&ic! %o&&owed ! t#e $ourt,
t#is minima& award s#ou&d e increased to P>,222'
11. 7o a.ar+ o, actual +a#a*es
7s to ot#er a&&eged actua& damages, t#e &ower court?s %inding t#at Maranan?s evidence t#ereon was
not convincing and s#ou&d not e distured'
1-. 5.ar+ o, #oral +a#a*es
7rtic&es 882> and 10>5 award mora& damages in addition to compensator! damages, to t#e parents o%
t#e passenger ki&&ed to compensate %or t#e menta& anguis# t#e! su%%ered' 7 c&aim t#ere%or #aving een
proper&! made, it ecomes t#e court?s dut! to award mora& damages' Maranan demands P4,222 as mora&
(ransportation La.! -""/ ( --% )
damagesC #owever, in t#e circumstances, t#e $ourt considers P3,222 mora& damages, in addition to t#e P>,222
compensator! damages as su%%icient'
[%1]
Lasa# vs. S#it) (GR 1%/%2! - &e$ruary 1%-/)
First Division, (strand (J): 4 concur
&acts' (n 80 Feruar! 1.1/, Frank "mit# Jr' was o% "an Fernando, +a Dnion, and engaged in t#e usiness o%
carr!ing passengers %or #ire %rom one point to anot#er in t#e Province o% +a Dnion and t#e surrounding
provinces' (n t#e date mentioned, #e undertook to conve! @onrion +asam and Joa9uina "anc#e*=+asam %rom
"an Fernando to $urrimao, ,&ocos Eorte, in a Ford automoi&e' (n &eaving "an Fernando, t#e automoi&e was
operated ! a &icensed c#au%%eur, ut a%ter #aving reac#ed t#e town o% "an Juan, t#e c#au%%eur a&&owed #is
assistant, :emigio 1ueno, to drive t#e car' 1ueno #e&d to driver?s &icense, ut #ad some e3perience in driving,
and wit# t#e e3ception o% some s&ig#t engine trou&e w#i&e passing t#roug# t#e town o% +una, t#e car
%unctioned we&& unti& a%ter t#e crossing o% t#e 7ra :iver in Tagudin, w#en de%ects deve&oped in t#e steering
gear so as to make accurate steering impossi&e, and a%ter *ig*agging %or a distance o% aout #a&% a ki&ometer,
t#e car &e%t t#e road and went down a steep emankment' ,n going over t#e ank o% t#e road, t#e automoi&e
was overturned and t#e spouses pinned down under it' Mr' +asam escaped wit# a %ew contusions and a
;dis&ocated< ri, ut #is wi%e, Joa9uina "anc#e*, received serious inAuries, among w#ic# was a compound
%racture o% one o% t#e ones in #er &e%t wrist' "#e a&so appears to #ave su%%ered a nervous reakdown %rom
w#ic# s#e #ad not %u&&! recovered at t#e time o% t#e tria&'
T#e "pouses roug#t t#e action, one and a #a&% !ear a%ter t#e occurrence, to recover damages in t#e sum o%
P82,222 %or p#!sica& inAuries sustained ! t#em in an automoi&e accident' T#e tria& court rendered a
Audgment in t#eir %avor %or t#e sum o% P1,845'12, wit# &ega& interest %rom t#e date o% t#e Audgment' 1ot# t#e
spouses and "mit# appea&ed, t#e %ormer maintaining t#at t#e damages awarded are insu%%icient w#i&e t#e &atter
denies a&& &iai&it! %or an! damages w#atever'
T#e "upreme $ourt a%%irmed t#e Audgment appea&ed %rom, wit#out costs'
1. 5rticles 11"1 to 11"3 7CC! not 5rticle 1%"3! applica$le
T#e cause o% action rests on "mit#?s reac# o% t#e contract o% carriage and t#at, conse9uent&!, artic&es
1121=1120 o% t#e $ivi& $ode, and not artic&e 1.23, are app&ica&e' @erein, t#e source o% "mit#?s &ega& &iai&it!
is t#e contract o% carriageC t#e ! entering into t#at contract #e ound #imse&% to carr! t#e spouses sa%e&! and
secure&! to t#eir destinationC and t#at #aving %ai&ed to do so #e is &ia&e in damages un&ess #e s#ows t#at t#e
%ai&ure to %u&%i&& #is o&igation was due to causes mentioned in artic&e 1124 o% t#e $ivi& $ode
-. Cases +istin*uis)in* extra>contractual an+ contractual lia$ilities
Dpon t#e %acts stated, t#e de%endant?s &iai&it!, i% an!, is contractua&, is we&& sett&ed ! previous
decisions o% t#e court, eginning wit# t#e case o% :akes vs' 7t&antic, 6u&% T Paci%ic $o' (0 P#i&', 34.), and t#e
distinction etween e3tra=contractua& &iai&it! and contractua& &iai&it! #as een so a&! and e3#austive&!
discussed in various ot#er cases, t#at not#ing %urt#er need e said upon t#at suAect' ("ee $angco vs' Mani&a
:ai&road $o' 3/ P#i&', 0>/C Mani&a :ai&road $o' $ompania Trasat&antica and 7t&antic, 6u&% T Paci%ic $o', 3/
P#i&', /04C De 6uia vs' Mani&a B&ectric :ai&road T +ig#t )
3. 5rticle 11"2 7CC
7rtic&e 1124 reads as ;no one s#a&& e &ia&e %or events w#ic# cou&d not e %oreseen or w#ic#, even i%
%oreseen, were inevita&e, wit# t#e e3ception o% t#e cases in w#ic# t#e &aw e3press&! provides ot#erwise and
t#ose in w#ic# t#e o&igation itse&% imposes suc# &iai&it!'<
/. Caso ,ortuito! @events .)ic) cannot $e ,oreseen an+ .)ic) )avin* $een ,oreseen! are
inevita$leA6 Spanis) construction
T#e "panis# aut#orities regard t#e &anguage emp&o!ed as an e%%ort to de%ine t#e term caso %ortuito
and #o&d t#at t#e two e3pressions are s!non!mous' (Manresa, $omentarios a& $o $ivi& Bspa)o&, vo&' /, pp' //
et se9'C "caevo&a, $odigo $ivi&, vo&' 1., pp' 48> et se9')
2. 5rticle 11"21s antece+ent' La. ;;! (itle 33! :arti+a 3
T#e antecedent to artic&e 1124 is %ound in +aw 11, Tit&e 33, Partida 0, w#ic# de%ines caso %ortuito as
;ocasion 9ue acaese por aventura de9ue non se puede ante ver' B son estos, derrivamientos de casas e %uego
9ue se enciende so ora, e 9uerantamiento de navio, %uerca de &adrones' ' ' ' ( 7n event t#at takes p&ace !
accident and cou&d not #ave een %oreseen, B3amp&es o% t#is are destruction o% #ouses, une3pected %ire,
s#ipwreck, vio&ence o% roers' ' ' ')<
. Caso ,ortuito +e,ine+6 Dscric)e
Bscric#e de%ines caso %ortuito as ;an une3pected event suc# as %&oods, torrents, s#ipwrecks,
con%&agrations, &ig#tning, compu&sion, insurrections, destruction o% ui&dings ! un%oreseen accidents and
ot#er occurrences o% a simi&ar nature'<
3. Caso ,ortuito +e,ine+6 Dnciclope+ia Buri+ica Dspanola
,n discussing and ana&!*ing t#e term caso %ortuito t#e Bncic&opedia Juridica Bspa)o&a sa!s: ; ,n a
&ega& sense and, conse9uent&!, a&so in re&ation to contracts, a caso %ortuito presents t#e %o&&owing essentia&
c#aracteristics: (1) T#e cause o% t#e un%oreseen and une3pected occurrence, or o% t#e %ai&ure o% t#e detor to
comp&! wit# #is o&igation, must e independent o% t#e #uman wi&&' (8) ,t must e impossi&e to %oresee t#e
event w#ic# constitutes t#e caso %ortuito, or i% it can e %oreseen, it must e impossi&e to avoid' (3) T#e
occurrence must e suc# as to render it impossi&e %or t#e detor to %u&%i&& #is o&igation in a norma& manner'
7nd (5) t#e o&igor (detor) must e %ree %rom an! participation in t#e aggravation o% t#e inAur! resu&ting to
t#e creditor'< (4 Bncic&opedia Juridica Bspa)o&a, 32.')
4. Dxtraor+inary circu#stance in+epen+ent o, o$li*or1s .ill an essential ele#ent o, caso ,ortuito
7ut#orities agree t#at some e3traordinar! circumstance independent o% t#e wi&& o% t#e o&igor, or o%
#is emp&o!ees, is an essentia& e&ement o% a caso %ortuito' @erein, it is at once apparent t#at t#is e&ements is
&acking' ,t is not suggested t#at t#e accident in 9uestion was due to an act o% 6od or to adverse road
conditions w#ic# cou&d not #ave een %oreseen' 7s %ar as t#e record s#ows, t#e accident was caused eit#er !
de%ects in t#e automoi&e or e&se t#roug# t#e neg&igence o% its driver' T#at is not a caso %ortuito'
%. Carrier o, passen*er not an a$solute insurer a*ainst risks o, travel6 Ho.ever! 5l$a vs. Socie+a+
5noni#a +e (ranvias +oes not apply
Eeit#er under t#e 7merican nor "panis# &aw is a carrier o% passengers an aso&ute insurer against t#e
risks o% trave& %rom w#ic# t#e passenger ma! protect #imse&% ! e3ercising ordinar! care and di&igence' T#e
case o% 7&a vs' "ociedad 7nonima de Tranvias, Jurisprudencia $ivi&, vo&' 128, p' .8/ a%%ords a good
i&&ustration o% t#e app&ication o% t#is princip&e' ,n t#at case 7&a, a passenger on a street car, was standing on
t#e p&at%orm o% t#e car w#i&e it was in motion' T#e car rounded a curve causing 7&a to &ose #is a&ance and
%a&& o%% t#e p&at%orm, sustaining sever inAuries' ,n an action roug#t ! #im to recover damages, t#e supreme
court o% "pain #e&d t#at inasmuc# as t#e car at t#e time o% t#e accident was trave&&ing at a moderate rate o%
speed and t#ere was no in%raction o% t#e regu&ations, and t#e p&ainti%% was e3posed to no greater danger t#an
t#at in#erent in t#at particu&ar mode o% trave&, t#e p&ainti%% cou&d not recover, especia&&! so since #e s#ou&d
#ave een on #is guard against a contingenc! as natura& as t#at o% &osing #is a&ance to a greater or &ess e3tent
w#en t#e car rounded t#e curve' @erein, #owever, t#e passengers #ad no means o% avoiding t#e danger or
escaping t#e inAur!'
1". <iscretion o, t)e court to #o+erate lia$ility accor+in* to circu#stances
7&t#oug# t#e e3penses incurred ! t#e spouses as a resu&t o% t#e accident great&! e3ceeded t#e amount
o% t#e damages awarded, t#e courts #ave ; a discretionar! power to moderate t#e &iai&it! according to t#e
circumstances< especia&&! in determining t#e e3tent o% t#e &iai&it! %or &osses or damages resu&ting %rom
neg&igence in t#e %u&%i&&ment o% a contractua& o&igation' T#e $ourt does not t#ink t#at t#e evidence is suc# as
to Austi%! in inter%ering wit# t#e discretion o% t#e court e&ow in t#is respect' @erein, ! %ar t#e greater part o%
t#e damages c&aimed ! t#e spouses resu&ted %rom t#e %racture o% a one in t#e &e%t wrist o% Joa9uina "anc#e*
and %rom #er oAections to #aving a deca!ing sp&inter o% t#e one re%usa& to sumit to suc# an operation, a
series o% in%ections ensued and w#ic# re9uired constant and e3pensive medica& treatment %or severa& !ears'
[%-], also [18/]
S.eet Lines vs. C5 (GR L>/3/"! -4 5pril 1%43)
&acts' Micae&a 1' Nuintos, Fr' Jose 1acatan "J, Marciano $aras and 7ndrea Ve&oso purc#ased %irst=c&ass
tickets %rom "weet +ines ,nc' at t#e &atter?s o%%ice in $eu $it!' T#e! were to oard "weet +ines? vesse&, M-V
"weet 6race, ound %or $ata&ogan, Festern "amar' ,nstead o% departing at t#e sc#edu&ed #our o% aout
midnig#t on / Ju&! 1.08, t#e vesse& set sai& at 3:22 7'M' o% . Ju&! 1.08 on&! to e towed ack to $eu due to
engine trou&e, arriving t#ere at aout 5:22 P'M' on t#e same da!' :epairs #aving een accomp&is#ed, t#e
vesse& &i%ted anc#or again on 12 Ju&! 1.08 at around /:22 7'M' ,nstead o% docking at $ata&ogan, w#ic# was
t#e %irst port o% ca&&, t#e vesse& proceeded direct to Tac&oan at around .:22 P'M' o% 12 Ju&! 1.08' Nuintos, et'
a&' #ad no recourse ut to disemark and oard a %err!oat to $ata&ogan'
@ence, a suit %or damages %or reac# o% contract o% carriage was %i&ed ! Nuintos, et' a&', w#ere t#e Tria& $ourt
($F, $eu, 1ranc# V,,,) ordered "weet +ines to pa! t#e %ormer to pa! (1) P04,222'22 as mora& damages
divided as %o&&ows: P32,222'22 %or Mrs' Micae&a 1' Nuintos, P84,222'22 %or Jesuit Fat#er Jose 1acatanC
P12,222'22 %or Mrs' 7ndrea Ve&oso and P12,222'22 %or Mike $arasC (8) P32,222'22 as e3emp&ar! or
corrective damagesC (3) ,nterest at t#e &ega& rate o% >I per annum on t#e mora& and e3emp&ar! damages as set
%ort# aove %rom t#e date o% t#is decision unti& said damages are %u&&! paidC (5) P4,222'22 as attorne!?s %eesC
and (4) T#e costs' T#e court a&so dismissed t#e counterc&aim'
T#e decision o% t#e tria& court was a%%irmed ! t#e 7ppe&&ate $ourt' @ence, t#e appea&'
T#e "upreme $ourt modi%ied t#e Audgment appea&ed %rom to t#e e%%ect t#at "weet +ines was sentenced to
indemni%! Nuintos, et' a&' in t#e sum o% P3,222'22 eac#, wit#out interest, p&us P1,842'22, eac#, ! wa! o%
attorne!?s %ees and &itigation e3pensesC wit# costs against "weet +ines'
1. 5rticle 1/! Co+e o, Co##erce
7rtic&e >15 o% t#e $ode o% $ommerce provides t#at ;a captain w#o, #aving agreed to make a vo!age,
%ai&s to %u&%i&& #is undertaking, wit#out eing prevented ! %ortuitous event or %orce maAeure, s#a&& indemni%!
a&& t#e &osses w#ic# #is %ai&ure ma! cause, wit#out preAudice to crimina& pena&ties w#ic# ma! e proper'<
-. 5rticle %4! Co+e o, Co##erce
7rtic&e >./ o% t#e $ode o% $ommerce provides t#at ;in case o% interruption o% a vo!age a&read!
egun, t#e passengers s#a&& on&! e o&iged to pa! t#e %are in proportion to t#e distance covered, wit#out rig#t
to recover damages i% t#e interruption is due to %ortuitous event or %orce maAeure, ut wit# a rig#t to
indemnit!, i% t#e interruption s#ou&d #ave een caused ! t#e captain e3c&usive&!' ,% t#e interruption s#ou&d e
caused ! t#e disai&it! o% t#e vesse&, and t#e passenger s#ou&d agree to wait %or #er repairs, #e ma! not e
re9uired to pa! an! increased %are o% passage, ut #is &iving e3penses during t#e de&a! s#a&& e %or #is own
account'<
3. &ortuitous event not present
T#e crucia& %actor in 7rtic&es >15 and >./ is t#e e3istence o% a %ortuitous event or %orce maAeure'
Fit#out it, t#e rig#t to damages and indemnit! e3ists against a captain w#o %ai&s to %u&%i&& #is undertaking or
w#ere t#e interruption #as een caused ! t#e captain e3c&usive&!' @erein, t#ere was no %ortuitous event or
%orce maAeure w#ic# prevented t#e vesse& %rom %u&%i&&ing its undertaking o% taking private respondents to
$ata&ogan' ,n t#e %irst p&ace, mec#anica& de%ects in t#e carrier are not considered a caso %ortuito t#at e3empts
t#e carrier %rom responsii&it!'
/. 5r*uen+o t)at en*ine ,ailure is ,ortuitous event! t)ere .as no ,ortuitous event to $ypass a port
o, call
,n t#e second p&ace, even granting arguendo t#at t#e engine %ai&ure was a %ortuitous event, it
accounted on&! %or t#e de&a! in departure' F#en t#e vesse& %ina&&! &e%t t#e port o% $eu on 12 Ju&! 1.08, t#ere
was no &onger an! %orce maAeure t#at Austi%ied !=passing a port o% ca&&' T#e vesse& was comp&ete&! repaired
t#e %o&&owing da! a%ter it was towed ack to $eu' ,n %act, a%ter docking at Tac&oan $it!, it &e%t t#e ne3t da!
%or Mani&a to comp&ete its vo!age'
2. Reason .)y Cat$alo*an .as $ypasse+
T#e reason %or !=passing t#e port o% $ata&ogan was to ena&e t#e vesse& to catc# up wit# its
sc#edu&e %or t#e ne3t week' T#ere were 42 passengers %or Tac&oan compared to 82 passengers %or
$ata&ogan, so t#at t#e $ata&ogan p#ase cou&d e scrapped wit#out too muc# &oss %or t#e compan!'
. Con+itions in t)e carrier1s ticket cannot prevail over 5rticles 1/ an+ %4
T#e carrier cannot re&! on t#e conditions in sma&& o&d print at t#e ack o% t#e ticket reading: ;T#e
passenger?s acceptance o% t#is ticket s#a&& e considered as an acceptance o% t#e %o&&owing conditions: (3) ,n
case t#e vesse& cannot continue or comp&ete t#e trip %or an! cause w#atsoever, t#e carrier reserves t#e rig#t to
ring t#e passenger to #is-#er destination at t#e e3pense o% t#e carrier or to cance& t#e ticket and re%und t#e
passenger t#e va&ue o% #is-#er ticketC 333 (11) T#e sai&ing sc#edu&e o% t#e vesse& %or w#ic# t#is ticket was
issued is suAect to c#ange wit#out previous notice'< @erein, t#e carrier did not comp&! wit# t#e same' ,t did
not cance& t#e ticket nor did it re%und t#e va&ue o% t#e tickets to its a%%ected passengers' 1esides, it was not t#e
vesse&?s sai&ing sc#edu&e t#at was invo&ved' T#e passengers? comp&aint is directed not at t#e de&a!ed departure
t#e ne3t da! ut at t#e !=passing o% $ata&ogan, t#eir destination' Furt#ermore, t#e conditions re&ied upon
! t#e carrrier cannot prevai& over 7rtic&es >15 and >./ o% t#e $ode o% $ommerce #ereto%ore 9uoted'
3. 8.ner o, vessel an+ s)ipa*ent civilly lia$le ,or acts o, t)e captain
T#e vo!age to $ata&ogan was ;interrupted< ! t#e captain upon instruction o% management' T#e
;interruption< was not due to %ortuitous event or %or maAeure nor to disai&it! o% t#e vesse&' @aving een
caused ! t#e captain upon instruction o% management, t#e passengers? rig#t to indemnit! is evident' T#e
owner o% a vesse& and t#e s#ip agent s#a&& e civi&&! &ia&e %or t#e acts o% t#e captain'
1ad %ait# means a reac# o% a known dut! t#roug# some motive or interest or i&&wi&&' "e&%=enric#ment
or %raterna& interest, and not persona& i&&wi&&, ma! #ave een t#e motive, ut it is ma&ice nevert#e&ess'
%. Ba+ ,ait) present6 &in+in*s o, t)e lo.er courts as to ,acts conclusive upon t)e Supre#e Court
1ot# t#e Tria& $ourt and t#e 7ppe&&ate $ourt %ound t#at t#ere was ad %ait# on t#e part o% t#e carrier
in t#at: (1) De%endants=appe&&ants did not give notice to p&ainti%%s=appe&&ees as to t#e c#ange o% sc#edu&e o% t#e
vesse&C (8) Pnowing %u&&! we&& t#at it wou&d take no &ess t#an %i%teen #ours to e%%ect t#e repairs o% t#e damaged
engine, de%endants=appe&&ants instead made announcement o% assurance t#at t#e vesse& wou&d &eave wit#in a
s#ort period o% time, and w#en p&ainti%%s=appe&&ees wanted to &eave t#e port and gave up t#e trip, de%endants=
appe&&ants? emp&o!ees wou&d come and sa!, Gwe are &eaving, a&read!'? (3) De%endants=appe&&ants did not o%%er
to re%und p&ainti%%s=appe&&ees? tickets nor provide t#em wit# transportation %rom Tac&oan $it! to $ata&ogan'
T#at %inding o% ad %ait# is inding on us, since it is not t#e %unction o% t#e $ourt to ana&!*e and review
evidence on t#is point a&& over again'
1". =oral +a#a*es +ue6 5.ar+ o, t)e lo.er court excessive
Dnder 7rtic&e 8882 o% t#e $ivi& $ode, mora& damages are Aust&! due in reac#es o% contract w#ere t#e
de%endant acted %raudu&ent&! or in ad %ait#' @erein, #owever, under t#e circumstances, t#e award o% mora&
damages is e3cessive and according&! s#ou&d e reduced to P3,222'22, respective&!, %or eac# o% t#e c&aimants'
11. 5.ar+ o, attorney1s ,ees ?usti,ie+
T#e tota& award o% attorne!?s %ees o% P4,222'22 is in order considering t#at t#e case #as reac#ed t#e
"upreme $ourt'
1-. 5.ar+ o, exe#plary +a#a*es at court1s +iscretion
,nso%ar as e3emp&ar! damages are concerned, a&t#oug# t#ere was ad %ait#, t#e $ourt was not inc&ined
to grant t#em in addition to mora& damages' B3emp&ar! damages cannot e recovered as a matter o% rig#tC t#e
$ourt decides w#et#er or not t#e! s#ou&d e adAudicated' T#e oAective to meet its sc#edu&e mig#t #ave een
ca&&ed %or, ut t#e carrier s#ou&d #ave taken t#e necessar! steps %or t#e protection o% its passengers under its
contract o% carriage'
13. 5rticle --12 (-) 7CC inapplica$le
7rtic&e 8814(8) o% t#e $ivi& $ode invoked ! t#e carrier is in=app&ica&e #erein' T#e #arm done to
private respondents outweig#s an! ene%its t#e! ma! #ave derived %rom eing transported to Tac&oan instead
o% eing taken to $ata&ogan, t#eir destination and t#e vesse&?s %irst port o% ca&&, pursuant to its norma&
sc#edu&e'
[%/]
=a*$oo vs. Bernar+o (GR L>13%"! 3" 5pril 1%3)
Bn 1anc, Maka&inta& (J): / concur, 1 took no part
&acts' Drano and Bmi&ia Magoo are t#e parents o% $esar Magoo, a c#i&d o% / !ears o&d, w#o &ived wit#
t#em and was under t#eir custod! unti& #is deat# on 85 (ctoer 1.4> w#en #e was ki&&ed in a motor ve#ic&e
accident, t#e %ata& ve#ic&e eing a passenger Aeepne! wit# P&ate 7$=1.>3 (4>) owned ! De&%in 1ernardo' 7t
t#e time o% t#e accident, said passenger Aeepne! was driven ! $onrado :o9ue' T#e contract etween :o9ue
and 1ernardo was t#at :o9ue was to pa! to 1ernardo t#e sum o% P/'22, w#ic# #e paid to 1ernardo, %or
privi&ege o% driving t#e Aeepne! on 85 (ctoer 1.4>, it eing t#eir agreement t#at w#atever earnings :o9ue
cou&d make out o% t#e use o% t#e Aeepne! in transporting passengers %rom one point to anot#er in t#e $it! o%
Mani&a wou&d e&ong entire&! to :o9ue' 7s a conse9uence o% t#e accident and as a resu&t o% t#e deat# o% $esar
Magoo in said accident, :o9ue was prosecuted %or #omicide t#ru reck&ess imprudence e%ore t#e $D, o%
Mani&a ($rimina& $ase 3003>), and t#at upon arraignment :o9ue p&eaded gui&t! to t#e in%ormation and was
sentenced to > mont#s o% arresto ma!or, wit# t#e accessor! pena&ties o% t#e &awC to indemni%! t#e #eirs o% t#e
deceased in t#e sum o% P3,222'22, wit# susidiar! imprisonment in case o% inso&venc!, and to pa! t#e costs'
Pursuant to said Audgment :o9ue served #is sentence ut #e was not a&e to pa! t#e indemnit! ecause #e was
inso&vent'
7n action was %i&ed ! t#e spouses Magoo against 1ernardo is %or en%orcement o% #is susidiar! &iai&it! as
emp&o!er in accordance wit# 7rtic&e 123, :evised Pena& $ode' T#e tria& court ($F, o% Mani&a) ordered
1ernardo to pa! t#e spouses P3,222'22 and costs' 1ernardo appea&ed to t#e $ourt o% 7ppea&s, w#ic# certi%ied
t#e case to t#e "upreme $ourt on t#e ground t#at on&! 9uestions o% &aw are invo&ved'
T#e "upreme $ourt a%%irmed t#e Audgment appea&ed %rom, wit# costs against 1ernardo'
1. Boun+ary syste#6 D#ployer>D#ployee relations)ip exists6 7LF vs. <in*lasan as cite+ in <oce
vs. ECC
,n Eationa& +aor Dnion vs' Ding&asan, 48 ('6' Eo' 5, 1.33, it was #e&d t#at t#e %eatures w#ic#
c#aracteri*e t#e ;oundar! s!stem< H name&!, t#e %act t#at t#e driver does not receive a %i3ed wage ut gets
on&! t#e e3cess o% t#e amount o% %ares co&&ected ! #im over t#e amount #e pa!s to t#e Aeep=owner, and t#at
t#e gaso&ine consumed ! t#e Aeep is %or t#e account o% t#e driver H are not su%%icient to wit#draw t#e
re&ations#ip etween t#em %rom t#at o% t#e emp&o!er and emp&o!ee' T#e ru&ing was suse9uent&! cited and
app&ied in Doce vs' Forkmen?s $ompensation $ommission, +.510, 88 Decemer 1.4/, w#ic# invo&ved t#e
&iai&it! o% a us owner %or inAur! compensation to a conductor working under t#e ;oundar! s!stem'<
-. :rinciple applie+ in ne*li*ence cases concernin* ri*)t o, t)ir+ parties to recover +a#a*es ,or
in?uries sustaine+
T#e same princip&e app&ies wit# greater reason in neg&igence cases concerning t#e rig#t o% t#ird
parties to recover damages %or inAuries sustained' ,n Monto!a vs' ,gnacio, +=4/>/, Decemer 8., 1.43, t#e
owner and operator o% a passenger Aeepne! &eased it to anot#er, ut wit#out t#e approva& o% t#e Pu&ic "ervice
$ommission' ,n a suse9uent co&&ision a passenger died' T#e $ourt ru&ed t#at since t#e &ease was made
wit#out suc# approva&, w#ic# was re9uired ! &aw, t#e owner continued to e t#e operator o% t#e ve#ic&e in
&ega& contemp&ation and as suc# was responsi&e %or t#e conse9uences incident to its operation' T#e same
responsii&it! was #e&d to attac# in a case w#ere t#e inAured part! was not a passenger ut a t#ird person, w#o
sued on t#e t#eor! o% cu&pa a9ui&iana (Timo& vs' (sias, +=0450, 7pri& 32, 1.44)' T#ere is no reason w#! a
di%%erent ru&e s#ou&d e app&ied in a susidiar! &iai&it! case under 7rtic&e 123 o% t#e :evised Pena& $ode' 7s
in t#e e3istence o% an emp&o!er=emp&o!ee re&ations#ip etween t#e owner o% t#e ve#ic&e and t#e driver' ,ndeed
to e3empt %rom &iai&it! t#e owner o% a pu&ic ve#ic&e w#o operates it under t#e ;oundar! s!stem< on t#e
ground t#at #e is a mere &essor wou&d e not on&! to aet %&agrant vio&ations o% t#e Pu&ic "ervice +aw ut
a&so to p&ace t#e riding pu&ic at t#e merc! o% reck&ess and irresponsi&e drivers H reck&ess ecause t#e
measure o% t#eir earnings depends &arge&! upon t#e numer o% trips t#e! make and, #ence, t#e speed at w#ic#
t#e! driveC and irresponsi&e ecause most i% not a&& o% t#em are in no position to pa! t#e damages t#e! mig#t
cause' ("ee Bre*o vs' Jepte, +=.>24, "eptemer 32, 1.40)'
3. Bernar+o +i+ not ai+ Ro9ue in cri#inal case! cannot escape su$si+iary lia$ility as provi+e+ $y
5rticle 1"3 R:C
Fit# respect to 1ernardo?s contention t#at #e was taken unaware ! t#e spontaneous p&ea o% gui&t
entered ! :o9ue, and t#at #e did not #ave a c#ance to prove t#e innocence o% :o9ue, t#e $ourt #o&ds t#at at
t#is stage, it is a&read! too &ate to tr! t#e crimina& case a&& over again' @is a&&egation t#at #e re&ied on #is e&ie%
t#at :o9ue wou&d de%end #imse&% and t#e! #ad su%%icient proo% to s#ow t#at :o9ue was not gui&t! o% t#e crime
c#arged cannot e entertained' @e s#ou&d #ave taken it to #imse&% to aid in t#e de%ense o% :o9ue' @aving
%ai&ed to take t#is step and t#e accused #aving een dec&ared gui&t! ! %ina& Audgment o% t#e crime o%
#omicide t#ru reck&ess imprudence, t#ere appears no more wa! %or #im to escape #is susidiar! &iai&it! as
provided %or in 7rtic&e 123 o% t#e :evised Pena& $ode'
[%2]
;saac vs. 5L 5##en (ransportation (GR L>%31! -3 5u*ust 1%23)
Bn 1anc, 1eng*on (J): . concur
&acts' 7' +' 7mmen Transportation $o', ,nc' is a corporation engaged in t#e usiness o% transporting
passengers ! &and %or compensation in t#e 1ico& provinces and one o% t#e &ines it operates is t#e one
connecting +egaspi $it!, 7&a! wit# Eaga $it!, $amarines "ur' (ne o% t#e uses w#ic# 7mmen
Transportation was operating is 1us 31' (n 31 Ma! 1.41, $esar +' ,saac oarded said us as a passenger
pa!ing t#e re9uired %are %rom +igao, 7&a! ound %or Pi&i, $amarines "ur, ut e%ore reac#ing #is destination,
t#e us co&&ided wit# a motor ve#ic&e o% t#e pick=up t!pe coming %rom t#e opposite direction, as a resu&t o%
w#ic# ,saac?s &e%t arm was comp&ete&! severed and t#e severed portion %e&& inside t#e us' ,saac was rus#ed to
a #ospita& in ,riga, $amarines "ur w#ere #e was given &ood trans%usion to save #is &i%e' 7%ter 5 da!s, #e was
trans%erred to anot#er #ospita& in Taaco, 7&a!, w#ere #e underwent treatment %or 3 mont#s' @e was moved
&ater to t#e (rt#opedic @ospita& w#ere #e was operated on and sta!ed t#ere %or anot#er 8 mont#s' For t#ese
services, #e incurred e3penses amounting to P>83'52, e3c&uding medica& %ees w#ic# were paid ! 7mmen
Transporation'
7s an a%termat#, ,saac roug#t an action against 7mmen Transportation %or damages a&&eging t#at t#e
co&&ision w#ic# resu&ted in t#e &oss o% #is &e%t arm was main&! due to t#e gross incompetence and reck&essness
o% t#e driver o% t#e us operated ! 7mmen Transportation and t#at 7mmen Transporation incurred in cu&pa
contractua& arising %rom its non=comp&iance wit# its o&igation to transport ,saac sa%e&! to #is destination'
7mmen Transportation set up as specia& de%ense t#at t#e inAur! su%%ered ! ,saac was due entire&! to t#e %au&t
or neg&igence o% t#e driver o% t#e pick=up car w#ic# co&&ided wit# t#e us driven ! its driver and to t#e
contriutor! neg&igence o% ,saac #imse&%' T#e court a%ter tria& %ound t#at t#e co&&ision occurred due to t#e
neg&igence o% t#e driver o% t#e pick=up car and not to t#at o% t#e driver o% t#e us it appearing t#at t#e &atter
did ever!t#ing #e cou&d to avoid t#e same ut t#at notwit#standing #is e%%orts, #e was not a&e to avoid it' 7s
a conse9uence, t#e court dismissed t#e comp&aint, wit# costs against ,saac' ,saac appea&ed'
T#e "upreme $ourt a%%irmed t#e decision appea&ed %rom, wit# costs against ,saac'
1. 5rticle 1333 7CC
%or t#e sa%et! o% t#e passengers transported ! t#em according to a&& t#e circumstances o% eac# case' "uc#
e3traordinar! di&igence in t#e vigi&ance over t#e goods is %urt#er e3pressed in artic&es 1035, 1034, and 1054,
Eos' 4, >, and 0, w#i&e t#e e3traordinar! di&igence %or t#e sa%et! o% t#e passengers is %urt#er set %ort# in
artic&es 1044 and 104>'<
-. 5rticle 1322 7CC
7rtic&e 1044 o% t#e $ivi& $ode provides t#at ;7 common carrier is ound to carr! t#e passengers
3. 5rticle 132 7CC
/. Rationale ,or extraor+inary +ili*ence re9uire#ent ,or a co##on carrier
T#e $ode $ommission, in Austi%!ing t#is e3traordinar! di&igence re9uired o% a common carrier, said
;7 common carrier is ound to carr! t#e passengers sa%e&! as %ar as #uman care and %oresig#t can provide,
using t#e utmost di&igence o% ver! cautious persons, wit# due regard %or a&& circumstances' T#is e3traordinar!
di&igence re9uired o% common carriers is ca&cu&ated to protect t#e passengers %rom t#e tragic mis#aps t#at
%re9uent&! occur in connection wit# rapid modern transportation' T#is #ig# standard o% care is imperative&!
demanded ! t#e preciousness o% #uman &i%e and ! t#e consideration t#at ever! person must in ever! wa! e
sa%eguarded against a&& inAur!' ;
2. :rinciples *overnin* lia$ility o, a co##on carrier
From t#e &ega& provisions, t#e %o&&owing restatement o% t#e princip&es governing t#e &iai&it! o% a
common carrier can e made: (1) t#e &iai&it! o% a carrier is contractua& and arises upon reac# o% its
o&igation' T#ere is reac# i% it %ai&s to e3ert e3traordinar! di&igence according to a&& t#e circumstances o%
eac# caseC (8) a carrier is o&iged to carr! its passenger wit# t#e utmost di&igence o% a ver! cautious person,
#aving due regard %or a&& t#e circumstancesC (3) a carrier is presumed to e at %au&t or to #ave acted
neg&igent&! in case o% deat# o%, or inAur! to, passengers, it eing its dut! to prove t#at it e3ercised
e3traordinar! di&igenceC and (5) t#e carrier is not an insurer against a&& risks o% trave&'
. &acts6 Bus runnin* at #o+erate spee+! s.erve+ to avoi+ reckless pick>up car
@erein, 1us 31, immediate&! prior to t#e co&&ision, was running at a moderate speed ecause it #ad
Aust stopped at t#e sc#oo& *one o% Matacong, Po&angui, 7&a!' T#e pick=up car was at %u&& speed and was
running outside o% its proper &ane' T#e driver o% t#e us, upon seeing t#e manner in w#ic# t#e pick=up was
t#en running, swerved t#e us to t#e ver! e3treme rig#t o% t#e road unti& its %ront and rear w#ee&s #ave gone
over t#e pi&e o% stones or grave& situated on t#e rampart o% t#e road' "aid driver cou&d not move t#e us %art#er
rig#t and run over a greater portion o% t#e pi&e, t#e peak o% w#ic# was aout 3 %eet #ig#, wit#out endangering
t#e sa%et! o% #is passengers' 7nd notwit#standing a&& t#ese e%%orts, t#e rear &e%t side o% t#e us was #it ! t#e
pick=up car'
3. Coolness an+ accuracy o, ?u+*#ent re9uire+ in or+inary circu#stances cannot $e expecte+ in
su++en e#er*ency6 5cts o, a pru+ent #an in situation +one
F#i&e t#e position taken ! ,saac, i'e' t#at t#e driver o% t#e us s#ou&d #ave stopped t#e us to a&&ow
t#e ot#er ve#ic&e to pass rat#er t#an s9uee*ing etween t#e oncoming pick=up and t#e pi&e o% grave&, appea&s
more to t#e sense o% caution t#at one s#ou&d oserve in a given situation to avoid an accident or mis#ap, suc#
#owever can not a&wa!s e e3pected %rom one w#o is p&aced sudden&! in a predicament w#ere #e is not given
enoug# time to take t#e proper course o% action as #e s#ou&d under ordinar! circumstances' (ne w#o is p&aced
in suc# a predicament cannot e3ercise suc# coo&ness or accurac! o% Audgment as is re9uired o% #im under
ordinar! circumstances and #e cannot t#ere%ore e e3pected to oserve t#e same Audgment, care and
precaution as in t#e &atter' For t#is reason, aut#orities aound w#ere %ai&ure to oserve t#e same degree o% care
t#at as ordinar! prudent man wou&d e3ercise under ordinar! circumstances w#en con%ronted wit# a sudden
emergenc! was #e&d to e warranted and a Austi%ication to e3empt t#e carrier %rom &iai&it!' T#us, it was #e&d
t#at ;w#ere a carrier?s emp&o!ee is con%ronted wit# a sudden emergenc!, t#e %act t#at #e is o&iged to act
9uick&! and wit#out a c#ance %or de&ieration must e taken into account, and #e is not #e&d to t#e same
degree o% care t#at #e wou&d ot#erwise e re9uired to e3ercise in t#e asence o% suc# emergenc! ut must
e3ercise on&! suc# care as an! ordinar! prudent person wou&d e3ercise under &ike circumstances and
conditions, and t#e %ai&ure on #is part to e3ercise t#e est Audgment t#e case renders possi&e does not
esta&is# &ack o% care and ski&& on #is part w#ic# renders t#e compan!, &ia&e' ; $onsidering a&& t#e
circumstances, t#e driver o% t#e us #as done w#at a prudent man cou&d #ave done to avoid t#e co&&ision and
t#is re&ieves t#e transport compan! %rom &iai&it! under t#e &aw'
4. ;saac *uilty o, contri$utory ne*li*ence
@erein, w#en ,saac oarded t#e us in 9uestion, #e seated #imse&% on t#e &e%t side t#ereo% resting #is
&e%t arm on t#e window si&& ut wit# #is &e%t e&ow outside t#e window, t#is eing #is position in t#e us w#en
t#e co&&ision took p&ace' ,t is %or t#is reason t#at t#e co&&ision resu&ted in t#e severance o% said &e%t arm %rom
t#e od! o% appe&&ant t#us doing #im a great damage' @ad #e not p&aced #is &e%t arm on t#e window si&& wit# a
portion t#ereo% protruding outside, per#aps t#e inAur! wou&d #ave een avoided as is t#e case wit# t#e ot#er
passengers' ,t is to e noted t#at ,saac was t#e on&! victim o% t#e co&&ision' ,t is apparent t#at ,saac is gui&t! o%
contriutor! neg&igence'
%. 7o recovery +ue to ne*li*ence $y passen*er
7&t#oug# contriutor! neg&igence cannot re&ieve t#e carrier o% its &iai&it! ut wi&& on&! entit&e it to a
reduction o% t#e amount o% damage caused (7rtic&e 10>8, new $ivi& $ode), t#is is a circumstance w#ic#
%urt#er mi&itates against t#e position taken ! ,saac in t#is case' ,t is t#e prevai&ing ru&e t#at it is neg&igence
per se %or a passenger on a rai&road vo&untari&! or inadvertent&! to protrude #is arm, #and, e&ow, or an! ot#er
part o% #is od! t#roug# t#e window o% a moving car e!ond t#e outer edge o% t#e window or outer sur%ace o%
t#e car, so as to come in contact wit# oAects or ostac&es near t#e track, and t#at no recover! can e #ad %or
an inAur! w#ic# ut %or suc# neg&igence wou&d not #ave een sustained'
[%]
ane$ vs. a%ala
[%3]
:anay 5uto$us vs. :astor (GR /3%33! -% Buly 1%/-)
Bn 1anc, Moran (J): 5 concur
&acts' Bar&! in t#e morning o% 11 Feruar! 1.3/, $oncepcion 6a&&opin (Z), wit# #er daug#ter=in=&aw, $armen
7reda, &e%t Bstancia, ,&oi&o, %or t#e $it! o% ,&oi&o on truck 52/ o% Pana! 7utous $ompan!, ,nc', driven ! one
Fe&icisimo Ti&os' 6a&&opin and 7reda were seated at t#e e3treme rig#t o% t#e second enc# e#ind t#e driver?s
seat' ,n t#e course o% transit, 6a&&opin stretc#ed #er rig#t arm e!ond t#e rai&ing o% t#e us, apparent&!
pointing to #er companion t#e rice %ie&ds !onder' T#is arm was caug#t and roken ! anot#er truck driven !
one Francisco Oap coming c&ose&! %rom t#e opposite direction' F#et#er 6a&&opin stretc#ed #er rig#t arm at
t#e precise moment t#at t#e two uses were aout to cross eac# ot#er or sometime prior t#ereto, and #ow
c&ose t#e two usses were to eac# ot#er, t#e record does not disc&ose' @er wrist &ed pro%use&! and
notwit#standing medica& treatment at t#e Maternit! @ospita& at "ara and Mission @ospita& at Jaro, ,&oi&o,
w#ere s#e was roug#t a%ter t#e accident, s#e died t#e %o&&owing da!, undouted&! as a resu&t o% #emorr#age
and severe s#ock'
$risanta, "a&ome, and Jose, a&& surnamed Pastor, as #eirs o% t#e deceased, instituted in t#e court e&ow an
action against Pana! 7utous as owner o% truck 52/, seeking to recover damages in t#e sum o% P/,822 %or t#e
deat# o% t#eir mot#er' Pana! 7utous #aving een aso&ved o% t#e comp&aint, t#e #eirs o% Pastor appea&ed to
t#e $ourt o% 7ppea&s w#ere t#e Audgment o% t#e tria& court was reversed and anot#er entered in t#eir %avor
awarding t#em damages in t#e sum o% P8,222' @ence, t#e appea& ! certiorari ! Pana! 7utous'
T#e "upreme $ourt reversed t#e Audgment, and aso&ved Pana! 7utous, wit#out costs'
7o ne*li*ence on part o, :anay 5uto$us6 5ct o, +ecease+ t)e proxi#ate cause o, in?ury
Driving at an appropriate speed, a&most at t#e midd&e o% a si3=meter #ig#wa! w#ic#, at t#e time o% t#e
accident, was wit#out tra%%ic, is not neg&igence' ,ndependent&! o% t#e act o% t#e deceased in stretc#ing #er rig#t
arm e!ond t#e rai&ing o% t#e us, t#e manner t#e us was driven cou&d not #ave produced t#e inAur!'
Petitioner?s driver at t#e time t#at t#e ot#er us was passing c&ose&! %rom t#e opposite direction, did not know
t#at t#e deceased?s arm was e3tended e!ond t#e rai&ing o% t#e us' @e #as t#e rig#t to assume t#at a&& #is
passengers are taking t#e usua& precaution %or t#eir own sa%et!' ,%, wit#out suc# know&edge o% t#e position o%
t#e deceased and on t#e assurance o% suc# assumption, t#e c#au%%eur drives #is us at a reasona&! sa%e
distance %rom t#at coming %rom t#e opposite direction, and one o% #is passengers su%%ers an inAur!, t#e
neg&igence cannot e attriuted to #im' ,n ot#er words, t#e act per%ormed ! t#e deceased at t#e time t#e
accident occurred must e regarded as t#e pro3imate cause o% t#e inAur!'
[%4]
<el :ra+o vs. =eralco (GR -%/-! 3 =arc) 1%-%)
&acts' T#e Mani&a B&ectric $ompan!, is engaged in operating street cars in t#e $it! o% Mani&a %or t#e
conve!ance o% passengersC and on t#e morning o% 1/ Eovemer 1.84, one Teodorico F&orenciano, as
Mera&co?s motorman, was in c#arge o% car 05 running %rom east to west on :' @ida&go "treet, t#e scene o% t#e
accident eing at a point near t#e intersection o% said street and Mendo*a "treet' 7%ter t#e car #ad stopped at
its appointed p&ace %or taking on and &etting o%% passengers, Aust east o% t#e intersection, it resumed its course
at a moderate speed under t#e guidance o% t#e motorman' T#e car #ad proceeded on&! a s#ort distance,
#owever, w#en ,gnacio de& Prado ran across t#e street to catc# t#e car, #is approac# eing made %rom t#e &e%t'
T#e car was o% t#e kind #aving entrance and e3it at eit#er end, and t#e movement o% de& Prado was so timed
t#at #e arrived at t#e %ront entrance o% t#e car at t#e moment w#en t#e car was passing' De& Prado, upon
approac#ing t#e car, raised #is #and as an indication to t#e motorman o% #is desire to oard t#e car, in
response to w#ic# t#e motorman eased up a &itt&e, wit#out stopping' Dpon t#is, de& Prado sei*ed, wit# #is &e%t
#and, t#e %ront perpendicu&ar #andpost, at t#e same time p&acing #is &e%t %oot upon t#e p&at%orm' @owever,
e%ore de& Prado?s position #ad ecome secure, and even e%ore #is raised rig#t %oot #ad reac#ed t#e p&at%orm,
t#e motorman app&ied t#e power, wit# t#e resu&t t#at t#e car gave a s&ig#t &urc# %orward' T#is sudden impu&se
to t#e car caused de& Prado?s %oot to s&ip, and #is #and was Aerked &oose %rom t#e #andpost' @e t#ere%ore %e&& to
t#e ground, and #is rig#t %oot was caug#t and crus#ed ! t#e moving car' T#e ne3t da! t#e memer #ad to e
amputated in t#e #ospita&'
7n action was instituted in t#e $F, o% Mani&a ! ,gnacio de& Prado to recover damages in t#e amount o%
P42,222 %or persona& inAuries a&&eged to #ave een caused ! t#e neg&igence o% Mera&co in t#e operation o%
one o% its street cars in t#e $it! o% Mani&a' Dpon #earing t#e cause t#e tria& court awarded to de& Prado t#e
sum o% P12,222, as damages, wit# costs o% suit' Mera&co appea&ed'
T#e "upreme $ourt a%%irmed t#e appea&ed Audgment wit# t#e modi%ication t#at t#e sum to e recovered
reduced to P8,422C wit# costs against Mera&co'
1. 7o o$li*ation on t)e part o, a street rail.ay co#pany to stop cars at points ot)er t)an
appointe+ ,or stoppa*e
T#ere is no o&igation on t#e part o% a street rai&wa! compan! to stop its cars to &et on intending
passengers at ot#er points t#an t#ose appointed %or stoppage' ,t wou&d e impossi&e to operate a s!stem o%
street cars i% a compan! engaged in t#is usiness were re9uired to stop an! and ever!w#ere to take on peop&e
w#o are too indo&ent, or w#o imagine t#emse&ves to e in too great a #urr!, to go to t#e proper p&aces %or
oarding t#e cars'
-. <uty o, t)e #otor#an o, t)e car
7&t#oug# t#e motorman o% t#e car was not ound to stop to &et t#e passenger on, it was #is dut! to do
no act t#at wou&d #ave t#e e%%ect o% increasing t#e passenger?s peri& w#i&e #e was attempting to oard t#e car'
T#e premature acce&eration o% t#e car was a reac# o% t#is dut!'
3. 7ature o, relation $et.een a carrier o, passen*ers ,or )ire an+ its patrons6 <uty o, t)e carrier
T#e re&ation etween a carrier o% passengers %or #ire and its patrons is o% a contractua& natureC and a
%ai&ure on t#e part o% t#e carrier to use due care in carr!ing its passengers sa%e&! is a reac# o% dut! (cu&pa
contractua&) under artic&es 1121, 1123, and 1125 o% t#e $ivi& $ode' Furt#ermore, t#e dut! t#at t#e carrier o%
passengers owes to its patrons e3tends to persons oarding t#e cars as we&& as to t#ose a&ig#ting t#ere%rom'
/. Can*co vs. =anila Railroa+6 Culpa Contractual
T#e case o% $angco vs' Mani&a :ai&road $o' (3/ P#i&', 0>/), supp&ies an instance o% t#e vio&ation o%
t#e dut! wit# respect to a passenger w#o was getting o%% o% a train' ,n t#at case, t#e p&ainti%% stepped o%% o% a
moving train, w#i&e it was s&owing down in a station, and at a time w#en it was too dark %or #im to see c&ear&!
w#ere #e was putting #is %eet' T#e emp&o!ees o% t#e compan! #ad care&ess&! &e%t waterme&ons on t#e p&at%orm
at t#e p&ace w#ere t#e p&ainti%% a&ig#ted, wit# t#e resu&t t#at #is %eet s&ipped and #e %e&& under t#e car, w#ere
#is rig#t arm was ad&! inAured' T#is court #e&d t#at t#e rai&road compan! was &ia&e %or reac# o% positive
dut! (cu&pa contractua&), and t#e p&ainti%% was awarded damages in t#e amount o% P8,422 %or t#e &oss o% #is
arm' ,n t#e opinion in t#at case t#e distinction is c&ear&! drawn etween a &iai&it! %or neg&igence arising %rom
reac# o% contractua& dut! and t#at arising under artic&es 1.28 and 1.23 o% t#e $ivi& $ode (cu&pa a9ui&iana)'
2. Relevance o, +istinction $et.een Culpa Contractual an+ Culpa 59uiliana as to +e,enses
availa$le
T#e distinction etween t#e two sorts o% neg&igence is important in t#is Aurisdiction, %or t#e reason
t#at w#ere &iai&it! arises %rom a mere tort (cu&pa a9ui&iana), not invo&ving a reac# o% positive o&igation, an
emp&o!er, or master, ma! e3cu&pate #imse&%, under t#e &ast paragrap# o% artic&e 1.23 o% t#e $ivi& $ode, !
proving t#at #e #ad e3ercised due di&igence to prevent t#e damageC w#ereas t#is de%ense is not avai&a&e i% t#e
&iai&it! o% t#e master arises %rom a reac# o% contractua& dut! (cu&pa contractua&)'
. (rainin* o, #otor#an irrelevant in $reac) o, o$li*ation un+er 5rticle 11"1 o, t)e Civil Co+e
@erein, t#e compan! p&eaded as a specia& de%ense t#at it #ad used a&& t#e di&igence o% a good %at#er o%
a %ami&! to prevent t#e damage su%%ered ! de& PradoC and to esta&is# t#is contention t#e compan! introduced
testimon! s#owing t#at due care #ad een used in training and instructing t#e motorman in c#arge o% t#is car
in #is art' T#is proo% is irre&evant in view o% t#e %act t#at t#e &iai&it! invo&ved was derived %rom a reac# o%
o&igation under artic&e 1121 o% t#e $ivi& $ode and re&ated provisions'
3. Relevance o, +istinction $et.een ne*li*ence arisin* un+er 5rticle 1%"- an+ 11"1 as to #iti*ation
o, lia$ility
7not#er practica& di%%erence etween &iai&it! %or neg&igence arising under artic&e 1.28 o% t#e $ivi&
$ode and &iai&it! arising %rom neg&igence in t#e per%ormance o% a positive dut!, under artic&e 1121 and
re&ated provisions o% t#e $ivi& $ode, is t#at, in dea&ing wit# t#e &atter %orm o% neg&igence, t#e court is given a
discretion to mitigate &iai&it! according to t#e circumstances o% t#e case (art 1123)' Eo suc# genera&
discretion is given ! t#e $ode in dea&ing wit# &iai&it! arising under artic&e 1.28C t#oug# possi&! t#e same
end is reac#ed ! courts in dea&ing wit# t#e &atter %orm o% &iai&it! ecause o% t#e &atitude o% t#e considerations
pertinent to cases arising under t#is artic&e'
4. Contri$utory ne*li*ence a #iti*atin* circu#stance un+er 5rticle 11"3 Civil Co+e
7s to t#e contriutor! neg&igence o% de& Prado, as in :akes vs' 7t&antic, 6u&% and Paci%ic $o' (0 P#i&',
34.), it is treated as a mitigating circumstance under artic&e 1123 o% t#e $ivi& $ode' @erein, t#e neg&igence o%
de& Prado was contriutor! to t#e accident and must e considered as a mitigating circumstance'
%. :roxi#ate cause o, t)e acci+ent
De& Prado?s neg&igence in attempting to oard t#e moving car was not t#e pro3imate cause o% t#e
inAur!' T#e direct and pro3imate cause o% t#e inAur! was t#e act o% Mera&co?s motorman in putting on t#e
power premature&!' 7 person oarding a moving car must e taken to assume t#e risk o% inAur! %rom oarding
t#e car under t#e conditions open to #is view, ut #e cannot %air&! e #e&d to assume t#e risk t#at t#e
motorman, #aving t#e situation in view, wi&& increase #is peri& ! acce&erating t#e speed o% t#e car e%ore #e is
p&anted sa%e&! on t#e p&at%orm' 7gain, t#e situation is one w#ere t#e neg&igent act o% t#e compan!?s servant
succeeded t#e neg&igent act o% t#e passenger, and t#e neg&igence o% t#e compan! must e considered t#e
pro3imate cause o% t#e inAur!'
1". Rule analo*ous to t)e +octrine o, @t)e last clear c)anceA
T#e ru&e app&ica&e seems to e ana&ogous to, i% not identica& wit# t#at w#ic# is sometimes re%erred to
as t#e doctrine o% ;t#e &ast c&ear c#ance'< ,n accordance wit# t#is doctrine, t#e contriutor! neg&igence o% t#e
part! inAured wi&& not de%eat t#e action i% it e s#own t#at t#e de%endant mig#t, ! t#e e3ercise o% reasona&e
care and prudence, #ave avoided t#e conse9uences o% t#e neg&igence o% t#e inAured part!'
(ransportation La.! -""/ ( -/" )
11. 5.ar+ o, +a#a*e
Fit# respect to t#e e%%ect o% t#is inAur! upon de& Prado?s earning power, a&t#oug# #e &ost #is %oot, #e
is a&e to use an arti%icia& memer wit#out great inconvenience and #is earning capacit! #as proa&! not een
reduced ! more t#an 32I' ,n view o% t#e precedents %ound in t#e $ourt?s decisions wit# respect to t#e
damages t#at oug#t to e awarded %or t#e &oss o% a &im, and more particu&ar&! :akes vs' 7t&antic, 6u&% and
Paci%ic $o' (0 P#i&', 34.)C $angco vs' Mani&a :ai&road $o' (3/ P#i&', 0>/)C and 1orromeo vs' Mani&a B&ectric
:ai&road and +ig#t $o' (55 P#i&', 1>4), and in view o% a&& t#e circumstances connected wit# t#e case, t#e $ourt
is o% t#e opinion t#at de& Prado wi&& e ade9uate&! compensated ! an award o% P8,422'
[%%]
Can*co vs. =anila Railroa+ (GR 1-1%1! 1/ 8cto$er 1%14)
Bn 1anc, Fis#er (J): 5 concur
&acts' Jose $angco, was in t#e emp&o!ment o% t#e Mani&a :ai&road $ompan! in t#e capacit! o% c&erk, wit# a
mont#&! wage o% P84' @e &ived in t#e pue&o o% "an Mateo, :i*a&, w#ic# is &ocated upon t#e &ine o% t#e
Mani&a :ai&road $ompan!C and in coming dai&! ! train to t#e compan!?s o%%ice in t#e cit! o% Mani&a w#ere
#e worked, #e used a pass, supp&ied ! t#e compan!, w#ic# entit&ed #im to ride upon t#e compan!?s trains
%ree o% c#arge' (n 82 Januar! 1.14, $angco was returning #ome ! rai& %rom #is dai&! &aorsC and as t#e train
drew up to t#e station in "an Mateo $angco arose %rom #is seat in t#e second c&ass=car w#ere #e was riding
and, making #is e3it t#roug# t#e door, took #is position upon t#e steps o% t#e coac#, sei*ing t#e uprig#t
guardrai& wit# #is rig#t #and %or support' (n t#e side o% t#e train w#ere passengers a&ig#t at t#e "an Mateo
station t#ere is a cement p&at%orm w#ic# egins to rise wit# a moderate gradient some distance awa! %rom t#e
compan!?s o%%ice and e3tends a&ong in %ront o% said o%%ice %or a distance su%%icient to cover t#e &engt# o%
severa& coac#es' 7s t#e train s&owed down anot#er passenger, named Bmi&io Runiga, a&so an emp&o!ee o% t#e
rai&road compan!, got o%% t#e same car, a&ig#ting sa%e&! at t#e point w#ere t#e p&at%orm egins to rise %rom t#e
&eve& o% t#e ground' F#en t#e train #ad proceeded a &itt&e %art#er $angco stepped o%% a&so, ut one or ot# o%
#is %eet came in contact wit# a sack o% waterme&ons wit# t#e resu&t t#at #is %eet s&ipped %rom under #im and #e
%e&& vio&ent&! on t#e p&at%orm' @is od! at once ro&&ed %rom t#e p&at%orm and was drawn under t#e moving car,
w#ere #is rig#t arm was ad&! crus#ed and &acerated' ,t appears t#at a%ter $angco a&ig#ted %rom t#e train t#e
car moved %orward possi&! > meters e%ore it came to a %u&& stop' T#e accident occurred etween 0 and /
p'm', and as t#e rai&road station was &ig#ted dim&! ! a sing&e &ig#t &ocated some distance awa!, oAects on t#e
p&at%orm w#ere t#e accident occurred were di%%icu&t to discern, especia&&! to a person emerging %rom a &ig#ted
car' $angco was drawn %rom under t#e car in an unconscious condition, and it appeared t#at t#e inAuries w#ic#
#e #ad received were ver! serious' @e was t#ere%ore roug#t at once to a certain #ospita& in t#e cit! o% Mani&a
w#ere an e3amination was made and #is arm was amputated' T#e resu&t o% t#is operation was unsatis%actor!,
and $angco was t#en carried to anot#er #ospita& w#ere a second operation was per%ormed and t#e memer
was again amputated #ig#er up near t#e s#ou&der' $angco e3pended t#e sum o% P0.2'84 in t#e %orm o%
medica& and surgica& %ees and %or ot#er e3penses in connection wit# t#e process o% #is curation'
(n 31 7ugust 1.14, $angco instituted t#e proceeding in t#e $ourt o% First ,nstance o% Mani&a to recover
damages o% t#e Mani&a :ai&road, %ounding #is action upon t#e neg&igence o% t#e servants and emp&o!ees o%
Mani&a :ai&road in p&acing t#e sacks o% me&ons upon t#e p&at%orm and in &eaving t#em so p&aced as to e a
menace to t#e securit! o% passenger a&ig#ting %rom t#e compan!?s trains' Judgment was entered in %avor o%
Mani&a :ai&road, and $angco appea&ed'
T#e "upreme $ourt reversed t#e decision o% t#e &ower court, and rendered Audgment $angco %or t#e sum o%
P3,8.2'84, and %or t#e costs o% ot# instances'
1. Reason ,or t)e .ater#elons on t)e plat,or#
(ransportation La.! -""/ ( -/1 )
T#e presence o% a sack o% me&ons on t#e p&at%orm w#ere $angco a&ig#ted was due to t#e %act t#at t#e
customar! season %or #arvesting t#ese me&ons and a &arge &ot #ad een roug#t to t#e station %or s#ipment to
t#e market' T#e! were contained in numerous tow sacks w#ic# #ad een pi&ed on t#e p&at%orm in a row one
upon anot#er' T#is row o% sacks was so p&aced t#at t#ere was a space o% on&! aout 8 %eet etween t#e sacks o%
me&ons and t#e edge o% t#e p&at%orm'
-. D#ployees o, railroa+ co#pany ne*li*ent
Bmp&o!ees o% t#e rai&road compan! were gui&t! o% neg&igence in pi&ing t#ese sacks on t#e p&at%orm in
t#e manner aove statedC t#at t#eir presence caused t#e p&ainti%% to %a&& as #e a&ig#ted %rom t#e trainC and t#at
t#e! t#ere%ore constituted an e%%ective &ega& cause o% t#e inAuries sustained ! $angco'
3. =anila Railroa+ lia$le i, action $ase+ upon $reac) o, contract o, carria*e
T#e %oundation o% t#e &ega& &iai&it! o% Mani&a :ai&road is t#e contract o% carriage, and t#at t#e
o&igation to respond %or t#e damage w#ic# $angco #as su%%ered arises, i% at a&&, %rom t#e reac# o% t#at
contract ! reason o% t#e %ai&ure o% Mani&a :ai&road to e3ercise due care in its per%ormance' ,ts &iai&it! is
direct and immediate, di%%ering essentia&&!, in t#e &ega& viewpoint %rom t#at presumptive responsii&it! %or t#e
neg&igence o% its servants, imposed ! artic&e 1.23 o% t#e $ivi& $ode, w#ic# can e reutted ! proo% o% t#e
e3ercise o% due care in t#eir se&ection and supervision'
/. 5rticle 1%"3 not applica$le to o$li*ations arisin* ex contractu $ut only to extra>contractual
o$li*ation
7rtic&e 1.23 o% t#e $ivi& $ode is not app&ica&e to o&igations arising e3 contractu, ut on&! to e3tra=
contractua& o&igations H or to use t#e tec#nica& %orm o% e3pression, t#at artic&e re&ates on&! to cu&pa
a9ui&iana and not to cu&pa contractua&'
2. <istinction $et.een culpa contractual an+ culpa a9uiliana
Manresa (vo&' /, p' >0) in #is commentaries upon artic&es 1123 and 1125 o% t#e $ivi& $ode, c&ear&!
points out t#e distinction' ,n commenting upon artic&e 1.23 (vo&' /, p' 32) Manresa c&ear&! points out t#e
di%%erence etween ;cu&pa, sustantive and independent, w#ic# o% itse&% constitutes t#e source o% an o&igation
etween persons not %ormer&! connected ! an! &ega& tie< and cu&pa considered as an ;accident in t#e
per%ormance o% an o&igation a&read! e3isting'<
. 5rticle 1%"3 o, t)e Civil Co+e not applica$le to acts o, ne*li*ence .)ic) constitute t)e $reac) o,
a contract6 Rakes vs. 5tlantic Gul,
T#e acts to w#ic# t#ese artic&es L1.28 and 1.23 o% t#e $ivi& $odeM are app&ica&e are understood to e
t#ose not growing out o% pre=e3isting duties o% t#e parties to one anot#er' 1ut w#ere re&ations a&read! %ormed
give rise to duties, w#et#er springing %rom contract or 9uasi=contract, t#en reac#es o% t#ose duties are suAect
to artic&es 1121, 1123 and 1125 o% t#e same code'< (:akes vs' 7t&antic, 6u&% and Paci%ic $o', 0 P#i&' :ep', 34.
at p' 3>4')
3. Lia$ility occasione+ $y ne*li*ence o, e#ployees to .)o# t)ey are not $oun+ $y contract not
$ase+ upon principle o, respon+ent superior
T#e &iai&it!, w#ic#, under t#e "panis# &aw, is, in certain cases imposed upon emp&o!ers wit# respect
to damages occasioned ! t#e neg&igence o% t#eir emp&o!ees to persons to w#om t#e! are not ound !
contract, is not ased, as in t#e Bng&is# $ommon +aw, upon t#e princip&e o% respondent superior H i% it were,
t#e master wou&d e &ia&e in ever! case and unconditiona&&! H ut upon t#e princip&e announced in artic&e
1.28 o% t#e $ivi& $ode, w#ic# imposes upon a&& persons w#o ! t#eir %au&t or neg&igence, do inAur! to anot#er,
t#e o&igation o% making good t#e damage caused'
4. 8$li*ation to #ake *oo+ +a#a*e arises .)en unskille+ servant causes in?ury! #aster
responsi$le ,or selection an+ +irection o, servant
(ransportation La.! -""/ ( -/- )
T#e o&igation to make good t#e damage arises at t#e ver! instant t#at t#e unski&&%u& servant, w#i&e
acting wit#in t#e scope o% #is emp&o!ment, causes t#e inAur!' T#e &iai&it! o% t#e master is persona& and direct'
1ut, i% t#e master #as not een gui&t! o% an! neg&igence w#atever in t#e se&ection and direction o% t#e servant,
#e is not &ia&e %or t#e acts o% t#e &atter, w#et#er done wit#in t#e scope o% #is emp&o!ment or not, i% t#e
damage done ! t#e servant does not amount to a reac# o% t#e contract etween t#e master and t#e person
inAured'
4. Dxtra>contractual culpa6 =aster .)o exercises all possi$le care in selection o, servant incurs no
lia$ility to t)ir+ persons to .)o# )e is $oun+ $y no contractual ties
7s Manresa sa!s (vo&' /, p' >/) t#e &iai&it! arising %rom e3tra=contractua& cu&pa is a&wa!s ased upon
a vo&untar! act or omission w#ic#, wit#out wi&&%u& intent, ut ! mere neg&igence or inattention, #as caused
damage to anot#er' 7 master w#o e3ercises a&& possi&e care in t#e se&ection o% #is servant, taking into
consideration t#e 9ua&i%ications t#e! s#ou&d possess %or t#e disc#arge o% t#e duties w#ic# it is #is purpose to
con%ide to t#em, and directs t#em wit# e9ua& di&igence, t#ere! per%orms #is dut! to t#ird persons to w#om #e
is ound ! no contractua& ties, and #e incurs no &iai&it! w#atever i%, ! reason o% t#e neg&igence o% #is
servants, even wit#in t#e scope o% t#eir emp&o!ment, suc# t#ird persons su%%er damage' True it is t#at under
artic&e 1.23 o% t#e $ivi& $ode t#e &aw creates a presumption t#at #e #as een neg&igent in t#e se&ection or
direction o% #is servant, ut t#e presumption is reutta&e and !ie&ds to proo% o% due care and di&igence in t#is
respect'
%. Si#ilar interpretation $y t)e Supre#e Court o, :uerto Rico
T#e supreme court o% Porto :ico, in interpreting identica& provisions, as %ound in t#e Porto :ican
$ivi& $ode, #as #e&d t#at t#ese artic&es are app&ica&e to cases o% e3tra=contractua& cu&pa e3c&usive&!'
($armona vs' $uesta, 82 Porto :ico :eports, 814')
1". Ba)ia vs. Liton?ua6 :resu#ption o, ne*li*ence o, #aster .)en servant cause in?ury $y
ne*li*ence
T#e distinction was again made patent ! t#is $ourt in its decision in t#e case o% 1a#ia vs' +itonAua
and +e!nes, (32 P#i&' :ep', >85), w#ic# was an action roug#t upon t#e t#eor! o% t#e e3tra=contractua&
&iai&it! o% t#e de%endant to respond %or t#e damage caused ! t#e care&essness o% #is emp&o!ee w#i&e acting
wit#in t#e scope o% #is emp&o!ment T#e $ourt, a%ter citing t#e &ast paragrap# o% artic&e 1.23 o% t#e $ivi&
$ode, said: ;From t#is artic&e two t#ings are apparent: (1) T#at w#en an inAur! is caused ! t#e neg&igence o%
a servant or emp&o!ee t#ere instant&! arises a presumption o% &aw t#at t#ere was neg&igence on t#e part o% t#e
master or emp&o!er eit#er in t#e se&ection o% t#e servant or emp&o!ee, or in supervision over #im a%ter t#e
se&ection, or ot#C and (8) t#at presumption is Auris tantum and not Auris et de Aure, and conse9uent&!, ma! e
reutted' ,t %o&&ows necessari&! t#at i% t#e emp&o!er s#ows to t#e satis%action o% t#e court t#at in se&ection and
supervision #e #as e3ercised t#e care and di&igence o% a good %at#er o% a %ami&!, t#e presumption is overcome
and #e is re&ieved %rom &iai&it!'
11. :eculiarity o, Spanis) la. o, ne*li*ence
T#e t#eor! ases t#e responsii&it! o% t#e master u&timate&! on #is own neg&igence and not on t#at o%
#is servant' T#is is t#e nota&e pecu&iarit! o% t#e "panis# &aw o% neg&igence' ,t is, o% course, in striking
contrast to t#e 7merican doctrine t#at, in re&ations wit# strangers, t#e neg&igence o% t#e servant is conc&usive&!
t#e neg&igence o% t#e master'
1-. Culpa contractual6 :roo, o, exercise o, ut#ost +ili*ence not a +e,ense
T#e &iai&it! o% masters and emp&o!ers %or t#e neg&igent acts or omissions o% t#eir servants or agents,
w#en suc# acts or omissions cause damages w#ic# amount to t#e reac# o% a contract, is not ased upon a
mere presumption o% t#e master?s neg&igence in t#eir se&ection or contro&, and proo% o% e3ercise o% t#e utmost
di&igence and care in t#is regard does not re&ieve t#e master o% #is &iai&it! %or t#e reac# o% #is contract'
13. Le*al o$li*ation eit)er extra>contractual or contractual6 &un+a#ental +istinction
Bver! &ega& o&igation must o% necessit! e e3tra=contractua& or contractua&' B3tra=contractua&
o&igation #as its source in t#e reac# or omission o% t#ose mutua& duties w#ic# civi&i*ed societ! imposes
upon its memers, or w#ic# arise %rom t#ese re&ations, ot#er t#an contractua&, o% certain memers o% societ! to
ot#ers, genera&&! emraced in t#e concept o% status' T#e &ega& rig#ts o% eac# memer o% societ! constitute t#e
measure o% t#e corresponding &ega& duties, main&! negative in c#aracter, w#ic# t#e e3istence o% t#ose rig#ts
imposes upon a&& ot#er memers o% societ!' T#e reac# o% t#ese genera& duties w#et#er due to wi&&%u& intent or
to mere inattention, i% productive o% inAur!, gives rise to an o&igation to indemni%! t#e inAured part!' T#e
%undamenta& distinction etween o&igations o% t#is c#aracter and t#ose w#ic# arise %rom contract, rests upon
t#e %act t#at in cases o% non=contractua& o&igation it is t#e wrong%u& or neg&igent act or omission itse&% w#ic#
creates t#e vincu&um Auris, w#ereas in contractua& re&ations t#e vincu&um e3ists independent&! o% t#e reac# o%
t#e vo&untar! dut! assumed ! t#e parties w#en entering into t#e contractua& re&ation'
1/. Li#itation o, lia$ility in extra>contractual o$li*ation arisin* ,ro# ne*li*ence6 =oral
responsi$ility
Fit# respect to e3tra=contractua& o&igation arising %rom neg&igence, w#et#er o% act or omission, it is
competent %or t#e &egis&ature to e&ect to &imit suc# &iai&it! to cases in w#ic# t#e person upon w#om suc# an
o&igation is imposed is mora&&! cu&pa&e or, on t#e contrar!, %or reasons o% pu&ic po&ic!, to e3tend t#at
&iai&it!, wit#out regard to t#e &ack o% mora& cu&pai&it!, so as to inc&ude responsii&it! %or t#e neg&igence o%
t#ose persons w#ose acts or omissions are imputa&e, ! a &ega& %iction, to ot#ers w#o are in a position to
e3ercise an aso&ute or &imited contro& over t#em' T#e &egis&ature w#ic# adopted t#e $ivi& $ode #as e&ected to
&imit e3tra contractua& &iai&it!, wit# certain we&&=de%ined e3ceptions, to cases in w#ic# mora& cu&pai&it! can
e direct&! imputed to t#e persons to e c#arged' T#is mora& responsii&it! ma! consist in #aving %ai&ed to
e3ercise due care in one?s own acts, or in #aving %ai&ed to e3ercise due care in t#e se&ection and contro& o%
one?s agents or servants, or in t#e contro& o% persons w#o, ! reason o% t#eir status, occup! a position o%
dependenc! wit# respect to t#e person made &ia&e %or t#eir conduct'
12. 5lle*ation an+ proo, o, ne*li*ent act or o#ission $y plainti,, re9uire+ .)en action $ase+ on
ne*li*ent act or o#ission! not .)en action $ase+ on $reac) o, contractual un+ertakin*
T#e position o% a natura& or Auridica& person w#o #as undertaken ! contract to render service to
anot#er, is w#o&&! di%%erent %rom t#at to w#ic# artic&e 1.23 re&ates' F#en t#e source o% t#e o&igation upon
w#ic# p&ainti%%?s cause o% action depends is a neg&igent act or omission, t#e urden o% proo% rests upon
p&ainti%% to prove t#e neg&igence, i% #e does not #is action %ai&s' 1ut w#en t#e %acts averred s#ow a contractua&
undertaking ! de%endant %or t#e ene%it o% p&ainti%%, and it is a&&eged t#at p&ainti%% #as %ai&ed or re%used to
per%orm t#e contract, it is not necessar! %or p&ainti%% to speci%! in #is p&eadings w#et#er t#e reac# o% t#e
contract is due to wi&&%u& %au&t or to neg&igence on t#e part o% t#e de%endant, or o% #is servants or agents' Proo%
o% t#e contract and o% its nonper%ormance is su%%icient prima %acie to warrant a recover!' 7s a genera& ru&e, it
is &ogica& t#at in case o% e3tra=contractua& cu&pa, a suing creditor s#ou&d assume t#e urden o% proo% o% its
e3istence, as t#e on&! %act upon w#ic# #is action is asedC w#i&e on t#e contrar!, in a case o% neg&igence w#ic#
presupposes t#e e3istence o% a contractua& o&igation, i% t#e creditor s#ows t#at it e3ists and t#at it #as een
roken, it is not necessar! %or #im to prove t#e neg&igence'
1. <e,en+ant cannot invoke ne*li*ence o, servants as +e,ense in $reac) o, contract
7s it is not necessar! %or t#e p&ainti%% in an action %or t#e reac# o% a contract to s#ow t#at t#e reac#
was due to t#e neg&igent conduct o% de%endant or o% #is servants, even t#oug# suc# e in %act t#e actua& cause
o% t#e reac#, it is ovious t#at proo% on t#e part o% de%endant t#at t#e neg&igence or omission o% #is servants
or agents caused t#e reac# o% t#e contract wou&d not constitute a de%ense to t#e action' ,% t#e neg&igence o%
servants or agents cou&d e invoked as a means o% disc#arging t#e &iai&it! arising %rom contract, t#e
anoma&ous resu&t wou&d e t#at persons acting t#roug# t#e medium o% agents or servants in t#e per%ormance
o% t#eir contracts, wou&d e in a etter position t#an t#ose acting in person' ,% suc# a t#eor! cou&d e accepted,
Auridica& persons wou&d enAo! practica&&! comp&ete immunit! %rom damages arising %rom t#e reac# o% t#eir
(ransportation La.! -""/ ( -// )
contracts i% caused ! neg&igent acts o% omission or commission on t#e part o% t#eir servants, as suc# Auridica&
persons can o% necessit! on&! act t#roug# agents or servants, and it wou&d no dout e true in most instances
t#at reasona&e care #ad een taken in t#e se&ection and direction o% suc# servants'
13. <istinction $et.een culpa a9uiliana as source o, o$li*ation! an+ culpa contractual as #ere
inci+ent to per,or#ance o, contract
T#e distinction etween cu&pa a9ui&iana, as t#e source o% an o&igation, and cu&pa contractua& as a
mere incident to t#e per%ormance o% a contract #as %re9uent&! een recogni*ed ! t#e supreme court o% "pain'
("entencias o% June 80, 1/.5C Eovemer 82, 1/.>C and Decemer 13 1/.>') ,n t#e decision o% 82 Eovemer
1/.>, it appeared t#at p&ainti%%?s action arose e3 contractu, ut t#at de%endant soug#t to avai& #imse&% o% t#e
provisions o% artic&e 1.28 o% t#e $ivi& $ode as a de%ense' T#e "panis# "upreme $ourt reAected de%endant?s
contention, sa!ing: ;T#ese are not cases o% inAur! caused, wit#out an! pre=e3isting o&igation, ! %au&t or
neg&igence, suc# as t#ose to w#ic# artic&e 1.28 o% t#e $ivi& $ode re&ates, ut o% damages caused ! t#e
de%endant?s %ai&ure to carr! out t#e undertakings imposed ! t#e contracts' ;
14. Bo)nson vs. <avi+6 8.ner not lia$le ,or +a#a*es cause+ $y ne*li*ence o, +river
,n t#e case o% Jo#nson vs' David (4 P#i&' :ep', >>3), t#e court #e&d t#at t#e owner o% a carriage was
not &ia&e %or t#e damages caused ! t#e neg&igence o% #is driver' ,n t#at case t#e court commented on t#e %act
t#at no evidence #ad een adduced in t#e tria& court t#at t#e de%endant #ad een neg&igent in t#e emp&o!ment
o% t#e driver, or t#at #e #ad an! know&edge o% #is &ack o% ski&& or care%u&ness'
1%. Baer Senior vs. Co#pania =ariti#a6 5rticles 1%"- an+ 1%"3 not applica$le (contractual
o$li*ation)
,n t#e case o% 1aer "enior T $o'?s "uccessors vs' $ompa)ia Maritima (> P#i&' :ep', 814), t#e p&ainti%%
sued t#e de%endant %or damages caused ! t#e &oss o% a arge e&onging to p&ainti%% w#ic# was a&&owed to get
adri%t ! t#e neg&igence o% de%endant?s servants in t#e course o% t#e per%ormance o% a contract o% towage' T#e
court #e&d, citing Manresa (vo&' /, pp' 8., >.) t#at i% t#e ;o&igation o% t#e de%endant grew out o% a contract
made etween it and t#e p&ainti%% ' ' ' we do not t#ink t#at t#e provisions o% artic&es 1.28 and 1.23 are
app&ica&e to t#e case'<
-". C)ap#an vs. Fn+er.oo+6 =aster not lia$le ,or ne*li*ence o, +river
,n t#e case o% $#apman vs' Dnderwood (80 P#i&' :ep', 305), p&ainti%% sued t#e de%endant to recover
damages %or persona& inAuries caused ! t#e neg&igence o% de%endant?s c#au%%eur w#i&e driving de%endant?s
automoi&e in w#ic# de%endant was riding at t#e time' T#e court %ound t#at t#e damages were caused ! t#e
neg&igence o% t#e driver o% t#e automoi&e, ut #e&d t#at t#e master was not &ia&e, a&t#oug# #e was present at
t#e time, sa!ing: ;un&ess t#e neg&igent acts o% t#e driver are continued %or suc# a &engt# o% time as to give t#e
owner a reasona&e opportunit! to oserve t#em and to direct t#e driver to desist t#ere%rom' ' ' ' T#e act
comp&ained o% must e continued in t#e presence o% t#e owner %or suc# a &engt# o% time t#at t#e owner ! #is
ac9uiescence, makes t#e driver?s acts #is own'<
-1. Ha#a+a vs. =anila Railroa+6 5pplication o, 5rticle 1%"3 alt)ou*) in?ury co#plaine+ o,
constitute+ a $reac) o, +uty arisin* out o, contract o, transportation
,n t#e case o% Oamada vs' Mani&a :ai&road $o' and :ac#rac# 6arage T Ta3ica $o' (33 P#i&' :ep',
/), it is true t#at t#e court rested its conc&usion as to t#e &iai&it! o% t#e de%endant upon artic&e 1.23, a&t#oug#
t#e %acts disc&osed t#at t#e inAur! comp&ained o% ! p&ainti%% constituted a reac# o% t#e dut! to #im arising out
o% t#e contract o% transportation' T#e e3press ground o% t#e decision in t#is case was t#at artic&e 1.23, in
dea&ing wit# t#e &iai&it! o% a master %or t#e neg&igent acts o% #is servants ;makes t#e distinction etween
private individua&s and pu&ic enterpriseC< t#at as to t#e &atter t#e &aw creates a reutta&e presumption o%
neg&igence in t#e se&ection or direction o% t#e servantsC and t#at in t#e particu&ar case t#e presumption o%
neg&igence #ad not een overcome'
--. Ha#a+a vs. =anila Railroa+6 E)ere +e,en+ant lia$le .)et)er $reac) o, +uty .ere to $e
re*ar+e+ as constitutin* culpa a9uiliana or culpa contractual
,n its decision in t#e Oamada case, t#e court treated p&ainti%%?s action as t#oug# %ounded in tort rat#er
t#an as ased upon t#e reac# o% t#e contract o% carriage, and an e3amination o% t#e p&eadings and o% t#e
rie%s s#ows t#at t#e 9uestions o% &aw were in %act discussed upon t#is t#eor!' Viewed %rom t#e standpoint o%
t#e de%endant t#e practica& resu&t must #ave een t#e same in an! event' T#e proo% disc&osed e!ond dout
t#at t#e de%endant?s servant was gross&! neg&igent and t#at #is neg&igence was t#e pro3imate cause o%
p&ainti%%?s inAur!' ,t a&so a%%irmative&! appeared t#at de%endant #ad een gui&t! o% neg&igence in its %ai&ure to
e3ercise proper discretion in t#e direction o% t#e servant' De%endant was t#ere%ore, &ia&e %or t#e inAur!
su%%ered ! p&ainti%%, w#et#er t#e reac# o% t#e dut! were to e regarded as constituting cu&pa a9ui&ina or
cu&pa contractua&'
-3. Dssential c)aracteristics o, ne*li*ent occurs as an inci+ent in per,or#ance o, contractual
un+ertakin* or itsel, as source o, extra>contractual o$li*ation are i+entical
7s Manresa points out (vo&' /, pp' 8. and >.) w#et#er neg&igence occurs as an incident in t#e course
o% t#e per%ormance o% a contractua& undertaking or is itse&% t#e source o% an e3tra=contractua& o&igation, its
essentia& c#aracteristics are identica&' T#ere is a&wa!s an act or omission productive o% damage due to
care&essness or inattention on t#e part o% t#e de%endant' $onse9uent&!, w#en t#e court #o&ds t#at a de%endant is
&ia&e in damages %or #aving %ai&ed to e3ercise due care, eit#er direct&!, or in %ai&ing to e3ercise proper care in
t#e se&ection and direction o% #is servants, t#e practica& resu&t is identica& in eit#er ease'
-/. Ha#a+a vs. =anila Railroa+6 :roper interpretation o, +ecision
,t is not to e in%erred, ecause t#e court #e&d in t#e Oamada case t#at t#e de%endant was &ia&e %or t#e
damages neg&igent&! caused ! its servant to a person to w#om it was ound ! contract, and made re%erence
to t#e %act t#at t#e de%endant was neg&igent in t#e se&ection and contro& o% its servants, t#at in suc# a case t#e
court wou&d #ave #e&d t#at it wou&d #ave een a good de%ense to t#e action, i% presented s9uare&! upon t#e
t#eor! o% t#e reac# o% t#e contract, %or de%endant to #ave proved t#at it did in %act e3ercise care in t#e
se&ection and contro& o% t#e servant'
-2. Relative sp)eres o, contractual an+ extra>contractual o$li*ations
T#e %ie&d o% non=contractua& o&igation is muc# more roader t#an t#at o% contractua& o&igation,
comprising, as it does, t#e w#o&e e3tent o% Auridica& #uman re&ations' T#ese two %ie&ds, %igurative&! speaking,
concentricC t#at is to sa!, t#e mere %act t#at a person is ound to anot#er ! contract does not re&ieve #im %rom
e3tra=contractua& &iai&it! to suc# person' F#en suc# a contractua& re&ation e3ists t#e o&igor ma! reak t#e
contract under suc# conditions t#at t#e same act w#ic# constitutes a reac# o% t#e contract wou&d #ave
constituted t#e source o% an e3tra=contractua& o&igation #ad no contract e3isted etween t#e parties'
-. Contract o, carria*e i#plie+ly carries +uty to carry passen*er in sa,ety
T#e contract o% Mani&a :ai&road to transport $angco carried wit# it, ! imp&ication, t#e dut! to carr!
#im in sa%et! and to provide sa%e means o% entering and &eaving its trains ($ivi& $ode, artic&e 184/)' T#at dut!,
eing contractua&, was direct and immediate, and its non=per%ormance cou&d not e e3cused ! proo% t#at t#e
%au&t was mora&&! imputa&e to de%endant?s servants'
-3. <octrine o, co#parative ne*li*ence6 Rakes case
Dnder t#e doctrine o% comparative neg&igence announced in t#e :akes case (supra), i% t#e accident
was caused ! p&ainti%%?s own neg&igence, no &iai&it! is imposed upon de%endant, w#ereas i% t#e accident was
caused ! de%endant?s neg&igence and p&ainti%%?s neg&igence mere&! contriuted to #is inAur!, t#e damages
s#ou&d e apportioned'
-4. ;t is not ne*li*ence per se ,or a passen*er to ali*)t ,ro# a #ovin* train6 Dxperience o, every>
+ay li,e
@erein, t#at t#e train was are&! moving w#en $angco a&ig#ted is s#own conc&usive&! ! t#e %act t#at
it came to stop wit#in > meters %rom t#e p&ace w#ere #e stepped %rom it' T#ousands o% persons a&ig#t %rom
trains under t#ese conditions ever! da! o% t#e !ear, and sustain no inAur! w#ere t#e compan! #as kept its
p&at%orm %ree %rom dangerous ostructions' T#ere is no reason to e&ieve t#at p&ainti%% wou&d #ave su%%ered
an! inAur! w#atever in a&ig#ting as #e did #ad it not een %or de%endant?s neg&igent %ai&ure to per%orm its dut!
to provide a sa%e a&ig#ting p&ace'
-%. (est to +eter#ine .)et)er passen*er )as $een *uilty o, ne*li*ence6 ()o#pson1s .ork o,
7e*li*ence
7s e3pressed in T#ompson?s work on Eeg&igence (vo&' 3, sec' 3212), ;t#e test ! w#ic# to determine
w#et#er t#e passenger #as een gui&t! o% neg&igence in attempting to a&ig#t %rom a moving rai&wa! train, is
t#at o% ordinar! or reasona&e care' ,t is to e considered w#et#er an ordinari&! prudent person, o% t#e age, se3
and condition o% t#e passenger, wou&d #ave acted as t#e passenger acted under t#e circumstances disc&osed !
t#e evidence' T#is care #as een de%ined to e, not t#e care w#ic# ma! or s#ou&d e used ! t#e prudent man
genera&&!, ut t#e care w#ic# a man o% ordinar! prudence wou&d use under simi&ar circumstances, to avoid
inAur!'< (T#ompson, $ommentaries on Eeg&igence, vo&' 3, sec' 3212')
-%. (est to +eter#ine .)et)er passen*er )as $een *uilty o, ne*li*ence6 :icart vs. S#it)
,% t#e $ourt wou&d pre%er to adopt t#e mode o% e3position used ! t#is court in Picart vs' "mit# (30
P#i&' :ep', /2.), it ma! sa! t#at t#e test is t#isC Fas t#ere an!t#ing in t#e circumstances surrounding t#e
p&ainti%% at t#e time #e a&ig#ted %rom t#e train w#ic# wou&d #ave admonis#ed a person o% average prudence
t#at to get o%% t#e train under t#e conditions t#en e3isting was dangerous S ,% so, t#e p&ainti%% s#ou&d #ave
desisted %rom a&ig#tingC and #is %ai&ure so to desist was contriutor! neg&igence'
3". Circu#stances to +eter#ine passen*er1s ne*li*ence in present case6 Can*co not ne*li*ent
T#e compan!?s p&at%orm was constructed upon a &eve& #ig#er t#an t#at o% t#e roaded and t#e
surrounding ground' T#e distance %rom t#e steps o% t#e car to t#e spot w#ere t#e a&ig#ting passenger wou&d
p&ace #is %eet on t#e p&at%orm was t#us reduced, t#ere! decreasing t#e risk incident to stepping o%%' T#e
nature o% t#e p&at%orm, constructed as it was o% cement materia&, a&so assured to t#e passenger a sta&e and
even sur%ace on w#ic# to a&ig#t' Furt#ermore, t#e p&ainti%% was possessed o% t#e vigor and agi&it! o% !oung
man#ood, and it was ! no means so risk! %or #im to get o%% w#i&e t#e train was !et moving as t#e same act
wou&d #ave een in an aged or %ee&e person' ,n determining t#e 9uestion o% contriutor! neg&igence in
per%orming suc# act H t#at is to sa!, w#et#er t#e passenger acted prudent&! or reck&ess&! H t#e age, se3, and
p#!sica& condition o% t#e passenger are circumstances necessari&! a%%ecting t#e sa%et! o% t#e passenger, and
s#ou&d e considered' Fomen, it #as een oserved, as a genera& ru&e, are &ess capa&e t#an men o% a&ig#ting
wit# sa%et! under suc# conditions, as t#e nature o% t#eir wearing appare& ostructs t#e %ree movement o% t#e
&ims' 7gain, it ma! e noted t#at t#e p&ace was per%ect&! %ami&iar to $angco, as it was #is dai&! custom to get
on and o%% t#e train at t#is station' T#ere cou&d, t#ere%ore, e no uncertaint! in #is mind wit# regard eit#er to
t#e &engt# o% t#e step w#ic# #e was re9uired to take or t#e c#aracter o% t#e p&at%orm w#ere #e was a&ig#ting'
$angco?s conduct, in undertaking to a&ig#t w#i&e t#e train was !et s&ig#t&! under wa!, was not c#aracteri*ed
! imprudence and t#at t#ere%ore #e was not gui&t! o% contriutor! neg&igence'
31. &air co#pensation ,or Can*co
$angco, at t#e time o% t#e accident, was earning P84 a mont# as a cop!ist c&erk, and t#at t#e inAuries
#e #as su%%ered #ave permanent&! disa&ed #im %rom continuing t#at emp&o!ment' Mani&a :ai&road #as not
s#own t#at an! ot#er gain%u& occupation is open to $angco' @is e3pectanc! o% &i%e, according to t#e standard
morta&it! ta&es, is appro3imate&! 33 !ears' 7 %air compensation %or t#e damage su%%ered ! #im %or #is
permanent disai&it! is t#e sum o% P8,422, and t#at #e is a&so entit&ed to recover o% Mani&a :ai&road t#e
additiona& sum o% P0.2'84 %or medica& attention, #ospita& services, and ot#er incidenta& e3penditures
connected wit# t#e treatment o% #is inAuries'
[1""]
<e Guia vs. =anila Dlectric Railroa+ M Li*)t Co. (GR 1/332! -4 Banuary 1%-")
First Division, "treet (J): 4 concur
&acts' (n 5 "eptemer 1.14, near t#e end o% t#e street=car &ine in $a&oocan, :i*a&, a nort#ern suur o% t#e
cit! o% Mani&a' ,t appears t#at, at aout /:22 p'm', Manue& de 6uia, a p#!sician residing in $a&oocan, oarded
a car at t#e end o% t#e &ine wit# t#e intention o% coming to t#e cit!' 7t aout 32 meters %rom t#e starting point
t#e car entered a switc#, de 6uia remained on t#e ack p&at%orm #o&ding t#e #and&e o% t#e rig#t=#and door'
Dpon coming out o% t#e switc#, t#e sma&& w#ee&s o% t#e rear truck &e%t t#e track, ran %or a s#ort distance a&ong
t#e macadam %i&&ing, w#ic# was %&us# wit# t#e rai&s, and struck a concrete post at t#e &e%t o% t#e track' T#e post
was s#atteredC and as t#e car stopped, de 6uia was t#rown against t#e door wit# some vio&ence, receiving
ruises and possi&! certain interna& inAuries'
De 6uia %i&ed an action against Mani&a B&ectric :ai&road T +ig#t $o' (Mera&co), operator o% t#e rai&car, and
its driver %or damages in &ig#t o% #is inAuries e%ore t#e $ourt o% First ,nstance o% t#e $it! o% Mani&a' T#e tria&
court %ound t#at t#e motorman o% t#e derai&ed car was neg&igent in #aving maintained too rapid a speed' T#e
tria& court ru&ed in %avor o% de 6uia, awarding t#e sum o% P>,122, wit# interest and costs, as damages incurred
! #im in conse9uence o% p#!sica& inAuries sustained w#i&e riding on one o% Mera&co?s car' 1ot# parties
appea&ed'
T#e "upreme $ourt a%%irmed t#e Audgment appea&ed %rom must, wit# modi%ication t#at t#e amount o% t#e
recover! is reduced to P1,122, wit# &ega& interest %rom / Eovemer 1.1>C wit#out an! specia& pronouncement
as to costs o% t#is instance'
1. =otor #an ne*li*ent
T#e %inding o% neg&igence in t#e operation o% t#e car must e sustained, as not eing c&ear&! contrar!
to t#e evidenceC not so muc# ecause o% e3cessive speed as ecause o% t#e distance w#ic# t#e car was a&&owed
to run wit# t#e %ront w#ee&s o% t#e rear truck derai&ed' 7n e3perienced and attentive motorman s#ou&d #ave
discovered t#at somet#ing was wrong and wou&d #ave stopped e%ore #e #ad driven t#e car over t#e entire
distance %rom t#e point w#ere t#e w#ee&s &e%t t#e track to t#e p&ace w#ere t#e post was struck'
-. Co#pany lia$le ,or #otor#an1s ne*li*ence6 <uty o, carrier
7s t#ere was neg&igence on t#e part o% t#e motorman in driving t#e car, it resu&ts t#at t#e compan! is
&ia&e %or t#e damage resu&ting to de 6uia as a conse9uence o% t#at neg&igence' De 6uia #ad oarded t#e car
as a passenger %or Mani&a and t#e compan! undertook to conve! #im %or #ire' T#e re&ation etween t#e parties
was, t#ere%ore, o% a contractua& nature, and t#e dut! o% t#e carrier is to e determined wit# re%erence to t#e
princip&es o% contract &aw, t#at is, t#e compan! was ound to conve! and de&iver de 6uia sa%e&! and secure&!
wit# re%erence to t#e degree o% care w#ic#, under t#e circumstances, is re9uired ! &aw and custom app&ica&e
to t#e case' Dpon %ai&ure to comp&! wit# t#at o&igation t#e compan! incurred t#e &iai&it! de%ined in artic&es
1123=1120 o% t#e $ivi& $ode'
3. <e,ense o, last para*rap) o, 5rticle 1%"3 cannot $e availe+6 7o culpa a9uiliana
From t#e nature o% t#e &iai&it!, t#e compan! can not avai& itse&% o% t#e &ast paragrap# o% artic&e 1.23
o% t#e $ivi& $ode, since t#at provision #as re%erence to &iai&it! incurred ! neg&igence in t#e asence o%
contractua& re&ation, t#at is, to t#e cu&pa a9ui&iana o% t#e civi& &aw' ,t was t#ere%ore irre&evant %or t#e compan!
to prove t#at t#e compan! #ad e3ercised due care in t#e se&ection and instruction o% t#e motorman w#o was in
c#arge o% its car and t#at #e was in %act an e3perienced and re&ia&e servant'
/. Court )as po.er to #o+erate lia$ility accor+in* to circu#stances o, t#e case6 5rticle 11"3 vis>Q>
vis 5rticle 11"3 7CC
7&t#oug# t#e compan! must answer %or t#e conse9uences o% t#e neg&igence o% its emp&o!ee, t#e court
#as t#e power to moderate &iai&it! according to t#e circumstances o% t#e case (7rtic&e 1123, $ivi& $ode)' 7n
emp&o!er w#o #as in %act disp&a!ed due di&igence in c#oosing and instructing #is servants is entit&ed to e
considered a detor in good %ait#, wit#in t#e meaning o% artic&e 1120 o% t#e $ode' $onstruing t#ese two
provisions toget#er, and app&!ing t#em to t#e %acts o% t#e present case, it resu&ts t#at t#e compan!?s &iai&it! is
&imited to suc# damages as mig#t, at t#e time o% t#e accident, #ave een reasona&! %oreseen as a proa&e
conse9uence o% t#e p#!sica& inAuries in%&icted upon de 6uia and w#ic# were in %act a necessar! resu&t o% t#ose
inAuries' 1ot# t#e civi& and t#e common &aw are agreed upon t#e point t#at t#e damages ordinari&! recovera&e
%or t#e reac# o% a contractua& o&igation, against a person w#o #as acted in good %ait#, are suc# as can
reasona&! e %oreseen at t#e time t#e o&igation is contracted'
2. <ay.alt vs. Corporacion +e ::. 5*ustinos Recoletos
,n Da!wa&t vs' $orporacion de PP' 7gustinos :eco&etos (3. P#i&', >/0), t#e $ourt said: ;T#e e3tent o%
t#e &iai&it! %or t#e reac# o% a contract must e determined in t#e &ig#t o% t#e situation in e3istence at t#e time
t#e contract is madeC and t#e damages ordinari&! recovera&e are in a&& events &imited to suc# as mig#t e
reasona&! %oreseen in t#e &ig#t o% t#e %acts t#en known to t#e contracting parties'<
. &in+in*s as to +a#a*es to $e a.ar+e+ (:%"" ,or loss o, pro,essional earnin*s) not +istur$e+
7s a resu&t o% t#e p#!sica& and nervous derangement resu&ting %rom t#e accident, Dr' De 6uia was
una&e proper&! to attend to #is pro%essiona& &aors %or t#ree mont#s and suspended #is practice %or t#at
period' De 6uia?s customar! income, as a p#!sician, was aout P322 per mont#' T#e tria& Audge a&&owed
P.22, as damages %or &oss o% pro%essiona& earnings' Dpon e3amining t#e evidence, t#e $ourt %e&t disinc&ined
to distur t#e part o% t#e Audgment, t#oug# it must e conceded t#at t#e estimate o% t#e tria& Audge on t#is point
was &iera& enoug# to de 6uia'
3. &in+in*s as to a++itional +a#a*es to $e a.ar+e+ (:3!%"" ,or position o, +istrict )ealt) o,,icer)
speculative
7not#er item a&&owed ! t#e tria& Audge consists o% P3,.22, w#ic# de 6uia was supposed to #ave &ost
! reason o% #is inai&it! to accept a position as district #ea&t# o%%icer in (ccidenta& Eegros' T#e Ao was
supposed to e good %or two !ears, wit# a sa&ar! o% P1,>22 per annum, and possii&it! o% outside practice
wort# P342' 7ccepting t#ese suggestions as true, t#e damages t#us incurred are too specu&ative to e t#e asis
o% recover! in a civi& action' T#is e&ement o% damages must t#ere%ore e e&iminated' ,t goes wit#out sa!ing
t#at damage o% t#is c#aracter cou&d not, at t#e time o% t#e accident, #ave een %oreseen ! t#e de&in9uent part!
as a proa&e conse9uence o% t#e inAur! in%&icted H a circumstance w#ic# makes app&ica&e artic&e 1120 o%
t#e $ivi& $ode'
4. Golu#inous literature as to trau#atic neurosis or trau#atic )ysteria not taken up $y Court
@erein, t#e opposing medica& e3perts venti&ated a considera&e mass o% pro%essiona& &earning wit#
re%erence to t#e nature and e%%ects o% t#e a%%&ing disease known as traumatic neurosis, or traumatic #!steria
H a topic w#ic# #as een t#e occasion o% muc# controvers! in actions o% t#is c#aracter in t#e triuna&s o%
Burope and 7merica' T#e suAect is one o% considera&e interest %rom a medico=&ega& point o% view, ut t#e
$ourt deem it unnecessar! to enter upon a discussion o% its vo&uminous &iterature'
%. <a#a*es cannot $e assesse+6 <elusion .as sel,>in,licte+
,n t#is Aurisdiction damages can not e assessed in %avor o% t#e p&ainti%% as compensation %or t#e
p#!sica& or menta& pain w#ic# #e ma! #ave endured (Marce&o vs' Ve&asco, 11 P#i&' :ep', 8/0)C and t#e
evidence re&ating to t#e inAuries, ot# e3terna& and interna&, received ! #im must e e3amined c#ie%&! in its
earing upon #is materia& we&%are, t#at is, in its resu&ts upon #is earning capacit! and t#e e3penses incurred in
restoration to t#e usua& condition o% #ea&t#' @erein, de 6uia?s case %or &arge damages in respect to #is
supposed incapacitation %or %uture pro%essiona& practice is not made out' ,mmediate&! a%ter t#e accident in
9uestion Doctor De 6uia, sensing in t#e situation a possii&it! o% pro%it, devoted #imse&% wit# great assiduit!
(ransportation La.! -""/ ( -/% )
to t#e promotion o% t#is &itigationC and wit# t#e aid o% #is own pro%essiona& know&edge, supp&emented !
suggestions otained %rom #is pro%essiona& %riends and associates, #e enve&oped #imse&% more or &ess
unconscious&! in an atmosp#ere o% de&usion w#ic# rendered #im incapa&e o% appreciating at t#eir true va&ue
t#e s!mptoms o% disorder w#ic# #e deve&oped' T#e tria& court was %u&&! Austi%ied in reAecting t#e e3aggerated
estimate o% damages t#us created'
1". 5#ount o, expenses incurre+ ,or #e+ical service Dr' Montes, t#e p#!sician w#o
treated de 6uia %rom traumatic neurosis speaks in t#e most genera& terms wit# respect to t#e times and e3tent
o% t#e services renderedC and it is ! no means c&ear t#at t#ose services w#ic# were rendered man! mont#s, or
!ear, a%ter t#e accident #ad in %act an! necessar! or &egitimate re&ation to t#e inAuries received ! de 6uia' ,n
view o% t#e vagueness and uncertaint! o% t#e testimon! re&ating to Doctor Montes?s services t#e $ourt was o%
t#e opinion t#at t#e sum o% P822, or t#e amount actua&&! paid to #im ! de 6uia, represents t#e e3tent o% de
6uia?s o&igation wit# respect to treatment %or said inAuries'
11. 7o o$li*ation incurre+ $y +e Guia to 3 ot)er p)ysicians6 Services *ratuitous an+ e#ploy#ent o,
#ultiple p)ysicians ,or success,ul pro#otion o, issue o, la.suit
Fit# regard to t#e o&igation supposed&! incurred ! de 6uia to t#ree ot#er p#!sicians, it does not
appear t#at said p#!sicians #ave in %act made c#arges %or t#ose services wit# t#e intention o% imposing
o&igations on de 6uia to pa! %or t#em' (n t#e contrar! it wou&d seem t#at said services were gratuitous&!
rendered out o% courtes! to de 6uia as a memer o% t#e medica& pro%ession' T#e suggestions made on t#e
stand ! t#ese p#!sicians to t#e e%%ect t#at t#eir services were wort# t#e amounts stated ! t#em are not
su%%icient to prove t#at de 6uia #ad incurred t#e o&igation to pa! t#ose amounts' Furt#er, in emp&o!ing so
man! p#!sicians, de 6uia must #ave ad in view t#e success%u& promotion o% t#e issue o% t#e &awsuit rat#er
t#an t#e ona %ide purpose o% e%%ecting t#e cure o% #is inAuries'
1-. =e+ical service as a proper ele#ent o, recovery
,n order to constitute a proper e&ement o% recover! in an action o% t#is c#aracter, t#e medica& service
%or w#ic# reimursement is c&aimed s#ou&d not on&! e suc# as to #ave created a &ega& o&igation upon t#e
p&ainti%% ut suc# as was reasona&! necessar! in view o% #is actua& condition' ,t can not e permitted t#at a
&itigant s#ou&d retain an unusua& and unnecessar! numer o% pro%essiona& e3perts wit# a view to t#e success%u&
promotion o% a &awsuit and e3pect to recover against #is adversar! t#e entire e3pense t#us incurred' @is c&aim
%or medica& services must e &imited to suc# e3penditures as were reasona&! suited to t#e case'
13. Eritten state#ents o, exa#inin* p)ysician are ,un+a#entally )earsay! an+ are not +ocu#ents
as pri#ary evi+ence
@erein, it appears t#at %our o% t#e p#!sicians e3amined as witnesses %or de 6uia #ad made written
statements at various dates certi%!ing t#e resu&ts o% t#eir respective e3aminations into t#e condition o% de
6uia' F#en t#ese witnesses were e3amined in court t#e! identi%ied t#eir respective signatures to t#ese
certi%icates and t#e tria& Audge, over t#e Mera&co?s oAection, admitted t#e documents as primar! evidence in
t#e case' T#is was undouted&! erroneous' 7 document o% t#is c#aracter is not primar! evidence in an! sense,
since it is %undamenta&&! o% a #earsa! natureC and t#e on&! &egitimate use to w#ic# one o% t#ese certi%icates
cou&d e put, as evidence %or t#e p&ainti%%, was to a&&ow t#e p#!sician w#o issued it to re%er t#ereto to re%res#
#is memor! upon detai&s w#ic# #e mig#t #ave %orgotten'
1/. Eritten #e#oran+u#6 I.an*iJer vs. 7e.#an
,n Rwangi*er vs' Eewman (/3 E' O' "upp', 1201) w#ic# was a&so an action to recover damages %or
persona& inAur!, it appeared t#at a p#!sician, w#o #ad een sent ! one o% t#e parties to e3amine t#e p&ainti%%
#ad made at t#e time a written memorandum o% t#e resu&ts o% t#e e3aminationC and it was proposed to
introduce t#is document in evidence at t#e tria&' ,t was e3c&uded ! t#e tria& Audge, and it was #e&d upon
appea& t#at t#is was proper' "aid t#e court: ;T#ere was no %ai&ure or e3#austion o% t#e memor!, and no
impeac#ment o% t#e memorandum on cross= e3aminationC and t#e document was c&ear&! incompetent as
evidence in c#ie%'<
[101] a1ena &elgian vs. CA, see [0]
[1"-]
Calalas vs. C5 (GR 1--"3%! 31 =ay -""")
"econd Division, Mendo*a (J): 8 concur, 8 on &eave
&acts' 7t 12 a'm' o% 83 7ugust 1./., B&i*a JuAeurc#e 6' "unga, t#en a co&&ege %res#man maAoring in P#!sica&
Bducation at t#e "i&iman Dniversit!, took a passenger Aeepne! owned and operated ! Vicente $a&a&as' 7s t#e
Aeepne! was %i&&ed to capacit! o% aout 85 passengers, "unga was given ! t#e conductor an ;e3tension seat,<
a wooden stoo& at t#e ack o% t#e door at t#e rear end o% t#e ve#ic&e' (n t#e wa! to Po&acion "iu&an, Eegros
(ccidenta&, t#e Aeepne! stopped to &et a passenger o%%' 7s s#e was seated at t#e rear o% t#e ve#ic&e, "unga gave
wa! to t#e outgoing passenger' Just as s#e was doing so, an ,su*u truck driven ! ,g&ecerio Verena and owned
! Francisco "a&va umped t#e &e%t rear portion o% t#e Aeepne!' 7s a resu&t, "unga was inAured' "#e sustained
a %racture o% t#e ;dista& t#ird o% t#e &e%t tiia=%iu&a wit# severe necrosis o% t#e under&!ing skin'< $&osed
reduction o% t#e %racture, &ong &eg circu&ar casting, and case wedging were done under sedation' @er
con%inement in t#e #ospita& &asted %rom 7ugust 83 to "eptemer 0, 1./.' @er attending p#!sician, Dr' Dani&o
V' (&igario, an ort#opedic surgeon, certi%ied s#e wou&d remain on a cast %or a period o% 3 mont#s and wou&d
#ave to amu&ate in crutc#es during said period'
(n . (ctoer 1./., "unga %i&ed a comp&aint %or damages against $a&a&as e%ore t#e :T$ o% Dumaguete $it!
(1ranc# 3>), a&&eging vio&ation o% t#e contract o% carriage ! t#e %ormer in %ai&ing to e3ercise t#e di&igence
re9uired o% #im as a common carrier' $a&a&as, on t#e ot#er #and, %i&ed a t#ird=part! comp&aint against
Francisco "a&va, t#e owner o% t#e ,su*u truck' T#e &ower court rendered Audgment, against "a&va as t#ird=part!
de%endant and aso&ved $a&a&as o% &iai&it!, #o&ding t#at it was t#e driver o% t#e ,su*u truck w#o was
responsi&e %or t#e accident' ,t took cogni*ance o% anot#er case ($ivi& $ase 35.2), %i&ed ! $a&a&as against
"a&va and Verena, %or 9uasi=de&ict, in w#ic# 1ranc# 30 o% t#e same court #e&d "a&va and #is driver Verena
Aoint&! &ia&e to $a&a&as %or t#e damage to #is Aeepne!'
(n appea& to t#e $ourt o% 7ppea&s, and on 31 Marc# 1..1, t#e ru&ing o% t#e &ower court was reversed on t#e
ground t#at "unga?s cause o% action was ased on a contract o% carriage, not 9uasi=de&ict, and t#at t#e common
carrier %ai&ed to e3ercise t#e di&igence re9uired under t#e $ivi& $ode' T#e appe&&ate court dismissed t#e t#ird=
part! comp&aint against "a&va and adAudged $a&a&as &ia&e %or damages to "unga' T#e $ourt ordered $a&a&as
tro pa! "unga (1) P42,222'22 as actua& and compensator! damagesC (8) P42,222'22 as mora& damagesC (3)
P12,222'22 as attorne!?s %eesC and (5) P1,222'22 as e3penses o% &itigationC and (4) to pa! t#e costs' $a&a&as?
motion %or reconsideration was denied 11 "eptemer 1..4' @ence, t#e petition %or review on certiorari'
T#e "upreme $ourt a%%irmed t#e 31 Marc# 1..1 decision and t#e 11 "eptemer 1..4 reso&ution o% t#e $ourt
o% 7ppea&s, wit# t#e modi%ication t#at t#e award o% mora& damages is de&eted'
1. Res Bu+icata +oes not apply
"unga is not ound ! t#e ru&ing in $ivi& $ase 35.2, w#ic# %ound t#e driver and t#e owner o% t#e
truck &ia&e %or 9uasi=de&ict, as s#e was never a part! to t#at case' Furt#er, t#e issues in $ivi& $ase 35.2 and in
t#e present case are not t#e same' T#e issue in $ivi& $ase 35.2 was w#et#er "a&va and #is driver Verena were
&ia&e %or 9uasi=de&ict %or t#e damage caused to $a&a&as? Aeepne!' (n t#e ot#er #and, t#e issue in t#e present
case is w#et#er $a&a&as is &ia&e on #is contract o% carriage' T#e princip&e o% res Audicata, t#ere%ore, does not
app&!'
-. <istinction $et.een culpa a9uiliana or culpa extracontractual! an+ culpa contractual
Nuasi=de&ict, a&so known as cu&pa a9ui&iana or cu&pa e3tra contractua&, #as as its source t#e neg&igence
o% t#e tort%easor' (n t#e ot#er #and, reac# o% contract or cu&pa contractua& is premised upon t#e neg&igence in
t#e per%ormance o% a contractua& o&igation' ,n 9uasi=de&ict, t#e neg&igence or %au&t s#ou&d e c&ear&!
esta&is#ed ecause it is t#e asis o% t#e action, w#ereas in reac# o% contract, t#e action can e prosecuted
mere&! ! proving t#e e3istence o% t#e contract and t#e %act t#at t#e o&igor, in t#is case t#e common carrier,
%ai&ed to transport #is passenger sa%e&! to #is destination'
3. Co##on carriers presu#e+ at ,ault unless t)ey o$serve+ extraor+inary +ili*ence6 Bur+en o,
proo,
,n case o% deat# or inAuries to passengers, 7rtic&e 104> o% t#e $ivi& $ode provides t#at common
carriers are presumed to #ave een at %au&t or to #ave acted neg&igent&! un&ess t#e! prove t#at t#e! oserved
e3traordinar! di&igence as de%ined in 7rtic&es 1033 and 1044 o% t#e $ode' T#e provision necessari&! s#i%ts to
t#e common carrier t#e urden o% proo%'
/. <octrine o, proxi#ate cause applica$le only in 9uasi>+elict! not in $reac) o, contract
T#e doctrine o% pro3imate cause is app&ica&e on&! in actions %or 9uasi=de&ict, not in actions invo&ving
reac# o% contract' T#e doctrine is a device %or imputing &iai&it! to a person w#ere t#ere is no re&ation
etween #im and anot#er part!' ,n suc# a case, t#e o&igation is created ! &aw itse&%' 1ut, w#ere t#ere is a
pre=e3isting contractua& re&ation etween t#e parties, it is t#e parties t#emse&ves w#o create t#e o&igation, and
t#e %unction o% t#e &aw is mere&! to regu&ate t#e re&ation t#us created' @erein, it is immateria& t#at t#e
pro3imate cause o% t#e co&&ision etween t#e Aeepne! and t#e truck was t#e neg&igence o% t#e truck driver'
2. 5rticles 1333! 1322! an+ 132 7CC
,nso%ar as contracts o% carriage are concerned, some aspects regu&ated ! t#e $ivi& $ode are t#ose
respecting t#e di&igence re9uired o% common carriers wit# regard to t#e sa%et! o% passengers as we&& as t#e
presumption o% neg&igence in cases o% deat# or inAur! to passengers' 7rtic&e 1033 o% t#e $ivi& $ode provides
t#at ;$ommon carriers, %rom t#e nature o% t#eir usiness and %or reasons o% pu&ic po&ic!, are ound to
oserve e3traordinar! di&igence in t#e vigi&ance over t#e goods and %or t#e sa%et! o% t#e passengers
transported ! t#em, according to a&& t#e circumstances o% eac# case' "uc# e3traordinar! di&igence in t#e
vigi&ance over t#e goods is %urt#er e3pressed in artic&es 1035, 1034, and 105>, Eos' 4,>, and 0, w#i&e t#e
e3traordinar! di&igence %or t#e sa%et! o% t#e passengers is %urt#er set %ort# in artic&es 1044 and 104>' ; (n t#e
ot#er #and, 7rtic&e 1044 o% t#e $ivi& $ode provides t#at ; 7 common carrier is ound to carr! t#e passengers
wit# due regard %or a&& t#e circumstances'< 7rtic&e 104> provides t#at ;,n case o% deat# o% or inAuries to
passengers, common carriers are presumed to #ave een at %au&t or to #ave acted neg&igent&!, un&ess t#e!
prove t#at t#e! oserved e3traordinar! di&igence as prescried ! artic&es 1033 and 1044'<
. ;n violation o, tra,,ic rules6 Section 2/ (8$struction o, (ra,,ic)
@erein, t#e Aeepne! was not proper&! parked, its rear portion eing e3posed aout 8 meters %rom t#e
road s#ou&ders o% t#e #ig#wa!, and %acing t#e midd&e o% t#e #ig#wa! in a diagona& ang&e' T#is is a vio&ation
o% t#e :7 513>, as amended, or t#e +and Transportation and Tra%%ic $ode, w#ic# provides in "ection 45
((struction o% Tra%%ic) t#at ;Eo person s#a&& drive #is motor ve#ic&e in suc# a manner as to ostruct or
impede t#e passage o% an! ve#ic&e, nor, w#i&e disc#arging or taking on passengers or &oading or un&oading
%reig#t, ostruct t#e %ree passage o% ot#er ve#ic&es on t#e #ig#wa!' ;
3. ;n violation o, tra,,ic rules6 Section 3-(a) (Dxcee+in* re*istere+ capacity)
@erein, t#e driver took in more passengers t#an t#e a&&owed seating capacit! o% t#e Aeepne!, a
vio&ation o% "ection 38(a) o% t#e same &aw' "ection 38 LaM (B3ceeding registered capacit!) provides t#at ;Eo
person operating an! motor ve#ic&e s#a&& a&&ow more passengers or more %reig#t or cargo in #is ve#ic&e t#an
its registered capacit!'< T#e %act t#at "unga was seated in an ;e3tension seat< p&aced #er in a peri& greater t#an
t#at to w#ic# t#e ot#er passengers were e3posed'
4. <river o, ?eepney +i+ not exercise ut#ost +ili*ence o, very cautious persons
Dpon t#e #appening o% t#e accident, t#e presumption o% neg&igence at once arose, and it ecame t#e
dut! o% $a&a&as to prove t#at #e #ad to oserve e3traordinar! di&igence in t#e care o% #is passengers' T#e
driver o% Aeepne! did not carr! "unga ;sa%e&! as %ar as #uman care and %oresig#t cou&d provide, using t#e
utmost di&igence o% ver! cautious persons, wit# due regard %or a&& t#e circumstances< as re9uired ! 7rtic&e
1044' Eot on&! was $a&a&as una&e to overcome t#e presumption o% neg&igence imposed on #im %or t#e inAur!
sustained ! "unga, ut a&so, t#e evidence s#ows #e was actua&&! neg&igent in transporting passengers'
%. (akin* o, @Dxtension seatA cannot $e consi+ere+ an i#plie+ assu#ption o, risk
"unga?s taking an ;e3tension seat< did not amount to an imp&ied assumption o% risk' (t#erwise, i,t is
akin to arguing t#at t#e inAuries to t#e man! victims o% t#e tragedies in our seas s#ou&d not e compensated
mere&! ecause t#ose passengers assumed a greater risk o% drowning ! oarding an over&oaded %err!'
1". Caso ,ortuito +e,ine+6 Re9uire#ents
7 caso %ortuito is an event w#ic# cou&d not e %oreseen, or w#ic#, t#oug# %oreseen, was inevita&e'
T#is re9uires t#at t#e %o&&owing re9uirements e present: (a) t#e cause o% t#e reac# is independent o% t#e
detor?s wi&&C () t#e event is un%oreseea&e or unavoida&eC (c) t#e event is suc# as to render it impossi&e %or
t#e detor to %u&%i&& #is o&igation in a norma& manner, and (d) t#e detor did not take part in causing t#e
inAur! to t#e creditor' 5 Petitioner s#ou&d #ave %oreseen t#e danger o% parking #is Aeepne! wit# its od!
protruding two meters into t#e #ig#wa!'
11. =oral +a#a*es not recovera$le in actions ,or +a#a*es $ase+ on $reac) o, contract6 Dxceptions
7s a genera& ru&e, mora& damages are not recovera&e in actions %or damages predicated on a reac#
o% contract %or it is not one o% t#e items enumerated under 7rtic&e 881. o% t#e $ivi& $ode' 7s an e3ception,
suc# damages are recovera&e: (1) in cases in w#ic# t#e mis#ap resu&ts in t#e deat# o% a passenger, as
provided in 7rtic&e 10>5, in re&ation to 7rtic&e 882>(3) o% t#e $ivi& $odeC and (8) in t#e cases in w#ic# t#e
carrier is gui&t! o% %raud or ad %ait#, as provided in 7rtic&e 8882'
1-. 7o le*al $asis ,or a.ar+ o, #oral +a#a*es6 Construction as to t)e person an+ act o, takin* t)e
victi# to )ospital
@erein, t#ere is no &ega& asis %or awarding mora& damages since t#ere was no %actua& %inding ! t#e
appe&&ate court t#at $a&a&as acted in ad %ait# in t#e per%ormance o% t#e contract o% carriage' "unga?s
contention t#at $a&a&as? admission in open court t#at t#e driver o% t#e Aeepne! %ai&ed to assist #er in going to a
near! #ospita& cannot e construed as an admission o% ad %ait#' T#e %act t#at it was t#e driver o% t#e ,su*u
truck (Verena) w#o took #er to t#e #ospita& does not imp&! t#at $a&a&as was utter&! indi%%erent to t#e p&ig#t o%
#is inAured passenger' ,% at a&&, it is mere&! imp&ied recognition ! Verena t#at #e was t#e one at %au&t %or t#e
accident'
[1"3]
,esusa 4da. "e )ueca vs =anila (ailroad
[104] "angwa Aransportation vs. CA,, see [3!]
[1"2]
Li*)t Rail (ransit 5ut)ority vs. 7avi+a+ (GR 1/24"/! &e$ruary -""3)
First Division, Vitug (J): 5 concur
&acts' (n 15 (ctoer 1..3, aout #a&% an #our past 0:22 p'm', Eicanor Eavidad, t#en drunk, entered t#e
BD"7 +:T station a%ter purc#asing a ;token< (representing pa!ment o% t#e %are)' F#i&e Eavidad was
standing on t#e p&at%orm near t#e +:T tracks, June&ito Bscartin, t#e securit! guard assigned to t#e area
approac#ed Eavidad' 7 misunderstanding or an a&tercation etween t#e two apparent&! ensued t#at &ed to a
%ist %ig#t' Eo evidence, #owever, was adduced to indicate #ow t#e %ig#t started or w#o, etween t#e two,
de&ivered t#e %irst &ow or #ow Eavidad &ater %e&& on t#e +:T tracks' 7t t#e e3act moment t#at Eavidad %e&&,
an +:T train, operated ! :odo&%o :oman, was coming in'Eavidad was struck ! t#e moving train, and #e
was ki&&ed instantaneous&!'
(n / Decemer 1..5, t#e widow o% Eicanor, MarAorie Eavidad, a&ong wit# #er c#i&dren, %i&ed a comp&aint %or
damages against June&ito Bscartin, :odo&%o :oman, t#e +:T7, t#e Metro Transit (rgani*ation, ,nc' (Metro
Transit), and Prudent %or t#e deat# o% #er #usand' +:T7 and :oman %i&ed a counterc&aim against Eavidad
and a cross=c&aim against Bscartin and Prudent' Prudent, in its answer, denied &iai&it! and averred t#at it #ad
e3ercised due di&igence in t#e se&ection and supervision o% its securit! guards' T#e +:T7 and :oman
presented t#eir evidence w#i&e Prudent and Bscartin, instead o% presenting evidence, %i&ed a demurrer
contending t#at Eavidad #ad %ai&ed to prove t#at Bscartin was neg&igent in #is assigned task' (n 11 7ugust
1../, t#e tria& court rendered its decision, ordering Prudent "ecurit! and Bscartin to Aoint&! and severa&&! pa!
Eavidad (a) (1) 7ctua& damages o% P55,/32'22C (8) $ompensator! damages o% P553,482'22C (3) ,ndemnit! %or
t#e deat# o% Eicanor Eavidad in t#e sum o% P42,222'22C () Mora& damages o% P42,222'22C (c) 7ttorne!?s %ees
o% P82,222C and (d) $osts o% suit' T#e court a&so dismissed t#e comp&aint against +:T7 and :odo&%o :oman
%or &ack o% merit, and t#e compu&sor! counterc&aim o% +:T7 and :oman'
Prudent appea&ed to t#e $ourt o% 7ppea&s' (n 80 7ugust 8222, t#e appe&&ate court promu&gated its decision
e3onerating Prudent %rom an! &iai&it! %or t#e deat# o% Eicanor Eavidad and, instead, #o&ding t#e +:T7 and
:oman Aoint&! and severa&&! &ia&e' T#e appe&&ate court modi%ied t#e Audgment ordering :oman and t#e +:T7
so&idari&! &ia&e to pa! Eavidad (a) P55,/32'22 as actua& damagesC () P42,222'22 as nomina& damagesC (c)
P42,222'22 as mora& damagesC (d) P42,222'22 as indemnit! %or t#e deat# o% t#e deceasedC and (e)
P82,222'22 as and %or attorne!?s %ees' T#e appe&&ate court denied +:T7?s and :oman?s motion %or
reconsideration in its reso&ution o% 12 (ctoer 8222' @ence, t#e appea&'
T#e "upreme $ourt a%%irmed t#e assai&ed decision o% t#e appe&&ate court wit# modi%ication t#at (a) t#e award
o% nomina& damages is de&eted and t#at () :oman is aso&ved %rom &iai&it!C wit#out costs'
1. Co##on carrier $ur+ene+ .it) +uty o, exercisin* ut#ost +ili*ence
+aw and Aurisprudence dictate t#at a common carrier, ot# %rom t#e nature o% its usiness and %or
reasons o% pu&ic po&ic!, is urdened wit# t#e dut! o% e3ercising utmost di&igence in ensuring t#e sa%et! o%
passengers'
-. Civil Co+e provisions *overnin* lia$ility o, Co##on carrier6 5rticles 1322! 132! 132%! an+
133
T#e $ivi& $ode, governing t#e &iai&it! o% a common carrier %or deat# o% or inAur! to its passengers'
(1) 7rtic&e 1044 provides t#at ;7 common carrier is ound to carr! t#e passengers sa%e&! as %ar as #uman care
and %oresig#t can provide, using t#e utmost di&igence o% ver! cautious persons, wit# a due regard %or a&& t#e
circumstances'< (8) 7rtic&e 104> provides t#at ;,n case o% deat# o% or inAuries to passengers, common carriers
are presumed to #ave een at %au&t or to #ave acted neg&igent&!, un&ess t#e! prove t#at t#e! oserved
e3traordinar! di&igence as prescried in artic&es 1033 and 1044'< (3) 7rtic&e 104. provides t#at ;$ommon
carriers are &ia&e %or t#e deat# o% or inAuries to passengers t#roug# t#e neg&igence or wi&&%u& acts o% t#e
%ormer?s emp&o!ees, a&t#oug# suc# emp&o!ees ma! #ave acted e!ond t#e scope o% t#eir aut#orit! or in
vio&ation o% t#e orders o% t#e common carriers' T#is &iai&it! o% t#e common carriers does not cease upon
proo% t#at t#e! e3ercised a&& t#e di&igence o% a good %at#er o% a %ami&! in t#e se&ection and supervision o% t#eir
emp&o!ees'< (5) 7rtic&e 10>3 provides t#at ;7 common carrier is responsi&e %or inAuries su%%ered ! a
passenger on account o% t#e wi&&%u& acts or neg&igence o% ot#er passengers or o% strangers, i% t#e common
carrier?s emp&o!ees t#roug# t#e e3ercise o% t#e di&igence o% a good %at#er o% a %ami&! cou&d #ave prevented or
stopped t#e act or omission'<
3. Ft#ost +ili*ence o, very cautious persons6 <uty to o$serve as lon* as passen*ers are .it)in its
pre#ises
T#e &aw re9uires common carriers to carr! passengers sa%e&! using t#e utmost di&igence o% ver!
cautious persons wit# due regard %or a&& circumstances' "uc# dut! o% a common carrier to provide sa%et! to its
passengers so o&igates it not on&! during t#e course o% t#e trip ut %or so &ong as t#e passengers are wit#in its
premises and w#ere t#e! oug#t to e in pursuance to t#e contract o% carriage'
/. Lia$ility o, co##on carrier
T#e statutor! provisions render a common carrier &ia&e %or deat# o% or inAur! to passengers (a)
t#roug# t#e neg&igence or wi&%u& acts o% its emp&o!ees or ) on account o% wi&%u& acts or neg&igence o% ot#er
passengers or o% strangers i% t#e common carrier?s emp&o!ees t#roug# t#e e3ercise o% due di&igence cou&d
#ave prevented or stopped t#e act or omission'
2. :resu#ption o, ne*li*ence6 :roo,
,n case o% deat# or inAur!, a carrier is presumed to #ave een at %au&t or een neg&igent, and ! simp&e
proo% o% inAur!, t#e passenger is re&ieved o% t#e dut! to sti&& esta&is# t#e %au&t or neg&igence o% t#e carrier or o%
its emp&o!ees and t#e urden s#i%ts upon t#e carrier to prove t#at t#e inAur! is due to an un%oreseen event or to
%orce maAeure' ,n t#e asence o% satis%actor! e3p&anation ! t#e carrier on #ow t#e accident occurred, t#e
presumption wou&d e t#at it #as een at %au&t, an e3ception %rom t#e genera& ru&e t#at neg&igence must e
proved'
. Co##on carrier not relieve o, responsi$ility .)en it )ires its o.n e#ployees or avails itsel, o,
services o, an outsi+er or in+epen+ent ,ir# to un+ertake task ensurin* sa,ety o, pasen*ers
T#e %oundation o% +:T7?s &iai&it! is t#e contract o% carriage and its o&igation to indemni%! t#e
victim arises %rom t#e reac# o% t#at contract ! reason o% its %ai&ure to e3ercise t#e #ig# di&igence re9uired o%
t#e common carrier' ,n t#e disc#arge o% its commitment to ensure t#e sa%et! o% passengers, a carrier ma!
c#oose to #ire its own emp&o!ees or avai& itse&% o% t#e services o% an outsider or an independent %irm to
undertake t#e task' ,n eit#er case, t#e common carrier is not re&ieved o% its responsii&ities under t#e contract
o% carriage'
3. :re#ise ,or e#ployer1s lia$ility ,or tort
T#e premise %or emp&o!er?s &iai&it! %or tort (under t#e provisions o% 7rtic&e 810> and re&ated
provisions, in conAunction wit# 7rtic&e 81/2 o% t#e $ivi& $ode) is neg&igence or %au&t on t#e part o% t#e
emp&o!ee' (nce suc# %au&t is esta&is#ed, t#e emp&o!er can t#en e made &ia&e on t#e asis o% t#e
presumption Auris tantum t#at t#e emp&o!er %ai&ed to e3ercise di&igentissimi patris %ami&ias in t#e se&ection and
supervision o% its emp&o!ees' T#e &iai&it! is primar! and can on&! e negated ! s#owing due di&igence in
t#e se&ection and supervision o% t#e emp&o!ee' @erein, suc# a %actua& matter t#at #as not een s#own'
4. Lia$ility ,or tort #ay arise even un+er a contract
7 contractua& o&igation can e reac#ed ! tort and w#en t#e same act or omission causes t#e inAur!,
one resu&ting in cu&pa contractua& and t#e ot#er in cu&pa a9ui&iana, 7rtic&e 81.5 o% t#e $ivi& $ode can we&&
app&!' ,n %ine, a &iai&it! %or tort ma! arise even under a contract, w#ere tort is t#at w#ic# reac#es t#e
contract' "tated di%%erent&!, w#en an act w#ic# constitutes a reac# o% contract wou&d #ave itse&% constituted
t#e source o% a 9uasi=de&ictua& &iai&it! #ad no contract e3isted etween t#e parties, t#e contract can e said to
#ave een reac#ed ! tort, t#ere! a&&owing t#e ru&es on tort to app&!'
%. 7e*li*ence o, :ru+ent1s e#ployee not prove+6 :ru+ent not lia$le
T#e &iai&it! o% t#e common carrier, on t#e one #and, and an independent contractor, on t#e ot#er
#and, can e descried as so&idar!' @owever, regretta&! %or +:T, as we&& as per#aps t#e surviving spouse and
#eirs o% t#e &ate Eicanor Eavidad, t#ere is not#ing to &ink Prudent to t#e deat# o% Eicanor Eavidad, %or t#e
reason t#at t#e neg&igence o% its emp&o!ee, Bscartin, #as not een du&! proven'
1". Guilt o, Ro#an o, any culpa$ility not s)o.n6 Ro#an not lia$le
T#ere eing no s#owing t#at :odo&%o :oman #imse&% is gui&t! o% an! cu&pa&e act or omission, #e
must a&so e aso&ved %rom &iai&it!' Eeed&ess to sa!, t#e contractua& tie etween t#e +:T and Eavidad is not
itse&% a Auridica& re&ation etween t#e &atter and :omanC t#us, :oman can e made &ia&e on&! %or #is own %au&t
or neg&igence'
11. :urpose o, no#inal +a#a*es6 7o#inal +a#a*es cannot co>exist .it) co#pensatory +a#a*es
Eomina& damages are adAudicated in order t#at a rig#t o% t#e p&ainti%%, w#ic# #as een vio&ated or
invaded ! t#e de%endant, ma! e vindicated or recogni*ed, and not %or t#e purpose o% indemni%!ing t#e
p&ainti%% %or an! &oss su%%ered ! #im' ,t is an esta&is#ed ru&e t#at nomina& damages cannot co=e3ist wit#
compensator! damages'
[1"]
La =allorca vs. C5 (GR L>-"31! -3 Buly 1%)
Bn 1anc, 1arrera (J): / concur, 1 concur in resu&t
&acts' (n 82 Decemer 1.43, at aout noontime, t#e spouses 1e&tran, toget#er wit# t#eir minor daug#ters,
name&! Mi&agros (13 !ears o&d), :a9ue& (aout 5=1-8 !ears o&d), and Fe (over 8 !ears o&d), oarded t#e
Pamusco 1us 348, (TPD 040C 1.43 Pampanga), owned and operated ! +a Ma&&orca, at "an Fernando,
Pampanga, ound %or 7nao, Me3ico, Pampanga' 7t t#e time, t#e! were carr!ing wit# t#em 5 pieces o%
aggages containing t#eir persona& e&ongings' T#e conductor o% t#e us w#o #appened to e a #a&%=rot#er o%
Mariano 1e&tran, issued 3 tickets covering t#e %u&& %ares o% t#e spouses and t#eir e&dest c#i&d, Mi&agros' Eo
%are was c#arged on :a9ue& and Fe, since ot# were e&ow t#e #eig#t at w#ic# %are is c#arged in accordance
wit# +a Ma&&orca?s ru&es and regu&ations' 7%ter aout an #our?s trip, t#e us reac#ed 7nao, w#ereat it stopped
to a&&ow t#e passengers ound t#ere%or, among w#om were t#e spouses and t#eir c#i&dren to get o%%' Mariano
1e&tran, t#en carr!ing some o% t#eir aggages, was t#e %irst to get down t#e us, %o&&owed ! #is wi%e and #is
c#i&dren' Mariano &ed #is companions to a s#aded spot on t#e &e%t pedestrians side o% t#e road aout 5 or 4
meters awa! %rom t#e ve#ic&e' 7%terwards, #e returned to t#e us in controvers! to get #is ot#er a!ong,
w#ic# #e #ad &e%t e#ind, ut in so doing, #is daug#ter :a9ue& %o&&owed #im unnoticed ! #er %at#er' F#i&e
said Mariano 1e&tran was on t#e running oard o% t#e us waiting %or t#e conductor to #and #im #is a!ong
w#ic# #e &e%t under one o% its seats near t#e doorC t#e us, w#ose motor was not s#ut o%% w#i&e un&oading,
sudden&! started moving %orward, evident&! to resume its trip, notwit#standing t#e %act t#at t#e conductor #as
not given t#e driver t#e customar! signa& to start, since said conductor was sti&& attending to t#e aggage &e%t
e#ind ! Mariano 1e&tran' ,ncidenta&&!, w#en t#e us was again p&aced into a comp&ete stop, it #ad trave&&ed
aout 12 meters %rom t#e point w#ere t#e 1e&trans #ad gotten o%%' "ensing t#at t#e us was again in motion,
Mariano 1e&tran immediate&! Aumped %rom t#e running oard wit#out getting #is a!ong %rom t#e conductor'
@e &anded on t#e side o% t#e road a&most in %ront o% t#e s#aded p&ace w#ere #e &e%t #is wi%e and c#i&dren' 7t
t#at precise time, #e saw peop&e eginning to gat#er around t#e od! o% t#e c#i&d &!ing prostrate on t#e
ground, #er sku&&, crus#ed, and wit#out &i%e' T#e c#i&d was none ot#er t#an #is daug#ter :a9ue&, w#o was run
over ! t#e us in w#ic# s#e rode ear&ier toget#er wit# #er parents'
For t#e deat# o% t#e c#i&d :a9ue&, t#e 1e&trans commenced t#e present suit against +a Ma&&orca seeking to
recover %rom t#e &atter an aggregate amount o% P>,222 to cover mora& damages and actua& damages sustained
as a resu&t t#ereo% and attorne!?s %ees' 7%ter tria& on t#e merits t#e tria& court %ound +a Ma&&orca &ia&e %or
reac# o% contract o% carriage and sentenced it to pa! P3,222'22 %or t#e deat# o% t#e c#i&d and P522'22 as
compensator! damages representing uria& e3penses and costs'
(n appea& to t#e $ourt o% 7ppea&s, +a Ma&&orca c&aimed t#at t#ere cou&d not e a reac# o% contract in t#e
case, %or t#e reason t#at w#en t#e c#i&d met #er deat#, s#e was no &onger a passenger o% t#e us invo&ved in
t#e incident and, t#ere%ore, t#e contract o% carriage #ad a&read! terminated' 7&t#oug# t#e $ourt o% 7ppea&s
sustained t#is t#eor!, it nevert#e&ess %ound +a Ma&&orca gui&t! o% 9uasi= de&ict and #e&d t#e &atter &ia&e %or
damages, %or t#e neg&igence o% its driver, in accordance wit# 7rtic&e 81/2 o% t#e $ivi& $ode' Furt#er, t#e
$ourt o% 7ppea&s did not on&! %ind +a Ma&&orca &ia&e, ut increased t#e damages awarded t#e 1e&trans to
P>,222'22, instead o% P3,222'22 granted ! t#e tria& court' @ence, t#e petition %or review'
T#e "upreme $ourt modi%ied t#e decision o% t#e $ourt o% 7ppea&s ! sentencing +a Ma&&orca to pa! to
Mariano 1e&tran, et a&', t#e sum o% P3,222'22 %or t#e deat# o% t#e c#i&d, :a9ue& 1e&tran, and t#e amount o%
P522'22 as actua& damagesC wit#out costs in t#is instance'
1. Relation o, passen*er an+ carrier su$sistin* .)en acci+ent occurre+
7&t#oug# it is true t#at Mariano 1e&tran, #is wi%e, and t#eir c#i&dren (inc&uding t#e deceased c#i&d)
#ad a&ig#ted %rom t#e us at a p&ace designated %or disemarking or un&oading o% passengers, it was a&so
esta&is#ed t#at t#e %at#er #ad to return to t#e ve#ic&e (w#ic# was sti&& at a stop) to get one o% #is ags or
a!ong t#at was &e%t under one o% t#e seats o% t#e us' T#ere can e no controvers! t#at as %ar as t#e %at#er is
concerned, w#en #e returned to t#e us %or #is a!ong w#ic# was not un&oaded, t#e re&ation o% passenger and
carrier etween #im and t#e petitioner remained susisting' For, t#e re&ation o% carrier and passenger does not
necessari&! cease w#ere t#e &atter, a%ter a&ig#ting %rom t#e car, aids t#e carrier?s servant or emp&o!ee in
removing #is aggage %rom t#e car'
-. Relation o, carrier an+ passen*er +oes not cease until t)e passen*er )as reasona$le ti#e or
opportunity to leave t)e carrier1s pre#ises
T#e re&ation o% carrier and passenger does not cease at t#e moment t#e passenger a&ig#ts %rom t#e
carrier?s ve#ic&e at a p&ace se&ected ! t#e carrier at t#e point o% destination, ut continues unti& t#e passenger
#as #ad a reasona&e time or a reasona&e opportunit! to &eave t#e carrier?s premises'
3. Reasona$le ti#e +eter#ine+ ,ro# circu#stances
F#at is a reasona&e time or a reasona&e de&a! wit#in t#e ru&e is to e determined %rom a&& t#e
circumstances' T#us, a person w#o, a%ter a&ig#ting %rom a train, wa&ks a&ong t#e station p&at%orm is considered
sti&& a passenger' "o a&so, w#ere a passenger #as a&ig#ted at #is destination and is proceeding ! t#e usua& wa!
to &eave t#e compan!?s premises, ut e%ore actua&&! doing so is #a&ted ! t#e report t#at #is rot#er, a %e&&ow
passenger, #as een s#ot, and #e in good %ait# and wit#out intent o% engaging in t#e di%%icu&t!, returns to
re&ieve #is rot#er, #e is deemed reasona&! and necessari&! de&a!ed and t#us continues to e a passenger
entit&ed as suc# to t#e protection o% t#e rai&road and compan! and its agents'
/. Ft#ost +ili*ence o, very cautious person not o$serve+
,n t#e circumstances, it cannot e c&aimed t#at t#e carrier?s agent #ad e3ercised t#e ;utmost
di&igence< o% a ;ver! cautious person< re9uired ! 7rtic&e 1044 o% t#e $ivi& $ode to e oserved ! a
common carrier in t#e disc#arge o% its o&igation to transport sa%e&! its passengers' ,n t#e %irst p&ace, t#e
driver, a&t#oug# stopping t#e us, nevert#e&ess did not put o%% t#e engine' "econd&!, #e started to run t#e us
even e%ore t#e us conductor gave #im t#e signa& to go and w#i&e t#e &atter was sti&& un&oading part o% t#e
aggages o% t#e passengers Mariano 1e&tran and %ami&!' T#e presence o% said passengers near t#e us was not
unreasona&e and t#e! are, t#ere%ore, to e considered sti&& as passengers o% t#e carrier, entit&ed to t#e
protection under t#eir contract o% carriage'
2. 5lternative causes o, action (Section -! Rule 4)6 Carrier #ay $e also $e )el+ lia$le ,or
ne*li*ence o, its +river
Bven assuming arguendo t#at t#e contract o% carriage #as a&read! terminated, +a Ma&&orca can e #e&d
&ia&e %or t#e neg&igence o% its driver, as ru&ed ! t#e $ourt o% 7ppea&s, pursuant to 7rtic&e 81/2 o% t#e $ivi&
$ode' Paragrap# 0 o% t#e comp&aint is c&ear&! an a&&egation %or 9uasi=de&ict' T#e inc&usion o% t#is averment %or
9uasi=de&ict, w#i&e incompati&e wit# t#e ot#er c&aim under t#e contract o% carriage, is permissi&e under
"ection 8 o% :u&e / o% t#e Eew :u&es o% $ourt, w#ic# a&&ows a p&ainti%% to a&&ege causes o% action in t#e
a&ternative, e t#e! compati&e wit# eac# ot#er or not, to t#e end t#at t#e rea& matter in controvers! ma! e
reso&ved and determined'
. Culpa su,,iciently alle*e+6 :resu#ption o, ne*li*ence not overco#e $y +e,en+ant
T#e 1e&trans su%%icient&! p&eaded t#e cu&pa or neg&igence upon w#ic# t#e c&aim was predicated w#en
it was a&&eged in t#e comp&aint t#at t#e deat# o% :a9ue& 1e&tran was caused ! t#e neg&igence and want o%
e3ercise o% t#e utmost di&igence o% a ver! cautious person on t#e part o% +a Ma&&orca and t#eir agent' T#is
a&&egation was a&so proved w#en it was esta&is#ed during t#e tria& t#at t#e driver, even e%ore receiving t#e
proper signa& %rom t#e conductor, and w#i&e t#ere were sti&& persons on t#e running oard o% t#e us and near
it, started to run o%% t#e ve#ic&e' T#e presentation o% proo% o% t#e neg&igence o% its emp&o!ee gave rise to t#e
presumption t#at t#e emp&o!er did not e3ercise t#e di&igence o% a good %at#er o% t#e %ami&! in t#e se&ection
and supervision o% its emp&o!ees' 7nd t#is presumption, +a Ma&&orca #ad %ai&ed to overcome' $onse9uent&!,
+a Ma&&orca must e adAudged pecuniari&! &ia&e %or t#e deat# o% t#e c#i&d :a9ue& 1e&tran'
3. ;ncrease o, a.ar+ o, +a#a*es cannot $e sustaine+
T#e increase o% t#e award o% damages %rom P3,222'22 to P>,222'22 ! t#e $ourt o% 7ppea&s,
#owever, cannot e sustained' 6enera&&!, t#e appe&&ate court can on&! pass upon and consider 9uestions or
issues raised and argued in appe&&ant?s rie%' @erein, t#e 1e&trans did not appea& %rom t#at portion o% t#e
Audgment o% t#e tria& court awarding t#em on&! P3,222'22 damages %or t#e deat# o% t#eir daug#ter' Eeit#er
does it appear t#at t#e 1e&trans #ave pointed out in t#eir rie% t#e inade9uac! o% t#e award, or t#at t#e
inc&usion o% t#e %igure P3,222'22 was mere&! a c&erica& error, in order t#at t#e matter ma! e treated as an
e3ception to t#e genera& ru&e'
[1"3]
5$oitiJ S)ippin* Corp. vs. C5 (GR 4//24! 7ove#$er 1%4%)
&acts' 7nac&eto Viana was on&! 52 !ears o&d and was in good #ea&t#' @is average annua& income as a %armer
or a %arm supervisor was 522 cavans o% pa&a! annua&&!' @is parents, 7ntonio and 6orgonia Viana, #ad een
recipient o% 82 cavans o% pa&a! as support or P182'22 mont#&!' (n 11 Ma! 1.04, 7nac&eto Viana oarded t#e
vesse& M-V 7ntonia, owned ! 7oiti* "#ipping $orp', at t#e port at "an Jose, (ccidenta& Mindoro, ound
%or Mani&a, #aving purc#ased a ticket (1103.8) in t#e sum o% P83'12' (n 18 Ma! 1.04, said vesse& arrived at
Pier 5, Eort# @aror, Mani&a, and t#e passengers t#erein disemarked, a gangp&ank #aving een provided
connecting t#e side o% t#e vesse& to t#e pier' ,nstead o% using said gangp&ank, Viana disemarked on t#e t#ird
deck w#ic# was on t#e &eve& wit# t#e pier' 7%ter said vesse& #ad &anded, t#e Pioneer "tevedoring $orporation
took over t#e e3c&usive contro& o% t#e cargoes &oaded on said vesse& pursuant to t#e Memorandum o%
7greement dated 8> Ju&! 1.04 etween t#e Pioneer "tevedoring $orporation and 7oiti*' T#e crane owned
! Pioneer and operated ! its crane operator 7&eAo Figueroa was p&aced a&ongside t#e vesse& and 1 #our a%ter
t#e passengers o% said vesse& #ad disemarked, it started operation ! un&oading t#e cargoes %rom said vesse&'
F#i&e t#e crane was eing operated, Viana w#o #ad a&read! disemarked %rom said vesse& ovious&!
rememering t#at some o% #is cargoes were sti&& &oaded in t#e vesse&, went ack to t#e vesse&, and it was w#i&e
#e was pointing to t#e crew o% t#e said vesse& to t#e p&ace w#ere #is cargoes were &oaded t#at t#e crane #it
#im, pinning #im etween t#e side o% t#e vesse& and t#e crane' @e was t#erea%ter roug#t to t#e #ospita&
w#ere #e &ater e3pired 3 da!s t#erea%ter, on 14 Ma! 1.04, t#e cause o% #is deat# according to t#e Deat#
$erti%icate eing ;#!postatic pneumonia secondar! to traumatic %racture o% t#e puic one &acerating t#e
urinar! &adder'< For #is #ospita&i*ation, medica&, uria& and ot#er misce&&aneous e3penses, 7nac&eto?s wi%e,
+uci&a $' Viana, spent a tota& o% P.,/22'22' 1ecause o% 7nac&eto?s deat#, t#e deceased?s parents and spouse
su%%ered menta& anguis# and e3treme worr! or mora& damages' For t#e %i&ing o% t#e case, t#e! #ad to #ire a
&aw!er %or an agreed %ee o% P12,222'22'
T#e Vianas %i&ed a comp&aint %or damages against 7oiti* %or reac# o% contract o% carriage' 7oiti*, on t#e
ot#er #and, %i&ed a t#ird=part! comp&aint against Pioneer' ,n a decision rendered on 10 7pri& 1./2 ! t#e tria&
court, 7oiti* was ordered to pa! t#e Vianas %or damages incurred (t#e sum o% P18,222'22 %or t#e deat# o%
7nac&eto VianaC P.,/22'22 as actua& damagesC P433,822'22 va&ue o% t#e 12,>>5 cavans o% pa&a! computed at
P42'22 per cavanC P12,222'22 as attorne!?s %eesC P4,222'22, va&ue o% t#e 122 cavans o% pa&a! as support %or 4
!ears %or deceased?s parents, 7ntonio and 6orgonia Viana computed at P42'22 per cavanC P0,822'22 as
support %or deceased?s parents computed at P182'22 a mont# %or 4 !ears pursuant to 7rtic&e 882> L8M o% t#e
$ivi& $odeC P82,222'22 as mora& damages, and costs), and Pioneer was ordered to reimurse 7oiti* %or
w#atever amount t#e &atter paid t#e Vianas' 1ot# 7oiti* and Pioneer %i&ed separate motions %or
reconsideration' ,n an order dated 80 (ctoer 1./8, t#e tria& court aso&ved Pioneer %rom &iai&it! %or %ai&ure
o% t#e Vianas and 7oiti* to preponderant&! esta&is# a case o% neg&igence against t#e crane operator' T#e
court t#us ordered 7oiti* to pa! t#e Vianas t#e damages incurred'
Eot satis%ied wit# t#e modi%ied Audgment o% t#e tria& court, 7oiti* appea&ed t#e same to t#e $ourt o% 7ppea&s
w#ic# a%%irmed t#e %indings o% t#e tria& court e3cept as to t#e amount o% damages awarded to t#e Vianas' T#e
$ourt t#erein ordered 7oiti* to pa! t#e Vianas t#e amount o% P32,222'22 %or t#e deat# o% 7nac&eto VianaC
actua& damages o% P.,/22'22C P1>2,222'22 %or unearned incomeC P0,822'22 as support %or deceased?s
parentsC=P82,222'22 as mora& damagesC P12,222'22 as attorne!?s %eesC and to pa! t#e costs' @ence, t#e appea&
! certiorari'
T#e "upreme $ourt denied t#e petition, and a%%irmed t#e Audgment appea&ed %rom in toto'
1. Fntil .)en contract o, carria*e su$sists
T#e ru&e is t#at t#e re&ation o% carrier and passenger continues unti& t#e passenger #as een &anded at
t#e port o% destination and #as &e%t t#e vesse& owner?s dock or premises' (nce created, t#e re&ations#ip wi&& not
ordinari&! terminate unti& t#e passenger #as, a%ter reac#ing #is destination, sa%e&! a&ig#ted %rom t#e carrier?s
conve!ance or #ad a reasona&e opportunit! to &eave t#e carrier?s premises' 7&& persons w#o remain on t#e
premises a reasona&e time a%ter &eaving t#e conve!ance are to e deemed passengers, and w#at is a
reasona&e time or a reasona&e de&a! wit#in t#is ru&e is to e determined %rom a&& t#e circumstances, and
inc&udes a reasona&e time to see a%ter #is aggage and prepare %or #is departure' T#e carrier=passenger
re&ations#ip is not terminated mere&! ! t#e %act t#at t#e person transported #as een carried to #is destination
i%, %or e3amp&e, suc# person remains in t#e carrier?s premises to c&aim #is aggage'
-. <octrine in t)e case o, La =allorca
,t #as een recogni*ed as a ru&e t#at t#e re&ation o% carrier and passenger does not cease at t#e
moment t#e passenger a&ig#ts %rom t#e carrier?s ve#ic&e at a p&ace se&ected ! t#e carrier at t#e point o%
destination, ut continues unti& t#e passenger #as #ad a reasona&e time or a reasona&e opportunit! to &eave
t#e carrier?s premises' 7nd, w#at is a reasona&e time or a reasona&e de&a! wit#in t#is ru&e is to e
determined %rom a&& t#e circumstances' T#us, a person w#o, a%ter a&ig#ting %rom a train, wa&ks a&ong t#e
station p&at%orm is considered sti&& a passenger' "o a&so, w#ere a passenger #as a&ig#ted at #is destination and
is proceeding ! t#e usua& wa! to &eave t#e compan!?s premises, ut e%ore actua&&! doing so is #a&ted ! t#e
report t#at #is rot#er, a %e&&ow passenger, #as een s#ot, and #e in good %ait# and wit#out intent o% engaging
in t#e di%%icu&t!, returns to re&ieve #is rot#er, #e is deemed reasona&! and necessari&! de&a!ed and t#us
continues to e a passenger entit&ed as suc# to t#e protection o% t#e rai&road compan! and its agents'
3. <eter#ination o, reasona$leness o, ti#e6 Dxistence o, reasona$le cause a pri#ary ,actor
:easona&eness o% time s#ou&d e made to depend on t#e attending circumstances o% t#e case, suc# as
t#e kind o% common carrier, t#e nature o% its usiness, t#e customs o% t#e p&ace, and so %ort#, and t#ere%ore
prec&udes a consideration o% t#e time e&ement per se wit#out taking into account suc# ot#er %actors' ,n +a
Ma&&orca, ,t is o% no moment t#at t#ere was no apprecia&e interregnum %or t#e passenger t#erein to &eave t#e
carrier?s premises' @erein, an interva& o% 1 #our #ad e&apsed e%ore t#e victim met t#e accident' T#e primar!
%actor to e considered is t#e e3istence o% a reasona&e cause as wi&& Austi%! t#e presence o% t#e victim on or
near 7oiti*? vesse&'
/. 5 carrier is +uty $oun+ not only to $rin* its passen*ers sa,ely to t)eir +estination $ut also to
a,,or+ t)e# a reasona$le ti#e to clai# t)eir $a**a*e
,t is o% common know&edge t#at, ! t#e ver! nature o% 7oiti*? usiness as a s#ipper, t#e passengers
o% vesse&s are a&&otted a &onger period o% time to disemark %rom t#e s#ip t#an ot#er common carriers suc# as
a passenger us' Fit# respect to t#e u&k o% cargoes and t#e numer o% passengers it can &oad, suc# vesse&s are
capa&e o% accommodating a igger vo&ume o% ot# as compared to t#e capacit! o% a regu&ar commuter us'
$onse9uent&!, a s#ip passenger wi&& need at &east an #our as is t#e usua& practice, to disemark %rom t#e vesse&
and c&aim #is aggage w#ereas a us passenger can easi&! get o%% t#e us and retrieve #is &uggage in a ver!
s#ort period o% time' Veri&!, 7oiti* cannot categorica&&! c&aim, t#roug# t#e are e3pedient o% comparing t#e
period o% time entai&ed in getting t#e passenger?s cargoes, t#at t#e ru&ing in +a Ma&&orca is inapp&ica&e to t#e
present case' (n t#e contrar!, i% t#e doctrine enunciated t#erein is app&ied to t#e present petition, t#e victim
7nac&eto Viana was sti&& a passenger at t#e time o% t#e incident' F#en t#e accident occurred, t#e victim was in
t#e act o% un&oading #is cargoes, w#ic# #e #ad ever! rig#t to do, %rom 7oiti*? vesse&'
2. Gicti# not prove+ to )ave +ise#$arke+ ,ro# vessel6 Gicti# +ee#e+ passen*er at ti#e o, +eat)
,t is not de%inite&! s#own t#at 1 #our prior to t#e incident, t#e victim #ad a&read! disemarked %rom
t#e vesse&' 7oiti* %ai&ed to prove t#is' F#at is c&ear is t#at at t#e time t#e victim was taking #is cargoes, t#e
vesse& #ad a&read! docked an #our ear&ier' ,n consonance wit# common s#ipping procedure as to t#e
minimum time o% 1 #our a&&owed %or t#e passengers to disemark, it ma! e presumed t#at t#e victim #ad Aust
gotten o%% t#e vesse& w#en #e went to retrieve #is aggage' Oet, even i% #e #ad a&read! disemarked an #our
ear&ier, #is presence in 7oiti*? premises was not wit#out cause' T#e victim #ad to c&aim #is aggage w#ic#
was possi&e on&! 1 #our a%ter t#e vesse& arrived since it was admitted&! standard procedure in t#e case o%
7oiti*? vesse&s t#at t#e un&oading operations s#a&& start on&! a%ter t#at time' $onse9uent&!, under t#e
%oregoing circumstances, t#e victim 7nac&eto Viana is sti&& deemed a passenger o% said carrier at t#e time o%
#is tragic deat#'
. Co##on carriers $oun+ to o$serve extraor+inary +ili*ence as to *oo+s! ut#ost +ili*ence o,
very cautious persons as to passen*ers
Dnder t#e &aw, common carriers are, %rom t#e nature o% t#eir usiness and %or reasons o% pu&ic
po&ic!, ound to oserve e3traordinar! di&igence in t#e vigi&ance over t#e goods and %or t#e sa%et! o% t#e
passengers transported ! t#em, according to a&& t#e circumstances o% eac# case' More particu&ar&!, a common
carrier is ound to carr! t#e passengers sa%e&! as %ar as #uman care and %oresig#t can provide, using t#e
utmost di&igence o% ver! cautious persons, wit# a due regard %or a&& t#e circumstances'
3. Co##on carrier presu#e+ ne*li*ent .)en passen*er +ies or in?ure+6 :roo, re9uire+ o,
plainti,,
F#ere a passenger dies or is inAured, t#e common carrier is presumed to #ave een at %au&t or to #ave
acted neg&igent&!' T#is gives rise to an action %or reac# o% contract o% carriage w#ere a&& t#at is re9uired o%
p&ainti%% is to prove t#e e3istence o% t#e contract o% carriage and its non=per%ormance ! t#e carrier, t#at is, t#e
%ai&ure o% t#e carrier to carr! t#e passenger sa%e&! to #is destination, w#ic#, in t#e present case, necessari&!
inc&udes its %ai&ure to sa%eguard its passenger wit# e3traordinar! di&igence w#i&e suc# re&ation susists'
4. Bur+en o, proo, to ne*ate presu#ption
T#e presumption is esta&is#ed ! &aw t#at in case o% a passenger?s deat# or inAur! t#e operator o% t#e
vesse& was at %au&t or neg&igent, #aving %ai&ed to e3ercise e3traordinar! di&igence, and it is incument upon it
to reut t#e same' T#is is in consonance wit# t#e avowed po&ic! o% t#e "tate to a%%ord %u&& protection to t#e
passengers o% common carriers w#ic# can e carried out on&! ! imposing a stringent statutor! o&igation
upon t#e &atter' $oncomitant&!, t#e "upreme $ourt #as &ikewise adopted a rigid posture in t#e app&ication o%
t#e &aw ! e3acting t#e #ig#est degree o% care and di&igence %rom common carriers, earing utmost in mind
t#e we&%are o% t#e passengers w#o o%ten ecome #ap&ess victims o% indi%%erent and pro%it=oriented carriers'
@erein, 7oiti* %ai&ed to reut t#e presumption against it'
%. 5$oitiJ )a+ ina+e9uately co#plie+ .it) t)e re9uire+ +e*ree o, +ili*ence to prevent t)e acci+ent
,ro# )appenin*
T#e evidence does not s#ow t#at t#ere was a cordon o% drums around t#e perimeter o% t#e crane' T#e
%act t#at t#e a&&eged presence o% visi&e warning signs in t#e vicinit! was disputa&e and not induita&!
esta&is#ed' T#e victim and ot#er passengers were not su%%icient&! warned t#at mere&! venturing into t#e area
in 9uestion was %raug#t wit# serious peri&' Bven assuming t#e e3istence o% t#e supposed cordon o% drums
&oose&! p&aced around t#e un&oading area and t#e guard?s admonitions against entr! t#erein, t#ese were at
most insu%%icient precautions w#ic# pa&e into insigni%icance i% considered vis=a=vis t#e gravit! o% t#e danger to
w#ic# t#e deceased was e3posed' T#ere is no s#owing t#at 7oiti* was e3traordinari&! di&igent in re9uiring or
seeing to it t#at said precautionar! measures were strict&! and actua&&! en%orced to suserve t#eir purpose o%
preventing entr! into t#e %oridden area'
1". 5$oitiJ1 ne*li*ence proxi#ate an+ +irect cause o, victi#1s +eat)
F#i&e t#e victim was admitted&! contriutori&! neg&igent, sti&& 7oiti*?s %ai&ure to e3ercise
e3traordinar! di&igence was t#e pro3imate and direct cause o%, ecause it cou&d de%inite&! #ave prevented, t#e
%ormer?s deat#'

11. :ioneer a$solve+ o, lia$ility
Eo e3cepting circumstance eing present, t#e $ourt is ound ! &ower court?s dec&aration t#at t#ere
was no neg&igence on t#e part o% Pioneer "tevedoring $orporation, a con%irmation o% t#e tria& court?s %inding
to t#at e%%ect, #ence t#e $ourt?s con%ormit! to Pioneer?s eing aso&ved o% an! &iai&it!' Pioneer #ad taken t#e
necessar! sa%eguards inso%ar as its un&oading operations were concerned, a %act w#ic# appears to #ave een
accepted ! t#e Vianas ! not imp&eading Pioneer as a de%endant, and &ikewise inceptive&! ! 7oiti* !
%i&ing its t#ird=part! comp&aint on&! a%ter 12 mont#s %rom t#e institution o% t#e suit against it' Parent#etica&&!,
Pioneer is not wit#in t#e amit o% t#e ru&e on e3traordinar! di&igence re9uired o%, and t#e corresponding
presumption o% neg&igence %oisted on, common carriers &ike 7oiti*' T#is, o% course, does not detract %rom
w#at t#e $ourt #as said t#at no neg&igence can e imputed to Pioneer ut, t#at on t#e contrar!, t#e %ai&ure o%
7oiti* to e3ercise e3traordinar! di&igence %or t#e sa%et! o% its passenger is t#e rationa&e %or t#e $ourt?s
%inding on its &iai&it!'
[1"4]
Bac)elor Dxpress vs. C5 (GR 42%1! 31 Buly 1%%")
&act' (n 1 7ugust 1./2, 1us /22, owned ! 1ac#e&or B3press, ,nc' and driven ! $resencio :ivera, came
%rom Davao $it! on its wa! to $aga!an de (ro $it! passing 1utuan $it!' F#i&e at Taon=Taon, 1utuan $it!,
t#e us picked up a passenger' 7out 14 minutes &ater, a passenger at t#e rear portion sudden&! staed a P$
so&dier w#ic# caused commotion and panic among t#e passengers' F#en t#e us stopped, passengers
(rnominio 1eter and Earcisa :autraut were %ound &!ing down t#e road, t#e %ormer a&read! dead as a resu&t o%
#ead inAuries and t#e &atter a&so su%%ering %rom severe inAuries w#ic# caused #er deat# &ater' T#e passenger=
assai&ant a&ig#ted %rom t#e us and ran toward t#e us#es ut was ki&&ed ! t#e po&ice'
T#erea%ter, t#e #eirs o% (rnomino 1eter and Earcisa :autraut (:icardo 1eter and "ergia 1eter are t#e parents
o% (rnominio w#i&e Teo%i&o :autraut and Rotera :autraut are t#e parents o% Earcisa) %i&ed a comp&aint %or
;sum o% mone!< against 1ac#e&or B3press, its a&&eged owner "amson Oasa!, and t#e driver :ivera' 7%ter due
tria&, t#e tria& court issued an order dated / 7ugust 1./4 dismissing t#e comp&aint'
Dpon appea& #owever, t#e tria& court?s decision was reversed and set aside' T#e appe&&ate entered a new
Audgment %inding 1ac#e&or B3press, Oasa!, and :ivera Aoint&! and so&idari&! &ia&e to pa! t#e 1eters and t#e
:autraut t#e amount o% P04,222'22 in &oss o% earnings and support, mora& damages, straig#t deat# indemnit!
and attorne!?s %ees to t#e #eirs o% (rnominio 1eterC and t#e amount o% P54,222'22 %or straig#t deat#
indemnit!, mora& damages and attorne!?s %ees to t#e #eirs o% Earcisa :autrautC wit# costs against 1ac#e&or
B3press, et' a&' @ence, t#e petition %or review'
T#e "upreme $ourt dismissed t#e petition, and a%%irmed t#e decision dated 1. Ma! 1.// and t#e reso&ution
dated 1 7ugust 1.// o% t#e $ourt o% 7ppea&s'
1. Lia$ility o, Bac)elor Dxpress! et. al. anc)ore+ on culpa contractual
T#e &iai&it!, i% an!, o% 1ac#e&or B3press, Oasa!, and :ivera, is anc#ored on cu&pa contractua& or
reac# o% contract o% carriage'
-. 5rticle 133- 7CC
7rtic&e 1038 o% t#e $ivi& $ode provides t#at ;$ommon carriers are persons, corporations, %irms or
associations engaged in t#e usiness o% carr!ing or transporting passengers or goods or ot# ! &and, water, or
3. 5rticle 1333 7CC
%or t#e sa%et! o% t#e passengers transported ! t#em, according to a&& t#e circumstances o% eac# case'
/. 5rticle 1322 7CC
7rtic&e 1044' o% t#e $ivi& $ode provides t#at ;7 common carrier is ound to carr! t#e passengers
2. 5rticle 132 7CC
e3traordinar! di&igence as prescried in 7rtic&es 1033 and 1044'<
. Bac)elor Dxpress a co##on carrier! $oun+ to carry passen*er usin* ut#ost +ili*ence o, very
cautious persons
1ac#e&or B3press, ,nc' is a common carrier' @ence, %rom t#e nature o% its usiness and %or reasons o%
pu&ic po&ic! 1ac#e&or B3press, ,nc' is ound to carr! its passengers sa%e&! as %ar as #uman care and %oresig#t
can provide using t#e utmost di&igence o% ver! cautious persons, wit# a due regard %or a&& t#e circumstances'
3. Bac)elor Dxpress presu#e+ to act ne*li*ently ,or +eat) o, passen*ers
@erein, (rnominio 1eter and Earcisa :autraut were passengers o% a us e&onging to 1ac#e&or
B3press and, w#i&e passengers o% t#e us, su%%ered inAuries w#ic# caused t#eir deat#' $onse9uent&!, pursuant
to 7rtic&e 104> o% t#e $ivi& $ode, 1ac#e&or B3press is presumed to #ave acted neg&igent&! un&ess it can prove
t#at it #ad oserved e3traordinar! di&igence in accordance wit# 7rtic&es 1033 and 1044 o% t#e Eew $ivi&
$ode'
4. 5rticle 113/ 7CC
7rtic&e 1105 o% t#e present $ivi& $ode states t#at ;B3cept in cases e3press&! speci%ied ! &aw, or w#en
it is ot#erwise dec&ared ! stipu&ations, or w#en t#e nature o% t#e o&igation re9uires t#e assumption o% risk,
no person s#a&& e responsi&e %or t#ose events w#ic# cou&d not e %oreseen, or w#ic# t#oug# %oreseen, were
inevita&e'<
%. 5rticle 11"2 o, t)e ol+ Civil Co+e is pre+ecessor o, 5rticle 113/ 7CC
7rtic&e 1105 o% t#e present $ivi& $ode was sustantia&&! copied %rom 7rtic&e 1124 o% t#e o&d $ivi&
$ode w#ic# states t#at ;Eo one s#a&& e &ia&e %or events w#ic# cou&d not e %oreseen or w#ic#, even i%
%oreseen, were inevita&e, wit# t#e e3ception o% t#e cases in w#ic# t#e &aw e3press&! provides ot#erwise and
t#ose in w#ic# t#e o&igation itse&% imposes &iai&it!'<
1". @DventsA +e,ine+6 Lasa# vs. S#it)
,n t#e case o% +asam v' "mit# (54 P#i&' >40 L1.85M), t#e $ourt de%ined ;events< w#ic# cannot e
%oreseen and w#ic#, #aving een %oreseen, are inevita&e in t#e %o&&owing manner: ;T#e "panis# aut#orities
regard t#e &anguage emp&o!ed as an e%%ort to de%ine t#e term Gcaso %ortuito? and #o&d t#at t#e two e3pressions
are s!non!mous' (Manresa $omentarios a& $odigo $ivi& Bspa)o&, vo&' /, pp' // et se9'C "caevo&a, $odigo
$ivi&, vo&' 1., pp' 48> et se9')
11. Caso ,ortuito +e,ine+6 La. ;;! (itle 33! :arti+a 3
T#e antecedent to 7rtic&e 1124 is %ound in +aw ,,, Tit&e 33, Partida 0, w#ic# de%ines caso %ortuito as
Gocasion 9ue acaese por aventura de 9ue non se puede ante ver' B son estos, derrivamientos de casas e %uego
9ue enciende a so ora, e 9uerantamiento de navio, %uerca de &adrones'? (7n event t#at takes p&ace ! incident
and cou&d not #ave een %oreseen' B3amp&es o% t#is are destruction o% #ouses, une3pected %ire, s#ipwreck,
vio&ence o% roers' ' ' ')
1-. Caso ,ortuito +e,ine+6 Dscric)e
Bscric#e de%ines caso %ortuito as an une3pected event or act o% 6od w#ic# cou&d neit#er e %oreseen
nor resisted, suc# as %&oods, torrents, s#ipwrecks, con%&agrations, &ig#tning, compu&sion, insurrections,
destruction o% ui&dings ! un%oreseen accidents and ot#er occurrences o% a simi&ar nature'
13. Caso ,ortutio +e,ine+! c)aracteriJe+6 Dnciclope+ia Buri+ica Dspanola
,n discussing and ana&!*ing t#e term caso %ortuito t#e Bncic&opedia Juridica Bspa)o&a sa!s: G,n a &ega&
sense and, conse9uent&!, a&so in re&ation to contracts, a caso %ortuito presents t#e %o&&owing essentia&
c#aracteristics: (1 ) T#e cause o% t#e un%oreseen and une3pected occurrence, or o% t#e %ai&ure o% t#e detor to
comp&! wit# #is o&igation, must e independent o% t#e #uman wi&&' (8) ,t must e impossi&e to %oresee t#e
event w#ic# constitutes t#e caso %ortuito, or i% it can e %oreseen, it must e impossi&e to avoid' (3) T#e
occurrence must e suc# as to render it impossi&e %or t#e detor to %u&%i&& #is o&igation in a norma& manner'
7nd (5) t#e o&igor (detor) must e %ree %rom an! participation in t#e aggravation o% t#e inAur! resu&ting to
t#e creditor'
1/. Dssential ele#ent o, caso ,ortuito
7ut#orities agree t#at some e3traordinar! circumstance independent o% t#e wi&& o% t#e o&igor, or o%
#is emp&o!ees, is an essentia& e&ement o% a caso %ortuito'<
12. :roxi#ate cause o, inci+ent6 Su++en act o, passen*er .)o sta$$e+ anot)er passen*er .it)in
context o, ,orce #a?eure
T#e running amuck o% t#e passenger was t#e pro3imate cause o% t#e incident as it triggered o%% a
commotion and panic among t#e passengers suc# t#at t#e passengers started running to t#e so&e e3it s#oving
eac# ot#er resu&ting in t#e %a&&ing o%% t#e us ! passengers 1eter and :autraut causing t#em %ata& inAuries'
T#e sudden act o% t#e passenger w#o staed anot#er passenger in t#e us is wit#in t#e conte3t o% %orce
maAeure'
1. Co##on carrier #ust prove t)at it .as not ne*li*ent in causin* in?uries resultin* ,ro# suc)
acci+ent
,n order t#at a common carrier ma! e aso&ved %rom &iai&it! in case o% %orce maAeure, it is not
enoug# t#at t#e accident was caused ! %orce maAeure' T#e common carrier must sti&& prove t#at it was not
neg&igent in causing t#e inAuries resu&ting %rom suc# accident' ("ee Tan $#iong "ian vs' ,nc#austi T $o', 88
P#i& 148 L1.18M)'
13. Batan*as La*una vs. ;5C6 5cci+ent #ust $e +ue to natural causes an+ .it)out )u#an
intervention
T#e princip&e in Tan $#iong "ian was reiterated in a more recent case, 1atangas +aguna Ta!aas $o'
v' ,ntermediate 7ppe&&ate $ourt (1>0 "$:7 30. L1.//M), w#erein t#e $ourt ru&ed t#at ;For t#eir de%ense o%
%orce maAeure or act o% 6od to prosper t#e accident must e due to natura& causes and e3c&usive&! wit#out
#uman intervention'<
14. Bac)elor Dxpress ne*li*ent
T#e neg&igence o% t#e common carrier, t#roug# its emp&o!ees, consisted o% t#e &ack o% e3traordinar!
di&igence re9uired o% common carriers, in e3ercising vigi&ance and utmost care o% t#e sa%et! o% its passengers,
e3emp&i%ied ! t#e driver?s e&ated stop and t#e reck&ess opening o% t#e doors o% t#e us w#i&e t#e same was
trave&&ing at an apprecia&! %ast speed' 7t t#e same time, t#e common carrier itse&% acknow&edged, t#roug# its
administrative o%%icer, 1enAamin 6ranada, t#at t#e us was commissioned to trave& and take on passengers
and t#e pu&ic at &arge, w#i&e e9uipped wit# on&! a so&itar! door %or a us its si*e and &oading capacit!, in
contravention o% ru&es and regu&ations provided %or under t#e +and Transportation and Tra%%ic $ode (:7 513>
as amended')' 1ac#e&or B3press, et' a&' #ave %ai&ed to overcome t#e presumption o% %au&t and neg&igence %ound
in t#e &aw governing common carriers'
1%. <e,ense o, carrier not insurers o, passen*ers not *iven #erit +ue to ,ailure to o$serve re9uire+
+ili*ence
1ac#e&or B3press? argument t#at t#e! ;are not insurers o% t#eir passengers< deserves no merit in view
o% t#eir %ai&ure to prove t#at t#e deat#s o% t#e two passengers were e3c&usive&! due to %orce maAeure and not to
t#eir %ai&ure to oserve e3traordinar! di&igence in transporting sa%e&! t#e passengers to t#eir destinations as
warranted ! &aw'
-". <eter#ination o, a.ar+ o, +a#a*es6 5rticle 13/ in connection .it) 5rticle --" 7CC
,n accordance wit# 7rtic&e 10>5 in conAunction wit# 7rtic&e 882> o% t#e $ivi& $ode, and esta&is#ed
Aurisprudence, severa& %actors ma! e considered in determining t#e award o% damages, name&!: 1) &i%e
e3pectanc! (considering t#e state o% #ea&t# o% t#e deceased and t#e morta&it! ta&es are deemed conc&usive)
and &oss o% earning capacit!C (8) pecuniar! &oss, &oss o% support and serviceC and (3) mora& and menta&
su%%ering (7&cantara, et e&' v' "urro, et a&', .3 P#i&' 502)'
-1. :eople vs. <aniel6 &actors servin* as $asis ,or a#ount ,or loss o, earnin* capacity
,n t#e case o% Peop&e v' Danie& (Eo' +=>>441, 7pri& 84, 1./4, 13> "$:7 .8, at page 125), t#e @ig#
Triuna&, reiterating t#e ru&e in Vi&&a :e! Transit, ,nc' v' $ourt o% 7ppea&s (31 "$:7 411), stated t#at t#e
amount o% &oss o% earning capacit! is ased main&! on two %actors, name&!, (1) t#e numer o% !ears on t#e
asis o% w#ic# t#e damages s#a&& e computedC and (8) t#e rate at w#ic# t#e &osses sustained ! t#e #eirs
s#ou&d e %i3ed'
--. &or#ula a+opte+ in <avila vs. :5L
7s t#e %ormu&a adopted in t#e case o% Davi&a v' P#i&ippine 7ir +ines, 5. "$:7 5.0, at t#e age o% 32
one?s norma& &i%e e3pectanc! is 33 1-3 !ears ased on t#e 7merican B3pectanc! Ta&e o% Morta&it! (8-3 3 /2=
38)' @erein, ! taking into account t#e pace and nature o% t#e &i%e o% a carpenter, it is reasona&e to make
a&&owances %or t#ese circumstances and reduce t#e &i%e e3pectanc! o% t#e deceased (rnominio 1eter to 84
!ears (Peop&e v' Danie&)' To %i3 t#e rate o% &osses it must e noted t#at 7rtic&e 882> re%ers to gross earnings
&ess necessar! &iving e3penses o% t#e deceased, in ot#er words, on&! net earnings are to e considered (Peop&e
v' Danie&, Vi&&a :e! Transit, ,nc' v' $ourt o% 7ppea&s)'
-3. 5.ar+ o, +a#a*es to )eirs o, 8rno#ino Beter
,t is ot# Aust and reasona&e, considering (rnominio 1eter?s socia& standing and position, to %i3 t#e
deducti&e, &iving and incidenta& e3penses at t#e sum o% P522'22 a mont#, or P5,/22'22 annua&&!' 7s to #is
income, considering t#e irregu&ar nature o% t#e work o% a dai&! wage carpenter w#ic# is seasona&, it is sa%e to
assume t#at #e s#a&& #ave work %or 82 da!s a mont# at P84'22 a da! or P422'22 a mont#' 7nnua&&!, #is
income wou&d amount to P>,222'22 or P142,222'22 %or 84 !ears' Deducting t#ere%rom #is necessar!
e3penses, #is #eirs wou&d e entit&ed to P32,222'22 representing &oss o% support and service (P142,222'22 &ess
P182,222'22)' ,n addition, #is #eirs are entit&ed to P32,222'22 as straig#t deat# indemnit! pursuant to 7rtic&e
882> (Peop&e v' Danie&)' For damages %or t#eir mora& and menta& anguis#, #is #eirs are entit&ed to t#e
reasona&e sum o% P12,222'22 as an e3ception to t#e genera& ru&e against mora& damages in case o% reac# o%
contract ru&e (7rtci&e 8822, Eecesito v' Paras, 125 P#i&' 04)' 7s attorne!?s %ees, 1eter?s #eirs are entit&ed to
P4,222'22' 7&& in a&&, :icardo and "ergia 1eter as #eirs o% t#eir son (rnominio are entit&ed to an indemnit! o%
P04,222'22'
-/. 5.ar+ o, +a#a*es to )eirs o, 7arcisa Rautraut
,n t#e case o% Earcisa :autraut, #er #eirs are entit&ed to a straig#t deat# indemnit! o% P32,222'22, to
mora& damages in t#e amount o% P12,222'22 and P4,222'22 as attorne!s %ees, or a tota& o% P54,222'22 as tota&
indemnit! %or #er deat# in t#e asence o% an! evidence t#at s#e #ad visi&e means o% support'
[1"%]
Bacarro vs. Castano (HR L>3/2%3! 2 7ove#$er 1%4-)
First Division, :e&ova (J): 5 concur, 1 on &eave
&acts' ,n t#e a%ternoon o% 1 7pri& 1.>2, 6erundio 1' $astano oarded a Aeep as a pa!ing passenger at
(ro9uieta ound %or Jimene*, Misamis (ccidenta&' ,t was t#en %i&&ed to capacit!, wit# 18 passengers in a&&'
T#e Aeep was driven ! Fe&ario Monte%a&con at around 52 ki&ometers per #our' F#i&e approac#ing "umasap
1ridge at t#e said speed, a cargo truck (owned ! Te Tiong, a&ias $#inggimC and driven ! Eicostrato Diga&)
coming %rom e#ind, &owing its #orn to signa& its intention to overtake t#e Aeep' T#e Aeep, wit#out c#anging
its speed, gave wa! ! swerving to t#e rig#t, suc# t#at ot# ve#ic&es ran side ! side %or a distance o% around
82 meters' T#erea%ter as t#e Aeep was &e%t e#ind, its driver was una&e to return it to its %ormer &ane and
instead it o&i9ue&! or diagona&&! ran down an inc&ined terrain towards t#e rig#t unti& it %e&& into a ditc#
pinning down and crus#ing $astano?s rig#t &eg in t#e process'
$astano %i&ed a case %or damages against :osita 1acarro, Fi&&iam "evi&&a, and Fe&ario Monte%a&con'
De%endants a&&eged t#at t#e Aeepne! was sideswiped ! t#e overtaking cargo truck' 7%ter tria&, t#e $F, o%
Misamis (rienta& ordered 1acarro, et'a&' to Aoint&! and severa&&! pa! $astano t#e sum o% (1) P.03'12 %or
medica& treatment and #ospita&i*ationC (8)P/52'82 %or &oss o% sa&ar! during treatmentC and (3) P8,222'22 %or
partia& permanent de%ormit!, wit# costs against 1acarro, et'a&'
7ppea& was taken ! 1acarro, et' a&' to t#e $ourt o% 7ppea&s, w#ic#, on 32 "eptemer 1.01, a%%irmed t#at o%
t#e tria& court' @ence, t#e appea& ! certiorari'
T#e "upreme $ourt a%%irmed t#e decision o% t#e $ourt o% 7ppea&sC wit# costs'
1. Contri$utory ne*li*ence o, =onte,alcon
@erein, driver Monte%a&con did not s&acken #is speed ut instead continued to run t#e Aeep at aout 52
ki&ometers per #our even at t#e time t#e overtaking cargo truck was running side ! side %or aout 82 meters
and at w#ic# time #e even s#outed to t#e driver o% t#e truck' @ad Monte%a&con s&ackened t#e speed o% t#e Aeep
at t#e time t#e truck was overtaking it, instead o% running side ! side wit# t#e cargo truck, t#ere wou&d #ave
een no contact and accident' @e s#ou&d #ave %oreseen t#at at t#e speed #e was running, t#e ve#ic&es were
getting nearer t#e ridge and as t#e road was getting narrower t#e truck wou&d e too c&ose to t#e Aeep and
wou&d eventua&&! sideswipe it' (t#erwise stated, #e s#ou&d #ave s&ackened #is Aeep w#en #e swerved it to t#e
rig#t to give wa! to t#e truck ecause t#e two ve#ic&es cou&d not cross t#e ridge at t#e same time'
-. Beepney +river ,aile+ to exercise extraor+inary +ili*ence! )u#an care! ,oresi*)t an+ ut#ost
+ili*ence o, a very cautious person 6 5rticle 133
T#e Aeepne! driver %ai&ed to e3ercise e3traordinar! di&igence, #uman care, %oresig#t and utmost
di&igence o% a ver! cautious person, w#en t#e di&igence re9uired pursuant to 7rtic&e 10>3 o% t#e $ivi& $ode is
on&! t#at o% a good %at#er o% a %ami&!' F#et#er t#e pro3imate cause o% t#e accident was t#e neg&igence o% t#e
driver o% t#e truck, as a&&eged, is immateria&' 7s t#ere was a contract o% carriage etween $astano and
1acarro, et' a&', t#e $ourt o% 7ppea&s correct&! app&ied 7rtic&es 1033, 1044 and 10>> o% t#e $ivi& $ode w#ic#
re9uire t#e e3ercise o% e3traordinar! di&igence on t#e part o% Monte%a&con'
3. 5rticle 1333 7CC
7rtic&e 1033 provides t#at ;$ommon carriers, %rom t#e nature o% t#eir usiness and %or reasons o%
pu&ic po&ic!, are ound to oserve e3traordinar! di&igence in t#e vigi&ance over t#e goods and %or t#e sa%et!
o% t#e passengers transported ! t#em, according to a&& t#e circumstances o% eac# case'<
/. 5rticle 1322 7CC
7rtic&e 1044 provides t#at ;7 common carrier is ound to carr! t#e passengers sa%e&! as %ar as #uman
care and %oresig#t can provide, using t#e utmost di&igence o% ver! cautious persons, wit# a due regard %or a&&
t#e circumstances'<
2. 5rticle 13 7CC
7rtic&e 10>> provides t#at ;,n a&& matters not regu&ated ! t#is $ode, t#e rig#ts and o&igations o%
common carriers s#a&& e governed ! t#e $ode o% $ommerce and ! specia& &aws'<
. Co##on carrier veste+ .it) pu$lic interest! re9uire+ ut#ost +ili*ence o, very cautious persons6
:resu#ption o, ,ault
T#e #a*ards o% modern transportation demand e3traordinar! di&igence' 7 common carrier is vested
wit# pu&ic interest' Dnder t#e new $ivi& $ode, instead o% eing re9uired to e3ercise mere ordinar! di&igence
a common carrier is e3#orted to carr! t#e passengers sa%e&! as %ar as #uman care and %oresig#t can provide
;using t#e utmost di&igence o% ver! cautious persons'< (7rtic&e 1044)' (nce a passenger in t#e course o% trave&
is inAured, or does not reac# #is destination sa%e&!, t#e carrier and driver are presumed to e at %au&t'
3. Si+es.ipin* o, ?eepney ,oreseea$le! not ,ortuitous event
T#e accident was not due to a %ortuitous event' T#e a&&eged %ortuitous event in t#e case, i'e' t#e
sideswiping o% t#e Aeepne! ! t#e cargo truck, was somet#ing w#ic# cou&d #ave een avoided considering t#e
narrowness o% "umasap 1ridge w#ic# was not wide enoug# to admit two ve#ic&es' @erein, Monte%a&con
contriuted to t#e occurrence o% t#e mis#ap'
[110] Pilapil vs. CA, see [*!]
[111]
La*una (aya$as Bus vs. (ion*son (GR L>--1/3! 3" 5pril 1%)
Bn 1anc, Di*on (J): 12 concur, 1 took no part
&acts' (n 3 June 1.4/, aout two ki&ometers past t#e po&acion o% 1a!, +aguna, +aguna Ta!aas 1us $o'?s
(+T1) 1us 825, coming %rom "an Pa&o $it! towards Mani&a co&&ided wit# a 0=up de&iver! truck coming %rom
t#e opposite direction' 7s a conse9uence t#e us %e&& on its rig#t side on t#e s#ou&der o% t#e road resu&ting in
inAuries to man! o% its passengers and t#e deat# o% :icardo $' Tiongson and a woman passenger' 1ot# driver
were prosecuted %or dou&e #omicide, mu&tip&e serious p#!sica& inAuries and damage to propert!, t#ru reck&ess
imprudence, in t#e $ourt o% First ,nstance o% +aguna, ut a separate action %or damages %or reac# o% contract
o% carriage was %i&ed in t#e $ourt o% First ,nstance o% 1u&acan ! 7ntonio and Fe&icitas J' Tiongson, as #eirs o%
t#e deceased :icardo $' Tiongson, against +T1'
,n t#e separate civi& action ($ivi& $ase 10>2), t#e tria& court, on 8/ Decemer 1.4., %ound +T1?s driver to
&ame %or t#e accident and rendered Audgment sentencing +T1 to pa! to t#e Tiongsons t#e sum o% P42,222'22
! wa! o% actua&, compensator! and mora& damages, and t#e %urt#er sum o% P4,222'22 as counse& %ees, wit#
costs against +T1' 1ot# parties appea&ed to t#e $ourt o% 7ppea&s, +T1 %rom t#e portion t#ereo% #o&ding it
&ia&e %or damages %or reac# o% contract, and t#e Tiongsons %rom t#e portion determining t#e amount o%
damages awarded to t#em'
,n t#e crimina& action ($rimina& $ase 1=331), #owever, on 31 Ju&! 1.>1, t#e $F, o% +aguna ac9uitted $&aro
"amonte, +T1?s driver, o% t#e o%%ense c#arged on t#e ground o% reasona&e dout'
(n 8/ (ctoer 1.>3, t#e $ourt o% 7ppea&s a%%irmed t#e decision o% t#e $F, o% 1u&acan' @ence, t#e appea& !
certiorari'
T#e "upreme $ourt a%%irmed t#e decision appea&ed %rom, wit# costs'
1. General principles as to co##on carriers
,n moving %orward to a conc&usion in t#e case, certain genera& princip&es must e orne in mind,
name&!: (1) t#e &iai&it! o% a carrier is contractua& and arises upon its reac# o% t#e o&igation, and t#ere is a
reac# i% it %ai&s to e3ercise e3tra=ordinar! di&igence according to a&& t#e circumstances o% eac# caseC (8) a
carrier is o&iged to carr! its passengers wit# t#e utmost di&igence o% a ver! cautious person, #aving due
regard %or t#e circumstancesC (3) a carrier is presumed to e at %au&t or to #ave acted neg&igent&! in case o%
deat# o%, or inAur! to its passengers, it eing its dut! to prove t#at it e3ercised e3tra=ordinar! di&igenceC (5) a
carrier is not an insurer against a&& risks o% trave& (,saac vs' 7'+' 7men Transportation $o', ,nc', 6':' Eo' +=
.>01, 7ugust 8/, 1.40)C and (4) t#at a carrier s#a&& not e responsi&e %or events w#ic# cou&d not e %oreseen,
or w#ic#, t#oug# %oreseen, were inevita&e (7&%aro vs' 7!son, 45 (%%' 6a*' 0.88)'
-. (esti#ony o, +river +ou$te+
T#e testimon! o% "amonte is to e serious&! douted' (1) @e and #is conductor, 7&cantara, must e
necessari&! iased witnesses %or t#e! are ot# emp&o!ed ! +T1' (8) ,t is o% common know&edge t#at a
de&iver! truck %u&&! &oaded wit# cases o% so%t drinks is a s&ower moving ve#ic&e t#an a passenger us' 7
passenger us is necessari&! designed %or speed ecause t#e trave&ers usua&&! want to arrive at t#eir
destinations wit#in t#e s#ortest possi&e time, w#ereas so%t drinks de&iver! trucks are ui&t more %or t#e sa%et!
o% its ott&ed cargo t#an %or speed' (3) "amonte?s c&aim t#at w#en #e app&ied t#e rakes o% #is us w#en it was
t#en aout 12 meters awa! %rom t#e 0=Dp truck, t#e speed o% #is us was on&! aout 12 ki&ometers per #our
cannot e given %u&& credence' @e stated t#at a%ter app&!ing t#e rakes, #is us sti&& moved &ess t#an 4 meters
e%ore eing #it ! t#e 0=Dp truck' ,% #is speed #ad on&! een 12 ki&ometers per #our, upon t#e app&ication o%
t#e rakes, #e wou&d #ave stopped t#e us wit#in a muc# s#orter distance'
3. Ra#i,ication o, t)e sketc) prepare+ $y t)e C)ie, o, :olice
7n e3amination o% t#e sketc# prepared ! t#e c#ie% o% po&ice o% 1a!, +aguna s#ows t#at t#e co&&ision
etween +T1?s us and t#e 0=Dp Truck occurred on&! / meters awa! %rom t#e id depression' T#is s#ort
distance wou&d seem to indicate t#at +T1?s driver, "amonte, knowing e3act&! t#e &ocation o% t#e depression,
and anticipating t#at t#e 0=Dp truck coming %rom t#e opposite direction wou&d veer to t#e &e%t o% t#e said
depression in order to avoid t#e same, raced wit# t#e 0=Dp truck in order t#at #e cou&d %irst pass t#roug# t#e
space etween t#e depression and w#at was &e%t o% t#e asp#a&t pavement o% t#e &ane on w#ic# #e was t#en
trave&ing, ovious&! %or t#e purpose o% avoiding de&a!' 1ecause o% t#is, t#e 0=Dp truck driver w#o must #ave
intended to pass on t#e said space in order to avoid going t#roug# t#e depression, was sudden&! %orced into
t#e depression, in order to avoid a #ead=on co&&ision wit# +T1?s us' 1ut un%ortunate&!, a%ter umping out o%
t#e depressions, t#e truck veered to t#e &e%t and #it +T1?s us on t#e &e%t %ront side, t#ere! causing t#e us to
overturn on its rig#t side'
/. (esti#ony o, +isintereste+ eye.itness to acci+ent #ore cre+i$le
T#e testimon! o% :u%o :eano, a arrio &ieutenant and a disinterested e!e=witness o% t#e accident, was
credi&eC t#at, to t#e contrar!, t#e testimon! o% $&aro "amonte and Brnesto 7&cantara, driver and conductor
respective&! o% petitioner?s us, was improa&e and iased'
2. L(B not success,ul +isc)ar*e+ $ur+en o, +isprovin* its presu#ptive ne*li*ence
@erein, +T1 not on&! %ai&ed to disprove t#e presumption o% neg&igence arising against it (7rtic&es
1033, 1044 and 104> o% t#e Eew $ivi& $ode) ut t#at, on t#e contrar!, its neg&igence #ad een esta&is#ed !
more t#an mere preponderance o% evidence' (1) "amonte actua&&! app&ied t#e rakes on #is ut too &ate to
avoid t#e accident ecause at t#at time t#e distance etween t#e two ve#ic&e was on&! ten meters' (8) "amonte
was we&& aware o% t#e condition o% t#e road, particu&ar&! o% t#e e3istence o% a depression near t#e p&ace w#ere
t#e two ve#ic&e co&&ided, ecause #e #ad een driving t#roug# and a&ong t#e same route %or a considera&e
period o% time prior to t#e accident' (3) (n 1> Ma! 1.4/ or on&! two weeks e%ore t#e %ata& co&&ision,
"amonte #ad een appre#ended %or overspeeding' (5) $ertain admissions made on t#e witness stand !
Teotimo de Mesa, +T1?s c#ie% c&erk since 1.5/, su%%icient&! s#owed t#at t#e compan! #ad not e3ercised due
care and di&igence in connection wit# t#e #iring o% "amonte'
. =oral +a#a*es +ue6 5rticle 13/ in relation to 5rticle --"! 7ecesito vs. :ras
+T1?s &iai&it! %or mora& damages can not now e serious&! 9uestioned in view o% t#e provisions o%
7rtic&e 10>5 and 882>, Eos' 1 and 3 o% t#e Eew $ivi& $ode and t#e ru&ing in Eecesito et a&' vs' Paras et a&',
125 P#i&' 04, :eso&ution on motion to reconsider 11 "eptemer 1.4/ w#ere it was #e&d t#at t#e case o% a
passenger w#o dies in t#e course o% an accident, due to t#e carrier?s neg&igence, constitutes an e3ception to
t#e genera& ru&e as to mora& damages' F#i&e under 7rtic&e 8882 o% t#e new $ivi& $ode t#ere can e no
recover! o% mora& damages %or a reac# o% contract in t#e asence o% %raud (ma&ice) or ad %ait#, t#e case o% a
vio&ation o% t#e contract or carrier &eading to a passenger?s deat# escapes t#is genera& ru&e, in view o% 7rtic&e
10>5 in connection wit# 7rtic&e 882> (3) o% t#e new $ivi& $ode'
3. 5rticle 13/ 7CC
7rtic&e 10>5 o% t#e $ivi& $ode provides t#at ;Damages in case comprised in t#is section s#a&& e
awarded in accordance wit# Tit&e JV,,, o% t#is 1ook, concerning Damages' 7rtic&e 882> s#a&& a&so app&! to
t#e deat# o% a passenger caused ! t#e reac# o% contract ! a common carrier'<
4. 5rticle --" (3) 7CC
7rtic&e 882> (3) o% t#e $ivi& $ode provides t#at ;T#e spouse, &egitimate and i&&egitimate descendants
and ascendants o% t#e deceased ma! demand mora& damages %or menta& anguis# ! reason o% t#e deat# o% t#e
deceased'<
%. Special provision control *eneral ones
1eing a specia& ru&e &imited to cases o% %ata& inAuries, 7rtic&es 10>5 and 882> (3) prevai& over t#e
genera& ru&e o% 7rt' 8882' "pecia& provision contro& genera& ones (+ic#auco T $o' vs' 7posto&, 55 P#i&' 13/C
"anc#o vs' +i*arrage, 44 P#i&' >21)'
1". 7ecesito vs. :aras not in con,lict .it) Cac)ero vs. =anila (axi Ca$6 5pplication o, rulin* in
ot)er cases
Dnder t#e new $ivi& $ode, in case o% accident due to a carrier?s neg&igence, t#e #eirs o% a deceased
passenger ma! recover mora& damages, even t#oug# a passenger w#o is inAured, ut manages to survive, is
not entit&ed to t#em' T#ere is, t#ere%ore, no con%&ict etween t#e $ourt?s main decision in Eecesito vs' Pras
and t#at o% $ac#ero vs' Mani&a Ta3i $a $o', 6':' Eo' +=/081, Ma! 83, 1.40, w#ere t#e passenger su%%ered
inAuries, ut did not &ose #is &i%e' T#e aove ru&ing was %o&&owed and app&ied in $ariaga vs' +'T'1', 6':' Eo'
+=11230, Decemer 8., 1.>2C 1ernardo vs' +una, 6':' Eo' +=1338/=8., "eptemer 8., 1.>1C and Martine*
vs' 6on*a&es, 6':' Eo' +=10402, (ctoer 32, 1.>8'
11. Co#pensatory an+ #oral +a#a*es a.ar+e+ not excessive
@erein, t#e deceased :icardo $' Tiongson, at t#e time o% #is deat# on 3 June 1.4/, was on&! 38 !ears
o&d' @e was a 1ac#e&or o% "cience in $ommerce (Far Bastern Dniversit! 1.5.) and otained emp&o!ment
wit# t#e "an Pa&o $it! 1ranc# o% t#e Peop&e?s 1ank in 1.45 wit# a starting mont#&! sa&ar! o% P142'22
w#ic#, a%ter > mont#s in t#e service, was increased to P104'22' F#i&e t#us emp&o!ed wit# t#e Peop&e?s 1ank,
#e was a&so administering #is mot#er?s %arm in $a&ama, +aguna' @e was t#e on&! son o% spouses 7ntonio
Tiongson and Pa* $ai&es Tiongson, and #ad een married #ard&! 3 !ears w#en #e died' T#e %oregoing
circumstances %u&&! Austi%! t#e damages awarded in t#e appea&ed decision w#ic# are sustantia&&! in accord
wit# t#e ru&es o% &aw contained in 7rtic&es 10>5 and 882>, Eos' 1 and 3 o% t#e Eew $ivi& $ode'
1-. 5.ar+ o, attorney1s ,ees ?usti,ie+
$onsidering t#e provisions o% 7rtic&e 882/, Eos' 8 and 11 o% t#e Eew $ivi& $ode, and t#e proven %act
t#at +T1 ignored t#e Tiongsons? demand %or an amica&e sett&ement o% t#eir c&aim, t#e award o% attorne!?s
%ees seems to e comp&ete&! Austi%ied (:e3 Ta3i $a $o' ,nc' vs' 1autista, 6':' Eo' +=143.8, "eptemer 32,
1.>2C Eecesito vs' Paras, supra)'
[11-]
Sulpicio Lines vs. C5 (GR 113234! 1/ Buly 1%%2)
First Division, Nuiason (J): 3 concur, 1 on &eave
&acts' (n 83 (ctoer 1.//, Tito Duran Tau9ui&de and #is t#ree=!ear o&d daug#ter Jenni%er 7nne oarded t#e
M-V Dona Mari&!n at Eort# @aror, Mani&a, ringing wit# t#em severa& pieces o% &uggage' ,n t#e morning o%
85 (ctoer 1.//, t#e M-V Dona Mari&!n, w#i&e in transit, encountered inc&ement weat#er w#ic# caused #uge
waves due to T!p#oon Dnsang' Eotwit#standing t#e %act t#at "torm "igna& 8 #ad een raised ! t#e P76=
7"7 aut#orities over +e!te as ear&! as 4:32 P'M' o% 83 (ctoer 1.// and w#ic# signa& was raised to "igna& 3
! 12 P'M' o% t#e same da!, t#e s#ip captain ordered t#e vesse& to proceed to Tac&oan w#en prudence dictated
t#at #e s#ou&d #ave taken it to t#e nearest port %or s#e&ter, t#us vio&ating #is dut! to e3ercise e3traordinar!
di&igence in t#e carr!ing o% passengers sa%e&! to t#eir destination' 7t aout t#e same time, 7nge&ina
Tau9ui&de, mot#er o% Jenni%er 7nne, contacted t#e "u&picio (%%ice to veri%! radio reports t#at t#e vesse& M-V
Dona Mari&!n was missing' Bmp&o!ees o% said "u&picio +ines assured #er t#at t#e s#ip was mere&! ;#iding<
t#ere! assuaging #er an3iet!' 7t around 8:22 P'M' o% 85 (ctoer 1.//, said vesse& capsi*ed, t#rowing Tito
and Jenni%er 7nne, a&ong wit# #undreds o% passengers, into t#e tumu&tuous sea' Tito tried to keep #imse&% and
#is daug#ter a%&oat ut to no avai& as t#e waves got stronger and #e was suse9uent&! separated %rom #is
daug#ter despite #is e%%orts' @e %ound #imse&% on 7&magro ,s&and in "amar t#e ne3t da! at around 11:22 7'M'
and immediate&! searc#ed %or #is daug#ter among t#e survivors in t#e is&and, ut t#e searc# proved %ruit&ess'
,n t#e meantime, 7nge&ina tried to seek t#e assistance o% t#e "u&picio +ines in Mani&a to no avai&, t#e &atter
re%using to entertain #er and #undreds o% re&atives o% t#e ot#er passengers w#o waited &ong #ours outside t#e
Mani&a o%%ice' 7nge&ina spent s&eep&ess nig#ts worr!ing aout #er #usand Tito and daug#ter Jenni%er 7nne in
view o% t#e re%usa& o% "u&picio +ines to re&ease a veri%ication o% t#e sinking o% t#e s#ip' (n 8> (ctoer 1.//,
Tito and ot#er survivors in t#e 7&magro ,s&and were %etc#ed and were roug#t to Tac&oan Medica& $enter %or
treatment' (n 31 (ctoer 1.//, Tito reported t#e &oss o% #is daug#ter, was in%ormed t#at t#e corpse o% a c#i&d
wit# #is daug#ter?s description #ad een %ound' "use9uent&!, Tito wrote a &etter to #is wi%e, reporting t#e sad
%act t#at Jenni%er 7nne was dead' 7nge&ina su%%ered %rom s#ock and severe grie% upon receipt o% t#e news' (n
3 Eovemer 1.//, t#e co%%in earing t#e corpse o% Jenni%er 7nne was uried in Tanauan, +e!te'
(n 85 Eovemer 1.//, a c&aim %or damages was %i&ed ! Tito wit# "u&picio +ines e%ore t#e :T$ o% Nue*on
$it! (1ranc# /4, $ivi& $ase N=/.=325/) in connection wit# t#e deat# o% Tito?s daug#ter and t#e &oss o% Tito?s
e&ongings wort# P80,4/2'22' (n 3 Januar! 1..1, t#e tria& court rendered a decision in %avor o% Tito Duran
Tau9ui&de and 7nge&ina de Pa* Tau9ui&de and against "u&picio +ines,' ,nc' ordering t#e &atter to pa!
P80,4/2'22 as actua& damages, P32,222'22 %or t#e deat# o% Jenni%er Tau9ui&de, P122,222'22 as mora&
damages, P42,222'22 as e3emp&ar! damages, and P42,222'22 as attorne!?s %ees, and costs'
"u&picio +ines appea&ed to t#e $ourt o% 7ppea&s w#ic# a%%irmed t#e decision o% t#e tria& court' "u&picio +ines
t#en %i&ed a motion %or reconsideration w#ic# was denied' @ence, t#e petition %or review on certiorari'
T#e "upreme $ourt a%%irmed t#e decision o% t#e $ourt o% 7ppea&s wit# t#e modi%ication t#at t#e award o%
P80,4/2'22 as actua& damages %or t#e &oss o% t#e contents o% t#e pieces o% aggage is de&eted and t#at t#e
award o% P32,222'22 under 7rtic&e 882> in re&ation 7rtic&e 10>5 is increased to P42,222'22'
1. <uty o, co##on carrier
7 common carrier is o&iged to transport its passengers to t#eir destinations wit# t#e utmost di&igence
o% a ver! cautious person (+aguna Ta!aas 1us $o' v' Tiongson, 1> "$:7 .52 L1.>>M)' @erein, t#e tria& court
%ound t#at "u&picio +ines %ai&ed to e3ercise t#e e3traordinar! di&igence re9uired o% a common carrier, w#ic#
resu&ted in t#e sinking o% t#e M-V Dona Mari&!n'
-. &acts6 Stor# si*nal .arnin*s involvin* (yp)oon Fnsan*
T!p#oon Dnsang entered t#e P#i&ippine 7rea o% :esponsii&it! on 81 (ctoer 1.//' T#e rain in
Metro Mani&a started a%ter &unc# o% 83 (ctoer 1.//, and at aout 4:22 p'm' Pu&ic "torm signa& 1 was
#oisted over Metro Mani&a, signa& 8 in +e!te and signa& 3 in "amar' 1! 12:22 a'm' o% 83 (ctoer 1.//, Pu&ic
"torm signa& 1 was a&read! #oisted over t#e province o% +e!te, w#ic# is t#e destination o% M-V Dona Mari&!n'
T#is was raised to signa& 8 at 5:22 p'm' and signa& 3 at 12:22 p'm' on t#e same date' T#e %o&&owing da!, 85
(ctoer 1.//, at 5:22 a'm' and 12:22 a'm', "torm signa& 3 remained #oisted in +e!te' 7t 5 p'm' on 85 (ctoer
1.//, "torm signa& 3 remained #oisted in +e!te ut was reduced to "torm signa& 8'
3. &acts6 =eanin* o, stor# si*nal .arnin*s
"igna& 1 #as ma3imum winds at >2 kp# wit#in 3> #oursC signa& 8 #as ma3imum winds o% %rom >2 kp#
to 122 kp# wit#in a period o% 85 #oursC and signa& 3 #as ma3imum winds o% 122 kp# and aove wit#in a
period o% 18 #ours'
/. &acts6 &re9uency o, issuance o, stor# si*nal .arnin*s
Farnings o% t#e storm signa& are issued ! P76=7"7 t#ru DRR7, (%%ice o% $ivi& De%ense, P#i&ippine
Eav!, $oast 6uard, :adio "tations, and ot#er o%%ices, ever! > #ours as soon as a c!c&one enters t#e P#i&ippine
7rea o% responsii&it!'
2. &acts6 :osition o, t)e vessel vis>Q>vis typ)oon on -/ 8cto$er 1%44
7t 12:32 a'm' on 85 (ctoer 1.//, t#e vesse& was estimated to e etween Mindoro and Masate,
and t#e center o% t#e t!p#oon t#en was around 132 degrees &ongitude wit# ma3imum winds o% >4 kp#, wit# a
radius o% roug# to p#enomena& sea at t#at time o% 542 kms' Eort# and 342 kms' e&sew#ereC 342 kms' Eort#
center and a&& t#roug#out t#e rest'
. &acts6 Cre. o, =CG <ona =arilyn took calculate+ risk! an+ later assu#e+ *reater risk
T#e crew o% t#e vesse& M-V Dona Mari&!n took a ca&cu&ated risk w#en it proceeded despite t#e
t!p#oon rewing somew#ere in t#e genera& direction to w#ic# t#e vesse& was going' T#e crew assumed a
greater risk w#en, instead o% dropping anc#or in or at t#e perip#er! o% t#e Port o% $a&apan, or returning to t#e
port o% Mani&a w#ic# is nearer, proceeded on its vo!age on t#e assumption t#at it wi&& e a&e to eat and race
wit# t#e t!p#oon and reac# its destination e%ore it (Dnsang) passes'<
3. &in+in*s o, trial court entitle+ to *reat .ei*)t! not +istur$e+ except ,or co*ent reasons
6enera&&!, t#e %indings o% %act o% t#e tria& court are entit&ed to great weig#t and not distured e3cept
%or cogent reasons (6atmaitan v' $ourt o% 7ppea&s, 822 "$:7 30(1..1M)' (ne o% t#e accepted reasons is
w#en t#e %indings o% %act are not supported ! t#e evidence ("andova& "#ip!ard, ,nc' v' $&ave, .5 "$:7 508
L1.0.M)'
4. 5ctual or co#pensatory +a#a*es #ust $e prove+ to allo. recovery
7ctua& or compensator! damages, to e recovered, must e provedC ot#erwise, i% t#e proo% is %&ims!,
no damages wi&& e awarded (Dic#oso v' $ourt o% 7ppea&s, 1.8 "$:7 1>. (1..2)' @erein, t#e tria& court
mere&! mentioned t#e %act o% t#e &oss and t#e va&ue o% t#e contents o% t#e pieces o% aggage wit#out stating
t#e evidence on w#ic# it ased its %indings' T#ere is no s#owing t#at t#e va&ue o% t#e contents o% t#e &ost
pieces o% aggage was ased on t#e i&& o% &ading or was previous&! dec&ared ! Tito D' Tau9ui&de e%ore #e
oarded t#e s#ip' @ence, t#ere can e no asis to award actua& damages in t#e amount o% P80,/42'22'
%. <eat)s cause+ $y cri#e as 9uasi +elict entitle+ to actual an+ co#pensatory +a#a*es .it)out
nee+ o, proo,6 5rticle --" 7CC
Dnder 7rtic&e 882> o% t#e $ivi& $ode o% t#e P#i&ippines, on&! deat#s caused ! a crime as 9uasi de&ict
are entit&ed to actua& and compensator! damages wit#out t#e need o% proo% o% t#e said damages' "aid 7rtic&e
provides t#at ;t#e amount o% damages %or deat# caused ! a crime or 9uasi de&ict s#a&& e at &east T#ree
T#ousand Pesos, even t#oug# t#ere ma! #ave een mitigating circumstances' ; @erein, t#e tria& court awarded
an indemnit! o% P32,222'22 %or t#e deat# o% t#e daug#ter o% Tau9ui&de' T#e award o% damages under 7rtic&e
882> #as een increased to P42,222'22 (Peop&e v' F&ores, 830 "$:7 >43 L1..5M)'
1". <eat) cause+ $y $reac) o, contract o, transportation entitle+ to actual an+ co#pensatory
+a#a*es6 5rticle 13/
Deducing a&one %rom 7rtic&e 882> o% t#e $ivi& $ode, one can conc&ude t#at damages arising %rom
cu&pa contractua& are not compensa&e wit#out proo% o% specia& damages sustained ! t#e #eirs o% t#e victim'
T#e $ivi& $ode, #owever, in 7rtic&e 10>5 t#ereo%, e3press&! makes 7rtic&e 882> app&ica&e ;to t#e deat# o% a
passenger caused ! t#e reac# o% contract ! a common carrier'< 7ccording&!, a common carrier is &ia&e %or
actua& or compensator! damages under 7rtic&e 882> in re&ation to 7rtic&e 10>5 o% t#e $ivi& $ode %or deat#s o%
its passengers caused ! t#e reac# o% t#e contract o% transportation'
11. =oral +a#a*es6 .)en recovera$le in culpa contractual
Fit# respect to t#e award o% mora& damages, t#e genera& ru&e is t#at said damages are not recovera&e
in cu&pa contractua& e3cept w#en t#e presence o% ad %ait# was proven'(Trans For&d 7ir +ines v' $ourt o%
7ppea&s, 1>4 "$:7 153 L1.//M)' @owever, in reac# o% contract o% carriage, mora& damages ma! e
recovered w#en it resu&ts in t#e deat# o% a passenger (P#i&ippine :ait 1us +ines, ,nc' v' Bsguerra, 110
"$:7 051 L1./8MC Vas9ue* v' $ourt o% 7ppea&s, 13/ "$:7 443 L1./4M)'
1-. Dxe#plary +a#a*es
Fit# respect to t#e award o% e3emp&ar! damages, 7rtic&e 8838 o% t#e $ivi& $ode o% t#e P#i&ippines
gives t#e $ourt t#e discretion to grant said damages in reac# o% contract w#en t#e de%endant acted in a
wanton, %raudu&ent and reck&ess manner (7ir France v' $arrascoso, 1/ "$:7 144 L1.>>M)'
13. ;nstitution o, exe#plary +a#a*es ,or sa,e an+ relia$le carria*e o, people an+ *oo+s $y sea6
=ecenas vs. C5
,n t#e case o% Mecenas v' $ourt o% 7ppea&s, 1/2 "$:7 /3 (1./.), t#e $ourt ru&ed t#at ;t#e $ourt wi&&
take Audicia& notice o% t#e dread%u& regu&arit! wit# w#ic# grievous maritime disasters occur in our waters wit#
massive &oss o% &i%e' T#e u&k o% our popu&ation is too poor to a%%ord domestic air transportation' "o it is t#at
notwit#standing t#e %re9uent sinking o% passenger vesse&s in our waters, crowds o% peop&e continue to trave&
! sea' T#is $ourt is prepared to use t#e instruments given to it ! t#e &aw %or securing t#e ends o% &aw and
pu&ic po&ic!' (ne o% t#ose instruments is t#e institution o% e3emp&ar! damagesC one o% t#ose ends, o% specia&
importance in an arc#ipe&agic state &ike t#e P#i&ippines, is t#e sa%e and re&ia&e carriage o% peop&e and goods
! sea' ;
[113a]
&is)er vs. Han*co Stea#s)ip (GR 4"42! 2 7ove#$er 1%1/)
Bn 1anc, $arson (J): 8 concur, 8 concur in resu&t
F$ Fis#er is a stock#o&der in t#e Oangco "teams#ip $ompan!, t#e owner o% a &arge numer o% steam vesse&s,
du&! &icensed to engage in t#e coastwise trade o% t#e P#i&ippine ,s&ands' (n 12 June 1.18, t#e directors o% t#e
compan! adopted a? reso&ution w#ic# was t#erea%ter rati%ied and a%%irmed ! t#e s#are#o&ders o% t#e compan!,
;e3press&! dec&aring and providing t#at t#e c&asses o% merc#andise to e carried ! t#e compan! in its
usiness as a common carrier do not inc&ude d!namite, powder or ot#er e3p&osives, and e3press&! pro#iiting
t#e o%%icers, agents and servants o% t#e compan! %rom o%%ering to carr!, accepting %or carriage or carr!ing said
d!namite, powder or ot#er e3p&osives'< T#erea%ter t#e 7cting $o&&ector o% $ustoms (J" "tan&e!) demanded
and re9uired o% t#e compan! t#e acceptance and carriage o% suc# e3p&osives' @e #as re%used and suspended
t#e issuance o% t#e necessar! c&earance documents o% t#e vesse&s o% t#e compan! un&ess and unti& t#e
compan! consents to accept suc# e3p&osives %or carriage' Fis#er was advised and e&ieved t#at s#ou&d t#e
compan! dec&ine to accept suc# e3p&osives %or carriage, t#e 7ttorne!=6enera& o% t#e P#i&ippine ,s&ands
(,gnacio Vi&&amor) and t#e t#e prosecuting attorne! o% t#e cit! o% Mani&a (F@ 1is#op) intend to institute
proceedings under t#e pena& provisions o% sections 5, 4, and > o% 7ct ./ o% t#e P#i&ippine $ommission against
t#e compan!, its managers, agents and servants, to en%orce t#e re9uirements o% t#e 7cting=$o&&ector o%
$ustoms as to t#e acceptance o% suc# e3p&osives %or carriage' Eotwit#standing t#e demands o% Fis#er, t#e
manager, agents and servants o% t#e compan! dec&ine and re%use to cease t#e carriage o% suc# e3p&osives, on
t#e ground t#at ! reason o% t#e severit! o% t#e pena&ties wit# w#ic# t#e! are t#reatened upon %ai&ure to carr!
suc# e3p&osives, t#e! cannot suAect t#emse&ves to ;t#e ruinous conse9uences w#ic# wou&d inevita&! resu&t<
%rom %ai&ure on t#eir part to oe! t#e demands and re9uirements o% t#e 7cting $o&&ector o% $ustoms as to t#e
acceptance %or carriage o% e3p&osives' Fis#er e&ieves t#at t#e 7cting $o&&ector o% $ustoms erroneous&!
construes t#e provisions o% 7ct ./ in #o&ding t#at t#e! re9uire t#e compan! to accept suc# e3p&osives %or
carriage notwit#standing t#e reso&ution o% t#e directors and stock#o&ders o% t#e compan!, and t#at i% t#e 7ct
does in %act re9uire t#e compan! to carr! suc# e3p&osives it is to t#at e3tent unconstitutiona& and void'
Fis#er %i&ed a comp&aint, t#e respondents demurred'
T#e "upreme $ourt sustained t#e demurrer , on t#e ground t#at t#e comp&aint does not set %ort# %acts
su%%icient to constitute a cause o% action' ,t ordered t#us t#at ;un&ess an amended comp&aint e %i&ed in t#e
meantime &et Audgment e entered ten da!s #erea%ter sustaining t#e demurrer and dismissing t#e comp&aint
wit# costs against t#e comp&ainant, and twent! da!s t#erea%ter &et t#e record e %i&ed in t#e arc#ives o%
origina& actions in t#is court'<
1. <uties an+ lia$ilities o, co##on carriers +e,ine+ an+ set ,ort) in 5ct %46 Court $oun+ $y its
provisions
T#e duties and &iai&ities o% common carriers in t#is Aurisdiction are de%ined and %u&&! set %ort# in 7ct
./ o% t#e P#i&ippine $ommission, and, unti& and un&ess t#at statute e dec&ared inva&id or unconstitutiona&, t#e
$ourt is ound ! its provisions'
-. Section - o, 5ct %4
"ection 8 o% 7ct ./ provides t#at ;,t s#a&& e un&aw%u& %or an! common carrier engaged in t#e
transportation o% passengers or propert! as aove set %ort# to make or give an! unnecessar! or unreasona&e
pre%erence or advantage to an! particu&ar person, compan!, %irm, corporation or &oca&it!, or an! particu&ar kind
o% tra%%ic in an! respect w#atsoever, or to suAect an! particu&ar person, compan!, %irm, corporation or &oca&it!,
or an! particu&ar kind o% tra%%ic, to an! undue or unreasona&e preAudice or discrimination w#atsoever, and
suc# unAust pre%erence or discrimination is a&so #ere! pro#iited and dec&ared to e un&aw%u&'<
3. Section 3 o, 5ct %4
"ection 3 o% 7ct ./ provides t#at ;Eo common carrier engaged in t#e carriage o% passengers or
propert! as a%oresaid s#a&&, under an! pretense w#atsoever, %ai& or re%use to receive %or carriage, and as
prompt&! as it is a&e to do so wit#out discrimination, to carr! an! person or propert! o%%ering %or carriage,
and in t#e order in w#ic# suc# persons or propert! are o%%ered %or carriage, nor s#a&& an! suc# common carrier
enter into an! arrangement, contract or agreement wit# an! ot#er person or corporation w#ere! t#e &atter is
given an e3c&usive or pre%erentia& privi&ege over an! ot#er person or persons to contro& or monopo&i*e t#e
carriage o% an! c&ass or kind o% propert! to t#e e3c&usion or partia& e3c&usion o% an! ot#er person or persons,
and t#e entering into an! suc# arrangement, contract or agreement, under an! %orm or pretense w#atsoever, is
#ere! pro#iited and dec&ared to e un&aw%u&'<
/. Section / o, 5ct %4
"ection 5 o% 7ct ./ provides t#at ;7n! wi&&%u& vio&ation o% t#e provisions o% t#is 7ct ! an! common
carrier engaged in t#e transportation o% passengers or propert! as #ereine%ore set %ort# is #ere! dec&ared to
e punis#a&e ! a %ine not e3ceeding %ive t#ousand do&&ars mone! o% t#e Dnited "tates, or ! imprisonment
not e3ceeding two !ears, or ot#, wit#in t#e discretion o% t#e court'<
2. Statute vali+
T#e va&idit! o% t#e 7ct #as een 9uestioned on various grounds, and it is vigorous&! contended t#at in
so %ar as it imposes an! o&igation on a common carrier to accept %or carriage merc#andise o% a c&ass w#ic# #e
makes no pu&ic pro%ession to carr!, or w#ic# #e #as e3press&! or imp&ied&! announced #is intention to
dec&ine to accept %or carriage %rom a&& s#ippers a&ike, it is u&tra vires, unconstitutiona& and void' T#e $ourt
ma! dismiss wit#out e3tended discussion an! argument or contention as to t#e inva&idit! o% t#e statute ased
on a&&eged asurdities in#erent in its provisions or on a&&eged unreasona&e or impossi&e re9uirements w#ic#
ma! e read into it ! a strained construction o% its terms'
. :rovision o, 5ct prescri$in* @7o co##on carrier s)all! un+er any pretense .)atsoever! ,ail or
re,use to receive ,or carria*e! an+ to carry any person or property o,,erin* ,or carria*e!A not to $e
construe+ literally
T#e provision o% t#e 7ct w#ic# prescries t#at, ;Eo common carrier ' ' ' s#a&&, under an! pretense
w#atsoever, %ai& or re%use to receive %or carriage, and ' ' ' to carr! an! person or propert! o%%ering %or
carriage,< is not to e construed in its &itera& sense and wit#out regard to t#e conte3t, so as to impose an
imperative dut! on a&& common carriers to accept %or carriage, and to carr! a&& and an! kind o% %reig#t w#ic#
ma! e o%%ered %or carriage wit#out regard to t#e %aci&ities w#ic# t#e! ma! #ave at t#eir disposa&' T#e
&egis&ator cou&d not #ave intended and did not intend to prescrie t#at a common carrier running passenger
automoi&es %or #ire must transport coa& in #is mac#inesC nor t#at t#e owner o% a tank steamer, e3press&!
constructed in sma&& watertig#t compartments %or t#e carriage o% crude oi& must accept a &oad o% catt&e or o%
&ogs in t#e roug#C nor t#at an! common carrier must accept and carr! contraand artic&es, suc# as opium,
morp#ine, cocaine, or t#e &ike, t#e mere possession o% w#ic# is dec&ared to e a crimina& o%%enseC nor t#at
common carriers must accept eggs o%%ered %or transportation in paper parce&s or an! merc#andise w#atever so
de%ective&! packed as to entai& upon t#e compan! unreasona&e and unnecessar! care or risks'
3. ;ntent o, t)e la.
:ead in connection wit# its conte3t, t#is, as we&& as a&& t#e ot#er mandator! and pro#iitor! provisions
o% t#e statute, was c&ear&! intended mere&! to %orid %ai&ures or re%usa&s to receive persons or propert! %or
carriage invo&ving an! ;unnecessar! or unreasona&e pre%erence or advantage to an! particu&ar person,
compan!, %irm, corporation or &oca&it!, or an! particu&ar kind o% tra%%ic in an! respect w#atsoever,< or w#ic#
wou&d ;suAect an! particu&ar person, compan!, %irm, corporation or &oca&it!, or an! particu&ar kind o% tra%%ic
to an! undue or unreasona&e preAudice or discrimination w#atsoever'<
4. Lan*ua*e o, statute re,utes contention as to invali+ity $ase+ on alle*e+ unreasona$leness o, its
#an+atory provisions
T#e 9uestion o% construing and app&!ing t#e statute, in cases o% a&&eged vio&ations o% its provisions,
a&wa!s invo&ves a consideration as to w#et#er t#e acts comp&ained o% #ad t#e e%%ect o% making or giving an
;unreasona&e or unnecessar! pre%erence or advantage< to an! person, &oca&it! or particu&ar kind o% tra%%ic, or
o% suAecting an! person, &oca&it!, or particu&ar kind o% tra%%ic to an! undue or unreasona&e preAudice or
discrimination' ,t is ver! c&ear t#ere%ore t#at t#e &anguage o% t#e statute itse&% re%utes an! contention as to its
inva&idit! ased on t#e a&&eged unreasona&eness o% its mandator! or pro#iitor! provisions'
%. :ains an+ penalties prescri$e+ .it)in province o, le*islator6 Courts .ill not inter,ere in a$sence
o, proo, as to its excessiveness an+ cruelty
T#e $ourt ma! dismiss wit#out muc# discussion t#e contentions as to t#e inva&idit! o% t#e statute,
w#ic# are ased on t#e a&&eged e3cessive severit! o% t#e pena&ties prescried %or vio&ation o% its provisions'
Dpon genera& princip&es it is pecu&iar&! and e3c&usive&! wit#in t#e province o% t#e &egis&ator to prescrie t#e
pains and pena&ties w#ic# ma! e imposed upon persons convicted o% vio&ations o% t#e &aws in %orce wit#in
#is territoria& Aurisdiction' Fit# t#e e3ercise o% #is discretion in t#is regard t#e courts #ave not#ing to do, save
on&! in cases w#ere it is a&&eged t#at e3cessive %ines or crue& and unusua& punis#ments #ave een prescried,
and even in suc# cases t#e courts wi&& not presume to inter%ere in t#e asence o% t#e c&earest and most
convincing argument and proo% in support o% suc# contentions' T#ere is no ground upon w#ic# to rest a
contention t#at t#e pena&ties prescried in t#e statute under consideration are eit#er e3cessive or crue& and
unusua&, in t#e sense in w#ic# t#ese terms are used in t#e organic &egis&ation in %orce in t#e P#i&ippine ,s&ands'
1". Dx parte Houn* (-"% F. S.! 1-3! 1/3! 1/4)6 Cottin* vs. Go+ar+ (143 F. S.! 3%! 1"-)6 =ercantile
(rust Co. vs. (exas Co. (21 &e+.! 2-%)6 Louisville Ry. vs. =cCor+ (1"3 &e+.! -1)6 Cons. Gas Co. vs.
=ayer (/1 &e+.! 12") not applica$le6 <i,,erent circu#stances in t)e la.1s creation an+ application
7n e3amination o% t#e genera& provisions o% t#e statute, o% t#e circumstances under w#ic# it was
enacted, t#e misc#ie% w#ic# it soug#t to remed! and o% t#e nature o% t#e pena&ties prescried %or vio&ations o%
its terms convinces us t#at, un&ike t#e statutes under consideration in t#e cases o% B3 parte OoungC $otting vs'
6odardC Mercanti&e Trust $o' vs' Te3as $o'C +ouisvi&&e :!' vs' Mc$ordC $ons' 6as $o' vs' Ma!er, its
enactment invo&ved no attempt to prevent common carriers ;%rom resorting to t#e courts to test t#e va&idit! o%
t#e &egis&ationC< no ;e%%ort to prevent an! in9uir!< as to its va&idit!' ,t imposes no aritrar! o&igation upon
t#e compan! to do or to re%rain %rom doing an!t#ing' ,t makes no attempt to compe& suc# carriers to do
usiness at a %i3ed or aritrari&! designated rate, at t#e risk o% separate crimina& prosecutions %or ever!
demand o% a #ig#er or a di%%erent rate' ,ts pena&ties can e imposed on&! upon proo% o% ;unreasona&e,<
;unnecessar!< and ;unAust< discriminations, and range %rom a ma3imum w#ic# is certain&! not e3cessive %or
wi&&%u&, de&ierate and contumacious vio&ations o% its provisions ! a great and power%u& corporation, to a
minimum w#ic# ma! e a mere&! nomina& %ine' Fit# so wide a range o% discretion con%erred upon t#e courts,
t#ere is no sustantia& asis %or a contention on t#e part o% an! common carrier t#at it or its o%%icers are
;intimidated %rom resorting to t#e courts to test t#e va&idit!< o% t#e provisions o% t#e statute pro#iiting suc#
;unreasona&e,< ;unnecessar!< and ;unAust< discriminations, or to test in an! particu&ar case w#et#er a given
course o% conduct does in %act invo&ve suc# discrimination'
11. Court .ill not presu#e t)at t)e lo.er courts .ill a$use +iscretion to inti#i+ate a co##on
carrier ,ro# resortin* to courts to test t)e vali+ity
T#e $ourt wi&& not presume, %or t#e purpose o% dec&aring t#e statute inva&id, t#at t#ere is so rea& a
danger t#at t#e $ourts o% First ,nstance and t#is court on appea& wi&& ause t#e discretion t#us con%erred upon
t#e $ourt, as to intimidate an! common carrier, acting in good %ait#, %rom resorting to t#e courts to test t#e
va&idit! o% t#e statute' +egis&ative enactments, pena&i*ing unreasona&e discriminations, unreasona&e
restraints o% trade, and unreasona&e conduct in various %orms o% #uman activit! are so %ami&iar and #ave een
so %re9uent&! sustained in t#e courts, as to render e3tended discussion unnecessar! to re%ute an! contention as
to t#e inva&idit! o% t#e statute under consideration, mere&! ecause it imposes upon t#e carrier t#e o&igation
o% adopting one o% various courses o% conduct open to it, at t#e risk o% incurring a prescried pena&t! in t#e
event t#at t#e course o% conduct actua&&! adopted ! it s#ou&d e #e&d to #ave invo&ved an unreasona&e,
unnecessar! or unAust discrimination'
1-. 5pplication o, t)e test announce+ in Dx parte Houn*6 :lenary po.er o, le*islature
7pp&!ing t#e test announced in B3 parte Ooung, it wi&& e seen t#at t#e va&idit! o% t#e 7ct does not
depend upon t#e e3istence o% a %act w#ic# can e determined on&! a%ter investigation o% a ver! comp&icated
and tec#nica& c#aracter,< and t#at ;t#e Aurisdiction o% t#e &egis&ature?< over t#e suAect wit# w#ic# t#e statute
dea&s ;is comp&ete in an! event'< T#ere can e no rea& 9uestion as to t#e p&enar! power o% t#e &egis&ature to
pro#iit and to pena&i*e t#e making o% undue, unreasona&e and unAust discriminations ! common carriers to
t#e preAudice o% an! person, &oca&it! or particu&ar kind o% tra%%ic'
13. Statute +oes not re9uire carrier! as con+ition to continue $usiness! t)at )e #ust carry anyt)in*
an+ everyt)in*
T#e statute does not ;re9uire o% a carrier, as a condition to #is continuing in said usiness, t#at #e
must carr! an!t#ing and ever!t#ing,< and t#ere! ;render use&ess t#e %aci&ities #e ma! #ave %or t#e carriage o%
certain &ines o% %reig#t'< ,t mere&! %orids %ai&ures or re%usa&s to receive persons or propert! %or carriage w#ic#
#ave t#e e%%ect o% giving an ;unreasona&e or unnecessar! pre%erence or advantage< to an! person, &oca&it! or
particu&ar kind o% tra%%ic, or o% suAecting an! person, &oca&it! or particu&ar kind o% tra%%ic to an! undue or
unreasona&e preAudice or discrimination'
1/. 7ot)in* in statute t)at .oul+ +eprive person o, )is li$erty
T#ere is not#ing in t#e statute w#ic# wou&d deprive an! person o% #is &iert! ;! re9uiring #im to
engage in usiness against #is wi&&'< T#e pro#iitions o% t#e statute against undue, unnecessar! or
unreasona&e pre%erences and discriminations are mere&! t#e reasona&e regu&ations w#ic# t#e &egis&ator #as
seen %it to prescrie %or t#e conduct o% t#e usiness in w#ic# t#e carrier is engaged o% #is own %ree wi&& and
accord' ,n so %ar as t#e se&%=imposed &imitations ! t#e carrier upon t#e usiness conducted ! #im, in t#e
various e3amp&es given ! counse&, do not invo&ve an unreasona&e or unnecessar! discrimination t#e statute
wou&d not contro& #is action in an! wise w#atever' ,t operates on&! in cases invo&ving suc# unreasona&e or
unnecessar! pre%erences or discriminations'
12. 7ature o, $usiness o, co##on carrier as pu$lic e#ploy#ent6 State )as po.er to i#pose ?ust
an+ reasona$le re*ulations
T#e nature o% t#e usiness o% a common carrier as a pu&ic emp&o!ment is suc# t#at it is c&ear&!
wit#in t#e power o% t#e state to impose suc# Aust and reasona&e regu&ations t#ereon in t#e interest o% t#e
pu&ic as t#e &egis&ator? ma! deem proper' (% course suc# regu&ations must not #ave t#e e%%ect o% depriving an
owner o% #is propert! wit#out due process o% &aw, nor o% con%iscating or appropriating private propert!
wit#out Aust compensation, nor o% &imiting or prescriing irrevoca&! vested rig#ts or privi&eges &aw%u&&!
ac9uired under a c#arter or %ranc#ise' 1ut aside %rom suc# constitutiona& &imitations, t#e determination o% t#e
nature and e3tent o% t#e regu&ations w#ic# s#ou&d e prescried rests in t#e #ands o% t#e &egis&ator' $ommon
carriers e3ercise a sort o% pu&ic o%%ice, and #ave duties to per%orm in w#ic# t#e pu&ic is interested' T#eir
usiness is, t#ere%ore, a%%ected wit# a pu&ic interest, and is suAect o% pu&ic regu&ation' ,ndeed, t#is rig#t o%
regu&ation is so %ar e!ond 9uestion t#at it is we&& sett&ed t#at t#e power o% t#e state to e3ercise &egis&ative
contro& over rai&road companies and ot#er carriers ;in a&& respects necessar! to protect t#e pu&ic against
danger, inAustice and oppression< ma! e e3ercised t#roug# oards o% commissioners'
1. Dxa#ples o, re*ulations controllin* ,ree exercise o, carrier1s +iscretion in con+uct o, $usiness
:egu&ations &imiting t#e numer o% passengers t#at ma! e carried in a particu&ar ve#ic&e or steam
vesse&, or %oridding t#e &oading o% a vesse& e!ond a certain point, or prescriing t#e numer and
9ua&i%ications o% t#e personne& in t#e emp&o! o% a common carrier, or %oridding unAust discrimination as to
rates, a&& tend to &imit and restrict #is &iert! and to contro& to some degree t#e %ree e3ercise o% #is discretion in
t#e conduct o% #is usiness'
13. 7o one 9uestions po.er o, le*islator to prescri$e reasona$le re*ulations upon property .it)
pu$lic interest
"ince t#e 6ranger cases were decided ! t#e "upreme $ourt o% t#e Dnited "tates no one 9uestions t#e
power o% t#e &egis&ator to prescrie suc# reasona&e regu&ations upon propert! c&ot#ed wit# a pu&ic interest as
#e ma! deem e3pedient or necessar! to protect t#e pu&ic against danger, inAustice or oppression'
14. Ri*)t to enter pu$lic e#ploy#ent +oes not carry ri*)t to con+uct $usiness as one pleases
T#e rig#t to enter t#e pu&ic emp&o!ment as a common carrier and to o%%er one?s services to t#e pu&ic
%or #ire does not carr! wit# it t#e rig#t to conduct t#at usiness as one p&eases, wit#out regard to t#e interests
o% t#e pu&ic and %ree %rom suc# reasona&e and Aust regu&ations as ma! e prescried %or t#e protection o% t#e
pu&ic %rom t#e reck&ess or care&ess indi%%erence o% t#e carrier as to t#e pu&ic we&%are and %or t#e prevention
o% unAust and unreasona&e discrimination o% an! kind w#atsoever in t#e per%ormance o% t#e carrier?s duties as
a servant o% t#e pu&ic'
1%. E)en private property $eco#es clot)e+ .it) pu$lic interest
1usiness o% certain kinds, inc&uding t#e usiness o% a common carrier, #o&ds suc# a pecu&iar re&ation
to t#e pu&ic interest t#at t#ere is super induced upon it t#e rig#t o% pu&ic regu&ation' F#en private propert!
is ;a%%ected wit# a pu&ic interest it ceases to e Auris privati on&!'< Propert! ecomes c&ot#ed wit# a pu&ic
interest w#en used in a manner to make it o% pu&ic conse9uence and a%%ect t#e communit! at &arge' ;F#en,
t#ere%ore, one devotes #is propert! to a use in w#ic# t#e pu&ic #as an interest, #e, in e%%ect, grants to t#e
pu&ic an interest in t#at use, and must sumit to e contro&&ed ! t#e pu&ic %or t#e common good, to t#e
e3tent o% t#e interest #e #as t#us created' @e ma! wit#draw #is grant ! discontinuing t#e use, ut so &ong as
#e maintains t#e use #e must sumit to contro&'<
-". :o.er to re*ulate not po.er to +estroy! li#itation is not con,iscation
T#e power to regu&ate is not a power to destro!, and &imitation is not t#e e9uiva&ent o% con%iscation'
Dnder pretense o% regu&ating %ares and %reig#t t#e state can not re9uire a rai&road corporation to carr! persons
or propert! wit#out reward' Eor can it do t#at w#ic# in &aw amounts to a taking o% private propert! %or pu&ic
use wit#out Aust compensation, or wit#out due process o% &aw'
-1. Bu+iciary .oul+ not inter,ere .it) re*ulations unless t)ere is ,la*rant attack upon ri*)ts o,
property
T#e Audiciar! oug#t not to inter%ere wit# regu&ations esta&is#ed under &egis&ative sanction un&ess t#e!
are so p&ain&! and pa&pa&! unreasona&e as to make t#eir en%orcement e9uiva&ent to t#e taking o% propert! %or
pu&ic use wit#out suc# compensation as under a&& t#e circumstances is Aust ot# to t#e owner and to t#e
pu&ic, t#at is, Audicia& inter%erence s#ou&d never occur un&ess t#e case presents, c&ear&! and e!ond a&& dout,
suc# a %&agrant attack upon t#e rig#ts o% propert! under t#e guise o% regu&ations as to compe& t#e court to sa!
t#at t#e regu&ation in 9uestion wi&& #ave t#e e%%ect to den! Aust compensation %or private propert! taken %or t#e
pu&ic use'
--. Co##on la. rules t)e#selves are re*ulations
Dnder t#e common &aw o% Bng&and it was ear&! recogni*ed t#at common carriers owe to t#e pu&ic
t#e dut! o% carr!ing indi%%erent&! %or a&& w#o ma! emp&o! t#em, and in t#e order in w#ic# app&ication is made,
and wit#out discrimination as to terms' True, t#e! were a&&owed to restrict t#eir usiness so as to e3c&ude
particu&ar c&asses o% goods, ut as to t#e kinds o% propert! w#ic# t#e carrier was in t#e #ait o% carr!ing in t#e
prosecution o% #is usiness #e was ound to serve a&& customers a&ikeC and it is to e oserved in passing t#at
t#ese common &aw ru&es are t#emse&ves regu&ations contro&&ing, &imiting and prescriing t#e conditions under
w#ic# common carriers were permitted to conduct t#eir usiness'
-3. Correction o, a$uses precipitate+ a+option o, statutory re*ulations6 Dxa#ples
T#e correction o% auses w#ic# #ad grown up wit# t#e enormous&! increasing usiness o% common
carriers necessitated t#e adoption o% statutor! regu&ations contro&&ing t#e usiness o% common carriers, and
imposing severe and drastic pena&ties %or vio&ations o% t#eir terms' ,n Bng&and, t#e :ai&wa! $&auses
$onso&idation 7ct was enacted in 1/54, t#e :ai&wa! and $ana& Tra%%ic 7ct in 1/45, and since t#e passage o%
t#ose 7cts muc# additiona& &egis&ation #as een adopted tending to &imit and contro& t#e conduct o% t#eir
usiness ! common carriers' ,n t#e Dnited "tates, t#e usiness o% common carriers #as een suAected to a
great variet! o% statutor! regu&ations' 7mong ot#ers $ongress enacted ;T#e ,nterstate $ommerce 7ct< (1//0 )
and its amendments, and t#e B&kins 7ct as amended (1.2>)C and most i% not a&& o% t#e "tates o% t#e Dnion #ave
adopted simi&ar &egis&ation regu&ating t#e usiness o% common carriers wit#in t#eir respective Aurisdictions
Dnending &itigation #as arisen under t#ese statutes and t#eir amendments, ut now#ere #as t#e rig#t o% t#e
state to prescrie Aust and reasona&e regu&ations contro&&ing and &imiting t#e conduct o% t#e usiness o%
common carriers in t#e pu&ic interest and %or t#e genera& we&%are een success%u&&! c#a&&enged, t#oug# o%
course t#ere #as een wide divergence o% opinion as to t#e reasona&eness, t#e va&idit! and &ega&it! o% man!
o% t#e regu&ations actua&&! adopted'
-/. :o.er o, :)ilippine le*islator to pro)i$it an+ penaliJe unnecessary or unreasona$le
+iscri#ination $y co##on carrier6 <iscri#ination #ust $e su$stantial
T#e power o% t#e P#i&ippine &egis&ator to pro#iit and to pena&i*e a&& and an! unnecessar! or
unreasona&e discriminations ! common carriers ma! e maintained upon t#e same reasoning w#ic#
Austi%ied t#e enactment ! t#e Par&iament o% Bng&and and t#e $ongress o% t#e Dnited "tates o% t#e statutes
pro#iiting and pena&i*ing t#e granting o% certain pre%erences and discriminations in t#ose countries' T#e
&egis&ator #aving enacted a regu&ation pro#iiting common carriers %rom giving unnecessar! or unreasona&e
pre%erences or advantages to an! particu&ar kind o% tra%%ic or suAecting an! particu&ar kind o% tra%%ic to an!
undue or unreasona&e preAudice or discrimination w#atsoever, it is c&ear t#at w#atever ma! #ave een t#e
ru&e at t#e common &aw, common carriers in t#is Aurisdiction cannot &aw%u&&! dec&ine to accept a particu&ar
c&ass o% goods %or carriage, to t#e preAudice o% t#e tra%%ic in t#ose goods, un&ess it appears t#at %or some
su%%icient reason t#e discrimination against t#e tra%%ic in suc# goods is reasona&e and necessar!' Mere w#im
or preAudice wi&& not su%%ice' T#e grounds %or t#e discrimination must e sustantia& ones, suc# as wi&& Austi%!
t#e courts in #o&ding t#e discrimination to #ave een reasona&e and necessar! under a&& t#e circumstances o%
t#e case'
-2. E)et)er re,usal to carry explosives involves an unnecessary or unreasona$le pre,erence or
a+vanta*e to any person $orne $y particular circu#stances o, eac) case6 7ot)in* in plea+in*s support
contention t)at tra,,ic o, explosive unnecessary or unreasona$le
T#e answer to t#e 9uestion w#et#er suc# a re%usa& to carr! e3p&osives invo&ves an unnecessar! or
unreasona&e pre%erence or advantage to an! person, &oca&it! or particu&ar kind o% tra%%ic or suAects an!
person, &oca&it! or particu&ar kind o% tra%%ic to an undue or unreasona&e preAudice or discrimination is ! no
means ;se&%=evident,< and t#at it is a 9uestion o% %act to e determined ! t#e particu&ar circumstances o% eac#
case' @erein, it is not a&&eged in t#e comp&aint t#at ;d!namite, gunpowder and ot#er e3p&osives< can in no
event e transported wit# reasona&e sa%et! on oard steam vesse&s engaged in t#e usiness o% common
carriers' ,t is not a&&eged t#at a&&, or indeed an! o% t#e Oangco "teams#ip?s vesse&s are unsuited %or t#e carriage
o% suc# e3p&osives' ,t is not a&&eged t#at t#e nature o% t#e usiness in w#ic# t#e steams#ip compan! is engaged
is suc# as to prec&ude a %inding t#at a re%usa& to accept suc# e3p&osives on an! o% its vesse&s wou&d suAect t#e
tra%%ic in suc# e3p&osives to an undue and unreasona&e preAudice and discrimination'
-. ;nclusions to t)e .or+s @+yna#ite! po.+er or ot)er explosives
T#e words ;d!namite, powder or ot#er e3p&osives< are road enoug# to inc&ude matc#es, and ot#er
artic&es o% &ike nature, and ma! %air&! e #e&d to inc&ude a&so kerosene oi&, gaso&ine and simi&ar products o% a
#ig#&! in%&amma&e and e3p&osive c#aracter' Man! o% t#ese artic&es o% merc#andise are in t#e nature o%
necessities in an! countr! open to modern progress and advancement'
-3. =et)o+s o, transportation possi$le ,or t)e transport o, +yna#ite! etc.
T#e $ourt is not %u&&! advised as to t#e met#ods o% transportation ! w#ic# t#e! are made
commercia&&! avai&a&e t#roug#out t#e wor&d, ut certain it is t#at d!namite, gunpowder, matc#es, kerosene
oi& and gaso&ine are transported on man! vesse&s sai&ing t#e #ig# seas' ,ndeed it is matter o% common
know&edge t#at common carriers t#roug#out t#e wor&d transport enormous 9uantities o% t#ese e3p&osives, on
ot# &and and sea, and t#ere can e &itt&e dout t#at a genera& re%usa& o% t#e common carriers in an! countr! to
accept suc# e3p&osives %or carriage wou&d invo&ve man! persons, %irms and enterprises in utter ruin, and
wou&d disastrous&! a%%ect t#e interests o% t#e pu&ic and t#e genera& we&%are o% t#e communit!'
-4. 5tten+ant circu#stances +eter#ines .)et)er re,usal to carry pro+ucts pre?u+ice+ or
+iscri#inatory
,n an! case o% a re%usa& to carr! products w#ic# wou&d suAect an! person, &oca&it! or t#e tra%%ic in
suc# products to an! preAudice or discrimination w#atsoever, it wou&d e necessar! to #ear evidence e%ore
making an a%%irmative %inding t#at suc# preAudice or discrimination was or was not unnecessar!, undue or
unreasona&e' T#e making o% suc# a %inding wou&d invo&ve a consideration o% t#e suitai&it! o% t#e vesse& %or
t#e transportation o% suc# productsC t#e reasona&e possii&it! o% danger or disaster resu&ting %rom t#eir
transportation in t#e %orm and under t#e conditions in w#ic# t#e! are o%%ered %or carriageC t#e genera& nature
o% t#e usiness done ! t#e carrier and, in a word, a&& t#e attendant circumstances w#ic# mig#t a%%ect t#e
9uestion o% t#e reasona&e necessit! %or t#e re%usa& ! t#e carrier to undertake t#e transportation o% t#is c&ass
o% merc#andise'
-%. Be)avior o, +yna#ite6 <eter#inin* its )aJar+s an+ transporta$ility
T#e $ourt wou&d not e Austi%ied in making suc# a #o&ding unaided ! evidence sustaining t#e
proposition t#at d!namite and gunpowder can never e carried wit# reasona&e sa%et! on an! vesse& engaged
in t#e usiness o% a common carrier' ,t is said t#at d!namite is so erratic and uncontro&&a&e in its action t#at it
is impossi&e to assert t#at it can e #and&ed wit# sa%et! in an! given case' (n t#e ot#er #and it is contended
t#at w#i&e t#is ma! e true o% some kinds o% d!namite, it is a %act t#at d!namite can e and is manu%actured so
as to e&iminate an! rea& danger %rom e3p&osion during transportation' T#ese are o% course 9uestions o% %act
upon w#ic# we are not 9ua&i%ied to pass Audgment wit#out t#e assistance o% e3pert witnesses w#o #ave made
specia& studies as to t#e c#emica& composition and reactions o% t#e di%%erent kinds o% d!namite, or attained a
t#oroug# know&edge o% its properties as a resu&t o% wide e3perience in its manu%acture and transportation'
3". Giolent an+ +estructive explosions attri$uta$le to +yna#ite! in itsel,! .oul+ not ?usti,y re,usal o,
co##on carrier
T#e mere %act t#at vio&ent and destructive e3p&osions can e otained ! t#e use o% d!namite under
certain conditions wou&d not e su%%icient in itse&% to Austi%! t#e re%usa& o% a vesse&, du&! &icensed as a common
carrier o% merc#andise, to accept it %or carriage, i% it can e proven t#at in t#e condition in w#ic# it is o%%ered
%or carriage t#ere is no rea& danger to t#e carrier, nor reasona&e ground to %ear t#at #is vesse& or t#ose on
oard #is vesse& wi&& e e3posed to unnecessar! and unreasona&e risk in transporting it, #aving in mind t#e
nature o% #is usiness as a common carrier engaged in t#e coastwise trade in t#e P#i&ippine ,s&ands, and #is
dut! as a servant o% t#e pu&ic engaged in a pu&ic emp&o!ment' "o a&so, i% ! t#e e3ercise o% due di&igence
and t#e taking o% reasona&e precautions t#e danger o% e3p&osions can e practica&&! e&iminated, t#e carrier
wou&d not e Austi%ied in suAecting t#e tra%%ic in t#is commodit! to preAudice or discrimination ! proo% t#at
t#ere wou&d e a possii&it! o% danger %rom e3p&osion w#en no suc# precautions are taken'
31. (ra,,ic in +yna#ite! *unpo.+er an+ ot)er explosives essential to t)e #aterial an+ *eneral
.el,are o, country
T#e tra%%ic in d!namite, gunpowder and ot#er e3p&osives is vita&&! essentia& to t#e materia& and
genera& we&%are o% t#e peop&e o% t#ese ,s&ands' ,% d!namite, gunpowder and ot#er e3p&osives are to continue in
genera& use t#roug#out t#e P#i&ippines, t#e! must e transported ! water %rom port to port in t#e various
is&ands w#ic# make up t#e 7rc#ipe&ago'
3-. Re,usal o, particular vessel to accept explosives ,or carria*e constitutes violation o, statute!
unless evi+ence o, su$stantial +an*er o, +isaster is s)o.n
T#e re%usa& ! a particu&ar vesse&, engaged as a common carrier o% merc#andise in t#e coastwise trade
o% t#e P#i&ippine ,s&ands, to accept an! or a&& o% t#ese e3p&osives %or carriage wou&d constitute a vio&ation o%
t#e pro#iitions against discriminations pena&i*ed under t#e statute, un&ess it can e s#own ! a%%irmative
evidence t#at t#ere is so rea& and sustantia& a danger o% disaster necessari&! invo&ved in t#e carriage o% an! or
a&& o% t#ese artic&es o% merc#andise as to render suc# re%usa& a due or a necessar! or a reasona&e e3ercise o%
prudence and discretion on t#e part o% t#e s#ipowner'
33. <e#urrer #ust $e sustaine+
T#e comp&aint in t#e present case &acks t#e necessar! a&&egations under t#e ru&ing, t#e demurrer must
e sustained on t#e ground t#at t#e %acts a&&eged do not constitute a cause o% action'
3/. ;nterestin* 9uestions o, proce+ure not passe+ upon as it #ay appear t)at +iscussion .oul+
#ake it appear t)at ,acts alle*e+ in co#plaint constitute a cause o, action
7 numer o% interesting 9uestions o% procedure are raised and discussed in t#e rie%s o% counse&' 7s to
a&& o% t#ese 9uestions we e3press&! reserve our opinion, e&ieving as we do t#at in sustaining t#e demurrer on
t#e grounds indicated in t#is opinion we are a&e to dispose o% t#e rea& issue invo&ved in t#e proceedings
wit#out entering upon t#e discussion o% t#e nice 9uestions w#ic# it mig#t #ave een necessar! to pass upon
#ad it appeared t#at t#e %acts a&&eged in t#e comp&aint constitute a cause o% action'
32. :assa*e o, 5cts -3"3 an+ -3- note+
"ince t#e institution o% t#ese proceedings t#e enactment o% 7cts 8320 and Eo' 83>8 (creating a 1oard
o% Pu&ic Dti&it! $ommissioners and %or ot#er purposes) ma! #ave materia&&! modi%ied t#e rig#t to institute
and maintain suc# proceedings in t#is Aurisdiction'
3. Basis o, t)e Court1s +ecision
T#e $ourt ased its ru&ing on t#e demurrer, t#at is to sa! ;T#at w#atever ma! #ave een t#e ru&e at
t#e common &aw, common carriers in t#is Aurisdiction cannot &aw%u&&! dec&ine to accept a particu&ar c&ass o%
goods %or carriage, to t#e preAudice o% t#e tra%%ic in t#ose goods, un&ess it appears t#at %or some su%%icient
reason t#e discrimination against t#e tra%%ic in suc# goods is reasona&e and necessar!' Mere preAudice or
w#im wi&& not su%%ice' T#e grounds o% t#e discrimination must e sustantia& ones, suc# as wi&& Austi%! t#e
courts in #o&ding t#e discrimination to #ave een reasona&e and necessar! under a&& t#e circumstances o% t#e
case'<
[113$]
&is)er vs. Han*co Stea#s)ip (GR 4"%2! 31 =arc) 1%12)
Bn 1anc, $arson (J): 3 concur
&acts' T#e case #as een decided ! t#e "upreme $ourt on 4 Eovemer 1.15, w#ere t#e court sustained t#e
demurrer on t#e ground t#at t#e origina& comp&aint did not set %ort# %acts su%%icient to constitute a cause o%
action' T#e case is e%ore t#e "upreme $ourt once again upon a demurrer interposed ! t#e o%%icia&s o% t#e
P#i&ippine 6overnment to an amended comp&aint %i&ed a%ter pu&ication o% t#e court?s decision sustaining t#e
demurrer to t#e origina& comp&aint' T#e amended comp&aint %i&ed on 15 Eovemer 1.15, is sustantia&&!
identica& wit# t#e origina& comp&aint, e3cept t#at it c#arges t#e o%%icia&s, as o% t#e date o% t#e amended
comp&aint, wit# t#e un&aw%u& e3ercise o% aut#orit! or intent to e3ercise un&aw%u& aut#orit! w#ic# s#ou&d e
restrained, and sustitutes t#e names o% t#e o%%icers #o&ding t#e o%%ices o% $o&&ector o% $ustoms (J" "tan&e!,
acting), 7ttorne!=6enera& (,gnacio Vi&&amor) and prosecuting attorne! o% t#e cit! o% Mani&a (F@ 1is#op) %or
t#ose o% t#e o%%icia& #o&ding t#ose o%%ices at t#e date o% t#e %i&ing o% t#e origina& comp&aint'
T#e "upreme $ourt ordered t#at t#e comp&aint e dismissed a%ter 82 da!s at t#e costs o% F$ Fis#er, un&ess in
t#e meantime it is amended so as to disc&ose a rig#t upon t#e part o% Fis#er to invoke t#e origina& Aurisdiction
o% t#is court wit#out %irst proceeding in one o% t#e $F,s'
1. 2 7ove#$er 1%1/ <ecision6 5ct %4 vali+
T#e va&idit! o% t#e statute (7ct ./), w#ic# was attacked ! counse& o% Fis#er was, w#en rig#t&!
construed, a va&id and constitutiona& enactment'
-. 2 7ove#$er 1%1/ <ecision6 Co##on carrier cannot +ecline to accept a particular class o, *oo+s
(e.*. +yna#ite! *unpo.+er! etc.)
F#atever ma! #ave een t#e ru&e at t#e common &aw, common carriers in t#is Aurisdiction cannot
&aw%u&&! dec&ine to accept a particu&ar c&ass o% goods %or carriage, to t#e preAudice o% t#e tra%%ic in t#ose goods,
un&ess it appears t#at %or some su%%icient reason t#e discrimination against t#e tra%%ic in suc# goods is
reasona&e and necessar!' Mere preAudice or w#im wi&& not su%%ice' T#e grounds o% t#e discrimination must e
sustantia& ones, suc# as wi&& Austi%! t#e courts in #o&ding t#e discrimination to #ave een reasona&e and
necessar! under a&& t#e circumstances o% t#e case' T#e tra%%ic in d!namite, gunpowder and ot#er e3p&osives is
vita&&! essentia& to t#e materia& and genera& we&%are o% t#e peop&e o% t#ese ,s&ands' ,% d!namite, gunpowder
and ot#er e3p&osives are to continue in genera& use t#roug#out t#e P#i&ippines, t#e! must e transported !
water %rom port to port in t#e various is&ands w#ic# make up t#e 7rc#ipe&ago' T#e re%usa& ! a particu&ar
vesse&, engaged as a common carrier o% merc#andise in t#e coastwise trade o% t#e P#i&ippine ,s&ands, to accept
an! or a&& o% t#ese e3p&osives %or carriage wou&d constitute a vio&ation o% t#e pro#iitions against
discriminations pena&i*ed under t#e statute un&ess it can e s#own ! a%%irmative evidence t#at t#ere is so rea&
and sustantia& a danger o% disaster necessari&! invo&ved in t#e carriage o% an! or a&& o% t#ese artic&es o%
merc#andise as to render suc# re%usa& a due or a necessar! or a reasona&e e3ercise o% prudence and discretion
on t#e part o% t#e s#ip owner'
3. 2 7ove#$er 1%1/ <ecision6 5lle*ations o, co#plaint +oes not constitute a cause o, action
T#erein, t#e a&&egations o% t#e comp&aint, w#ic# in sustance a&&eged mere&! t#at t#e pu&ic o%%icia&s
were coercing t#e steams#ip compan! to carr! e3p&osives upon some o% t#eir vesse&s, under aut#orit! o%, and
in re&iance upon t#e provisions o% t#e 7ct, did not set %ort# %acts constituting a cause o% actionC or in ot#er
words, t#at t#e a&&egations o% t#e comp&aint even i% true, wou&d not sustain a %inding t#at t#e pu&ic o%%icia&s
were acting ;wit#out or in e3cess o% t#eir Aurisdiction< and &aw%u& aut#orit! in t#e premises'
/. 5lle*ations +o not pose 9uestion as to vali+ity o, statute! $ut on t)e vali+ exercise o, aut)ority
$y t)e o,,icials
T#e a&&egations raise no 9uestion as to t#e va&idit! or constitutiona&it! o% an! statuteC t#at t#e rea&
9uestion w#ic# p&ainti%% seeks to sumit to t#is court in origina& pro#iition proceedings is w#et#er t#e
respondent o%%icia&s o% t#e 6overnment are correct&! e3ercising t#e discretion and aut#orit! wit# w#ic# t#e!
#ave een c&ot#edC and t#at #is contention in t#e amended comp&aint is not, as it was in t#e origina&
comp&aint, t#at t#ese o%%icia&s are acting wit#out aut#orit!, and in re&iance upon an inva&id and
unconstitutiona& statute, ut rat#er t#at t#e! are e3ercising t#eir aut#orit! improvident&!, unwise&! or
mistaken&!'
2. :ro)i$ition6 Sections -- an+ 21 o, Co+e o, Civil :roce+ure
Dnder t#e provisions o% sections 88> and 41> o% t#e $ode o% $ivi& Procedure Aurisdiction in
pro#iition proceedings is con%erred upon t#e courts w#en t#e comp&aint a&&eges ;t#e proceedings o% an!
in%erior triuna&, corporation, oard, or person, w#et#er e3ercising %unctions Audicia& or ministeria&, were
wit#out or in e3cess o% t#e Aurisdiction o% suc# triuna&, corporation, oard or person'< @erein, it is mani%est
t#at t#e a&&egations o% t#e amended comp&aint, even i% true, wi&& not sustain t#e issuance o% a writ o%
pro#iition wit#out %urt#er amendment un&ess t#e! e construed to e in e%%ect a c#arge t#at t#e o%%icia&s are
ausing t#e discretion con%erred upon t#em in t#e e3ercise o% t#eir aut#orit! in suc# manner t#at t#e acts
comp&ained o% s#ou&d e #e&d to e wit#out or in e3cess o% t#eir Aurisdiction'
. <octrine in Dx :arte Houn* cannot $e invoke+ to support ri*)t o, action
,t ma! we&& e douted w#et#er t#e doctrine o% t#e case B3 parte Ooung can proper&! e invoked in
support o% a rig#t o% action predicated upon suc# premisesC so a&so, since t#e acts comp&ained o% in t#e
amended comp&aint are a&&eged to #ave een done at a date suse9uent to t#e enactment o% t#e statutes
creating t#e 1oard o% Pu&ic Dti&it! $ommissioners, it ma! we&& e douted w#et#er t#e courts s#ou&d
entertain pro#iition proceedings seeking to restrain a&&eged auses o% discretion on t#e part o% o%%icers and
o%%icia&s o% t#e 6overnment, and o% pu&ic service corporations wit# regard to t#e ru&es under w#ic# suc#
corporations are operated, unti& and un&ess redress %or t#e a&&eged wrong #as een soug#t at t#e #ands o% t#e
1oard'
3. Supre#e Court clot)e+ .it) ori*inal ?uris+iction in pro)i$ition procee+in*s! $ut ?uris+iction
concurrent .it) C&;
7&t#oug# t#e "upreme $ourt is c&ot#ed wit# origina& Aurisdiction in pro#iition proceedings (section
41>, 7ct 1.2), t#is Aurisdiction is concurrent wit# t#e origina& Aurisdiction o% t#e various $ourts o% First
,nstance t#roug#out t#e ,s&ands, e3cept in cases w#ere t#e writ runs to restrain t#ose courts t#emse&ves, w#en
o% course it is e3c&usive'
4. ;ntention o, le*islator +oes not re9uire Supre#e Court to assu#e ori*inal ?uris+iction in all
cases
,t cou&d not #ave een t#e intention o% t#e &egis&ator to re9uire t#e "upreme $ourt to assume origina&
Aurisdiction in a&& cases w#erein t#e p&ainti%% e&ects to invoke it' "uc# a practice mig#t resu&t in overw#e&ming
t#e court wit# t#e dut! o% entertaining and deciding origina& proceedings w#ic# %rom t#eir nature cou&d muc#
etter e adAudicated in t#e tria& courtsC and in unnecessari&! diverting t#e time and attention o% t#e court %rom
its important appe&&ate %unctions to t#e sett&ement o% controversies o% no especia& interest to t#e pu&ic at &arge,
in t#e course o% w#ic# it mig#t ecome necessar! to take testimon! and to make %indings touc#ing
comp&icated and #ot&! contested issues o% %act'
%. Court #ay +ecline to per#it its ori*inal ?uris+iction to $e involve+ in pro)i$ition procee+in*s6
Spellin*! on ;n?unctions an+ 8t)er Dxtraor+inary Re#e+ies
Dn&ess specia& reasons appear t#ere%or, t#e "upreme $ourt s#ou&d dec&ine to permit its origina&
Aurisdiction to e invo&ved in pro#iition proceedings, and t#is especia&&! w#en t#e adAudication o% t#e issues
raised invo&ves t#e taking o% evidence and t#e making o% %indings touc#ing controverted %acts, w#ic#, as a
ru&e, can e done so muc# etter in t#e %irst instance ! a tria& court t#an an appe&&ate court organi*ed as is t#e
"upreme $ourt' "pe&&ing, on ,nAunctions and (t#er B3traordinar! :emedies (vo&' 8, p' 15.3), in discussing
t#e cases in w#ic# t#e appe&&ate courts in t#e Dnited "tates permit t#eir origina& Aurisdiction to e invoked
w#ere t#at Aurisdiction is concurrent wit# t#at o% some in%erior court, sa!s ;(% t#e p&an o% concurrent
Aurisdiction Fest Virginia ma! e taken as an i&&ustration' T#e "upreme $ourt o% 7ppea&s o% t#at "tate #as
concurrent origina& Aurisdiction wit# t#e circuit courts in cases o% pro#iition, ut ! a ru&e adopted ! t#e
%ormer court it wi&& not take suc# origina& Aurisdiction un&ess specia& reasons appear t#ere%or'<
1". 5ssu#ption o, court o, ?uris+iction in ori*inal co#plaint! +enial o, assu#ption o, ?uris+iction in
a#en+e+ co#plaint
T#e amended comp&aint presents %or adAudication in origina& pro#iition proceedings in t#e "upreme
$ourt 9uestions o% a w#o&&! di%%erent c#aracter %rom t#ose sumitted in t#e origina& comp&aint' F#i&e t#e
$ourt deemed it proper to assume Aurisdiction to adAudicate and decide t#e issues raised ! t#e ru&ings on t#e
origina& comp&aint, invo&ving as t#e! did a 9uestion as to t#e va&idit! o% a pu&ic statute o% vita& interest to
s#ippers and s#ip owners genera&&! as a&so to t#e pu&ic at &arge, and presenting %or determination no di%%icu&t
or comp&icated 9uestions o% %actC t#e $ourt dec&ined to take Aurisdiction o% t#e matters re&ied upon in t#e
amended comp&aint in support o% p&ainti%%?s pra!er %or t#e writ'
11. 5ction s)oul+ $e $rou*)t in C&;
T#e 9uestion o% t#e construction and va&idit! o% t#e statute #aving een disposed o% in t#e $ourt?s
ru&ing on t#e demurrer to t#e origina& comp&aint, it must e apparent t#at i% t#e a&&egations o% t#e amended
comp&aint are su%%icient to maintain t#e p&ainti%%?s action %or a writ o% pro#iition, a 9uestion as to w#ic# t#e
$ourt e3press&! reserved its opinion, t#e action s#ou&d e roug#t in one o% t#e $ourts o% First ,nstance'
[11/]! also [149]
=ariti#e Co. o, t)e :)ilippines vs. C5 (GR /3""/! 4 =arc) 1%4%)
&acts' :i*a& "uret! T ,nsurance $o' ;was t#e insurer o% /22 packages o% PV$ compound &oaded on t#e ""
Do)a Eati at Ooko#ama and consigned to t#e 7cme B&ectrica& Manu%acturing $ompan!' T#e "" Do)a Eati
was owned ! t#e Eationa& Deve&opment $ompan! (ED$) w#ereas t#e Maritime $ompan! o% t#e P#i&ippines
was its 7gent' T#e goods were never de&ivered to t#e consignee (7cme B&ectrica&, etc', supra) so t#at :i*a&
"uret!, as ,nsurer, paid said consignee t#e sum o% P3/,04/'42' T#e cause o% t#e non=de&iver! o% t#e goods is
t#at in Eago!a 1a!, w#i&e t#e "" Do)a Eati was eing pi&oted ! a Japanese pi&ot, t#e "" Do)a Eati was
rammed ! M-V Oasus#ima Maru, causing damage to t#e #u&& o% t#e "" Do)a Eati and t#e resu&tant %&ooding
o% t#e #o&ds damaged e!ond repair t#e goods o% t#e consignee in 9uestion' ,t appeared t#at t#e M-V
Oasus#ima Maru was at %au&t in t#e co&&ision'
,n t#e $F, o% Mani&a, :i*a& "uret! sued t#e ED$ and Maritime $o' %or t#e recover! o% a sum o% mone! paid
! it as insurer %or t#e va&ue o% goods &ost in transit on oard vesse& known as t#e "" Do)a Eati' 7%ter due
proceedings and tria&, t#e comp&ainant was dismissed, wit# costs against :i*a& "uret!'
:i*a& "uret! e&evated t#e case to t#e $ourt o% 7ppea&s' T#at $ourt %ound merit in its appea&' ,t t#us rendered
Audgment, setting aside t#at o% t#e Tria& $ourt and ordering ED$ and Maritime $o' Aoint&! and severa&&! to
pa! Aoint&! and severa&&! to :i*a& "uret! t#e sum o% P3/,04/'42 wit# &ega& rate o% interest %rom t#e %i&ing o%
t#e comp&aint' T#is Audgment o% t#e 7ppe&&ate Triuna& was in turn appea&ed ! Maritime $ompan!'
T#e "upreme $ourt a%%irmed t#e Decision o% t#e $ourt o% 7ppea&s suAect o% t#e petition %or review, wit#
costs against Maritime $o'
1. 7ature o, t)e principal cause o, action
T#e principa& cause o% action is not derived %rom a maritime co&&ision, ut rat#er, %rom a contract o%
carriage, as evidenced ! t#e i&& o% &ading'
-. =ariti#e Co. is t)e s)ipa*ent o, 7<C
ED$ #ad appointed Maritime $o', as its agent to manage and operate t#ree vesse&s owned ! it,
inc&uding t#e "" Do)a Eati, %or and in its e#a&% and account, and %or a determina&e period (i'e', unti& %u&&
reimursement o% a&& mone!s advanced and-or %u&& re&ie% %rom or pa!ment o% a&& guarantees made ! Maritime
$o' %or account o% t#e vesse&s)' Dnder t#eir written agreement, Maritime $o' was ound to ;provision and
victua&< t#e "" Do)a Eati and t#e ot#er two vesse&s, and to render a comp&ete report o% t#e operations o% t#e
vesse&s wit#in >2 da!s a%ter conc&usion o% eac# vo!ageC it was a&so aut#ori*ed to appoint su=agents at an!
ports or p&aces t#at it mig#t deem necessar!, remaining #owever responsi&e to t#e s#ip owner (ED$) %or t#e
time&! and satis%actor! per%ormance o% said su=agents' T#ese %acts preponderant&! demonstrate t#e c#aracter
o% Maritime $o' as s#ip agent under t#e $ode o% $ommerce, a s#ip agent, according&! to t#at $ode, eing
;t#e person entrusted wit# provisioning or representing t#e vesse& in t#e port in w#ic# it ma! e %ound'<
3. =ariti#e Co. not a s)ipa*ent o, &u?i 5sano Co. Lt+.
T#e &etter#ead o% t#e i&& o% &ading is in 8 parts' ,n w#at ma! e descried as t#e main &etter#ead,
Maritime $o' is indicated as ;7gent< %or t#e (1) P#i&ippines, (8) @ongkong, (3) Japan, and t#e (5) D'"' Paci%ic
$oast=6u&% Ports' Dnderneat# t#is main &etter#ead is a sort o% secondar! su=#ead: ;@ongkong=$osmos
Deve&opment $ompan!C Japan=FuAi 7sano Paiun $o', +td', D'"'7=Eort# 7merican Maritime 7gencies'< T#e
necessar! connotation is t#at t#e %irms t#us named are su=agents or secondar! representatives o% Maritime
$o', FuAi 7sano Paiun $o', +td', particu&ar&!, eing t#e representative o% ED$ and Maritime $o' in Japan, as
distinguis#ed %rom t#e Maritime $o', w#ic# is descried as 76BET not on&! in Japan ut a&so in ot#er p&aces:
t#e P#i&ippines, @ongkong, D'"' Paci%ic $oast, and t#e 6u&% Ports' Moreover, t#e i&& s#ows on its %ace t#at it
was issued GF(: T@B M7"TB:? ! ;Maritime $ompan! o% t#e P#i&ippines, 7gent'<
/. 5c#e Dlectrical =anu,acturin*! =anila .as t)e consi*nee o, t)e *oo+s
T#e i&& o% &ading w#ic# states t#at i% t#e goods are ;consigned to t#e "#ipper?s (rder< H and t#e i&&
is so consigned: ;to t#e order o% $#ina 1anking $orporation, Mani&a, or assigns< H t#e ;7cme B&ectrica&
Manu%acturing, Mani&a,< s#a&& e noti%ied' T#is s#ows, in t#e conte3t o% t#e ot#er documents adverted to, t#at
7cme was t#e importer and $#ina 1anking $orporation t#e %inancing agenc!' Furt#er, t#e $ommercia&
,nvoice o% t#e s#ipper recites t#at it was ;! order and %or account o% Messrs' 7cme B&ectrica& Manu%acturing,
Mani&a< t#at t#e /22 ags o% PV$ compound were s#ipped %rom Ooko#ama to Mani&a' Furt#ermore, it was
7cme t#at insured t#e goods wit# :i*a& "uret! and t#e &atter did insure t#em on t#e strengt# o% t#e %ormer?s
Marine :isk Eote, &ong e%ore t#e goods were &ost at sea, and it was 7cme, t#ru its roker, t#at c&aimed t#e
proceeds %or t#e &oss' Maritime $o'?s own certi%ication states t#at t#e ;/22 packages o% PV$ $ompound
consigned to 7cme B&ectrica& Manu%acturing was Gcarried awa!? to sea as a resu&t o% t#e accident and same
was unrecovered'
2. RiJal Surety .as su$ro*ate+ to 5c#e1s ri*)ts a*ainst s)ipo.ner an+ t)e s)ipa*ent
T#ere is no 9uestion o% t#e entit&ement o% 7cme B&ectrica& Manu%acturing to t#e proceeds o% t#e
insurance against &oss o% t#e goods in 9uestion, nor aout t#e %act t#at it did receive suc# proceeds %rom t#e
:i*a& "uret!, as insurer, w#ic# made pa!ment upon due ascertainment o% t#e actua&it! o% t#e &oss' T#e &ega&
e%%ect is inescapa&e' :i*a& "uret! was surogated to 7cme?s rig#ts against t#e s#ipowner and t#e s#ip agent
arising %rom t#e &oss o% t#e goods'
. La. o, +estination6 5c#e1s ri*)ts are to $e +eter#ine+ $y t)e Civil Co+e! not t)e Co+e o,
Co##erce
T#is conc&usion derives %rom 7rtic&e 1043 o% t#e $ivi& $ode to t#e e%%ect t#at it is t#e ;&aw o% t#e
countr! to w#ic# t#e goods are to e transported (w#ic#) s#a&& govern t#e &iai&it! o% t#e common carrier %or
t#eir &oss, destruction or deterioration'< ,t is on&! in ;matters not regu&ated ! t#e $ivi& $ode,< according to
7rtic&e 10>>, t#at ;t#e rig#ts and o&igations o% common carriers s#a&& e governed ! t#e $ode o% $ommerce
and ! specia& &aws'< "ince t#ere are indeed speci%ic provisions regu&ating t#e matter o% suc# &iai&it! in t#e
$ivi& $ode, t#ese eing emodied in 7rtic&e 1035, as we&& as prescriing t#e period o% prescription o% actions,
it %o&&ows t#at t#e $ode o% $ommerce, or t#e $arriage o% 6oods ! "ea 7ct, #as no re&evanc! in t#e
determination o% t#e carrier?s &iai&it! in t#e present case'
3. C8GS5 #erely suppletory to t)e Civil Co+e
,n 7merican President +ines v' P&epper, t#e $ourt ru&ed t#at in view o% said 7rtic&es 1043 and 104>,
t#e provisions o% t#e $arriage o% 6oods ! "ea 7ct are mere&! supp&etor! to t#e $ivi& $ode'
4. Lia$ility o, co##on carriers6 Dxceptin* circu#stances
Dnder t#e esta&is#ed %acts, and in accordance wit# 7rtic&e 1035, Maritime $o' and ED$, as
;common carriers,< are &ia&e to 7cme %or ;t#e &oss, destruction or deterioration o% t#e goods,< and ma! e
re&ieved o% responsii&it! i% t#e &oss, etc', ;is due to an! o% t#e %o&&owing causes on&!: (1) F&ood, storm,
eart#9uakes, &ig#tning, or ot#er natura& disaster or ca&amit!C (8) 7ct o% t#e pu&ic enem! in war, w#et#er
internationa& or civi&C (3) 7ct or omission o% t#e s#ipper or owner o% t#e goodsC (5) T#e c#aracter o% t#e goods
or de%ects in t#e packing or in t#e containersC and (4) (rder or act o% competent pu&ic aut#orit!'< @erein,
since none o% t#e speci%ied aso&utor! causes is present, t#e carrier?s &iai&it! is pa&pa&e'
%. &actual conclusions o, t)e appellate court conclusive
T#e appe&&ate court %ound, a%ter a review and stud! o% evidence, t#at Do)a Eati ;did not e3ercise even
due di&igence to avoid t#e co&&ision'< ,n &ine wit# t#e %ami&iar a3iom t#at %actua& conc&usions o% t#e $ourt o%
7ppea&s are conc&usive and ma! not e reviewed, Maritime $o'?s attempt to s#i%t t#e &ame to t#e Japanese
vesse& is %uti&e' @aving %ai&ed to e3ercise e3traordinar! di&igence to avoid an! &oss o% &i%e and propert!, as
commanded ! &aw, not #aving in %act e3ercised ;even due di&igence to avoid t#e co&&ision,< it must e #e&d
responsi&e %or t#e &oss o% t#e goods in 9uestion'
[112]
Gatc)alian vs. <eli# (GR 2/43! -1 8cto$er 1%%1)
&acts' 7t noon time on 11 Ju&! 1.03, :e!na&da 6atc#a&ian oarded, as a pa!ing passenger, respondent?s
;T#ames< mini=us at a point in "an Bugenio, 7ringa!, +a Dnion, ound %or 1auang, o% t#e same province'
(n t#e wa!, w#i&e t#e us was running a&ong t#e #ig#wa! in 1arrio Pa!ocpoc, 1auang, +a Dnion, ;a
snapping sound< was sudden&! #eard at one part o% t#e us and, s#ort&! t#erea%ter, t#e ve#ic&e umped a
cement %&ower pot on t#e side o% t#e road, went o%% t#e road, turned turt&e and %e&& into a ditc#' "evera&
passengers, inc&uding 6atc#a&ian, were inAured' T#e! were prompt&! taken to 1et#an! @ospita& at "an
Fernando, +a Dnion, %or medica& treatment' Dpon medica& e3amination, 6atc#a&ian was %ound to #ave
sustained p#!sica& inAuries on t#e &eg, arm and %ore#ead, speci%ica&&! descried as %o&&ows: &acerated wound,
%ore#eadC arasion, e&ow, &e%tC arasion, knee, &e%tC arasion, &atera& sur%ace, &eg, &e%t' (n 15 Ju&! 1.03, w#i&e
inAured passengers were con%ined in t#e #ospita&, Mrs' 7de&a De&im, wi%e o% 7rsenio De&im, visited t#em and
&ater paid %or t#eir #ospita&i*ation and medica& e3penses' "#e a&so gave 6atc#a&ian P18'22 wit# w#ic# to pa!
#er transportation e3pense in going #ome %rom t#e #ospita&' @owever, e%ore Mrs' De&im &e%t, s#e #ad t#e
inAured passengers, inc&uding 6atc#a&ian, sign an a&read! prepared Joint 7%%idavit w#ic# stated, among ot#er
t#ings, ;t#at we are no &onger interested to %i&e a comp&aint, crimina& or civi& against t#e said driver and owner
o% t#e said T#ames, ecause it was an accident and t#e said driver and owner o% t#e said T#ames #ave gone to
t#e e3tent o% #e&ping us to e treated upon our inAuries'<
Eotwit#standing t#e document, 6atc#a&ian %i&ed wit# t#e t#en $ourt o% First ,nstance o% +a Dnion an action
e3tra contractu to recover compensator! and mora& damages' "#e a&&eged in t#e comp&aint t#at #er inAuries
sustained %rom t#e ve#icu&ar mis#ap #ad &e%t #er wit# a conspicuous w#ite scar measuring 1 ! 1-8 inc#es on
t#e %ore#ead, generating menta& su%%ering and an in%eriorit! comp&e3 on #er partC and t#at as a resu&t, s#e #ad
to retire in sec&usion and sta! awa! %rom #er %riends' "#e a&so a&&eged t#at t#e scar diminis#ed #er %acia&
eaut! and deprived #er o% opportunities %or emp&o!ment' "#e pra!ed %or an award o%: P12,222'22 %or &oss o%
emp&o!ment and ot#er opportunitiesC P12,222'22 %or t#e cost o% p&astic surger! %or remova& o% t#e scar on #er
%ore#eadC P32,222'22 %or mora& damagesC and P1,222'22 as attorne!?s %ees' 7%ter tria&, t#e tria& court
dismissed t#e comp&aint upon t#e ground t#at w#en 6atc#a&ian signed t#e Joint 7%%idavit, s#e re&in9uis#ed
an! rig#t o% action (w#et#er crimina& or civi&) t#at s#e ma! #ave #ad against De&im and t#e driver o% t#e mini=
us'
(n appea& ! petitioner, t#e $ourt o% 7ppea&s reversed t#e tria& court?s conc&usion t#at t#ere #ad een a va&id
waiver, ut a%%irmed t#e dismissa& o% t#e case ! den!ing 6atc#a&ian?s c&aim %or damages' @ence, t#e petition
%or review'
T#e "upreme $ourt reversed and set aside t#e Decision o% t#e $ourt o% 7ppea&s dated 85 (ctoer 1./2, as
we&& as t#e decision o% t#e t#en $ourt o% First ,nstance o% +a Dnion dated 5 Decemer 1.04C and ordered
De&im to pa! 6atc#a&ian (1) P14,222'22 as actua& or compensator! damages to cover t#e cost o% p&astic
surger! %or t#e remova& o% t#e scar on petitioner?s %ore#eadC (8) P32,222'22 as mora& damagesC and (3)
P1,222'22 as attorne!?s %ees, t#e aggregate amount to ear interest at t#e &ega& rate o% >I per annum counting
%rom t#e promu&gation o% t#is decision unti& %u&& pa!ment t#ereo% $osts against De&im'
1. 7o vali+ .aiver6 Stan+ar+s provi+e+ in Hepes vs. Sa#ar Dxpress
Eo va&id waiver o% #er cause o% action #ad een made ! 6atc#a&ian' T#e re&evant &anguage o% t#e
Joint 7%%idavit provides t#at ;we are no &onger interested to %i&e a comp&aint, crimina& or civi& against t#e said
driver and owner o% t#e said T#ames, ecause it was an accident and t#e said driver and owner o% t#e said
T#ames #ave gone to t#e e3tent o% #e&ping us to e treated upon our inAuries'< 7 waiver, to e va&id and
e%%ective, must in t#e %irst p&ace e couc#ed in c&ear and une9uivoca& terms w#ic# &eave no dout as to t#e
intention o% a person to give up a rig#t or ene%it w#ic# &ega&&! pertains to #im' 7 waiver ma! not casua&&! e
attriuted to a person w#en t#e terms t#ereo% do not e3p&icit&! and c&ear&! evidence an intent to aandon a
rig#t vested in suc# person' T#e degree o% e3p&icitness w#ic# t#e "upreme $ourt #as re9uired in purported
waivers is i&&ustrated in Oepes and "usa!a v' "amar B3press Transit' T#erein, e3pressing a Gdesire? to make t#e
waiver is not t#e same as making an actua& waiver o% t#eir rig#t' 7 waiver must e c&ear and une9uivoca&'
-. Circu#stances in si*nin* o, a,,i+avit consi+ere+6 Gatc)alian #ay not un+erstoo+ ,ully t)e
i#port o, t)e a,,i+avit si*ne+
Moreover, t#e circumstances under w#ic# t#e Joint 7%%idavit was signed ! 6atc#a&ian need to e
considered' Petitioner testi%ied t#at s#e was sti&& ree&ing %rom t#e e%%ects o% t#e ve#icu&ar accident, #aving een
in t#e #ospita& %or on&! 3 da!s, w#en t#e purported waiver in t#e %orm o% t#e Joint 7%%idavit was presented to
#er %or signingC t#at w#i&e reading t#e same, s#e e3perienced di**iness ut t#at, seeing t#e ot#er passengers
w#o #ad a&so su%%ered inAuries sign t#e document, s#e too signed wit#out ot#ering to read t#e Joint 7%%idavit
in its entiret!' $onsidering t#ese circumstances, t#ere appears sustantia& dout w#et#er 6atc#a&ian
understood %u&&! t#e import o% t#e Joint 7%%idavit (prepared ! or at t#e instance o% De&im) s#e signed and
w#et#er s#e actua&&! intended t#ere! to waive an! rig#t o% action against De&im'
3. Eaiver #ust not $e contrary to la.! etc.
F#at is invo&ved #ere is t#e &iai&it! o% a common carrier %or inAuries sustained ! passengers in
respect o% w#ose sa%et! a common carrier must e3ercise e3traordinar! di&igence, an! suc# purported waiver
must e construed most strict&! against t#e common carrier' For a waiver to e va&id and e%%ective, it must not
e contrar! to &aw, mora&s, pu&ic po&ic! or good customs' To up#o&d a supposed waiver o% an! rig#t to c&aim
damages ! an inAured passenger, under t#e present and simi&ar circumstances, wou&d e to di&ute and weaken
t#e standard o% e3traordinar! di&igence e3acted ! t#e &aw %rom common carriers and #ence to render t#at
standard unen%orcea&e' "uc# a purported waiver is o%%ensive to pu&ic po&ic!'
/. <uty o, exercise extraor+inary +ili*ence6 :resu#ption o, ne*li*ence6 Court nee+ not #ake
express ,in+in* o, ,ault6 Bur+en o, proo,
7 dut! to e3ercise e3traordinar! di&igence in protecting t#e sa%et! o% its passengers is imposed upon a
common carrier' ,n case o% deat# or inAuries to passengers, a statutor! presumption arises t#at t#e common
carrier was at %au&t or #ad acted neg&igent&! ;un&ess it proves t#at it L#adM oserved e3traordinar! di&igence as
prescried in 7rtic&es 1033 and 1044'< ,n %act, ecause o% t#is statutor! presumption, it #as een #e&d t#at a
court need not even make an e3press %inding o% %au&t or neg&igence on t#e part o% t#e common carrier in order
to #o&d it &ia&e' To overcome t#is presumption, t#e common carrier must s#ow to t#e court t#at it #ad
e3ercised e3traordinar! di&igence to present t#e inAuries'
2. Stan+ar+ o, +ili*ence
T#e standard o% e3traordinar! di&igence imposed upon common carriers is considera&! more
demanding t#an t#e standard o% ordinar! di&igence, i'e', t#e di&igence o% a good pater%ami&ias esta&is#ed in
respect o% t#e ordinar! re&ations etween memers o% societ!' 7 common carrier is ound to carr! its
passengers sa%e&! ;as %ar as #uman care and %oresig#t can provide, using t#e utmost di&igence o% a ver!
cautious person, wit# due regard to a&& t#e circumstances<'

. Carrier +i+ not prove )e )a+ exercise+ extraor+inary +ili*ence to prevent #is)ap
T#e records e%ore t#e $ourt are ere%t o% an! evidence s#owing t#at De&im #ad e3ercised t#e
e3traordinar! di&igence re9uired ! &aw' $urious&!, De&im did not even attempt, during t#e tria& e%ore t#e
court a 9uo, to prove t#at #e #ad indeed e3ercised t#e re9uisite e3traordinar! di&igence' De&im did tr! to
e3cu&pate #imse&% %rom &iai&it! ! a&&eging t#at t#e mis#ap was t#e resu&t o% %orce maAeure' 1ut a&&egation is
not proo% and #ere again, De&im utter&! %ai&ed to sustantiate #is de%ense o% %orce maAeure'
3. Dxe#ption upon *roun+ o, ,orce #a?eure
To e3empt a common carrier %rom &iai&it! %or deat# or p#!sica& inAuries to passengers upon t#e
ground o% %orce maAeure, t#e carrier must c&ear&! s#ow not on&! t#at t#e e%%icient cause o% t#e casua&t! was
entire&! independent o% t#e #uman wi&&, ut a&so t#at it was impossi&e to avoid' 7n! participation ! t#e
common carrier in t#e occurrence o% t#e inAur! wi&& de%eat t#e de%ense o% %orce maAeure'
4. Caso ,ortuito +e,ine+! exa#ples6 Servan+o vs. :)ilippine Stea# 7avi*ation
,n "ervando v' P#i&ippine "team Eavigation $ompan!, t#e $ourt #e&d t#at ;w#ere %ortuitous event or
%orce maAeure is t#e immediate and pro3imate cause o% t#e &oss, t#e o&igor is e3empt %rom &iai&it! %or non=
per%ormance' T#e Partidas, t#e antecedent o% 7rtic&e 1105 o% t#e $ivi& $ode, de%ines ;caso %ortuito< as an
event t#at takes p&ace ! accident and cou&d not #ave een %oreseen' B3amp&es o% t#is are destruction o%
#ouses, une3pected %ire, s#ipwreck, vio&ence o% roers'
%. C)aracteristics o, Caso ,ortuito6 Servan+o vs. :)ilippine Stea# 7avi*ation
,n its dissertation on t#e p#rase ;caso %ortuito< t#e Bnc!c&opedia Juridica Bspa)o&a sa!s: ;,n &ega&
sense and, conse9uent&!, a&so in re&ation to contracts, a Gcaso %ortuito? presents t#e %o&&owing essentia&
c#aracteristics: (1) t#e cause o% t#e un%oreseen and une3pected occurrence, or o% t#e %ai&ure o% t#e detor to
comp&! wit# #is o&igation, must e independent o% t#e #uman wi&&C (8) ,t must e impossi&e to %oresee t#e
event w#ic# constitutes t#e Gcaso %ortuito?, or i% it can e %oreseen, it must e impossi&e to avoidC (3) t#e
occurrence must e suc# as to render it impossi&e %or t#e detor to %u&%i&& ms o&igation in a norma& mannerC
and (5) t#e o&igor must e %ree %rom an! participation in t#e aggravation o% t#e inAur! resu&ting to t#e
creditor'<
1". @Snappin* soun+A6 Bus not c)ecke+ p)ysically an+ #ec)anically
T#e record !ie&ds a%%irmative evidence o% %au&t or neg&igence on t#e part o% t#e common carrier'
"#ort&! e%ore t#e ve#ic&e went o%% t#e road and into a ditc#, a ;snapping sound< was sudden&! #eard at one
part o% t#e us' (ne o% t#e passengers, an o&d woman, cried out, ;F#at #appenedS< (;7pa! addan samet
nadadae&enS<)' T#e driver rep&ied, nonc#a&ant&!, ;T#at is on&! norma&< (;Dga&i ti makina da!ta<)' T#e driver
did not stop to c#eck i% an!t#ing #ad gone wrong wit# t#e us' Moreover, t#e driver?s rep&! necessari&!
indicated t#at t#e same ;snapping sound< #ad een #eard in t#e us on previous occasions' T#is cou&d on&!
mean t#at t#e us #ad not een c#ecked p#!sica&&! or mec#anica&&! to determine w#at was causing t#e
;snapping sound< w#ic# #ad occurred so %re9uent&! t#at t#e driver #ad gotten accustomed to it' "uc# a sound
is ovious&! a&ien to a motor ve#ic&e in good operating condition, and even a modicum o% concern %or &i%e and
&im o% passengers dictated t#at t#e us e c#ecked and repaired' T#e ovious continued %ai&ure o% De&im to
&ook a%ter t#e roadwort#iness and sa%et! o% t#e us, coup&ed wit# t#e driver?s re%usa& or neg&ect to stop t#e
mini=us a%ter #e #ad #eard once again t#e ;snapping sound< and t#e cr! o% a&arm %rom one o% t#e passengers,
constituted wanton disregard o% t#e p#!sica& sa%et! o% t#e passengers, and #ence gross neg&igence on t#e part
o% De&im and #is driver'
11. 7o a.ar+ ,or +a#a*e on t)e $asis o, loss o, earnin* capacity
@erein, at t#e time o% t#e accident, 6atc#a&ian was no &onger emp&o!ed in a pu&ic sc#oo& since, eing
a casua& emp&o!ee and not a $ivi& "ervice e&igi&e, s#e #ad een &aid o%% #er emp&o!ment as a sustitute
teac#er was occasiona& and episodic, contingent upon t#e avai&ai&it! o% vacancies %or sustitute teac#ers' ,n
view o% #er emp&o!ment status as suc#, s#e cou&d not e said to #ave in %act &ost an! emp&o!ment a%ter and !
reason o% t#e accident' 6atc#a&ian #as not sumitted an! asis %or overturning t#e %inding o% %act o% t#e $ourt
o% 7ppea&s, and s#e ma! not e awarded damages on t#e asis o% specu&ation or conAecture'
1-. Cost o, plastic sur*ery ,or re#oval o, scar recovera$le6 5#ount o, clai# not unreasona$le
7 person is entit&ed to t#e p#!sica& integrit! o% #is or #er od!C i% t#at integrit! is vio&ated or
diminis#ed, actua& inAur! is su%%ered %or w#ic# actua& or compensator! damages are due and assessa&e' ,n
7raneta, et a&' vs' 7reg&ado, et a&', t#e $ourt awarded actua& or compensator! damages %or, among ot#er
t#ings, t#e surgica& remova& o% t#e scar on t#e %ace o% a !oung o! w#o #ad een inAured in a ve#icu&ar
co&&ision' @erein, 6atc#a&ian is entit&ed to e p&aced as near&! as possi&e in t#e condition t#at s#e was e%ore
t#e mis#ap' 7 scar, especia&&! one on t#e %ace o% t#e woman, resu&ting %rom t#e in%&iction o% inAur! upon #er, is
a vio&ation o% odi&! integrit!, giving raise to a &egitimate c&aim %or restoration to #er conditio ante' ,% t#e scar
is re&ative&! sma&& and does not grievous&! dis%igure t#e victim, t#e cost o% surger! ma! e e3pected to e
corresponding&! modest' 6atc#a&ian estimated t#at t#e cost o% #aving #er scar surgica&&! removed was
somew#ere etween P12,222'22 to P14,222'22' Dpon t#e ot#er #and, Dr' Fe Ta!ao +asam, a witness
presented as an e3pert ! 6atc#a&ian, testi%ied t#at t#e cost wou&d proa&! e etween P4,222'22 to
P12,222'22' ,n view o% t#is testimon!, and t#e %act t#at a considera&e amount o% time #as &apsed since t#e
mis#ap in 1.03 w#ic# ma! e e3pected to increase not on&! t#e cost ut a&so ver! proa&! t#e di%%icu&t! o%
removing t#e scar, t#e $ourt considered t#at t#e amount o% P14,222'22 to cover t#e cost o% suc# p&astic
surger! is not unreasona&e'
13. 5.ar+ o, #oral +a#a*es +ue6 Clai# o, attorney1s ,ees *rante+
Mora& damages ma! e awarded w#ere gross neg&igence on t#e part o% t#e common carrier is s#own'
"ince t#e common carrier and #is driver #ad een gross&! neg&igent in connection wit# t#e us mis#ap w#ic#
#ad inAured 6atc#a&ian and ot#er passengers, and reca&&ing t#e aggressive maneuvers o% De&im, t#roug# #is
wi%e, to get t#e victims to waive t#eir rig#t to recover damages even as t#e! were sti&& #ospita&i*ed %or t#eir
inAuries, 6atc#a&ian must e #e&d entit&ed to suc# mora& damages' $onsidering t#e e3tent o% pain and an3iet!
w#ic# 6atc#a&ian must #ave su%%ered as a resu&t o% #er p#!sica& inAuries inc&uding t#e permanent scar on #er
%ore#ead, t#e $ourt e&ieves t#at t#e amount o% P32,222'22 wou&d e a reasona&e award' 6atc#a&ian?s c&aim
%or P1,222'22 as attorne!?s %ees is in %act even more modest'
[11]
5#erican Ho#e 5ssurance vs. C5 (GR %/1/%! 2 =ay 1%%-)
&acts' 7merican @ome 7ssurance $o' and t#e Eationa& Marine $orporation (EM$) are %oreign corporations
&icensed to do usiness in t#e P#i&ippines, t#e %ormer t#roug# its ranc#, T#e 7merican @ome 7ssurance
$ompan! (P#i&ippines), ,nc' and t#e &atter t#roug# its ranc#, T#e Eationa& Marine $orporation (Mani&a)' (n
or aout 1. June 1.//, $#eng @wa Pu&p $orporation s#ipped 4,222 a&es (1,222 7DMT) o% &eac#ed kra%t
pu&p %rom @au&ien, Taiwan on oard ;"" Paun&aran<, w#ic# is owned and operated ! EM$ wit#
:egistration P,D=885' T#e said s#ipment was consigned to Ma!&een Paper, ,nc' o% Mani&a, w#ic# insured t#e
s#ipment wit# 7merican @ome 7ssurance $o' as evidenced ! 1i&& o% +ading @+ME=21' (n 88 June 1.//,
t#e s#ipment arrived in Mani&a and was disc#arged into t#e custod! o% t#e Marina Port "ervices, ,nc', %or
eventua& de&iver! to t#e consignee=assured' @owever, upon de&iver! o% t#e s#ipment to Ma!&een Paper, ,nc', it
was %ound t#at 188 a&es #ad eit#er een damaged or &ost' T#e &oss was ca&cu&ated to e 5,3>2 ki&ograms wit#
an estimated va&ue o% P>1,8>3'51' Ma!&een Paper, ,nc' t#en du&! demanded indemni%ication %rom EM$ %or
t#e damages-&osses in t#e s#ipment ut, %or apparent&! no Austi%ia&e reason, said demand was not #eeded' 7s
t#e s#ipment was insured wit# 7merican @ome 7ssurance $o' in t#e amount o% D" K/30,422'22, Ma!&een
Paper, ,nc' soug#t recover! %rom t#e %ormer' Dpon demand and sumission o% proper documentation,
7merican @ome 7ssurance paid Ma!&een Paper, ,nc' t#e adAusted amount o% P31'42>'04 %or t#e
damages-&osses su%%ered ! t#e s#ipment, #ence, t#e %ormer was surogated to t#e rig#ts and interests o%
Ma!&een Paper, ,nc'
(n > June 1./., 7merican @ome 7ssurance, as surogee, t#en roug#t suit against EM$ %or t#e recover! o%
t#e amount o% P31'42>'04 and 84I o% t#e tota& amount due as attorne!?s %ees, ! %i&ing a comp&aint %or
recover! o% sum o% mone!' EM$ %i&ed a motion to dismiss dated 0 7ugust 1./. stating t#at 7merican @ome
7ssurance $ompan! #ad no cause o% action ased on 7rtic&e /5/ o% t#e $ode o% $ommerce' ,t contended t#at
ased on t#e a&&egations o% t#e comp&aint, t#e &oss sustained in t#e case was P34,42>'04 w#ic# is on&! 1/I o%
P10,582,222'22, t#e tota& va&ue o% t#e cargo' ,n its order dated 83 Eovemer 1./., t#e :egiona& Tria& $ourt
sustained EM$?s contention' 7merican @ome 7ssurance t#en %i&ed a motion %or reconsideration o% t#e order
o% dismissa& ut same was denied ! t#e court in its order dated 8> Januar! 1..2'
,nstead o% %i&ing an appea& %rom t#e order o% t#e court a 9uo dismissing t#e comp&aint %or recover! o% a sum o%
mone!, 7merican @ome 7ssurance %i&ed a petition %or certiorari wit# t#e $ourt o% 7ppea&s to set aside t#e two
orders o% t#e Audge in said court' 1ut t#e $ourt o% 7ppea&s in its decision dated 32 Ma! 1..2, dismissed t#e
petition as constituting p&ain errors o% &aw and not grave ause o% discretion correcti&e ! certiorari (a "pecia&
$ivi& 7ction)' ,% at a&&, t#e appe&&ate court ru&ed t#at t#ere are errors o% Audgment suAect to correction !
certiorari as a mode o% appea& ut t#e appea& is to t#e "upreme $ourt under "ection 10 o% t#e Judiciar! 7ct o%
1.5/ as amended ! :7 4552' (t#erwise stated, t#e appe&&ate $ourt opined t#at t#e proper remed! is a
petition %or review on certiorari wit# t#e "upreme $ourt on pure 9uestions o% &aw'
@ence, t#e petition %or review on certiorari'
,n a reso&ution dated 12 Decemer 1..2, t#e "upreme $ourt gave due course to t#e petition and re9uired ot#
parties to %i&e t#eir respective memoranda' T#e "upreme $ourt reversed t#e decisions o% ot# t#e $ourt o%
7ppea&s and t#e :egiona& Tria& $ourt o% Mani&a, 1ranc# 51, appea&ed %romC and (8) ordered EM$ to
reimurse t#e surogee, 7merican @ome 7ssurance, t#e amount o% P31,42>'04'
1. Certiorari not t)e proper re#e+y in t)e case $e,ore t)e Court o, 5ppeals
T#e $ourt o% 7ppea&s ru&ed t#at appea& is t#e proper remed!, %or aside %rom t#e %act t#at t#e two
orders dismissing t#e comp&aint %or &ack o% cause o% action are %ina& orders wit#in t#e meaning o% :u&e 51,
"ection 8 o% t#e :u&es o% $ourt, suAect petition raised 9uestions w#ic# i% at a&&, constitute p&ain errors o% &aw
or o% Audgment not constituting grave ause o% discretion correcti&e ! certiorari' Bvident&!, t#e $ourt o%
7ppea&s did not err in dismissing t#e petition %or certiorari %or as ru&ed ! t#e "upreme $ourt, an order o%
dismissa& w#et#er rig#t or wrong is a %ina& order, #ence, a proper suAect o% appea&, not certiorari (Mara#a! v'
Me&icor, 1/1 "$:7 /11 L1..2M)'
-. Rule #ay $e relaxe+ ,or t)e $roa+er interests o, ?ustice
@owever, w#ere t#e %act remains t#at t#e $ourt o% 7ppea&s ovious&! in t#e roader interests o%
Austice, nevert#e&ess proceeded to decide t#e petition %or certiorari and ru&ed on speci%ic points raised t#erein
in a manner akin to w#at wou&d #ave een done on assignments o% error in a regu&ar appea&, t#e petition
t#erein was t#ere%ore disposed o% on t#e merits and not on a dismissa& due to erroneous c#oice o% remedies or
tec#nica&ities' @ence, a review o% t#e decision o% t#e $ourt o% 7ppea&s on t#e merits against 7merican @ome
7ssurance in t#is case is in order'
3. 5rticle 4/4! Co+e o, Co##erce
7rtic&e /5/ o% t#e $ode o% $ommerce provides ;t#at c&aims %or averages s#a&& not e admitted i% t#e!
do not e3ceed 4I o% t#e interest w#ic# t#e c&aimant ma! #ave in t#e vesse& or in t#e cargo i% it e gross
average and 1I o% t#e goods damaged i% particu&ar average, deducting in ot# cases t#e e3penses o% appraisa&,
un&ess t#ere is an agreement to t#e contrar!'<
/. :articular avera*e +e,ine+
Particu&ar average is a &oss #appening to t#e s#ip, %reig#t, or cargo w#ic# is not s#ared ! contriuting
among a&& t#ose interested, ut must e orne ! t#e owner o% t#e suAect to w#ic# it occurs'
2. General avera*e +e,ine+
6enera& average is a contriution ! t#e severa& interests engaged in t#e maritime venture to make
good t#e &oss o% one o% t#em %or t#e vo&untar! sacri%ice o% a part o% t#e s#ip or cargo to save t#e residue o% t#e
propert! and t#e &ives o% t#ose on oard, or %or e3traordinar! e3penses necessari&! incurred %or t#e common
ene%it and sa%et! o% a&&'
. La. o, country o, +estination
7s reso&ved in Eationa& Deve&opment $o' v' $'7' (1>5 "$:7 4.3 L1.//MC citing Bastern "#ipping
+ines, ,nc' v' ,'7'$', 142 "$:7 5>., 502 L1./0M, ;t#e &aw o% t#e countr! to w#ic# t#e goods are to e
transported governs t#e &iai&it! o% t#e common carrier in case o% t#eir &oss, destruction or deterioration'<
(7rtic&e 1043, $ivi& $ode)' @erein, t#us, %or cargoes transported to t#e P#i&ippines, t#e &iai&it! o% t#e carrier
is governed primari&! ! t#e $ivi& $ode and in a&& matters not regu&ated ! said $ode, t#e rig#ts and
o&igations o% common carrier s#a&& e governed ! t#e $ode o% $ommerce and ! specia& &aws (7rtic&e 10>>,
$ivi& $ode)'
3. <e*ree o, +ili*ence re9uire+ o, co##on carriers6 :resu#ption o, ne*li*ence
Dnder 7rtic&e 1033 o% t#e $ivi& $ode, common carriers %rom t#e nature o% t#eir usiness and %or
reasons o% pu&ic po&ic! are ound to oserve e3traordinar! di&igence in t#e vigi&ance over t#e goods and %or
t#e sa%et! o% passengers transported ! t#em according to a&& circumstances o% eac# case' T#us, under 7rtic&e
1034 o% t#e same $ode, in a&& cases ot#er t#an t#ose mentioned in 7rtic&e 1035 t#ereo%, t#e common carrier
s#a&& e presumed to #ave een at %au&t or to #ave acted neg&igent&!, un&ess it proves t#at it #as oserved t#e
e3traordinar! di&igence re9uired ! &aw'
4. Co##on carrier cannot li#it lia$ility ,or in?ury cause+ $y its o.n ne*li*ence
$ommon carriers cannot &imit t#eir &iai&it! %or inAur! or &oss o% goods w#ere suc# inAur! or &oss was
caused ! its own neg&igence' (t#erwise stated, t#e &aw on averages under t#e $ode o% $ommerce cannot e
app&ied in determining &iai&it! w#ere t#ere is neg&igence'
%. ;ssue o, ne*li*ence a++resse+ $e,ore extent o, lia$ility applie+
Dnder t#e %oregoing princip&e and in &ine wit# t#e $ivi& $ode?s mandator! re9uirement o%
e3traordinar! di&igence on common carriers in t#e care o% goods p&aced in t#eir stead, it is ut reasona&e to
conc&ude t#at t#e issue o% neg&igence must %irst e addressed e%ore t#e proper provisions o% t#e $ode o%
$ommerce on t#e e3tent o% &iai&it! ma! e app&ied'
1". &ilin* o, #otion to +is#iss +ue to lack o, cause o, action carries a+#ission o, #aterial ,acts
T#e %i&ing o% a motion to dismiss on t#e ground o% &ack o% cause o% action carries wit# it t#e admission
o% t#e materia& %acts p&eaded in t#e comp&aint ("uneam $onvenience Foods, ,nc' v' $'7', 1/1 "$:7 553
L1..2M)' @erein, upon de&iver! o% t#e s#ipment in 9uestion at Ma!&een?s ware#ouse in Mani&a, 188 a&es were
%ound to e damaged-&ost wit# straps cut or &oose, ca&cu&ated ! t#e so=ca&&ed ;percentage met#od< at 5,3>2
ki&ograms and amounting to P>1,8>3'51' ,nstead o% presenting proo% o% t#e e3ercise o% e3traordinar! di&igence
as re9uired ! &aw, EM$ %i&ed its Motion to Dismiss dated 0 7ugust 1./., #!pot#etica&&! admitting t#e trut#
o% t#e %acts a&&eged in t#e comp&aint to t#e e%%ect t#at t#e &oss or damage to t#e 188 a&es was due to t#e
neg&igence or %au&t o% EM$' "uc# eing t#e case, it is evident t#at t#e $ode o% $ommerce provisions on
averages cannot app&!'
11. Co##on carriers are responsi$le ,or loss! etc. o, *oo+s6 Dxceptions
7rtic&e 1035 o% t#e $ivi& $ode provides t#at common carriers are responsi&e %or &oss, destruction or
deterioration o% t#e goods, un&ess due to an! o% t#e causes enumerated t#erein' @erein, it is ovious t#at t#e
present case does not %a&& under an! o% t#e e3ceptions' T#us, 7merican @ome 7ssurance $ompan! is entit&ed
to reimursement o% w#at it paid to Ma!&een Paper, ,nc' as insurer'
[113] =endo$a vs. PAL, see [17]
[114] Co%pania =ariti%a vs. 'nsurance Co. o2 )orth A%erica: see [0/]
[11%]
Dastern S)ippin* Lines vs. =ar*arine>Gerkau,s>Fnion G#$H (GR L>31"43! -3 Septe#$er 1%3%)
First Division, Tee#ankee (J): 4 concur
Facts: Margarine=Verkau%s= Dnion 6m@, a Fest 6erman corporation not engaged in usiness in t#e
P#i&ippines, was t#e consignee o% 422 &ong tons o% P#i&ippine copra in u&k wit# a tota& va&ue o%
D"K12/,042'22 s#ipped %rom $eu $it! on oard Bastern "#ipping +ines? (a P#i&ippine corporation) vesse&,
t#e "" ;B7"TB:E P+7EBT< %or disc#arge at @amurg, 6erman!' Bastern "#ipping?s i&& o% &ading %or t#e
cargo provided t#at ;e3cept as ot#erwise stated #erein and in t#e $#arter Part!, t#e contract s#a&& e governed
! t#e &aws o% t#e F&ag o% t#e "#ip carr!ing t#e goods' ,n case o% average, same s#a&& e adAusted according to
Oork=7ntwerp :u&es o% 1.42'< F#i&e t#e vesse& was o%% 6ira&tar, a %ire roke out aoard t#e vesse& and
caused water damage to t#e copra s#ipment in t#e amount o% D"K4.1'3/' Bastern "#ipping reAected
Margarine?s c&aim %or pa!ment o% t#e damage'
Margarine %i&ed on 1/ June 1.>> in t#e Mani&a $F, its comp&aint against Bastern "#ipping as de%endant %or
recover! o% t#e same and D"K842'22=attorne!?s %ees and e3penses o% &itigation' 7%ter tria&, t#e &ower court
(ransportation La.! -""/ ( -%" )
reAected Bastern "#ippings?s de%ense t#at it was not &ia&e under P#i&ippine +aw %or t#e damage w#ic# did not
e3ceed 4I o% Margarine?s interest in t#e cargo and rendered Audgment on 84 7pri& 1.>. ordering t#e Bastern
"#ipping to pa! to Margarinet#e sum o% D"K4.1'3/, wit# interest at t#e &ega& rate %rom t#e date o% t#e %i&ing
o% t#e comp&aint unti& %u&&! paid, p&us D"K842'22 as attorne!?s %ees and t#e costs o% t#e suit' 7 petition %or
review on 9uestions o% &aw was %i&ed wit# t#e "upreme $ourt'
T#e "upreme $ourt a%%irmed t#e appea&ed Audgment #o&ding Bastern "#ipping &ia&e under t#e terms o% its
own i&& o% &ading %or t#e damage su%%ered ! Margarines copra cargo on oard petitioner?s vesse&, ut sets
aside t#e award o% attorne!?s %ees to Margarine %or &ack o% an! statement or reason in t#e &ower court?s
Audgment t#at wou&d Austi%! t#e award' T#us, t#e appea&ed Audgment is a%%irmed wit# t#e modi%ication t#at
t#e award o% attorne!?s %ees is set asideC wit# costs against Bastern "#ipping'
1. 5rticle 4/4 o, t)e Co+e o, Co##erce +oes not apply as t)ere is t)e clause @a*ree#ent to t)e
contraryA in t)e $ill o, la+in* (application o, t)e Hork>5nt.erp Rules o, 1%2")
7rtic&e /5/ o% t#e $ode o% $ommerce w#ic# wou&d ar c&aims %or averages not e3ceeding 4I o% t#e
c&aimant?s interest cannot e app&ied %or t#e reason t#at t#e i&& o% &ading contains Gan agreement to t#e
contrar!? %or it is e3press&! provided in t#e &ast sentence o% t#e %irst paragrap# t#at G,n case o% average, same
s#a&& e adAusted according to Oork=7ntwerp :u&es o% 1.42' T#e insertion o% said condition is e3press&!
aut#ori*ed ! $7 >4 w#ic# #as adopted in toto t#e D'"' $arriage o% 6oods ! "ea 7ct' Eow, it #as not een
s#own t#at said ru&es &imit t#e recover! o% damage to cases wit#in a certain percentage or proportion t#at said
damage ma! ear to c&aimant?s interest eit#er in t#e vesse& or cargo as provided in 7rtic&e /5/ o% t#e $ode o%
$ommerce' (n t#e contrar!, :u&e 3 o% said Oork=7ntwerp :u&es e3press&! states t#at GDamage done to a s#ip
and cargo, or eit#er o% t#em, ! water or ot#erwise, inc&uding damage ! reac#ing or scutt&ing a urning
s#ip, in e3tinguis#ing a %ire on oard t#e s#ip, s#a&& e made good as genera& average ' ' '<?
-. Bein* a contract o, a+)esion! inconsistency or a#$i*uity construe+ a*ainst aut)or (Dastern
S)ippin*)
T#ere is a c&ear and irreconci&a&e inconsistenc! etween t#e Oork=7ntwerp :u&es e3press&! adopted
! t#e parties as t#eir contract under t#e i&& o% &ading w#ic# sustains Margarine?s c&aim and t#e coda& artic&e
cited ! Bastern "#ipping w#ic# wou&d ar t#e same' F#at is invo&ved is a contract o% ad#esion as emodied
in t#e printed i&& o% &ading issued ! Bastern "#ipping %or t#e s#ipment to w#ic# Margarine as t#e consignee
mere&! ad#ered, #aving no c#oice in t#e matter, and conse9uent&!, an! amiguit! t#erein must e construed
against Bastern "#ipping as t#e aut#or'
3. 5.ar+ o, attorney1s ,ees un?usti,ie+
T#ere was no Austi%ication nor reason %or t#e award o% attorne!?s %ees in t#e te3t o% t#e tria& court?s
decision and s#ou&d t#ere%ore e disa&&owed' 7s restated in 1uan vs' $amaganacan, t#e genera& ru&e is t#at it
is contrar! to sound pu&ic po&ic! to p&ace a pena&t! on t#e rig#t to &itigate nor s#ou&d attorne!?s %ees e
awarded ever!time a part! wins a &awsuit' @ence, 7rtic&e 882/ o% t#e $ivi& $ode provides t#at ;in t#e asence
o% stipu&ation, attorne!?s %ees end e3penses o% &itigation, ot#er t#an Audicia& costs, cannot e recovered,< save
%or t#e e&even e3ceptions t#erein e3press&! provided' T#e present case does not %a&& wit#in an! o% t#e
e3ceptions t#at wou&d Austi%! t#e award %or attorne!?s %ees, suc# as gross and evident ad %ait# in re%using to
satis%! a p&ain&! va&id, Aust and demanda&e c&aim'
/. Bu+icial +iscretion to a.ar+ attorney1s ,ees +e#an+ ,actual! le*al or e9uita$le ?usti,ication
Bven i% under t#e road e&event# e3ception o% t#e cited artic&e w#ic# a&&ows t#e imposition o%
attorne!?s %ees ;in an! ot#er case w#ere t#e court deems it Aust and e9uita&e t#at attorne!?s %ees and e3penses
o% &itigation s#ou&d e recovered,< t#e conc&usion must e orne out ! %indings o% %acts and &aw' F#at is Aust
and e9uita&e in a given case is not a mere matter o% %ee&ing ut o% demonstration' @ence, t#e e3ercise o%
Audicia& discretion in t#e award o% attorne!?s %ees under 7rtic&e 882/ (11) o% t#e $ivi& $ode demands a %actua&,
&ega& or e9uita&e Austi%ication upon t#e asis o% w#ic# t#e court e3ercises its discretion' Fit#out suc# a
(ransportation La.! -""/ ( -%1 )
Austi%ication, t#e award is a conc&usion wit#out a premise, its asis eing improper&! &e%t to specu&ation and
conAecture'
2. Bu+*#ent in FS currency not 9uestione+! t)us is allo.e+
T#e appea&ed Audgment ordered Bastern "#ipping to pa! Margarine t#e sum o% D"K4.1'3/ wit#
interest at t#e &ega& rate (>I under 7rtic&e 882. o% t#e $ivi& $ode in %orce at t#e time o% t#e Audgment o% 84
7pri& 1.>.) %rom t#e %i&ing o% t#e comp&aint on 1/ June 1.>> unti& %u&&! paid' Bastern "#ipping did not appea&
%rom nor 9uestion t#is portion o% t#e Audgment re9uiring t#at it pa! Margarine t#e damage c&aim wit# interest
in D'"' currenc! (wit# re%erence to t#e genera& ru&e o% disc#arging o&igations in P#i&ippine currenc!
measured at t#e prevai&ing rate o% e3c#ange)' T#e $ourt a%%irmed t#e Audgment in D'"' currenc! in %avor o%
Margarine in view o% Bastern "#ipping?s ac9uiescence t#erein and viewed t#e Audgment as one w#erein t#e
&ower court sentenced Bastern "#ipping to pa! and remit to Margarine as a non=resident %oreign corporation
t#e amount due under t#e Audgment in D'"' currenc!'
[1-"]
=a*ellan =anu,acturin* =arketin* vs. C5 [GR %22-%! -- 5u*ust 1%%1]
"econd Division, :ega&ado (J): 3 concur, 1 on &eave
&acts' (n 82 Ma! 1./2, Mage&&an Manu%acturers Marketing $orp' (MMM$) entered into a contract wit#
$#oAu $o' o% Ooko#ama, Japan to e3port 13>,222 ana#aw %ans %or and in consideration o% K83,882'22' 7s
pa!ment t#ereo%, a &etter o% credit was issued to MMM$ ! t#e u!er' T#roug# its president, James $u,
MMM$ t#en contracted F'B' Rue&&ig, a s#ipping agent, t#roug# its so&icitor, one Mr' Ping, to s#ip t#e ana#aw
%ans t#roug# (rient (verseas $ontainer +ines, ,nc', ((($+) speci%!ing t#at #e needed an on=oard i&& o%
&ading and t#at transs#ipment is not a&&owed under t#e &etter o% credit' (n 32 June 1./2, MMM$ paid F'B'
Rue&&ig t#e %reig#t c#arges and secured a cop! o% t#e i&& o% &ading w#ic# was presented to 7&&ied 1ank' T#e
ank t#en credited t#e amount o% D"K83 ,882'22 covered ! t#e &etter o% credit to appe&&ant?s account'
@owever, w#en MMM$?s president James $u, went ack to t#e ank &ater, #e was in%ormed t#at t#e pa!ment
was re%used ! t#e u!er a&&eged&! ecause t#ere was no on=oard i&& o% &ading, and t#ere was a
transs#ipment o% goods' 7s a resu&t o% t#e re%usa& o% t#e u!er to accept, upon MMM$?s re9uest, t#e ana#aw
%ans were s#ipped ack to Mani&a ! (($+ and FB Rue&&ig, %or w#ic# t#e &atter demanded %rom MMM$
pa!ment o% P85>,253'53' MMM$ aandoned t#e w#o&e cargo and asked (($+ and FB Rue&&ig %or damages'
(n 82 Ju&! 1./1 MMM$ %i&ed t#e comp&aint in t#is case pra!ing t#at (($+ and FB Rue&&ig e ordered to
pa! w#atever MMM$ was not a&e to earn %rom $#oAu $o', +td', amounting to P105,142'22 and ot#er
damages &ike attorne!?s %ees since (($+ and FB Rue&&ig are to &ame %or t#e re%usa& o% $#oAu $o', +td' to
accept t#e 7na#aw %ans' ,n answer t#ereto t#e &atter a&&eged t#at t#e i&& o% &ading c&ear&! s#ows t#at t#ere wi&&
e a transs#ipment and t#at MMM$ was we&& aware t#at MV (Paci%ic) Despatc#er was on&! up to @ongkong
w#ere t#e suAect cargo wi&& e trans%erred to anot#er vesse& %or Japan' T#e! t#is %i&ed a counterc&aim pra!ing
t#at MMM$ e ordered to pa! %reig#t c#arges %rom Japan to Mani&a and t#e demurrage?s in Japan and Mani&a
amounting to P8./,142'.3' T#e &ower court decided t#e case in %avor o% (($+ and FB Rue&&ig'
(n appea& to t#e $ourt o% 7ppea&s, t#e %inding o% t#e &ower court t#at MMM$ agreed to a transs#ipment o%
t#e goods was a%%irmed ut t#e %inding t#at petitioner is &ia&e %or P8./,142'.3 was modi%ied' ,t was reduced
to P48,128'54 w#ic# represents t#e %reig#t c#arges and demurrage?s incurred in Japan ut not %or t#e
demurrage?s incurred in Mani&a' MMM$, dissatis%ied wit# t#e decision moved %or reconsideration' Denied, it
%i&ed a petition %or review on certiorari'
T#e "upreme $ourt a%%irmed t#e Audgment o% t#e $ourt o% 7ppea&s wit# t#e modi%ication t#at MMM$ is
&ikewise aso&ved o% an! &iai&it!, t#us setting aside t#e award o% P48,128'54 wit# &ega& interest granted ! t#e
(ransportation La.! -""/ ( -%- )
appe&&ate court on (($+ and FB Rue&&ig?s counterc&aim, said counterc&aim eing dismissed, wit#out
pronouncement as to costs'
1. (ranss)ip#ent +e,ine+
Transs#ipment, in maritime &aw, is de%ined as ;t#e act o% taking cargo out o% one s#ip and &oading it in
anot#er,< or ;t#e trans%er o% goods %rom t#e vesse& stipu&ated in t#e contract o% a%%reig#tment to anot#er vesse&
e%ore t#e p&ace o% destination named in t#e contract #as een reac#ed,< or ;t#e trans%er %or %urt#er
transportation %rom one s#ip or conve!ance to anot#er'< Bit#er in its ordinar! or its strict&! &ega& acceptation,
t#ere is transs#ipment w#et#er or not t#e same person, %irm or entit! owns t#e vesse&s' ,n ot#er words, t#e %act
o% trans#ipment is not dependent upon t#e owners#ip o% t#e transporting s#ips or conve!ances or in t#e
c#ange o% camera, ut rat#er on t#e %act o% actua& p#!sica& trans%er o% cargo %rom one vesse& to anot#er'
-. (ranss)ip#ent exists in present case
T#ere was trans#ipment, as t#ere unmistaka&! appears on t#e %ace o% t#e i&& o% &ading t#e entr!
;@ong Pong< in t#e &ank space &ae&ed ;Transs#ipment,< w#ic# can on&! mean t#at transs#ipment actua&&!
took p&ace' T#is %act is %urt#er o&stered ! t#e certi%ication issued ! F'B' Rue&&ig, ,nc' dated 1. Ju&! 1./2,
a&t#oug# it care%u&&! used t#e term ;trans%er< instead o% transs#ipment' Eonet#e&ess, no amount o% semantic
Augg&ing can mask t#e %act t#at transs#ipment in trut# occurred in t#is case'
3. 5 $ill o, la+in* operates $ot) as a receipt an+ as a contract
7 i&& o% &ading operates ot# as a receipt and as a contract' ,t is a receipt %or t#e goods s#ipped and a
contract to transport and de&iver t#e same as t#erein stipu&ated' 7s a contract, it names t#e parties, w#ic#
inc&udes t#e consignee, %i3es t#e route, destination, and %reig#t rates or c#arges, and stipu&ates t#e rig#ts and
o&igations assumed ! t#e parties' 1eing a contract, it is t#e &aw etween t#e parties w#o are ound ! its
terms and conditions provided t#at t#ese are not contrar! to &aw, mora&s, good customs, pu&ic order and
pu&ic po&ic!' 7 i&& o% &ading usua&&! ecomes e%%ective upon its de&iver! to and acceptance ! t#e s#ipper' ,t
is presumed t#at t#e stipu&ations o% t#e i&& were, in t#e asence o% %raud, concea&ment or improper conduct,
known to t#e s#ipper, and #e is genera&&! ound ! #is acceptance w#et#er #e reads t#e i&& or not'
/. Clai#s o, #istake #ilitates a*ainst nature o, $ill o, la+in*
T#e c&aim t#at t#ere was a mistake in documentation on t#e part o% (($+ and FB Rue&&ig mi&itates
against t#e conc&usiveness o% t#e i&& o% &ading inso%ar as it re%&ects t#e terms o% t#e contract etween t#e
parties, as an e3ception to t#e paro& evidence ru&e, and wou&d t#ere%ore permit it to e3p&ain or present
evidence to var! or contradict t#e terms o% t#e written agreement, t#at is, t#e i&& o% &ading invo&ved'
2. Receipt o, $ill la+in* .it)out o$?ection presu#e+ to #ean acceptance o, contents as correct an+
assent t)ereto
7 s#ipper w#o receives a i&& o% &ading wit#out oAection a%ter an opportunit! to inspect it, and
permits t#e carrier to act on it ! proceeding wit# t#e s#ipment is presumed to #ave accepted it as correct&!
stating t#e contract and to #ave assented to its terms' T#e acceptance o% t#e i&& wit#out dissent raises t#e
presumption t#at a&& t#e terms t#erein were roug#t to t#e know&edge o% t#e s#ipper and agreed to ! #im and,
in t#e asence o% %raud or mistake, #e is estopped %rom t#erea%ter den!ing t#at #e assented to suc# terms' T#is
ru&e app&ies wit# particu&ar %orce w#ere a s#ipper accepts a i&& o% &ading wit# %u&& know&edge o% its contents
and acceptance under suc# circumstances makes it a inding contract'
. :arol evi+ence rule vis>Q>vis contracts
Dnder t#e paro& evidence ru&e, t#e terms o% a contract are rendered conc&usive upon t#e parties, and
evidence a&iunde is not admissi&e to var! or contradict a comp&ete and en%orcea&e agreement emodied in a
document, suAect to we&& de%ined e3ceptions w#ic# do not otain in t#is case' T#e paro& evidence ru&e is
ased on t#e consideration t#at w#en t#e parties #ave reduced t#eir agreement on a particu&ar matter into
writing, a&& t#eir previous and contemporaneous agreements on t#e matter are merged t#erein' 7ccording&!,
evidence o% a prior or contemporaneous vera& agreement is genera&&! not admissi&e to var!, contradict or
de%eat t#e operation o% a va&id instrument' T#e mistake contemp&ated as an e3ception to t#e paro& evidence
ru&e is one w#ic# is a mistake o% %act mutua& to t#e parties' Furt#ermore, t#e ru&es on evidence, as amended,
re9uire t#at in order t#at paro& evidence ma! e admitted, said mistake must e put in issue ! t#e p&eadings,
suc# t#at i% not raised inceptive&! in t#e comp&aint or in t#e answer, as t#e case ma! e, a part! can not &ater
on e permitted to introduce paro& evidence t#ereon'
3. (er#s o, contract in $ill o, la+in* clear an+ conclusive
T#e terms o% t#e contract as emodied in t#e i&& o% &ading are c&ear and t#us oviates t#e need %or an!
interpretation' T#e intention o% t#e parties w#ic# is t#e carriage o% t#e cargo under t#e terms speci%ied
t#ereunder and t#e wordings o% t#e i&& o% &ading do not contradict eac# ot#er' T#e terms o% t#e contract eing
conc&usive upon t#e parties and Audging %rom t#e contemporaneous and suse9uent actuations o% petitioner, to
wit, persona&&! receiving and signing t#e i&& o% &ading and pa!ing t#e %reig#t c#arges, t#ere is no dout t#at
petitioner must necessari&! e c#arged wit# %u&& know&edge and un9ua&i%ied acceptance o% t#e terms o% t#e i&&
o% &ading and t#at it intended to e ound t#ere!'
4. (ranss)ip#ent o, ,rei*)t .it)out le*al excuse is a violation o, contract6 7o cause to suppose
s)ippers to $e una.are o, custo#
,t is a we&&=known commercia& usage t#at transs#ipment o% %reig#t wit#out &ega& e3cuse, #owever
competent and sa%e t#e vesse& into w#ic# t#e trans%er is made, is a vio&ation o% t#e contract and an
in%ringement o% t#e rig#t o% t#e s#ipper, and suAects t#e carrier to &iai&it! i% t#e %reig#t is &ost even ! a cause
ot#erwise e3cepted' ,t is #ig#&! improa&e to suppose t#at (($+ and FB Rue&&ig, #aving een engaged in
t#e s#ipping usiness %or so &ong, wou&d e unaware o% suc# a custom o% t#e trade as to #ave undertaken suc#
transs#ipment wit#out petitioner?s consent and unnecessari&! e3pose t#emse&ves to a possi&e &iai&it!' Veri&!,
t#e! cou&d on&! #ave undertaken transs#ipment wit# t#e s#ipper?s permission, as evidenced ! t#e signature
o% James $u'
%. 0no.le+*e o, +i,,erence $et.een $ill o, la+in* an+ on $oar+ $ill o, la+in* expecte+ ,ro# t)ose
en*a*e+ in export in+ustry ,or lon* perio+s
T#e re%usa& o% acceptance o% t#e cargo o% ana#aw %ans ! $#oAu $o', +td' was a&so made on t#e
ground t#at t#e i&& o% &ading t#at was issued was not an on oard i&& o% &ading, in c&ear vio&ation o% t#e terms
o% t#e &etter o% credit issued in %avor o% MMM$' MMM$ knew %rom t#e onset t#at its u!er, $#oAu $o', +td',
particu&ar&! re9uired t#at t#ere e an on oard i&& o% &ading, ovious&! due to t#e guarant! a%%orded ! suc# a
i&& o% &ading over an! ot#er kind o% i&& o% &ading' T#e u!er cou&d not #ave insisted on suc# a stipu&ation on a
pure w#im or caprice, ut rat#er ecause o% its re&iance on t#e sa%eguards to t#e cargo t#at #aving an on oard
i&& o% &ading ensured' @erein petitioner cannot %eign ignorance o% t#e distinction etween an ;or oard< and a
;received %or s#ipment< i&& o% &ading' ,t is on&! to e e3pected t#at t#ose &ong engaged in t#e e3port industr!
s#ou&d e %ami&iar wit# usiness usages and customs'
1". 8n $oar+ $ill o, la+in* +e,ine+
7n on oard i&& o% &ading is one in w#ic# it is stated t#at t#e goods #ave een received on oard t#e
vesse& w#ic# is to carr! t#e goods, w#ereas a received %or s#ipment i&& o% &ading is one in w#ic# it is stated
t#at t#e goods #ave een received %or s#ipment wit# or wit#out speci%!ing t#e vesse& ! w#ic# t#e goods are
to e s#ipped' :eceived %or s#ipment i&&s o% &ading are issued w#enever conditions are not norma& and t#ere
is insu%%icienc! o% s#ipping space' 7n on oard i&& o% &ading is issued w#en t#e goods #ave een actua&&!
p&aced aoard t#e s#ip wit# ever! reasona&e e3pectation t#at t#e s#ipment is as good as on its wa!' ,t is,
t#ere%ore, understanda&e t#at a part! to a maritime contract wou&d re9uire an on oard i&& o% &ading ecause
o% its apparent guarant! o% certaint! o% s#ipping as we&& as t#e seawort#iness o% t#e vesse& w#ic# is to carr!
t#e goods'
11. &D Iuelli*1s certi,ication cannot 9uali,y $ill o, la+in* into an o$ $oar+ $ill o, la+in*
(ransportation La.! -""/ ( -%/ )
T#e certi%ication o% F'B' Rue&&ig, ,nc' cannot 9ua&i%! t#e i&& o% &ading, as origina&&! issued, into an on
oard i&& o% &ading as re9uired ! t#e terms o% t#e &etter o% credit issued in %avor o% MMM$' For one, t#e
certi%ication was issued on&! on 1. Ju&! 1./2, wa! e!ond t#e e3pir! date o% 32 June 1./2 speci%ied in t#e
&etter o% credit %or t#e presentation o% an on oard i&& o% &ading' T#us, even assuming t#at ! a &iera&
treatment o% t#e certi%ication it cou&d #ave t#e e%%ect o% converting t#e received %or s#ipment i&& o% &ading into
an on oard o% i&& o% &ading, suc# an e%%ect ma! e ac#ieved on&! as o% t#e date o% its issuance, t#at is, on 1.
Ju&! 1./2 and onwards' T#e %act remains, t#oug#, t#at on t#e crucia& date o% 32 June 1./2 no on oard i&& o%
&ading was presented ! petitioner in comp&iance wit# t#e terms o% t#e &etter o% credit and t#is de%au&t
conse9uent&! negates its entit&ement to t#e proceeds t#ereo%' "aid certi%ication, i% a&&owed to operate
retroactive&!, wou&d render i&&usor! t#e guarant! a%%orded ! an on oard i&& o% &ading, t#at is, reasona&e
certaint! o% s#ipping t#e &oaded cargo aoard t#e vesse& speci%ied, not to mention t#at it wou&d induita&! e
stretc#ing t#e concept o% sustantia& comp&iance too %ar'
1-. Clai# o, contract o, a+)esion cannot $e up)el+ as $ill o, la+in* is clear
MMM$ cannot escape &iai&it! ! adverting to t#e i&& o% &ading as a contract o% ad#esion, t#us
warranting a more &iera& consideration in its %avor to t#e e3tent o% interpreting amiguities against (($+
and FB Rue&&ig as a&&eged&! eing t#e parties w#o gave rise t#ereto' T#e i&& o% &ading is c&ear on its %ace'
T#ere is no occasion to speak o% amiguities or oscurities w#atsoever' 7&& o% its terms and conditions are
p&ain&! worded and common&! understood ! t#ose in t#e usiness'
13. Certain contracts o, a+)esion! suc) as $ill o, la+in*! not pro)i$ite+
,t is conceded t#at i&&s o% &ading constitute a c&ass o% contracts o% ad#esion' @owever, as ru&ed in t#e
ear&ier case o% (ng Oiu us' $ourt o% 7ppea&s, et a&' and reiterated in "ervando, et a&' vs' P#i&ippine "team
Eavigation $o', p&ane tickets as we&& as i&&s o% &ading are contracts not entire&! pro#iited' T#e one w#o
ad#eres to t#e contract is in rea&it! %ree to reAect it entire&!C i% #e ad#eres, #e gives #is consent'
1/. Giolation o, letter o, cre+it .oul+ +e,eat ri*)t to collect procee+s t)ereo,
7n! vio&ation o% t#e terms and conditions o% t#e &etter o% credit as wou&d de%eat its rig#t to co&&ect t#e
proceeds t#ereo% was, t#ere%ore, entire&! o% MMM$?s making %or w#ic# it must ear t#e conse9uences'
F#et#er t#ere was a vio&ation o% t#e terms and conditions o% t#e &etter o% credit, or w#et#er suc# vio&ation was
t#e cause or motive %or t#e reAection ! MMM$?s Japanese u!er s#ou&d not a%%ect (($+ and FB Rue&&ig
since t#e! were not privies to t#e terms and conditions o% MMM$?s &etter o% credit and cannot t#ere%ore e
#e&d &ia&e %or an! vio&ation t#ereo% ! an! o% t#e parties t#ereto'
12. <e#urra*e +e,ine+
Demurrage, in its strict sense, is t#e compensation provided %or in t#e contract o% a%%reig#tment %or
t#e detention o% t#e vesse& e!ond t#e time agreed on %or &oading and un&oading' Bssentia&&!, demurrage is t#e
c&aim %or damages %or %ai&ure to accept de&iver!' ,n a road sense, ever! improper detention o% a vesse& ma! e
considered a demurrage' +iai&it! %or demurrage, using t#e word in its strict&! tec#nica& sense, e3ists on&!
w#en e3press&! stipu&ated in t#e contract' Dsing t#e term in its roader sense, damages in t#e nature o%
demurrage are recovera&e %or a reac# o% t#e imp&ied o&igation to &oad or un&oad t#e cargo wit# reasona&e
dispatc#, ut on&! ! t#e part! to w#om t#e dut! is owed and on&! against one w#o is a part! to t#e s#ipping
contract' Eotice o% arriva& o% vesse&s or conve!ances, or o% t#eir p&acement %or purposes o% un&oading is o%ten
a condition precedent to t#e rig#t to co&&ect demurrage c#arges'
1. 5$an+on#ent o, *oo+s releases ===C ,ro# lia$ility ,ro# +e#urra*e c)ar*es
(rdinari&!, t#e s#ipper is &ia&e %or %reig#tage due to t#e %act t#at t#e s#ipment was made %or its
ene%it or under its direction and, corresponding&!, t#e carrier is entit&ed to co&&ect c#arges %or its s#ipping
services' 1! virtue o% t#e e3ercise o% its option to aandon t#e goods so as to a&&ow (($+ and FB Rue&&ig to
se&& t#e same at a pu&ic auction and to app&! t#e proceeds t#ereo% as pa!ment %or t#e s#ipping and demurrage
c#arges, MMM$ was re&eased %rom &iai&it! %or t#e sum o% P48,128'53 since suc# amount represents t#e
s#ipping and demurrage c#arges %rom w#ic# it is considered to #ave een re&eased due to t#e aandonment o%
goods'
13. 88CL o,,ere+ ===C option! cannot rene*e o, o,,er unilaterally
(($+ and FB Rue&&ig une9uivoca&&! o%%ered MMM$, on 82 Marc# 1./1, t#e option o% pa!ing t#e
s#ipping and demurrage c#arges in order to take de&iver! o% t#e goods or o% aandoning t#e same so t#at t#e
%ormer cou&d se&& t#em at pu&ic auction and t#erea%ter app&! t#e proceeds in pa!ment o% t#e s#ipping and
ot#er c#arges' :esponding t#ereto, in a &etter dated 3 7pri& 1./1, MMM$ seasona&! communicated its
decision to aandon to t#e goods in %avor o% t#e %ormer wit# t#e speci%ic instruction t#at an! e3cess o% t#e
proceeds over t#e &ega& costs and c#arges e turned over to MMM$' @aving given suc# option, especia&&!
since it was accepted ! MMM$, (($+ and FB Rue&&ig are estopped %rom reneging t#ereon' To a&&ow eit#er
o% t#em to uni&atera&&! ack out on t#e o%%er and on t#e e3ercise o% t#e option wou&d e to countenance ause
o% rig#ts as an order o% t#e da!, doing vio&ence to t#e &ong entrenc#ed princip&e o% mutua&it! o% contracts'
14. Groun+s ,or a$an+on#ent o, *oo+s
,n over&and transportation, an unreasona&e de&a! in t#e de&iver! o% transported goods is su%%icient
ground %or t#e aandonment o% goods' 1! ana&og!, t#is can a&so app&! to maritime transportation' Furt#er,
MMM$ can proper&! aandon t#e goods, not on&! ecause o% t#e unreasona&e de&a! in its de&iver! ut
ecause o% t#e option w#ic# was categorica&&! granted to and e3ercised ! it as a means o% sett&ing its &iai&it!
%or t#e cost and e3penses o% res#ipment' "aid c#oice #aving een du&! communicated, t#e same is inding
upon t#e parties on &ega& and e9uita&e considerations o% estoppe&'
[1-1]
Rey#a Brokera*e vs. :)ilippine Ho#e 5ssurance Corp. (GR %3//! 3 8cto$er 1%%1)
&acts' (n 8 (ctoer 1.0., t#e vesse& GM" Ma&mros Monsoon? received onoard at Fremant&e, 1risane
Nueens&and, 7ustra&ia %rom s#ipper $raig Most!n T $o', Pt!' +td' (o% 1risane, Nueens&and) a s#ipment o%
8,>/2 cartons o% #ard %ro*en one&ess ee% contained in %ive (4) containers comp&ete and in good order and
condition %or transport to Mani&a in %avor o% t#e eventua& consignee :FM $orp' under 1i&& o% +ading Eo'
4315., dated 8 (ctoer 1.0.' (n 13 (ctoer 1.0., t#e M" GMa&mros Monsoon? arrived at Pier 3 o% t#e Port
o% Mani&a and disc#arged t#e s#ipment into t#e possession and custod! o% t#e arrastre operator' From Pier 3,
t#e s#ipment was trans%erred to t#e :ee%er Van 7rea o% Pier 13 and on 88 (ctoer 1.0., t#e arrastre
contractor &oaded t#e containers in 8 trucks and de&ivered t#em to 6rec# Food ,ndustries $o&d "torage in
Pasig, :i*a& arriving t#ere at 1:22 7'M', t#e %o&&owing morning, 83 (ctoer 1.0.' 5 personne& o% t#e :e!ma
1rokerage, a driver and a #e&per in eac# truck made t#e de&iver!' (n 83 (ctoer 1.0. at .:22 a'm', t#e
containers were stripped and t#e representative o% :e!ma 1rokerage and consignee counted t#e contents o% 4
containers and a%ter an inventor! o% $ontainer 1:(D=532>4>L1M, it was discovered t#at 823 cartons were
%ound s#ort out o% t#e &oaded 8,>/2 cartons o% #ard %ro*en one&ess ee% w#ic# according to t#e consignee
was tota&&! attriuta&e to t#e de%endant as it occurred w#i&e t#e said container in 9uestion was in t#e custod!
and responsii&it! o% :e!ma 1rokerage' $onsignee %i&ed c&aim %or t#e recover! o% t#e missing 823 cartons ut
t#e same was denied and conse9uent&!, consignee %i&ed t#e c&aim wit# t#e insurer under its Marine $argo
,nsurance Po&ic!' T#e consignee was paid ! p&ainti%% t#e amount o% P//,>4/'88 T#e pa!ment o% consignee?s
c&aim ! t#e insurer #ad surogated t#e &atter to %i&e t#is instant c&aim %or t#e recover! o% t#e said amount'
T#e tria& court (:T$, E$J:, 1ranc# 31, Mani&a) ru&ed against :e!ma 1rokerage, ordering t#e &atter (1) to pa!
t#e sum o% P//,>42'88 p&us &ega& interest t#ereon %rom t#e date o% t#e %i&ing o% t#e $omp&aint unti& t#e same is
%u&&! paidC () to pa! a sum e9uiva&ent to 84I o% t#e entire amount as attorne!?s %eesC and (3) to pa! t#e costs
o% t#is suit'
T#e $ourt o% 7ppea&s a%%irmed t#e decision o% t#e &ower court on 8. Eovemer 1.// ($7 6: $V 15442) in
toto' @ence, t#e petition %or review on certiorari'
T#e "upreme $ourt denied t#e petition, wit# costs against :e!ma 1rokerage'
1. Dxpress ackno.le+*#ent o, carrier in present case
T#e carrier, ! signi%!ing in t#e i&& o% &ading t#at ;it is a receipt ' ' ' %or t#e numer o% packages
s#own aove,< #ad e3p&icit&! admitted t#at t#e containeri*ed s#ipments #ad actua&&! t#e numer o% packages
dec&ared ! t#e s#ipper in t#e i&& o% &ading' T#is conc&usion is o&stered ! t#e stipu&ation printed in t#e i&&
o% &ading, ;un&ess e3press&! acknow&edged and agreed to'< T#ere%ore, t#e p#rase ;said to contain< a&so
appearing in t#e i&& o% &ading must give wa! to t#is rea&it!'
-. Dxpress ackno.le+*#ent an exception to +octrine o, FS Lines case
T#e e3press acknow&edgment o% t#e carrier makes t#e case at ar an e3ception to t#e doctrine
enunciated in Dnited "tates +ines' T#e ru&e enunciated ! Dnited "tates +ines app&ies to a situation w#ere t#e
carrier o% t#e containeri*ed cargo simp&! admits t#e in%ormation %urnis#ed ! t#e s#ipper wit# regard to t#e
goods it s#ipped as re%&ected in t#e i&& o% &ading (;said to contain<) ut not w#ere t#e carrier o% t#e
containeri*ed cargo makes an e3p&icit admission as to t#e weig#t, measurement marks, numers, 9ua&it!
contents, and va&ue, and more so, inscried t#ese admissions as stipu&ations in t#e i&& o% &ading itse&%, or made
t#em an addendum t#ereto, to w#ic# t#e carrier a%%i3ed its e3press acknow&edgment as w#at #appened in t#is
case' ,n its stead, t#e dictum t#at t#e i&& o% &ading s#a&& e prima %acie evidence o% t#e receipt ! t#e carrier o%
t#e goods as t#erein descried governs'
3. Bill o, la+in* $ot) a receipt an+ a contract
contract to transport and de&iver t#e same as t#erein stipu&ated' 7s a receipt, it recites t#e date and p&ace o%
s#ipment, descries t#e goods as to 9uantit!, weig#t, dimensions, identi%ication marks and condition, 9ua&it!,
and va&ue' 7s a contract it names t#e contracting parties, w#ic# inc&ude t#e consignee, %i3es t#e route,
destination, and %reig#t rates or c#arges, and stipu&ates t#e rig#ts and o&igations assumed ! t#e parties'
/. &acts alle*e+ in a party1s plea+in* are +ee#e+ a+#issions o, t)at party an+ $in+in* upon it6
:ri#a ,acie evi+ence
:e!ma 1rokerage inc&uded a&&egations in its answer t#at a&& t#e containeri*ed s#ipments arrived in
Mani&a wit# t#e sea&s intact, and t#at it received t#e said sea&ed containers o% t#e s#ipments, particu&ar&!
container 1:(D=532>4>1 w#ic# sustained t#e &oss o% 823 cartons %rom t#e arrastre operator, a&so wit# t#e
sea&s intact' ,t can t#ere%ore e conc&uded t#at :e!ma 1rokerage received a&& t#e s#ipments as itemi*ed in t#e
i&& o% &ading' For t#e ru&e is we&&=esta&is#ed t#at t#e
2. Bur+en o, proo, to overturn pri#a ,acie evi+ence
7s t#e arrastre operator prima %acie received a&& t#e s#ipments in t#e sea&ed containers, it #as t#e
urden to reut t#e conc&usion t#at it received t#e same wit#out s#ortage' Prima %acie evidence is o% course,
&ike a&& evidence suscepti&e to reutta&C ut unreutted it remains su%%icient, as a matter o% &aw to esta&is# t#e
u&timate proposition it purports to prove' ,t goes wit#out sa!ing t#at suc# evidence can on&! e overcome !
contrar! proo% and not ! mere surmises and specu&ations' :e!ma 1rokerage #ad not overt#rown t#is
presumption ! contrar! evidence, and t#us t#e &oss o% t#e 823 cartons is attriuta&e to it'
. :rescription +e,ense .aive+ or a$an+one+
T#e de%ense o% prescription (citing sec' 8(>), paragrap# 5 o% t#e $arriage o% 6oods ! "ea 7ct w#ic#
provides t#at t#e carrier and t#e s#ip s#a&& e disc#arged %rom a&& &iai&it! in respect o% &oss or damage un&ess
suit is roug#t wit#in one !ear a%ter de&iver! o% t#e goods or t#e date w#en t#e goods s#ou&d #ave een
de&ivered<) #ad een waived and-or aandoned ! t#e petitioner' (t#er t#an t#e a&&egation o% prescription in
t#e answer, :e!ma 1rokerage never pursued t#is matter eit#er in t#e &ater proceedings o% t#e tria& court or in
t#e $ourt o% 7ppea&s' T#e petitioner cannot now e a&&owed to raise t#is issue to t#e "upreme $ourt a%ter suc#
waiver or aandonment' 6ranting arguendo t#at :e!ma 1rokerage can sti&& put up prescription as its de%ense,
nonet#e&ess it wi&& not prosper considering t#at it is not a carrier or a vesse& or a c#arterer or t#e &ega& #o&der
o% t#e i&& o% &ading' ,t is t#e roker and t#e private respondent is t#e insurer' T#e prescriptive period o% t#is
cause o% action is 12 !ears' ,n t#e present case, 12 !ears #ave not !et &apsed %rom t#e de&iver! o% t#e s#ipment'
[1--]
0en* Hua :aper :ro+ucts vs. C5 (GR 1143! 1- &e$ruary 1%%4)
First Division, Panganian (J): 5 concur
&acts' "ea=+and "ervice, a s#ipping compan!, is a %oreign corporation &icensed to do usiness in t#e
P#i&ippines' (n 8. June 1./8, "ea+and received at its @ong Pong termina& a sea&ed container, $ontainer
"B7D >0483, containing 0> a&es o% ;unsorted waste paper< %or s#ipment to Peng @ua Paper Products, $o'
in Mani&a' 7 i&& o% &ading to cover t#e s#ipment was issued ! "ea=+and' (n . Ju&! 1./8, t#e s#ipment was
disc#arged at t#e Mani&a ,nternationa& $ontainer Port' Eotices o% arriva& were transmitted to Peng @ua ut t#e
&atter %ai&ed to disc#arge t#e s#ipment %rom t#e container during t#e ;%ree time< period or grace period' T#e
said s#ipment remained inside t#e "ea=+and?s container %rom t#e moment t#e %ree time period e3pired on 8.
Ju&! 1./8 unti& t#e time w#en t#e s#ipment was un&oaded %rom t#e container on 88 Eovemer 1./3, or a tota&
o% 5/1 da!s' During t#e 5/1=da! period, demurrage c#arges accrued' Fit#in t#e same period, &etters
demanding pa!ment were sent ! "ea=+and to Peng @ua w#o, #owever, re%used to sett&e its o&igation w#ic#
eventua&&! amounted to P>0,352'22' Eumerous demands were made on Peng @ua ut t#e o&igation remained
unpaid'
"ea +and t#erea%ter commenced t#e civi& action %or co&&ection and damages' T#e :T$ %ound Peng @ua &ia&e
%or demurrage, attorne!?s %ees and e3penses o% &itigation'
Peng @ua appea&ed to t#e $ourt o% 7ppea&s, w#ic# denied t#e appea& and a%%irmed t#e &ower court?s decision
in toto' ,n a suse9uent reso&ution, it a&so denied Peng @ua?s motion %or reconsideration' @ence, t#e petition
%or review'
T#e "upreme $ourt a%%irmed t#e assai&ed Decision wit# t#e modi%ication t#at t#e &ega& interest o% >I per
annum s#a&& e computed %rom 8/ "eptemer 1..2 unti& its %u&& pa!ment e%ore %ina&it! o% Audgment' T#e rate
o% interest s#a&& e adAusted to 18I per annum, computed %rom t#e time said Audgment ecame %ina& and
e3ecutor! unti& %u&& satis%action' T#e award o% attorne!?s %ees is de&eted'
1. 7ature o, $ill o, la+in*
7 i&& o% &ading serves two %unctions' First, it is a receipt %or t#e goods s#ipped' "econd, it is a
contract ! w#ic# t#ree parties, name&!, t#e s#ipper, t#e carrier, and t#e consignee undertake speci%ic
responsii&ities and assume stipu&ated o&igations' 7 ;i&& o% &ading de&ivered and accepted constitutes t#e
contract o% carriage even t#oug# not signed,< ecause t#e ;(a)cceptance o% a paper containing t#e terms o% a
proposed contract genera&&! constitutes an acceptance o% t#e contract and o% a&& o% its terms and conditions o%
w#ic# t#e acceptor #as actua& or constructive notice'< ,n a nuts#e&&, t#e acceptance o% a i&& o% &ading ! t#e
s#ipper and t#e consignee, wit# %u&& know&edge o% its contents, gives rise to t#e presumption t#at t#e same was
a per%ected and inding contract'
-. S)ipper an+ consi*nee .ere lia$le ,or pay#ent o, +e#urrer c)ar*es6 Section 13 o, t)e $ill o,
la+in*
"ection 10 o% t#e i&& o% &ading provided t#at t#e s#ipper and t#e consignee were &ia&e %or t#e
pa!ment o% demurrage c#arges %or t#e %ai&ure to disc#arge t#e containeri*ed s#ipment e!ond t#e grace period
a&&owed ! tari%% ru&es' "ection 10 o% t#e i&& o% &ading provided ;$ooperage Fines' T#e s#ipper and
consignee s#a&& e &ia&e %or, indemni%! t#e carrier and s#ip and #o&d t#em #arm&ess against, and t#e carrier
s#a&& #ave a &ien on t#e goods %or, a&& e3penses and c#arges %or mending cooperage, a&ing, repairing or
reconditioning t#e goods, or t#e van, trai&ers or containers, and a&& e3penses incurred in protecting, caring %or
or ot#erwise made %or t#e ene%it o% t#e goods, w#et#er t#e goods e damaged or not, and %or an! pa!ment,
e3pense, pena&t! %ine, dues, dut!, ta3 or impost, &oss, damage, detention, demurrage, or &iai&it! o% w#atsoever
nature, sustained or incurred ! or &evied upon t#e carrier or t#e s#ip in connection wit# t#e goods or !
reason o% t#e goods eing or #aving een on oard, or ecause o% s#ipper?s %ai&ure to procure consu&ar or
ot#er proper permits, certi%icates or an! papers t#at ma! e re9uired at an! port or p&ace or s#ipper?s %ai&ure to
supp&! in%ormation or ot#erwise to comp&! wit# a&& &aws, regu&ations and re9uirements o% &aw in connection
wit# t#e goods o% %rom an! ot#er act or omission o% t#e s#ipper or consignee'< Peng @ua?s pro&onged %ai&ure
to receive and disc#arge t#e cargo %rom t#e "ea=+and?s vesse& constitutes a vio&ation o% t#e terms o% t#e i&& o%
&ading' ,t s#ou&d t#us e &ia&e %or demurrage to t#e %ormer'
3. 0en* Hua1s letter prove+ re,usal to pick up car*o an+ not re?ection o, $ill o, la+in*6 ;#plie+
acceptance
Peng @ua ;received t#e i&& o% &ading immediate&! a%ter t#e arriva& o% t#e s#ipment< on / Ju&! 1./8'
@aving een a%%orded an opportunit! to e3amine t#e said document, it did not immediate&! oAect to or
dissent %rom an! term or stipu&ation t#erein' ,t was on&! si3 mont#s &ater, on 85 Januar! 1./3, t#at it sent a
&etter to private respondent sa!ing t#at it cou&d not accept t#e s#ipment' ,ts inaction %or suc# a &ong period
conve!s t#e c&ear in%erence t#at it accepted t#e terms and conditions o% t#e i&& o% &ading' Moreover, said &etter
spoke on&! o% petitioner?s inai&it! to use t#e de&iver! permit, i'e' to pick up t#e cargo, due to t#e s#ipper?s
%ai&ure to comp&! wit# t#e terms and conditions o% t#e &etter o% credit, %or w#ic# reason t#e i&& o% &ading and
ot#er s#ipping documents were returned ! t#e ;anks< to t#e s#ipper' T#e &etter mere&! proved its re%usa& to
pick up t#e cargo, not its reAection o% t#e i&& o% &ading'
/. 5ppre)ension o, violatin* la.s cannot +e,eat contractual o$li*ation an+ lia$ility
Peng @ua?s attempt to evade its o&igation to receive t#e s#ipment on t#e prete3t t#at t#is ma! cause
it to vio&ate customs, tari%% and centra& ank &aws must %ai&' Mere appre#ension o% vio&ating said &aws, wit#out
a c&ear demonstration t#at taking de&iver! o% t#e s#ipment #as ecome &ega&&! impossi&e, cannot de%eat t#e
petitioner?s contractua& o&igation and &iai&it! under t#e i&& o% &ading'
2. ;ssue raise+ ,or ,irst ti#e on appeal cannot $e entertaine+
7n issue raised %or t#e %irst time on appea& and not raised time&! in t#e proceedings in t#e &ower court
is arred ! estoppe&' Nuestions raised on appea& must e wit#in t#e issues %ramed ! t#e parties and,
conse9uent&!, issues not raised in t#e tria& court cannot e raised %or t#e %irst time on appea&' @erein, t#e issue
o% w#et#er or not Peng @ua accepted t#e i&& o% &ading was raised %or t#e %irst time on&! in its memorandum
e%ore t#e "upreme $ourt'
. 7ature o, +e#urra*e
Demurrage is mere&! an a&&owance or compensation %or t#e de&a! or detention o% a vesse&' ,t is o%ten a
matter o% contract, ut not necessari&! so' T#e ver! circumstance t#at in ordinar! commercia& vo!ages, a
particu&ar sum is deemed ! t#e parties a %air compensation %or de&a!s, is t#e ver! reason w#! it is, and oug#t
to e, adopted as a measure o% compensation, in cases e3 de&icto' F#at %airer ru&e can e adopted t#an t#at
w#ic# %ounds itse&% upon mercanti&e usage as to indemnit!, and %i3es a recompense upon t#e de&ierate
consideration o% a&& t#e circumstances attending t#e usua& earnings and e3penditures in common vo!agesS ,t
appears to us t#at an a&&owance, ! wa! o% demurrage, is t#e true measure o% damages in a&& cases o% mere
detention, %or t#at a&&owance #as re%erence to t#e s#ip?s e3penses, wear and tear, and common emp&o!ment'
3. 5#ount o, <e#urra*e C)ar*es supporte+ $y extant evi+ence
(ransportation La.! -""/ ( -%% )
T#e amount o% demurrage c#arges in t#e sum o% P>0,352 is a %actua& conc&usion o% t#e tria& court t#at
was a%%irmed ! t#e $ourt o% 7ppea&s and, t#us, inding on t#e "upreme $ourt' 1esides, suc# %actua& %inding
is supported ! t#e e3tant evidence' T#e apparent discrepanc! was a resu&t o% t#e variance o% t#e dates w#en
t#e two demands were made' Eecessari&!, t#e &onger t#e cargo remained unc&aimed, t#e #ig#er t#e demurrage'
T#us, w#i&e in #is &etter dated 85 7pri& 1./3, "ea=+and?s counse& demanded pa!ment o% on&! P30,/22, t#e
additiona& demurrage incurred ! Peng @ua due to its continued re%usa& to receive de&iver! o% t#e cargo
a&&ooned to P>0,352 ! 88 Eovemer 1./3'
4. ()ree contracts in a letter o, cre+it
,n a &etter o% credit, t#ere are t#ree distinct and independent contracts: (1) t#e contract o% sa&e etween
t#e u!er and t#e se&&er, (8) t#e contract o% t#e u!er wit# t#e issuing ank, and (3) t#e &etter o% credit proper
in w#ic# t#e ank promises to pa! t#e se&&er pursuant to t#e terms and conditions stated t#erein' ;Few t#ings
are more c&ear&! sett&ed in &aw t#an t#at t#e t#ree contracts w#ic# make up t#e &etter o% credit arrangement are
to e maintained in a state o% perpetua& separation'< 7 transaction invo&ving t#e purc#ase o% goods ma! a&so
re9uire, apart %rom a &etter o% credit, a contract o% transportation specia&&! w#en t#e se&&er and t#e u!er are
not in t#e same &oca&e or countr!, and t#e goods purc#ased #ave to e transported to t#e &atter'
%. Contract o, carria*e in $ill o, la+in* to $e treate+ in+epen+ently o, contract o, sale an+ t)e
contract ,or t)e issuance o, cre+it
T#e contract o% carriage, as stipu&ated in t#e i&& o% &ading in t#e present case, must e treated
independent&! o% t#e contract o% sa&e etween t#e se&&er and t#e u!er, and t#e contract %or t#e issuance o% a
&etter o% credit etween t#e u!er and t#e issuing ank' 7n! discrepanc! etween t#e amount o% t#e goods
descried in t#e commercia& invoice in t#e contract o% sa&e and t#e amount a&&owed in t#e &etter o% credit wi&&
not a%%ect t#e va&idit! and en%orceai&it! o% t#e contract o% carriage as emodied in t#e i&& o% &ading' 7s t#e
ank cannot e e3pected to &ook e!ond t#e documents presented to it ! t#e se&&er pursuant to t#e &etter o%
credit, neit#er can t#e carrier e e3pected to go e!ond t#e representations o% t#e s#ipper in t#e i&& o% &ading
and to veri%! t#eir accurac! vis=a=vis t#e commercia& invoice and t#e &etter o% credit' T#us, t#e discrepanc!
etween t#e amount o% goods indicated in t#e invoice and t#e amount in t#e i&& o% &ading cannot negate Peng
@ua?s o&igation to private respondent arising %rom t#e contract o% transportation'
1". Re#e+y o, alle*e+ overs)ip#ent lies a*ainst t)e s)ipper an+ not a*ainst t)e carrier
T#e contract o% carriage was under t#e arrangement known as ;"#ipper?s +oad 7nd $ount,< and t#e
s#ipper was so&e&! responsi&e %or t#e &oading o% t#e container w#i&e t#e carrier was o&ivious to t#e contents
o% t#e s#ipment' Peng @ua?s remed! in case o% overs#ipment &ies against t#e se&&er-s#ipper, not against t#e
carrier'
11. Co#putation o, le*al interest
a' F#en an o&igation, not constituting a &oan or %orearance o% mone!, is reac#ed, an interest on t#e
amount o% damages awarded ma! e imposed at t#e discretion o% t#e court at t#e rate o% >I per
annum' Eo interest, #owever, s#a&& e adAudged on un&i9uidated c&aims or damages e3cept w#en or
unti& t#e demand can e esta&is#ed wit# reasona&e certaint!' 7ccording&!, w#ere t#e demand is
esta&is#ed wit# reasona&e certaint!, t#e interest s#a&& egin to run %rom t#e time t#e c&aim is made
Audicia&&! or e3traAudicia&&! (7rt' 11>., $ivi& $ode) ut w#en suc# certaint! cannot e so reasona&!
esta&is#ed at t#e time t#e demand is made, t#e interest s#a&& egin to run on&! %rom t#e date t#e
Audgment o% t#e court is made (at w#ic# time t#e 9uanti%ication o% damages ma! e deemed to #ave
een reasona&! ascertained)' T#e actua& ase %or t#e computation o% &ega& interest s#a&&, in an! case,
e on t#e amount %ina&&! adAudged'
' F#en t#e Audgment o% t#e court awarding a sum o% mone! ecomes %ina& and e3ecutor!, t#e rate o%
&ega& interest, w#et#er t#e case %a&&s under paragrap# 1 or paragrap# 8, aove, s#a&& e 18I per
annum %rom suc# %ina&it! unti& its satis%action, t#is interim period eing deemed to e ! t#en an
e9uiva&ent to a %orearance o% credit'
1-. 8$li*ation one not arisin* ,ro# loan or ,or$earance o, #oney6 Le*al interest in t)e present case
T#e case invo&ves an o&igation not arising %rom a &oan or %orearance o% mone!C t#us, pursuant to
7rtic&e 882. o% t#e $ivi& $ode, t#e app&ica&e interest rate is >I per annum' "ince t#e i&& o% &ading did not
speci%! t#e amount o% demurrage, and t#e sum c&aimed ! "ea=+and increased as t#e da!s went !, t#e tota&
amount demanded cannot e deemed to #ave een esta&is#ed wit# reasona&e certaint! unti& t#e tria& court
rendered its Audgment' ,ndeed, ;un&i9uidated damages or c&aims, it is said, are t#ose w#ic# are not or cannot
e known unti& de%inite&! ascertained, assessed and determined ! t#e courts a%ter presentation o% proo%'<
$onse9uent&!, t#e &ega& interest rate is >I, to e computed %rom 8/ "eptemer 1..2, t#e date o% t#e tria&
court?s decision' 7nd in accordance wit# t#e cases o% PE1 and Bastern "#ipping, t#e rate o% 18I per annum
s#a&& e c#arged on t#e tota& t#en outstanding, %rom t#e time t#e Audgment ecomes %ina& and e3ecutor! unti&
its satis%action'
13. 5ttorney1s ,ees +enie+ +ue to lack o, ?usti,ication
T#e matter o% attorne!?s %ees was taken up on&! in t#e dispositive portion o% t#e tria& court?s decision'
T#is %a&&s s#ort o% t#e sett&ed re9uirement t#at t#e te3t o% t#e decision s#ou&d state t#e reason %or t#e award o%
attorne!?s %ees, %or wit#out suc# Austi%ication, its award wou&d e a ;conc&usion wit#out a premise, its asis
eing improper&! &e%t to specu&ation and conAecture'<
[1-3] Dng vs. CA, see [+*]
[1-/], also [187]
Hs#ael vs. Barretto (GR -4"-4! -2 7ove#$er 1%-3)
Bn 1anc, Jo#ns (J): > concur
&acts' Juan Osmae& T $o' ,nc', a domestic corporation, seeks to recover %rom 6aino 1arretto, et' a&'
P.,.52'.4, t#e a&&eged va&ue o% %our cases o% merc#andise w#ic# it de&ivered to t#e steams#ip 7ndres on 84
(ctoer 1.88, at Mani&a to e s#ipped to "urigao, ut w#ic# were never de&ivered to "a&omon "#aru%%, t#e
consignee, or returned to Juan Osmae& T $o' Juan Osmae& made its c&aim o% &oss wit#in 0 da!s a%ter receipt
o% in%ormation t#at 1>2 cases on&! were de&ivered' ,ts second c&aim was made on 8. Decemer 1.88, in w#ic#
it said t#at, i% t#e c&aim was not paid e%ore 3 Januar! 1.83, it wou&d e p&aced in t#e #ands o% attorne!s %or
co&&ection' (n 3 Januar! 1.83, 6aino 1arretto T $ompan! advised Juan Osmae& t#at it wou&d not pa! t#e
c&aim' T#e origina& comp&aint was %i&ed on 10 7pri& 1.83, or a &itt&e &ess t#an > mont#s a%ter t#e s#ipment was
made, and was &ater amended to inc&ude 6aino 1arretto and P' B' "oon as memers o% t#e &imited
partners#ip o% 6aino 1arretto T $o', +td' ,n t#eir amended answers 1arretto, et' a&' make a speci%ic denia& o%
a&& o% t#e materia& a&&egations o% t#e comp&aint, and as a specia& de%ense a&&ege t#at t#e %our cases o%
merc#andise in 9uestion were never de&ivered to t#em, and t#at under t#e provisions o% paragrap# 0 o% t#e
printed conditions appearing on t#e ack o% t#e i&& o% &ading, Juan Osmae&?s rig#t o% action is arred %or t#e
reason t#at it was not roug#t wit#in >2 da!s %rom t#e time t#e cause o% action accrued'
T#e evidence was taken upon suc# issues, and t#e &ower court rendered Audgment %or Juan Osmae& %or t#e %u&&
amount o% its c&aim, %rom w#ic# 7ndres @' +imgengco and Vicente Javier appea&ed'
1. 1/ cases o, *oo+s .ere +elivere+ to an+ loa+e+ on t)e stea#s)ip 5n+res
T#ere is amp&e evidence to support t#e %inding t#at t#e merc#andise was received ! 1arretto T $o'
,n %act it is sustained ! a preponderance o% t#e evidence' @erein, Juan Osmae&?s testimon!, toget#er wit# t#e
mani%est signed ! ;6' 1arretto, 7gents,< %or 7ndres @eras +imgengco covering t#e s#ipment o% t#e
merc#andise, w#erein 1>4 cases o% merc#andise appear as e&onging to Juan Osmae& and t#e i&&s o% &ading
signed ! t#e second o%%icer, $&aro 6a&&eros, %or t#e s#ipment o% t#e 1>4 cases, and a trip&icate cop! o% t#e i&&
o% &ading >8, on w#ic# t#e %irst o%%icer o% t#e steamer 7ndres, Francisco Masingsong, made a note t#at among
t#e merc#andise disc#arged in "urigao were t#e %our cases in 9uestion, c&ear&! s#ows t#at 1arretto T $o'
received %rom Juan Osmae& 1>5 cases o% merc#andise, and de&ivered at "urigao on&! 1>2 cases o% suc#
merc#andise, and t#at 1arretto %ai&ed to de&iver t#e said %our cases in "urigao w#en Juan Osmae&?s
representative took de&iver! o% t#e cargo at t#at port, and t#at t#e origina& %igure ;&< and t#e word ;u&to<
appearing on t#e ack o% t#e i&& o% &ading were c#anged ! 6a&&eros to read ;4< and ;u&tos'< T#e said
6a&&eros admitted as a witness t#at #e #ad t#e i&& o% &ading in #is possession %rom t#e time t#e steamer sai&ed
%rom Mani&a unti& t#e cargo was recounted in "urigao in t#e presence o% t#e %irst o%%icer, Francisco
Masingsong, "a&omon "#aru%%, t#e odeguero and 6a&&eros' T#e testimon! o% $&aro 6a&&eros stands
uncorroorated' T#e de%endants, wit#out s#owing an! &ega& reason t#ere%or, did not present as witnesses t#e
%irst o%%icer, Francisco Masingsong, and t#e #e&msman o% t#e steamer 7ndres and t#e odeguero in "urigao to
corroorate t#e testimon! o% $&aro 6a&&eros' 1ased upon t#e %indings o% %act o% t#e tria& court w#ic# are
sustained ! t#e evidence, Juan Osmae& de&ivered to 1arretto T $o' 1>5 cases o% si&k consigned and to e
de&ivered ! 1arretto T $o' to "a&omon "#aru%% in "urigao' Four o% suc# cases were never de&ivered, and t#e
evidence s#ows t#at t#eir va&ue is t#e amount a&&eged in t#e comp&aint'
-. Contents o, para*rap) 3 o, t)e $ill o, la+in*
Paragrap# 0 o% t#e i&& o% &ading provides t#at ;a&& c&aims %or s#ortage or damage must e made at t#e
time o% de&iver! to consignee or #is agent, i% t#e packages or containers s#ow e3terior signs o% damageC
ot#erwise to e made in writing to t#e carrier wit#in twent!=%our #ours %rom t#e time o% de&iver!' $&aims %or
nonde&iver! or s#ipment must e presented in writing to t#e carrier wit#in t#irt! da!s %rom t#e date o% accrua&'
"uits ased upon c&aims arising %rom s#ortage, damage, or nonde&iver! o% s#ipment s#a&& e instituted wit#in
si3t! da!s %rom date o% accrua& o% t#e rig#t o% action' Fai&ure to make c&aims or to institute Audicia&
proceedings as #erein provided s#a&& constitute a waiver o% t#e c&aim or rig#t o% action'<
3. Section 2"2 C! Corpus Buris Gol 1".! p. 3/3>3//
"ection 424 $, $orpus Juris, vo&' 12, pp' 353=355, provides ;contractua& +imitations 7s To Time For 1ringing
"uit' H 1' ,n 6enera&' H ,n t#e asence o% an! e3press statutor! pro#iition, according to t#e great weig#t o%
aut#orit!, it is competent %or t#e parties to a contract o% s#ipment to agree on a &imitation o% time s#orter t#an
t#e statutor! &imitation, wit#in w#ic# action %or reac# o% t#e contract s#a&& e roug#t, and suc# a &imitation
wi&& e en%orced i% reasona&e, a&t#oug# t#ere is some aut#orit! to t#e contrar!' Eevert#e&ess to e e%%ective
suc# &imitation must e reasona&eC and it #as een said t#at t#e on&! &imitations as to t#e va&idit! o% suc#
contracts are t#at t#e! must e reasona&e, and t#at t#ere must e prompt action on t#e part o% t#e carrier in
den!ing its &iai&it!, to t#e end t#at t#e s#ipper ma! e du&! apprised o% t#e %act t#at suit wi&& e necessar!'
"tipu&ations o% t#is c#aracter are not opposed to pu&ic po&ic!, and do not operate as a restriction on t#e
common=&aw &iai&it! o% t#e carrier'<
/. Rulin* Case La.! volu#e /! pp. 3%4>3%%
:u&ing $ase +aw, vo&ume 5, pp' 0./=0.., w#ic# reads: ;(84>) "tipu&ations +imiting Time %or
1ringing "uit' H "imi&ar in c#aracter to t#e stipu&ations Aust considered prescriing a certain time wit#in
w#ic# notice o% &oss must e given, are t#e provisions %re9uent&! met wit# in i&&s o% &ading w#ic# re9uire t#at
an! action to recover %or &oss or damage to t#e artic&e s#ipped s#ou&d e egun wit#in a speci%ied period' T#e
parties ma!, i% t#e! see %it, %i3 ! agreement a s#orter time %or t#e ringing o% suit on t#e contract t#an t#at
provided ! t#e statute o% &imitations, and i% t#e period t#erein &imited is reasona&e, suit must e roug#t
wit#in t#at time or t#e s#ipper?s rig#t o% action wi&& e arred' "uc# a provision is pro#iited ! no ru&e o% &aw
nor ! an! consideration o% pu&ic po&ic!' Eor is it at a&& a%%ected ! t#e e3istence wit#in t#e Aurisdiction o% a
statutor! or constitutiona& pro#iition against carriers &imiting or restricting t#eir common &aw &iai&it!, since
it is #e&d t#at suc# a stipu&ation does not in an! wa! de%eat t#e comp&ete vestiture o% t#e rig#t to recover, ut
mere&! re9uires t#e assertion o% t#at rig#t ! action at an ear&ier period t#an wou&d e necessar! to de%eat it
t#roug# t#e operation o% t#e ordinar! statute o% &imitations' 1ut t#e &imitation must e reasona&e, and i% t#e
period o% time speci%ied is suc# t#at under t#e %acts o% t#e particu&ar case t#e s#ipper cou&d not wit#
reasona&e di&igence e ena&ed to ring suit e%ore it e3pired, t#e attempted &imitation is void' T#us, a
provision t#at suit must e roug#t wit#in t#irt! da!s a%ter t#e &oss or damage occurred #as een #e&d
unreasona&e w#ere it appeared t#at t#e transit mig#t reasona&! consume t#e w#o&e o% t#at time' 7 period o%
%ort! da!s #as on t#e ot#er #and een #e&d to e a reasona&e &imitation'<
2. Con+itions in t)e $ill o, la+in*! $ein* unreasona$le an+ not printe+ in t)e triplicate copies! +o
not $in+ s)ipper
@erein, assuming t#at t#e conditions came to t#e know&edge o% Juan Osmae&, t#e "upreme $ourt o%
t#e P#i&ippine ,s&ands, #as #e&d t#at suc# stipu&ations in t#e i&& o% &ading are not reasona&e, and t#ere%ore, do
not ar an action' Furt#er, granting, wit#out deciding, t#at said conditions appearing on t#e ack o% t#e
origina&s mig#t #ave &ega& e%%ect, t#e court is o% t#e opinion t#at in view o% t#e %act t#at said conditions are not
printed on t#e trip&icate copies w#ic# were de&ivered to t#e p&ainti%%, suc# conditions are not inding upon
Juan Osmae&'

. Reasona$le ti#e6 5*uinal+o vs. <aJa
,n t#e case o% 7guina&do vs' Da*a (6' :' Eo' 84.>1), in w#ic# t#e printed conditions on t#e i&& o%
&ading were identica& wit# t#ose in t#e present case, t#e action was not commenced %or more t#an a !ear a%ter
t#e de&iver! o% t#e goods ! t#e p&ainti%% and t#e receipt o% t#e i&& o% &ading, and it was t#ere #e&d t#at ;#aving
regard to t#e situation invo&ved in t#is s#ipment, and t#e s&owness o% communication etween Mani&a and
$ata&ogan, t#e contractua& &imitation stated in t#is i&& o% &ading wit# respect to t#e time %or presentation o%
t#e written c&aim was insu%%icient' T#e same considerations are necessari&! decisive wit# respect to t#e time
re9uired %or t#e institution o% Audicia& action' ,t resu&ts t#at t#e stipu&ations re&ied upon ! t#e de%endant=
appe&&ee constitute no ostac&e to t#e maintenance o% t#e present action'<
3. 5ction in present case .as $rou*)t .it)in a @reasona$le ti#eA
@erein, t#e action was roug#t wit#in a ;reasona&e time'< 7&t#oug# it is true t#at ot# Juan Osmae&
and 1arreto T $o' are residents o% t#e $it! o% Mani&a, it is a&so true t#at "urigao w#ere t#e goods in 9uestion
were to e de&ivered is one o% t#e most distant p&aces %rom Mani&a in t#e P#i&ippine ,s&ands' ,n t#e ver! nature
o% t#ings, Juan Osmae& wou&d not want to commence its action unti& suc# time as it #ad made a %u&& and
care%u& investigation o% a&& o% t#e materia& %acts and even t#e &aw o% t#e case, so as to determine w#et#er or not
1arretto T $o' were &ia&e %or its &oss'
4. Clause 1- o, t)e $ill o, la+in*
$&ause 18 o% t#e i&& o% &ading provides t#at ;it is e3press&! understood t#at carrier s#a&& not e &ia&e
%or &oss or damage %rom an! cause or %or an! reason to an amount e3ceeding t#ree #undred pesos (P322)
P#i&ippine currenc! %or an! sing&e package o% si&k or ot#er va&ua&e cargo, nor %or an amount e3ceeding one
#undred pesos (P122) P#i&ippine currenc! %or an! sing&e package o% ot#er cargo, un&ess t#e va&ue and contents
o% suc# packages are correct&! dec&ared in t#is i&& o% &ading at t#e time o% s#ipment and %reig#t paid in accord
wit# t#e actua& measurement or weig#t o% t#e cargo s#ipped'< ,n %ine, t#e c&ause provides t#at t#e carrier s#a&&
not e &ia&e %or &oss or damage %rom an! cause or %or an! reason to an amount in e3cess o% P322 ;%or an!
sing&e package o% si&k or ot#er va&ua&e cargo'<
%. Silk s)ip#ents in t)e :)ilippines
,t is a matter o% common know&edge t#at &arge 9uantities o% si&k are imported in t#e P#i&ippine
,s&ands, and t#at a%ter eing imported, t#e! are so&d ! t#e merc#ants in Mani&a and ot#er &arge seaports, and
t#en s#ipped to di%%erent points and p&aces in t#e ,s&ands' @ence, t#ere is not#ing unusua& aout t#e s#ipment
o% si&k' ,n trut# and in %act, it is a matter o% usua& and ordinar! usiness' T#ere was no %raud or concea&ment in
t#e s#ipment in 9uestion'
1". Li#itation o, value in Clause 1- unconsciona$le an+ voi+ as a*ainst pu$lic policy
T#e s#ip, steamer 7nders, was a common carrier and must #ave een operated as a pu&ic uti&it!'
$&ause 18 p&aces a &imit o% P322 ;%or an! sing&e package o% si&k'< T#e evidence s#ows t#at 1>5 ;cases< were
s#ipped, and t#at t#e va&ue o% eac# case was ver! near P8,422' ,n t#is situation, t#e &imit o% 1arretto T $o'?s
&iai&it! %or eac# case o% si&k ;%or &oss or damage %rom an! cause or %or an! reason< wou&d put it in t#eir
power to #ave taken t#e w#o&e cargo o% 1>5 cases o% si&k at a va&uation o% P322 %or eac# case, or &ess t#an
1-/t# o% its actua& va&ue' ,% t#at ru&e o% &aw s#ou&d e sustained, no si&k wou&d ever e s#ipped %rom one is&and
to anot#er in t#e P#i&ippines' "uc# a &imitation o% va&ue is unconsciona&e and void as against pu&ic po&ic!'
11. Corpus Buris! Golu#e 1"! p. 12/6 :ara*rap) 1%/. (Reasona$leness o, Li#itation)
Paragrap# 1.5' > (:easona&eness o% +imitation) provides t#at ;t#e va&idit! o% stipu&ations &imiting
t#e carrier?s &iai&it! is to e determined ! t#eir reasona&eness and t#eir con%ormit! to t#e sound pu&ic
po&ic!, in accordance wit# w#ic# t#e o&igations o% t#e carrier to t#e pu&ic are sett&ed' ,t cannot &aw%u&&!
stipu&ate %or e3emption %rom &iai&it!, un&ess suc# e3emption is Aust and reasona&e, and un&ess t#e contract is
%ree&! and %air&! made' Eo contractua& &imitation is reasona&e w#ic# is suversive o% pu&ic po&ic!'<
1-. Corpus Buris! Golu#e 1"! p. 12/6 :ara*rap) 1%2.3 (E)at Li#itations o, Lia$ility :er#issi$le)
Paragrag# 1.4' 0 (F#at +imitations o% +iai&it! Permissi&e) provides t#at ;a' Eeg&igence H (&) :u&e
in 7merica H (a) ,n 7sence o% (rganic or "tatutor! Provisions :egu&ating "uAect H aa' MaAorit! :u&e' H
,n t#e asence o% statute, it is sett&ed ! t#e weig#t o% aut#orit! in t#e Dnited "tates, t#at w#atever &imitations
against its common=&aw &iai&it! are permissi&e to a carrier, it cannot &imit its &iai&it! %or inAur! to or &oss o%
goods s#ipped, w#ere suc# inAur! or &oss is caused ! its own neg&igence' T#is is t#e common &aw doctrine
and it makes no di%%erence t#at t#ere is no statutor! pro#iition against contracts o% t#is c#aracter'<
13. Corpus Buris! Golu#e 1"! p. 12/6 :ara*rap) 1%.$$ (Consi+erations on .)ic) Rule Base+)
Paragrap# 1.>' ($onsiderations on F#ic# :u&e 1ased) provides t#at ;T#e ru&e, it is said, rests on
considerations o% pu&ic po&ic!' T#e undertaking is to carr! t#e goods, and to re&ieve t#e s#ipper %rom a&&
&iai&it! %or &oss or damage arising %rom neg&igence in per%orming its contract is to ignore t#e contract itse&%'
T#e natura& e%%ect o% a &imitation o% &iai&it! against neg&igence is to induce want o% care on t#e part o% t#e
carrier in t#e per%ormance o% its dut!' T#e s#ipper and t#e common carrier are not on e9ua& termsC t#e s#ipper
must send #is %reig#t ! t#e common carrier, or not at a&&C #e is t#ere%ore entire&! at t#e merc! o% t#e carrier,
un&ess protected ! t#e #ig#er power o% t#e &aw against eing %orced into contracts &imiting t#e carrier?s
&iai&it!' "uc# contracts are wanting in t#e e&ement o% vo&untar! assent'<
1/. Corpus Buris! Golu#e 1"! p. 12/6 :ara*rap) 1%3 cc (5pplication an+ Dxtent o, Rule)
Paragrap# 1.0 cc (7pp&ication and B3tent o% :u&e) provides t#at ;(aa) Eeg&igence o% "ervants' H
T#e ru&e pro#iiting &imitation o% &iai&it! %or neg&igence is o%ten stated as a pro#iition o% an! contract
re&ieving t#e carrier %rom &oss or damage caused ! its own neg&igence or mis%easance, or t#at o% its servantsC
and it #as een speci%ica&&! decided in man! cases t#at no contract &imitation wi&& re&ieve t#e carrier %rom
responsii&it! %or t#e neg&igence, unski&&%u&ness, or care&essness o% its emp&o!ees'<
[1-2] hewara% vs. PAL, see [F a2ter +7]
[1-] t. PaulKs vs. =acondra-, see [+!]
[1-3] =aca% vs. CA, see [0*]
[1-4]
=aersk Line vs. C5 (GR %/31! 13 =ay 1%%3)
T#ird Division, 1idin (J): 5 concur
&acts' Maersk +ine is engaged in t#e transportation o% goods ! sea, doing usiness in t#e P#i&ippines
t#roug# its genera& agent $ompania 6enera& de Taacos de Fi&ipinas' B%ren $asti&&o, on t#e ot#er #and, is t#e
proprietor o% Bt#ega& +aoratories, a %irm engaged in t#e manu%acture o% p#armaceutica& products' (n 18
Eovemer 1.0>, $asti&&o ordered %rom B&i +i&&!, ,nc' o% Puerto :ico t#roug# t#e &atter?s agent in t#e
P#i&ippines, B&anco Products, >22,222 empt! ge&atin capsu&es %or t#e manu%acture o% #is p#armaceutica&
products' T#e capsu&es were p&aced in > drums o% 122,222 capsu&es eac# va&ued at D" K1,>>/'01' T#roug# a
Memorandum o% "#ipment, t#e s#ipper B&i +i&&!, ,nc' o% Puerto :ico advised $asti&&o as consignee t#at t#e
>22,222 empt! ge&atin capsu&es in > drums o% 122,222 capsu&es eac#, were a&read! s#ipped on oard MV
;7nders Maersk&ine< under Vo!age 0023 %or s#ipment to t#e P#i&ippines via (ak&and, $a&i%ornia' ,n said
Memorandum, s#ipper B&i +i&&!, ,nc' speci%ied t#e date o% arriva& to e 3 7pri& 1.00' For reasons unknown,
said cargo o% capsu&es were miss#ipped and diverted to :ic#mond, Virginia, D"7 and t#en transported ack
to (ak&and, $a&i%ornia' T#e goods %ina&&! arrived in t#e P#i&ippines on 12 June 1.00 or a%ter 8 mont#s %rom
t#e date speci%ied in t#e memorandum' 7s a conse9uence, $asti&&o as consignee re%used to take de&iver! o% t#e
goods on account o% its %ai&ure to arrive on time'
$asti&&o, a&&eging gross neg&igence and undue de&a! in t#e de&iver! o% t#e goods, %i&ed an action e%ore t#e tria&
court %or rescission o% contract wit# damages against Maersk +ine and B&i +i&&!, ,nc' as de%endants' +ater,
$asti&&o moved %or t#e dismissa& o% t#e comp&aint against B&i +i&&! on t#e ground t#at t#e evidence on record
s#ows t#at t#e de&a! in t#e de&iver! o% t#e s#ipment was attriuta&e so&e&! to Maersk +ine' 7cting on said
motion, t#e tria& court dismissed t#e comp&aint against B&i +i&&!C and corresponding&!, t#e &atter wit#drew its
cross=c&aim against Maersk +ine in a Aoint motion dated 3 Decemer 1.0.' 7%ter tria&, t#e tria& court rendered
Audgment dated / Januar! 1./8 in %avor o% $asti&&o, ordered Maersk +ine, t#roug# its agent $ompania
6enera& de Taacos de Fi&ipinas, to pa! $asti&&o t#e amount o% P3>.,222'22 as unrea&i*ed pro%itC P822,222'22
as mora& damagesC P12,222'22 as e3emp&ar! damagesC P11,>/2'.0 as cost o% credit &ineC and P42,222'22, as
attorne!?s %ees and to pa! t#e costs o% suit' T#e court a&so #e&d t#at sums due to $asti&&o wi&& ear t#e &ega&
rate o% interest unti& t#e! are %u&&! paid %rom t#e time t#e case was %i&ed'
(n appea&, t#e appe&&ate court rendered its decision dated 1 7ugust 1..2 a%%irming wit# modi%ications t#e
&ower court?s decisionC ordering Maersk +ine to pa! $asti&&o (1) compensator! damages o% P11,>/2'.0 at >I
annua& interest %rom %i&ing o% t#e comp&aint unti& %u&&! paid, (8) mora& damages o% P42,222'22, (3) e3emp&ar!
damages o% P82,222,22, (3) attorne!?s %ees, per appearance %ees, and &itigation e3penses o% P32,222'22, (5)
32I o% t#e tota& damages awarded e3cept item (3) aove, and t#e costs o% suit'
T#e "upreme $ourt a%%irmed t#e appea&ed decision, wit# t#e modi%ication regarding t#e de&etion o% item 5 o%
t#e appe&&ate court?s decision'
1. <is#issal o, Dli Lilly cross>clai# a*ainst =aersk Line +i+ not +is#iss ori*inal co#plaint
a*ainst it
T#e comp&aint was %i&ed origina&&! against B&i +i&&!, ,nc' as s#ipper=supp&ier and Maersk +ine as
carrier' Maersk +ine, eing an origina& part! de%endant upon w#om t#e de&a!ed s#ipment is imputed, cannot
c&aim t#at t#e dismissa& o% t#e comp&aint against B&i +i&&!, ,nc' inured to its ene%it' @ence, t#e appe&&ate court
erred in dec&aring t#at t#e tria& court ased Maersk +ine?s &iai&it! on t#e cross=c&aim o% B&i +i&&!' 7s orne out
! t#e record, t#e tria& court anc#ored its decision on Maersk +ine?s de&a! or neg&igence to de&iver t#e >
drums o% ge&atin capsu&es wit#in a reasona&e time on t#e asis o% w#ic# Maersk +ine was #e&d &ia&e %or
damages under 7rtic&e 1102 o% t#e Eew $ivi& $ode w#ic# provides t#at t#ose w#o in t#e per%ormance o% t#eir
o&igations are gui&t! o% %raud, neg&igence, or de&a! and t#ose w#o in an! manner contravene t#e tenor
t#ereo%, are &ia&e %or damages'
-. Content o, $ills o, la+in*
T#e i&& o% &ading covering t#e suAect s#ipment among ot#ers, reads ;(>) 6BEB:7+ Q (1) T#e
$arrier does not undertake t#at t#e 6oods s#a&& arrive at t#e port o% disc#arge or t#e p&ace o% de&iver! at an!
particu&ar time or to meet an! particu&ar market or use and save as is provided in c&ause 5 t#e $arrier s#a&& in
no circumstances e &ia&e %or an! direct, indirect or conse9uentia& &oss or damage caused ! de&a!' ,% t#e
$arrier s#ou&d nevert#e&ess e #e&d &ega&&! &ia&e %or an! suc# direct or indirect or conse9uentia& &oss or
damage caused ! de&a!, suc# &iai&it! s#a&& in no event e3ceed t#e %reig#t paid %or t#e transport covered !
t#is 1i&& o% +ading'< T#is provision in t#e i&& o% &ading #as t#e e%%ect o% practica&&! &eaving t#e date o% arriva&
o% t#e suAect s#ipment on t#e so&e determination and wi&& o% t#e carrier'
3. Contract o, a+)esion *enerally voi+! $ut not entirely pro)i$ite+
T#e provision at t#e ack o% t#e i&& o% &ading, in %ine print, is a contract o% ad#esion' 6enera&&!,
contracts o% ad#esion are considered void since a&most a&& t#e provisions o% t#ese t!pes o% contracts are
prepared and dra%ted on&! ! one part!, usua&&! t#e carrier' T#e on&! participation &e%t o% t#e ot#er part! in
suc# a contract is t#e a%%i3ing o% #is signature t#ereto, #ence t#e term ;ad#esion<' Eonet#e&ess, sett&ed is t#e
ru&e t#at i&&s o% &ading are contracts not entire&! pro#iited' (ne w#o ad#eres to t#e contract is in rea&it! %ree
to reAect it in its entiret!C i% #e ad#eres, #e gives #is consent'
/. 7ature o, $ill o, la+in*6 =a*ellan =anu,acturin* =arketin* Corp.v. C5
,t is a &ong standing Aurisprudentia& ru&e t#at a i&& o% &ading operates ot# as a receipt and as a
contract' ,t is a receipt %or t#e goods s#ipped and a contract to transport and de&iver t#e same as t#erein
stipu&ated' 7s a contract, it names t#e parties, w#ic# inc&udes t#e consignee, %i3es t#e route, destination, and
%reig#t rates or c#arges, and stipu&ates t#e rig#ts and o&igations assumed ! t#e parties' 1eing a contract, it is
t#e &aw etween t#e parties w#o are ound ! its terms and conditions provided t#at t#ese are not contrar! to
&aw, mora&s, good customs, pu&ic order and pu&ic po&ic!' 7 i&& o% &ading usua&&! ecomes e%%ective upon its
de&iver! to and acceptance ! t#e s#ipper' ,t is presumed t#at t#e stipu&ations o% t#e i&& were, in t#e asence
o% %raud, concea&ment or improper conduct, known to t#e s#ipper, and #e is genera&&! ound ! #is acceptance
w#et#er #e reads t#e i&& or not'
2. <elivery o, s)ip#ent or car*o #ust $e #a+e .it)in a reasona$le ti#e
F#i&e it is true t#at common carriers are not o&igated ! &aw to carr! and to de&iver merc#andise,
and persons are not vested wit# t#e rig#t to prompt de&iver!, un&ess suc# common carriers previous&! assume
t#e o&igation to de&iver at a given date or time, de&iver! o% s#ipment or cargo s#ou&d at &east e made wit#in a
reasona&e time'
. Carrier *enerally not an insurer o, +elay in transportation o, *oo+s6 Salu+o vs. C5
,n "a&udo, Jr' v' $ourt o% 7ppea&s (820 "$:7 5./ L1..8M) t#e $ourt #e&d t#at ;t#e o%t=repeated ru&e
regarding a carrier?s &iai&it! %or de&a! is t#at in t#e asence o% a specia& contract, a carrier is not an insurer
against de&a! in transportation o% goods' F#en a common carrier undertakes to conve! goods, t#e &aw imp&ies
a contract t#at t#e! s#a&& e de&ivered at destination wit#in a reasona&e time, in t#e asence, o% an!
agreement as to t#e time o% de&iver!' 1ut w#ere a carrier #as made an e3press contract to transport and de&iver
propert! wit#in a speci%ied time, it is ound to %u&%i&& its contract and is &ia&e %or an! de&a!, no matter %rom
w#at cause it ma! #ave arisen' T#is resu&t &ogica&&! %o&&ows %rom t#e we&&=sett&ed ru&e t#at w#ere t#e &aw
creates a dut! or c#arge, and t#e part! is disa&ed %rom per%orming it wit#out an! de%au&t in #imse&%, and #as
no remed! over, t#en t#e &aw wi&& e3cuse #im, ut w#ere t#e part! ! #is own contract creates a dut! or
c#arge upon #imse&%, #e is ound to make it good notwit#standing an! accident or de&a! ! inevita&e
necessit! ecause #e mig#t #ave provided against it ! contract' F#et#er or not t#ere #as een suc# an
undertaking on t#e part o% t#e carrier is to e determined %rom t#e circumstances surrounding t#e case and !
app&ication o% t#e ordinar! ru&es %or t#e interpretation o% contracts'<
3. 5.areness o, s)ip#ent1s arrival #akes execution o, anot)er contract to in+icate +ate o, arrival
o, s)ip#ent a super,luity
7n e3amination o% t#e suAect i&& o% &ading s#ows t#at t#e suAect s#ipment was estimated to arrive
in Mani&a on 3 7pri& 1.00' F#i&e t#ere was no specia& contract entered into ! t#e parties indicating t#e date
o% arriva& o% t#e suAect s#ipment, Maersk +ine nevert#e&ess, was ver! we&& aware o% t#e speci%ic date w#en
t#e goods were e3pected to arrive as indicated in t#e i&& o% &ading itse&%' ,n t#is regard, t#ere arises no need to
e3ecute anot#er contract %or t#e purpose as it wou&d e a mere super%&uit!'
4. <elay in present case $eyon+ reasona$leness
@erein, a de&a! in t#e de&iver! o% t#e goods spanning a period o% 8 mont#s and 0 da!s %a&&s wa!
e!ond t#e rea&m o% reasona&eness' Descried as ge&atin capsu&es %or use in p#armaceutica& products, suAect
s#ipment was de&ivered to, and &e%t in, t#e possession and custod! o% Maersk +ine %or transport to Mani&a via
(ak&and, $a&i%orniaC ut t#roug# Maersk +ine?s neg&igence was miss#ipped to :ic#mond, Virginia' Maersk
+ines? insistence t#at it cannot e #e&d &ia&e %or t#e de&a! %inds no merit'
%. 5.ar+ o, actual an+ co#pensatory +a#a*es proper
,t is sett&ed t#at actua& and compensator! damages re9uire sustantia& proo%' @erein, $asti&&o was a&e
to su%%icient&! prove t#roug# an invoice, certi%ication %rom t#e issuer o% t#e &etter o% credit and t#e
Memorandum o% "#ipment, t#e amount #e paid as costs o% t#e credit &ine %or t#e suAect goods' T#ere%ore,
appe&&ate court acted correct&! in a%%irming t#e award o% P11,>/2'.0 as costs o% said credit &ine'
1". 5.ar+ o, #oral +a#a*es proper
7s to t#e propriet! o% t#e award o% mora& damages, 7rtic&e 8882 o% t#e $ivi& $ode provides t#at mora&
damages ma! e awarded in ;reac#es o% contract w#ere t#e de%endant acted %raudu&ent&! or in ad %ait#'<
@erein, Maersk +ine never even ot#ered to e3p&ain t#e cause %or t#e de&a!, i'e' more t#an 8 mont#s, in t#e
de&iver! o% t#e suAect s#ipment' Dnder t#e circumstances o% t#e case, Maersk +ine is &ia&e %or reac# o%
contract o% carriage t#roug# gross neg&igence amounting to ad %ait#' T#us, t#e award o% mora& damages is
t#ere%ore proper in t#e case'
11. 5.ar+ o, exe#plary +a#a*es proper
B3emp&ar! damages ma! e awarded to $asti&&o' ,n contracts, e3emp&ar! damages ma! e awarded i%
t#e de%endant acted in a wanton, %raudu&ent, reck&ess, oppressive or ma&evo&ent manner' T#ere was gross
neg&igence on t#e part o% t#e petitioner mis#ipping t#e suAect goods destined %or Mani&a ut was ine3p&ica&!
s#ipped to :ic#mond, Virginia, D'"'7' 6ross care&essness or neg&igence constitutes wanton misconduct,
#ence, e3emp&ar! damages ma! e awarded to t#e aggrieved part!'
1-. 5.ar+ o, attorney1s ,ees proper6 5.ar+ o, 3"R o, total +a#a*es unconsciona$le
7&t#oug# attorne!?s %ees are genera&&! not recovera&e, a part! can e #e&d &ia&e %or suc# i%
e3emp&ar! damages are awarded (7rtic&e 882/, Eew $ivi& $ode)' @erein, $asti&&o is entit&ed to reasona&e
attorne!?s %ees since Maersk +ine acted wit# gross neg&igence amounting to ad %ait#' @owever, t#e award o%
32I o% t#e tota& damages awarded, e3cept t#ose pertaining to attorne!?s %ees and &itigation e3penses in %avor
o% $asti&&o, are unconsciona&e' T#e same s#ou&d t#en e de&eted'
[1-%]
7e. Iealan+ ;nsurance Co. vs. ;5C (GR L>2%! -4 5u*ust 1%4/)
"econd Division, 7ad "antos (J): 8 concur, 1 concur in resu&t, 1 on &eave, 1 took no part
&acts' 7 cargo o% oats was consigned to Mu&&er and P#ipps (Mani&a) +td' T#e cargo was insured against a&&
risks ! T#e Eew Rea&and ,nsurance $o', +td' F#en t#e cargo was disc#arged severa& cartons w#ic#
contained t#e oats were in ad order' T#e consignee %i&ed a c&aim against t#e insurer %or t#e va&ue o% t#e
damaged goods w#ic# t#e &atter paid in t#e amount o% P1/,15/'>.' T#e insurer as surogee o% t#e consignee
sued B' :a*on, ,nc' w#o was t#e arrastre operator' T#e insurer demanded reimursement in t#e amount o%
P10,284'/0' T#e &ower %igure is due to t#e %act t#at t#e carrier responded %or its s#are o% t#e &oss in t#e sum o%
P1,181'28'
T#e insurer sued' T#e $F, Mani&a gave Audgment in %avor o% t#e insurer' ,t ordered B' :a*on to pa! to t#e
insurer P10,284'/0 wit# >I interest %rom 83 7pri& 1.03, unti& same is paid, P1,222'22 as attorne!?s %ees, and
t#e costs'

B' :a*on, ,nc' appea&ed t#e adverse decision to t#e $ourt o% 7ppea&s ($7=6: $V >5228)' T#e ,ntermediate
7ppe&&ate $ourt w#ic# succeeded t#e $ourt o% 7ppea&s reversed t#e decision o% t#e tria& court on t#e ground
o% prescription, t#e insurer #as no cause o% action against B' :a*on' T#e instant petition seeks a reversa& o% t#e
appe&&ate court?s decision'
T#e "upreme $ourt granted t#e petition, set aside t#e decision o% t#e ,ntermediate 7ppe&&ate $ourt, and
reinstated t#at o% t#e tria& courtC wit# costs against B' :a*on'
1. :rovision o, t)e Revise+ =ana*e#ent Contract in issue as to prescription
7 provision o% t#e :evised Management $ontract in respect o% c&aims against t#e arrastre operator,
reads: ;t#at a %orma& c&aim toget#er wit# t#e necessar! copies o% t#e i&& o% &ading invoice, certi%ied packing
&ist, ack certi%icate s#owing t#e rate o% e3c#ange at t#e time o% purc#ase or opening o% &etter o% credit, and t#e
computation arrived at covering t#e &oss, damage, or nonde&iver! o% suc# goods s#a&& #ave een %i&ed wit# t#e
$(ET:7$T(: wit#in t#irt! (32) da!s %rom t#e date o% %i&ing o% entr!C P:(V,DBD FD:T@B:, t#at i% t#e
&oss, inAur! or damage is discovered wit#in t#e &ast %i%teen (14) da!s o% said period o% t#irt! (32) da!s, t#en t#e
%orma& c&aim s#a&& e %i&ed wit#in %i%teen (14) da!s %rom t#e date o% discover! o% t#e &oss, inAur! or damage'<
-. Ba+ 8r+er Certi,icates serve+ t)e purpose o, a ,or#al clai# (See &ire#an1s &un+ vs. =anila
:ort Service
T#e ad order certi%icates Q w#ic# were issued ! B' :a*on, ,nc' on Marc# 83 and 85, 1.08 Q served
t#e purpose o% a %orma& c&aim so t#at t#e c&aim was not %i&ed out o% time' ,n t#e case o% Fireman?s Fund ,ns'
$o' vs' Mani&a Port "ervice $o', et a&' Justice J'1'+' :e!es, said t#at t#e signi%icance o% t#e re9uest %or, and
t#e resu&t o%, t#e ad order e3amination, w#ic# were %i&ed and done wit#in %i%teen da!s %rom t#e #au&age o%
t#e goods %rom t#e vesse& is t#at said re9uest and resu&t, in e%%ect, served t#e purpose o% a c&aim, w#ic# is Gto
a%%ord t#e carrier or depositar! reasona&e opportunit! and %aci&ities to c#eck t#e va&idit! or c&aims w#i&e %acts
are sti&& %res# in t#e minds o% t#e person w#o took part in t#e transaction and t#e documents are sti&& avai&a&e'
($onsunAi vs' Mani&a Port "ervice, +=14441, 8. Eov' 1.>2) ,ndeed, t#e e3amination undertaken ! t#e
de%endant?s own inspector not on&! gave t#e de%endant an opportunit! to c#eck t#e goods ut is itse&% a
veri%ication o% its own &iai&it! ($%' Parsons @ardware vs' Mani&a :ai&road $o', +=14103, Ma! 32, 1.>1)'<
3. D. RaJon a+#its t)e insurer1s ar*u#ent6 5#ount o, lia$ility cannot $e re+uce+
B' :a*on o&i9ue&! concedes t#e va&idit! o% t#e insurer?s argument ! stating t#at i% t#e petition e
given due course its &iai&it! s#ou&d e in t#e reduced amount o% P4,355'13 on&! and not t#e amount %ound !
t#e &ower court' $onsidering t#at t#e instant petition is meritorious and t#e amount to e awarded is a
9uestion o% %act said amount cannot e reduced at t#is stage'
[13"] <verett vs. CA, see [++]
[131] =ariti%e vs. CA, see [110]
[13-] ea Land vs. 'AC, see [+0]
[133] (o1les vs. antos,see [1 a2ter 71]
[13/]
=ariano Fy C)aco Sons M Co. vs. 5+#iral Line (GR --13/! 13 8cto$er 1%-/)
"econd Division, Ma&co&m (J): > concur
&acts' Mariano D! $#aco "ons T $o' a&&eges t#at upon arriva& o% t#e "' "' "atsuma at t#e power o% Mani&a
on 88 June 1.82, t#ere were s#ort=de&ivered one case o% varnis# and paint remover and 42 a&es o% oakum, %or
t#e conversion o% w#ic# 7dmira& +ine is &ia&e' 7dmira& +ine, on t#e ot#er #and, c&aims t#at t#e merc#andise
#ad een de&a!ed, #ad een %ound, and de&iver! t#ereo% #ad een tendered and reAected'
T#e merc#andise s#ou&d #ave een &anded on 88 June 1.82' Eot #aving een de&ivered eit#er on t#at da! or
an! suse9uent da! e%ore 81 Ma! 1.81, and a&& e%%orts to secure satis%action %rom t#e carrier #aving %ai&ed,
t#e comp&aint was presented on t#e date &ast mentioned' ,t was amended on 18 Ju&! 1.81' 7nswer in t#e %orm
o% a genera& denia& was interposed ! 7dmira& +ine on 11 7ugust 1.81' T#e %irst amended answer was %i&ed
on 1/ Feruar! 1.88' Forma& tender o% t#e goods was made ! 7dmira& +ine on 0 (ctoer 1.88' B%%orts at
compromise #aving %ai&ed, Mariano D! $#aco "ons T $o' moved on 80 7pri& 1.83, %or t#e assignment o% t#e
case %or #earing' (n 15 7ugust 1.83, 7dmira& +ine o%%ered its second amended answer in w#ic# t#e c&aim
now advanced was %irst announced, sa!ing ;T#at since t#e institution o% t#is action, etc'< (ne week &ater, on
81 7ugust 1.83, t#e tria& commenced' 7%ter tria&, t#e tria& court ru&ed in %avor o% Mariano D! $#aco "ons T
$o' re9uiring 7dmira& +ine to pa! %or t#e va&ue o% t#e case o% varnis# and paint remover, P88'/2, %or t#e va&ue
o% t#e 42 a&es o% oakum, P022, %or t#e %reig#t, P1.4'42, and %or t#e insurance, P1/, or a tota& o% P.3>'32,
wit# &ega& interest and costs'
T#e "upreme $ourt a%%irmed t#e Audgment wit# costs'
1. <elay in +elivery vs. Conversion
Mere de&a! in t#e de&iver! o% goods ! a common carrier, no matter #ow &ong continued, is not a
conversion t#ereo%, ut is on&! a reac# o% t#e contract o% carriage' T#ere%ore, w#ere a carrier %ai&s to de&iver
goods wit#in a reasona&e time, a&t#oug# #e t#ere! makes #imse&% &ia&e %or t#e damages incurred ! reasons
o% t#e de&a!, t#e consignee cannot re%use to accept t#e goods %rom #im and recover t#eir va&ue, ut is
compe&&ed to receive t#em' T#e most usua& e&ement o% damages %or a carrier?s neg&igent de&a! in de&ivering
t#e goods o% t#e consignee is t#e di%%erence etween t#e market va&ue o% t#e goods at t#e time w#en t#e!
s#ou&d #ave een de&ivered, and t#e time w#en t#e! were de&ivered, to w#ic# ma! e added reasona&e
e3penses caused ! t#e de&a!C ut i% t#ere #as een a conversion o% t#e goods ! t#e carrier, and t#e consignee
#as not t#erea%ter accepted t#em, #e is entit&ed to recover t#e va&ue o% t#e goods at t#e time t#e! s#ou&d #ave
een de&ivered to #im'
-. ()e nature o, +elay in t)e present case
T#e interva& w#ic# e&apsed etween t#e date w#en t#e merc#andise s#ou&d #ave een de&ivered and
t#e presentation o% t#e comp&aint was appro3imate&! 11 mont#s' T#e de&a! w#ic# ensued etween t#e date
w#en t#e merc#andise s#ou&d #ave een de&ivered and t#e date w#en it was %ina&&! tendered was c&ose to 8
!ears and 5 mont#s' T#e time w#ic# passed etween t#e date w#en t#e merc#andise s#ou&d #ave een
de&ivered and t#e date w#en t#e de%ense o% tender was set up, was over 3 !ears'
3. 7o prior case .it) t)e si#ilar ,acts
Eo case coming eit#er %rom t#e &oca& %orum or %rom %oreign Aurisdictions w#ic# e3act&! %its t#e %acts
#as een %ound' (1ut 1e#n, Me!er T $o', vs' 1anco Bspa)o&=Fi&ipino L1.2/M, 11 P#i&', 843, and Oangco vs'
Meerkamp T $ompan!, :' 6' Eo' 145./, 1 can e noted')
/. Corpus Buris! Golu#e 1"! p. -3- as to +elay an+ conversion
Vo&ume 12, $orpus Juris, at page 808, is aut#orit! %or t#is: ;' ' ' 7 demand and a re%usa& to de&iver is
sometimes essentia& to s#ow a conversion' Bven a%ter demand, i% t#e goods are tendered e%ore suit roug#t,
t#e consignee cannot re%use to receive t#e goods and sue %or conversion, #is so&e remed! eing an action %or
damages resu&ting %rom t#e de&a!'< @utc#inson?s Treatise on t#e +aw o% $arriers (t#ird edition, vo&' 8, p' 010)
contains t#is: ;T#oug# t#e carrier ma! de&a! ever so &ong, t#e owner cannot c#arge #im wit# a conversion, or
%or va&ue o% t#e goods, i% t#e! are sa%e&! kept, un&ess t#e! #ave een demanded o% t#e carrier and t#eir
de&iver! re%used, ' ' '< re&!ing on @ami&ton vs' $#icago, Mi&waukee T "t' Pau& :ai&wa! $ompan! (L1/.0M),
123 ,owa, 384)'
2. Lia$ility ,or conversion vs. lia$ility ,or +a#a*es
F#ere propert! in t#e #ands o% a common carrier is not de&ivered wit#in a reasona&e time a%ter it #as
reac#ed its destination, t#e carrier, in t#e asence o% an! &ega& e3emption and a%ter demand #as een made and
de&iver! re%used, is &ia&e %or a conversion o% t#e propert!' T#e consignee, under suc# circumstances, ma!
e&ect to waive a&& tit&e to t#e propert! and sue %or t#e conversion, and a%ter #e #as done so, a suse9uent tender
! t#e carrier wi&& not e avai&a&e %or it as a de%ense' 7 tender o% t#e propert!, to e e%%ectua&, must #ave een
made wit#in t#e time in w#ic# t#e de%endant was entit&ed to de&iver it and t#e p&ainti%% ound to receive it' T#e
tender made was not unti& &ong a%ter t#e &apse o% t#is period, and, not eing accepted, is no ar to p&ainti%%?s
rig#t to recover' F#en t#e de%endant tendered t#e goods to p&ainti%% e%ore t#is action was commenced, and
p&ainti%% re%used to receive t#em' @is action, t#en, was not %or conversion, ut %or damages<
. :resent case involves conversion
7 de&a! o% more t#an two !ears in making de&iver! was conc&usive&! unreasona&e' 7 de&a! in
pressing a de%ense predicated on tender, o% more t#an two !ears counted %rom t#e date w#en t#e comp&aint
was %i&ed, was &ikewise unreasona&e' T#e mancupation o% t#e propert! ! t#e de%endant was su%%icient&!
comp&ete since it was una&e to turn t#e goods over to t#e p&ainti%% at an! time e%ore t#e comp&aint was
presented, and in %act, cou&d not do so unti& a &ong time t#erea%ter' 7dd t#ese %acts toget#er, and t#e reasons
w#! Mariano D! $#aco "ons T $(' can e permitted to recover on its action are se&%=evident' @erein,
7dmira& +ine was in e%%ect gui&t! o% conversion and must according&! respond %or t#e va&ue o% t#e propert! at
t#e time o% conversion'
[>] =endo$a vs. PAL, see [117]
[132], also [1/0]
Stan+ar+ Gacuu# 8il Co. vs. LuJon Steve+orin* Co. (GR L>2-"3! 14 5pril 1%2)
&acts' "tandard Vacuum (i& $o' entered into a contract wit# +u*on "tevedoring $o' ,nc' to transport etween
t#e ports o% Mani&a and Ein 1a!, "aga!, ,&oi&o, 8,.1>'55 arre&s o% u&k gaso&ine e&onging to t#e %ormer' T#e
gaso&ine was de&ivered in accordance wit# t#e contract ut +u*on "tevedoring %ai&ed to transport it to its p&ace
o% destination' ,t appeared t#at t#e tugoat towing arge +=488 w#ic# was &aden wit# gaso&ine, among ot#ers,
sta&&ed due to a roken id&er during t#e morning o% 5 Feruar! 1.50' T#e arges t#at tied to it roke o%% due to
t#e roug# condition o% t#e sea during t#e a%ternoon' T#e tugoat and t#e arges were das#ed against rocks, t#e
tugoat sunk, and arge +=488 was so ad&! damaged t#at t#e gaso&ine &eaked out'
"tandard Vacuum (i& roug#t an action in t#e $F, o% Mani&a to recover t#e sum o% P04,40/'>2 as damages'
+u*on "tevedoring, in its answer, p&eaded t#at its %ai&ure to de&iver t#e gaso&ine was due to %ortuitous event or
caused ! circumstances e!ond its contro& and not to its %au&t or neg&igence or t#at o% an! o% its emp&o!ees'
T#e court, a%ter receiving t#e evidence, rendered decision %inding t#at t#e disaster t#at #ad e%a&&en t#e
tugoat was t#e resu&t o% an unavoida&e accident and t#e &oss o% t#e gaso&ine was due to a %ortuitous event
w#ic# was e!ond t#e contro& o% +u*on "tevedoring and, conse9uent&!, dismissed t#e case wit# costs against
"tandard Vacuum (i&'
T#e "upreme $ourt reversed t#e decision appea&ed %romC and ordered +u*on "tevedoring to pa! to "tandard
Vacuum (i& $o' t#e sum o% P04,40/'42, wit# &ega& interest %rom t#e date o% t#e %i&ing o% t#e comp&aint, wit#
costs'
1. LuJon Steve+orin* Co. not a co##on carrier $ut )as earne+ level o, a pu$lic utility6 Contract
covere+ $y Co+e o, Co##erce
+u*on "tevedoring is a private stevedoring compan! engaged in transporting &oca& products,
inc&uding gaso&ine in u&k and #as a %&eet o% aout 152 tugoats and aout .2 per cent o% its usiness is
devoted to transportation' T#oug# it is engaged in a &imited contract o% carriage in t#e sense t#at it c#ooses its
customers and is not opened to t#e pu&ic, nevert#e&ess, t#e continuit! o% its operations in t#is kind o%
usiness #ave earned %or it t#e &eve& o% a pu&ic uti&it!' @erein, t#e contract etween "tandard Vacuum (i& and
+u*on "tevedoring comes t#ere%ore under t#e provisions o% t#e $ode o% $ommerce'
-. 5rticle 31 o, t)e Co+e o, Co##erce
7rtic&e 3>1 o% t#e $ode o% $ommerce provides t#at ;t#e merc#andise s#a&& e transported at t#e risk
and venture o% t#e s#ipper, i% t#e contrar! was not e3press&! stipu&ated' T#ere%ore, a&& damages and
impairment su%%ered ! t#e goods during t#e transportation, ! reason o% accident, %orce maAeure, or ! virtue
o% t#e nature or de%ect o% t#e artic&es, s#a&& e %or t#e account and risk o% t#e s#ipper' T#e proo% o% t#ese
accidents is incument on t#e carrier'<
3. =erc)an+ise transporte+ at risk o, s)ipper unless ot)er.ise stipulate+6 <a#a*es +ue to ,orce
#a?eure to $e proven $y carrier
F#enever merc#andise is transported on t#e sea ! virtue o% a contract entered into etween t#e
s#ipper and t#e carrier, t#e merc#andise is deemed transported at t#e risk and venture o% t#e s#ipper, i% t#e
contrar! is not stipu&ated, and a&& damages su%%ered ! t#e merc#andise during t#e transportation ! reason o%
accident or %orce maAeure s#a&& e %or t#e account and risk o% t#e s#ipper, ut t#e proo% o% t#ese accidents is
incument on t#e carrier'
/. :roo, re9uire+ o, carrier
7&& a s#ipper #as to prove in connection wit# sea carriage is de&iver! o% t#e merc#andise in good
condition and its non=de&iver! at t#e p&ace o% destination in order t#at t#e urden o% proo% ma! s#i%t to t#e
carrier to prove an! o% t#e accidents aove adverted to' ;"#ippers w#o are %orced to s#ip goods on an ocean
&iner or an! ot#er s#ip #ave some &ega& rig#ts, and w#en goods are de&ivered on oard a s#ip in good order
and condition, and t#e s#ipowner de&ivers t#em to t#e s#ipper in ad order and condition, it t#en devo&ves
upon t#e s#ipowner to ot# a&&ege and prove t#at t#e goods were damaged ! reason o% some %act w#ic#
&ega&&! e3empts #im %rom &iai&it!< (Miraso& vs' :oert Do&&ar $o', 43 P#i&', 18.)'
2. (u*$oat @SnapperA not sea.ort)y
T#e tugoat ;"napper< was ac9uired ! +u*on "tevedoring %rom t#e Foreign +i9uidation
$ommission' ,t was a surp&us propert!' ,t was a deep=sea tugoat t#at #ad een in t#e service o% t#e Dnited
"tates 7rmed Forces prior to its purc#ase ! t#e +u*on "tevedoring $o' T#e tugoat was put into operation
wit#out %irst sumitting it to an over#au& in a dr!=dock' T#e tugoat #ad previous&! made severa& trips and
eac# time it #ad to otain a specia& permit %rom t#e 1ureau o% $ustoms ecause it #ad never een dr!=docked
and did not #ave comp&ete e9uipment to e a&e to otain a permanent permit' T#e specia& permits t#at were
issued ! said 1ureau speci%ica&&! state t#at t#e! were issued ;pending sumission o% p&ans and &oad &ine
certi%icate, inc&uding test and %ina& inspection o% e9uipment'< F#en t#e tugoat was inspected ! t#e 1ureau
o% $ustoms on 1/ (ctoer 1.5>, it %ound it to e inade9uate&! e9uipped and so t#e 1ureau re9uired +u*on
"tevedoring to provide it wit# t#e re9uisite e9uipment ut it was never a&e to comp&ete it'
. <ry>+ock ,acilities6 7o ?usti,ication ,or LuJon Steve+orin* to put une9uippe+ tu*$oat in
$usiness
7&t#oug# t#ere were t#en no dr!=dock %aci&ities in t#e P#i&ippines, t#is does not mean t#at t#e! cou&d
not e otained e&sew#ere' ,t eing a surp&us propert!, a dr!=dock inspection was a must to put t#e tugoat in
a sea going condition' T#e %act t#at t#e de%icienc! in t#e e9uipment was due to t#e %act t#at no suc#
e9uipment was avai&a&e at t#e time, t#is did not Austi%! +u*on "tevedoring in putting suc# tugoat in usiness
even i% une9uipped mere&! to make a pro%it' Eor cou&d t#e %act t#at t#e tugoat was given a specia& permit !
t#e 1ureau o% $ustoms to make t#e trip re&ieve +u*on "tevedoring %rom &iai&it!'
3. LuJon Steve+orin* ne*li*ent! +i+ not use reasona$le +ili*ence
T#e %act t#at t#e tugoat was a surp&us propert!, #as not een dr!=docked, and was not provided wit#
t#e re9uisite e9uipment to make it seawort#!, s#ows t#at +u*on "tevedoring did not use reasona&e di&igence
in putting t#e tugoat in suc# a condition as wou&d make its use sa%e %or operation' F#ere owner u!s o&d tug,
&icensed coastwise, and e9uips it %or ocean going, it is neg&igence to send tug out wit#out knowing somet#ing
o% #er stai&it! and especia&&! wit#out stai&it! test, w#ere #istor! and per%ormance wit# respect to crankiness
and tenderness are matters o% o%%icia& record'
4. Lack o, spare parts s)o. lack o, precaution an+ +ili*ence
7not#er circumstance w#ic# s#ows t#e &ack o% precaution and di&igence taken ! +u*on "tevedoring
to make t#e trave& o% t#e tugoat sa%e, is t#e %ai&ure to carr! on oard t#e necessar! spare parts' F#en t#e id&er
was roken, t#e engineer o% t#e tugoat e3amined it %or t#e %irst time and it was on&! t#en t#at #e %ound t#at
t#ere were no spare parts to use e3cept a worn out spare driving c#ain' Vesse&s motored ! diese& engines it is
necessar! a&wa!s to carr! spare c#ains, a&& earings and c#ain drives' T#is was not done'
%. (u* lia$le ,or +a#a*e to $ar*e1s car*o $y ,aulty e9uip#ent
7 tug engaged to tow a arge is &ia&e %or damage to t#e cargo o% t#e arge caused ! %au&t! e9uipment o% t#e
tug'
1". <e,iciency or inco#petence in t)e #anpo.er o, t)e tu*$oat
7not#er circumstance, w#ic# s#ows t#e &ack o% precaution and di&igence, re%ers to t#e de%icienc! or
incompetence in t#e manpower o% t#e tugoat' 7ccording to &aw, a tugoat o% t#e tonnage and powers o% one
&ike t#e ;"napper< is re9uired to #ave a comp&ement composed o% one %irst mate, one second mate, one t#ird
mate, one c#ie% engineer, one second engineer, and one t#ird engineer, (section 1823, :evised 7dministrative
$ode), ut w#en t#e trip in 9uestion was undertaken, it was on&! manned ! one master, w#o was mere&!
&icensed as a a!, river, and &ake patron, one second mate, w#o was &icensed as a t#ird mate, one c#ie%
engineer w#o was &icensed as t#ird motor engineer, one assistant engineer, w#o was &icensed as a a!, river,
and &ake motor engineer, and one second assistant engineer, w#o was un&icensed' T#e emp&o!ment o% t#is
crew to per%orm %unctions e!ond its competence and 9ua&i%ications is not on&! risk! ut against t#e &aw and
i% a mis#ap is caused, one cannot ut surmise t#at suc# incompetence #as somet#ing to do wit# t#e mis#ap'
T#e %act t#at t#e tugoat #ad undertaken severa& trips e%ore wit# practica&&! t#e same crew wit#out an!
untoward conse9uence, cannot %urnis# an! Austi%ication %or continuing in its emp&o! a de%icient or
incompetent personne& contrar! to &aw and t#e regu&ations o% t#e 1ureau o% $ustoms'
11. Sea.ort)iness +e,ine+
6enera&&!, seawort#iness is t#at strengt#, durai&it! and engineering ski&& made a part o% a s#ip?s
construction and continued maintenance, toget#er wit# a competent and su%%icient crew, w#ic# wou&d
wit#stand t#e vicissitudes and dangers o% t#e e&ements w#ic# mig#t reasona&! e e3pected or encountered
during #er vo!age wit#out &oss or damage to #er particu&ar cargo'
1-. D,,orts ,all s)ort o, +ili*ence an+ precaution re9uire+ in t)e situtation
T#e e%%orts made ! +u*on "tevedoring %a&& s#ort o% t#at di&igence and precaution t#at are demanded
! t#e situation to save t#e tugoat and t#e arge it was towing %rom disaster' More t#an 85 #ours #ad e&apsed
e%ore t#e tug ;Taman< s#owed up to e3tend #e&p' T#e de&a! was caused not so muc# ecause o% t#e &ack o%
avai&a&e s#ips in t#e vicinit! w#ere t#e ;"napper< sta&&ed ut ecause +u*on "tevedoring did not #ave in
readiness an! tugoat su%%icient in tonnage and e9uipment to attend to t#e rescue' T#e tug ;Taman< t#at was
ordered to e3tend #e&p was %u&&! inade9uate %or t#at purpose' ,t was a sma&& vesse& t#at was aut#ori*ed to
operate on&! wit#in Mani&a 1a! and did not even #ave an! map o% t#e Visa!an ,s&ands' 7 pu&ic uti&it! t#at is
engaged in sea transportation even %or a &imited service wit# a %&eet o% 152 tugoats s#ou&d #ave a competent
tug to rus# %or towing or repairs in t#e event o% untoward #appening overseas' ,% +u*on "tevedoring #ad on&!
suc# a tug read! %or suc# an emergenc!, t#is disaster wou&d not #ave #appened' +u*on "tevedoring cou&d
#ave avoided sending a poor&! e9uipped tug w#ic# %ai&ed to do Ao'
13. Cause o, +isaster attri$ute+ to ne*li*ence or lack o, precaution
F#i&e t#e reaking o% t#e id&er ma! e due to an accident, or to somet#ing une3pected, t#e cause o%
t#e disaster w#ic# resu&ted in t#e &oss o% t#e gaso&ine can on&! e attriuted to t#e neg&igence or &ack o%
precaution to avert it on t#e part o% +u*on "tevedoring' ,t #ad enoug# time to e%%ectuate t#e rescue i% it #ad
on&! a competent tug %or t#e purpose ecause t#e weat#er was good %rom 3:22 a'm' to 18:22 p'm' o% 5
Feruar! 1.50 and it was on&! in t#e a%ternoon t#at t#e wind egan to &ow wit# some intensit!, ut %ai&ed to
do so ecause o% t#at s#ortcoming' T#e &oss o% t#e gaso&ine certain&! cannot e said to e due to %orce maAeure
or un%oreseen event ut to t#e %ai&ure o% +u*on "tevedoring to e3tend ade9uate and proper #e&p'
[13], also [205]
(an C)ion* Sian vs. ;nc)austi (GR "%-! 4 =arc) 1%1-)
Bn 1anc, Torres (J): 3 concur, 8 dissent
&acts' (n 84 Eovemer 1.2/, ,nc#austi T $o' received in Mani&a %rom t#e $#inaman, (ng 1ieng "ip, 824
und&es, a&es or cases o% goods to e conve!ed ! t#e steamer "orsogon to t#e port o% 6uat, Province o%
"orsogon, w#ere t#e! were to e transs#ipped to anot#er vesse& e&onging to ,nc#austi and ! t#e &atter
transported to t#e pue&o o% $atarman, ,s&and o% "amar, t#ere to e de&ivered to t#e $#inese s#ipper wit#
w#om ,nc#austi made t#e s#ipping contract' To t#is end 3 i&&s o% &ading were e3ecuted (3/, 3., and 0>)' T#e
steamer "orsogon, w#ic# carried t#e goods, arrived at t#e port o% 6uat on 8/ Eovemer 1.2/ and as t#e
&orc#a Pi&ar, to w#ic# t#e merc#andise was to e transs#ipped %or its transportation to $atarman, was not !et
t#ere, t#e cargo was un&oaded and stored in t#e de%endant compan!?s ware#ouses at t#at port' "evera& da!s
&ater, t#e &orc#a Pi&ar arrived at 6uat and, a%ter t#e cargo it carried #ad een un&oaded, t#e merc#andise
e&onging to t#e $#inaman, (ng 1ieng "ip, toget#er wit# ot#er goods owned ! ,nc#austi T $o', was taken
aoard to e transported to $atarman' (n 4 Decemer 1.2/, #owever, e%ore t#e Pi&ar cou&d &eave %or its
destination, towed ! t#e &aunc# Te3as, t#ere arose a storm, w#ic#, coming %rom t#e Paci%ic, passed over
6uat and, as a resu&t o% t#e strong wind and #eav! sea, t#e &orc#a was driven upon t#e s#ore and wrecked,
and its cargo, inc&uding t#e $#inese s#ipper?s 824 packages o% goods, scattered on t#e eac#' +aorers or
workmen o% ,nc#austi, ! its order, t#en proceeded to gat#er up Tan $#iong "ian?s merc#andise and, as it was
impossi&e to preserve it a%ter it was sa&ved %rom t#e wreck o% t#e &orc#a, it was so&d at pu&ic auction e%ore a
notar! %or t#e sum o% P1,>.3'>0'
(n 11 Januar! 1.2., t#e $#inaman, Tan $#iong "ian or Tan $#into, %i&ed a written comp&aint, w#ic# was
amended on 8/ Januar! 1.2., and again on 80 (ctoer 1.2. against ,nc#austi T $o' a&&eging t#at ,nc#austi
neit#er carried nor de&ivered #is merc#andise to (ng 1ieng "ip, in $atarman, ut unAust&! and neg&igent&!
%ai&ed to do so, wit# t#e resu&t t#at t#e said merc#andise was a&most tota&&! &ost, and t#us c&aimed t#e va&ue o%
t#e merc#andise w#ic# was P82,222, &ega& interest t#ereon %rom 84 Eovemer 1.2/, and t#e cost o% t#e suit'
7%ter t#e #earing o% t#e case and t#e introduction o% testimon! ! t#e parties, Audgment was rendered, on 1/
Marc# 1.12, in %avor o% Tan $#iong "ian or Tan $#into, against ,nc#austi T $o', %or t#e sum o% P15,>58'>3,
wit# interest at t#e rate o% >I per annum %rom 11 Januar! 1.2., and %or t#e costs o% t#e tria&' ,nc#austi T $o'
appea&ed %rom t#e Audgment'
T#e "upreme $ourt reversed t#e Audgment appea&ed %rom, and aso&ved ,nc#austi T $o', wit#out specia&
%inding as to costsC #o&ding t#at ,nc#austi is not &ia&e %or t#e &oss and damage o% t#e goods s#ipped on t#e
&orc#a Pi&ar ! t#e $#inaman, (ng 1ieng "ip, inasmuc# as suc# &oss and damage were t#e resu&t o% a
%ortuitous event or %orce maAeure, and t#ere was no neg&igence or &ack o% care and di&igence on t#e part o%
,nc#austi or its agents'
1. 5rticle 1"1 7CC
7rtic&e 1>21 o% t#e $ivi& $ode prescries t#at ;$arriers o% goods ! &and or ! water s#a&& e suAect
wit# regard to t#e keeping and preservation o% t#e t#ings entrusted to t#em, to t#e same o&igations as
determined %or innkeepers ! artic&es 10/3 and 10/5' T#e provisions o% t#is artic&e s#a&& e understood
wit#out preAudice to w#at is prescried ! t#e $ode o% $ommerce wit# regard to transportation ! sea and
&and'<
-. 5rticle 1"- 7CC
7rtic&e 1>28 o% t#e $ivi& $ode reads ;$arriers are a&so &ia&e %or t#e &oss o% and damage to t#e t#ings
w#ic# t#e! receive, un&ess t#e! prove t#at t#e &oss or damage arose %rom a %ortuitous event or %orce maAeure'<
3. 5rticles 1343 7CC
7rtic&e 10/3 o% t#e $ivi& $ode provides t#at ;t#e depositum o% goods made ! trave&ers in inns or
#oste&ries s#a&& a&so e considered a necessar! one' T#e keepers o% inns and #oste&ries are &ia&e %or t#em as
suc# ai&ees, provided t#at notice t#ereo% ma! #ave een given to t#em or to t#eir emp&o!ees, and t#at t#e
trave&ers on t#eir part take t#e precautions w#ic# said innkeepers or t#eir sustitutes ma! #ave advised t#em
concerning t#e care and vigi&ance o% said goods'<
/. 5rticle 134/ 7CC
7rtic&e 10/5 o% t#e $ivi& $ode provides t#at ;t#e &iai&it! re%erred to in t#e preceding artic&e s#a&&
inc&ude damages to t#e goods o% t#e trave&ers caused ! servants or emp&o!ees o% t#e keepers o% inns or
#oste&ries as we&& as ! strangers, ut not t#ose arising %rom roer! or w#ic# ma! e caused ! an! ot#er
case o% %orce maAeure'<
2. 5rticle 31! Co+e o, Co##erce
7rtic&e 3>1 o% t#e $ode o% $ommerce provides t#at ;Merc#andise s#a&& e transported at t#e risk and
venture o% t#e s#ipper, un&ess t#e contrar! was e3press&! stipu&ated' T#ere%ore, a&& damages and impairment
su%%ered ! t#e goods in transportation, ! reason o% accident, %orce maAeure, or ! virtue o% t#e nature or
de%ect o% t#e artic&es, s#a&& e %or t#e account and risk o% t#e s#ipper' T#e proo% o% t#ese accidents is
incument on t#e carrier'<
. 5rticle 3-! Co+e o, Co##erce
7rtic&e 3>8 o% t#e $ode o% $ommerce provides t#at ;t#e carrier, #owever, s#a&& e &ia&e %or t#e &osses
and damages arising %rom t#e causes mentioned in t#e %oregoing artic&e i% it is proved t#at t#e! occurred on
account o% #is neg&igence or ecause #e did not take t#e precautions usua&&! adopted ! care%u& persons,
un&ess t#e s#ipper committed %raud in t#e i&& o% &ading, stating t#at t#e goods were o% a c&ass or 9ua&it!
di%%erent %rom w#at t#e! rea&&! were' ,%, notwit#standing t#e precaution re%erred to in t#is artic&e, t#e goods
transported run t#e risk o% eing &ost on account o% t#e nature or ! reason o% an unavoida&e accident,
wit#out t#ere eing time %or t#e owners o% t#e same to dispose t#ereo%, t#e carrier s#a&& proceed to t#eir sa&e
p&acing t#em %or t#is purpose at t#e disposa& o% t#e Judicia& aut#orit! or o% t#e o%%icia&s determined ! specia&
provisions'<
7rtic&e 3>3 o% t#e $ode o% $ommerce provides t#at ;wit# t#e e3ception o% t#e cases prescried in t#e
second paragrap# o% artic&e 3>1, t#e carrier s#a&& e o&iged to de&iver t#e goods transported in t#e same
condition in w#ic#, according to t#e i&& o% &ading, t#e! were at t#e time o% t#eir receipt, wit#out an!
detriment or impairment, and s#ou&d #e not do so, #e s#a&& e o&iged to pa! t#e va&ue o% t#e goods not
de&ivered at t#e point w#ere t#e! s#ou&d #ave een and at t#e time t#e de&iver! s#ou&d #ave taken p&ace' ,%
part o% t#e goods transported s#ou&d e de&ivered t#e consignee ma! re%use to receive t#em, w#en #e proves
t#at #e can not make use t#ereo% wit#out t#e ot#ers'<
4. Contract $et.een 8n* Bien* Sip an+ ;nc)austi6 5.areness o, 8n* Bien* Sip as to #anner
*oo+s are to $e transporte+! no o$?ection or protest .as #a+e
T#e contract entered into etween t#e $#inese s#ipper, (ng 1ieng "ip, and t#e %irm o% ,nc#austi T
$o', provided t#at transportation s#ou&d e %urnis#ed %rom Mani&a to $atarman, a&t#oug# t#e merc#andise
taken aoard t#e steamer "orsogon was to e transs#ipped at 6uat to anot#er vesse& w#ic# was to conve! it
%rom t#at port to $atarmanC it was not stipu&ated in t#e said contract t#at t#e "orsogon s#ou&d conve! t#e
goods to t#eir %ina& destination, nor t#at t#e vesse& into w#ic# t#e! were to e transs#ipped, s#ou&d e a
steamer' T#e s#ipper, (ng 1ieng "ip, t#ere%ore assented to t#ese arrangements and made no protest w#en #is
824 packages o% merc#andise were un&oaded %rom t#e s#ip and, on account o% t#e asence o% t#e &orc#a Pi&ar,
stored in t#e ware#ouses at 6uat nor did #e o%%er an! oAection to t#e &ading o% #is merc#andise on to t#is
&orc#a as soon as it arrived and was prepared to receive cargoC moreover, #e knew t#at to reac# t#e port o%
$atarman wit# promptness and dispatc#, t#e &orc#a #ad to e towed ! some vesse& &ike t#e &aunc# Te3as,
w#ic# ,nc#ausi #ad een steadi&! using %or simi&ar operations in t#ose waters' @ence t#e s#ipper, (ng 1ieng
"ip, made no protest or oAection to t#e met#ods adopted ! t#e agents o% ,nc#austi %or t#e transportation o%
#is goods to t#e port o% t#eir destination, and t#e record does not s#ow t#at in 6uat, ,nc#austi possessed an!
ot#er means %or t#e conve!ance and transportation o% merc#andise, at &east %or $atarman, t#an t#e &orc#a
Pi&ar, towed ! t#e said &aunc# and e3posed during its passage to a&& sorts o% accidents and peri&s %rom t#e
nature and sea%aring 9ua&ities o% a &orc#a, %rom t#e circumstances t#en present and t#e winds prevai&ing on t#e
Paci%ic (cean during t#e mont#s o% Eovemer and Decemer'
%. Lorc)a not easily #ana*e+ or steere+
7 &orc#a is not easi&! managed or steered w#en trave&ing, %or, out at sea, it can on&! e moved !
wind and sai&sC and a&ong t#e coast near t#e s#ore and in t#e estuaries w#ere it customari&! trave&s, it can on&!
move ! po&ing' For t#is reason, in order to arrive at t#e pue&o o% $atarman wit# promptness and dispatc#,
t#e &orc#a was usua&&! towed ! t#e &aunc# Te3as'
1". 7otice o, stor# provi+e+ only at 1">11 a.#. o, 2 <ece#$er 1%"4
T#e record does not s#ow t#at, %rom t#e a%ternoon o% 5 Decemer 1.2/, unti& t#e morning o% t#e
%o&&owing da!, t#e 4t#, t#e patron or master o% t#e &orc#a w#ic# was anc#ored in t#e cove o% 6uat, received
an! notice %rom t#e captain o% t#e steamer Ton Oek, a&so anc#ored near !, o% t#e near approac# o% a storm'
T#e said captain, Juan Domingo 7&erdi, makes no re%erence in #is sworn testimon! o% #aving given an! suc#
notice to t#e patron o% t#e &orc#a, nor did t#e &atter, Mariano 6advi&ao, testi%! t#at #e received suc# notice
%rom t#e captain o% t#e Ton Oek or %rom t#e person in c#arge o% t#e 6overnment oservator!' 6advi&ao, t#e
patron, testi%ied t#at on&! etween 12 and 11 a'm' o% 4 Decemer, was #e in%ormed ! ,nc#austi T $o'?s agent
in 6uat t#at a t!p#oon was approac#ing'
11. Lorc)a provi+e+ .it) all proper an+ necessary e9uip#ent an+ )as su,,icient cre. ,or its
#ana*e#ent an+ preservation
(n account o% t#e condition o% t#e sea, #e dropped t#e 5 anc#ors t#at t#e &orc#a #ad on oard and
immediate&! went as#ore to get anot#er anc#or and a new ca&e in order more secure&! to #o&d t#e oat in
view o% t#e predicted storm' T#is testimon! was corroorated ! t#e said representative, Me&c#or Mu)o*' "o
t#e &orc#a, w#en t#e storm roke upon it, was #e&d %ast ! %ive anc#ors and was we&& %ound and provided wit#
a&& proper and necessar! e9uipment and #ad a su%%icient crew %or its management and preservation'
1-. 7o port a+e9uate ,or s)elter an+ re,u*e o, vessels in cases o, +an*er in i##e+iate vicinity6
Lorc)a cannot $e co#pare+ .it) stea#er
T#e patron o% t#e &orc#a testi%ied speci%ica&&! t#at at 6uat or in its immediate vicinit! t#ere is no port
w#atever ade9uate %or t#e s#e&ter and re%uge o% vesse&s in cases o% danger, and t#at, even t#oug# t#ere were,
on eing advised etween 12 and 11 o?c&ock o% t#e morning o% t#e 4t#, o% t#e approac# o% a storm %rom t#e
eastern Paci%ic, it wou&d #ave een impossi&e to spread an! sai&s or weig# anc#or on t#e &orc#a wit#out eing
dragged or driven against t#e ree%s ! t#e %orce o% t#e wind' 7s t#e cra%t was not provided wit# steam or ot#er
motive power, it wou&d not #ave een possi&e %or it to c#ange its anc#orage, nor move %rom t#e p&ace w#ere
it &a!, even severa& #ours e%ore t#e notice was received ! its patron' 7 &orc#a can not e compared wit# a
steamer w#ic# does not need t#e #e&p or assistance o% an! ot#er vesse& in its movements'
13. :eople o, Gu$at not a.are o, i#pen+in* stor#6 (esti#ony o, .eat)er o$server
Due importance must e given to t#e testimon! o% t#e weat#er oserver, 7ntonio :oc#a, t#at t#e
notice received %rom t#e Mani&a (servator! on t#e a%ternoon o% Decemer 5, wit# regard to a storm trave&ing
%rom t#e east o% t#e Pe&ew ,s&ands toward t#e nort#west, was not made known to t#e peop&e o% 6uat and t#at
#e mere&! &e%t a memorandum notice on t#e desk o% t#e station, intending to give e3p&anations t#ereo% to an!
person w#o s#ou&d re9uest t#em o% #im' "o t#e notice o% t#e storm sent ! t#e Mani&a (servator! was on&!
known to t#e said oserver, and #e did not apprise t#e pu&ic o% t#e approac# o% t#e storm unti& #e received
anot#er notice %rom Mani&a at 82 minutes past / o?c&ock on "aturda! morning, Decemer 4' T#en #e made a
pu&ic announcement and advised t#e aut#orities o% t#e storm t#at was coming'
1/. ()e lorc)a cannot take re,u*e in t)e Sa$an* River! )al, a #ile ,ro# .)ere it .as anc)ore+
T#e o%%icia& c#art o% t#e port o% 6uat proves t#at t#e dept# o% water over t#e ar or entrance o% t#e
"aang :iver is on&! one %oot and a #a&% at ordinar! &ow tideC t#at t#e rise and %a&& o% t#e tide is aout 5U %eet,
t#e #ig#est tide eing at 8 o?c&ock in t#e a%ternoon o% ever! da!C and at t#at #our, on t#e 4t# o% Decemer, t#e
#urricane #ad a&read! made its appearance and t#e wind was &owing wit# a&& its %ur! and raising great waves'
T#e &orc#a Pi&ar, &oaded as it #ad een %rom t#e a%ternoon o% Decemer 5, even t#oug# it cou&d #ave een
moved ! means o% po&es, wit#out eing towed, evident&! cou&d not #ave entered t#e "aang :iver on t#e
morning o% t#e 4t#, w#en t#e wind egan to increase and t#e sea to ecome roug#, on account o% t#e &ow tide,
t#e s#a&&owness o% t#e c#anne&, and t#e oat?s dra%t'
12. 7atural p)eno#enon o, ti+es taken ?u+icial notice o,! unless contrary $e proven6 Section -32 o,
t)e Co+e o, Civil :roce+ure
7ccording to section 804 o% t#e $ode o% $ivi& Procedure, t#e natura& p#enomenon o% t#e tides,
mentioned in t#e o%%icia& #!drograp#ic map, w#ic# is prima %acie evidence on t#e suAect, o% t#e #ours o% its
occurrence and o% t#e conditions and circumstances o% t#e port o% 6uat, s#a&& e Audicia&&! recogni*ed
wit#out t#e introduction o% proo%, un&ess %acts to t#e contrar! e proven, w#ic# was not done, nor was it
proven t#at etween t#e #ours o% 12 and 11 o?c&ock o% t#e morning o% Decemer 4, 1.2/, t#ere did not prevai&
a state o% &ow tide in t#e port o% 6uat'
1. C)art a pri#a ,acie evi+ence o, particulars o, *eneral notoriety an+ interest
7ccording to section 382 o% t#e $ode o% $ivi& Procedure, suc# a c#art is prima %acie evidence o%
particu&ars o% genera& notoriet! and interest, suc# as t#e e3istence o% s#oa&s o% var!ing dept#s in t#e ar and
mout# o% t#e "aang :iver and w#ic# ostruct t#e entrance into t#e sameC t#e distance, &engt#, and numer o%
t#e said s#oa&s, wit# ot#er detai&s apparent&! we&& known to t#e patron o% t#e &orc#a Pi&ar, to Audge %rom #is
testimon!' Vesse&s o% considera&e dra%t, &arger t#an t#e said &orc#a, mig#t #ave entered t#e "aang :iver
some seven or nine !ears e%ore, according to t#e testimon! o% t#e $#inaman, 7ntonio 1' Oap $unco, t#oug#
#e did not state w#et#er t#e! did so at #ig# tideC ut, since 1.21, or previous !ears, unti& 1.2/, c#anges ma!
#ave taken p&ace in t#e ed o% t#e river, its mout# and its ar' More s#oa&s ma! #ave %ormed or t#ose in
e3istence ma! #ave increased in e3tent ! t#e constant action o% t#e sea' T#is is t#e reason w#! t#e patron,
6advi&ao, w#o was ac9uainted wit# t#e conditions o% t#e port and cove o% 6uat, positive&! dec&ared t#at t#e
&orc#a Pi&ar cou&d not, on account o% #er dra%t, enter t#e "aang :iver, on account o% &ow water'
13. :atron o, lorc)a co*niJant o, )is +uties
T#e patron 6advi&ao, eing cogni*ant o% t#e duties imposed upon #im ! ru&es 15 and 14 o% artic&e
>18, and ot#ers, o% t#e $ode o% $ommerce, remained wit# #is sai&ors, during t#e time t#e #urricane was
raging, on oard t#e &orc#a %rom t#e morning o% Decemer 4 unti& ear&! t#e %o&&owing morning, t#e >t#,
wit#out aandoning t#e oat, notwit#standing t#e imminent peri& to w#ic# #e was e3posed, and kept to #is
post unti& a%ter t#e wreck and t#e &orc#a #ad een das#ed against t#e rocks' T#en #e so&icited #e&p %rom t#e
captain o% t#e steamer Ton Oek, and, t#anks to t#e re&ie% a%%orded ! a sma&& oat sent ! t#e &atter o%%icer,
6advi&ao wit# #is crew succeeded in reac#ing &and and immediate&! reported t#e occurrence to t#e
representative o% ,nc#austi T $o' and to t#e pu&ic o%%icia& %rom w#om #e otained t#e document o% protest'
1! suc# procedure, #e s#owed t#at, as a patron ski&&ed in t#e e3ercise o% #is vocation, #e per%ormed t#e duties
imposed ! &aw in cases o% s#ipwreck roug#t aout ! %orce maAeure'
14. S)ip.recks! 5rticle 4/" o, t)e Co+e o, Co##erce
Treating o% s#ipwrecks, artic&e /52 o% t#e $ode o% $ommerce prescries t#at ;T#e &osses and
damages su%%ered ! a vesse& and #e cargo ! reason o% s#ipwreck or stranding s#a&& e individua&&! %or t#e
account o% t#e owners, t#e part o% t#e wreck w#ic# ma! e saved e&onging to t#em in t#e same proportion'<
1%. S)ip.recks! 5rticle 4/1 o, t)e Co+e o, Co##erce
7rtic&e /51 o% t#e same code reads: ;,% t#e wreck or stranding s#ou&d arise t#roug# t#e ma&ice,
neg&igence, or &ack o% ski&& o% t#e captain, or ecause t#e vesse& put to sea insu%%icient&! repaired and supp&ied,
t#e owner or t#e %reig#ters ma! demand indemnit! o% t#e captain %or t#e damages caused to t#e vesse& or
cargo ! t#e accident, in accordance wit# t#e provisions contained in artic&es >12, >18, >15 and >81'<
-". 5rticles 4/" an+ 4/1 are in )ar#ony .it) 5rticles 31 an+ 3- o, t)e Co+e o, Co##erce
T#e genera& ru&e esta&is#ed in 7rtic&e /52 is t#at t#e &oss o% t#e vesse& and o% its cargo, as t#e resu&t
o% s#ipwreck, s#a&& %a&& upon t#e respective owners t#ereo%, save %or t#e e3ceptions speci%ied in t#e second o%
t#e said artic&es' T#ese &ega& provisions are in #armon! wit# t#ose o% artic&es 3>1 and 3>8 o% t#e $ode o%
$ommerce, and are app&ica&e w#enever it is proved t#at t#e &oss o%, or damage to, t#e goods was t#e resu&t o%
a %ortuitous event or o% %orce maAeureC ut t#e carrier s#a&& e &ia&e %or t#e &oss or t#e damage arising %rom t#e
causes a%orementioned, i% it s#a&& #ave een proven t#at t#e! occurred t#roug# #is own %au&t or neg&igence or
! #is %ai&ure to take t#e same precautions usua&&! adopted ! di&igent and care%u& persons'
-1. 7o +elay! ne*li*ence or a$an+on#ent in t)e s)ip#ent o, 8n* Bien* Sip1s #erc)an+ise
,n t#e contract made and entered into ! and etween t#e owner o% t#e goods and t#e de%endant, no
term was %i3ed wit#in w#ic# t#e said merc#andise s#ou&d e de&ivered to t#e %ormer at $atarman, nor was it
proved t#at t#ere was an! de&a! in &oading t#e goods and transporting t#em to t#eir destination' From 8/
Eovemer, w#en t#e steamer "orsogon arrived at 6uat and &anded t#e said goods e&onging to (ng 1ieng
"ip to await t#e &orc#a Pi&ar w#ic# was to conve! t#em to $atarman, as agreed upon, no vesse& carr!ing
merc#andise made t#e vo!age %rom 6uat to t#e said pue&o o% t#e ,s&and o% "amar, and wit# (ng 1ieng
"ip?s merc#andise t#ere were a&so to e s#ipped goods e&onging to ,nc#austi, w#ic# goods were actua&&!
taken on oard t#e said &orc#a and su%%ered t#e same damage as t#ose e&onging to t#e $#inaman' "o t#at
t#ere was no neg&igence, aandonment, or de&a! in t#e s#ipment o% (ng 1ieng "ip?s merc#andise, and a&& t#at
was done ! t#e carrier, ,nc#austi T $o', was w#at it regu&ar&! and usua&&! did in t#e transportation ! sea
%rom Mani&a to $atarman o% a&& c&asses o% merc#andise' Eo attempt #as een made to prove t#at an! course
ot#er t#an t#e %oregoing was pursued ! t#at %irm on t#is occasion'
--. 5rticle 31 o, t)e Co+e o, Co##erce6 =erc)an+ise at risk o, s)ipper unless contrary is
expressly stipulate+
7ccording to artic&e 3>1 o% t#e $ode o% $ommerce, merc#andise s#a&& e transported at t#e risk and
venture o% t#e s#ipper, un&ess t#e contrar! e e3press&! stipu&ated' Eo suc# stipu&ation appears o% record,
t#ere%ore, a&& damages and impairment su%%ered ! t#e goods in transportation, ! reason o% accident, %orce
maAeure, or ! virtue o% t#e nature or de%ect o% t#e artic&es, are %or t#e account and risk o% t#e s#ipper'
-3. 5rticle 31 o, t)e Co+e o, Co##erce6 Bur+en o, proo, o, acci+ents upon t)e carrier
7 %ina& c&ause o% t#is same artic&e adds t#at t#e urden o% proo% o% t#ese accidents is upon t#e carrier'
@erein, t#e &oss and damage o% t#e goods s#ipped ! t#e $#inaman, (ng 1ieng "ip, was due to t#e stranding
and wreck o% t#e &orc#a Pi&ar in t#e #eav! storm or #urricaneC t#is Tan $#iong "ian did not den!, and admitted
t#at it took p&ace etween t#e a%ternoon o% t#e 4t# and ear&! in t#e morning o% t#e >t# o% Decemer, 1.2/, so it
is evident t#at ,nc#austi is e3empt %rom t#e o&igation imposed ! t#e &aw to prove t#e occurrence o% t#e said
storm, #urricane, or c!c&one in t#e port o% 6uat, and, t#ere%ore, i% t#e said goods were &ost or damaged and
cou&d not e de&ivered in $atarman, it was due to a %ortuitous event and a superior, irresisti&e natura& %orce, or
%orce maAeure, w#ic# comp&ete&! disa&ed t#e &orc#a intended %or t#eir transportation to t#e said port o% t#e
,s&and o% "amar'
-/. ;nc)austi took precautions usually a+opte+ $y care,ul an+ +ili*ent persons! as re9uire+ $y
5rticle 3- o, t)e Co+e o, Co##erce
@erein, ,nc#austi, #is agents and t#e patron did take t#e measures w#ic# t#e! deemed necessar! and
proper in order to save t#e &orc#a and its cargo %rom t#e impending dangerC according&!, t#e patron, as soon as
#e was in%ormed t#at a storm was approac#ing, proceeded to c&ear t#e oat o% a&& gear w#ic# mig#t o%%er
resistance to t#e wind, dropped t#e %our anc#ors #e #ad, and even procured an e3tra anc#or %rom t#e &and,
toget#er wit# a new ca&e, and cast it into t#e water, t#ere! adding, in so %ar as possi&e, to t#e stai&it! and
securit! o% t#e cra%t, in anticipation o% w#at mig#t occur, as presaged ! t#e vio&ence o% t#e wind and t#e
#eav! seaC and ,nc#austi T $ompan!?s agent %urnis#ed t#e artic&es re9uested ! t#e patron o% t#e &orc#a %or
t#e purpose o% preventing t#e &oss o% t#e oatC t#us did t#e! a&& disp&a! a&& t#e di&igence and care suc# as mig#t
#ave een emp&o!ed ! an!one in simi&ar circumstances, especia&&! t#e patron w#o was responsi&e %or t#e
&orc#a under #is c#argeC nor is it possi&e to e&ieve t#at t#e &atter %ai&ed to adopt a&& t#e measures t#at were
necessar! to save #is own &i%e and t#ose o% t#e crew and to %ree #imse&% %rom t#e imminent peri& o% s#ipwreck'
-2. Ereck o, lorc)a +ue to ,ortuitous event6 Loss cannot $e attri$ute+ to ;nc)austi or its a*ents
From t#e moment t#at it is #e&d t#at t#e &oss o% t#e said &orc#a was due to %orce maAeure, a %ortuitous
event, wit# no conc&usive proo% o% neg&igence or o% t#e %ai&ure to take t#e precautions suc# as di&igent and
care%u& persons usua&&! adopt to avoid t#e &oss o% t#e oat and its cargo, it is neit#er Aust nor proper to attriute
t#e &oss or damage o% t#e goods in 9uestion to an! %au&t, care&essness, or neg&igence on t#e part o% ,nc#austi
and its agents and, especia&&!, t#e patron o% t#e &orc#a Pi&ar'
-. ;nc)austi took all #easures ,or )e salva*e o, *oo+s recovera$le a,ter t)e acci+ent
@erein, suse9uent to t#e wreck, ,nc#austi?s agent took a&& t#e re9uisite measures %or t#e sa&vage o%
suc# o% t#e goods as cou&d e recovered a%ter t#e accident, w#ic# #e did wit# t#e know&edge o% t#e s#ipper,
(ng 1ieng "ip, and, in e%%ecting t#eir sa&e, #e endeavored to secure a&& possi&e advantage to t#e $#inese
s#ipperC in a&& t#ese proceedings, #e acted in oedience to t#e &aw'
[137] =artini, Ltd vs. =acondra- 7 Co. see [/0]
[134]
9orld Eire vs. =acondra-
[139] 8ui Pai vs. "ollar tea%ship Line , see [00]
[1/"]
Leacoc5Ks A5la% vs. A1oiti$
[1/1]
7e. Iealan+ ;nsurance vs. C)ua Boy (GR L>3311! 3" Septe#$er 1%22)
First Division, 1autista 7nge&o (J): 0 concur
&acts' (n 82 Ma! 1.42, t#e s#ip ;Jupiter<, on #er vo!age 15., received on oard at $arangian, "amar, in
good order and condition, 120 und&es o% %irst c&ass &oose weig#t #emp weig#ing /, 803 ki&os, o% 132'/2
picu&s, va&ued at P>, 03>'82, %rom t#e +ee Te# T $o', ,nc', %or transportation and de&iver! to Mani&a, under a
i&& o% &ading issued ! t#e carrier to t#e s#ipper' T#e s#ip was owned ! 7driano $#oa Jo!, doing usiness
under t#e name o% "out# "ea "#ipping +ine, w#i&e t#e cargo was s#ipped ! t#e ranc# o%%ice o% +ee Te# T
$o', ,nc', at $araingian, "amar, %or transportation and de&iver! to its main o%%ice at Mani&a' T#e cargo %ai&ed to
arrive in Mani&a ecause t#e vesse& ran aground w#i&e entering t#e +aoang 1a!, "amar, on 82 Ma! 1.42, due
to t#e neg&igence o% its captain, Jose Mo&ina, w#o, in t#e investigation conducted ! t#e Marine 1oard o%
,n9uir!, was %ound neg&igent o% #is duties and was suspended %rom t#e o%%ice %or a period o% 3 mont#s' (% t#e
cargo, on&! 0, 4.2 ki&os, or 182 picu&s o% #emp, were saved and ecause o% t#eir damaged condition, t#e!
were so&d %or t#e sum o% P8, 252, t#e consignor #aving spent P422 %or t#eir sa&vage, t#ere! causing +ee Te#
T $o', ,nc', &osses in t#e sum o% P4,1.>'82' T#e cargo was insured ! t#e Eew Rea&and ,nsurance $o', +td',
and ecause o% t#e damage caused to said cargo w#i&e in transit, t#e &osses were paid ! said compan! to t#e
s#ipper'
T#e carrier #aving re%used to reimurse t#ese damage despite demands made to t#at e%%ect, t#e insurance
compan!, as surogee o% t#e s#ipper instituted t#e action e%ore t#e $F, Mani&a' 7%ter t#e parties #ad
presented t#eir evidence, t#e court %ound t#at, w#i&e t#e s#ipper #as su%%ered damages ecause o% t#e inai&it!
o% t#e carrier to transport t#e cargo as agreed upon, #owever, t#e &iai&it! o% t#e carrier did not attac# ecause
o% t#e %ai&ure o% t#e s#ipper or o% t#e consignee to %i&e its c&aim %or damages wit#in 85 #ours %rom t#e receipt
o% t#e cargo as re9uired ! &aw' $onse9uent&!, t#e court dismissed t#e case, wit# costs against t#e insurance
compan!' T#e compan! roug#t t#e case on appea& direct&! to t#e "upreme $ourt'
T#e "upreme $ourt reversed t#e decision appea&ed %rom, and entered anot#er one ordering $#ua Jo! to pa!
t#e Eew Rea&and ,nsurancet#e sum o% P4,1.>'82, wit# &ega& interest %rom t#e %i&ing o% t#e comp&aint, wit#
costs against $#ua Jo!'
7rtic&e 3>> o% t#e $ode o% $ommerce, provides: ;Fit#in twent!=%our #ours %o&&owing t#e receipt o%
t#e merc#andise, t#e c&aim against t#e carrier %or damage or average w#ic# ma! e %ound t#erein upon
opening t#e packages, ma! e made, provided t#at t#e indications o% t#e damage or average w#ic# gives rise
to t#e c&aim cannot e ascertained %rom t#e outside part o% suc# packages, in w#ic# case t#e c&aim s#a&& e
admitted on&! at time o% receipt' 7%ter t#e periods mentioned #ave e&apsed, or t#e transportation c#arges #ave
een paid, no c&aim s#a&& e admitted against t#e carrier wit# regard to t#e condition in w#ic# t#e goods
transported were de&ivered'<
-. 5rticle 3 CC construe+
,n order t#at t#e condition provided in 7rtic&e 3>> o% t#e $ode o% $ommerce ma! e demanded t#ere
s#ou&d e a consignment o% goods, t#roug# a common carrier, ! a consignor in one p&ace to a consignee in
anot#er p&ace' 7nd said artic&e provides t#at t#e c&aim %or damages must e made ;wit#in twent!=%our #ours
%o&&owing t#e receipt o% t#e merc#andise< ! t#e consignee %rom t#e carrier' ,n ot#er words, t#ere must e
de&iver! o% t#e merc#andise ! t#e carrier to t#e consignee at t#e p&ace o% destination'
3. Carrier ,or,eite+ ri*)t to invoke con+itions re9uire+ $y 5rticle 3 ,or $reac)in* contract
@erein, t#e consignor is t#e ranc# o%%ice o% +ee Te# T co', ,nc', at $atarman, "amar, w#ic# p&aced
t#e cargo on oard t#e s#ip Jupiter, and t#e consignee, its main o%%ice at Mani&a' T#e cargo never reac#ed
Mani&a, its destination, nor was it ever de&ivered to t#e consignee, t#e o%%ice o% t#e s#ipper in Mani&a, ecause
t#e s#ip ran aground upon entering +aoang a!, "amar on t#e same da! o% t#e s#ipment' "uc# eing t#e case,
it %o&&ows t#at t#e cargo was never received ! t#e consignee' Moreover, under t#e i&& o% &ading issued ! t#e
carrier, it was t#e &atter?s undertakings to ring t#e cargo to its destination H Mani&a, H and de&iver it to
consignee, w#ic# undertaking was never comp&ied wit#' T#e carrier, t#ere%ore, reac#ed its contract, and, as
suc#, it %or%eited its rig#t to invoke in its %avor t#e conditions re9uired ! artic&e 3>>'
/. 5rticle 3 CC li#ite+ to cases o, clai#s ,or +a#a*es to *oo+s actually receive+ $y t)e
consi*nee6 Rol+an vs. Li# :onJo M Co. (33 :H;L -42)
7rtic&e 3>> o% t#e $ommercia& $ode is &imited to cases o% c&aims %or damages to goods actua&&! over
! t#e carrier and received ! t#e consignee, w#et#er t#ose damages e apparent %rom an e3amination o% t#e
packages in w#ic# t#e goods are de&ivered, or o% suc# c#aracter t#at t#e nature and e3tent o% t#e damage is not
apparent unti& t#e packages are opened and t#e contents e3amined' ,t #as no app&ication in cases w#erein t#e
goods entrusted to t#e carrier are not de&ivered ! t#e carrier to t#e consignee' ,n suc# cases t#ere can e no
9uestion o% a c&aim %or damages su%%ered ! t#e goods w#i&e in transport, since t#e c&aim %or damages arises
e3c&usive&! out o% t#e %ai&ure to make de&iver!'< T#e measures to e taken under t#e terms o% 7rtic&e 3>0 o%
t#e $ode w#en t#e parties are una&e to arrive at an amica&e sett&ement o% c&aims %or damages set up in
accordance wit# 7rtic&e 3>>, 9uite c&ear&! indicate t#at t#e necessit! %or t#e presentation o% c&aims under t#e
artic&e arises on&! in t#ose cases w#erein t#e carrier makes de&iver! and t#e consignee receives t#e goods in
pursuance o% t#e terms o% t#e contract'<
2. Carrier cannot +e#an+ ,ul,ill#ent unless it co#plies ,irst .it) its o.n o$li*ation
Bven i% t#ere is some disagreement as to w#et#er t#e sa&vage o% t#e portion o% t#e cargo t#at was
saved was due to t#e e%%orts o% t#e carrier itse&% or to t#e comined e%%orts o% t#e &atter and t#e s#ipper as a
resu&t o% w#ic# t#e sa&vaged cargo was p&aced in possession o% t#e s#ipper w#o so&d it and deducted its
proceeds %rom t#e &iai&it! o% t#e carrier' 1ut t#is discrepanc! wou&d seem to e immateria& ecause t#e &aw as
we&& as t#e contract contemp&ated de&iver! o% t#e cargo to t#e consignee at its port o% destination in order t#at
t#e ene%it o% t#e &aw ma! e avai&ed o%' T#e &iai&it! o% t#e carrier must e determined in t#e &ig#t o% t#e
carriage contract, and since t#at contact ca&&s %or reciproca& o&igations, t#e carrier cannot demand %u&%i&&ment
o% its part %rom t#e s#ipper or consignee un&ess it %irst comp&ies wit# its own o&igation' (7rtic&e 1122, o&d
$ivi& $ode')
. Breac) alone ?usti,ies lia$ility6 ;+entity o, consi*nor an+ consi*nee irrelevant
@erein, t#e %act t#at t#e consignor is ! t#e ranc# o%%ice o% t#e compan! t#at s#ipped t#e goods, and
t#e consignee is t#e main o%%ice at Mani&a, is o% no moment, ecause t#e duties o% eac# part! under t#e &aw are
di%%erent' Moreover, even i% t#e consignor and t#e consignee e considered as one and t#e same part!, sti&& t#e
carrier cannot disc&aim responsii&it! under its contract %or t#e simp&e reason t#at it %ai&ed to comp&! wit# its
o&igation to ring t#e cargo to its destination' T#is reac# a&one Austi%ies its &iai&it! under t#e carriage
contract'
[1/-]
D. RaJon vs! C5 (GR L>2"-/-! -1 =ay 1%44)
&acts' 7 tota& o% /> cases o% radio and p#onograp# parts %rom Poe, Japan were s#ipped aoard t#e "" ;Don
Jacinto ,,< o% Eort#ern +ines, ,nc', %or de&iver! to t#e consignee M6M ,mporters $orporation at Mani&a' T#e
tota& s#ipment was insured ! Pioneer' (n 15 Eovemer 1.>., t#e s#ipment was disc#arged %rom t#e carr!ing
vesse& into t#e custod! o% B' :a*on, ,nc', one o% t#e arrastre operators in t#e Port o% Mani&a, c#arged wit# t#e
o&igation o% #and&ing, custod! and de&iver! o% a&& cargo disc#arged at t#e government piers o% Mani&a' T#e
s#ipment was de&ivered to its consignee, M6M ,mporters wit# &osses and damages va&ued at P81,.30'04' (n
18 Decemer 1.>., B' :a*on certi%ied t#at out o% /> cases o% radio parts &oaded on oard t#e "" ;D(E
J7$,ET( ,,< under 1i&& o% +ading PM=1/, on&! /3 cases #ad een de&ivered to t#e consignee' Forma& c&aims
were t#us %i&ed ! M6M ,mporters wit# Eort#ern +ines and B' :a*on, as we&& as t#e Pioneer ,nsurance
$ompan!' T#e &atter indemni%ied t#e assured in t#e sum o% P81,.30'04 covering t#e %u&& va&ue o% t#e &ost
cargo'
$ivi& $ase /15>2 was %i&ed ! Pioneer ,nsurance as insurer=surogee, to recover %rom eit#er or ot#
de%endants (Eort#ern +ines ,nc' and-or B' :a*on ,nc'), Aoint&! and severa&&!, t#e sum o% P81,.30'04
representing t#e invoice va&ue, %reig#t costs and ot#er importation e3penses o% 3 cases o% radio and
p#onograp# parts w#ic# were s#ort=de&ivered' 7%ter #earing, t#e $F, o% Mani&a rendered its decision ordering
B' :a*on to indemni%! Pioneer t#e sum o% P12,/..'8/ wit# &ega& interest and dismissing t#e case against
Eort#ern +ines, &eaving t#e controvers! against B' :a*on, ,nc' a&one'
(n 1/ Decemer 1.05, B' :a*on, ,nc' %i&ed its appea& wit# t#e $ourt o% 7ppea&s w#ic# rendered its decision
on 5 Januar! 1.0/, a%%irming in toto t#e tria& court?s decision' (n . Marc# 1.0., t#e $ourt o% 7ppea&s denied
t#e B' :a*on?s motion %or reconsideration' @ence, t#e petition to review %or certiorari'
T#e "upreme $ourt dismissed t#e petition, and a%%irmed t#e Audgment appea&ed %rom ordering B' :a*on to
pa! Pioneer ,nsurance ;t#e sum o% P12,/..'8/ wit# &ega& interest %rom t#e date o% %i&ing o% t#e comp&aint, 13
Eovemer 1.02, unti& %u&&! paid and costs'<
1. Contents o, :ara*rap) NN o, t)e Revise+ =ana*e#ent Contract
Paragrap# or $&ause JJ o% t#e :evised Management $ontract, entered into wit# t#e 1ureau o%
$ustoms, reads ;t#e $(ET:7$T(: s#a&& at its own e3pense #and&e a&& merc#andise upon or over said piers,
w#arves, and ot#er designated p&aces and at its own e3pense per%orm a&& work undertaken ! it #ereunder
di&igent&! and in a ski&&%u& workman &ike and e%%icient mannerC t#at t#e contractor s#a&& e so&e&! responsi&e
as an independent $(ET:7$T(:, and #ere! agrees to accept &iai&it! and to prompt&! pa! to t#e steams#ip
compan!, consignee consignor, or ot#er interested part! or parties %or t#e &oss, damage, or non=de&iver! o%
cargoes to t#e e3tent o% t#e actua& invoice va&ue o% eac# package w#ic# in no case s#a&& e more t#an Two
T#ousand Pesos (P8,222'22) %or eac# package un&ess t#e va&ue o% t#e importation is ot#erwise speci%ied or
communicated in writing toget#er wit# t#e invoice va&ue and supported ! a certi%ied packing &ist to t#e
$(ET:7$T(: ! t#e interested part! or parties e%ore t#e arriva& o% t#e goods, as we&& as a&& damages t#at
ma! e su%%ered on account o% &oss, damage or destruction o% an! merc#andise w#i&e in custod! or under t#e
contro& o% t#e $(ET:7$T(: upon an! pier, w#ar% or ot#er designated p&ace under t#e supervision o% t#e
1ureau, ut said $(ET:7$T(: s#a&& not e responsi&e %or t#e condition o% an! package received nor %or
t#e weig#t, nor %or an! &oss, inAur! or damage to t#e said cargo e%ore or w#i&e t#e goods are eing received
or remain on t#e piers or w#arves, or i% t#e &oss, inAur! or damage is caused ! %orce maAeure, or ot#er causes
e!ond t#e $(ET:7$T(:?s contro&, or capacit! to prevent or remed!'<
-. Su$#ission o, +ocu#ents ,or custo# +uties an+ arrastre c)ar*es satis,ies con+ition o, exception
to li#itation o, lia$ility
7&t#oug# t#e :evised Management $ontract denotes a ru&e in t#e &imited &iai&it! o% B' :a*on, ,nc'
(i'e' it s#ou&d not e3ceed P8,222 per package, e3cept on&! in case t#e va&ue o% t#e importation is speci%ied,
mani%ested or communicated in writing toget#er wit# t#e certi%ied packing &ist to t#e contractor e%ore t#e
arriva& o% t#e goods)C under t#e provisions o% t#e Tari%% and $ustoms $ode, %or purposes o% c&earing cargo
%rom t#e 1ureau o% $ustoms, t#e ,nvoice, Packing +ist, 1i&& o% +ading and ot#er documents must e
sumitted %or processing and computation o% customs duties, arrastre c#arges,< satis%ied t#e condition o%
e3ception to t#e P8,222 &imitation o% &iai&it! o% t#e arrastre operator' @erein, M6M ,mporters, upon arriva& o%
t#e s#ipment, dec&ared t#e same %or ta3 purposes, as we&& as %or t#e assessment o% arrastre c#arges and ot#er
%ees' For t#e purpose, t#e invoice, packing &ist and ot#er s#ipping documents were presented to t#e 1ureau o%
$ustoms as we&& as to B' :a*on %or t#e proper assessment o% t#e arrastre c#arges and ot#er %ees' "uc#
mani%estation satis%ies t#e condition o% dec&aration o% t#e actua& invoices o% t#e va&ue o% t#e goods e%ore
arriva& o% t#e goods, to overcome t#e &imitation o% &iai&it! o% t#e arrastre operator'
3. @Be,ore arrival o, t)e *oo+sA construe+
T#e provision in t#e management contract regarding t#e dec&aration o% t#e actua& invoice va&ue
;e%ore t#e arriva& o% t#e goods< must e understood to mean a dec&aration e%ore t#e arriva& o% t#e goods in
t#e custod! o% t#e arrastre operator, w#et#er it e done &ong e%ore t#e &anding o% t#e s#ipment at port, or
immediate&! e%ore turn=over t#ereo% to t#e arrastre operator?s custod!' F#at is essentia& is know&edge
e%ore#and o% t#e e3tent o% t#e risk to e undertaken ! t#e arrastre operator, as determined ! t#e va&ue o%
t#e propert! committed to its care t#at it ma! de%ine its responsii&it! %or &oss or damage to suc# cargo and to
ascertain compensation commensurate to suc# risk assumed' @erein, #aving een du&! in%ormed o% t#e actua&
invoice va&ue o% t#e merc#andise under its custod! and #aving received pa!ment o% arrastre c#arges ased
t#ereon, B' :a*on, ,nc', as arrastre operator, cannot in Austice insist on a &imitation o% its &iai&it!, under t#e
contract, to &ess t#an t#e va&ue o% eac# unde&ivered case or package consigned to M6M ,mporters, ,nc'
/. :urpose o, stipulation re9uirin* consi*nee to in,or# contractor or arrestre operator o, actual
invoice value o, *oo+s place+ in its custo+y
T#e stipu&ation re9uiring a consignee to in%orm t#e contractor or arrastre operator and give t#e
advance notice o% t#e actua& invoice va&ue o% t#e goods to e put in its custod! is %or t#e purpose o%
determining its &iai&it!, t#at it ma! otain compensation commensura&e to t#e risk it assumes, not %or t#e
purpose o% determining t#e degree o% care or di&igence it must e3ercise as a depositor! or ware#ouseman'
2. 5rticle 113 7CC
7rtic&e 11>3, vis=a=vis 7rtic&e 1.08 o% t#e $ivi& $ode on o&igations o% t#e depositor! provides t#at
;ever! person o&iged to give somet#ing is a&so o&iged to take care o% it wit# t#e proper di&igence o% a good
%at#er o% a %ami&!, un&ess t#e &aw or stipu&ation o% t#e parties re9uires anot#er standard o% care'<
3. :u$lic service operator1s o$li*ation to exercise care an+ +ili*ence
Fit# its %urt#er responsii&it! as a pu&ic service operator, t#e o&igation o% B' :a*on to e3ercise care
and di&igence can e no &ess'
[1/3]
:ernito 5rrastre Services vs. =en+oJa (GR L>23/%-! -% <ece#$er 1%4)
Eastern $e0te Arrastre Serv!(e vs. 1a('0('0 )*+ $,542/5-
2as!o vs. Arro )*+ $,54394-, $e0te Inte#rated Port Serv!(es vs. P!l!""!ne Ports A'tor!t0 )*+ $,545/5-
Bn 1anc, 6utierre* Jr' (J): 0 concur, 1 reserves vote, 1 took no part
&acts' [1] ,n Eovemer, 1.08, an 7d @oc $ommittee on Fater%ront "ervices was created ! t#e 6overnment
to stud! t#e pro&ems o% arrastre and stevedoring operations in various ports in t#e P#i&ippines' 7mong t#e
pro&ems pinpointed were t#e pro&i%eration o% t#e oppressive ;cao s!stem< and t#e increase in t#e incidence
o% vio&ence and t#e%ts in t#e ports' T#ere was a&so recogni*ed a need to stream&ine port operations, ensure t#e
smoot# %&ow o% water orne commerce in internationa& and domestic trade, and promote regiona& deve&opment
t#roug# improved port %aci&ities' (n 83 7pri& 1.03, t#e $ommittee recommended t#e integration o% arrastre
and stevedoring operations in eac# port so t#at u&timate&! on&! one contractor wou&d e aut#ori*ed to service
t#at port' (n / Ma! 1.04, t#e 1ureau o% $ustoms issued Memorandum (rder 8/=04, providing %or t#e merger
o% a&& e3isting cargo=#and&ing contractors in eac# port' To e%%ect t#e gradua& integration o% t#e severa& arrastre
and stevedoring &aor contractors t#en operating in t#e Port o% Tac&oan, t#e 1ureau o% $ustoms decided to
re9uire t#e merger o% t#e 3> e3isting &aor contractors into 5 corporations, and t#en to Aust one' 7ccording&!, 5
organi*ations were %ormed, name&!: (1) Tac&oan Fater%ront +aor and 7rrastre "ervice $ooperative, ,nc', or
TF7+"$, w#ic# asored Bastern +e!te 7rrastre "erviceC (8) "an Juanico Pumpoats and Motor +aunc#es
"tevedoring and De&iver! "ervice, ,nc', (3) "ea&and, ,nc', and (5) Tac&oan Port "ervices, ,nc' (n 83
Decemer 1.04, PD /40 took e%%ect as a resu&t o% w#ic# t#e powers, duties, and Aurisdiction o% t#e 1ureau o%
$ustoms wit# regard to arrastre and stevedoring operations were trans%erred to and vested in t#e P#i&ippine
Ports 7ut#orit! (PP7)' Pursuant to said decree, PP7 was aut#ori*ed among ot#ers, to ;regu&ate t#e rates or
c#arges %or port services or port re&ated services so t#at, taking one !ear wit# anot#er, suc# rates or c#arges
%urnis# ade9uate working capita& and produce an ade9uate return on t#e assets o% t#e 7ut#orit!< (PP7) and ;to
&ev! dues, rates, or c#arges %or t#e use o% t#e premises, works, app&iances, %aci&ities, or %or services provided
! or e&onging to t#e 7ut#orit! or an! ot#er organi*ation concerned wit# port operations'< Pursuant to said
decree, PP7 imposed a 12I c#arge on t#e mont#&! gross earnings o% t#e operators o% arrastre and stevedoring
services' T#roug# its Memorandum (rder 81 (1.00), PP7 a&so adopted as its own, t#e 1ureau o% $ustoms?
po&ic! o% integrating t#e operation o% arrastre and stevedoring services in eac# port' T#is po&ic! was app&ied to
t#e port o% Tac&oan w#ere t#e 5 arrastre-stevedoring operators agreed to merge and %orm t#e +e!te ,ntegrated
Port "ervices, ,nc' (+,P",)' (n 31 Januar! 1.0/, PP7 issued a temporar! permit to +,P",, suAect to severa&
conditions'
[GR 23/%-] (n 80 Feruar! 1.0/, Pernito 7rrastre "ervices, ,nc' and ot#er arrastre operators %i&ed wit# t#e
t#en $F, o% $eu an action %or dec&arator! re&ie% and mandamus against t#e PP7, assai&ing t#e va&idit! o% t#e
integration po&ic! w#ic# wou&d, in e%%ect, aut#ori*e on&! one arrastre operator in eac# port in t#e P#i&ippines
and t#e aut#orit! o% PP7 to co&&ect 12I o% t#e gross arrastre and stevedoring c#arges paid to operators' (n 31
Marc# 1.0/, t#e tria& court issued a writ o% inAunction, pro#iiting t#e PP7, pendente &ite, %rom en%orcing its
po&ic! o% integration in t#e $eu $it! port and directing it to a&&ow t#e arrastre operators to operate
individua&&! and independent&! as arrastre and stevedoring contractors' @owever, wit# respect to t#e
co&&ection o% t#e 12I c#arge ! PP7, t#e court ru&ed t#at it was going to presume its reasona&eness in t#e
meantime since PP7 was mere&! %o&&owing t#e rate %i3ed ! t#e 1ureau o% $ustoms'
Eot satis%ied wit# t#e court?s order, PP7 %i&ed a petition %or certiorari e%ore t#e "upreme $ourt as a resu&t o%
w#ic# a temporar! restraining order was issued enAoining t#e tria& court %rom en%orcing its order' T#e
"upreme $ourt, #owever, suse9uent&! a&&owed t#e tria& court to proceed wit# t#e case' $onse9uent&!, t#e
arrastre operators %i&ed a supp&ementa& app&ication %or pre&iminar! inAunction seeking to stop PP7 %rom
co&&ecting t#e 12I c#arge' T#e tria& court denied t#e arrastre operators? supp&ementa& app&ication on t#e
ground t#at t#e reason re&ied upon does not appear to e induita&e' @ence, t#e arrastre operators %i&ed t#e
petition %or certiorari, 6:' 435.8, wit# t#e "upreme $ourt'
T#e "upreme $ourt, on 88 Ju&! 1./2, issued a temporar! restraining order enAoining t#e PP7 %rom co&&ecting
%rom t#e arrastre operators t#e 12I o% t#eir gross income %rom arrastre operations' (n 15 June 1./3, t#e
Easipit ,ntegrated 7rrastre T "tevedoring, ,nc' %i&ed a motion %or intervention asking t#at in view o% t#e
restraining order issued ! t#e "upreme $ourt, it s#ou&d not e re9uired to pa! 12I o% its gross earnings to
PP7'
[-] ,n t#e meantime, according to PP7, in t#e course o% t#e operation o% arrastre services ! +,P",, it noted a
numer o% vio&ations o% t#e temporar! permitC suc# as ine%%icienc! in providing services due to %ai&ure to
ac9uire t#e needed cargo=#and&ing e9uipmentC inai&it! to render nig#t workC permitting i&&ega& operations !
un&icensed individua& &aor contractors or caos w#om +,P", was supposed to #ave asored ! t#e process
o% mergerC emp&o!ment o% c#i&d &aorC and non=remittance o% t#e government s#are o% arrastre c#arges' 7s a
resu&t, t#e PP7 gave +ipsi severa& written and vera& warnings to carr! out t#e needed re%orms in its
operations' (n 15 7pri& 1.0/, Jose M' 7sturias, t#e B3ecutive Vice=President and 6enera& Manager o% +,P",
wrote PP7 admitting its %ai&ure to comp&! wit# t#e conditions o% its temporar! permit' (n 8> 7pri& 1.0., PP7
issued "pecia& (rder 115=0. creating t#e P#i&ippine Ports 7ut#orit!=Tac&oan 7rrastre Ports "ervices (PP7=
T7P") wit#in its own Tac&oan port unit and ordering a take=over ! PP7=T7P" o% t#e entire arrastre and
stevedoring services in t#e Port o% Tac&oan, e%%ective not &ater t#an 1 June 1.0.' +,P",, as we&& as a&& port
users were du&! in%ormed o% t#e take=over ! PP7=T7P"' (n 1 June 1.0., PP7=T7P" took over t#e actua&
management and operations o% arrastre and stevedoring services in t#e port o% Tac&oan' For t#is purpose'
PP7=T7P" uti&i*ed t#e same dock &aor %orce t#at e3isted at t#e time o% t#e cance&&ation o% t#e permit o%
+,P",' 7ccording to PP7, a%ter suc# take=over, t#e dockworkers were p&aced on regu&ar pa!ro&&sC t#eir socia&
securit! premiums were prompt&! paid and a&& i&&ega& e3actions %rom t#eir pa! were stoppedC t#e! were issued
%ree uni%orms and #ard #ats %or sa%et! and protectionC and t#e! organi*ed a genuine &aor organi*ation, t#e
Tac&oan Port "ervice +aor Dnion (T7P"+D) %or t#e protection o% t#eir rig#ts' 7s a resu&t o% t#e take=over,
PP7 sent a notice to ,nternationa& $opra B3port $orporation (,ETB:$(), a corporation wit# a stevedoring
contract wit# petitioner Bastern +e!te 7rrastre "ervice (Bastern +e!te) reiterating t#e %act t#at PP7 #as taken
over t#e cargo=#and&ing operations in t#e port o% Tac&oan and t#ere%ore, a&& transactions and pa!ments
re&evant to said cargo=#and&ing operations s#ou&d e coursed t#roug# t#e management o% t#e PP7 at Tac&oan'
$onse9uent&!, ,ETB:$(, in turn, sent a %orma& &etter to Bastern +e!te demanding a re%und o% t#e pa!ments it
made %or t#e services rendered ! Bastern +e!te on June 8 and 1>, 1.0.'
[GR 2/-2] (n 4 Ju&! 1.0., Bastern +e!te %i&ed an action wit# t#e $F, o% +e!te %or inAunction wit#
pre&iminar! inAunction, pro#iition and damages seeking to restrain respondent ,ETB:$( %rom making an!
pa!ment to PP7=T7P" and to prevent t#e &atter %rom taking over t#e operations o% petitioner, a&&eging t#at t#e
same was i&&ega&, against pu&ic po&ic! and an impairment o% t#e contract e3ecuted ! and etween Bastern
+e!te and ,ETB:$(' (n 1> 7ugust 1.0., t#e Audge issued a writ o% pre&iminar! inAunction against PP7' 7
motion %or reconsideration was %i&ed ! t#e &atter a&&eging among ot#ers, t#at under PD /40, it #as t#e
aut#orit! to take over t#e operation o% arrastre and stevedoring services to t#e e3c&usion o% a&& private
contractors, inc&uding Bastern +e!te' (n 8/ Januar! 1./2, t#e Audge granted PP7?s motion, stating t#at since
t#ere is no s#owing t#at PF /40 is unconstitutiona& and in view o% t#e we&& known presumption o% va&idit! t#at
ever! statute #as in its %avor, t#ere is no reason %or not !ie&ding to t#e motion o% PP7 to disso&ve t#e writ o%
pre&iminar! inAunction' Bastern +e!te %i&ed a motion %or reconsideration ut t#e same was denied' @ence, it
%i&ed t#e petition in 6: 458>4'
T#e "upreme $ourt, on 10 Ju&! 1./2, issued a temporar! restraining order enAoining t#e tria& court %rom
%urt#er proceeding wit# t#e tria& o% t#e case and t#e PP7 %rom taking over t#e arrastre operations o% Bastern
+e!te in t#e port o% Tac&oan'
LGR L>2/3%/] (n 1/ Feruar! 1./2, a petition was %i&ed ! Froi&an 1asio and ot#er &aor contractors wit#
t#e $F, o% +e!te, 9uestioning t#e PP7=T7P"? take=over o% t#e port o% Tac&oan and a&&eging t#at t#e same
constituted an impairment o% t#e contract etween t#e &aor contractors and t#e owners o% motor &aunc#es and
etween t#e &aor contractors and PP7' 7s evidence o% t#e &atter a&&egation, t#e petitioners attac#ed to t#eir
petition a cop! o% t#e ;Memorandum< o% t#e +e!te="amar +aor Dnion and 1enigno Magpa&e, ,nc', t#e
manager o% t#e PP7=PMD o% Tac&oan w#ere! t#e &atter agreed to remit 12I o% t#e gross income derived
%rom t#e port users serviced ! t#e +e!te="amar +aor Dnion %or t#e period Ju&! 1 to 31, 1.0. to t#e &aor
contractors' ,nitia&&!, t#e tria& court issued a temporar! restraining order, @owever, instead o% deciding t#e
petition on t#e merits, it ca&&ed t#e parties to a series o% con%erences to %ind means and wa!s w#ere! t#e &aor
contractors and t#e workers under t#em cou&d e asored under t#e new set=up' T#e PP7 sumitted its
;$omp&iance,< inding itse&% to asor t#e &aor contractors and workers' ,t assured t#em t#at w#oever wou&d
e t#e winning idder o% t#e arrastre service, #e must uti&i*e t#e services o% t#e &aor %orce w#o are a&&
memers o% t#e water%ront union' ,n view o% t#is ;$omp&iance< sumitted ! PP7, t#e tria& court dismissed
t#e petition and &i%ted t#e restraining order' T#e &aor contractors %i&ed a motion %or reconsideration a&&eging
t#at t#e decision o% t#e tria& court #ad no evidence to support itse&% and t#at tria& s#ou&d #ave een conducted
ecause t#ere were a&&egations raised ! ot# sides w#ic# needed to e c&ari%ied and sett&ed' T#e! a&so soug#t
t#e issuance o% a restraining order against t#e PP7' T#e motion, #owever, was denied ! said court' T#us,
instead o% waiting %or t#e tria& court to reso&ve t#e motion, t#e &aor contractors %i&ed t#e petition %or certiorari,
6: 453.5, wit# t#e "upreme $ourt, seeking to set aside t#e decision o% t#e tria& court on t#e ground t#at t#e
same vio&ated t#e petitioners? rig#t to due process o% &aw'
T#e "upreme $ourt, on 4 7ugust 1./2, t#e "upreme $ourt issued a temporar! restraining order enAoining t#e
court %rom #earing t#e case and t#e PP7 %rom taking over t#e work o% t#e &aor contractors'
[GR 2/22] (n 82 7ugust 1./2, +,P", %i&ed a petition %or certiorari wit# pre&iminar! mandator! inAunction
9uestioning t#e va&idit! and constitutiona&it! o% portions o% PD 424 and PD /40 L"ec' >(a) (v)M on t#e ground
t#at said provisions %rom w#ic# t#e PP7 derives its aut#orit! to take=over t#e port o% +e!te vio&ate +,P",?s
rig#t to due process o% &aw' ,n t#e a&ternative, it asked t#at t#e $ourt de%ine and c&ari%! t#e e3tent o% PP7?s
aut#orit! to take=over t#e port services o% a&& ports in t#e countr! as we&& as to grant t#e same to an e3c&usive
contractor, %irm, or corporation'
T#e "upreme $ourt, on 8> 7ugust 1./2, issued a reso&ution conso&idating t#e %our petitions' (n 32 "eptemer
1./2, T7P"+D %i&ed a motion to intervene in t#e case o% +,P", v' PP7, et a&', a&&eging t#at it #as a &ega&
interest in t#e matters in issue as it constitutes t#e entire &aor %orce o% t#e stevedoring and arrastre services
turned over ! t#e "upreme $ourt to +,P",'
T#e "upreme $ourt dismissed t#e petitions in 6:s 435.8, 458>4, 453.5 and 454>4 %or &ack o% meritC and
disso&ved t#e temporar! restraining orders dated 10 Ju&! 1./2, 88 Ju&! 1./2, 4 7ugust 1./2 and 81 7ugust
1./2'
1. 5rrastre operations a,,ecte+ .it) pu$lic interest6 5n*lo>&il (ra+in* vs. LaJaro
,n t#e case o% 7ng&o=Fi& Trading $orporation v' +a*aro (185 "$:7 5.5, 418, 413 and 41.), t#e $ourt
#as a&read! underscored t#e %act t#at t#e arrastre operations in t#e various ports in t#e P#i&ippines are a%%ected
wit# pu&ic interest' T#erein, it was #e&d t#at t#e ;stream&ining o% t#e stevedoring activities in t#e various
ports o% t#e P#i&ippines was undertaken ! PP7 to imp&ement +(, 1224=7' T#e pu&ic interest, pu&ic
we&%are, and pu&ic po&ic! soug#t to e suserved ! said +(, are c&ear&! set %ort# in its w#ereas c&auses'
$&ear&!, t#ere is reasona&e re&ation etween t#e undenia&e e3istence o% an undesira&e situation and t#e
statutor! attempt to avoid it' Pu&ic we&%are, t#en, &ies at t#e ottom o% t#e enactment o% said &aw, and t#e state
in order to promote t#e genera& we&%are ma! inter%ere wit# persona& &iert!, wit# propert!, and wit# usiness
and occupations' T#e Mani&a "out# @aror is pu&ic propert! owned ! t#e "tate' T#e operations o% t#e
premiere port o% t#e countr!, inc&uding stevedoring work, are a%%ected wit# pu&ic interest' "tevedoring
services are suAect to regu&ation and contro& %or t#e pu&ic good and in t#e interest o% genera& we&%are'<
-. State in exercise o, its police po.er! t)rou*) its a*ency! )as po.er to revoke te#porary per#its
T#e "tate in t#e e3ercise o% its po&ice power t#roug# its agenc!, t#e PP7, #as t#e power to revoke t#e
temporar! permits, assuming t#e e3istence o% va&id temporar! permits, and take over t#e operations o% t#e
port o% Tac&oan w#enever t#e need to promote t#e pu&ic interest and we&%are ot# o% t#e stevedoring
industr! and t#e workers t#erein Austi%ies suc# take over' F#atever rig#t, i% an!, t#at t#e arrastre operators and
&aor contractors ma! #ave ac9uired on t#e asis o% t#e temporar! permits ear&ier given t#em must !ie&d to t#e
"tate?s va&id e3ercise o% po&ice power'
3. &un+a#ental ri*)ts vis>Q>vis police po.er6 Bautista vs. Buinio
7s ru&ed in 1autista v' Juinio (180 "$:7 38., 33/), ;,n t#e interp&a! etween suc# a %undamenta&
rig#t and po&ice power, especia&&! so w#ere t#e assai&ed governmenta& action dea&s wit# t#e use o% one?s
propert!, t#e &atter is accorded muc# &eewa!' T#at is sett&ed &aw' F#at is more, it is good &aw' Due process,
t#ere%ore, cannot va&id&! e invoked' 7s stressed in t#e cited Brmita=Ma&ate @ote& decision (180 P#i&' 32>,
314), VTo #o&d ot#erwise wou&d e to undu&! restrict and narrow t#e scope o% po&ice power w#ic# #as een
proper&! c#aracteri*ed as t#e most essentia&, insistent and t#e &east &imita&e o% powers, e3tending, as it does
Vto a&& t#e great pu&ic needs? '<
/. 7o i#pair#ent o, contract
T#e rig#t to non=impairment o% contract #ad not een vio&ated' ,n t#e same case o% 7ng&o=Fi& Trading
$orporation v' +a*aro (supra, p' 41.), t#e "upreme $ourt #e&d t#at t#e suservience o% t#e contract c&ause to
t#e po&ice power enacting pu&ic regu&ations intended %or t#e genera& we&%are o% t#e communit! #as een
sett&ed ! t#e $ourt' @erein, t#e records wi&& ear out t#e %act t#at on&! +,P", #as a temporar! permit issued
! PP7' T#e rest were eit#er mere&! a&&owed or to&erated to operate in t#e port o% Tac&oan' @owever, even on
t#e assumption t#at a&& o% t#em were a&e to secure temporar! permits %rom PP7, sti&&, t#is does not vest an!
propert! rig#t on t#em and #ence, cannot a&&ege a vio&ation o% t#eir rig#t to non=deprivation o% propert!
wit#out due process o% &aw'
2. :er#its provi+e ,or privile*e an+ not property ri*)ts6 5n*lo>&il (ra+in* vs. LaJaro
,n t#e case o% 7ng&o=Fi& Trading $orporation v' +a*aro, t#e $ourt ru&ed t#at ;a&& #o&d=over permits
were ! nature temporar! and suAect to suse9uent po&ic! guide&ines as ma! e imp&emented ! PP7' "uc#
s#ou&d #ave served as su%%icient notice t#at, at an! time, t#eir aut#orities ma! e terminated' F#et#er or not a
PT( wou&d e issued depended on t#e sound discretion o% PP7 and on t#e po&icies, ru&es and regu&ations t#at
t#e &atter ma! imp&ement in accordance wit# t#e statutor! grant o% power' ,t cannot e said t#at t#e petitioners
to #ave een deprived o% propert! wit#out due process o% &aw ecause, in t#is respect, w#at was given t#em
was not a propert! rig#t ut a mere privi&ege and t#e! s#ou&d #ave taken cogni*ance o% t#e %act t#at since t#e!
#ave no vested rig#t to operate, t#eir permits can e wit#drawn an!time t#e pu&ic we&%are deems it est to do
so'<
. ;#position o, reasona$le rates .it)in soun+ +iscretion o, t)e ::5
,t is wit#in t#e sound discretion o% t#e PP7 to impose a reasona&e c#arge or rate on arrastre and
stevedoring operators w#ic# it deems to e most appropriate and advantageous to t#e government under t#e
circumstances' ,n t#e case o% 7ng&o=Fi& Trading $orporation v' +a*aro, t#e $ourt #e&d t#at t#e award o% PP7
to (cean Termina& "ervices, ,nc' ((T",) o% t#e stevedoring contract is not vio&ative o% t#e 7nti=6ra%t +aw
since said contract, %or one, emodied su%%icient consideration w#ic# is t#e pa!ment ! (T", to t#e
government o% 12I o% its gross income'
3. 5n*lo>&il (ra+in* vs. LaJaro6 =ana*e#ent contract not violative o, anti>*ra,t la.
T#erein, ;t#e management contract is not vio&ative o% t#e 7nti=6ra%t +aw' ,t is a contract e3ecuted in
pursuance to &aw and t#e instructions o% t#e President to carr! out government oAectives to promote pu&ic
interest' T#e act did not cause Vundue inAur!? to t#e petitioners w#o #ad no vested propert! rig#ts entit&ed to
protection' T#ere is no undue inAur! to t#e government nor an! unwarranted ene%it to (T", considering t#at
t#e contract carried su%%icient consideration %or PP7 w#ic# is t#e pa!ment ! (T", o% 12I o% its gross
income, somet#ing w#ic# (T", is &oat#e to pa!' T#e rationa&i*ation and e%%ective uti&i*ation o% port %aci&ities
is to t#e advantage o% t#e 6overnment' Furt#ermore, t#e discretion in c#oosing t#e stevedoring contractor %or
t#e "out# @aror, Port o% Mani&a, e&ongs to t#e PP7' 7s &ong as standards are set in determining t#e
contractor and suc# standards are reasona&e and re&ated to t#e purpose %or w#ic# t#e! are used, t#e courts
s#ou&d not in9uire into t#e wisdom o% PP7?s c#oice'<
4. 1"R s)are o, *overn#ent in earnin*s a reasona$le consi+eration
T#e 12I s#are o% t#e government in t#e earnings %rom stevedoring and arrastre services a reasona&e
consideration %or t#e use o% government premises, works, %aci&ities, and services, not to mention t#e
supervision in#erent in t#e upgrading and improvement o% port operations, o% w#ic# said services are an
integra& part'
%. ;n in+ustries a,,ecte+ .it) pu$lic interest! a re*ulate+ #onopoly is not necessarily proscri$e+
,n industries a%%ected wit# pu&ic interest, a regu&ated monopo&! is not necessari&! proscried, i% suc#
is deemed necessar! in order to protect and promote pu&ic interest' ,n t#e case o% P#i&ippine Ports 7ut#orit!
v' Mendo*a, (13/ "$:7 5.>, 42.=412), t#e $ourt ru&ed t#at ;private monopo&ies are not necessari&!
pro#iited' T#e use o% t#e word Gregu&ate? in t#e $onstitution indicates t#at some monopo&ies, proper&!
regu&ated, are a&&owed' G$ompetition can est regu&ate a %ree econom!' +ike a&& asic e&ie%s, #owever, t#at
princip&e must accommodate #ard practica& e3perience' T#ere are areas w#ere %or specia& reasons t#e %orce o%
competition, w#en &e%t w#o&&! %ree, mig#t operate too destructive&! to sa%eguard t#e pu&ic interest' Pu&ic
uti&ities are an instance o% t#at consideration'? 1! t#eir ver! nature, certain pu&ic services or pu&ic uti&ities
suc# as t#ose w#ic# supp&! water, e&ectricit!, transportation, te&egrap#, etc' must e given e3c&usive %ranc#ises
i% pu&ic interest is to e served' "uc# e3c&usive %ranc#ises are not vio&ative o% t#e &aw against monopo&ies'
1". ::5>(5:S co#pose+ o, all la$or contractors an+ .orkers
,n t#e present cases, w#en PP7=T7P" took over arrastre operations, it a&so asored t#e entire &aor
%orce t#at e3isted at t#e time o% t#e cance&&ation o% +,P",?s permit' @ence, it can e sa%e&! said t#at PP7=T7P"
is a&so composed o% a&& t#e &aor contractors and t#e workers under t#em w#ic# #ave een integrated to
deve&op and improve t#e p&anning, growt#, %inancing, construction, maintenance and operation o% ports
t#roug#out t#e countr! and make t#em responsive to t#e needs o% t#eir individua& &oca&ities'
[1//]
(an :)o vs. <ala#al (GR /22%4! - 5pril 1%3%)
Bn 1anc, $oncepcion (J): 4 concur
&acts' Bnri9ue 7&deguer purc#ased on credit %rom @assama& Da&ama& certain merc#andise va&ued at P4/3'>2'
@assama& Da&ama& s#ipped said merc#andise on t#e s#ip o% Tan P#oand endorsed t#e i&& o% &ading to t#e
$#artered 1ank o% $#ina, ,ndia T 7ustra&ia, w#ic#, in turn, endorsed it to t#e P#i&ippine Eationa& 1ank
(PE1)' T#e said i&& o% &ading was made to order and contains t#e initia&s o% Bnri9ue 7&deguer, ;B' 7'< Dpon
arriva& o% t#e goods in "orsogon, t#e agent o% Tan P#o de&ivered t#e merc#andise to Bnri9ue 7&deguer w#o
presented t#e invoice an & signed a receipt' Da&ama& upon &earning t#at 7&deguer #ad received t#e
merc#andise, made #im sign a 52=da! dra%t %or t#e va&ue o% said merc#andise' T#e PE1, wit# t#e consent o%
Da&ama&, gave 7&deguer an e3tension o% ten da!s to pa! t#e amount o% t#e merc#andise in 9uestion, and upon
t#e e3piration o% t#e period, Da&ama& re9uired 7&deguer to pa! t#e merc#andise'
Dna&e to get suc# pa!ment, Da&ama& roug#t suit on Eovemer 8/, 1.35, t#at is, a%ter t#e e3piration o% 105
da!s %rom t#e de&iver! o% t#e merc#andise to 7&deguer' T#e court decided in %avor o% Tan P#o and against
Da&ama& upon t#e t#eor! t#at t#e de&iver! o% t#e goods to 7&deguer constitutes nonde&iver!, w#ere%ore, t#e
c&aim not #aving een %i&ed wit#in 32 da!s nor t#e action instituted wit#in >2 da!s, Da&ama& waived #is c&aim
or rig#t o% action against Tan P#o'
(n appea& t#e $ourt o% 7ppea&s up#e&d t#e contrar! view and rendered Audgment in %avor o% Da&ama& and
against Tan P#o %or t#e sum o% P4/>'>2, wit# &ega& interest %rom t#e %i&ing o% t#e comp&aint, and t#e costs o%
ot# instances' From t#is decision, Tan P#o #as taken t#e appea& on certiorari'
T#e "upreme $ourt a%%irmed t#e decision, wit# costs against Tan P#o'
1. Section 3 o, t)e $ill o, la+in*
T#e i&& o% &ading signed ! t#e parties provides in part as %o&&ows ;"B$T,(E 0' $&aim %or
nonde&iver! o% s#ipment must e presented in writing to t#e carrier wit#in t#irt! da!s %rom t#e date o% accrua&'
"uits ased upon c&aims arising %rom s#ortage, damage, or nonde&iver! o% s#ipment s#a&& e instituted wit#in
si3t! da!s %rom t#e date o% accrua& o% t#e rig#t o% action' Fai&ure to make c&aims, to institute Audicia&
proceedings as #erein provided s#a&& constitute a waiver o% c&aim or rig#t o% action'<
-. =is+elivery! not non+elivery! occurre+
$onsidering t#at t#e i&& o% &ading covering t#e goods in 9uestion #as een made to order, w#ic#
means t#at said goods cannot e de&ivered wit#out previous pa!ment o% t#e va&ue t#ereo%, it is evident t#at,
t#e said goods #aving een de&ivered to 7&deguer wit#out pa!ing t#e price o% t#e same, t#ese %acts constitute
misde&iver! and not nonde&iver!, ecause t#ere was in %act de&iver! o% merc#andise' @erein, Tan P#o s#ou&d
not #ave de&ivered t#e goods to 7&deguer ut to t#e PE1' @aving made t#e de&iver! to 7&deguer, t#e de&iver!
is a case o% misde&iver!' ,% t#e goods #ave een de&ivered, it cannot at t#e same time e said t#at t#e! #ave not
een de&ivered'
3. <uty o, t)e carrier not to +eliver #erc)an+ise .it)out presentation o, $ill la+in* +uly en+orse+
$y s)ipper
7ccording to t#e i&& o% &ading w#ic# was issued in to t#e order o% t#e s#ipper, t#e carrier was under a
dut! not to de&iver t#e merc#andise mentioned in t#e i&& o% &ading e3cept upon presentation o% t#e i&& o%
&ading du&! endorsed ! t#e s#ipper' @ence, Tan P#o #aving de&ivered t#e goods to Bnri9ue 7&deguer wit#out
t#e presentation ! t#e &atter o% t#e i&& o% &ading du&! endorsed to #im ! t#e s#ipper, Tan P#o made a
misde&iver! and vio&ated t#e i&& o% &ading, ecause #is dut! was not on&! to transport t#e goods entrusted to
#im sa%e&!, ut to de&iver t#em to t#e person indicated in t#e i&& o% &ading'
/. Si*nin* o, /">+ay +ra,t ,or t)e a#ounts o, *oo+s not an act o, rati,ication o, t)e #is+elivery
T#e %act t#at Da&ama& re9uired 7&deguer to return t#e goods, and it #as een #e&d t#at w#en t#e owner
o% t#e goods transported attempts to secure t#e va&ue t#ereo% %rom t#e person to w#om t#e! #ave een
de&ivered ! mistake, #e cannot e deemed to #ave rati%ied t#e misde&iver! or to #ave waived #is rig#t against
t#e carrier'
2. <e,ect o, not inclu+in* t)e C5 as party to present petition #erely tec)nical an+ not ,atal
T#e $ourt o% 7ppea&s #as not een made a part! in t#e present petition' 7s #e&d in Ma!or vs' 1&anco
(>1 P#i&', 450), t#is de%ect eing mere&! tec#nica&, t#e same cannot e considered as a ground %or den!ing t#e
petition'
[1/2], also [1/1]
Baer Senior M Co. vs. La Co#pania =ariti#a (GR 1%3! 3" 5pril 1%")
First Division, Fi&&ard (J): 5 concur
&acts' 1aer "enior T $o, eing t#e owner o% t#e &aunc# Mascota, w#ic# was t#en at 7parri, made a contract
wit# +a $ompania Maritima aout 8 Feruar! 1.23, ! t#e terms o% w#ic# +a $ompania Maritima agreed to
tow t#e &aunc# %rom 7parri to Mani&a' ,n accordance wit# t#is agreement t#e &aunc# was de&ivered to +a
$ompania Maritima at 7parri on t#e da! named, and +a $ompania Maritima?s steamer $#urruca &e%t 7parri
on t#at da! wit# t#e &aunc# in tow' T#e steamer, wit# t#e &aunc# in tow, arrived sa%e&! at Vigan' Two or t#ree
#ours a%ter &eaving Vigan t#e wind increased in vio&ence, wit# a roug# sea' T#e speed o% t#e streamer was
decreased so t#at t#e tow mig#t trave& more easi&!' 7out 11:32 p'm' t#e &ookout, w#o was stationed in t#e
stern o% t#e steamer %or t#e purpose o% watc#ing t#e &aunc#, reported to t#e o%%icer o% t#e deck t#at t#e &aunc#
#ad disappeared' T#e steamer was stopped and searc# was made t#e rest o% t#e nig#t %or t#e &aunc#, ut
wit#out success, and in t#e morning t#e steamer proceeded on #er wa! to Mani&a'
1aer "enior T $o' roug#t t#e action to recover t#e va&ue o% t#e &aunc#' Judgment was rendered in t#e tria&
court in %avor o% 1aer "enior T $o' +a $ompania Maritima moved %or a new tria&, w#ic# was denied' +a
$ompania Maritima #as roug#t t#e case to t#e "upreme $ourt ! i&& o% e3ceptions'
T#e "upreme $ourt reversed t#e Audgment o% t#e court e&ow, and entered Audgment %or +a $ompania
Maritima, aso&ving it %rom t#e comp&aint, wit# t#e costs o% t#e &ower court' T#e court disa&&owed recover!
costs to eit#er part!' T#e court ordered t#at %ina& Audgment e entered in accordance wit# t#e decision a%ter t#e
e3piration o% 82 da!s and t#e case e remanded to t#e &ower court %or proper procedure a%ter 12 da!s
t#erea%ter'
1. 5rticle 1"1 7CC
7rtic&e 1>21 E$$ provides t#at ;$arriers o% goods ! &and or ! water s#a&& e suAect wit# regard to
t#e keeping and preservation o% t#e t#ings intrusted to t#em, to t#e same o&igations as determined %or in
keepers ! artic&es 10/3 and 10/5' T#e provisions o% t#is artic&e s#a&& e understood wit#out preAudice to w#at
is prescried ! t#e $ode o% $ommerce wit# regard to transportation ! sea and &and'<
-. 5rticle 1"- 7CC
7rtic&e 1>28 E$$ provides t#at ;$arriers are a&so &ia&e %or t#e &oss o% and damage to t#e t#ings
w#ic# t#e! receive, un&ess t#e! prove t#at t#e &oss or damage arose %rom a %ortuitous event or %orce maAuere'<
3. 5rticle 14 (1)! Co+e o, Co##erce
7rtic&e >1/ o% t#e $ode o% $ommerce is in part provides t#at ;t#e captain s#a&& e civi&&! &ia&e to t#e
agent and t#e &atter to t#e t#ird persons w#o ma! #ave made contracts wit# t#e %ormer H (1) For a&& t#e
damages su%%ered ! t#e vesse& and its cargo ! reason o% want ski&& or neg&igence on #is part' ,% a
misdemeanor wit# t#e Pena& $ode'<
/. 5rticle -"! Co+e o, Co##erce
7rtic&e >82 o% t#e $ode o% $ommerce is in part t#at ;t#e captain s#a&& not e &ia&e %or t#e damages
caused to t#e vesse& or to t#e cargo ! reason o% %orce maAuereC ut #e s#a&& a&wa!s e so H no agreement to
t#e contrar! eing va&id H %or t#ose arising t#roug# #is own %au&t'<
2. La Co#pania =ariti#a not a carrier o, *oo+s in respect to launc)6 ()e B. :. <onal+son (13 FS
2%%)
7rtic&es 1>21=1>28 E$$, and 7rtic&es >1/ (1) and >82 o% t#e $ode o% $ommerce, treat o% t#e &iai&it!
o% a carrier o% goods' +a $ompania Maritima, #owever, was not a carrier o% goods in respect to t#e &aunc#'
F#i&e t#e tug is per%orming #er contract o% towing t#e arges t#e! ma! indeed e regarded as part o% #erse&%,
in t#e sense t#at #er master is ound to use due care to provide %or t#eir sa%et! as we&& as #er own and to avoid
co&&ision, eit#er o% t#em or o% #erse&%, wit# ot#er vesse&s' 1ut t#e arges in tow are ! no means put under t#e
contro& o% t#e master o% t#e tug to t#e same e3tent as t#e tug #erse&%, and t#e cargo, i% an!, on oard o% #er' 7
genera& s#ip carr!ing goods %or #ire, w#et#er emp&o!ed in interna&, in coasting, or in %oreign commerce, is a
common carrierC and t#e s#ip and #er owners, in t#e asence o% a va&id agreement to t#e contrar!, are &ia&e to
t#e owners o% t#e goods carried as insurers against a&& &osses, e3cepting on&! suc# irresisti&e causes as t#e act
o% 6od and pu&ic enemies' 1ut a tug and #er owners are suAect to no suc# &iai&it! to t#e owners o% t#e
vesse&s towed, or o% t#e cargoes can not maintain an! action %or t#e &oss o% eit#er against t#e tug o% #er
owners, wit#out proving neg&igence on #er part'
. 7o presu#ption o, ,ault ,or tu* operator! unlike in co##on carriers6 <e*ree o, caution an+
skill .)ic) pru+ent navi*ators e#ploy in si#ilar services
7n engagement to tow does not impose eit#er an o&igation to insure or t#e &iai&it! o% common
carriers' T#e urden is a&wa!s upon #im w#o a&&eges t#e reac# o% suc# a contract to s#ow eit#er t#at t#ere
#as een no attempt at per%ormance, or t#at t#ere #as een neg&igence or unski&&%u&ness to #is inAur! in t#e
per%ormance' Dn&ike t#e case o% common carriers, damage sustained ! t#e tow does not ordinari&! raise a
presumption t#at t#e tug #as een in %au&t' T#e contract re9uires no more t#an t#at #e w#o undertakes to tow
s#a&& carr! out #is undertaking wit# t#at degree o% caution and ski&& w#ic# prudent navigators usua&&! emp&o!
in simi&ar services'
3. Source o, o$li*ation in t)e present case
T#e o&igation o% +a $ompania Maritima grew out o% a contract made etween it and 1aer "enior T
$o', and t#e &iai&it! o% t#e %ormer is de%ined in artic&es 1121 and 1125 o% t#e $ivi& $ode' T#e provisions o%
artic&es 1.28 and 1.23 are not app&ica&e to t#e present case'
4. 5rticle 11"1 7CC
7rtic&e 1121 E$$ provides t#at ;t#ose w#o in %u&%i&&ing t#eir o&igations are gui&t! o% %raud,
neg&igence, or de&a!, and t#ose w#o in an! manner w#atsoever act in contravention o% t#e stipu&ations o% t#e
same, s#a&& e suAect to indemni%! %or t#e &osses and damages caused t#ere!'<
%. 5rticle 11"/ 7CC
7rtic&e 1125 E$$ provides t#at ;t#e %au&t or neg&igence o% t#e detor consists o% t#e omission o% t#e
steps w#ic# ma! e re9uired ! t#e c#aracter o% t#e o&igation, and w#ic# ma! pertain to t#e circumstances o%
t#e persons, time, and p&ace' "#ou&d t#e o&igation not state w#at conduct is to e oserve in its %u&%i&&ment,
t#at oserved ! a good %at#er o% a %ami&! s#a&& e re9uired'<
1". La Co#pania =ariti#a exercise+ +ue +ili*ence
1! t#e terms o% artic&es 1125, +a $ompania Maritima was ound to e3ercise w#at is known in t#e
7merican &aw as ordinar! di&igence, taking into consideration t#e nature o% t#e o&igation and t#e
circumstances o% persons, time, and p&ace' Bvidence s#ows t#at +a $ompania Maritima did e3ercise t#e
di&igence re9uired o% it ! &aw' T#e towing &ine was passed %rom t#e steamer to t#e &aunc#, around t#e stern o%
t#e &aunc# once or twice, and one or two ot#er &ines passed entire&! around t#e ow o% t#e &aunc# and under
t#e kee&' T#ese &ines were %astened to a post in t#e ow o% t#e &aunc#, w#ic# post was used %or %astening ropes
in cases o% towing and %or t#e purpose o% %astening t#e &aunc# to t#e w#ar%' 7t t#e time t#e &oss occurred t#e
towing &ine did not reak, ut t#e post did, and was %ound %astened to t#e towing &ines w#en t#e! were pu&&ed
on oard t#e steamer' T#e captain o% t#e steamer and t#e %irst mate, ot# men o% e3perience in t#e matter,
testi%ied t#at t#e &ines were proper&! adAusted and t#e tow proper&! made %ast to t#e steamer'
11. ;nco#petence o, .itness o, contrary testi#ony
T#e on&! evidence to t#e contrar!, as to t#e e3ercise o% ordinar! di&igence, was t#e evidence %urnis#ed
! one witness o% 1aer "enior T $o', w#o testi%ied t#at #e was present w#en t#e towing &ines were made %ast
! t#e captain #imse&%, o% t#e steamerC t#at #e t#en to&d t#e captain it s#ou&d e done anot#er wa!' T#e captain
denied t#is' T#is witness #ad no e3perience, in t#e matter o% towingC #ad never #ad occasion to make %ast a
tow to a tug, and #ad never seen it done, wit# one e3ceptionC and t#at w#en t#is same &aunc# was towed %rom
Mani&a to 7parri' @is evidence is su%%icient to overcome t#e evidence o% +a $ompania Maritima'
[>] also [204]
LopeJ vs. <uruelo (GR -%1! -- 8cto$er 1%-4)
Bn 1anc, "treet (J): 5 concur, 1 concur in resu&t
&acts' (n 12 Feruar! 1.80, 7ugusto +ope*, w#o is a resident o% t#e municipa&it! o% "i&a!, (ccidenta&
Eegros, was desirous o% emarking upon t#e interis&and steamer "an Jacinto in order to go to ,&oi&o' T#is oat
was at t#e time in t#e anc#oring ground o% t#e port o% "i&a!, some #a&% a mi&e distant %rom t#e port' +ope*
t#ere%ore emarked at t#e &anding in t#e motor oat Jison, w#ic# was t#en engaged in conve!ing passengers
and &uggage ack and %ort# %rom t#e &anding to oats at anc#or, and w#ic# was owned and operated ! 7&ino
Jison, wit# Juan Durue&o as patron' T#e engineer (ma9uinista) aoard on t#is trip was one :odo&in Durue&o, a
o! o% on&! 1> !ears o% age' @e is a&&eged to #ave een a mere novice wit#out e3perience in t#e running o%
motor oatsC and t#e da! o% t#e occurrence now in contemp&ation is said to #ave een t#e t#ird da! o% #is
apprentices#ip in t#is capacit!' ,t is a&&eged t#at t#e Jison, upon t#is trip, was gross&! over&aden, #aving
aoard 15 passengers, w#i&e its capacit! was on&! %or / or .' 7s t#e motor oat approac#ed t#e "an Jacinto in
a per%ect&! 9uiet sea, it came too near to t#e stern o% t#e s#ip, and as t#e prope&&er o% t#e s#ip #ad not !et
ceased to turn, t#e &ades o% t#e prope&&er struck t#e motor oat and sank it at once' 7s t#e Jison sank, +ope*
was t#rown into t#e water against t#e prope&&er, and t#e revo&ving &ades in%&icted various inAuries upon #im,
consisting o% a ruise in t#e reast, two serious %ractures o% t#e ones o% t#e &e%t &eg, and a compound %racture
o% t#e &e%t %emur' 7s a conse9uence o% t#ese inAuries +ope* was kept in ed in a #ospita& in t#e $it! o% Mani&a
%rom 8/ Feruar! unti& 1. (ctoer 1.80, or appro3imate&! / mont#s'
+ope* instituted an action in t#e $F, o% (ccidenta& Eegros %or t#e purpose o% recovering damages (P182,222)
%or persona& inAuries in%&icted upon #im ! reason o% t#e neg&igence o% Durue&o and Jison' Durue&o and Jison
demurred to t#e comp&aint, and t#e demurrer #aving een sustained, +ope* e&ected to stand upon #is
comp&aint, w#ic# was according&! dismissed' +ope* appea&ed'
T#e "upreme $ourt reversed t#e Audgment appea&ed %rom, overru&ed t#e demurrer, and re9uired Jison to
answer t#e comp&aint wit#in 4 da!s a%ter noti%ication o% t#e return o% t#e decision to t#e court o% originC wit#
costs against Jison'
1. 5rticle 432 o, t)e Co+e o, Co##erce applies only to sea>*oin* vessels an+ not t)ose en*a*e+ in
rever an+ $ay tra,,ic
7rtic&e /34, $ode o% $ommerce is %ound in t#e section dea&ing wit# co&&isions, and t#e conte3t s#ows
t#e co&&isions intended are co&&isions o% sea=going vesse&s' "aid artic&e cannot e app&ied to sma&& oats
engaged in river and a! tra%%ic' T#e T#ird 1ook o% t#e $ode o% $ommerce, dea&ing wit# Maritime
$ommerce, o% w#ic# t#e section on $o&&isions %orms a part, was evident&! intended to de%ine t#e &aw re&ative
to merc#ant vesse&s and marine s#ippingC and, as appears %rom said $ode, t#e vesse&s intended in t#at 1ook
are suc# as are run ! masters #aving specia& training, wit# t#e e&aorate apparatus o% crew and e9uipment
indicated in t#e $ode' T#e word ;vesse&< ("panis#, ;u9ue,< ;nave<), used in t#e section re%erred to was not
intended to inc&ude a&& s#ips, cra%t or %&oating structures o% ever! kind wit#out &imitation, and t#e provisions o%
t#at section s#ou&d not e #e&d to inc&ude minor cra%t engaged on&! in river and a! tra%%ic' Vesse&s w#ic# are
&icensed to engage in maritime commerce, or commerce ! sea, w#et#er in %oreign or coastwise trade, are no
dout regu&ated ! 1ook ,,, o% t#e $ode o% $ommerce' (t#er vesse&s o% a minor nature not engaged in
maritime commerce, suc# as river oats and t#ose carr!ing passengers %rom s#ip to s#ore, must e governed,
as to t#eir &iai&it! to passengers, ! t#e provisions o% t#e $ivi& $ode or ot#er appropriate specia& provisions
o% &aw'
-. @GesselA construe+6 Dstasen! <er. =er. Gol. ;G! p. 1%2
T#e writer Bstasen made comment upon t#e word ;vesse&< to t#e %o&&owing e%%ect: ;F#en t#e
mercanti&e codes speak o% vesse&s, t#e! re%er so&e&! and e3c&usive&! to merc#ant s#ips, as t#e! do not inc&ude
war s#ips, and %urt#ermore, t#e! a&most a&wa!s re%er to cra%t w#ic# are not accessor! to anot#er as is t#e case
o% &aunc#es, &i%eoats, etc' Moreover, t#e mercanti&e &aws, in making use o% t#e words s#ip, vesse&, oat,
emarkation, etc', re%er e3c&usive&! to t#ose w#ic# are engaged in t#e transportation o% passengers and %reig#t
%rom one port to anot#er or %rom one p&ace to anot#erC in a word, t#e! re%er to merc#ant vesse&s and in no wa!
can t#e! or s#ou&d t#e! e understood as re%erring to p&easure cra%t, !ac#ts, pontoons, #ea&t# service and
#aror po&ice vesse&s, %&oating store#ouses, wars#ips or patro& vesse&s, coast guard vesse&s, %is#ing vesse&s,
towoats, and ot#er cra%t destined to ot#er uses, suc# as %or instance coast and geodetic surve!, t#ose engaged
in scienti%ic researc# and e3p&oration, cra%t engaged in t#e &oading and disc#arge o% vesse&s %rom same to
s#ore or docks, or in trans#ipment and t#ose sma&& cra%t w#ic# in #arors, a&ong s#ore, a!s, in&ets, coves and
anc#orages are engaged in transporting passengers and aggage'< (Bstasen, Der' Mer', vo&' ,V, p' 1.4')
3. Hu Con vs. ;pil
,n Ou $on vs' ,pi& (51 P#i&', 002), t#e court #e&d t#at a sma&& vesse& used %or t#e transportation o%
merc#andise ! sea and %or t#e making o% vo!ages %rom one port to anot#er o% t#ese ,s&ands, e9uipped and
victua&ed %or t#is purpose ! its owner, is a vesse&, wit#in t#e purview o% t#e $ode o% $ommerce, %or t#e
determination o% t#e c#aracter and e%%ect o% t#e re&ations created etween t#e owners o% t#e merc#andise &aden
on it and its owner'
/. ()e Bison not a $oat as conte#plate+ in 5rticle 432! re9uirin* protest in case o, collision
@erein, t#e Jison was prope&&ed ! a second=#and motor, origina&&! used %or a tractor p&owC and it #ad a
capacit! %or on&! / persons' T#e use to w#ic# it was eing put was t#e carr!ing o% passengers and &uggage
etween t#e &anding at "i&a! and s#ips in t#e #aror' T#is was not suc# a oat as is contemp&ated in artic&e /34
o% t#e $ode o% $ommerce, re9uiring protest in case o% co&&ision'
2. =ercantile La. $y Blanco (Spanis))
"a!s 1&anco: ;+as pa&aras Gnave? ! Gu9ue, en su sentido gramatica&, se ap&ican para designar
cua&9uier c&ase de emarcaciones, grandes o pe9ueiias, mercantes o de guerra, signi%icacion 9ue no di%iere
esencia&mente de &a Auridica, con arreg&o a &a cua& se consideran u9ues para &os e%ectos de& $odigo ! de&
:eg&amento para &a organi*acion de& :egistro mercanti&, no so&o &as emarcaciones destinadas a &a navegacion
de caotaAe o a&tura, sino tamien &os di9ues %&otantes, pontones, dragas, gangui&es ! cua&9uier otro aparato
%&otante destinado a servicios de &a industria o de& comercio maritimo' 7un cuando, con%orme a este concepto
&ega&, parece 9ue todo aparato %&otante 9ue sirve directamente para e& trasporte de cosas o personas, o 9ue
indirectamente se re&acionen con esta industria, #an de suAetarse a &os preceptos de& $odigo sore propiedad,
transmision, derec#os, inscripciones, etc', entendemos con e& "r' 1enito (ora cit') ! asi ocurre en &a practica,
9ue no son ap&ica&es a &as pe9ue)as emarcaciones, 9ue so&o estan suAetas a &os de &a administracion de
marina para e& servicio de &os puNrtos o eAercicio de &a industria de &a pesca'< (1&anco, Der' Mer', vo&' ,,, pag'
88')
. =ercantile La. $y Blanco (Dn*lis) (ranslation)
"a!s 1&anco: ;T#e words Gs#ip? (nave) and Gvesse&? (u9ue), in t#eir grammatica& sense, are app&ied to
designate ever! kind o% cra%t, &arge or sma&&, merc#ant vesse&s or war vesse&s, a signi%ication w#ic# does not
di%%er essentia&&! %rom its Auridica& meaning, according to w#ic# vesse&s %or t#e purposes o% t#e $ode and
:egu&ations %or t#e organi*ation o% t#e Mercanti&e :egistr!, are considered not on&! t#ose engaged in
navigation, w#et#er coastwise or on t#e #ig# seas, ut a&so %&oating docks, pontoons, dredges, scows and an!
ot#er %&oating apparatus destined %or t#e service o% t#e industr! or maritime commerce' Oet notwit#standing
t#ese princip&es %rom w#ic# it wou&d seem t#at an! %&oating apparatus w#ic# serves direct&! %or t#e
transportation o% t#ings or persons or w#ic# indirect&! is re&ated to t#is industr!, oug#t to e suAected to t#e
princip&es o% t#e $ode wit# re%erence to owners#ip, trans%er, rig#ts, registration, etc', we agree wit# 1enito
(cora cit') and it so #appens in practice t#at t#e! are not app&ica&e to sma&& cra%t w#ic# are on&! suAect to
administrative (customs) regu&ations in t#e matter o% port service and in t#e %is#ing industr!'<
3. @7aveA (s)ip .it) +ecks an+ sails) clari,ie+
T#e word ;nave< in "panis#, w#ic# is used interc#angea&! wit# ;u9ue< in t#e $ode o% $ommerce,
means, according to t#e "panis#=Bng&is# Dictionar! compi&ed ! Bdward :' 1ens&e! and pu&is#ed at Paris in
t#e !ear 1/.>, ;"#ip, a vesse& wit# decks and sai&s'< Particu&ar&! signi%icant in t#is de%inition is t#e use o% t#e
word ;decks,< since a deck is not a %eature o% t#e sma&&est t!pes o% water cra%t'
4. Si#ilar case ,ro# &e+eral Court in t)e Fnite+ States6 ()e =a#ie
,n t#e Mamie (4 Fed', /13), it was #e&d t#at on&! vesse&s engaged in w#at is ordinari&! known as
maritime commerce are wit#in t#e provisions o% &aw con%erring &imited &iai&it! on t#e owner in case o%
maritime disaster' ,n t#e course o% t#e opinion in t#at case t#e aut#or cites t#e ana&ogous provisions in t#e
&aws o% %oreign maritime nations, especia&&! t#e provisions o% t#e $ommercia& $ode o% FranceC and it is
oserved t#at t#e word ;vesse&< in t#ese codes is &imited to s#ips and ot#er sea=going vesse&s' ;,ts provisions
are not app&ica&e,< said t#e court, ;to vesse&s in in&and navigation, w#ic# are especia&&! designated ! t#e
name o% oats'< Nuoting %rom t#e Frenc# aut#or Du%our (1 Droit Mer' 181), t#e writer o% t#e opinion in t#e
case cited %urt#er sa!s: ;T#us, as a genera& ru&e, it appears to me c&ear&!, ot# ! t#e &etter and spirit o% t#e
&aw, t#at t#e provisions o% t#e "econd 1ook o% t#e $ommercia& $ode LFrenc#M re&ate e3c&usive&! to maritime
and not to %&uvia& navigationC and t#at conse9uent&! t#e word Gs#ip,? w#en it is %ound in t#ese provisions,
oug#t to e understood in t#e sense o% a vesse& serving t#e purpose o% maritime navigation or seagoing vesse&,
and not in t#e sense o% a vesse& devoted to t#e navigation o% rivers'<
%. 5 passen*er on $oat not re9uire+ to #ake protest6 5n in+ivi+ual .)o su,,ere+ ,ractures cannot
$e suppose+ to #ake protest .it)in -/ )ours a,ter occurrence
7 passenger on a oat, &ike t#e Jison #erein, is not re9uired to make protest as a condition precedent
to #is rig#t o% action %or t#e inAur! su%%ered ! #im in t#e co&&ision descried in t#e comp&aint' ,n ot#er words,
artic&e /34 o% t#e $ode o% $ommerce does not app&!' 1ut even i% said provision #ad een considered
app&ica&e, a %air interpretation o% t#e a&&egations o% t#e comp&aint indicates, t#at t#e inAuries su%%ered !
+ope* were o% suc# a nature as to e3cuse protestC %or, under artic&e /3>, it is provided t#at want o% protest
cannot preAudice a person not in a condition to make known #is wis#es' 7n individua& w#o #as su%%ered a
compound %racture o% t#e %emur and received ot#er p#!sica& inAuries su%%icient to keep #im in a #ospita& %or
man! mont#s, cannot e supposed to #ave een in a condition to make protest wit#in 85 #ours o% suc#
occurrence'
1". Cause o, action upon civil lia$ility arisin* ,ro# tort
T#e rie% states a good cause o% action upon a civi& &iai&it! arising %rom tort under artic&es 1.28 and
1.23 o% t#e $ivi& $ode, and t#e $ourt?s attention #as not een drawn to an! provision o% &aw w#ic# wou&d
constitute an ostac&e to t#e maintenance o% t#e action'
11. Case s)oul+ not $e +is#isse+ on +e#urrer i, a cause o, action can $e #a+e out
7 case s#ou&d not e dismissed on demurrer w#en, under an! reasona&e interpretation o% t#e
comp&aint, a cause o% action can e made outC and t#e %act t#at a comp&aint is inarti%icia&&! drawn or in a
certain degree &acking in precision constitutes no su%%icient reason %or dismissing it' ,n passing upon a
demurrer, ever! reasona&e intendment is to e taken in %avor o% t#e p&eader' ,n t#is connection, i% a comp&aint
does not s#ow a good cause o% action, t#e action can e dismissed at a &ater stage o% t#e proceedingsC and even
w#ere no oAection #as een previous&! made, t#e point can e raised in t#e "upreme $ourt under section .3
o% t#e $ode o% $ivi& Procedure (7iera vs' (rin, / P#i&', 1.3)' +itt&e or no apprecia&e preAudice to t#e
de%endant wi&& t#ere%ore ordinari&! resu&t %rom overru&ing a demurrer, and no #arm is done to an!one !
re9uiring t#e de%endant to answer' (n t#e contrar!, grave preAudice ma! resu&t to a p&ainti%% %rom t#e
erroneous sustaining o% a demurrer, ecause o% t#e de&a! and even e3pense necessar! to set t#e matter rig#t
upon appea&'
[>]
:)ilippine Re,inin* v. Bar9ue [G.R. 7o. /12". =arc) -2! 1%32.]
Bn 1anc, Ma&co&m (J): . $oncur
&acts' (n var!ing dates t#e P#i&ippine :e%ining $o', ,nc', and Francisco Jar9ue e3ecuted t#ree mortgages,
denominated as ;c#atte& mortgage< on t#e motor vesse&s Pandan and Rarago*a' T#e %irst two mortgages do
not #ave an appended a%%idavit o% good %ait#, w#i&e t#e t#ird contains suc#' T#e t#ird mortgage was
suscried ! Jar9ue and ME 1rink (in w#at capacit! t#e &atter signed is not disc&osed) and was not
registered in t#e customs #ouse unti& 10 Ma! 1.38, or wit#in t#e period o% 32 prior to t#e commencement o%
inso&venc! proceedings against Jar9ue' 7 %ourt# mortgage was e3ecuted ! Jar9ue and :amon 7oiti* on t#e
motors#ip Rarago*a and was entered in t#e c#atte& mortgage registr! o% t#e register o% deeds on 18 Ma! 1.38,
or again wit#in t#e 32=da! period e%ore t#e institution o% inso&venc! proceedings'
7 petition was %i&ed wit# t#e $F, $eu on 8 June 1.38 in w#ic# it was pra!ed t#at Francisco Jar9ue e
dec&ared an inso&vent detor, wit# t#e resu&t t#at an assignment o% a&& t#e properties o% t#e inso&vent detor,
was e3ecuted in %avor o% Jose $orominas' T#e petition on t#e matter o% Jar9ue?s inso&venc! was granted'
@owever, t#e Audge dec&ined to order t#e %orec&osure o% t#e mortgages, ut on t#e contrar! sustained t#e
specia& de%enses o% %ata& de%ectiveness o% t#e mortgages'
T#e "upreme $ourt a%%irmed t#e Audgment, wit# costs against appe&&ant'
1. 5+#iralty ?uris+iction o, court raise+ to .arrant court to sit en $anc
T#e case was decided ! t#e court in anc, as a motion was presented ! counse& %or t#e appe&&ant in
w#ic# it was asked t#at t#e case e #eard and determined ! t#e court sitting in anc ecause t#e admira&t!
Aurisdiction o% t#e court was invo&ved, and t#is motion was granted in regu&ar course' (n %urt#er investigation
it appears t#at t#is was an error ecause t#e mere mortgage o% a s#ip is a contract entered into ! t#e parties to
it wit#out re%erence to navigation or peri&s o% t#e sea, and does not, t#ere%ore, con%er admira&t! Aurisdiction'
(1ogart vs' "teamoat Jo#n Ja! L1/45M, 10 @ow', 3..')
-. Gessels are personal property un+er civil an+ co##on la.
Vesse&s are considered persona& propert! under t#e civi& &aw' ($ode o% $ommerce, artic&e 4/4')
"imi&ar&! under t#e common &aw, vesse&s are persona& propert!' Dnder t#e common &aw, vesse&s are persona&
propert! a&t#oug# occasiona&&! re%erred to as a pecu&iar kind o% persona& propert!'
3. C)attel #ort*a*e o, a vessel! +istin*uis)e+ to c)attel #ort*a*e o, ot)er personality
"ince t#e term ;persona& propert!< inc&udes vesse&s, t#e! are suAect to mortgage agreea&! to t#e
provisions o% t#e $#atte& Mortgage +aw' (7ct 142/, section 8') ,ndeed, it #as #ereto%ore een accepted
wit#out discussion t#at a mortgage on a vesse& is in nature a c#atte& mortgage' T#e on&! di%%erence etween a
c#atte& mortgage o% a vesse& and a c#atte& mortgage o% ot#er persona&it! is t#at it is not now necessar! %or a
c#atte& mortgage o% a vesse& to e noted in t#e registr! o% t#e register o% deeds, ut it is essentia& t#at a record
o% documents a%%ecting t#e tit&e to a vesse& e entered in t#e record o% t#e $o&&ector o% $ustoms at t#e port o%
entr!' (t#erwise a mortgage on a vesse& is genera&&! &ike ot#er c#atte& mortgages as to its re9uisites and
va&idit!'
/. C)attel #ort*a*e o, a vessel .it)out a,,i+avit o, *oo+ ,ait) is unen,orcea$le a*ainst t)ir+
persons
"ection 4 o% t#e $#atte& Mortgage +aw deemed it a re9uirement to #ave an a%%idavit o% good %ait#
appended to t#e mortgage and recorded t#erewit#' T#e asence o% t#e a%%idavit vitiates a mortgage as against
creditors and suse9uent encumrancers' 7s a conse9uence a c#atte& mortgage o% a vesse& w#erein t#e
a%%idavit o% good %ait# re9uired ! t#e $#atte& Mortgage +aw is &acking, is unen%orcea&e against t#ird
persons'
[1/]
=c=ickin* vs. Dl Banco Dspanol>&ilipino (GR 2"-%! 1 5pril 1%"%)
Bn 1anc, Jo#nson (J): 5 concur
&acts' (n 81 Feruar! 1.20, one "anc#e* and one $ue "uan as a sociedad en comandita were t#e owners o%
certain steams#ip, known as t#e @ock=Ta!' "aid sociedad orrowed %rom B& 1anco Bspano&=Fi&ipino t#e sum
o% P32,222 at /I per annum %rom 81 "eptemer 1.20, unti& paid, and gave as securit! %or t#e pa!ment o% said
sum a c#atte& mortgage e3ecuted and de&ivered in accordance wit# 7ct 142/ o% t#e P#i&ippine $ommission'
"aid mortgage was du&! recorded in t#e o%%ice o% t#e co&&ector o% customs o% t#e port o% Mani&a on 80
Feruar! 1.20, in t#e record o% conve!ances o% tit&es, mortgages and #!pot#ecations o% vesse&s documented at
said port' "aid mortgage was du&! recorded in t#e o%%ice o% t#e register o% propert! o% t#e cit! o% Mani&a on 13
"eptemer 1.20, in accordance wit# t#e provisions o% section 5 o% said 7ct (Eo' 142/)' T#e &ast vo!age o% t#e
steamer @ock=Ta! egan on 18 "eptemer 1.20, and ended on 8. "eptemer o% t#e same !ear' $aptain
Manue& 7!a&a was t#e one w#o co&&ected %rom t#e agents ;"anc#e* ! $ue "ang,< t#e wages o% t#e crew #ired
! #im and w#o distriuted t#e same among t#em, t#e said crew #aving not#ing to do wit# t#e s#ip?s agents
w#om t#e! did not know and wit# w#om t#e! made no contract e3cept t#roug# $aptain 7!a&a' T#e o%%icers
and crew o% t#e steamer @ock=Ta!, t#e same as a&& t#ose e&onging to t#e coastwise trade o% t#ese ,s&ands,
were #ired upon a mont#&! sa&ar! wit# %ood and drink' ,nc#austi T $o', as c#arterers o% t#e steamer @ock=
Ta!, paid to Manue& 7!a&a, during t#e mont# o% "eptemer, 1.20, a&& t#e e3penses %or susistence, wit# t#e
e3ception o% t#ose corresponding to t#e maintenance o% t#e o%%icers and crew, and t#at t#e a&ances on&! re%er
to t#e %ood and drink o% t#e o%%icers and crew' (n 12 (ctoer 1.20, B& 1anco Bspano&=Fi&ipino caused to e
de&ivered to t#e s#eri%% o% t#e cit! o% Mani&a t#e said c#atte& mortgage on t#e said steamer, @ock=Ta!, toget#er
wit# notice t#at t#e terms o% said mortgage #ad een roken ! t#e mortgagors, and re9uested t#at t#e s#eri%%
se&& said mortgaged propert! in accordance wit# t#e provisions o% section 15 o% said 7ct' T#e s#eri%% gave
notice to said mortgagors o% said re9uest on t#e part o% t#e said mortgagee (B& 1anco Bspano&=Fi&ipino) and
t#at said s#ip wou&d e so&d in accordance wit# t#e &aw' Due notice was given o% t#e sa&e o% said mortgaged
propert! (t#e @ock=Ta!) in accordance wit# t#e provisions o% said 7ct' T#e date %i3ed %or t#e sa&e o% said
propert! was 80 (ctoer 1.20' (n 80 (ctoer 1.20, Manue& 7!a&a served upon t#e said s#eri%% a notice, in
#is capacit! as captain o% t#e steamer @ock=Ta!, demanding t#at t#e "#eri%% s#ou&d not de&iver to 1anco
Bspano&=Fi&ipino t#e sum o% P5,551,.8, w#ic# is t#e amount o% t#e wages o% t#e crew and e3penses o%
supp&ies now owing, and w#ic#, in accordance wit# t#e $ode o% $ommerce, constitute pre%erred c&aims' (n
80 (ctoer 1.20, t#e steamer was so&d to t#e #ig#est idder %or cas# %or t#e sum o% P32,222'
(n 32 (ctoer 1.20, t#e s#eri%% o% t#e cit! o% Mani&a %i&ed a comp&aint in t#e $ourt o% First ,nstance o% t#e
cit! o% Mani&a to re9uest 1anco Bapano& Fi&ipino and 7!a&a to interp&ead t#eir respective rig#ts to t#e %unds
ac9uired resu&ting %rom t#e auction sa&e' T#e tria& court rendered a Audgment on 8. "eptemer 1.2/, #o&ding
t#at t#ere is due 7!a&a %rom t#e proceeds o% t#e sa&e o% t#e vesse& and in pre%erence to t#e c&aim o% t#e
mortgagee t#e said sum o% P04>'>>C and adAudging t#at t#e Audgment o% 82 Januar! 1.2/, e vacated and t#at
t#e s#eri%% o% Mani&a, out o% t#e proceeds o% t#e sa&e o% said vesse& as reported ! #im, pa! to 7!a&a t#e said
sum o% P04>'>>, and t#at t#e a&ance o% said proceeds &ess t#e costs o% t#e proceeding e paid to t#e
mortgagee, t#e 1anco Bspano&=F&ipino'
From t#e decision o% t#e &ower court, 7!a&a du&! appea&ed'
T#e "upreme $ourt a%%irmed t#e Audgment o% t#e &ower court, wit#out an! specia& %inding as to costs'
1. 5rticle 24" o, t)e Co+e o, Co##erce
7rtic&e 4/2 provides t#at ;,n a&& Audicia& sa&es o% vesse&s %or t#e pa!ment o% creditors, t#e %o&&owing
s#a&& #ave pre%erence in t#e order stated: (1) T#e credits in %avor o% t#e pu&ic treasur! w#ic# are accounted
%or ! means o% a Audicia& certi%icate o% t#e competent aut#orit!' (8) T#e Audicia& costs o% t#e proceedings,
according to an appraisement approved ! t#e Audge or court' (3) T#e pi&otage c#arges, tonnage dues, and t#e
ot#er sea or port c#arges, proven ! means o% proper certi%icates o% t#e o%%icers intrusted wit# t#e co&&ection'
(5) T#e sa&aries o% t#e caretakers and watc#men o% t#e vesse& and an! ot#er e3pense connected wit# t#e
preservation o% said vesse&, %rom t#e time o% arriva& unti& #er sa&e, w#ic# appear to #ave een paid or are due
! virtue o% a true account approved ! t#e Audge or court' (4) T#e rent o% t#e ware#ouse w#ere t#e rigging
and stores o% t#e vesse& #ave een taken care o%, according to contract' (>) T#e sa&aries due t#e captain and
crew during t#eir &ast vo!age, w#ic# s#a&& e vouc#ed %or ! virtue o% t#e &i9uidation made %rom t#e s#ipping
artic&es and account ooks o% t#e vesse&, approved ! t#e c#ie% o% t#e ureau o% merc#ant marine w#ere t#ere
is one, and in #is asence ! t#e counse&, or Audge, or court' (0) T#e reimursement %or t#e goods o% t#e
%reig#t t#e captain ma! #ave so&d in order to repair t#e vesse&, provided t#e sa&e #as een ordered ! a Audicia&
instrument e3ecuted wit# t#e %orma&ities re9uired in suc# cases, and recorded in t#e certi%icate o% t#e registr!
o% t#e vesse&' (/) T#e part o% t#e price w#ic# #as not een paid t#e &ast vendor, t#e credits pending %or t#e
pa!ment o% materia& and work in t#e construction o% t#e vesse&, w#en it #as not navigated, and t#ose arising
%rom t#e repair and e9uipment o% t#e vesse& and its provisioning wit# victua&s and %ue& during its &ast vo!age'
,n order t#at said credits ma! enAo! t#e pre%erence contained in t#is numer, t#e! must appear ! contracts
recorded in t#e commercia& registr!, or i% t#e! were contracted %or t#e vesse& w#i&e on a vo!age and said
vesse& #as not returned to t#e port w#ere s#e is registered, t#e! must e proven wit# t#e aut#orit! re9uired %or
suc# cases and entered in t#e certi%icate o% t#e record o% said vesse&' (.) T#e amounts orrowed on ottomr!
onds e%ore t#e departure o% t#e vesse&, proven ! means o% t#e contracts e3ecuted according to &aw and
recorded in t#e commercia& registr!, t#e amounts orrowed during t#e vo!age wit# t#e aut#orit! mentioned in
t#e %oregoing numer, %i&&ing t#e same re9uisites, and t#e insurance premium, proven ! t#e po&ic! o% t#e
contract or certi%icate taken %rom t#e ooks o% t#e roker' (12) T#e indemnit! due t#e s#ippers %or t#e va&ue o%
t#e goods s#ipped, w#ic# were not de&ivered to t#e consignees, or %or averages su%%ered %or w#ic# t#e vesse&
is &ia&e, provided eit#er appear in a Audicia& or aritration decision'<
-. 5rticle 24"! para*rap)
1! re%erence to paragrap# > o% said artic&e 4/2, it is seen t#at in a&& Audicia& sa&es o% vesse&s t#e
sa&aries due t#e captain and t#e crew during t#e &ast vo!age s#a&& e paid in accordance wit# t#e pre%erences
mentioned in said artic&e out o% t#e proceeds o% said s#ip'
3. 5rticle / o, t)e Co+e o, Co##erce
7rtic&e >5> o% said $ode o% $ommerce provides t#at ;T#e vesse& wit# #er engines, rigging,
e9uipment, and %reig#ts s#a&& e &ia&e %or t#e pa! earned ! t#e crew engaged per mont# or %or t#e trip, t#e
&i9uidation and pa!ment to take p&ace etween one vo!age and t#e ot#er' 7%ter a new vo!age #as een
undertaken, credits suc# as t#e %ormer s#a&& &ose t#eir rig#t o% pre%erence'<
/. 5rticle / in relation to 5rticle 24"
7rtic&e >5> creates a &ien upon a s#ip in %avor o% t#e crew engaged in t#e operation o% t#e same and
t#is &ien in %avor o% t#e crew takes certain pre%erence in accordance wit# t#e provisions o% said artic&e 4/2'
T#e wages due t#e crew and e3penses incurred in maintaining t#e s#ip during t#e &ast vo!age constitute a &ien
under t#e &aw and take pre%erence over a &ien created ! giving t#e s#ip as securit! %or mone! orrowed' T#e
crew, t#ere%ore, under artic&e 4/2 o% t#e $ommercia& $ode, %or t#eir wages, etc', %or t#e &ast vo!age, #ave a
prior &ien upon a s#ip, to t#e &ien created in t#e present case ! t#e c#atte& mortgage'
2. Liens in ,avor o, cre. in present circu#stances kno.n as le*al liens
+iens in %avor o% t#e crew under t#ese circumstances are known as &ega& &iens and w#oever u!s a
s#ip or &oans mone! and takes a c#atte& mortgage as securit!, takes t#e s#ip suAect to suc# prior &iens' @erein,
t#e said mortgage was e3ecuted and de&ivered in accordance wit# t#e provisions o% 7ct 142/ o% t#e P#i&ippine
$ommission' T#e s#ip was so&d ! t#e s#eri%% o% t#e cit! o% Mani&a in accordance wit# t#e provisions o%
section 15 o% t#at 7ct'
. Section 1/! 5ct 12"46 =et)o+
"ection 15 provides t#e met#od o% disposing o% t#e %unds received under suc# a sa&e' T#e met#od is as
%o&&ows: ;T#e proceeds o% suc# sa&e s#a&& e app&ied to t#e pa!ment, (1) o% t#e cost and e3penses o% keeping
and sa&eC (8) to t#e pa!ment o% t#e demand or o&igation secured ! suc# mortgagesC (3) t#e residue s#a&& e
paid to persons #o&ding suse9uent mortgages in t#eir order and (5) t#e a&ance s#a&& e paid to t#e mortgagor
or person #o&ding under #im or demand'<
3. Reason ,or t)e a$sence o, provision ,or usin* ,un+s receive+ in #ort*a*e+ sale o, a#ounts +ue
on prior liens6 ;llustration
T#ere is no provision in t#e &aw %or using t#e %unds received in t#e sa&e o% mortgaged propert! %or t#e
pa!ment o% amounts due on prior &iens' T#e reason is p&ain w#! no suc# provision was made' ,t is t#at in no
case can suc# a sa&e or a sa&e ased upon t#e second mortgage or &ien upon propert! a%%ect in an! wa! prior
&iens' To i&&ustrate: "uppose t#at ;7 #e&d a mortgage against t#e s#ip in 9uestion, e3ecuted, de&ivered a
recorded prior to t#e date o% t#e mortgage e3ecuted, de&ivered, and recorded to and ! B& 1anco Bspano&=
Fi&ipino' $ertain&! t#e sa&e o% t#e s#ip under t#e mortgage in %avor o% t#e second mortgage cou&d in no wa!
a%%ect t#e rig#ts w#ic# ;7< #e&d against t#e s#ip and t#e purc#aser under t#e sa&e o% t#e mortgage in %avor o%
1anco Bspano&=Fi&ipino wou&d take t#e s#ip suAect to t#e c&aim w#ic# ;7< #e&d against t#e same' T#e &ien
w#ic# Manue& 7!a&a and t#e ot#er memers o% #is crew #e&d against t#e said s#ip were e3act&! ana&ogous to
t#e c&aims o% ;7< in t#e aove i&&ustration' T#ere%ore t#e sa&e o% t#e s#ip under t#e mortgage in 9uestion in no
wa! divested t#e &ine w#ic# t#e &aw created in %avor o% t#e said Manue& 7!a&a and #is crew against t#e s#ip in
9uestion'
4. Re#e+y o, 5yala an+ ot)er #e#$ers o, )is cre.
7!a&a?s remed! is not against t#e mone! w#ic# was received under said sa&e, ut against t#e s#ip !
%orec&osing #is &ien against t#e same' ,t is true t#at under a sa&e o% persona& propert! in accordance wit#
section 15 o% said 7ct, t#e s#eri%% #as a rig#t to pa! t#e costs and e3penses o% keeping and sa&e, ut t#e $ourt
is not o% t#e opinion t#at t#is re&ates to t#e cost o% keeping and maintaining t#e s#ip prior to t#e time w#en t#e
s#eri%% takes possession o% it %or t#e purpose o% se&&ing t#e same'
%. (.o #et)o+s o, sale in Co+e o, Co##erce6 5rticle 24"! an+ 5rticles 23% an+ 24/
T#e $ode o% $ommerce re%ers to two met#ods o% sa&e: one a Audicia& and t#e ot#er a vo&untar! sa&e'
7rtic&e 4/2 provides #ow t#e %unds received %rom a Audicia& sa&e s#a&& e distriuted and %or t#e cance&&ation
o% &iens #e&d against t#e s#ip' 1ut it can not e contended, even under t#e provisions o% artic&e 4/3, t#at t#e
mere %act t#at a s#ip #as een so&d under a Audicia& sa&e, t#e rig#ts o% prior &ien #o&ders, w#o were not parties
to t#e procedure under w#ic# suc# sa&e took p&ace, were %orec&osed' T#e rig#ts o% persons not parties to a
proceeding can not e a%%ected t#ere!' 7rtic&e 4/8 gives a certain time wit#in w#ic# t#e creditors s#a&&
present and en%orce t#eir &iens w#en t#e sa&e is a vo&untar! one' 7rtic&e 40. and 4/5 provide a met#od o%
co&&ecting or en%orcing not on&! t#e &iens created under section 4/2 ut a&so %or t#e co&&ection o% an! ot#er
kind o% &ien w#atsoever'
1". Section 11/ o, Co+e o, :roce+ure in Civil 5ctions6 5ction prosecute+ in na#e o, real party in
interest6 :urpose
"ection 115 o% t#e $ode o% Procedure in $ivi& 7ctions e3press&! provides t#at ever! action must e
prosecuted in t#e name o% t#e rea& part! in interest' T#is section o% t#e code recogni*es t#e assignments o%
rig#ts o% action and a&so recogni*es t#at w#en one #as a rig#t o% action assigned to #im #e is t#en t#e rea&
part! in interest and ma! maintain an action upon suc# c&aim or rig#t' T#e purpose o% section 115 is to re9uire
t#e p&ainti%% to e t#e rea& part! in interest, or, in ot#er words, #e must e t#e person to w#om t#e proceeds o%
t#e action s#a&& e&ong, and to prevent actions ! persons w#o #ave no interest in t#e resu&t o% t#e same' (%
course t#e said section can not e construed to pro#iit t#e maintenance o% an action ! one w#o is &ega&&!
aut#ori*ed to represent t#e rea& parties in interest' @erein, 7!a&a was a&&owed to co&&ect t#e amount t#at was
due #im, as we&& as t#e amount w#ic# was due ot#er memers o% t#e crew and w#ic# #ad een assigned to
#im'
[1/3]
;vancic) vs. 8+lin (GR %-/! 1 =ay 1%"-)
First Division, 7re&&ano ($J): 4 concur
Facts: T#e captain o% t#e steamer Marguerite, contrar! to t#e conditions o% a c#arter part! etween t#e owners
o% t#e vesse& and t#e Paci%ic B3port +umer $ompan!, caused t#e vesse& to deviate %rom #er proper course, on
account o% #er not eing in a seawort#! condition or a&e to per%orm t#e service %or w#ic# s#e was de&ivered
! t#e said owners to t#e &ie&&antC t#at t#e steamer was wit#out a su%%icient stock o% coa&, and conse9uent&!
was o&iged to touc# at @ono&u&u, w#ere %ue& was taken aoard, and t#at t#e &ie&&ant was o&iged to pa! t#e
#aror dues o% t#e port o% @ono&u&u and to pa! %or t#e coa& purc#ased, and in addition t#e cost o% stowing t#e
same, t#e amount o% t#ese e3penditures and advances eing K5,380'.2' T#e &oss o% time occasioned ! t#is
deviation was 4 U da!s, and t#at t#e said advances, pa!ments, and &oss o% time constitute a genera& average
&oss %or t#eir respective s#ares w#ic# t#e owners o% t#e said steamer and t#e consignees o% t#e cargo are
&ia&e, and t#at t#e owners o% t#e steamer re%use to contriute t#eir s#are' Dpon reac#ing Mani&a t#e owners o%
t#e steamer otained, t#roug# t#e medium o% t#e 7ustrian consu&, t#e retention, ! t#e Nuartermaster
Department o% t#e Dnited "tates 7rm!, o% t#e %reig#ts due t#e Paci%ic B3port +umer, t#ere! causing t#e
&atter damages in t#e sum o% K8>,222' 7%ter t#e said steamer was disc#arged t#ere were 5,222 tons o% coa&
remaining in t#e unkers, o% t#e va&ue o% 13 pesos a ton, %or w#ic# t#e owners re%used to pa! Paci%ic B3port
+umer, to its damage in t#e sum o% 5,822 Me3ican pesos' Dpon t#e arriva& at t#is port o% t#e said steamer,
t#e owners and t#e master t#ereo% re%used to ca&& %or a genera& average contriution, and re%used to ca&& upon
t#e consignees o% t#e cargo to sign a genera& average ond, as re9uested ! Paci%ic B3port +umer, t#ere!
damaging t#e &atter in t#e sum o% K422'
Paci%ic B3port +umer %i&ed a &ie&, pra!ing t#at t#e court ;issue process against t#e master and against t#e
said vesse&, and t#at a&& persons c&aiming an! interest t#erein ma! e cited to appear and answer t#e comp&aint
aove set %ort#, and t#at t#is #onora&e court %i3 and decree t#e damages and genera& average due, as
a%oresaid, to t#e &ie&&ant, wit# t#e costs and attorne!?s %ees, and t#at t#e said vesse& ma! e condemned and
so&d to pa! t#e same, and %or suc# %urt#er re&ie% as in &aw and Austice ma! e proper'< T#e $F, o% Mani&a
directed t#e attac#ment o% t#e 7ustrian steamer Marguerite, wit# #er tack&e, %urniture, and ot#er
appurtenances, and ordered t#at a&& persons c&aiming an! interest in t#e said vesse&, or w#o cou&d s#ow cause
w#! s#e s#ou&d not e so&d as pra!ed %or in t#e &ie& %i&ed in t#e said court, e noti%ied to appear e%ore t#e
said court wit#in t#e term assigned' T#e captain appeared ! #is attorne!s, and moved t#e court to disso&ve
t#e attac#ment and to dismiss t#e &ie& on t#e ground t#at t#e &atter was a nu&&it!' T#e motion was argued, and
was overru&ed ! t#e court'
7ction roug#t ! t#e captain, Pio ,vancic#, against t#e Audge, 7rt#ur F' (d&in, and t#e Paci%ic B3port
+umer' @e soug#t to otain %rom t#e "upreme $ourt t#e issue o% a writ o% pro#iition against t#e Audge and
against 7ttorne! (scar "utro, as representative o% t#e &ie&&ants, pro#iiting t#e Audge %rom continuing to take
cogni*ance o% t#e case, t#e tria& o% w#ic# #ad een commenced, and %rom detaining t#e steamer upon an e3
parte &ie&, and to pro#iit 7ttorne! "utro %rom continuing to prosecute t#e suit and seeking t#e detention o%
t#e steamer wit#out actua& parties to t#e proceeding, as re9uired ! t#e provisions o% c#apter > o% t#e $ode o%
$ivi& Procedure, and asks t#at ot# o% t#em e pro#iited %rom detaining t#e said steamer un&ess t#is e done
in accordance wit# t#e provisions o% c#apter 1/ o% t#e $ode' T#e "upreme $ourt denied t#e petition %or a writ
o% pro#iition, wit# t#e costs to ,vancic#'
1. Result i, case occurre+ in Spanis) ti#e6 5rticles 24" an+ 24/ o, t)e Co+e o, Co##erce
@ad a case suc# as t#is occurred in t#e time o% t#e "panis# sovereignt!, t#ere wou&d #ave een no
di%%icu&t! in %inding &aws app&ica&e to it, %or it is certain t#at in t#e P#i&ippines we #ad a comp&ete &egis&ation,
ot# sustantive and adAective, under w#ic# to ring an action in rem against a vesse& %or t#e purpose o%
en%orcing certain &iens' T#e sustantive &aw is %ound in artic&e 4/2 o% t#e $ode o% $ommerce' T#is enumerates
in t#e order o% pre%erence ten c&asses o% &iens, and a case suc# as t#e present wou&d %a&& under t#e eig#t c&ass,
w#ic# re%ers to %urnis#ing a vesse& wit# provisions and %ue& on #er &ast vo!age H one o% t#e &iens a&&eged !
t#e p&ainti%% corporation in t#e case w#ic# gave rise to t#is petition %or a writ' T#e procedura& &aw is to e
%ound in artic&e 4/5 o% t#e same $ode, w#ic# provides: ;Vesse&s suAect to t#e &iens mentioned in artic&e 4/2
ma! e attac#ed and so&d Audicia&&! in t#e manner provided in artic&e 40., in an! port in w#ic# t#e! ma! e
%ound, at t#e instance o% an! creditor, suAect to t#e e3ceptions enumerated in t#e same artic&e'<
-. E)y provisions o, proce+ural la. ,oun+ in t)e Co+e o, Co##erce (Spanis) era)
T#e reason w#! provisions o% adAective &aw are to e %ound in a code w#ic# purports to e sustantive
&aw is t#at t#e o&d +aw o% $ivi& Procedure o% t#e P#i&ippines was promu&gated prior to t#e $ode o% $ommerce
now in %orce in t#e P#i&ippines, and in t#is $ode o% $ommerce certain c#anges were made w#ic# were not to
e %ound in t#e o&d $ode o% 1/8.'
3. 5rticles 24"! 24/! 23% Co+e o, Co##erce! an+ 5rticles 12- an+ 12-3 o, t)e La. o, Civil
:roce+ure6 5ttac)#ent procee+in*s in #ercantile #atters (Spanis) Dra)
7t a&& events, t#e Audge wou&d #ave proceeded in accordance wit# t#e provisions o% artic&e 4/2 %or t#e
purpose o% determining t#e e3istence o% t#e rig#t, and %or procedure wou&d #ave turned to artic&es 4/5 and
40., not over&ooking t#e provisions o% artic&es 148> and 1480 o% t#e +aw o% $ivi& Procedure' T#ese artic&es
re%er to attac#ment proceedings in mercanti&e matters, t#e words ;and %ue&< %or t#e provisioning o% t#e vesse&,
%ound in section / o% artic&e 4/2 o% t#e $ode o% $ommerce, eing regarded an e3tension o% section 5 o% artic&e
148>, w#ic# designates t#e c#arterers or masters o% vesse&s as detors &ia&e %or victua&s supp&ied %or t#eir
e9uipmentC and t#e same remark app&ies to section 5 o% artic&e 1480' @ence t#e Audicia& procedure %or t#e
attac#ment and sa&e o% a vesse& is de%ined in t#e said artic&es o% t#e $ode o% $ommerce and t#e o&d $ode o%
$ivi& Procedure o% t#e P#i&ippines in %orce under t#e %ormer 6overnment'
/. Co+e o, Co##erce operative! Co+e o, Civil :roce+ure repeale+ La. o, Civil :roce+ure6 D,,ects
on attac)#ent
1! proc&amation o% t#e commanding genera& o% t#e 7merican 7rm! in t#ese ,s&ands, dated 15 7ugust
1/./, a&& t#ese &aws were kept in %orce, and a&t#oug# t#e o&d +aw o% $ivi& Procedure #as een repea&ed ! t#e
new $ode o% $ivi& Procedure enacted ! t#e new 6overnment, t#e $ode o% $ommerce is sti&& operative' T#e
resu&t is, t#ere%ore, t#at in t#e P#i&ippines an! vesse& H even t#oug# it e a %oreign vesse& H %ound in an!
port o% t#e 7rc#ipe&ago ma! e attac#ed and so&d under t#e sustantive &aw w#ic# de%ines t#e rig#t, and t#e
procedura& &aw contained in t#e same $ode ! w#ic# t#is rig#t is to e en%orced'
2. 5lle*e+ error in proce+ure cannot $e cure+ $y pro)i$ition
T#ere is no necessit! %or app&!ing an! ot#er procedure w#i&e t#e present one is in %orce' T#e Audge did
not, act wit#out Aurisdiction w#en directing t#e attac#ment o% t#e vesse& in 9uestion, and #as not e3ceeded #is
Aurisdiction' ,% t#e e3cess o% t#e Aurisdiction upon w#ic# t#e argument was ased consists in #is #aving &evied
t#e attac#ment wit#out t#e %u&%i&&ment o% t#e necessar! conditions and wit#out %o&&owing t#e %orm prescried
! some &aw o% procedure app&ica&e to t#e case, suc# error is not suc# an e3cess o% Aurisdiction as can e
cured ! pro#iition, and t#at t#e captain #as ot#er means w#ere! t#is error o% procedure ma! e corrected
or remedied'
[>]
Heat) vs. Stea#er San 7icolas (GR L>3"! -2 &e$ruary 1%"3)
First Division, Fi&&ard (J): 4 concur
&acts' (n 1. (ctoer 1.25, @' +' @eat# %i&ed a comp&aint in t#e $F, o% Mani&a against t#e steamer "an
Eico&as, a&&eging t#at on 14 "eptemer 1.25, t#e sc#ooner 7nita, owned ! @+ @eat#, #ad een in co&&ision
wit# t#e "an Eico&asC t#at it #ad een damaged ! t#e co&&ision, and t#at t#e "an Eico&as was w#o&&! at %au&t'
Eo natura& or Audicia& person was named as de%endant in t#e comp&aint' (n t#e same da!, t#e court made an
order directing t#at t#e "an Eico&as e sei*ed, and t#at a&& persons w#o c&aimed an! interest in #er s#ou&d e
summoned to appear e%ore t#e court on 8/ (ctoer 1.25' Dnder t#is order t#e s#ip was attac#ed and on 82
(ctoer, Bsperidion 6' 1orAa %i&ed a document in t#e proceeding in w#ic# #e stated t#at #e was t#e owner o%
t#e "an Eico&asC t#at t#e sei*ure wou&d cause #im serious damages, as t#e steamer was read! to sai& on t#e
same da!, and #e asked t#at t#e order t#ere%ore e vacated upon #is giving a ond' T#is ond was given and
t#e order vacated' (n / Eovemer, 1orAa made a motion to vacate t#e order o% sei*ure and a&so presented a
demurrer to t#e comp&aint' T#e demurrer was overru&ed and t#e motion to vacate t#e order o% sei*ure was
denied' To ot# o% t#ese orders 1orAa e3cepted'
(n 81 Eovemer, 1orAa answered t#e comp&aint, den!ing a&& t#e a&&egations t#ereo%' 7 tria& was #ad and on 8>
(ctoer,1.24, Audgment was rendered in %avor o% @+ @eat# %i3ing t#e amount o% t#e damages su%%ered ! #im
at P5,310'>1' T#e Audgment %urt#er ordered t#e Audgment as to t#e suret!, 6eronimo Jose, e3cept as to costs,
wi&& e satis%ied ! t#e de&iver! o% t#e oat "an Eico&as to t#e s#eri%% o% t#e cit! o% Mani&a' 1orAa du&!
e3cepted to t#is assignment and moved %or a new tria& on t#e ground t#at t#e Audgment was p&ain&! and
mani%est&! against t#e weig#t o% t#e evidence' T#is motion was denied and to t#e denia& t#ereto 1orAa du&!
e3cepted' 1orAa roug#t t#e case to t#e "upreme $ourt %or review'
T#e "upreme $ourt reversed t#e 18 Eovemer 1.25 order o% t#e &ower court, overru&ing t#e demurrer and
re%using to vacate t#e order o% sei*ureC vacated t#e 8> (ctoer 1.24 AudgmentC remanded t#e cause to t#e
&ower court %or %urt#er proceedings not inconsistent wit# t#e $ourt?s opinionC a&&owed no costs to eit#er part!
in t#e courtC and ordered t#at a%ter t#e e3piration o% 82 da!s t#e Audgment e rendered in accordance #erewit#,
and 12 da!s t#erea%ter t#e case e remanded to t#e court %rom w#ence it came %or proper action'
1. 8ri*inal ?uris+iction in all actions in a+#iralty an+ #ariti#e ?uris+iction
7ct 13>, section 4>, provides in paragrap# 5 o% t#at $ourt o% First ,nstance s#a&& #ave origina&
Aurisdiction in a&& actions in admira&t! and maritime Aurisdiction, irrespective o% t#e va&ue o% t#e propert! in
controvers! or t#e amount o% t#e demand'
-. ()e la.! practice! an+ proce+ure in ,orce in t)e a+#iralty courts o, t)e Fnite+ States .ere not
$rou*)t to t)e :)ilippines $y t)e insertion o, t)e p)rase @a+#iralty an+ #ariti#e ?uris+iction!A in
section 2 o, 5ct 13
T#e use o% t#e p#rase ;admira&t! and maritime Aurisdiction< in "ection 4> o% 7ct 13> did not
introduce into t#e &aw in %orce in t#ese ,s&ands a&& t#e provisions o% practice and procedure in %orce in simi&ar
cases in t#e Dnited "tates' T#e contrar! view #as een contented previous&! in ,vancic# vs' (d&in'
3. ;vancic) vs. 8+lin (1 :)il. -4/)6 E)et)er use o, a+#iralty in 8r*anic 5c ex propio vi*ore
$rou*)t to court all proce+ures in use in t)e #ariti#e court o, t)e Fnite+ States
,n t#e opinion in ,vancic# vs' (d&in, it is said t#at t#e Audge e&ow #e&d ;t#at t#e word admira&t! used
in paragrap# 5 o% section 4> o% t#e (rganic 7ct passed ! t#e Dnited "tates P#i&ippine $ommission e3 propio
vigore roug#t to t#e court a&& t#e procedure in use in t#e maritime court o% t#e Dnited "tates'< T#e court t#en
t#at ;@ad a case suc# as t#is occurred in t#e time o% t#e "panis# sovereignt!, t#ere wou&d #ave een no
di%%icu&t! in %inding &aws app&ica&e to it, %or it is certain t#at in t#e P#i&ippines we #ad a comp&ete &egis&ation,
ot# sustantive and adAective, under w#ic# to ring an action in rem against a vesse& %or t#e purpose o%
en%orcing certain &iens' T#e sustantive &aw is %ound in artic&e 4/2 o% t#e $ode o% $ommerce' ' ' ' T#e
procedura& &aw is to e %ound in artic&e 4/5 o% t#e same code ' ' ' ' T#e reason w#! provisions o% adAective &aw
are to e %ound in a code w#ic# purports to e sustantive &aw is t#at t#e o&d +aw o% $ivi& Procedure o% t#e
P#i&ippines was promu&gated prior to t#e $ode o% $ommerce now in %orce in t#e P#i&ippines, and in t#is $ode
o% $ommerce certain c#anges were made w#ic# were not to e %ound in t#e o&d code o% 1/8.' 7t a&& events,
t#e Audge wou&d t#en #ave proceeded in accordance wit# t#e provisions o% artic&e 4/2 %or t#e purpose o%
determining t#e e3istence o% t#e rig#t, and %or procedure wou&d #ave turned to artic&es 4/5 and 40., not
over&ooking t#e provisions o% artic&es 148> and 1480 o% t#e +aw o% $ivi& Procedure ' ' ' ' @ence t#e Audicia&
procedure %or t#e attac#ment and sa&e o% t#e $ode o% $ommerce and t#e o&d $ode o% $ivi& Procedure o% t#e
P#i&ippines in %orce under t#e %ormer 6overnment' 1! proc&amation o% t#e commanding genera& o% t#e
7merican 7rm! in t#ese ,s&ands, dated 7ugust 15, 1/./, a&& t#ese &aws were kept in %orce, and a&t#oug# t#e
o&d +aw o% $ivi& Procedure #as een repea&ed ! t#e new $ode o% $ivi& Procedure enacted ! t#e new
6overnment, t#e $ode o% $ommerce is sti&& operative' T#e resu&t, is, t#ere%ore, t#at in t#e P#i&ippines and
vesse&, even t#oug# it e a %oreign vesse&, %ound in an! port o% t#is 7rc#ipe&ago ma! e attac#ed and so&d
under t#e sustantive &aw, w#ic# de%ines t#e rig#t, and t#e procedura& &aw contained in t#e same code !
w#ic# t#is rig#t is to e en%orced' T#ere is no necessit! %or app&!ing an! ot#er procedure w#i&e t#at descried
aove is in %orce, as we understand it to e'<
/. Gie. in ;vancic) con,ir#e+ $y le*islation o, t)e Co##ission on t)e su$?ect
T#e view is con%irmed ! t#e &egis&ation o% t#e $ommission on t#is suAect' 7ct 0>, enacted 85
Januar! 1.21, provided in section 1 t#at ;admira&t! Aurisdiction over a&& maritime contracts, torts, inAuries, or
o%%enses is #ere! con%erred upon t#e severa& provost courts organi*ed and e3isting in t#e open ports o% t#e
P#i&ippine ,s&ands, under aut#orit! o% t#e Mi&itar! 6overnor'< "ection 8 provides t#at ;t#e civi& Aurisdiction o%
t#e provost courts in admira&t! s#a&& e e3ercised in t#e manner provided ! 6enera& (rders, Eumered
Twent!=t#ree, o% t#e Mi&itar! 6overnor, issued on June twent!=%ourt#, eig#teen #undred and ninet!=nine, and
its decisions s#a&& e governed ! t#e ru&es t#erein stated'<
2. General 8r+er -3 (-/ Bune 14%%)
T#is genera& order provided t#at ;t#ese provost courts, in t#e e3ercise o% t#e civi& Aurisdiction
con%erred, wi&& %ormu&ate t#eir own procedure, w#ic# wi&& e simp&e and rie%' ,n t#e decisions rendered t#e!
wi&& e guided ! t#e provisions o% t#e "panis# &aw recogni*ed in 6enera& (rders, Eos' 82 and 81, current
series, t#is o%%ice, as continuing in %orce in p&aces in t#e P#i&ippine ,s&ands, under Dnited "tates mi&itar!
occupation, w#en suc# provision can e ascertained, and ! princip&es o% e9uit! and Austice'<
. Civil an+ cri#inal ?uris+iction in a+#iralty con,erre+ upon C&;
T#e "panis# &aw, w#ic# was entire&! ade9uate, was t#us made t#e &aw o% t#ese triuna&s and it
necessari&! e3c&uded t#e 7merican &aw' 7ct 13>, w#ic# esta&is#ed courts o% Austice, in its section 0/
e3press&! took awa! %rom provost courts t#eir civi& Aurisdiction and its section 4>, paragrap# 5, con%erred
admira&t! Aurisdiction on t#e $ourt o% First ,nstance as e%ore stated' T#e crimina& Aurisdiction in admira&t! o%
t#ese courts was taken awa! ! 7ct 522, enacted 1> Ma! 1.28, w#ic# con%erred it upon $ourts o% First
,nstance'
3. E)ic) la. e,,ective in cases o, a+#iralty an+ #ariti#e ?uris+iction
$ases o% admira&t! and maritime Aurisdiction arising must e determined ! t#e &aws in %orce at t#e
time o% t#e trans%er o% sovereignt! and t#e &aws suse9uent&! passed ! t#e $ommission or ! t#e $ongress o%
t#e Dnited "tates' From 1/./ to June, 1.21, t#ose &aws were %ound in t#e $ode o% $ommerce and in t#e
"panis# +aw o% $ivi& procedure' For cases arising since t#e &ast named date, resort must e #ad to t#e same
$ode o% $ommerce and to t#e present $ode o% $ivi& Procedure'
4. <e,en+ant as person an in+ispensa$le prere9uisite in #aintenance o, action
,t was aso&ute&! indispensa&e %or t#e maintenance o% a contentious action in t#e courts o% Austice to
#ave as de%endant some natura& or Auridica& person' 7 suit against a s#ip, suc# as is permitted in t#e Bng&is#
and t#e 7merican admira&t! courts, was unknown to t#e "panis# +aw' ,t is true t#at t#e "panis# +aw o% $ivi&
Procedure contained certain provisions re&ating to vo&untar! Aurisdiction in matters o% commerce, ut none o%
t#ese provisions #ad an! app&ication to a contentious suit o% t#is c#aracter' ,t eing impossi&e to maintain an
action o% t#is c#aracter against a s#ip as t#e on&! de%endant prior to June 1.21, it %o&&ows t#at i% suc# an action
can now e maintained it must e ! virtue o% some provision %ound in t#e $ode o% $ivi& Procedure and
w#ic# is t#e on&! new &aw now in %orce re&ating to t#is matter' 7n e3amination o% t#e provisions o% t#at code
wi&& s#ow t#at no suc# action is aut#ori*ed' ,t can not, t#ere%ore, e now maintained, and t#e demurrer o%
1orAa s#ou&d #ave een sustained on t#at ground'
%. :roperty cannot $e seiJe+ $e,ore a ,inal ?u+*#ent! except as provi+e+ $y la.
1e%ore a %ina& Audgment, propert! can not e sei*ed un&ess ! virtue o% some provision o% &aw' T#e
$ode o% $ivi& Procedure, in its section 103 and %o&&owing, aut#ori*es suc# sei*ure in cases o% receivers#ipC in
its sections 8>8 and %o&&owing, in cases o% rep&evinC and in its sections 585 and %o&&owing, in cases o%
attac#ment' ,n t#e present case no attempt was made to comp&! wit# t#e provisions o% t#e &aw re&ating to
sei*ure in an! o% t#ese t#ree cases' T#e order a&&owing suc# sei*ure wit#out comp&iance wit# an! o% t#ese
provisions was t#ere%ore erroneous and s#ou&d #ave een set aside on motion'
1". 5ppropriate #et)o+ o, seiJure +epen+s as to ,acts6 5$sence o, la. or contract creatin* lien or
c)ar*e upon vessel
,n cases o% admira&t! and maritime Aurisdiction, t#e 9uestion as to w#ic# one o% t#e t#ree wa!s
pointed out ! t#e code s#ou&d e restored to must e reso&ved ! re%erence to t#e %acts o% eac# particu&ar
case' 7rtic&e 4/2 o% t#e $ode o% $ommerce speci%ies t#e order o% pa!ment in case o% t#e sa&e o% a vesse&' ,t is
said in t#e case o% ,vancic# vs' (d&in (1 P#i&' :ep', 8/5) t#at t#e creditors named in t#is artic&e #ave a &ien
upon t#e s#ip' F#ere neit#er t#e &aw nor t#e contract etween t#e parties creates an! &ien or c#arged upon t#e
vesse&, t#e on&! wa! in w#ic# it can e sei*ed e%ore Audgment is ! pursuing t#e remed! re&ating to
attac#ment pointed out in sections 585 and %o&&owing'
11. Bor?a1s appearance in court not voluntary
@erein, t#e appearance o% 1orAa was in no sense vo&untar!' @is vesse& was sei*ed, according to #is
c&aim, upon t#e ver! da! it was to sai&' @e was rea&&! %orced into court %or t#e purpose o% securing t#e re&ease
o% it' Furt#er, #e never in an! wa! consented to t#e irregu&ar procedure adopted in t#e case' ,n t#e %irst
document w#ic# #e presented #e stated t#at t#e reasons a&&eged in t#e comp&aint were insu%%icient as a ground
%or t#e specia& re&ie% asked ! @+ @eat#' T#e ne3t document #e presented was a motion to vacate t#e order o%
sei*ure on t#e ground t#at t#ere was no aut#orit! %or its issuance, and t#e ne3t document was a demurrer on
t#e ground t#at suc# procedure was entire&! irregu&ar' Dnder t#e circumstances, w#at #e did can e construed
as a waiver o% #is rig#t to make t#e oAections w#ic# #ave een we&& %ounded'
1-. ()e =onte 5 case applica$le
,n t#e case o% T#e Monte 7 (18 Fed' :ep', 331) it is said t#at ;7s t#e owner o% t#e vesse&, #owever, is
a nonresident w#o appeared genera&&! in t#e action and contested #is &iai&it! upon t#e merits wit#out taking
an! e3ception to t#e %orm o% remed! as #e mig#t and s#ou&d #ave done at t#e commencement o% t#e action,
and as t#e situation as respects #im a%ter t#e re&ease o% t#e vesse& on ond is c&aimed to e essentia&&! t#e
same as i% t#e action #ad een commenced in personam, it is urged t#at i% #e is %ound c&ear&! &ia&e %or t#e
damages a&&eged in t#e &ie&, a persona& Audgment against #im oug#t to e rendered'< T#e c&aim made in t#at
case is identica& wit# t#e c&aim made in t#e present case, wit# t#e important di%%erence, #owever, t#at in t#is
case, t#e owner did immediate&! upon #is %irst appearance oAect to t#e %orm o% remed!' T#is point t#us raised
in t#e case was discussed and it was decided t#at t#e Audgment against t#e owner %or damages in suc# an
appearance cou&d not e sustained, and #erein 1orAa did not waive #is rig#ts to oAect to t#e irregu&ar
procedure' Eeit#er t#e Audgment nor t#e orders re%using to vacate t#e order o% sei*ure and overru&ing t#e
demurrer can e sustained'
13. ;vancic) vs. 8+lin (1 :)il. -4/)6 5s to t)e #anner o, attac)in* property
,n t#e case o% ,vancic# vs' (d&in t#e p&ainti%% was a &ien=creditor' T#e order o% sei*ure was soug#t to
e reviewed, not ! an appea& %rom an order re%using to vacate it as in t#is case, ut in an origina& suit in t#is
court ased upon t#e proposition t#at t#e court e&ow acted wit#out Aurisdiction' F#at was rea&&! decided in
t#at case is apparent %rom t#e %o&&owing 9uotation %rom t#e opinion: ;T#e Audge did not, t#ere%ore, act wit#out
Aurisdiction w#en directing t#e attac#ment o% t#e vesse& in 9uestion, and #as not e3ceeded #is Aurisdiction' ,%
t#e e3cess o% Aurisdiction upon w#ic# t#e argument was ased consists in #is #aving &evied t#e attac#ment
wit#out t#e %u&%i&&ment o% t#e necessar! conditions and wit#out %o&&owing t#e %rom t#e prescried ! some &aw
procedure app&ica&e to t#e case, it is our opinion t#at t#is error is not suc# an e3cess o% Aurisdiction as can e
cured ! pro#iition, and t#e petitioner #as ot#er means w#ere! t#is error o% procedure ma! e corrected or
remedied'< (1 P#i&' :ep', 8/.') ,n t#is case t#e de%endant avai&ed #imse&% o% t#ose ot#er means, and appea&ed
%rom t#e various orders w#ic# were rendered against #im'
1/. 8t)er relate+ cases
,n t#e case o% F&eming vs' T#e +orc#a Euestra "ra' de& $armen 1 (4 (%%' 6a*', 4>) no oAection was
made to t#e procedure' ,n ot#er cases suc# as Dnited "tates vs' "mit#, 1e&& T $o', 8 Eo' 1/0>, "eptemer 32,
1.24, and P#i&ippine "#ipping $o' vs' Vergara, 3 Eo' 1>22, June 1, 1.2>, t#e action was directed against t#e
owner'
[148] )ational "evKt Co. vs. CA, see [0!]
[149] =ariti%e Co. vs. CA, see [110]
[>]
=anila Stea#s)ip vs. ;nsa 5$+ul)a#an (GR L>%23/! -% Septe#$er 1%2)
Bn 1anc, :e!es J1+ (J): / concur
&acts' From 0:22 = /:22 p'm' o% 5 Ma! 1.5/, t#e M-+ ;$onsue&o V<, &aden wit# cargoes and passengers &e%t
t#e port o% Ramoanga $it! ound %or "iokon under t#e command o% Faustino Macro#on' "#e was t#en
towing a kumpit, named ;"ta' Maria 1a!<' T#e weat#er was good and %air' 7mong #er passengers were ,nsa
7du&#aman, #is wi%e $arim&a Mora and t#eir 4 c#i&dren' ,nsa 7du&#aman and #is wi%e paid t#eir %are e%ore
t#e vo!age started' (n t#at same nig#t t#e M-" ;1ow&ine Pnot< was navigating %rom MarioAoc towards
Ramoanga' 1etween .:32 to 12:22 p'm' t#e dark c&ouds &oated wit# rain egan to %a&& and t#e gus#ing
strong wind egan to &ow steadi&! #arder, &as#ing t#e waves into a c#opp! and roaring sea' "uc# weat#er
&asted %or aout an #our and t#en it ecame %air a&t#oug# it was s#owering and t#e visii&it! was good enoug#'
F#en some o% t#e passengers o% t#e M-+ ;$onsue&o V< were t#en s&eeping and some were &!ing down awake,
a&& o% a sudden t#e! %e&t t#e s#ocking co&&ision o% t#e M-+ ;$onsue&o V< and a ig motors#ip, w#ic# &ater on
was identi%ied as t#e M-V ;1ow&ine Pnot<' 1ecause t#e M-+ ;$onsue&o V< capsi*ed, #er crew and
passengers, e%ore rea&i*ing w#at #ad #appened, %ound t#emse&ves swimming and %&oating on t#e crest o% t#e
waves and as a resu&t o% w#ic# . passengers were dead and missing and a&& t#e cargoes carried on said oat'
7mong t#e dead passengers %ound were Maria, 7m&asa, 1idoa!a and 1ida&&a, a&& surnamed ,nasa, w#i&e t#e
od! o% t#e c#i&d 7du&a ,nasa o% > !ears o% age was never recovered' 1e%ore t#e co&&ision, none o% t#e
passengers were warned or in%ormed o% t#e impending danger as t#e co&&ision was so sudden and une3pected'
7&& t#ose rescued at sea were roug#t ! t#e M-V ;1ow&ine Pnot< to Ramoanga $it!'
T#e case was egun in t#e $F, o% Ramoanga ($ivi& $ase 102) ! ,nsa 7du&#aman against t#e Mani&a
"teams#ip $o', owner o% t#e M-" ;1ow&ine Pnot<, and +im @ong To, owner o% t#e M-+ ;$onsue&o V<, to
recover damages %or t#e deat# o% #is 4 c#i&dren and &oss o% persona& properties on oard t#e M-+ ;$onsue&o
V< as a resu&t o% a maritime co&&ision etween said vesse& and t#e M-" ;1ow&ine Pnot< on 5 Ma! 1.5/, a %ew
ki&ometers distant %rom "an :amon 1eac#, Ramoanga $it!' I"isposition not provided in the caseJ
(n appea&, t#e $ourt o% 7ppea&s a%%irmed t#e %indings o% t#e 1oard o% Marine ,n9uir! as to t#e cause o% t#e
co&&ision, i'e' t#e commanding o%%icer o% t#e co&&iding vesse&s #ad ot# een neg&igent in operating t#eir
respective vesse&s' F#ere%ore, t#e $ourt #e&d t#e owners o% ot# vesse&s so&idari&! &ia&e to ,nsa 7du&#aman
%or t#e damages caused to #im ! t#e co&&ision, under 7rtic&e /80 o% t#e $ode o% $ommerceC ut e3empted
+im @ong To %rom &iai&it! ! reason o% t#e sinking and tota& &oss o% #is vesse&, t#e M-+ ;$onsue&o V<, w#i&e
t#e Mani&a "teams#ip $o', owner o% t#e M-" ;1ow&ine Pnot<, was ordered to pa! a&& o% ,nsa 7du&#aman?s
damages in t#e amount o% P82,0/5'22 p&us U o% t#e costs' ,t is %rom t#is Audgment t#at Mani&a "teams#ip $o'
#ad appea&ed to t#e "upreme $ourt'
T#e "upreme $ourt #e&d t#at (1) T#at t#e Mani&a "teams#ip $o', owner o% t#e M-" ;1ow&ine Pnot<, is
direct&! and primari&! responsi&e in tort %or t#e inAuries caused to t#e p&ainti%% ! t#e co&&ision o% said vesse&
wit# t#e &aunc# ;$onsue&o V<, t#roug# t#e neg&igence o% t#e crews o% ot# vesse&s, and it ma! not escape
&iai&it! on t#e ground t#at it e3ercised due di&igence in t#e se&ection and supervision o% t#e o%%icers and crew
o% t#e ;1ow&ine Pnot<C (8) T#at +im @ong To, as owner o% t#e motor &aunc# ;$onsue&o V<, #aving caused
t#e same to sai& wit#out &icensed o%%icers, is &ia&e %or t#e inAuries caused ! t#e co&&ision over and e!ond t#e
va&ue o% said &aunc#C and (3) T#at ot# vesse&s eing at %au&t, t#e &iai&it! o% +im @ong To and Mani&a
"teams#ip $o' to t#e p&ainti%% #erein is in so&idum, as prescried ! 7rtic&e /80 o% t#e $ode o% $ommerce'
T#e $ourt, t#us, modi%ied t#e decision o% t#e $ourt o% 7ppea&s is modi%ied, and a%%irmed t#at o% t#e $F,, in
t#e sense o% dec&aring ot# origina& de%endants so&idari&! &ia&e to ,nsa 7du&#aman in t#e sum o% P82,0/5'22
and t#e cost o% t#e &itigation, wit#out preAudice to t#e rig#t o% t#e one w#o s#ou&d pa! t#e Audgment in %u&& to
demand contriution %rom #is co=de%endant'
1. (ort in 9uestion not civil tort $ut a #ariti#e tort resultin* in a collision at sea! *overne+ $y
5rticles 4- to %3% o, t)e Co+e o, Co##erce
F#i&e it is true t#at ,nsa 7du&#aman?s action against Mani&a "teams#ip is ased on a tort or 9uasi=
de&ict, t#e tort in 9uestion is not a civi& tort under t#e $ivi& $ode ut a maritime tort resu&ting in a co&&ision at
sea, governed ! 7rtic&es /8>=.3. o% t#e $ode o% $ommerce' Dnder 7rtic&e /80 o% t#e $ode o% $ommerce, in
case o% co&&ision etween two vesse&s imputa&e to ot# o% t#em, eac# vesse& s#a&& su%%er #er own damage and
ot# s#a&& e so&idari&! &ia&e %or t#e damages occasioned to t#eir cargoes' T#e c#aracteristic &anguage o% t#e
&aw in making t#e ;vesse&s< so&idari&! &ia&e %or t#e damages due to t#e maritime co&&ision emp#asi*es t#e
direct nature o% t#e responsii&ities on account o% t#e co&&ision incurred ! t#e s#ipowner under maritime &aw,
as distinguis#ed %rom t#e civi& &aw and mercanti&e &aw in genera&' T#is direct responsii&it! is recogni*ed in
7rtic&e >1/ o% t#e $ode o% $ommerce under w#ic# t#e captain s#a&& e civi&&! &ia&e to t#e s#ip agent, and t#e
&atter is t#e one &ia&e to t#ird persons'
-. E)ere s)ipa*ent lia$le to t)ir+ persons
7s pointed out in t#e co&&ision case o% Oueng "#eng B3c#ange T Trading $o' vs' Drrutia T $o', 18
P#i&' 050, 043: ;T#e responsii&it! invo&ved in t#e present action is t#at derived %rom t#e management o% t#e
vesse&, w#ic# was de%ective on account o% &ack o% ski&&, neg&igence, or %au&t, eit#er o% t#e captain or o% t#e
crew, %or w#ic# t#e captain is responsi&e to t#e agent, w#o in #is turn is responsi&e to t#e t#ird part!
preAudiced or damaged' (7rtic&e >1/, $ode o% $ommerce)'<
3. S)ipo.ners an+ s)ipa*ents civilly lia$le ,or t)e acts o, t)e captain an+ ,or in+e#nities +ue to
t)ir+ persons
,n %act, it is a genera& princip&e, we&& esta&is#ed maritime &aw and custom, t#at s#ipowners and s#ip
agents are civi&&! &ia&e %or t#e acts o% t#e captain ($ode o% $ommerce, 7rtic&e 4/>) and %or t#e indemnities
due t#e t#ird persons (7rtic&e 4/0)C so t#at inAured parties ma! immediate&! &ook %or reimursement to t#e
owner o% t#e s#ip, it eing universa&&! recogni*ed t#at t#e s#ip master or captain is primari&! t#e
representative o% t#e owner ("tandard (i& $o' vs' +ope* $aste&o, 58 P#i&' 84>, 8>2)' T#is direct &iai&it!,
moderated and &imited ! t#e owner?s rig#t o% aandonment o% t#e vesse& and earned %reig#t (7rtic&e 4/0), #as
een dec&ared to e3ist, not on&! in case o% reac#ed contracts, ut a&so in cases o% tortious neg&igence (Ou 1iao
"ontua vs' (sorio, 53 P#i&' 411, 414)' F#ere t#e vesse& is one o% %reig#t, a pu&ic concern or pu&ic uti&it!, its
owner or agents is &ia&e %or t#e tortious acts o% #is agents (7rtic&es 4/0, >13, and >1/ $ode o% $ommerceC
and 7rtic&e 1.28, 1.23, 1.2/, $ivi& $ode)' T#is princip&e #as een repeated&! up#e&d in various decisions o%
t#e "upreme $ourt'
/. <e,ense o, +ue +ili*ence o, $onus pater,a#ilias to exe#pt s)ipo.ner ,ro# lia$ility ,or ,ault
.oul+ ren+er nu*atory soli+arity lia$ility esta$lis)e+ $y 5rticle 4-3 Co+e o, Co##erce
To admit t#e de%ense o% due di&igence o% a onus pater%ami&ias (in t#e se&ection and vigi&ance o% t#e
o%%icers and crew) as e3empting t#e s#ipowner %rom an! &iai&it! %or t#eir %au&ts, wou&d render nugator! t#e
so&idar! &iai&it! esta&is#ed ! 7rtic&e /80 o% t#e $ode o% $ommerce %or t#e greater protection o% inAured
parties' "#ipowners wou&d e a&e to escape &iai&it! in practica&&! ever! case, considering t#at t#e
9ua&i%ications and &icensing o% s#ip masters and o%%icers are determined ! t#e "tate, and t#at vigi&ance is
practica&&! impossi&e to e3ercise over o%%icers and crew o% vesse&s at sea' To compe& t#e parties preAudiced to
&ook to t#e crew %or indemnit! and redress wou&d e an i&&usor! remed! %or a&most a&wa!s its memers are,
%rom captains down, mere wage earners'
2. Ealter S#it) Co. vs. Ca+.alla+er Gi$son Lu#$er not in point
T#e case o% Fa&ter "' "mit# T $o' vs' $adwa&&ader 6ison +umer $o', 44 P#i&' 410, is not t#e point'
"aid case treated o% a civi& tort, in t#at t#e vesse& o% t#e de%endant, a&&eged&! neg&igent&! managed ! its
captain in t#e course o% its maneuvers to moor at p&ainti%%?s w#ar%, struck t#e same and partia&&! demo&is#ed it,
causing damage to p&ainti%%' 1ecause t#e tort a&&eged&! committed was civi&, t#e provisions o% 7rtic&e 1.23 o%
t#e $ivi& $ode were correct&! app&ied' T#e present case, on t#e ot#er #and, invo&ves tortious conduct resu&ting
in a maritime co&&isionC w#ere%ore, t#e &iai&it! o% t#e s#ipowner is governed ! t#e provisions o% t#e $ode o%
$ommerce and not ! t#e $ivi& $ode'
. Lia$ility o, Li# Hon* (o cannot $e li#ite+ accor+in* to t)e Li#ite+ Lia$ility Rule6 Li# Hon*
(o in violation o, la.
Disregarding t#e 9uestion w#et#er mere inai&it! to meet t#e sa&ar! demands o% du&! &icensed masters
and engineers constitutes non=avai&ai&it! t#ereo% t#at wou&d e3cuse noncomp&iance wit# t#e &aw and
aut#ori*e operation wit#out &icensed o%%icers under 7ct 3443, t#e %act remains t#at ! operating wit# an
un&icensed master, +im @ong To de&ierate&! increased t#e risk to w#ic# t#e passengers and s#ippers o% cargo
aoard t#e ;$onsue&o V< wou&d e suAected' ,n #is desire to reap greater ene%its in t#e maritime trade, +im
@ong To wi&&%u&&! augmented t#e dangers and #a*ards to #is vesse&?s unwarr! passengers, w#o wou&d
norma&&! assume t#at t#e &aunc# o%%icers possessed t#e necessar! ski&& and e3perience to evade t#e peri&s o%
t#e sea' @ence, t#e &iai&it! o% +im @ong To can not e t#e identica& to t#at o% a s#ipowner w#o ears in mind
t#e sa%et! o% t#e passengers and cargo ! emp&o!ing du&! &icensed o%%icers' To #o&d t#at +im @ong To ma!
&imit #is &iai&it! to t#e va&ue o% #is vesse&s, is to erase a&& di%%erence etween comp&iance wit# &aw and t#e
de&ierate disregard t#ereo%'
3. Li#ite+ Lia$ility Rule +oes not apply .)ere t)e in?ury or avera*e is +ue to s)ipo.ner1s o.n
,ault
T#e internationa& ru&e is to t#e e%%ect t#at t#e rig#t o% aandonment o% vesse&s, as a &ega& &imitation o%
a s#ipowner?s &iai&it!, does not app&! to cases w#ere t#e inAur! or t#e average is due to s#ipowner?s own
%au&t'
4. &arina! <rec)o Co#ercial =ariti#o
Fari)a (Derec#o $omercia& Maritimo, Vo&' ,, pp' 188=183), on t#e aut#orit! o% Audicia& precedents
%rom various nations, sets t#e ru&e to e as %o&&ows: ;Bsta genera&mente admitido 9ue e& propietario de& u9ue
no tiene derec#o a &a &imitacion &ega& de responsii&idad si &os da)os o averias 9ue dan origen a &a &imitacion
provienen de sus propias cu&pas' B& $onvenio de 1ruse&as de 84 de agosto de 1.85 tamien inva&ida &a
&imitacion en e& caso de cu&pa persona& en &os accidentes o aver[as sorevenidos (7rt' 8\)'<
%. <an?on! <erec)o =ariti#o
To t#e same e%%ect, a noted Frenc# aut#or (DanAon) states ((Derec#o Maritimo, Vo&' 8, p' 338): ;+a
&imitacion de &a responsai&idad maritima #a sido admitida para proteger a &os armadores contra &os actos
ausivos de sus encargados ! no deAar su patrimonio entero a &a discrecion de& persona& de sus u9ues, por9ue
este persona& cump&e sus o&igaciones en condiciones especia&esC pero &os armadores no tienen por sore &os
demas derec#o a ser amparados contra e&&os mismos ni a ser protegidos contra sus propios actos'<
1". Lia$ility o, Li# Hon* (o #ust $e $eyon+ t)e value o, )is vessal
T#at +im @ong To understood t#at #e wou&d incur greater &iai&it! t#an t#at norma&&! orne !
s#ipowners, is c&ear %rom #is assumption o% ; %u&&< risk and responsii&it! %or a&& t#e conse9uences< o% t#e
operation o% t#e M-+ ;$onsue&o V<C a responsii&it! e3press&! assumed in #is &etter, and imposed in #is
specia& permit, in addition to t#e vesse& itse&% eing #e&d answera&e' T#is e3press assumption o% ;%u&& risk and
responsii&it!< wou&d e meaning&ess un&ess intended to roaden t#e &iai&it! o% respondent +im @ong To
e!ond t#e va&ue o% #is vesse&'
[150] Leirs o2 A%paro de los antos vs. CA, see [//]
[121]
C)ua Hek Hon* vs. ;5C (GR L>3/411! 3" Septe#$er 1%44)
"econd Division, Me&encio=@errera (J): 5 concur
&acts' $#ua Oek @ong is a du&! &icensed copra dea&er ased at Puerta 6a&era, (rienta& Mindoro, w#i&e
Mariano 6uno and Dominador (&it are t#e owners o% t#e vesse&, ;M-V +u*viminda ,,< a common carrier
engaged in coastwise trade %rom t#e di%%erent ports o% (rienta& Mindoro to t#e Port o% Mani&a' ,n (ctoer
1.00, $#ua Oek @ong &oaded 1,222 sacks o% copra, va&ued at P121,880'52, on oard t#e vesse& ;M-V
+u*viminda ,< %or s#ipment %rom Puerta 6a&era, (rienta& Mindoro, to Mani&a' "aid cargo, #owever, did not
reac# Mani&a ecause somew#ere etween $ape "antiago and $a&atagan, 1atangas, t#e vesse& capsi*ed and
sank wit# a&& its cargo'
(n 32 Marc# 1.0., $#ua Oek @ong instituted e%ore t#e t#en $F, o% (rienta& Mindoro, a $omp&aint %or
damages ased on reac# o% contract o% carriage against 6uno and (&it' ,n t#eir 7nswer, 6uno and (&it
averred t#at even assuming t#at t#e a&&eged cargo was tru&! &oaded aoard t#eir vesse&, t#eir &iai&it! #ad een
e3tinguis#ed ! reason o% t#e tota& &oss o% said vesse&' (n 10 Ma! 1./3, t#e Tria& $ourt rendered its Decision,
#o&ding t#at t#e preponderance o% evidence mi&itates in %avor o% $#ua Oek @ong and against 6uno and (&it !
ordering t#e &atter, Aoint&! and severa&&!, to pa! $#ua Oek @ong t#e sum o% P121,880'52 representing t#e va&ue
o% t#e cargo e&onging to $#ua Oek @ong w#ic# was &ost w#i&e in t#e custod! o% 6uno and (&itC P>4,442'22
representing misce&&aneous e3penses o% $#ua Oek @ong on said &ost cargoC attorne!?s %ees in t#e amount o%
P4,222'22, and to pa! t#e costs o% suit'<
(n appea&, t#e 7ppe&&ate $ourt ru&ed to t#e contrar! w#en it app&ied 7rtic&e 4/0 o% t#e $ode o% $ommerce
and t#e doctrine in Oangco vs' +aserna (03 P#i&' 332 L1.51M) and #e&d t#at 6uno?s and (&it?s &iai&it!, as
s#ipowners, %or t#e &oss o% t#e cargo is mere&! co=e3tensive wit# t#eir interest in t#e vesse& suc# t#at a tota&
&oss t#ereo% resu&ts in its e3tinction' Dnsuccess%u& in #is Motion %or :econsideration o% t#e Decision, $#ua
Oek @ong %i&ed a petition %or review on certiorari'
T#e "upreme $ourt a%%irmed t#e Audgment soug#t to e reviewedC wit#out costs'
7rtic&e 4/0 o% t#e $ode o% $ommerce provides t#at ;t#e s#ipagent s#a&& a&so e civi&&! &ia&e %or t#e
indemnities in %avor o% t#ird persons w#ic# ma! arise %rom t#e conduct o% t#e captain in t#e care o% t#e goods
w#ic# #e &oaded on t#e vesse&C ut #e ma! e3empt #imse&% t#ere%rom ! aandoning t#e vesse& wit# a&& t#e
e9uipments and t#e %reig#t it ma! #ave earned during t#e vo!age'<
-. S)ipa*ent in 5rticle 243 inclu+es s)ipo.ner
T#e term ;s#ipagent< as used in 7rtic&e 4/0 o% t#e $ode o% $ommerce is road enoug# to inc&ude t#e
s#ipowner' Pursuant to said provision, t#ere%ore, ot# t#e s#ipowner and s#ipagent are civi&&! and direct&!
&ia&e %or t#e indemnities in %avor o% t#ird persons, w#ic# ma! arise %rom t#e conduct o% t#e captain in t#e
care o% goods transported, as we&& as %or t#e sa%et! o% passengers transported'
3. Fniversal principle o, li#ite+ lia$ility (no vessel! no lia$ility)6 D,,ect o, a$an+on#ent
Dnder 7rtic&e 4/0 o% t#e $ode o% $ommerce, direct &iai&it! is moderated and &imited ! t#e
s#ipagent?s or s#ipowner?s rig#t o% aandonment o% t#e vesse& and earned %reig#t' T#is e3presses t#e universa&
princip&e o% &imited &iai&it! under maritime &aw' T#e most %undamenta& e%%ect o% aandonment is t#e cessation
o% t#e responsii&it! o% t#e s#ipagent-owner' ,t #as t#us een #e&d t#at ! necessar! imp&ication, t#e
s#ipagent?s or s#ipowner?s &iai&it! is con%ined to t#at w#ic# #e is entit&ed as o% rig#t to aandon H ;t#e
vesse& wit# a&& #er e9uipment and t#e %reig#t it ma! #ave earned during t#e vo!age,< and ;to t#e insurance
t#ereo% i% an!'< ,n ot#er words, t#e s#ipowner?s or agent?s &iai&it! is mere&! co=e3tensive wit# #is interest in
t#e vesse& suc# t#at a tota& &oss t#ereo% resu&ts in its e3tinction' ;Eo vesse&, no &iai&it!< e3presses in a nuts#e&&
t#e &imited &iai&it! ru&e' T#e tota& destruction o% t#e vesse& e3tinguis#es maritime &iens as t#ere is no &onger
an! res to w#ic# it can attac#'
/. :rinciple o, Li#ite+ Lia$ility6 Han*co vs. Laserna
7s #e&d in Oangco vs' +aserna, ;,% t#e s#ipowner or agent ma! in an! wa! e #e&d civi&&! &ia&e at a&&
%or inAur! to or deat# o% passengers arising %rom t#e neg&igence o% t#e captain in cases o% co&&isions or
s#ipwrecks, #is &iai&it! is mere&! co=e3tensive wit# #is interest in t#e vesse& suc# t#at a tota& &oss t#ereo%
resu&ts in its e3tinction'<
2. Real an+ )ypot)ecary nature o, t)e lia$ility o, t)e s)ipo.ner or a*ent6 5$ue* vs. San <ie*o
T#e rea& and #!pot#ecar! nature o% t#e &iai&it! o% t#e s#ipowner or agent emodied in t#e provisions
o% t#e Maritime +aw, 1ook ,,,, $ode o% $ommerce, #ad its origin in t#e prevai&ing conditions o% t#e maritime
trade and sea vo!ages during t#e medieva& ages, attended ! innumera&e #a*ards and peri&s' To o%%set against
t#ese adverse conditions and to encourage s#ipui&ding and maritime commerce, it was deemed necessar! to
con%ine t#e &iai&it! o% t#e owner or agent arising %rom t#e operation o% a s#ip to t#e vesse&, e9uipment, and
%reig#t, or insurance, i% an!, so t#at i% t#e s#ipowner or agent aandoned t#e s#ip, e9uipment, and %reig#t, #is
&iai&it! was e3tinguis#ed'
. :rinciple o, li#ite+ lia$ility in line .it) pu$lic policy6 Han*co vs. Laserna
Fit#out t#e princip&e o% &imited &iai&it!, a s#ipowner and investor in maritime commerce wou&d run
t#e risk o% eing ruined ! t#e ad %ait# or neg&igence o% #is captain, and t#e appre#ension o% t#is wou&d e
%ata& to t#e interest o% navigation'
3. @RealA nature o, t)e #ariti#e la.6 :)il. S)ippin* Co. vs. Ger*ara
7s evidence o% t#is Grea&? nature o% t#e maritime &aw, t#ere is (1) t#e &imitation o% t#e &iai&it! o% t#e
agents to t#e actua& va&ue o% t#e vesse& and t#e %reig#t mone!, and (8) t#e rig#t to retain t#e cargo and t#e
emargo and detention o% t#e vesse& even in cases w#ere t#e ordinar! civi& &aw wou&d not a&&ow more t#an a
persona& action against t#e detor or person &ia&e' ,t wi&& e oserved t#at t#ese rig#ts are corre&ative, and
natura&&! so, ecause i% t#e agent can e3empt #imse&% %rom &iai&it! ! aandoning t#e vesse& and %reig#t
mone!, t#us avoiding t#e possii&it! o% risking #is w#o&e %ortune in t#e usiness, it is a&so Aust t#at #is
maritime creditor ma! %or an! reason attac# t#e vesse& itse&% to secure #is c&aim wit#out waiting %or a
sett&ement o% #is rig#ts ! a %ina& Audgment, even to t#e preAudice o% a t#ird person'
4. Dxception to li#ite+ lia$ility rule
T#e &imited &iai&it! ru&e, #owever, is not wit#out e3ceptions, name&!: (1) w#ere t#e inAur! or deat# to
a passenger is due eit#er to t#e %au&t o% t#e s#ipowner, or to t#e concurring neg&igence o% t#e s#ipowner and
t#e captainC (8) w#ere t#e vesse& is insuredC and (3) in workmen?s compensation c&aims (7ueg vs' "an Diego,
supra)' ,n t#is case, t#ere is not#ing in t#e records to s#ow t#at t#e &oss o% t#e cargo was due to t#e %au&t o% t#e
private respondents as s#ipowners, or to t#eir concurrent neg&igence wit# t#e captain o% t#e vesse&'
%. Civil Co+e provisions +o not a,,ect principle o, li#ite+ lia$ility
$onsidering t#e ;rea& and #!pot#ecar! nature< o% &iai&it! under maritime &aw, t#e provisions o% t#e
$ivi& $ode on common carriers wou&d not #ave an! e%%ect on t#e princip&e o% &imited &iai&it! %or s#ipowners
or s#ipagents' 7s #e&d in Oangco vs' +aserna, t#e %act is not ignored t#at t#e i&&=%ated vesse& engaged in
interis&and trade, is a common carrier, and t#at t#e re&ations#ip etween t#e carrier and t#e passengers w#o
died in t#e mis#ap rests on a contract o% carriage' 1ut assuming t#at t#e carrier is &ia&e %or a reac# o%
contract o% carriage, t#e e3c&usive&! Grea& and #!pot#ecar! nature? o% maritime &aw operates to &imit suc#
&iai&it! to t#e va&ue o% t#e vesse&, or to t#e insurance t#ereon, i% an!' ,n said case it does not appear t#at t#e
vesse& was insured'
1". 5rticle 13 7CC
7rtic&e 10>> o% t#e $ivi& $ode provides t#at ;in a&& matters not regu&ated ! t#is $ode, t#e rig#ts and
o&igations o% common carriers s#a&& e governed ! t#e $ode o% $ommerce and ! specia& &aws'<
11. 5pplica$le la.
T#e primar! &aw is t#e $ivi& $ode (7rts' 1038=10>>) and in de%au&t t#ereo%, t#e $ode o% $ommerce
and ot#er specia& &aws are app&ied' @erein, since t#e $ivi& $ode contains no provisions regu&ating &iai&it! o%
s#ipowners or agents in t#e event o% tota& &oss or destruction o% t#e vesse&, it is t#e provisions o% t#e $ode o%
$ommerce, more particu&ar&! 7rtic&e 4/0'
1-. Conclusion o, t)e court in t)e present case
@erein, since t#e s#ipagent?s or s#ipowner?s &iai&it! is mere&! co=e3tensive wit# #is interest in t#e
vesse& suc# t#at a tota& &oss t#ereo% resu&ts in its e3tinction, and none o% t#e e3ceptions to t#e ru&e on &imited
&iai&it! eing present, t#e &iai&it! o% 6uno and (&it %or t#e &oss o% t#e cargo o% copra must e deemed to #ave
een e3tinguis#ed' T#ere is no s#owing t#at t#e vesse& was insured'
[12-]
Co##issioner vs. FS Lines (GR L>142"! 3" =ay 1%-)
Bn 1anc, 1arrera (J): 0 concur
&acts' T#e D" +ines $ompan!, a %oreign corporation du&! &icensed to do usiness in t#e P#i&ippines, under
t#e trade name ;7merican Pioneer +ines<, is t#e operator o% ocean=going vesse&s transporting passengers and
%reig#t to and %rom t#e P#i&ippines' ,t is a&so t#e so&e agent and representative o% t#e Paci%ic Far Bast +ine,
,nc', anot#er s#ipping compan! engaged in usiness in t#e P#i&ippines as a common carrier ! water' ,n t#e
e3amination o% its ooks o% accounts and ot#er records to determine its ta3 &iai&ities %or t#e period %rom 1
Januar! 1.42 to 32 "eptemer 1.44, it was %ound t#at t#e $ompan! a&so acted in e#a&% o% t#e Fest $oast
Trans=(ceanic "teams#ip +ines $o', ,nc', a non=resident %oreign corporation, in connection wit# t#e
transportation, on oard t#e ;"" Port&and Trader< e&onging to t#e &atter, on 80 Eovemer 1.41 and 8. 7pri&
1.48, o% c#rome ores %rom Masin&oc, Rama&es to t#e Dnited "tates, %rom w#ic# carriage or transportation
%reig#t revenue in t#e tota& sum o% K808,502'22 was rea&i*ed ! t#e vesse&?s owner, and %or w#ic# t#e 8I
common carrier?s percentage ta3 imposed ! "ection 1.8 o% t#e Eationa& ,nterna& :evenue $ode was never
paid' 7s a conse9uence, t#e $ommissioner o% ,nterna& :evenue assessed and demanded %rom t#e $ompan!, as
de%icienc! ta3, (a) t#e sum o% P>,>.1'3> %or its own usiness under t#e name 7merican Pioneer +inesC ()
P4,58.'22, as agent o% Paci%ic Far Bast +ine, ,nc', and (c) P13,>5.'24 on t#e %reig#t revenue o% t#e Fest $oast
Trans=(ceanic "teams#ip +ines $o' %rom t#e carriage or transportation o% t#e c#rome oresC or a tota& o%
P84,0>.'51' 7t t#e instance o% t#e $ompan!, a reinvestigation o% t#e case was conducted and a #earing
t#ereon #e&d e%ore t#e 7ppe&&ate Division o% t#e 1ureau o% ,nterna& :evenue' T#ese, notwit#standing, t#e
$ommissioner maintained #is demand'
T#e $ompan! %i&ed a petition wit# t#e $ourt o% Ta3 7ppea&s contesting t#e correctness o% (1) t#e conversion
o% ;co&&ect< revenues or t#ose %reig#t and passage receipts, commissions, and agenc! %ees %or services in t#e
P#i&ippines, ut pa!a&e in t#e Dnited "tates, at t#e rate o% P8'22304 to K1'22 and (8) t#e demand on t#e
$ompan! o% t#e 8I carrier?s percentage ta3 on t#e gross receipts o% t#e Fest $oast Trans=(ceanic "teams#ip
+ines %rom t#e c#rome ore s#ipments o% 80 Eovemer 1.41 and 8. 7pri& 1.48' T#e $ourt o% Ta3 7ppea&s, in
its decision, ru&ed %or t#e $ompan! on t#e %irst issue, using t#e agreed conversion rates K1'22 to P8'214 and
K1'22 to P8'28 wit# regard to t#e Gprepaid? %reig#t and passage revenues, respective&!, in order to arrive at t#e
actua& amounts co&&ected ! t#e $ompan! in P#i&ippine pesos H t#e correct ta3a&e gross receipts' 7s to t#e
second issue, it ru&ed t#at t#e 8I percentage ta3 under "ection 1.8 o% t#e Ta3 $ode is impossi&e on&! on
owners or operators o% t#e common carrier, and as t#ere is no &aw constituting t#e s#ipping agent t#e
wit##o&ding agent o% t#e ta3es due %rom t#e principa&, said s#ipping agent is not persona&&! &ia&e %or t#e ta3
o&igations o% t#e &atter, un&ess t#e agent vo&untari&! assumes suc# o&igation w#ic#, in t#is case, t#e agent
$ompan! did not' $onse9uent&!, t#e $ompan! was ordered to pa! on&! a ta3 de%icienc! and surc#arge in t#e
sum o% P428'04' @ence, t#e institution o% t#e appea& ! t#e $ommissioner o% ,nterna& :evenue'
T#e "upreme $ourt modi%ied t#e decision o% t#e $ourt o% Ta3 7ppea&s, and remanded t#e records remanded
to t#e court a 9uo %or t#e purpose directedC wit#out costs'
1. Conversion o, t)e @collectA ,rei*)t ,ees
T#e ru&ing ! t#e &ower court t#at t#e conversion o% t#e ;co&&ect< %reig#t %ees (or t#ose earned in t#e
P#i&ippines ut actua&&! paid in t#e Dnited "tates in do&&ar) s#ou&d e at t#e rate o% P8'22 to K1'22 as
esta&is#ed ! &aw ("ec' 5/, :7 8>4), and not t#e rate o% e3c#ange o% P8'22304 to K1'22, as %i3ed ! t#e
Monetar! 1oard, must e up#e&d' Eo evidence was presented reutting t#e positive a&&egation o% ta3pa!er,
w#ic# was sustained ! t#e Ta3 $ourt, t#at t#e ;co&&ect< %reig#tage %ees were not remitted to t#e &oca& o%%ice
o% t#e D" +ines $ompan! (in t#e P#i&ippines) nor actua&&! converted to and received in P#i&ippine pesos' ,n
ot#er words, no %oreign e3c#ange operations were invo&ved'
-. Co###issioner1s state#ent as to @collectA revenues not $orne out $y recor+s
T#e statement made in t#e $ommissioner?s rie% t#at ;it is uncontroverted t#at t#e $ompan!?s do&&ar
earnings #ere representing its so=ca&&ed Gco&&ect? revenues were accounted %or t#ru its ank, t#e Eationa& $it!
1ank o% Eew Oork at P8'22304 to a do&&ar, is not orne out ! t#e records' T#e $ompan! #erein received
certain amounts %rom its #ome o%%ice in t#e Dnited "tates to meet its &oca& e3penses, and t#ese were
wit#drawn %rom a &etter o% credit in t#e First $it! 1ank o% Eew Oork in Mani&a at t#e rate o% P8'22304 to a
do&&ar' 1ut t#e $ompan! asserts H and t#ere is no evidence to t#e contrar! H t#at t#ere is no re&ations#ip
w#atsoever etween t#ese %unds and t#e %reig#t %ees co&&ected in t#e Dnited "tates'
3. :urpose o, Section 1%- o, t)e (ax Co+e6 Lia$ility o, s)ippin* a*ent as .it))ol+in* a*ent o,
taxes +ue ,ro# its principal
T#e ru&ing o% t#e $ourt o% Ta3 7ppea&s adopts a ver! restrictive interpretation o% "ection 1.8 o% t#e
Ta3 $ode' T#erein, it #e&d t#at a s#ipping agent is not persona&&! responsi&e %or t#e pa!ment o% t#e ta3
o&igations o% its principa&, reasoning t#at t#ere is no &aw constituting a s#ipping agent as a wit##o&ding agent
o% t#e ta3es due %rom its principa&' ,% %urt#er stated t#at a s#ipping agent can on&! e #e&d &ia&e %or t#e
pa!ment o% t#e common carrier?s percentage ta3 i% suc# o&igation is stipu&ated in t#e agenc! agreement, or i%
t#e agent vo&untari&! assumes t#e ta3 &iai&it!' @erein, w#at t#e &ega& provision purports to ta3 is t#e usiness
o% transportation, so muc# so t#at t#e ta3 is ased on t#e gross receipts' T#e person &ia&e is o% course t#e
owner or operators, ut t#is does not mean t#at #e and #e a&one can e made actua&&! to pa! t#e ta3' ,n ot#er
words, w#oever acts on #is e#a&% and %or #is ene%it ma! e #e&d &ia&e to pa!, %or and on e#a&% o% t#e
carrier or operator, suc# percentage ta3 on t#e usiness'
/. Hus$an+in* a*ent +e,ine+
7 ;#usanding agent< is t#e genera& agent o% t#e owner in re&ation to t#e s#ip, wit# powers, among
ot#ers, to engage t#e vesse& %or genera& %reig#t and t#e usua& conditions, and sett&e %or %reig#t and adAust
averages wit# t#e merc#ant'
2. 7ature o, a*ency as per correspon+ence .it) Eest Coast (rans>8ceanic Stea#s)ip Lines
T#us, (1) in t#e &etter o% Fest $oast Trans=(ceanic "teams#ip +ines, dated 82 (ctoer 1.41, giving
instructions to t#e master o% its vesse& ;"" Port&and Trader<, it re%erred to t#e $ompan! as t#e ;(wner?s
agents< at t#e &oading point (Masin&oc) to w#ic# t#e vesse& #ad to e consigned' ,n &ine wit# its designation as
t#e ;(wner?s agent< and t#e vesse&?s consignee, t#e $ompan! wrote t#e master o% t#e vesse& advising #im
t#at it #ad secured $ustoms aut#orit! %or t#e vesse& to proceed to Masin&oc, as we&& as t#e B3port Bntr!
covering t#e &oading o% t#e ore, giving instructions #ow to proceed wit# t#e &oading and to keep it c&ose&!
advised o% a&& movements and dai&! tonnages &aden' ,t a&so undertook to and did in %act prepare a&& t#e cargo
documents' T#e corresponding i&& o% &ading %or t#e cargo was prepared and signed ! t#e $ompan! ;7s
7gent %or Fest $oast Trans=(ceanic "teams#ip +ine< w#erein it acknow&edged t#e receipt o% .,.22 &ong tons
o% c#rome, a prerogative act o% a common carrier itse&%' 7gain, signing ;7s 7gents %or Fest $oast Trans=
(ceanic "teams#ip +ine<, t#e $ompan! transmitted t#e s#ipping documents covering t#e s#ipment o% ore to
$ast&e $ooke, +td', t#e vesse&?s agent at @ono&u&u' 7&& t#ese were in respect to t#e %irst s#ipment on 80
Eovemer 1.41' (8) $oncerning t#e second s#ipment, t#e &etter o% Fest $oast Trans=(ceanic "teams#ip
+ines, dated 81 Feruar! 1.48 addressed to t#e $ompan!, advising it o% t#e second trip o% ;"" Port&and
Trader< and stating: ;Fe trust t#at !ou wi&& #and&e t#e vesse& at Mani&a and t#at !our usua& %ee wi&& app&!<,
and re9uesting t#e $ompan! to act a&so as supervisor! agents at "aigon and @aip#ong' T#e steams#ip
compan!, &ikewise, advised t#e master o% its vesse& t#at ;its agents %or Masin&oc< wi&& e t#e $ompan! %rom
w#ic# ;%u&& assistance and in%ormation< cou&d e otained' Bvident&! accepting t#e designation, t#e $ompan!,
representing itse&% as ;t#e &oca& agents< o% t#e vesse&, secured t#e entr! and c&earance o% t#e vesse& at t#e
customs' 7%ter t#e &oading o% ore at Masin&oc, again t#e $ompan! prepared t#e s#ipping documents and
signed t#e i&& o% &ading ;7s 7gent %or t#e Fest $oast Trans=(ceanic "teams#ip +ines'<
. FS Lines a *eneral a*ent
F#atever ma! e t#e tec#nica& %unctions o% a ;s#ip?s #usand<, t#e $ompan! #erein was considered
and acted more as a genera& agent' T#e agenc! contract is not e3tant in t#e records' "ti&&, %rom t#e
correspondence etween t#e principa& Fest $oast Trans=(ceanic "teams#ip +ines and t#e $ompan! itse&%,
and wit# ot#er entities regarding t#e s#ipment in 9uestion, t#e rea& nature o% t#e agenc! ma! e g&eaned'
Documents s#ow t#at t#e $ompan! c&ear&! acted (as it #e&d itse&% to t#e pu&ic and to t#e 6overnment,
speci%ica&&! t#e 1ureau o% $ustoms) as t#e s#ipowner?s &oca& agent or t#e s#ip agent representing t#e
owners#ip o% t#e vesse&'
3. 5rticle 2%2 o, t)e Co+e o, Co##erce
7s provided in 7rtic&e 4.4 o% t#e $ode o% $ommerce, ;t#e s#ip agent s#a&& represent t#e owners#ip o%
t#e vesse&, and ma!, in #is own name and in suc# capacit!, take Audicia& and e3traAudicia& steps in matters
re&ating to commerce<' ,% t#e s#ipping agent represents t#e owners#ip o% t#e vesse& in matters re&ating to
commerce, t#en an! &iai&it! arising in connection t#erewit# ma! e en%orced against t#e agent w#o is, as a
conse9uence t#ereo%, aut#ori*ed to take Audicia& or e3tra=Audicia& steps, eit#er in t#e prosecution or de%ense o%
t#e owner?s rig#ts or interests' 7s a matter o% %act, i% a %oreign s#ipping compan! #as a c&aim against t#e
6overnment in re&ation to commerce, its &oca& s#ipping agent, ! virtue o% 7rtic&e 4.4 o% t#e $ode o%
$ommerce, can %i&e suc# a c&aim in #is own name' $onverse&!, and &ogica&&!, it must e admitted, t#e
6overnment can #o&d t#e &oca& s#ipping agent &ia&e %or t#e ta3es due %rom #is principa&' T#is is, o% course,
wit#out preAudice to t#e rig#t o% t#e agent to seek reimursement %rom #is principa&'
4. 5*ree#ent an+ t)e la. +eter#ines t)e lia$ility o, t)e a*ent
7n! agreement or contract to e en%orcea&e in P#i&ippine Aurisdiction is understood to incorporate
t#erein t#e provision or provisions o% &aw speci%!ing t#e o&igations o% t#e parties under suc# contract' T#e
contract etween #erein $ompan! and its principa& conse9uent&! imposed upon t#e parties not on&! t#e rig#ts
and duties de&ineated t#erein, ut a&so t#e provisions o% &aw suc# as t#at o% t#e $ode o% $ommerce'
%. Reexa#ination re9uire+ as to a#ount o, taxa$le receipts6 Re#an+
T#e records, as to t#e amount o% ta3a&e receipts, are not c&ear' T#e $ommissioner c&aims t#at t#ere
are contradictions in and among t#e t#ree sets o% summaries sumitted ! t#e $ompan! and t#e! s#ou&d not
#ave een considered ! t#e tria& court' (n t#e ot#er #and, t#e assessments issued ! t#e $ommissioner are,
&ikewise, con%&icting' ,n t#e present petition, t#e pra!er sets t#e ta3 de&in9uenc! o% t#e $ompan! at
P8>,53>'10, w#ic# is t#e amount demanded in #is &etter o% demand o% > June 1.4/' ,n #is rie%, t#e
$ommissioner pra!s t#at t#e $ompan! e ordered to pa! t#e sum o% P84,0>.'51, t#e amount demanded in #is
&etter o% 8/ June 1.4>' ,n view o% t#ese discrepancies, a re=e3amination and veri%ication o% t#e records is
necessar! to determine t#e e3act ta3a&e amount on w#ic# t#e 8I common carrier?s percentage ta3 is to e
computed in accordance wit# t#e terms o% t#e present decision'
[123]
=a+ri*al S)ippin* vs. 8*ilve (GR L>4/31! 3" 8cto$er 1%24)
Bn 1anc, Padi&&a (J): / concur
&acts' Jesus 6' (gi&vie, "a&vador (rti&e, 7ntonio $' Mi&itar and Migue& M' Fermin were engaged ! Manue&
Mascu)ana, master or captain emp&o!ed ! Madriga& "#ipping $ompan!, ,nc', to man and %etc# t#e vesse&
;"'"' 1ridge< %rom "aseu, Japan, as evidenced ! a contract e3ecuted on 85 Decemer 1.50 in Mani&a' (n 0
Januar! 1.5/, anot#er contract o% simi&ar terms and conditions was e3ecuted in Mani&a e%ore t#e $onsu&
6enera& o% t#e :epu&ic o% Panama %or t#e reason t#at t#e "'"' 1ridge was registered under t#e &aws o% t#at
:epu&ic' Pursuant t#ereto (gi&vie, et'a&' were %&own to "aseu, Japan, and t#e! manned t#e vesse& out o% t#e
port o% "aseu' (n 1> Marc# 1.5/, w#en t#e vesse& reac#ed @ongkong, (gi&vie, et'a&' were dismissed and
rep&aced ! a crew o% $#inese nationa&it!' (gi&vie, et'a&' were %&own ack to Mani&a and paid t#eir respective
sa&aries up to t#e date o% t#eir dismissa&' T#e tota& sum o% P18,125'42 w#ic# t#e! seek to co&&ect represents
sa&aries and susistence a&&owance %rom 10 Marc# 1.5/ to 32 "eptemer 1.5/ w#en t#e vesse& arrived in t#e
port o% Mani&a'
(gi&vie, et'a&' roug#t an action in t#e $F, o% Mani&a to co&&ect %rom t#e Madriga& "#ipping $ompan!, ,nc',
t#e aggregate sum o% P18,125'42 %or sa&aries and susistence %rom 1. Marc# to 32 "eptemer 1.5/ ($ivi&
/55>)' Madriga& "#ipping moved %or t#e dismissa& o% t#e comp&aint on t#e ground o% &ack o% Aurisdiction over
t#e suAect matter o% t#e action' T#e $ourt denied t#e motion and directed Madriga& "#ipping to answer t#e
comp&aint wit#in 12 da!s %rom receipt o% a cop! o% t#e order' 7s Madriga& "#ipping %ai&ed to answer t#e
comp&aint as directed, upon motion o% (gi&ve, et' a&' t#e $ourt dec&ared it in de%au&t and set t#e case %or
#earing on 32 "eptemer 1.5.' Madriga& "#ipping %i&ed a motion to set aside t#e order o% de%au&t, w#ic# was
denied' 7 motion %or reconsideration o% t#e previous order was &ikewise denied' Madriga& "#ipping %i&ed a
petition %or a writ o% certiorari wit# pre&iminar! inAunction in t#e "upreme $ourt to annu& and set aside t#e
order o% de%au&t, w#ic# was dismissed %or t#e reason t#at appea& was t#e proper remed!'
T#e tria& court t#en proceeded to #ear (gi&vie, et'a&?s evidence and a%ter t#e #earing it rendered Audgment
dismissing t#e t#eir comp&aint upon t#e so&e ground t#at t#e! %ai&ed to prove t#at Madriga& "#ipping is a
corporation du&! organi*ed and e3isting under t#e &aws o% t#e P#i&ippines' 7 motion was %i&ed pra!ing t#at
(gi&vie, et' a&&' e a&&owed to sumit evidence to prove t#at Madriga& "#ipping is a du&! organi*ed and
e3isting corporation under t#e &aws o% t#e P#i&ippines, w#ic# was granted' 7%ter #earing t#e additiona&
evidence presented ! (gi&vie, et'a&' s#owing t#at Madriga& "#ipping is an organi*ed and e3isting Auridica&
entit! under t#e &aws o% t#e P#i&ippines, t#e tria& court dismissed t#e comp&aint on t#e ground t#at t#e
evidence was not new ut %orgotten' (gi&vie, et'a&' appea&ed to t#e $ourt o% 7ppea&s'
T#e Audgment appea&ed %rom was reversed and Madriga& "#ipping was ordered to pa! Jesus 6' (gi&vie t#e
sum o% P3,88>'42 and "a&vador (rti&e, Migue& M' Fermin and 7ntonio $' Mi&itar t#e sum o% P8,.35 eac#'
Madriga& "#ipping #as roug#t t#e case to t#e "upreme $ourt ! wa! o% certiorari to #ave t#e Audgment o% t#e
$ourt o% 7ppea&s reviewed'
T#e "upreme $ourt denied t#e petition, wit# costs against Madriga& "#ipping'
1. Section %! Rule -3
"ection ., :u&e 80, provides ;Eo service o% papers s#a&& e necessar! on a part! in de%au&t e3cept
w#en #e %i&es a motion to set aside t#e order o% de%au&t, in w#ic# event #e is entit&ed to notice o% a&& %urt#er
proceedings, t#is $ourt #e&d t#at ;a de%endant in de%au&t is not entit&ed to notice o% t#e proceedings unti& t#e
%ina& termination o% t#e case, and t#ere%ore #e #as no rig#t to e #eard or %i&e rie% or memoranda on appea&'<
-. Li# (o Co vs. Go &ay (4" :)il. 1)! interpretin* Section %! Rule -3
7 de%endant in de%au&t &oses #is standing in or is considered out o% $ourt, and conse9uent&! can not
appear in courtC adduce evidenceC and e #eard, and %or t#at reason #e is not entit&ed to notice' ,% #e is not
entit&ed to notice o% t#e proceedings in t#e case and to e #eard, #e can not appea& %rom t#e Audgment rendered
! t#e court on t#e merits, ecause #e can not %i&e a notice o% appea&, and %i&e an appea& ond and t#e record
on appea&, %or approva& ! t#e court' T#e on&! e3ception provided ! &aw is w#en t#e de%endant in de%au&t
%i&es a motion to set aside t#e order o% de%au&t on t#e grounds stated in :u&e 3/ ;in w#ic# event #e is entit&ed
to notice o% a&& %urt#er proceedings'< T#at a de%endant in de%au&t can not e #eard in t#e suit, not on&! in t#e
tria& court ut a&so in t#e %ina& #earing, t#at is, on appea& w#ic# is part o% t#e proceedings in a suit, is t#e ru&ing
&aid down %or guidance o% courts and practitioners ! t#e $ourt in t#e case o% Ve&e* vs' :amos, 52 P#i&', 0/0'
3. Re#e+y o, party +eclare+ in +e,ault
T#e remed! avai&a&e to a part! w#o was dec&ared in de%au&t to regain #is standing in court and e
entit&ed once more to notice o% t#e proceedings is to move %or t#e setting aside o% t#e order o% de%au&t under
section 8, :u&e 3/ and to appea& t#ere%rom i% denied'
/. &ailure to appeal ren+ers or+er o, +e,ault in ,orce6 Loss o, ri*)t to $e serve+ .it) $rie,
From a denia& o% a motion to set aside an order o% de%au&t, as Madriga& "#ipping?s ;urgent motion to
set aside order o% de%au&t,< w#ic# ma! e deemed to %a&& under section 8, :u&e 3/, Madriga& "#ipping cou&d
#ave appea&ed' ,nstead o% taking an appea& %rom suc# denia&, Madriga& "#ipping c#ose to ring t#e matter to
t#e "upreme $ourt ! a petition %or a writ o% certiorari wit# a pra!er %or a writ o% pre&iminar! inAunction
w#ic# was correct&! dismissed %or t#e remed! was an appea& %rom t#e order den!ing t#e motion to set aside
t#e order o% de%au&t entered against Madriga& "#ipping ecause o% mistake or e3cusa&e neg&ect' Eot #aving
appea&ed %rom t#e order den!ing t#e motion to set aside t#e order o% de%au&t under section 8, :u&e 3/, t#e
order o% de%au&t remained in %orce wit# a&& t#e conse9uences t#at t#e part! against w#om it #ad een entered
must su%%er' (ne o% t#em is t#e &oss o% t#e rig#t to e served wit# t#e rie% o% (gi&vie, et'a&', appe&&ants in t#e
$ourt o% 7ppea&s'
2. Contents o, t)e contract
T#e pertinent provision o% t#e contract e3ecuted on 85 Decemer 1.50 in Mani&a provides t#at ;(a)
T#e severa& persons w#ose names are #ereto suscried, and w#ose descriptions are contained #erein,
engaged as seamen, #ere! agree to serve on oard t#e "'"' 1ridge o% w#ic# M' M7"$D]7E7 is master, in
t#e severa& capacities e3pressed against t#eir respective names, on a vo!age %rom T@B $:BF F,++
BEP+7EB F:(M M7E,+7 T( J7P7E' ,E J7P7E T@B $:BF F+++ M7E T@B "@,P T( M7E,+7'
T@," $(ET:7$T BJP,:B" (E T@B 7::,V7+ (F T@," 1(7T 7T T@B P(:T (F M7E,+7'
BJTBE",(E (F T@," $(ET:7$T ," V7+,D (E+O F@BE ",6EBD 1O T@B (FF,$,7+ "P,PPB:'<
. Groun+s not alle*e+ in #otion to +is#iss +ee#e+ .aive+
7 motion to dismiss an action must inc&ude a&& t#e grounds avai&a&e at t#e time o% its %i&ing, and a&&
grounds not so inc&uded are deemed waived, e3cept &ack o% Aurisdiction over t#e suAect matter' @erein, ,n its
motion to dismiss t#e comp&aint, Madriga& "#ipping invoked and re&ied so&e&! upon &ack o% Aurisdiction o% t#e
court over t#e suAect matter o% t#e action and did not den! owners#ip o% t#e "'"' 1ridge nor disavow t#e
aut#orit! o% Manue& Mascu)ana, its captain, to engage t#e services o% (gi&vie, et' a&'' More, in t#e answer o%
Madriga& "#ipping attac#ed to its ;urgent motion to set aside order o% de%au&t,< t#e averments under its specia&
de%enses sustantia&&! admit t#e a&&egations o% (gi&vie, et'a&'?s comp&aint, i'e' t#at t#e termination o% t#e
services o% (gi&vie, et'a&' as memers o% t#e crew as not due to t#eir %au&t as t#at upon t#e s#ip?s arriva& in
@ongkong it was %ound t#at repairs #ad to e made on #er e%ore s#e cou&d proceed on #er vo!age to Mani&a'
3. 5+#issions to t)e contract o, service
,n t#e motion to dismiss t#e comp&aint Madriga& "#ippinga&&eged t#at ;(n t#e date o% t#e e3ecution o%
t#e service contract etween t#e p&ainti%%s and t#e de%endant (Januar! 0, 1.5/), t#e suAect vesse& was in
"aseu, Japan, ' ' ',< t#ere! imp&!ing t#at Madriga& "#ipping in trut# and in %act contracted t#e services o%
t#e crew, to man its vesse&' Furt#ermore, Moises J' +ope*, manager o% t#e s#ipping compan!, testi%ied t#at #e
reca&&ed #aving contracted t#e services o% severa& persons to %orm a crew to man t#e "'"' 1ridge e&onging to
Madriga& "#ipping' @ow cou&d t#e &atter now disc&aim owners#ip o% t#e "'"' 1ridge and t#e aut#orit! o%
Manue& Mascu)ana, its captain, to engage t#e services o% t#e respondentsS
4. =a+ri*al S)ippin* estoppe+ ,ro# +enyin* existence o, ?uri+ical personality
6ranting t#at Madriga& "#ipping ma! not e sued %or &ack o% Auridica& persona&it!, it is now estopped %rom
den!ing t#e e3istence o% suc# persona&it! to evade responsii&it! on t#e contract it #ad entered into, ecause it
#as taken advantage o% t#e crew?s services and #as pro%ited t#ere!'
%. Groun+ o, @not ne. $ut ,or*otten evi+enceA applica$le to +eny a #otion ,or ne. trial $ut not
a,ter #otion )a+ $een *rante+
T#e tria& court committed an error w#en it re%used to take into account t#e evidence presented ! t#e
respondents to prove t#at t#e petitioner was a corporation du&! organi*ed and e3isting under t#e &aws o% t#e
P#i&ippines, t#e documents s#owing t#at %act #aving een reconstituted on&! a%ter t#e %irst #earing o% t#e case,
upon t#e so&e ground t#at it was not new ut %orgotten evidence' "uc# ground cou&d e re&ied upon to den! a
motion %or new tria&, ut not a%ter t#e motion #ad een granted, %or o%%icia& or pu&ic documents presented to
s#ow or prove t#e Auridica& persona&it! or entit! o% a part! to an action not known or avai&a&e at t#e %irst
#earing cou&d not e ignored' T#e tria& court cou&d not c&ose its e!es to rea&it!'
1". &iction o, corporate existence6 :iercin* t)e veil
6ranting t#at it was not t#e Madriga& "#ipping $ompan!, ,nc', t#at owned t#e "'"' 1ridge ut t#e
Madriga& T $ompan!, a corporation wit# a Auridica& persona&it! distinct %rom t#e %ormer, !et as t#e %ormer
was t#e susidiar! o% t#e &atter, and t#at t#e %ormer was a usiness conduit o% t#e &atter, t#e %iction o%
corporate e3istence ma! e disregarded and t#e rea& part! ordered to pa! (gi&vie, et' a&' t#eir Aust due'
11. 5rticle "2 o, t)e Co+e o, Co##erce
T#e services o% (gi&vie, et' a&' were engaged ! Madriga& "#ipping to man its vesse& %or a determinate
time or vo!age, wit# an e3press stipu&ation t#at ;t#is contract e3pires on t#e arriva& o% t#is oat at t#e port o%
Mani&a'< 7rtic&e >24 o% t#e $ode o% $ommerce provides ;,% t#e contracts o% t#e captain and memers o% t#e
crew wit# t#e s#ip agent s#ou&d e %or a de%inite period or vo!age, t#e! ma! not e disc#arged unti& a%ter t#e
%u&%i&&ment o% t#eir contracts e3cept ! reason o% insuordination in serious matters, roer!, t#e%t, #aitua&
drunkenness, or damage caused to t#e vesse& or its cargo t#roug# ma&ice or mani%est or proven neg&igence'<
Eot #aving een disc#arged %or an! o% t#e causes enumerated in t#e provision, (gi&vie, et' a&' are entit&ed to
t#e amounts t#e! respective&! seek to co&&ect %rom Madriga& "#ipping'
[12/]
Garcia vs. RuiJ (GR %-3! 1 Banuary 1%"3)
First Division, Torres (J): 4 concur
&acts' (n 88 7ugust 1/.0, Don Domingo 6arcia ! $asanova took command as skipper o% t#e merc#ant
steamer ,rene Drina, under a vera& contract wit# its owner, D' Bmeterio :ui* ! Drina, entered into in t#e
cit! o% Mani&a, under w#ic# 6arcia was to command t#e steamer in its vo!ages etween t#e ports o% Misamis
and in service as a tugC t#at t#is contract did not stipu&ate t#e time it was to continue in %orce or during w#ic#
t#e services were to e rendered' (n 11 June 1/./, upon 6arcia?s arriva& wit# t#e steamer in t#e port o%
+apinig, o% t#e town o% Ta&isa!an de Misamis, t#e s#ipowner :ui* wrote #im a &etter disc#arging #im, wit#
none o% t#e causes w#ic# Austi%! t#e dismissa& o% t#e captain or ot#er memer o% t#e crew were present' 6arcia
c&aimed t#at :ui* was under t#e o&igation o% pa!ing #im t#e sa&ar! o% K122 per mont# w#ic# #e #ad een
receiving unti& suc# time as 6arcia cou&d return to Mani&a, toget#er wit# #is passage mone!, and K>2 ! wa!
o% indemni%ication %or t#e damages su%%ered ! #is #aving een aandoned at a p&ace w#ere it was impossi&e
%or #im to support #imse&% ! t#e e3ercise o% #is ca&&ing' T#e c&aim was made to t#e marine aut#orities w#ere
:ui* denied t#e rig#t o% 6arcia'
(n 18 Ju&! 1/./, 6arcia %i&ed a comp&aint in an action o% &esser import pra!ing t#at a%ter t#e regu&ar
procedure Audgment e rendered against :ui*, %or t#e pa!ment o% t#e sa&ar! accruing in %avor o% 6arcia %rom
t#e 11 June 1/./, unti& suc# time as 6arcia cou&d return to t#e cit! o% Mani&a, toget#er wit# #is passage
mone!, K>2 damages, and t#e costs o% t#e action' ,n support o% #is comp&aint, #e attac#ed two petitions
presented to t#e marine aut#orities, and t#e :ui*? rep&!' (n 13 Ju&! 1/./, t#e court ordered t#at service o% t#e
comp&aint e #ad on :ui*' Dpon eing noti%ied ! t#e Austice o% t#e peace o% t#e said town, w#o de&ivered #im
a cop! o% t#e summons and o% t#e comp&aint, t#e de%endant re%used to accept t#e cop! o% t#e comp&aint or to
sign t#e noti%ication' For t#is reason, on motion o% 6arcia, :ui* #aving %ai&ed to appear, t#e &atter was
dec&ared in de%au&t and t#e comp&aint admitted as answered' T#e suit continued its course, and t#e decision
was noti%ied ! reading in open court in accordance wit# t#e provisions o% artic&es 8>4 and 8>>, in addition to
t#e pu&ication o% t#e edicts prescried ! artic&e 8>0 o% t#e &aw o% $ivi& Procedure' T#e parties were cited to
appear on 31 7ugust' (n&! 6arcia and #is attorne! appeared' T#e court in rendered Audgment in accordance
wit# 6arcia?s comp&aint'
(n 6arcia?s motion, an order was made %or t#e attac#ment o% t#e rea& and persona& propert! o% :ui* in t#e
sum o% K022' Eo persona&it! #aving een %ound, a preventative annotation was ! Audicia& mandate entered on
t#e ooks o% :ecorder o% Propert! s#owing t#e attac#ment o% a #ouse o% sustantia& materia& wit# an iron roo%,
e&onging to :ui*, situated in t#e s9uare o% t#e town o% Tago&oan o% t#e said district' (n 6arcia?s motion,
persona& service o% t#e Audgment rendered in t#e action was #ad on :ui*, w#o t#ereupon %i&ed written notice
o% appea& to t#e %ormer 7udiencia, w#ic# appea& was a&&owed ! an order entered on %o&io >1' T#e %ormer
7udiencia denied :ui*? motion to set aside t#e proceedings ! its decision o% 14 Eovemer 1.22, upon t#e
grounds e3pressed in said order'
T#e "upreme $ourt a%%irmed t#e appea&ed Audgment, wit# t#e costs against :ui*'
1. RuiJ ,ully a.are o, ter#s an+ ,acts o, co#plaint
@erein, :ui* was %u&&! aware o% t#e terms o% t#e comp&aint as a&so o% t#e %acts t#erein a&&eged,
ecause t#e written c&aim %i&ed ! 6arcia wit# t#e governor o% t#e district as sude&egate o% t#e marine
aut#orities, w#ic# c&aim was suse9uent&! reproduced in t#e comp&aint upon t#e same statement o% %acts, was
rep&ied to ! :ui* ! a statement o% t#e reasons %or #is conduct, and suse9uent&! upon eing cited and
noti%ied to appear in t#e court o% Misamis to answer to it in due %orm #e re%used to accept a cop! o% t#e
comp&aint or to sign an acknow&edgment o% services, t#ere! vo&untari&! ecoming in de%au&t, inasmuc# as #e
aso&ute&! %ai&ed to appear and did not a&&ege t#at #e was prevented ! %orce maAeure %rom doing so'
-. 5+#ission $y silence
@erein, not#ing #aving occurred to #ave prevented :ui* %rom appearing in t#e action to de%end
#imse&% against t#e %acts a&&eged ! 6arcia' T#us, t#e si&ence o% :ui* must e taken as an admission to t#ese
%acts'
3. :rinciple in 5rticle "/ Co+e o, Co##erce
T#e princip&e esta&is#ed ! artic&e >25 o% t#e $ode o% $ommerce is a &egis&ative sanction and
recognition o% 6arcia?s rig#tC not#ing appearing in an! wa! tending to deprive #im o% #is un9uestiona&e rig#t
to receive #is sa&ar! unti& #is return to t#e port w#ere #is contract %or an un&imited time was entered into, and
conse9uent&! t#e propriet! o% #is c&aim is un9uestiona&e' (7rtic&e >3> o% t#e $ode o% $ommerce') @erein,
6arcia was entit&ed to receive #is sa&ar! %rom 11 June 1/./, at t#e rate o% K122 per mont#, unti& #is return to
t#e cit! o% Mani&a, in w#ic# p&ace t#e contract was entered into under w#ic# #e was to command t#e steamer
,rene Drina as skipper, notwit#standing t#e %act t#at :ui* as s#ipowner disc#arged #im on t#e da! mentioned
in t#e mont# o% June'
/. 7o exception to t)e li#itation o, ri*)t to receive salary6 Bu+*#ent ,inal
T#e Audge o% %irst instance in #is decision &imited t#e rig#t o% 6arcia to receive #is sa&ar! to t#e time
o% t#e noti%ication o% t#e Audgment, w#ic# took p&ace on 18 "eptemer 1/./' 6arcia did not take an!
e3ception to t#is decision' (n t#e ot#er #and, 6arcia did not#ing ut appea& %rom t#e Audgment rendered
against #im ! de%au&t' T#e %ormer 7udiencia denied :ui*? motion to set aside t#e proceedings ! its decision
o% 14 Eovemer 1.22, upon t#e grounds e3pressed in said orderC and t#e $ourt is t#us prec&uded %rom
discussing in t#e decision t#e %orma& de%ects or errors o% procedure w#ic# #ave t#us een passed upon ! a
%ina& decision'
[122]
Haptico vs. 5n+erson (GR %3! 1 5u*ust 1%1)
"econd Division, Jo#nson (J): 3 concur, 1 concur in resu&t
&acts' (n 85 7pri& 1.18, @' $' 7nderson, a pi&ot on dut!, undertook to carr! out o% t#e river a vesse& named
Oesan Maru w#ic# #ad een disc#arging coa& and was going out &ig#t' Dp t#e river was anot#er steamer
&oading wit# sugar and a&ongside at t#e ow #atc# were two &ig#ters, one t#e "onci&&o, tied up against t#e
s#ip, and t#e Monserrat, %or w#ic# t#is damage is c&aimed ! Oap Tico T $(', was tied up a&ongside t#e
"onci&&o' T#e wind was strong and t#at t#e s#ip #ad een at work aout an #our or an #our and a #a&% in
turning around and getting out o% t#e river' T#ere was Aust are&! room to turn around, t#e river eing a &itt&e
wider t#at t#e &engt# o% t#e s#ip, and as t#e! pu&&ed out on t#e anc#or, w#ic# #ad een dropped in t#e river, it
was discovered t#at t#e anc#or #ad een %ou&ed ! t#e anc#or o% t#e s#ip aove' 1! t#is time t#e oat #ad
turned around wit# t#e ow down t#e stream #eaded out into t#e a! w#en t#is was discovered and t#e pi&ot
noticing t#is ordered s#ip?s o%%icers to s&ack out t#e c#ain, w#ic# was not done' 7&t#oug# t#e %irst mate o% t#e
s#ip was at t#e stern, #e did not give 7nderson an! warning t#at t#e stern o% t#e s#ip was approac#ing or
aout to approac# t#e &orc#a in 9uestion' T#e s#ip acked into t#e &orc#a and t#e prope&&er &ades cut t#roug#
t#e sides t#e widt# or aout nine p&anks on t#e side o% t#e &orc#a' T#e &orc#a suck in t#e river'
T#e action was commenced on 8. Ju&! 1.18 against @' $' 7nderson persona&&! and ;T#e ,&oi&o Pi&ots?
7ssociation< and t#e individua& memers t#ereo% to recover damages caused to t#e &orc#a Monserrat, w#ic#
e&onged to Oap Tico T $o' (n 80 7ugust 1.18, t#e de%endants (Francisco Bc#evarria, Mariano 7gui&ar, F$
$airns, @$ 7nderson, and t#e ,&oi&o Pi&ots? 7ssociation) #aving %ai&ed to answer t#e petition, Oap Tico moved
%or a Audgment ! de%au&t, w#ic# motion was granted ! t#e &ower court upon t#e same da!' "aid order or
Audgment ! de%au&t was, upon motion o% t#e de%endants, set aside' T#e &ower court reac#ed t#e conc&usion
t#at t#e a&&eged damages #ad not een caused ! t#e neg&igence o% t#e de%endants, or ! an! one o% t#em, and
aso&ved t#em %rom a&& &iai&it! under t#e comp&aint' From t#e Audgment o% t#e &ower court, Oap Tico
appea&ed'
1. Custo#s 5+#inistrative Circular 1-- su$stitute+ $y Custo#s #arine Circular 136 :ara*rap)
22
,n an e%%ort to otain a cop! o% t#e $ustoms 7dministrative $ircu&ar 188, it was discovered t#at said
circu&ar #as een sustituted ! $ustoms Marine $ircu&ar 10, and t#at said circu&ar #ad een in %orce at t#e
time o% t#e a&&eged accident' Man! o% t#e provisions o% said $ircu&ar 188 are inc&uded in said $ustoms Marine
$ircu&ar 10' Paragrap# 44 o% said circu&ar provides t#at ;a pi&ot s#a&& e #e&d responsi&e %or t#e direction o% a
vesse& %rom t#e time #e assumes contro& t#ereo% unti& #e &eaves it anc#ored %ree %rom s#oa&: Provided, T#at #is
responsii&it! s#a&& cease at t#e moment t#e master neg&ects or re%uses to carr! out #is instructions'<
-. Dxa#ination o, ,acts support a$solution ,ro# lia$ility
Oap Tico #as %ai&ed to ring t#e evidence in t#e case and t#ere%ore t#e court cannot e3amine t#e
evidence' T#e $ourt can on&! e3amine t#e %acts set out in t#e %inding o% %acts made ! t#e &ower court %or t#e
purpose o% ascertaining w#et#er or not said %acts are su%%icient to Austi%! its conc&usion' T#e &ower court %ound
speci%ica&&! t#at t#e crew o% t#e s#ip %ai&ed to oe! t#e orders o% t#e pi&ot, 7nderson' T#at eing true, it must
%o&&ow t#at 7nderson and t#e ot#er de%endants are not &ia&e %or damages in t#e present case'
[12]
Hu Con vs. ;pil (GR 1"1%2! -% <ece#$er 1%1)
Bn 1anc, 7rau&&o (J): 5 concur
&acts' Ou $on, a merc#ant and a resident o% t#e town o% "an Eico&as, o% t#e cit! o% $eu, engaged in t#e sa&e
o% c&ot# and domestic artic&es and #aving a s#are in a s#op, or sma&& store, situated in t#e town o% $atmon, o%
said province, #ad severa& times c#artered %rom Earciso +auron, a anca named Maria e&onging to t#e &atter,
o% w#ic# 6&icerio ,pi& was master and Justo "o&amo, supercargo, %or t#e transportation o% certain merc#andise
and some mone! to and %rom t#e said town and t#e port o% $eu' (n 10 (ctoer, 1.11 Ou $on c#artered t#e
said anca %rom +auron %or t#e transportation o% various merc#andise %rom t#e port o% $eu to $atmon, at t#e
price o% P54 %or t#e round trip, w#ic# merc#andise was &oaded on oard t#e said cra%t w#ic# was t#en at
anc#or in %ront o% one o% t#e graded %i&&s o% t#e w#ar% o% said port' ,n t#e a%ternoon o% t#e %o&&owing da!, #e
de&ivered to t#e ot#er two de%endants, ,pi&, and "o&amo, master and supercargo, respective&!, o% t#e anca, t#e
sum o% P542, w#ic# was in a trunk e&onging to Ou $on and was taken c#arge o% ! ,pi& and "o&amo, w#o
received t#is mone! %rom Ou $on, %or t#e purpose o% its de&iver! to t#e &atter?s s#op in $atmon %or t#e
purc#ase o% corn in t#is town' F#i&e t#e mone! was sti&& in said trunk aoard t#e vesse&, on t#e nig#t o% 1/
(ctoer, t#e time sc#edu&ed %or t#e departure o% t#e Maria %rom t#e port o% $eu, said master and said
supercargo trans%erred t#e P542 %rom Ou $on?s trunk, w#ere it was, to t#eirs, w#ic# was in a stateroom o% t#e
anca, %rom w#ic# stateroom ot# t#e trunk and t#e mone! disappeared during t#at same nig#t, and t#at t#e
investigations, made to ascertain t#eir w#ereaouts, produced no resu&t'
Ou $on roug#t action to ena&e #im to recover %rom ,pi&, +auron, and "o&amo in so&idum t#e sum o% P542
&ost' Ou $onased #is action on t#e c#arge t#at t#e disappearance o% said sum was due to t#e aandonment,
neg&igence, or vo&untar! reac#, on t#e part o% t#e de%endants, o% t#e dut! t#e! #ad in respect to t#e sa%e=
keeping o% said sum'
7t t#e termination o% t#e tria&, t#e court, #e&d t#at t#e so&e cause o% t#e disappearance o% t#e mone! %rom t#e
said anca was t#e neg&igence o% t#e master and t#e supercargo, ,pi& and "o&amo, respective&!, and t#at
+auron was responsi&e %or t#at neg&igence, as owner o% t#e anca, pursuant to artic&es 4/>, 4/0, and >1/ o%
t#e $ode o% $ommerce, Ou $on t#ere%ore eing entit&ed to recover t#e amount &ost' Judgment was rendered
on 82 7pri& 1.15, in %avor o% Ou $on and against ,pi&, et' a&' Aoint&! and severa&&! %or t#e sum o% P542, wit#
interest t#ereon at t#e rate o% >I per annum %rom t#e date o% %i&ing o% t#e comp&aint, 85 (ctoer 1.11, wit#
costs' Ou $on was aso&ved %rom t#e counterc&aim' From t#is Audgment ,pi&, et' a&' e3cepted and at t#e same
time moved %or a new tria&' T#eir motion was denied, to w#ic# ru&ing t#e! a&so e3cepted, and, t#roug# t#e
proper i&& o% e3ceptions, entered an appea& to t#e "upreme $ourt'
T#e "upreme $ourt a%%irmed t#e Audgment appea&ed %rom, wit# t#e costs o% t#is instance against ,pi&, et' a&'
1. =aster an+ supercar*o *ave no satis,actory explanation in re*ar+ +isappearance o, trunk an+
#oney
T#e master and t#e supercargo, gave no satis%actor! e3p&anation in regard to t#e disappearance o% t#e
trunk and t#e mone! t#erein contained, %rom t#e stateroom in w#ic# t#e trunk was, nor as to w#o sto&e or
mig#t #ave sto&en it' T#e master and t#e supercargo o% t#e anca mere&! testi%ied t#at t#e! did not know w#o
t#e roers were, %or, w#en t#e roer! was committed, t#e! were sound as&eep, as t#e! were tired, and t#at
#e e&ieved t#at t#e guard "imeon a&so %e&& as&eep ecause #e, too, was tired' 1ot# o% t#em testi%ied t#at t#e
sma&& window o% t#e stateroom #ad een roken, and t#e %irst o% t#em, i' e', t#e master, stated t#at a&& t#e
window=&inds #ad een removed %rom t#e windows, as we&& as part o% t#e partition in w#ic# t#e! were and
t#at t#e trunk in w#ic# t#e mone! was contained cou&d #ave een passed t#roug# said sma&& window, ecause
t#e $#inaman?s trunk, w#ic# di%%ered ut a &itt&e %rom t#e one sto&en, cou&d e passed t#roug# t#e same
opening' @owever, no evidence w#atever was o%%ered to prove t#at it mig#t #ave een possi&e to remove t#e
trunk %rom t#e stateroom t#roug# t#e opening made ! t#e reaking o% t#e sma&& window, neit#er was t#e si*e
o% t#e trunk proven, so t#at it mig#t e veri%ied w#et#er t#e statement made ! t#e &atter was true, vi*', t#at it
mig#t #ave een possi&e to remove %rom t#e stateroom t#roug# said opening t#e trunk in w#ic# t#e P542
were contained, w#ic# sum, t#e same as t#e trunk, its container, #ad not een %ound, in spite o% t#e
investigation made %or t#e purpose' Furt#ermore, it was not proven, nor is t#ere an! circumstantia& evidence
to s#ow, t#at t#e roer! in 9uestion was committed ! persons not e&onging to t#e cra%t'
-. Loss occurre+ t)rou*) #ani,est ,ault an+ ne*li*ence o, ;pil! et. al.6 7o ,orce #a?eure
T#e &oss or disappearance o% t#e propert! o% Ou $on, w#ic#, were in t#e possession o% ,pi& and
"o&amo, t#e master and t#e supercargo o% t#e anca Maria, occurred t#roug# t#e mani%est %au&t and neg&igence
o% t#e &atter, %or, not on&! did t#e! %ai& to take t#e necessar! precautions in order t#at t#e stateroom containing
t#e trunk in w#ic# t#e! kept t#e mone! s#ou&d e proper&! guarded ! memers o% t#e crew and put in suc#
condition t#at it wou&d e impossi&e to stea& t#e trunk %rom it or t#at persons not e&onging to t#e vesse&
mig#t %orce an entrance into t#e stateroom %rom t#e outside, ut a&so t#e! did not e3press&! station some
person inside t#e stateroom %or t#e guarding and sa%e=keeping o% t#e trunk, %or it was not proven t#at t#e
cain=o! 6arie& s&ept t#ere, nor t#at t#e ot#er cain=o!, "imeon "o&amo, was on guard t#at nig#t' (n t#e
contrar!, it was proven t#at a&& t#e peop&e on t#e vesse& s&ept sound&! t#at nig#tC w#ic# %act cannot, in an!
manner, serve t#em as an e3cuse, nor can it e accepted as an e3p&anation o% t#e statement t#at t#e! were not
aware o% w#at was t#en occurring on oard' ,% t#e trunk was actua&&! sto&en ! outsiders and removed t#roug#
t#e sma&& window o% t#e stateroom, a detai& w#ic# a&so was not proven, ut, on t#e contrar!, increases t#eir
&iai&it!, ecause it is ver! strange t#at none o% t#em w#o were si3 and were around or near t#e stateroom,
s#ou&d #ave #eard t#e noise w#ic# t#e roers must #ave made in reaking its window' 7&& o% t#ese
circumstances, toget#er wit# t#at o% its #aving een impossi&e to know w#o took t#e trunk and t#e mone!
and t#e %ai&ure to recover t#e one or t#e ot#er, make t#e conduct o% master and supercargo and o% t#e ot#er
memers o% t#e crew o% t#e anca, eminent&! suspicious and prevent t#e $ourt #o&ding t#at t#e disappearance
or &oss o% t#e mone! was due to a %ortuitous event, to %orce maAeure, or t#at it was an occurrence w#ic# cou&d
not #ave een %oreseen, or w#ic#, i% %oreseen, was inevita&e'
3. =anresa6 Lia$ility o, Carriers
Manresa, in #is $ommentaries on t#e $ivi& $ode (Vo&' 12 p' 003), in treating o% t#e provisions o% t#e
said code concerning transportation ! sea and ! &and o% ot# persons and t#ings, sa!s G?+iai&it! o% carriers'
H ,n order t#at a t#ing ma! e transported, it must e de&ivered to t#e carrier, as t#e $ode sa!s' From t#e time
it is de&ivered to t#e carrier or s#ipper unti& it is received ! t#e consignee, t#e carrier #as it in #is possession,
as a necessar! condition %or its transportation, and is o&iged to preserve and guard itC w#ere%ore it is ut
natura& and &ogica& t#at #e s#ou&d e responsi&e %or it' T#e $ode discovers in t#e re&ation o% a&& t#ese
e&ements t#e %actors w#ic# go to make up t#e conception o% a trust' and, taking into account t#at t#e de&iver!
o% t#e t#ing on t#e part o% t#e s#ipper is unavoida&e, i% t#e transportation is to take p&ace, esteems t#at, at
&east in certain respects, suc# trusts are necessar!'<
/. ;pil an+ Sola#o +epositories! are lia$le un+er 5rticle 133"! an+ 5rticles 1"1 an+ 1"- in
relation to 5rticles 1343 an+ 134/
,pi& and "o&amo, eing t#e depositaries o% t#e sum in 9uestion, and t#e! #aving %ai&ed to e3ercise %or
its sa%e=keeping t#e di&igence re9uired ! t#e nature o% t#e o&igation assumed ! t#em and ! t#e
circumstances o% t#e time and t#e p&ace, in pursuance o% t#e provisions o% artic&es 1>21 and 1>28, in t#eir
re&ation to artic&es 10/3 and 10/5, and as prescried in artic&e 1002, o% t#e $ivi& $ode, t#e! are &ia&e %or its
&oss or misp&acement and must restore it to Ou $on, toget#er wit# t#e corresponding interest t#ereon as an
indemnit! %or t#e &osses and damages caused #im t#roug# t#e &oss o% t#e said sum'
2. Lauron )as responsi$ility as to selection an+ supervision o, ;pil an+ Sola#o6 Lauron party to
contract .it) Hu Con
Earciso +auron was t#e owner o% t#e vesse& in w#ic# t#e &oss or misp&acement o% t#e P542 occurred,
o% w#ic# vesse&, 6&icerio ,pi& was master and Justo "o&amo, supercargo, ot# o% w#om were appointed to, or
c#osen %or, t#e positions t#e! #e&d, ! +auron #imse&%' T#e sum was de&ivered to t#e said master, ,pi&, and t#e
merc#andise to e transported ! means o% said vesse& %rom t#e port o% $eu to t#e town o% $atmon was &aden
! virtue o% a contract e3ecuted ! and etween Oucon and t#e owner o% t#e vesse&, Earciso +auron' "aid
vesse& was engaged in t#e transportation o% merc#andise ! sea and made vo!ages to and %rom t#e port o%
$eu to $atmon, and #ad een e9uipped and victua&ed %or t#is purpose ! its owner, wit# w#om, Ou $on
contracted %or t#e transportation o% t#e merc#andise w#ic# was to e carried %rom t#e port o% $eu to t#e
town o% $atmon'
. Gessel construe+6 Reus
T#e word vesse& serves to designate ever! kind o% cra%t ! w#atever particu&ar or tec#nica& name it
ma! now e known or w#ic# nautica& advancements ma! give it in t#e %uture' ($ommentaries on t#e $ode o%
$ommerce, in t#e 6enera& :eview o% +egis&ation and Jurisprudence, %ounded ! D' Jose :eus ! 6arcia, Vo&'
8, p' 13>')
3. Gessel construe+6 Dscric)e
7ccording to t#e Dictionar! o% +egis&ation and Jurisprudence ! Bscric#e, a vesse& is an! kind o%
cra%t, considering so&e&! t#e #u&&'
4. S)ip an+ Gessel construe+6 Blanco
1&anco, t#e commentator on mercanti&e &aw, in re%erring to t#e grammatica& meaning o% t#e words
;s#ip< and ;vesse&s,< sa!s, in #is work, t#at t#ese terms designate ever! kind o% cra%t, &arge or sma&&, w#et#er
e&onging to t#e merc#ant marine or to t#e nav!' 7nd re%erring to t#eir Auridica& meaning, #e adds: ;T#is does
not di%%er essentia&&! %rom t#e grammatica& meaningC t#e words Gs#ip? and Gvesse&? a&so designate ever! cra%t,
&arge or sma&&, so &ong as it e not an accessor! o% anot#er, suc# as t#e sma&& oat o% a vesse&, o% greater or &ess
tonnage' T#is de%inition comprises ot# t#e cra%t intended %or ocean or %or coastwise navigation, as we&& as t#e
%&oating docks, mud &ig#ters, dredges, dumpscows or an! ot#er %&oating apparatus used in t#e service o% an
industr! or in t#at o% maritime commerce' ' ' '< (Vo&' 1, p' 3/.')
%. Banca in present case a vessel
7ccording to t#e de%initions, t#e anca ca&&ed Maria, c#artered ! Ou $on %rom Earciso +auron, was
a ;vesse&<, pursuant to t#e meaning t#is word #as in mercanti&e &aw, t#at is, in accordance wit# t#e provisions
o% t#e $ode o% $ommerce in %orce'
1". ;pil is also consi+ere+ as captain6 5rticle "%
6&icerio ,pi&, t#e master o% t#e said anca, Maria, must a&so e considered as its captain, in t#e &ega&
acceptation o% t#is word' T#e same $ode o% $ommerce in %orce in t#ese ,s&ands compares, in its artic&e >2.,
masters wit# captains' ,t is to e noted t#at in t#e $ode o% $ommerce o% "pain t#e denomination o% arraeces is
not inc&uded in said artic&e as e9uiva&ent to t#at o% masters, as it is in t#e $ode o% t#ese ,s&ands'
11. 5rticle "%6 General Revie. o, Le*islation an+ Burispru+ence
$ommenting on 7rtic&e >2., t#e 6enera& :eview o% +egis&ation and Jurisprudence sa!s: ;T#e name
o% captain or master is given, according to t#e kind o% vesse&, to t#e person in c#arge o% it' T#e %irst
denomination is app&ied to t#ose w#o govern vesse&s t#at navigate t#e #ig# seas or s#ips o% &arge dimensions
and importance, a&t#oug# t#e! e engaged in t#e coastwise trade' Masters are t#ose w#o command sma&&er
s#ips engaged e3c&usive&! in t#e coastwise trade' For t#e purposes o% maritime commerce, t#e words Gcaptain?
and Gmaster? #ave t#e same meaningC ot# eing t#e c#ie%s or commanders o% s#ips'< (Vo&' 8, p' 1>/')
1-. 5rticle 243 o, t)e Co+e o, Co##erce
7rtic&e 4/0 o% t#e $ode o% $ommerce in %orce provides t#at ;T#e agent s#a&& e civi&&! &ia&e %or t#e
indemnities in %avor o% t#ird persons w#ic# arise %rom t#e conduct o% t#e captain in t#e care o% t#e goods
w#ic# t#e vesse& carriedC ut #e ma! e3empt #imse&% #ere%rom ! aandoning t#e vesse& wit# a&& #er
e9uipments and t#e %reig#t #e ma! #ave earned during t#e trip'<
7rtic&e >1/ o% t#e same $ode a&so prescries t#at ;T#e captain s#a&& e civi&&! &ia&e to t#e agent and
t#e &atter to t#e t#ird persons w#o ma! #ave made contracts wit# t#e %ormer H (1) For a&& t#e damages
su%%ered ! t#e vesse& and its cargo ! reason o% want o% ski&& or neg&igence on #is part, ,% a misdemeanor or
crime #as een committed #e s#a&& e &ia&e in accordance wit# t#e Pena& $ode' (8) For a&& t#e t#e%ts
committed ! t#e crew, reserving #is rig#t o% action against t#e gui&t! parties'<
1/. 5rticle -/ o, t)e 14-% Co+e o, Co##erce
T#e $ode o% $ommerce previous to t#e one now in %orce, to wit, t#at o% 1/8., in its artic&e >85,
provided t#at t#e agent or s#ipowner s#ou&d not e &ia&e %or an! e3cesses w#ic#, during t#e navigation,
mig#t e committed ! t#e captain and crew, and t#at, %or t#e reason o% suc# e3cesses it was on&! proper to
ring action against t#e persons and propert! o% t#ose %ound gui&t!'
12. Reasons ,or ,un+a#ental +i,,erence $et.een provisions o, ol+ an+ ne. Co+e o, Co##erce6
Dstasen
Bstasen, in #is work on t#e ,nstitutes o% Mercanti&e +aw (Vo&' 5, p' 8/2), makes t#e remarks, in
re%erring to t#e e3position o% reasons presented ! t#e $ode $ommission w#ic# prepared and presented %or
approva& t#e $ode o% $ommerce now in %orce, in w#ic# e3position o% reasons were set %ort# t#e %undamenta&
di%%erences etween t#e provisions contained in ot# codes' @e sa!s: ;7not#er ver! important innovation
introduced ! t#e $ode is t#at re&ative to t#e &iai&it! %or misdemeanors and crimes committed ! t#e captain
or ! memers o% t#e crew T#is is a matter o% t#e greatest importance on w#ic# a variet! o% opinions #as een
e3pressed ! di%%erent Auris=consu&ts' T#e o&d code dec&ares t#e captain civi&&! &ia&e %or a&& damage sustained
! t#e vesse& or its cargo t#roug# &ack o% ski&& or care on #is part, t#roug# vio&ations o% t#e &aw, or t#roug#
un&aw%u& acts committed ! t#e crew' 7s regards t#e agent or s#ipowner, it dec&ares in unmistaka&e terms
t#at #e s#a&& in no wise e &ia&e %or an! e3cesses w#ic#, during t#e navigation, ma! e committed ! t#e
captain and t#e crew' Dpon an e3amination, in t#e &ig#t o% t#e princip&es o% modern &aw, o% t#e standing &ega&
doctrine on t#e non&iai&it! o% t#e s#ipowner %or t#e un&aw%u& acts, t#at is, t#e crimes or 9uasi crimes,
committed ! t#e captain and t#e crew, it is oserved t#at it cannot ! maintained in t#e aso&ute and
categorica& terms in w#ic# it is %ormu&ated' ,t is we&& and good t#at t#e s#ipowner e not #e&d crimina&&! &ia&e
%or suc# crimes or 9uasi crimesC ut #e cannot e e3cused %rom &iai&it! %or t#e damage and #arm w#ic#, in
conse9uence o% t#ose acts, ma! e su%%ered ! t#e t#ird parties w#o contracted wit# t#e captain, in #is dou&e
capacit! o% agent and suordinate o% t#e s#ipowner #imse&%' ,n maritime commerce, t#e s#ippers and
passengers in making contracts wit# t#e captain do so t#roug# t#e con%idence t#e! #ave in t#e s#ipowner w#o
appointed #imC t#e! presume t#at t#e owner made a most care%u& investigation e%ore appointing #im, and,
aove a&&, t#e! t#emse&ves are una&e to make suc# an investigation, and even t#oug# t#e! s#ou&d do so, t#e!
cou&d not otain comp&ete securit!, inasmuc# as t#e s#ipowner can, w#enever #e sees %it, appoint anot#er
captain instead' T#e s#ipowner is in t#e same case wit# respect to t#e memers o% t#e crew, %or, t#oug# #e
does not appoint direct&!, !et, e3press&! or tacit&!, #e contriutes to t#eir appointment' (n t#e ot#er #and, i%
t#e s#ipowner derives pro%its %rom t#e resu&ts o% t#e c#oice o% t#e captain and t#e crew, w#en t#e c#oice turns
out success%u&, it is a&so Aust t#at #e s#ou&d su%%er t#e conse9uences o% an unsuccess%u& appointment, !
app&ication o% t#e ru&e o% natura& &aw contained in t#e Partidas, vi*', t#at #e w#o enAo!s t#e ene%its derived
%rom a t#ing must &ikewise su%%er t#e &osses t#at ensue t#ere%rom' Moreover, t#e Pena& $ode contains a
genera& princip&e t#at reso&ves t#e 9uestion under consideration, %or it dec&ares t#at suc# persons as undertake
and carr! on an! industr! s#a&& e civi&&! &ia&e, in de%au&t o% t#ose w#o ma! e crimina&&! &ia&e, %or t#e
misdemeanors and crimes committed ! t#eir suordinates in t#e disc#arge o% t#eir duties' T#e $ode o%
$ommerce in %orce omits t#e dec&aration o% non=&iai&it! contained in t#e o&d code, and c&ear&! makes t#e
s#ipowner &ia&e civi&&! %or t#e &oss su%%ered ! t#ose w#o contracted wit# t#e captain, in conse9uence o% t#e
misdemeanors and crimes committed ! t#e &atter or ! t#e memers o% t#e crew'<
1. Lauron civilly lia$le to Hu Con
,n accordance wit# t#e provisions o% t#e $ode o% $ommerce in %orce, Earciso +auron, as t#e
proprietor and owner o% t#e cra%t o% w#ic# 6&icerio ,pi& was t#e master and in w#ic#, t#roug# t#e %au&t and
neg&igence o% t#e &atter and o% t#e supercargo Justo "o&amo, t#ere occurred t#e &oss, t#e%t, or roer! o% t#e
P542 t#at e&onged to Ou $on and were de&ivered to said master and supercargo, a t#e%t w#ic#, on t#e ot#er
#and, does not appear to #ave een committed ! a person not e&onging to t#e cra%t, s#ou&d, %or said &oss or
t#e%t, e #e&d civi&&! &ia&e to Ou $on, w#o e3ecuted wit# +auron t#e contract %or t#e transportation o% t#e
merc#andise and mone! etween t#e port o% $eu and t#e town o% $atmon, ! means o% t#e said cra%t'
[123]
FS vs. Stea#s)ip @;slas &ilipinasA (GR 43/! 3" 8cto$er 1%1/)
Bn 1anc, $arson (J): 8 concur, 1 concur in resu&t, 8 dissent
&acts' T#e steams#ip ,s&as Fi&ipinas arrived at t#e port o% Mani&a %rom t#e %oreign port o% @ongkong on or
aout 14 7pri& 1.18, and t#at s#e #ad on oard .1/ tins o% prepared opium, weig#ing 812'/0 ki&os, w#ic# did
not appear on t#e s#ip?s mani%ests' T#e estimated va&ue o% t#is opium in Mani&a was etween P34,222 and
P52,222, t#e streamer #ad on oard ot#er cargo t#at t#e opium, a&& o% w#ic# was du&! mani%ested as re9uired
! &aw, ut t#at portion o% #er cargo consisting o% .1/ tins o% opium was not mani%ested and did not appear
upon an! written or t!pewritten mani%est o% t#e cargo aoard said vesse&' T#e steams#ip ,s&as Fi&ipinas was
sei*ed ! t#e customs aut#orities %or #aving on oard unmani%ested contraand cargo in vio&ation o% t#e
$ustoms 7dministrative 7ctC and at a #earing #e&d at t#e custom#ouse in Mani&a, at w#ic# one o% #er owners,
toget#er wit# #is counse&, was present, t#e ,nsu&ar $o&&ector o% $ustoms, a%ter #earing t#e evidence, imposed
a %ine o% P1,222 upon t#e vesse& under t#e provisions o% section 00 o% 7ct 344' 7n investigation was made !
t#e owners and t#e! disc#arged t#e captain and a&& ot#er memers o% t#e crew w#om t#e! e&ieved
imp&icated' 7 crimina& c#arge was a&so %i&ed against Jose 7rtiaga, t#e captain o% t#e s#ip, and $eci&io Jimene*,
anot#er o%%icer o% t#e s#ip, c#arging t#em wit# t#e crime o% i&&ega& importation o% t#e opium mentioned' "aid
persons were du&! tried, convicted and punis#ed %or said o%%ense' ("ee case />.1, $F, Mani&a')
T#e owners o% t#e steams#ip ,s&as Fi&ipinas (t#e Fernande* @ermanos) appea&ed %rom t#e order o% t#e ,nsu&ar
o% $ustoms imposing a %ine upon t#em %or vio&ating "ection 00 o% 7ct 344' T#e $F, o% Mani&a, con%ormed
wit# t#e decision o% t#e ,nsu&ar $o&&ector o% $ustoms, imposing t#e %ine o% P1,222 upon t#e vesse& %or %ai&ure
to #ave on oard a comp&ete mani%est in t#e prescried %orm o% a&& t#e cargo' @ence, t#e appea&'
T#e "upreme $ourt a%%irmed t#e Audgment entered in t#e &ower court, wit# t#e costs o% t#is instance against
Fernande* @ermanos'
1. Section 33 o, 5ct 322! as a#en+e+
7ct 344, section 00, as amended, provides ;Bver! vesse& %rom a %oreign port or p&ace must, under a
pena&t! o% not e3ceeding one t#ousand pesos %or %ai&ure, #ave on oard comp&ete written or t!pewritten
mani%ests o% a&& #er cargo'<
-. :ropriety o, a+#inistrative ,ine a #atter ,or le*islative +eter#ination
T#e 9uestion o% t#e propriet! o% suAecting t#e owners o% a vesse& to an administrative %ine %or t#e
vio&ation o% t#e customs=revenue &aws is a matter %or &egis&ative determination' T#e P#i&ippine +egis&ature #as
adopted t#is met#od o% punis#ment %or t#e in%raction o% certain provisions o% t#e $ustoms 7dministrative 7ct'
Far more stringent &aws and regu&ations #ave een adopted e&sew#ere' 1! t#e genera& maritime &aw, vesse&s
are made responsi&e %or t#e un&aw%u& acts o% t#eir masters and crewsC and t#is e3tends even to %or%eiture !
positive &aw'
3. S)ipo.ner #ay $e #a+e lia$le ,or +a#a*e+ cause+ $y i#proper navi*ation o, vessel6 5rnoul+!
=arine ;nsurance
,n #is work on Marine ,nsurance (0t# ed', vo&' 1, sec' 842), "ir Josep# 7rnou&d sa!s: ;7 s#ipowner
ma! ecome &ia&e to pa! &arge sums in conse9uence o% &oss o% &i%e, inAur! to person, or damage to propert!
caused ! t#e improper navigation o% #is vesse&'<
/. Basis o, responsi$ility o, o.ners o, vessels! .)et)er a*ency or res as *uilty t)in*! not i#portant
F#et#er t#is responsii&it! o% t#e owners o% vesse&s is ased on t#e &aw o% agenc! or on t#e t#eor!
t#at t#e vesse& (res) is t#e gui&t! t#ing, is o% no specia& importance' B3perience #as demonstrated t#at t#e
app&ication o% suc# pena&ties is necessar! %or t#e purpose o% protecting t#e revenues, and t#e &ives and
propert! intrusted to suc# common carriers'
2. <ura lex se+ lex6 :)ile vs. ()e 5nna
,n P#i&e vs' T#e 7nna (1 Da&&as, D' "', 828), under a statute providing %or t#e %or%eiture o% t#e vesse&,
it is said ;t#at t#e determination o% t#is cause wou&d certain&! produce conse9uences o% an important nature,
and eit#er render t#e act o% assem&! upon w#ic# it is %ounded, a dead &etter, or a productive instrument o%
pu&ic revenue' ,n governments di%%erent&! constituted, w#ere rega& pageantr!, or mi&itar! %orce, can invite or
compe& respect and oedience to t#e &aw, &itt&e danger is to e appre#ended %rom t#e occasiona& indu&gence o%
&earned men in t#eir ingenious and nove& comments upon t#e sense and e3pressions o% t#e &egis&atureC ut
under a democratica& constitution suc# as ours, s#ou&d t#e peop&e ac9uire a #ait o% !ie&ding to &ogica&
sut&eties and specious dec&amation, t#ere is no power to contro& t#e evi& t#at must ensueC t#e princip&es o%
Aurisprudence wou&d ecome weak and %&uctuating, and t#e virtue and dignit! o% t#e commonwea&t# wou&d e
contaminated and eventua&&! destro!ed' ,nstead, t#ere%ore, o% considering #ow to escape %rom t#e strong
e3pression o% t#e 7ct e%ore us, it is our dut! to give it t#e %u&&est operation t#at is necessar! %or suppressing
t#e misc#ie% to w#ic# t#e &egis&ative attention was origina&&! directedC and #ere we cordia&&! emrace t#e
position o% our antagonists, t#at t#e meaning o% t#ose w#o %ramed t#e &aw is t#e est guide to direct us in
carr!ing it into e3ecution' F#at t#en was t#e evi& comp&ained o%, at t#e time t#at t#is act was madeS T#e
atrocious %rauds committed upon t#e revenue' F#at was t#e remed! provided S ,t cou&d not e mere&! t#e
%or%eiture o% t#e smugg&ed goods, as t#e c&aimants insinuate, %or t#at was imposed ! an antecedent &awC ut
t#e trut# is, t#at ever! ot#er pena&t! #aving proved ine%%ectua&, t#is statute was enacted e3press&! to super add
t#e %or%eiture o% t#e vesse& or oat %rom w#ic# t#e goods s#ou&d e c&andestine&! un&aded'< Dnder t#e &aw t#e
vesse& was &ia&e to %or%eiture in case t#e goods were un&aden %rom #er e%ore due entr!, w#et#er t#e owners
were priv! to t#e transaction or ot#erwise' ;T#is #as een repeated&! ca&&ed a #ard &awC ut t#e trut# is, t#at
revenue &aws are o% a #ars#er nature t#an an! ot#ers, and necessari&! soC %or, t#e devices o% ingenious men
render it indispensa&e %or t#e &egis&ature to meet t#eir i&&icit practices wit# severer pena&ties'<
. Section 3"3 vis>Q>vis Section 33 o, 5ct 322
"ection 323 imposes certain duties upon t#e master o% a vesse& in connection wit# t#e administration
o% t#e customs regu&ationsC and provides pena&ties in case o% %ai&ure to per%orm t#emC and t#e vesse& or its
owners are not made responsi&e e3cept as provided in section 353 o% t#e 7ct' "ection 00 imposes t#e
aso&ute o&igation, under pena&t! %or %ai&ure, upon ever! vesse& %rom a %oreign port to #ave ;on oard
comp&ete written or t!pewritten mani%ests o% a&& #er cargo, signed ! t#e master'< F#ere t#e &aw re9uires a
mani%est to e kept or de&ivered, it is not comp&ied wit# un&ess t#e mani%est is true and accurate'
3. Car*o! inclusions
T#e term ;cargo< is not speci%ica&&! de%ined in t#e $ustoms 7dministrative 7ct, ut %rom t#e
&anguage used in severa& o% its provisions it is c&ear t#at t#e word ;cargo< as used in t#e section under
consideration inc&udes a&& goods, wares, and merc#andise aoard s#ip w#ic# do not %orm part o% t#e s#ip?s
stores' T#us, it cannot e said t#at t#e opium in 9uestion is not ;cargo< wit#in t#e meaning o% t#e custom
&aws'
4. Car*o6 Black1s La. <ictionary
1&ack?s +aw Dictionar! de%ines t#e term ;cargo< as %o&&ows: ;T#e &oad or &ading o% a vesse&C goods
and merc#andise put on oard a s#ip to e carried to a certain port' T#e &ading or %reig#t o% a s#ipC t#e goods,
merc#andise, or w#atever is conve!ed in a s#ip or ot#er merc#ant vesse&' 7 cargo is t#e &oading o% a s#ip or
ot#er vesse&, t#e u&k o% w#ic# is to e ascertained %rom t#e capacit! o% t#e s#ip or vesse&' T#e word emraces
a&& t#at t#e vesse& is capa&e o% carr!ing' T#e term ma! e app&ied in suc# a sense as to inc&ude passengers, as
we&& as %reig#t, ut in a tec#nica& sense it designates goods on&!'<
%. Car*o ex vi ter#ini6 Sea#ans vs. Lorin*
T#e word Gcargo? e3 vi termini, means t#e goods on oard o% t#e vesse&'< (ea%ans vs. Loring (C. .),
31 Eed. Cas., .3!, .30.)
1". Car*o6 &lana*an vs. <e#arest
;7 cargo is t#e &ading o% a s#ip or ot#er vesse&, t#e u&k or dimension o% w#ic# is to e ascertained
%rom t#e capacit! o% t#e s#ip or vesse&C and, w#ere t#e name o% t#e s#ip or vesse& is in t#e contract, #er
capacit! %or carr!ing or t#e u&k o% #er cargo need not e stated %or t#e word Gcargo? emraces a&& t#at t#e
vesse& is capa&e o% carr!ing'< (Elanagan vs. "e%arest, 3+ ). B. up. Ct. (3 (o1.), 173, 1*1.)
11. Car*o6 :)ile vs. 5nna
;T#e cargo is t#e &ading o% t#e vesse&, and, t#oug# ! rier! or cra%t, some artic&es mig#t e
introduced in t#e #o&d, wit#out t#e know&edge o% t#e owners or t#e captain, !et ever!t#ing w#ic# is put on
oard t#e vesse& is, in genera&, compre#ended in t#at description'< (Phile vs. Ahe Anna, 1 "allas (C..), 3!3.)
1-. 8.ners cannot $e allo.e+ to escape penalty! as suc) .ill +e,eat le*islative intention
T#e present case raises a 9uestion o% great importance to t#e practica& and success%u& working on t#e
$ustoms 7dministrative 7ct, and its decision wi&& determine w#et#er section 00 o% said 7ct is to e given
%orce and e%%ect ands is to #ave an! rea& va&ue as a provision designed to prevent %rauds upon t#e pu&ic
revenues' ,% t#e owners o% vesse&s were a&&owed to escape t#e pena&t! provided %or t#is %raud or attempt to
de%raud t#e revenues ! setting up p&eas o% innocence and ignorance, it is c&ear t#at t#e &egis&ative intention
wou&d e de%eated'
13. ;ntent o, t)e la.6 :)ile vs. ()e 5nna
7s said in t#e case o% P#i&e vs' 7nna, ;T#en, t#ere remains on&! t#e great point upon w#ic# t#e
counse& %or t#e c&aimnants seem c#ie%&! to re&!, to wit, t#eir innocence and ignorance wit# respect to t#e %raud
t#at #as een committed' T#ere is no evidence, indeed, t#at tends to s#ow t#at t#e owners o% t#e s#ip meant
to do an!t#ing un%air&!C ut, on t#e contrar!, t#at t#e mate roug#t t#e goods #it#er wit# t#e avowed intention
to de%raud t#em as we&& as t#e "tate' T#e 9uestion t#en recurs, w#at di%%erence does it make, w#et#er t#e!
knew o% it or notS @ere is a positive &aw t#at directs a due entr! o% a&& goods, wares, and merc#andise
imported into t#is "tate, under certain pena&ties, and one o% t#em is t#e %or%eiture o% t#e vesse& or oat %rom
w#ic# t#e! are un&aded ,t does not speak o% t#e know&edge o% an! person, ut seems to e studious&! worded
to avoid t#at construction' ,t is not a nove& &aw, t#roug# per#aps it is stricter now t#an %ormer&!C %or, in
Bng&and, it #as &ong e3isted, and e%ore t#e :evo&ution it was known in Penns!&vania' t#e &egis&ature #as
t#oug#t t#at not#ing e&se ound to oedience' ,% indeed, t#e &aw was dout%u& or &atitudina& ,admitting one
interpretation, w#ic# wou&d e Aust, and anot#er w#ic# wou&d e unAust, it wou&d ecome us to pre%er t#e
%ormer' 1ut i% t#e po&ic! o% t#e &egis&ature seems to ear #ard on t#e suAect, we are not to Audge and
determine upon its propriet! (t#at is a matter %or de&ieration o% t#ose w#o made t#e &aw), and #owever, unAust
it seems, we must ac9uiesce, or t#ere must e a disso&ution o% societ!' ,t must certaint! a%%ect ever! #umane
man to see t#e innocent su%%erC ut in societ! t#is is not strange or uncommonC and t#e distinction ma!
propert! e taken etween crimina& and civi& cases' T#e &aw never punis#es an! man crimina&&! ut %or #is
own act, !et it %re9uent&! punis#es #im in #is pocket %or t#e act o% anot#er'<
[124]
8)ta <evelop#ent Co. vs. Stea#s)ip :o#pey (GR -/24! 31 =arc) 1%-)
Bn 1anc, 7vancena ($J): 4 concur, 1 dissents
&acts' From 1.13, (#ta Deve&opment $o' was t#e owner o% a pier situated in Ta&omo 1a!, Davao' (n t#e
western side o% t#is pier were two groups o% posts, t#ree to a group, aout 82 %eet apart and aout 8 %eet %rom
t#e pier itse&%, w#ic# served as a protection to t#e pier against t#e impact o% vesse&s' 1etween 1.81 and 1.88,
t#is pier was repaired rep&acing suc# materia& as was not in good condition, and driving aout 142 pi&es o%
pagatpat and >2 o% mo&ave' 7ccording to t#e witness "i3to 1aao, t#e o%%icer in c#arge o% t#e %orest station o%
t#at province, pagatpat, w#en p&aced in sa&t water, &asts %rom %ive to si3 !ears' 7t aout 0:22 a'm' o% 83 Ju&!
1.83, t#e steams#ip Pompe!, in command o% $aptain 7&%redo 6a&ve* and possessing a certi%icate o% pu&ic
convenience issued ! t#e $ommissioner o% Pu&ic Dti&it! in t#e name o% ;T#e Eationa& $oa& $ompan!,<
carr!ing cargo consisting principa&&! o% %&our and rice %or (#ta, docked a&ongside t#e said pier' T#e s#ip
docked wit# #er ow %acing towards t#e &andC and %astened #er ropes to t#e posts on t#e pier' T#e evidence
s#ows t#at, previous&!, ot#er s#ips docking a&ongside t#e said pier #ad t#e ow %acing towards t#e &and and
%astened a rope to a tree situated %art#er west on t#e eac#, a precaution taken to avoid t#e s#ip %rom getting
too c&ose to t#e pier' F#en t#e Pompe! docked, s#e did not stretc# a rope to t#e tree on t#e s#ore, neit#er did
s#e drop #er ow anc#ors' 7%ter eing t#us docked t#e! proceeded to un&oad t#e %&our and rice w#ic# was %irst
deposited on t#e pier and &ater transported to (#ta?s ware#ouse on &and, w#ere it was o%%icia&&! receipted %or'
T#e work o% disc#arging and t#e #au&ing o% t#e cargo to t#e ware#ouse o% (#ta was done wit#out an!
inter%erence on t#e part o% (#ta and e3c&usive&! ! &aorers and t#e crew t#e s#ip' T#e un&oading o% t#e cargo
on to t#e pier done in a #urr! and t#eir eing ut 14 or 82 &aorers engaged in t#e #au&ing o% t#e same to
(#ta?s ware#ouse, a &arge amount o% cargo accumu&ated on t#e dock, wit# t#e resu&t t#at at 11:12 a'm' t#e pier
sank wit# a&& t#e merc#andise'
1roug#t to t#e tria& court, t#e court sentenced "teams#ip Pompe!, 7&%redo 6a&ve*, and t#e Eationa& $oa&
$ompan!, to pa! (#ta Deve&opment t#e sum o% P/,440'2>, as damages su%%ered ! t#e &atter ! reason o% t#e
destruction o% its pier and t#e &oss o% its merc#andise t#en stored on said pier' "teams#ip Pompe!, et' a&'
appea&ed'
T#e "upreme $ourt a%%irmed t#e Audgment appea&ed %romC wit# costs against "teams#ip Pompe!, et' a&'
1. Current exist in t)e +irection ,ro# .est to east6 Current ,orce+ s)ip to.ar+s t)e pier .)ic)
i#pact results in its sinkin*
@erein, at t#e time t#e pier sank t#ere was a current %rom west to east' 7ccording to $aptain $a&vo,
and Audging ! t#e condition o% t#e sea appears %rom one o% t#e p#otograp#s presented in evidence, t#ere was
a strong undercurrent' T#e %&our w#ic# %&oated a%ter t#e sinking o% t#e dock dri%ted %rom west to east' T#e pier,
w#en it sank, &eaned towards t#e east as t#e posts, w#ic# did not co&&apse comp&ete&!' 7%ter sinking o% t#e pier
t#e two groups o% pi&es t#at served as a de%ense a&so &eaned towards t#e east, going e!ond t#e western &ine
%ormer&! occupied ! t#e pierC and t#e #u&& o% t#e s#ip came to a stop at a point e!ond w#ere t#e pi&es o%
de%ense %ormer&! stood and in w#ic# a man ma! e seen standing on t#e edge o% t#e sunken pier supporting
#imse&% on t#e #u&& o% t#e s#ip (%rom t#e p#otograp# taken a%ter t#e accident)' ,n view o% a&& o% t#ese
circumstances it is evident t#at t#e current %orced t#e s#ip towards t#e pier, t#e impact o% w#ic# caused it to
sink' T#e dock sank on account o% t#e impact o% t#e s#ip as a resu&t o% t#e strong current at t#e timeC t#at t#e
s#ip was not %astened wit# a rope to a tree on s#ore and t#at t#e ow anc#ors #ad not een dropped'
-. C)allen*e to corporate personality .it)out #erit
@erein, "teams#ip Pompe!, et' a&' c#a&&enged t#e persona&it! o% (#ta Deve&opment $o' as a du&!
organi*ed corporation' 1ut esides t#e %act t#at t#ere is evidence o% t#is persona&it!, t#e %ormer cannot
c#a&&enge it a%ter #aving acknow&edged same w#en entering into t#e contract wit# t#e &atter as suc#
corporation %or t#e transportation o% its merc#andise'
3. 5rticle 1%! Co+e o, Co##erce
7rtic&e >1. o% t#e $ode o% $ommerce provides t#at t#e captain s#a&& e answera&e %or t#e cargo %rom
t#e moment t#at it is de&ivered to #im at t#e w#ar% or a&ongside t#e s#ip in t#e #aror o% emarkation unti&
de&ivered on t#e s#ore or w#ar% o% t#e port o% disc#arge' Dnder t#is provision o% t#e &aw it is t#e de&iver! o%
t#e cargo at t#e port o% disc#arge t#at terminates t#e captain?s responsii&it! as to t#e cargo'
/. =erc)an+ise on +ock not yet +elivere+
F#en t#e merc#andise was &ost on account o% t#e sinking o% t#e dock, it #ad not !et een de&ivered
and conse9uent&! it was under t#e responsii&it! o% t#e captain' @erein, t#e Eationa& $oa& $ompan!, as t#e
operator, is responsi&e %or t#e indemnities arising %rom t#e &ack o% ski&& or neg&igence o% t#e captain' (7rtic&es
4/0 and >1/ o% t#e $ode o% $ommerce')
2. 5rticles 243 an+ 433 Co+e o, Co##erce inapplica$le in present case
,t cannot e said t#e &iai&it! o% t#e ot#er de%endants is susidiar! and &imited to w#at t#e steams#ip
Pompe! ma! answer %or' "uc# argument, seeming&! ased upon artic&e 4/0 o% t#e $ode o% $ommerce w#ic#
aut#ori*es t#e s#ipowner to aandon t#e s#ip wit# a&& its tack&e and %reig#t earned during t#e vo!age in order
to answer %or #is &iai&it! to t#ird persons, is inapp&ica&e, %or t#e reason t#at t#ere was no aandonment o% t#e
s#ip' T#e $ourt does not e&ieve t#at "teams#ip Pompe!, et'a&' ased t#eir contention upon artic&e /30 w#ic#
re%ers to co&&isions, ecause t#at is not t#e case #ere'
[>] #overn%ent vs. 'nchausti 7 Co., see [0+]
[12%]
(riton ;nsurance vs. Bose (GR 1"341 an+ 1"31/! 1/ Banuary 1%1)
First Division, Jo#nson (J): 4 concur
&acts' 7 certain consignment o% %&our %or eac# o% t#e %irms ;$onne&& 1rot#ers $ompan!< and ;F' F'
"tevenson T $ompan!,< arrived at t#e port o% Mani&a on t#e steams#ip Prin* "igismund, in t#e %irst da!s o%
Januar! 1.15' "aid %irms entered into a vera& contract wit# 7nge& Jose, ! w#ic# said cargoes o% %&our were
to e transs#ipped %rom said steams#ip Prin* "igismund, to t#e odegas o% said %irms, &ocated on t#e 1inondo
cana& in t#e cit! o% Mani&a' Jose, in transs#ipping said cargoes o% %&our, used t#e &orc#a Petroning' ,t is not
denied t#at said &orc#a was a new one and was du&! &icensed %or t#e purpose %or w#ic# it was used in t#e
present case' During t#e transs#ipment, t#e said &orc#a sprung a &eakC t#at water entered t#e same and t#e
cargoes o% %&our were damaged' "aid cargoes o% %&our were p&aced on said &orc#a' (n 4 Januar! 1.15, $' 1'
Ee&son, a marine surve!or, e3amined said cargoes o% %&our %or t#e insurance companies' (n or aout Januar!
0 or /, 1.15, t#e cargoes o% %&our were de&ivered to t#e respective companies, ;$onne&& 1rot#ers $ompan!,<
and ;F' F' "tevenson T $ompan!,< and were ! t#em accepted, wit#out protest' "aid companies &ater a&so
paid t#e c#arges o% transportation to Jose, wit#out protest' +ater, or on or aout t#e 81st or 88d o% Januar!,
1.15, a %orma& protest was made ! eac# o% t#e companies in eac# o% said causes' +ater t#e damage done to
said cargoes o% %&our was paid ! t#e said insurance companies, to t#e respective owners o% t#e same'
T#ose actions are now roug#t ! t#e insurance companies, upon t#e t#eor! t#at t#e! #ave een surogated to
t#e rig#ts o% t#e owners o% said cargoes o% %&our' Dpon t#e %oregoing %acts, t#e &ower court, ru&ed t#at ;wit#out
discussing t#e ot#er 9uestions invo&ved in t#e case, t#e court is o% t#e opinion t#at under artic&e 3>> o% t#e
$ode o% $ommerce, and t#e ru&e &aid down in t#e case o% t#e 6overnment o% t#e P#i&ippine ,s&ands vs'
,nc#austi T $o' (85 P#i&' :ep', 314), recover! is arred, t#roug# t#e %ai&ure o% t#e assignee to present a c&aim
%or damages wit#in twent!=%our #ours %rom t#e time o% t#e de&iver! o% t#e %&our' T#e court appreciates t#e
%orce o% t#e p&ainti%%?s contention, t#at artic&es 3>> (supra) app&ies on&! to river and &and transportation, ut
t#e ana&og! etween t#e present case and t#e ,nc#austi case is so c&ose, t#at t#e distinction, i% an!, ma! est e
drawn ! t#e "upreme $ourt itse&%, and not ! an in%erior court'<
T#e "upreme $ourt a%%irmed t#e Audgment o% t#e &ower court as it is o% t#e opinion, wit#out a %urt#er
discussion, t#at t#e ru&e o% &aw 6overnment o% t#e P#i&ippine ,s&ands vs' ,nc#austi T $o' announced is
app&ica&e to t#e %acts in t#e present case'
[1/0] tandard 4acuu% Dil vs. Lu$on tevendoring, see [13/]
[1/1] &aer enior 7 Co.vs. Cia =ariti%a. see [10/]
[1-]
FS5 vs. Stea#s)ip Ru$i (GR %-32! 13 7ove#$er 1%12)
Bn 1anc, $arson (J): 8 concur, 1 concur in resu&t, 8 dissent
&acts' (n . Feruar! 1.13, "teamer ;:ui< arrived in t#e cit! o% Mani&a %rom a coastwise port ut w#i&e on a
continuous vo!age %rom t#e %oreign port o% @ongkong' 7t t#e time o% #er arriva& in t#e port o% Mani&a s#e
#ad on oard concea&ed in an unknown p&ace 13'3/2 ki&os o% opium and 8'>82 ki&os o% morp#ine' 7t t#e same
time t#e steamer #ad ot#er cargo w#ic# was du&! mani%ested as re9uired ! &aw, and t#at t#e said opium and
morp#ine were not mani%ested' F#i&e t#e steamer was &!ing in t#e #aror two memers o% t#e steamer?s
crew, one known as a Gcoa& passer? and t#e ot#er as a Gdonke! man,? attempted to disc#arge t#e opium and
morp#ine %rom t#e vesse& ut in doing so de&ivered it to secret service agents o% t#e 1ureau o% $ustoms'
T#ereupon t#e steamer was sei*ed and t#e $o&&ector o% $ustoms imposed a pena&t! o% P422 on account o% t#e
vio&ation o% section 00 o% 7ct 344, t#e usua& proceedings #aving een %o&&owed in imposing t#e pena&t!'
T#e Dnited "tates and t#e ,nsu&ar $o&&ector o% $ustoms app&ied wit# t#e $ourt o% First ,nstance o% Mani&a %or
a petition %or a Audgment con%irming t#e action o% t#e ,nsu&ar $o&&ector o% $ustoms in imposing an
administrative %ine on t#e steams#ip :ui %or ringing unmani%ested cargo into t#e port o% Mani&a' T#e
"teams#ip :ui was represented ! Farner, 1arnes T $o' (+td'), genera& agents in t#e P#i&ippine ,s&ands %or
#er owners' T#e tria& Audge dismissed t#e petition on t#e ground t#at ;t#ere was no know&edge on t#e part o%
t#e master o% t#e vesse& o% t#e opium and morp#ine, and so %ar as #e was concerned it was not cargo' @e eing
t#e master o% t#e vesse&, w#o s#ou&d make mani%ests o% a&& cargo, cou&d not mani%est t#at w#ic# #e did not
know o%, and t#e vesse& cou&d not know more or #ave know&edge o% more t#an #e #ad, %or #is know&edge was
t#at o% t#e vesse&' @ence, t#e appea&'
T#e "upreme $ourt reversed t#e Audgment entered in t#e court e&ow, wit# t#e costs o% t#is instance de o%icio,
and ordered t#at t#e record s#ou&d e remanded to t#e court e&ow wit# instructions to enter t#e appropriate
orders in accord wit# t#e pra!er o% t#e petition'
1. FS vs. Stea#s)ip ;slas &ilipinas in point
,n t#e recent&! decided case o% t#e Dnited "tates o% 7merica and t#e ,nsu&ar $o&&ector o% $ustoms vs'
T#e "teams#ip ,s&as Fi&ipinas, represented ! #er owners Fernande* @ermanos (8/ P#i&' :ep', 8.1), w#erein
t#e %acts were ver! simi&ar to t#ose stipu&ated in t#e court e&ow, t#e $ourt ru&ed adverse&! to most o% t#e
contentions o% t#e appe&&ee in said case, at t#e same time sustaining contentions w#ic# are sustantia&&!
identica& wit# t#ose upon w#ic# t#e present appe&&ants rest t#eir appea&'
-. <istinction $et.een FS vs. Stea#s)ip ;slas &ilipinas an+ present case
,n t#e %ormer case, #owever, no rea& 9uestion arose as to t#e %act t#at t#e unmani%ested cargo came
%rom a %oreign portC and it c&ear&! appeared t#at t#e captain o% t#e vesse& wi&&%u&&!, and wit# intent to smugg&e
and to import pro#iited drugs into t#e P#i&ippine ,s&ands, omitted t#e goods %rom t#e mani%est' T#e present
case is to e distinguis#ed %rom t#at case in t#at it is e3press&! stipu&ated t#at t#e time w#en and t#e p&ace
w#ere t#e unmani%ested goods were p&aced on oard t#e :ui were unknown to t#e de%endants, t#ese goods
#aving een discovered on . Feruar! 1.13, a%ter t#e vesse&, w#ic# #ad arrived in Mani&a %rom @ongkong on
32 Januar! 1.13, #ad touc#ed, in t#e course o% #er vo!age, at t#e ports o% Mangarin, ,&oi&o, $eu, and
returned to Mani&a a second timeC and %urt#er ecause it does not appear t#at t#e captain, or an! o% t#e o%%icers
o% t#e :ui #ad an! know&edge o% t#e presence o% t#e unmani%ested goods on t#e s#ip, t#ese goods #aving
een roug#t on oard surreptitious&! ! two memers o% t#e crew, w#o attempted to &and t#em in Mani&a
wit#out t#e know&edge and against t#e wis#es o% t#e owners, t#e captain and t#e ot#er o%%icers o% t#e s#ip, and
despite t#eir di&igent e%%orts to prevent t#e smugg&ing o% suc# goods into t#e P#i&ippine ,s&ands'
3. Section 33 o, 5ct 322! as a#en+e+ $y Section - o, 5ct 1-32
T#e pena&ties were imposed ! t#e $o&&ector o% $ustoms on c#arges o% vio&ations o% t#e provisions o%
section 00 o% 7ct Eo' 344, as amended ! section 8 o% 7ct Eo' 1834, w#ic# is as %o&&ows: ;Bver! vesse& %rom
a %oreign port or p&ace must, under a pena&t! o% not e3ceeding %ive #undred do&&ars %or %ai&ure, #ave on oard
comp&ete written or t!pewritten mani%ests o% a&& #er cargo, signed ! t#e master' 7&& o% t#e cargo intended to
e &anded at a port in t#e P#i&ippine 7rc#ipe&ago must e descried in separate mani%ests %or eac# port o% ca&&
t#erein' Bac# mani%est s#a&& inc&ude t#e port o% departure and t#e port o% de&iver!, wit# t#e marks, numers,
9uantit!, and description o% t#e packages and t#e names o% t#e consignees t#ereo%' Bver! vesse& %rom a %oreign
port or p&ace must #ave on oard comp&ete mani%ests o% passengers, immigrants and t#eir aggage, in t#e
prescried %orm, setting %ort# t#eir destination and a&& particu&ars re9uired ! t#e immigration &awsC and ever!
suc# vesse& s#a&& #ave prepared %or presentation to t#e proper customs o%%icia&, upon arriva& in ports o% t#e
P#i&ippines, a comp&ete &ist o% a&& s#ip?s stores t#en on oard, w#ic# must e certi%ied t#ereto ! t#e master
t#ereo%' Bver! vesse& entering P#i&ippine ports %rom a %oreign port must carr! mani%ests as #ereine%ore
provided, w#et#er s#e carries cargo, passengers, or immigrants and t#eir aggage, or not' ,% an! suc# vesse&
does not carr! cargo, passengers, or immigrants, t#e mani%ests must s#ow t#at no cargo is carried %rom t#e
port o% departure to t#e port o% destination in t#e P#i&ippine 7rc#ipe&ago' Mani%ests in sustantia& comp&iance
wit# t#ese re9uirements s#a&& e accepted, w#et#er in Bng&is# or in t#e &anguage o% t#e nation to w#ic# t#e
vesse& e&ongs' ,% in a &anguage ot#er t#an Bng&is#, t#e master must %urnis# t#e numer o% trans&ated copies
re9uired ! t#e $o&&ector'<
/. 7ot)in* in statute ?usti,ies in,erence t)at penalties prescri$e+ ,or )avin* on $oar+
un#ani,este+ *oo+s are applica$le only .)ere it a,,ir#atively appears t)at suc) *oo+s )ave $een
i#porte+ ,ro# a$roa+
F#i&e t#e pena&t! prescried in section 00 o% 7ct 344 can e incurred on&! ! vesse&s ;%rom a %oreign
port or p&ace,< t#ere is not#ing in t#e statute w#ic# Austi%ies t#e in%erence t#at t#e pena&ties prescried %or
#aving on oard unmani%ested goods are app&ica&e on&! in cases w#ere it a%%irmative&! appears t#at suc#
goods #ave een imported %rom aroad' Dnder t#e e3press terms o% t#e statute t#e pena&t! ma! e imposed i%
an! unmani%ested cargo is %ound on oard suc# vesse&s, and t#ere is no provision, e3press or imp&ied, w#ic#
%orids its imposition in t#e asence o% proo% as to t#e p&ace w#ere or t#e time w#en suc# unmani%ested cargo
is p&aced aoard t#e vesse&'
2. ;, t)e penalty is i#pose+ only upon pro+uction o, proo, t)at *oo+s surreptitiously place+ on
$oar+ at so#e ,orei*n port .oul+ +e,eat purpose o, t)e la.
(ne o% t#e purposes soug#t to e attained ! pena&i*ing t#e %ai&ure to mani%est a&& cargo on oard suc#
vesse&s is to prevent t#e smugg&ing into t#e ,s&ands o% %oreign goodsC ut it wou&d tend &arge&! to de%eat t#is,
as we&& as t#e ot#er purposes and oAects soug#t to e attained ! t#e statute, i% t#e pena&t! prescried %or
#aving on oard unmani%ested goods cou&d on&! e imposed upon t#e production o% a%%irmative proo% t#at
suc# goods #ad een surreptitious&! p&aced on oard at some %oreign port rat#er t#an upon t#e #ig# seas or at
an! one o% various ports at w#ic# vesse&s %rom %oreign ports are permitted to touc# in t#e P#i&ippine ,s&ands'
,n t#e ver! nature o% t#ings suc# proo% wou&d not e avai&a&e in man! i% not most cases o% vio&ations o% t#e
statute' T#e surreptitious or un&aw%u& importation or smugg&ing o% goods into t#e P#i&ippine ,s&ands is
severe&! pena&i*ed e&sew#ere in t#e statute, and t#e pena&ties prescried in t#e section under consideration are
not imposed %or t#at o%%ense ut %or t#e %ai&ure o% t#e s#ip and its o%%icers to comp&! wit# t#e regu&ations
contained t#erein in regard to t#e mani%esting o% t#e cargo on oard'
. Sections 13 an+ 133 not in con,lict .it) re*ulations in Section 33
F#i&e sections 13> and 130 are app&ica&e to a&& vesse&s &icensed %or carr!ing on coasting trade wit#in
t#e P#i&ippine ,s&ands, t#e e3istence o% t#ose regu&ations is in no wise in con%&ict wit# t#e regu&ations
contained in section 00 o% t#e 7ct w#ic# re9uire t#at ;ever! vesse& %rom a %oreign port or p&ace must, under a
pena&t! o% not e3ceeding one t#ousand pesos %or %ai&ure, #ave on oard comp&ete written or t!pewritten
mani%ests o% a&& #er cargo, signed ! t#e master'< "o t#at i% a vesse& %rom a %oreign port or p&ace engaged in a
continuous vo!age is ;&icensed %or carr!ing on coasting trade,< and touc#es at various ports wit#in t#e
,s&ands, s#e is not t#ere! re&ieved %rom t#e dut! o% #aving #er cargo du&! mani%ested w#en s#e enters an!
suc# port' ,n t#is connection it ma! e proper to oserve t#at w#i&e it a%%irmative&! appears t#at at t#e time o%
t#e sei*ure t#e :ui was a vesse& %rom a %oreign port or p&ace, it does not appear w#et#er s#e was or was not
&icensed to engage in t#e coasting trade in t#e P#i&ippines'
3. Car*o construe+6 FS vs. Stea#s)ip ;slas &ilipinas citin* :)ile vs. ()e 5nna
,n t#e %ormer case, Dnited "tates vs' "teams#ip ,s&as Fi&ipinas, (8/ P#i&' :ep', 8.1), t#e $ourt #e&d
t#at t#e term ;cargo< as used in section 00 o% 7ct Eo' 344, as amended ! section 8 o% 7ct 1834, inc&udes ;a&&
goods, wares and merc#andise aoard s#ip w#ic# do not %orm part o% t#e s#ip?s stores,< and in support o% t#e
ru&ing t#e $ourt re&ied in part upon t#e ru&ings in t#e case o% P#i&e vs' T#e 7nna (1 Da&&as LD' "'M 828')
4. Scope o, @car*oA
T#e &anguage used in D" vs' "teams#ip ,s&as Fi&ipinas, w#i&e su%%icient&! inc&usive %or t#e purpose o%
t#e case t#en under consideration, is i% an!t#ing too narrow rat#er t#an too road i% intended as a de%inition o%
t#e word ;cargo< as used in t#e %irst paragrap# o% t#at section' $ertain&! t#is is true i% t#e words ;goods, wares
and merc#andise< are taken in t#e strict&! tec#nica& and &imited sense sometimes attriuted to t#em in=
commercia& &aw' @aving in mind t#e conte3t, and t#e purposes and oAects soug#t to e otained ! t#e
enactment o% t#is statute, t#e $ourt is satis%ied t#at t#e word ;cargo< as used in t#e %irst paragrap# o% section
00 re%ers to t#e ;entire &ading o% t#e s#ip w#ic# carries it< and inc&udes a&& goods, wares, merc#andise, e%%ects,
and indeed ever!t#ing, o% ever! kind or description, %ound on oard, e3cept suc# t#ings as are used or
intended %or use in connection wit# t#e management or direction o% t#e vesse& and are not intended %or
de&iver! at an! port o% ca&&, and e3cept a&so, per#aps, ;passengers or immigrants and t#eir aggage'<
Mani%ests are re9uired %or ;passengers or immigrants and t#eir aggage,< and t#e word ;cargo< #as
sometimes een used wit# re%erence to passengers and immigrants, ut in view o% t#e apparent c&assi%ication
o% t#e kinds o% mani%ests prescried in t#e section under consideration into mani%ests o% ;cargo,< and
mani%ests o% ;passengers or immigrants and t#eir aggage,< t#e $ourt e3press&! reserve its (pinion as to
w#et#er t#e word ;cargo< in t#e %irst paragrap# o% t#is section was intended ! t#e &egis&ator to inc&ude t#e
&atter'
%. ;ntent an+ o$?ect o, re9uire#ents ,or su$#ission o, #ani,est
T#e evident intent and oAect o% t#ese re9uirements %or t#e sumission o% mani%ests ! a&& vesse&s
%rom %oreign ports is to impose upon t#e owners and o%%icers o% suc# vesse&s an imperative o&igation to
sumit &ists o% t#e entire &ading o% t#e s#ip in t#e prescried %orm, in order to %aci&itate t#e &aors o% t#e
customs and immigration o%%icers, and to de%eat an! attempt to make use o% suc# vesse&s to secure t#e
un&aw%u&&! entr! o% persons or t#ings into t#e ,s&ands' Eo e3ception is made in t#e statute, and t#e recognition
o% an! attempt to read an e3ception into t#e statute cou&d #ard&! %ai& to de%eat t#e purpose o% its enactment'
1". Rulin* in :)ile vs. 5nna construe+6 ;ntent o, le*islator
,t is true t#at in t#e case o% P#i&e vs' T#e 7nna, 6overnor $us#man (Fed' $ase 4>5>) and in some
ot#er cases t#e courts #ave #e&d or intimated t#at it cou&d not #ave een t#e intention o% t#e &egis&ator to
impose t#e pena&t! prescried %or reac#es o% t#e revenue &aws under suc# circumstances' T#e $ourt t#inks
t#at, on e3amination, it wi&& e %ound t#at in t#ese cases t#e ru&ings in t#is regard are ased on t#e enormous
disproportion etween t#e pena&t! o% %or%eiture o% t#e vesse& w#ic# was soug#t to e en%orced in t#ese cases
and t#e a&&eged misc#ie% soug#t to e remedied' T#e reasoning on w#ic# t#ose decisions rest is not t#at t#e
&egis&ator cou&d not #ave prescried a pena&t! %or an! and ever! %ai&ure to mani%est t#e entire cargo, ut t#at
t#e &egis&ator cou&d not #ave intended to prescrie t#e %or%eiture o% t#e vesse& as a pena&t! %or t#e unintentiona&
omission o% some tri%&e %rom t#e s#ip?s mani%ests, wit#out t#e know&edge or consent o% t#e owners and despite
t#e e3ercise o% reasona&e di&igence ! t#e s#ip?s o%%icers'
11. :enalty in statute not su,,icient to sustain i#plie+ exception to *eneral provisions o, t)e
:)ilippine statute
,n P#i&ippine Aurisdiction, t#e pena&t! prescried ! t#e section under consideration is a %ine o% not
more t#an K422, so t#at, in t#e e3ercise o% a sound discretion, t#e amount o% t#e pena&t! imposed in eac# case
ma! e and s#ou&d e proportioned to t#e gravit! o% t#e particu&ar vio&ation o% t#e statute on account o% w#ic#
it is imposed' Mani%est&! a pena&t! o% t#is nature is not su%%icient to sustain an imp&ied e3ception to t#e
genera& provisions o% t#e P#i&ippine statute suc# as t#e courts in some cases appear to #ave read into certain
7merican statutes prescriing t#e %or%eiture o% t#e vesse& %or vio&ations o% t#eir provisions'
1-. Section 33 o, 5ct 322 une9uivocal in prescri$in* i#position o, penalty6 Section 3"3
T#ere is not#ing in section 00 o% t#e 7ct w#ic# indicates an! intention on t#e part o% t#e &egis&ator to
&imit t#e imposition o% t#e prescried pena&t! to cases w#ere t#e captain or t#e s#ip?s o%%icers knowing&! or
wi&&%u&&! omitted an! part o% t#e cargo %rom t#e mani%ests' T#is section in une9uivoca& terms prescries t#e
imposition o% t#e pena&t! in a&& cases o% suc# omissions, and read toget#er wit# section 323, w#ic# imposes
pena&ties or %or%eitures on t#e master o% t#e vesse&s in suc# cases, it cannot e douted t#at t#e intention o% t#e
&egis&ator was to provide %or t#e imposition o% t#e prescried pena&ties, w#et#er suc# omissions occurred wit#
or wit#out t#e know&edge o% t#e owner or t#e o%%icers o% t#e vesse&s'
13. Section 3"3 o, 5ct 322
"ection 323, ot# ! its terms and t#e nature o% t#e pena&ties prescried it makes ver! c&ear t#e
intention o% t#e &egis&ator to pena&i*e omissions %rom t#e s#ip?s mani%est, w#et#er made wit# or wit#out t#e
know&edge o% t#e owners, or o% t#e s#ip?s o%%icers c#arged wit# t#e preparation o% t#e re9uired mani%ests'
"ection 323 provides t#at ;B3cept as provided ! t#e &ast preceding section, i% an! merc#andise e %ound on
oard an! vesse& %rom a %oreign port w#ic# is not inc&uded in #er mani%ests, produced as re9uired ! t#is 7ct,
t#e master s#a&& %or%eit an amount e9ua& to dou&e t#e duties %i3ed t#ere%or: Provided a&wa!s, T#at i% it appears
to t#e co&&ector t#at suc# omissions occurred wit# intent to de%raud t#e revenue, t#e master s#a&& in addition
%or%eit an amount e9ua& to t#e va&ue o% t#e merc#andise not mani%ested' and a&& suc# merc#andise e&onging
or consigned to t#e o%%icers or crew o% t#e vesse& s#a&& e sei*ed and %or%eitedC ut i% suc# merc#andise
e&ongs to an! ot#er person acting in good %ait# t#e same s#a&& e re&eased upon pa!ment o% t#e regu&ar duties
and c#arges t#ereon' ,% an! package or artic&e named on t#e mani%est e missing on t#e arriva& o% t#e vesse&,
or i% t#e merc#andise on oard does not ot#erwise agree wit# t#e mani%est de&ivered ! t#e master, e3cept as
aove prescried, t#e master s#a&& e &ia&e to a pena&t! o% not &ess t#an two #undred and %i%t! do&&ars and not
more t#an two t#ousand %ive #undred do&&ars and in addition an amount e9ua& to t#e va&ue o% t#e said missing
merc#andise as ascertained ! t#e co&&ector o% customs, un&ess t#e co&&ector s#a&& e satis%ied t#at suc#
de%icienc! or disagreement occurred wit#out %raudu&ent intent, in w#ic# case said pena&t! s#a&& not e
in%&icted: Provided, nevert#e&ess, T#at i% suc# disagreement or de%icienc! is %ound ! t#e co&&ector to e due to
t#e care&essness, neg&igence, or incompetence o% t#e master o% t#e vesse&, #er owners, or agents, a pena&t! o%
not more t#an t#e va&ue t#ereo% ma! e imposed upon t#e master %or eac# package missing or materia&&!
disagreeing in marks, c#aracter, or ot#erwise wit# t#e description t#ereo% in t#e mani%est' 7&& pena&ties
in%&icted under t#e provisions o% t#is section s#a&& e %ort#wit# reported to t#e ,nsu&ar $o&&ector wit# %u&&
particu&ars o% t#e o%%ense committed and o% t#e previous conduct o% t#e master in &ike matters'<
1/. FS vs. Sta+acona! an+ F. S. vs. =issouri not applica$le
,n t#e cases o% D" vs' "tadacona, and D' "' vs' Missouri, it was #e&d, under t#e statutes re&ied upon in
t#ose cases, t#at w#ere ;no persona& de&in9uenc! is imputa&e to t#e master,< ;a sense o% Austice to t#e
master< %orids t#e imposition o% t#e prescried pena&t! as to #im' @owever, in view o% t#e e3press provisions
o% t#e P#i&ippine statute, and o% t#e nature o% t#e prescried pena&ties, and in view a&so o% t#e mani%est
intention o% t#e &egis&ator to provide %or t#e imposition o% pena&ties %or omissions %rom s#ip?s mani%ests,
w#et#er made wit# or wit#out t#e know&edge o% t#e owner or s#ip?s o%%icers, t#e $ourt wou&d not e Austi%ied
in adopting and %o&&owing t#e reasoning o% t#e decisions in t#e cases o% D" vs' "tadacona (Fed' $ase 1>301)
and D" vs' Missouri (Fed $ase 140/4)'
12. :o.er o, t)e le*islator to prescri$e penalties6 FS vs. Bri* =alek 5+)el
T#e power o% t#e &egis&ator to prescrie suc# pena&ties is c&ear&! sustained in t#e opinion o% t#e
"upreme $ourt o% t#e Dnited "tates in t#e case o% Dnited "tates vs' 1rig Ma&ek 7d#e& (53 D' "', 812)'
T#erein, it was said: ;T#e ne3t 9uestion is, w#et#er t#e innocence o% t#e owners can wit#draw t#e s#ip %rom
t#e pena&t! o% con%iscation under t#e 7ct o% $ongress' @ere, again, it ma! e remarked t#at t#e 7ct makes no
e3ception w#atsoever, w#et#er t#e aggression e wit# or wit#out t#e cooperation o% t#e owners' T#e vesse&
w#ic# commits t#e aggression is treated as t#e o%%ender, as t#e gui&t! instrument or t#ing to w#ic# t#e
%or%eiture attac#es, wit#out an! re%erence w#atsoever to t#e c#aracter or conduct o% t#e owner' T#e vesse& or
oat (sa!s t#e 7ct o% $ongress) %rom w#ic# suc# piratica& aggression, etc', s#a&& #ave een %irst attempted or
made s#a&& e condemned' Eor is t#ere an!t#ing new in a provision o% t#is sort' ,t is not an uncommon course
in t#e admira&t!, acting under t#e &aw o% nations, to treat t#e vesse& in w#ic# or ! w#ic#, or ! t#e master or
crew t#ereo%, a wrong or o%%ense #as een done as t#e o%%ender, wit#out an! regard w#atsoever to t#e persona&
misconduct or responsii&it! o% t#e owner t#ereo%' 7nd t#is is done %rom t#e necessit! o% t#e case, as t#e on&!
ade9uate means o% suppressing t#e o%%ense or wrong, or insuring an indemnit! to t#e inAured part!' T#e
doctrine a&so is %ami&iar&! app&ied to cases o% smugg&ing and ot#er misconduct under our revenue &awsC and
#as een app&ied to ot#er kindred cases, suc# as cases arising on emargo and non=intercourse acts' ,n s#ort,
t#e acts o% t#e master and crew, in cases o% t#is sort, ind t#e interest o% t#e owner o% t#e s#ip, w#et#er #e e
innocent or gui&tC and #e imp&ied&! sumits to w#atever t#e &aw denounces as a %or%eiture attac#ed to t#e s#ip
! reason o% t#eir un&aw%u& or wanton wrongs' ,n t#e case o% T#e Dnited "tates vs' T#e "c#ooner +itt&e
$#ar&es (1 1rock' :ep', 350, 345), a case arising under t#e emargo &aws, t#e same argument w#ic# #as een
addressed to us, was upon t#at occasion addressed to Mr' $#ie% Justice Mars#a&&' T#e &earned Audge, in rep&!,
said: GT#is is not a proceeding against t#e ownerC it is a proceeding against t#e vesse& %or an o%%ense
committed ! t#e vesse&C w#ic# is not t#e &ess an o%%ense, and does not t#e &ess suAect #er to %or%eiture
ecause it was committed wit#out t#e aut#orit! and against t#e wi&& o% t#e owner' ,t is true t#at inanimate
matter can commit no o%%ense' 1ut t#is od! is animated and put in action ! t#e crew, w#o are guided ! t#e
master' T#e vesse& acts and speaks ! t#e master' "#e reports #erse&% ! t#e master' ,t is t#ere%ore not
unreasona&e t#at t#e vesse& s#ou&d e a%%ected ! t#is report'? T#e same doctrine was #e&d ! t#is court in t#e
case o% T#e Pa&m!ra (18 F#eat' : 1, 15) w#ere, re%erring to sei*ures in revenue causes, it was said: GT#e
t#ing is #ere primari&! considered as t#e o%%ender, or rat#er t#e o%%ense is primari&! attac#ed to t#e t#ing and
t#is w#et#er t#e o%%ense e ma&um pro#iitum or ma&um in re' T#e same t#ing app&ies to proceeding in rem or
sei*ures in t#e 7dmira&t!'? ;
1. 8.ner o, vessel #a+e to su,,er ,or acts or o#ission o, o,,icers an+ cre.
T#e doctrine is we&& esta&is#ed in pursuance o% w#ic# t#e owner o% a vesse& ma! e made to su%%er
%or t#e acts or omissions o% t#e o%%icers and crew, ;wit#out an! regard w#atsoever to t#e c#aracter or
responsii&it! o% t#e owner,< %rom ;t#e necessit! o% t#e case, as t#e on&! ade9uate means o% suppressing t#e
o%%ense, or wrong'< ,n man! i% not in most instances o% vio&ations o% t#e provisions o% section 00 o% t#e statute
it wou&d e practica&&! impossi&e to esta&is# t#e connivance or wi&&%u& participation o% t#e master in t#e
surreptitious &ading o% #is s#ip wit# unmani%ested goods, un&ess t#e! were o% suc# u&k as to render t#e
in%erence o% gui&t! know&edge irresisti&e' T#ere wou&d e ut sma&& prospects o% success in t#e attempt to
suppress t#e practice o% carr!ing unmani%ested goods on vesse&s %rom %oreign ports ! t#e imposition o%
pena&ties on t#e s#ip or t#e master, i% t#e imposition o% suc# pena&ties were made dependent on t#e production
o% a%%irmative proo% t#at suc# omissions #ad een made knowing&! ! t#e master or t#at t#e unmani%ested
goods #ad een roug#t aoard wit# #is connivance' Dnder suc# circumstances t#e &egis&ator #as seen %it to
prescrie pena&ties in a&& cases w#ere unmani%ested cargo is %ound on t#e vesse&, w#et#er it appears t#at suc#
cargo was p&aced on oard wit# or wit#out t#e consent or know&edge o% t#e owners or s#ip?s o%%icers and
despite t#e possii&it! o% individua& #ards#ips in some instances'
13. <isciplinary control o, o,,icers on cre. ren+ers conceal#ents o, un#ani,este+ car*o rare
,t is a&wa!s wit#in t#e power o% t#e s#ip?s o%%icers to render it e3treme&! di%%icu&t i% not practica&&!
impossi&e %or memers o% t#e crew or ot#er persons to concea& unmani%ested goods on oard s#ip' T#eir
discip&inar! contro& o% t#e s#ip, t#e crew, and indeed o% ever! person on oard, i% du&! e3ercised, s#ou&d
render suc# concea&ments o% unmani%ested cargo rare indeed'
14. :enalty not )ars) or oppressive6 <iscretion o, Collector o, Custo#s
T#e danger o% rea& #ards#ip or inAustice arising %rom t#e imposition o% #ars# or oppressive pena&ties
under t#e provisions o% sections 00 o% t#e 7ct is sustantia&&! provided against ! t#e discretion con%erred
upon t#e $o&&ector o% $ustoms under t#e supervision o% t#e courts w#ere! #e ma! impose an! pena&t!, %rom
an amount mere&! nomina& up to a ma3imum o% K422'
[13] , also [, a.ter 170], and [190]
;nternational Harvester Co. in Russia vs. Ha#$ur*>5#erican Line (GR 11212! -% Buly 1%14)
"econd Division, "treet (J): 4 concur
&acts' ,n t#e spring o% 1.15, ,nternationa& @arvester $ompan! in :ussia, an 7merican corporation, organi*ed
under t#e &aws o% t#e "tate o% Maine, de&ivered to t#e @amurg=7merican +ine, at 1a&timore, Mar!&and, to e
&aden on its steamer t#e 1u&garia, ound %rom t#at port to @amurg, 6erman!, a &arge consignment o%
agricu&tura& mac#iner!, consisting o% /48 o3es, crates, and parce&s, a&& o% w#ic# were to e de&ivered to t#e
order o% t#e consignor at V&adivostock, :ussia' T#e %reig#t c#arges were t#en and t#ere prepaid to t#e
u&timate destination' T#e i&& o% &ading w#ic# was issued to ,nternationa& @arvester at 1a&timore provided,
among ot#er t#ings, t#at t#e goods s#ou&d e %orwarded ! @amurg=7merican +ine %rom @amurg to
V&adivostock at t#e s#ip?s e3pense ut at t#e risk o% t#e owner o% t#e goods' ,t was a&so provided t#at goods
t#us destined %or points e!ond @amurg s#ou&d e suAect to t#e terms e3pressed in t#e customar! %orm o%
i&& o% &ading in use at t#e time o% s#ipment ! t#e carrier comp&eting t#e transit' F#en t#e s#ipment arrived at
@amurg t#e carrier compan! trans%erred t#e cargo to t#e "uevia, a s#ip o% its own &ine, and issued to itse&%
t#ere%or, as %orwarding agent, anot#er i&& o% &ading in t#e customar! %orm t#en in use in t#e port o% @amurg,
covering t#e transportation %rom @amurg to V&adivostock' F#i&e t#e s#ip carr!ing said cargo was in t#e
$#ina "ea en route to V&adivostock war roke out in BuropeC and as t#e "uevia was a 6erman vesse&, t#e
master considered it necessar! to take re%uge in t#e nearest neutra& port, w#ic# #appened to e Mani&a'
7ccording&! #e put into t#is #aror on > 7ugust 1.15, and at t#e date o% t#e tria& in t#e tria& court, t#e s#ip
sti&& remained in re%uge in said port' 7%ter it ecame apparent t#at t#e "uevia wou&d e detained inde%inite&! in
t#e port o% Mani&a, ,nternationa& @arverster, as owner o% t#e cargo, in Januar!, 1.14, made demand upon t#e
agent o% @amurg=7merican +ine in Mani&a to t#e e%%ect t#at it s#ou&d %orward t#e cargo to V&adivostock, i%
not ! t#e "uevia t#en ! some ot#er steamer' T#is @amurg=7merican +ine re%used to do e3cept upon t#e
condition t#at ,nternationa& @arvester wou&d agree to suAect said cargo to &iai&it! upon genera& average to
satis%! t#e costs and e3penses o% t#e "uevia incident to its sta! in t#e port o% Mani&a' To t#is condition
,nternationa& @arvester did not assent and on t#e contrar! t#ereupon demanded t#e immediate de&iver! o% t#e
cargo to it in Mani&a' @amurg=7merican +ine rep&ied wit# an o%%er to de&iver t#e cargo provided t#e owner
wou&d deposit wit# @amurg=7merican +ine a sum o% mone! e9uiva&ent to 82I o% t#e va&ue o% said cargo, as
securit! %or t#e costs and e3penses to e adAusted as genera& average' ,n t#is connection it ma! e stated t#at
t#e costs and e3penses incurred ! t#e "uevia %rom t#e date t#e s#ip entered t#e port o% Mani&a unti& 32 Marc#
1.14, amounted to t#e sum o% P>3,285'42, w#ic# inc&uded port c#arges, repairs, and wages and maintenance
o% o%%icers and crew'
@aving %ai&ed in its e%%orts to otain possession o% its propert!, ,nternationa& @arvester instituted an action in
t#e $F, o% Mani&a upon 13 Feruar! 1.14' T#e purpose o% t#e proceeding is to recover t#e possession o% t#e
cargo, toget#er wit# damages %or reac# o% contract and un&aw%u& detention o% t#e propert!' 7t t#e time t#e
action was instituted, or soon t#erea%ter, ,nternationa& @arvester otained t#e de&iver! o% t#e propert! %rom t#e
"uevia ! means o% a writ o% rep&evin and %orwarded it to V&adivostock ! anot#er steamer' ,n its answer,
@amurg=7merican +ine denies &iai&it! %or damages and asserts t#at it #as a &ien on t#e propert! %or genera&
average' ,n t#e court e&ow Audgment was given in %avor o% ,nternationa& @arvesting, recogni*ing its rig#t to
t#e possession o% t#e goods and awarding damages to it in t#e sum o% P4,581'8/, t#e amount s#own to #ave
een e3pended in %orwarding t#e goods to V&adivostock' From t#is Audgment @amurg=7merican +ine
appea&ed'
T#e "upreme $ourt a%%irmed t#e Audgment appea&ed %rom, wit# costs against @amurg=7merican +ine'
1. Car*o not lia$le to *eneral avera*e6 7o co##on +an*er to s)ip an+ car*o
@erein, it is not c&aimed t#at t#e agricu&tura& mac#iner! was contraand o% warC and eing neutra&
goods, it was not &ia&e to %or%eiture in t#e event o% capture ! t#e enemies o% t#e s#ip?s %&ag' ,t %o&&ows t#at
w#en t#e master o% t#e "uevia decided to take re%uge in t#e port o% Mani&a, #e acted e3c&usive&! wit# a view
to t#e protection o% #is vesse&' T#ere was no common danger to t#e s#ip and cargoC and t#ere%ore it was not a
case %or a genera& average' T#e point in dispute #as a&read! een determined ! t#e court un%avora&!'
($ompagnie de $ommerce et de Eavigation D?B3treme (rient vs' @amurg 7merika Packet%ac#t 7ctien
6ese&&sc#a%t, 3> P#i&', 4.2')
-. Section 1"! Hork>5nt.erp Rules
T#e %o&&owing provision contained in t#e Oork=7ntwerp :u&es is conc&usive against @amurg=
7merian +ine?s contention, i'e' ;F#en a s#ip s#a&& #ave entered a port o% re%uge in conse9uence o% accident,
sacri%ice, or ot#er e3traordinar! circumstance w#ic# renders t#at necessar! %or t#e common sa%et!, t#e
e3pense o% entering suc# port s#a&& e admitted as genera& average'<
3. Ha#$ur*>5#erican Line lia$le ,or expenses inci+ent to transs)ip#ent an+ conveyance o, car*o
to Gla+ivostock
@amurg=7merican +ine is &ia&e %or t#e e3penses incident to t#e trans#ipment and conve!ance o%
t#e cargo to V&adivostock' T#e origina& i&& o% &ading issued to t#e s#ipper in 1a&timore contained t#e
provision t#at t#e goods s#ou&d e %orwarded %rom @amurg to V&adivostock at t#e steamer?s e3pense and
t#is term appeared not on&! in t#e paragrap# numered 10 in t#e od! o% t#e i&& o% &ading ut a&so
conspicuous&! printed in t#e s#ipping directions on t#e %ace o% t#e instrument'
/. Contents o, para*rap) 1"! General Rules o, t)e $ill o, la+in*
,n t#e tent# paragrap# o% t#e 6enera& :u&es contained in t#e i&& o% &ading w#ic# was issued at
@amurg upon account o% t#e "uevia, %or t#e %orwarding o% t#e cargo to V&adivostock, t#ere is %ound t#e
%o&&owing provision: ;,% on account o% 9uarantine, t#reatening 9uarantine, ice &ockade, war disturances,
strike, &ockout, o!cott, or reason o% a simi&ar nature, t#e master is in dout as to w#et#er #e can sa%e&! reac#
t#e port o% destination, t#ere disc#arge in t#e usua& manner, or proceed t#ence on #is vo!age unmo&ested #e is
at &iert! to disc#arge t#e goods at anot#er p&ace or #arour w#ic# #e ma! consider sa%e, w#ere! #is
o&igations are %u&%i&&ed ' ' ' ,% t#e goods %or an! reason w#atsoever cannot e disc#arged ' ' ' at t#e port o%
destination, t#e s#ip is at &iert! to ' ' ' %orward t#em ! some ot#er means to t#e port o% destination, %or s#ip?s
account ut not at s#ip?s risk'<
2. Contents o, a++en+u# to Rule 1" un+er @Special ClausesA
,n t#e same i&& o% &ading under t#e #ead ;"pecia& $&auses< is %ound an addendum to ru&e ten to t#e
%o&&owing e%%ect: ;"pecia& H $ondition to ru&e J' H T#e %orwarding o% t#roug# goods to e e%%ected as soon
as possi&e, ut t#e s#ipowner not to e responsi&e %or de&a! in t#e conve!ance' T#e s#ipowner to #ave t#e
&iert! to store t#e goods at t#e e3pense and risk o% t#e owner, s#ipper or consignee' T#e s#ipowner %urt#er to
e entit&ed to %orward t#e goods ! rai& %rom t#e port o% disc#arge to t#e %ina& p&ace o% destination, at #is
e3pense, ut at t#e risk o% t#e owner, s#ipper or consignee'<
. 8ut$reak o, .ar $et.een Ger#any an+ Russia .oul+ )ave a$solve+ carrier ,ro# contract o,
a,,rei*)t#ent! i, not ,or t)e latter1s ter#s
T#e outreak o% t#e war etween 6erman! and :ussia undouted&! aso&ved @amurg=7merican
+ine %rom so muc# o% t#e contract o% a%%reig#tment as re9uired @amurg=7merican +ine to conve! t#e goods
to V&adivostock upon t#e s#ip on w#ic# it was emarkedC and no damages cou&d e recovered ! ,nternationa&
@arvester o% @amurg=7merican +ine %or its %ai&ure to conve! t#e goods to t#e port o% destination on t#at
s#ip' 1ut ! t#e terms o% t#e contract o% a%%reig#tment, @amurg=7merican +ine was ound to %orward t#e
cargo to V&adivostock at t#e steamer?s e3pense, not necessari&! ! a steamer e&onging to itC and it does not
! an! means %o&&ow t#at it is not &ia&e %or t#e e3pense incurred ! t#e owner in comp&eting t#e un%inis#ed
portion o% t#e vo!age in anot#er s#ip' T#us, @amurg=7merican +ine #as not een aso&ved ! t#e outreak
o% war %rom its contractua& o&igation to ear t#e e3penses o% %orwarding t#e goods to V&adivostock, even
t#oug# it is immediate&! aso&ved %rom t#e dut! to conve! t#em on its own s#ip'
3. Dlection to +isc)ar*e at anot)er port not #a+e $y #aster
Dnder paragrap# J o% t#e i&& o% &ading, t#e master is given t#e e&ection to disc#arge at anot#er port, i%
war s#ou&d inter%ere wit# t#e comp&etion o% t#e vo!age to t#e port o% destination' Eo suc# e&ection #as een
made ! t#e master' (n t#e contrar!, a%ter arriva& in Mani&a, #e re%used to disc#arge t#e goods, and must e
#e&d to #ave e&ected to retain t#em, &eaving t#e o&igations o% t#e contract intact, e3cept in so %ar as t#e! were
modi%ied, under t#e genera& princip&es o% internationa& &aw, ! t#e %act t#at war e3isted' "o %ar was t#e master
%rom e&ecting to disc#arge t#e goods in t#e port o% Mani&a even on t#e demand o% t#e owner, t#at #e proposed
to #o&d t#e cargo unti& suc# time as t#e "uevia mig#t continue #er vo!age wit#out %ear o% mo&estation %rom
#er enemies'
4. Responsi$ility to ,or.ar+ *oo+s reco*niJe+
,n t#e specia& condition to ru&e J, t#e de%endant compan! recogni*es its responsii&it! wit# respect to
t#e %orwarding o% goodsC and w#ere it is said in paragrap# J t#at t#e master?s o&igations wi&& e %u&%i&&ed !
disc#arge in anot#er port, it must e understood t#at re%erence is #ad to t#e o&igations incident to t#e carriage
o% t#e goods on t#e instant vo!age'
%. Stipulations exe#ptin* a s)ipo.ner ,ro# lia$ility construe+ a*ainst it
"tipu&ations, in a i&& o% &ading e3empting a s#ipowner %rom t#e &iai&it! w#ic# wou&d ordinari&!
attac# to #im under t#e &aw are to e strict&! construed against #im' ($ia' de Eavigacion +a F&ec#a vs' 1rauer,
1>/ D' "', 125') T#is ru&e s#ou&d e un#esitating&! app&ied in a case suc# as t#is w#ere t#e i&& o% &ading under
w#ic# t#e e3emption is c&aimed was issued ! @amurg=7merican +ine to itse&%'
1". E)ere .ar $reaks out $et.een country to .)ic) vessel $elon*s an+ country o, port o,
+isc)ar*e6 Carver! Carria*e o, Goo+s $y Sea6 (eutonia case
F#ere cargo #as een taken aoard a s#ip at a %oreign port and war reaks out etween t#e countr! to
w#ic# t#e vesse& e&ongs and t#e countr! o% t#e port o% disc#arge, t#e neutra& owner o% t#e goods cannot
comp&ain o% #er not going to #er destination' ($arver, $arriage o% 6oods ! "ea, sec 83.') F#ere goods #ave
een &oaded and part&! carried on t#e agreed vo!age, t#oug# t#e e3act per%ormance o% t#e contract ma!
ecome &ega&&! impossi&e, it wi&& not e regarded as comp&ete&! at an end, i% it can ! an! reasona&e
construction e treated as sti&& capa&e o% eing per%ormed in sustance' T#us, w#ere a Prussian vesse&,
carr!ing goods under c#arter, #ad een ordered to disc#arge at Dunkirk, and it ecame impossi&e %or #er to
do so, ecause war roke out etween France and 6erman!, it was #e&d in t#e Priv! $ounci&, t#at t#e contract
was not disso&ved, and t#at t#e s#ipowner mig#t sti&& #o&d t#e goods at Dover, w#ere #e #ad taken t#e s#ip, %or
t#e %reig#t w#ic# wou&d #ave een pa!a&e under t#e c#arter=part! #ad s#e een ordered to t#at part'
11. 8ut$reak o, .ar +i+ not #ake contract o, a,,rei*)t#ent a$solutely ille*al6 Co#pany not
a$solve+ ,ro# every +uty to t)e s)ipper
T#e outreak o% t#e war etween 6erman! and :ussia did not make t#e contract o% a%%reig#tment
aso&ute&! i&&ega& as etween t#e 6erman compan! and t#e 7merican s#ipper' ,% war #ad roken out etween
6erman! and t#e Dnited "tates, and re%uge #ad een taken in some port in a neutra& countr!, it mig#t e said
t#at t#is contract was disso&ved on ot# sides, and a di%%erent 9uestion wou&d t#us #ave een presentedC ut
even in t#at case, it cou&d not e success%u&&! maintained t#at t#e 6erman! compan! was w#o&&! aso&ved
%rom ever! dut! to t#e s#ipper'
1-. &rei*)t prepai+! $ut only in part earne+
T#e %reig#t was prepaid ! t#e s#ipper %rom 1a&timore to destination, ut #as een on&! in part
earned' T#e de%endant compan! #as roken t#e vo!age ! stopping at t#e intermediate port o% Mani&a'
7dmitting t#at @amurg=7merican +ine is aso&ved %rom t#e o&igation to conve! t#e cargo %urt#er on its
course, it is nevert#e&ess c&ear t#at upon princip&es o% e9uit! t#e compan! s#ou&d e ound to restore so muc#
o% t#e %reig#t as represents t#e unaccomp&is#ed portion o% t#e vo!age' ,% t#e %reig#t #ad not een paid, t#e
most t#at cou&d e c&aimed ! @amurg=7merican +ine wou&d e an amount pro rata itineris peracti, as was
conceded in t#e case o% t#e Teutonia, to w#ic# re%erence #as een a&read! madeC and now t#at t#e %reig#t #as
een prepaid, t#ere is a c&ear o&igation on t#e part o% t#e compan! to re%und t#e e3cess, as mone! paid upon
a consideration t#at #as partia&&! %ai&ed'
13. Break in continuity o, voya*e ,ro# voluntary act o, #aster o, t)e Suevia
T#e reak in t#e continuit! o% t#e vo!age was a resu&t o% t#e vo&untar! act o% t#e master o% t#e "uevia,
adopted wit# a view to t#e preservation o% t#e s#ipC and it can not e permitted t#at @amurg=7merican +ine
s#ou&d escape t#e conse9uences o% t#at act, so %ar as necessar! to e%%ect an e9uita&e adAustment o% t#e rig#ts
o% t#e owner o% t#e cargo'
1/. 5#ount approxi#ately representin* unearne+ portion o, t)e ,rei*)t
T#ere eing no evidence e%ore t#e $ourt wit# respect to t#e amount o% %reig#t w#ic# was prepaid,
nor wit# respect to t#e proportion earned and unearned, ut on&! t#e %act t#at t#e owner paid out a certain
amount %or trans#ipment to V&adivostock, it can e assumed t#at t#is amount appro3imate&! represents t#e
unearned portion o% t#e %reig#t'
12. :rovisions in $ill o, la+in* as to e,,ect o, ,rei*)t pai+ in a+vance applica$le special case o, loss!
not .)en s)ip a$an+ons enterprise
T#e provision in t#e origina& i&& o% &ading w#ic# provides t#at %reig#t paid in advance wi&& not e
returned, goods &ost or not &ost' T#ere is a&so a somew#at simi&ar provision in t#e second i&& o% &ading issued
at @amurg' T#ese provisions contemp&ate t#e specia& case o% t#e &oss o% t#e goods and can not e e3tended to
t#e situation w#ic# arises w#en t#e s#ip %or purposes o% its own protection aandons t#e enterprise'
1. Conclusion o, trial court as to Ha#$ur*>5#erican Line1s lia$ility correct
T#e $ourt o% First ,nstance was correct not on&! in adAudging possession o% t#e cargo to ,nternationa&
@arvester ut a&so in imposing upon @amurg=7merican +ine &iai&it! wit# respect to t#e amount e3pended
! ,nternationa& @arvester in %orwarding t#e goods to t#eir destination'
13. Buris+iction cannot $e #a+e $y stipulation6 :rovision .aive+
,t can not e admitted t#at a provision o% t#is c#aracter (i'e' t#at a&& disputes arising under t#e contract
are, at t#e option o% t#e de%endant compan!, to e decided according to 6erman &aw and e3c&usive&! ! t#e
@amurg courts) #as t#e e%%ect o% ousting t#e Aurisdiction o% t#e courts o% t#e P#i&ippine ,s&ands in t#e matter
e%ore it' 7n e3press agreement tending to deprive a court o% Aurisdiction con%erred on it ! &aw is o% no
e%%ect' 1esides, w#atever t#e e%%ect o% t#is provision, t#e ene%it o% it was waived w#en @amurg=7merican
+ine appeared and answered genera&&! wit#out oAecting to t#e Aurisdiction o% t#e court'
14. &orei*n la. #ust $e plea+e+ an+ prove+! else it .oul+ $e presu#e+ to $e t)e sa#e as t)ose o,
:)ilippines
F#en it is proposed to invoke t#e &aw o% a %oreign countr! as supp&!ing t#e proper ru&es %or t#e
so&ution o% a case, t#e e3istence o% suc# &aw must e p&eaded and proved' @erein, @amurg=7merican +ine
#as done neit#er' ,n suc# a case it is to e presumed t#at t#e &aw prevai&ing in t#e %oreign countr! is t#e same
as t#at w#ic# prevai&s in our own'
[>]
Co#pa*nie &ranco>;n+oc)inoise vs. <eutsc) 5ustralisc)e <a#psc)i,,s Gesselsc)a,t (GR 111%! 31
=arc) 1%13)
Bn 1anc, $arson (J): 3 concur
&acts' T#e steams#ip Bss&ingen is owned ! Deutsc# 7ustra&isc#e Dampsc#i%%s 6esse&sc#a%t (D7D6) and
registered in 6erman!, sai&ing under t#e 6erman %&ag' (n 1 7ugust 1.15, t#e said steams#ip was in t#e
Frenc# port o% "aigon engaged in &oading a cargo o% rice=mea& (a %ood product used principa&&! %or anima&s)
e&onging $ompagnie Franco=,ndoc#inoise ($F,), in accordance wit# t#e terms o% t#e c#arter part!' (n said
da!, t#e master o% t#e said steams#ip received te&egrap#ic instructions %rom D7D6 to proceed to t#e port o%
Mani&a in t#e P#i&ippine ,s&ands and t#ere await %urt#er orders, t#e instructions eing given on account o% t#e
t#reatening aspect o% war etween 6erman! and France' (n said date, t#e master o% t#e said steams#ip
de&ivered to $F, a &etter, w#o simi&ar&! sent a &etter to t#e master o% t#e steams#ip' T#e steams#ip remained in
t#e port o% "aigon and continued to &oad said cargo and comp&eted t#e &oading o% t#e same on 5 7ugust 1.15'
(n 5 7ugust 1.15, steams#ip &e%t t#e port o% "aigon %or t#e port o% Mani&a, a neutra& port, pursuant to t#e
instructions %rom t#e owners' T#e $F, at t#e time o% t#e departure o% t#e said steams#ip %rom "aigon #ad %u&&
know&edge o% t#e intention o% #er master to proceed to Mani&a, $F,?s agents in "aigon eing a&so t#e D7D6?s
agents, and at t#e instance o% t#e master, $F, t#roug# its agents, secured a i&& o% #ea&t# and ot#er necessar!
c&earance papers %or t#e vo!age o% t#e steams#ip to Mani&a' Far etween t#e :epu&ic o% France and Bmpire
o% 6erman! egan on 3 7ugust 1.15, and #as continued %rom t#at date to t#e present time' Eeit#er t#e master
o% t#e said steams#ip nor an! ot#er representative t#ereo% or an! ot#er person soug#t to otain %rom t#e
Frenc# aut#orities at t#e port o% "aigon a &asse* passer or c&earance, or ot#er permission to proceed %rom
"aigon to t#e ports o% +iverpoo&, Bng&and, and @amurg, 6erman!, or eit#er o% t#em, and t#at at t#e time o%
said steams#ip?s &eaving "aigon %or Mani&a it was understood etween $F, and D7D6 t#at t#e steams#ip
s#ou&d proceed on&! to @amurg and t#e port o% +iverpoo& was to e &e%t out' (n 15 "eptemer 1.15, and at
ot#er times t#erea%ter up to t#e time o% %i&ing o% t#e comp&aint, $F, demanded de&iver! o% t#e cargo o% t#e said
steams#ip %rom t#e master, and t#at D7D6?s agent #as at a&& times een wi&&ing to de&iver said cargo upon
deposit in cas# o% t#e %u&& amount %or %reig#t %rom "aigon to destination as stated in t#e c#arter part!,
amounting to near&! P02,222, and #as re%used to de&iver said cargo e3cept upon t#e making o% suc# deposit,
and t#at $F, #as at a&& times re%used to deposit t#e %reig#t c#arges'
7n action was %i&ed ! $F, against D7D6 asking t#at a receiver e appointed to take possession o% t#e cargo
o% t#e 6erman steams#ip Bss&ingen, consisting o% 18>,28/ sacks o% rice=mea& and >22 wooden venti&ators, and
to dispose o% t#e same and to #o&d t#e proceeds t#ereo% suAect to t#e order o% t#e courtC and a&so pra!ing t#at
a Audgment e given in %avor o% $F, and against D7D6 %or t#e de&iver! o% t#e cargo, or %or t#e va&ue t#ereo%,
i% suc# de&iver! cannot e made, and %or damages and costs' (n 1> (ctoer 1.15, t#e tria& court appointed as
Aoint receivers @T Fo3 and D@ Jaco! to take possession o% t#e cargo o% t#e Bss&ingen, and to se&& and
dispose o% t#e same, and to #o&d and deposit t#e proceeds o% suc# sa&e suAect to t#e %urt#er order o% t#e court'
T#e receivers #ave so&d t#e same %or P>1,145'4/' 7%ter due #earing and tria&, t#e tria& court rendered
Audgment in %avor o% $F, and against D7D6 %or t#e sum 40,/83'34 &ess an! commissions o% t#e c&erk o% t#e
court, %ree and c&ear o% a&& &iens, c&aims or c#arges asserted ! D7D6, wit# &ega& interest on said sum %rom t#e
date o% t#e %i&ing o% t#e comp&aint unti& paidC and %urt#er, t#at $F, #ave and recover o% and %rom D7D6 t#e
sum o% P>/,30>2'25 as and %or actua& damages su%%ered ! $F, ! D7D6?s reac# o% c#arter part! in
evidence, wit# interest t#ereon %rom t#e date o% t#e %i&ing o% t#e comp&aint unti& paid' T#e tria& court dismissed
D7D6?s cross comp&aint and counterc&aim, wit# costs against D7D6' @ence, t#e appea&'
T#e "upreme $ourt a%%irmed t#e Audgment o% t#e tria& court as provides %or t#e de&iver! to $F, o% t#e sum o%
P40,/83'34, t#e net proceeds o% t#e sa&e o% t#e cargo o% t#e Bss&ingen now on deposit, &ess commissions o% t#e
c&erk o% t#at court, ut %ree and c&ear o% a&& &iens, c&aims or c#arges asserted ! D7D6' T#e $ourt, #owever,
reversed t#e decision as %or t#e recover! o% P>/,30>'25, wit# interest, as and %or actua& damages su%%ered !
$F, ! D7D6?s reac# o% t#e c#arter part!' 7s %or t#e recover! o% t#e &ega& interest upon t#e amount o% t#e
proceeds o% t#e sa&e o% t#e cargo, t#e $ourt modi%ied t#e decision ! sustituting t#ere%or a provision %or t#e
recover! o% an! interest a&&owances w#ic# ma! #ave accumu&ated in an! ank or ot#er institution w#erein t#e
said net proceeds o% t#e sa&e o% t#e cargo ma! #ave een deposited suAect to t#e order o% t#e court' T#e $ourt
ordered t#e record to e returned to t#e court w#erein it originated wit# instructions to grant a new tria&,
w#erein t#e in9uir! wi&& e &imited to t#e determination o% t#e amount w#ic# cou&d #ave een gotten %or t#e
cargo taken on oard in "aigon, i% suc# cargo #ad een o%%ered %or sa&e in an undamaged condition in Mani&a
1a! at t#e time w#en t#e damaged cargo was so&d' Fit#out costs in ot# instances'
1. Sa#$ia case si#ilar
From a comparison o% t#e statement o% t#e case wit# t#e statement o% t#e case set %ort# in t#e opinion
in t#e case o% "amia ($ompagnie de $ommerce et de Eavigation d?B3treme (rient vs' T#e @amurg
7merika Packet%ac#t 7ctien 6esse&&sc#a%t, it wi&& e seen t#at t#e contro&&ing %acts in ot# cases are striking&!
simi&ar, wit# t#e e3ception o% t#e %acts touc#ing t#e disposition o% t#e cargoes o% t#e two vesse&s ! t#eir
respective masters a%ter t#e! #ad taken re%uge in t#e port o% Mani&a' T#e $ourt?s ru&ings upon t#e various
contentions o% counse&s in t#e %ormer case ma!, t#ere%or, e regarded as renewed wit# re&ation to &ike
contentions in t#e present case, e3cept on&! as to t#e contention t#at t#e s#ipowner s#ou&d e #e&d &ia&e %or
t#e damages su%%ered ! t#e cargo aoard t#e Bss&ingen, w#i&e t#e vesse& &a! in Mani&a 1a!, ecause o% t#e
%ai&ure o% t#e master to proceed wit# reasona&e promptness to take proper measures %or t#e disposition o% t#is
peris#a&e cargo ! sa&e or ot#erwise, and ecause o% #is re%usa& to de&iver it to its owner w#en &aw%u& demand
was made t#ere%or'
-. Sa#$ia case ,acts
,n t#e case o% t#e "amia it appeared t#at t#e vesse& arrived %rom "aigon in Mani&a 1a! on / 7ugust
1.15' Two te&egrams were dispatc#ed ! t#e &oca& agent o% t#e s#ipowner and o% t#e master, to t#e du&!
aut#ori*ed representative o% t#e cargo owner in "aigon, one on t#e da! o% arriva& and anot#er a week &ater,
advising #im o% t#e situation' T#ese ca&egrams were not de&ivered presuma&! ecause o% t#e interruption o%
ca&e communication %o&&owing t#e outreak o% war' +ater two &etters were %orwarded ut remained
unanswered unti& a%ter t#e master #as soug#t and secured Audicia& aut#orit! to se&& t#e cargo H t#e answer
w#en it was received eing a %&at re%usa& on t#e part o% t#e "aigon representative o% t#e cargo owner to give
an! instructions or assume an! responsii&it!' (n 15 "eptemer 1.15, t#e master o% t#e "amia #ad a surve!
made o% t#e cargo, ! a 9ua&i%ied marine surve!or, w#o reported t#at it ;s#owed signs o% #eating and eing
in%ested wit# weevi&s< and recommended t#at it e so&d in t#e interest o% a&& concerned' (n 12 "eptemer
1.15, t#e master not #aving een a&e to get into communication wit# t#e cargo owners, or t#eir
representative in "aigon, soug#t and secured Audicia& aut#orit! to se&& t#e cargo' T#e cargo was so&d under
Audicia& aut#orit! in accordance wit# t#e provisions o% &oca& &aw made and provided in suc# cases'
3. =aster +i+ not take #easures ,or t)e protection o, interests o, car*o o.ners in present case
,n t#e case o% t#e Bss&ingen w#ic# arrived in Mani&a 1a! on 0 7ugust 1.15, it does not a%%irmative&!
appear t#at t#e master took an! measures w#atever &ooking to t#e protection o% t#e interests o% t#e cargo
ownersC and, on t#e contrar!, it appears t#at a&t#oug# t#e du&! aut#ori*ed representative o% t#e cargo owner
was in Mani&a, and made demand upon t#e master %or de&iver! o% t#e cargo on 15 "eptemer 1.15, ;and at
ot#er times t#erea%ter, up to t#e time o% t#e %i&ing o% t#e comp&aint in t#is action< on 14 (ctoer 1.15, t#e
master and t#e &oca& agent o% t#e s#ipowner re%used to make de&iver! wit#out a deposit in cas# o% t#e %u&&
amount o% %reig#t c#arges agreed upon in t#e c#arter part!, amounting to near&! P02,222, ;to insure t#e
pa!ment o% w#atever %reig#t mig#t e %ound due upon adAustment under t#e terms o% t#e c#arter part!C< t#at
not unti& t#e da! %o&&owing t#e %i&ing o% t#e comp&aint in t#is action, pra!ing %or damages and t#e appointment
o% a receiver to take possession and dispose o% t#e cargo, t#at is to sa! not unti& 1> (ctoer 1.15, 02 da!s
a%ter t#e arriva& o% t#e vesse& in t#e port o% re%uge, and t#en on&! upon stipu&ation o% counse& in open court,
were Aoint receivers appointed to se&& t#e cargo and to #o&d and deposit t#e proceeds suAect to t#e order o% t#e
court'
/. =aster )as +uty to sell peris)a$le *oo+s un+er a contract o, a,,rei*)t#ent )e ,oun+ )i#sel,
una$le to execute
,n t#e case o% t#e "amia, t#e $ourt discussed at some &engt# t#e dut! and t#e &iai&it! o% t#e master
and t#e s#ipowner as to t#e disposition o% #er cargo a%ter t#e vesse& #ad taken re%uge in Mani&a 1a!, and t#e
$ourt #e&d, sustantia&&!, t#at t#e master #ad comp&ied wit# t#e dut! resting upon #im, in t#e asence o% t#e
owner o% t#e cargo, to se&& t#is peris#a&e cargo w#ic# #ad een intrusted to #im under a contract o%
a%%reig#tment w#ic# #e %ound #imse&% una&e to e3ecute'
2. =aster an+ s)ipo.ner responsi$le ,or +a#a*es su,,ere+ $y car*o .)ile Dsslin*er lay in =anila
Bay
@erein, under t#e doctrine &aid down in t#e case o% t#e "amia, t#e master, and t#ere%ore t#e
s#ipowner, must e #e&d responsi&e %or t#e damage su%%ered ! t#e cargo aoard t#e Bss&ingen w#i&e it &a! in
Mani&a 1a!' Eot on&! did #e %ai& and neg&ect to take an! measures &ooking to t#e sa&e o% t#e cargo, ut #e
actua&&! re%used to de&iver t#is peris#a&e cargo to its owner upon demand, a%ter it #ad &ain in t#e #o&d o% t#e
vesse& %or aout 4 weeks, un&ess t#e cargo owner wou&d comp&! wit# #is w#o&&! unAusti%ia&e re9uirement o% a
deposit o% P02,222 cas#, on account o% %reig#t to w#ic# #e #ad not t#e s#adow o% a &aw%u& c&aimC and #e
persisted in t#at re%usa& unti& &ega& proceedings were instituted a%ter t#e peris#a&e cargo #ad &ain in t#e #o&d
o% t#e vesse& %or more t#an 8 mont#s under t#e ra!s o% a tropica& sun, and wit#out ade9uate venti&ation, it
eing impossi&e to secure suc# venti&ation w#i&e t#e vesse& &a! at anc#or'
. Citation 3"% o, Carver1s Carria*e o, Goo+s $y Sea! 2
t)
e+.
;T#e master is entit&ed to de&a! %or suc# a period as ma! e reasona&e under t#e circumstances,
e%ore deciding on t#e course #e wi&& adopt' @e ma! c&aim a %air opportunit! o% carr!ing out t#e contract, and
earning t#e %reig#t, w#et#er ! repairing or trans#ipping' ("ee T#e 1&en#eim L1//4M 45 +' J', 7dm' /1C 12 P'
D', 1>0C 4 7sp' M' $', 488') "#ou&d t#e repair o% t#e s#ip e undertaken it must e proceeded wit# di&igent&!C
and i% so done, t#e %reig#ter wi&& #ave no ground o% comp&aint, a&t#oug# t#e conse9uent de&a! e a &ong one'
Dn&ess, indeed, t#e cargo is peris#a&e, and &ike&! to e inAured ! t#e de&a!' F#ere t#at is t#e case, it oug#t to
e %orwarded, or so&d, or given up, as t#e case ma! e, wit#out waiting %or t#e repairs, or proper steps, i% suc#
are possi&e, taken to prevent t#e cargo su%%ering ! t#e de&a!' 7n! %ai&ure on t#e part o% t#e s#ipowner or
master to per%orm #is dut! in t#ese respects wi&& e ground %or an action ! t#e owner o% t#e cargo' (@ansen
vs' Dunn L1.2>M, 11 $om' $a', 122C 88 T' +' :', 54/')<
3. Citation 3"/a o, Carver1s Carria*e o, Goo+s $y Sea! 2
t)
e+.
;7 s#ipowner, or s#ipmaster (i% communication wit# t#e s#ipowner is impossi&e) wi&& e a&&owed a
reasona&e time in w#ic# to decide w#at course #e wi&& adopt in suc# cases as t#ose under discussionC time
must e a&&owed to #im to ascertain t#e %acts, and to a&ance t#e con%&icting interests invo&ved, o% s#ipowner,
cargo owner, underwriters on s#ip, cargo, and %reig#t' 1ut once t#at time #as e&apsed, #e is ound to act
prompt&! according as #e #as e&ected eit#er to repair or aandon t#e vo!age, or trans#ip' ,% #e de&a!s, and
owing to t#at de&a! a peris#a&e cargo su%%ers damage, t#e s#ipowner wi&& e &ia&e %or t#at damageC #e cannot
escape t#at o&igation ! p&eading t#e asence o% de%inite instructions %rom t#e owners o% cargo or t#eir
underwriters, since #e #as contro& o% t#e cargo and is entit&ed to e&ect' T#us, in @ansen vs' Dunn (L1.2>M 11
$om' $a', 122C 88 T' +' :', 54/) t#e s#ipowner was #e&d &ia&e %or damage su%%ered ! a cargo o% mai*e,
w#ic# #e #ad kept in t#e s#ip?s #o&d during an unreasona&e de&a! in e&ecting w#at course #e s#ou&d adopt' G,%
instead o% prompt&! transs#ipping, #e pre%erred to negotiate %or t#at to w#ic# #e was not entit&ed, a pro rata
%reig#t on disc#arge o% t#e mai*e at $ape Town, #e #ad no rig#t in order to otain t#at advantage to keep t#e
goods meanw#i&e w#ere #e knew t#at t#e! were dai&! su%%ering damage and mig#t t#ere! ecome
unmerc#anta&e' ,% #e wis#ed, %or #is own advantage, to de&a! action, it cou&d on&! e done, in common
%airness, ! #is incurring t#e e3pense invo&ved in #is doing #is est %or t#e goods ! disc#arging t#em out o%
T#e $&oseurn?s #o&d'? (Penned!, J', 11 $om' $a', at p' 124')<
4. 5#ount o, +eterioration an+ conse9uent loss in value o, car*o un+eter#ine+
T#e va&ue o% t#e cargo in "aigon was admitted&! 320,815'55 %rancs or P154,>22'.1, and its ;true and
%air va&ue< in t#e condition in w#ic# it was %ound at t#e time w#en it was so&d in Mani&a was e3press&! agreed
to e t#e net proceeds o% t#e sa&e, t#at is to sa!, P40,/83'34' 1ut #ow muc# o% t#is #eav! &oss in va&ue was due
to t#e deterioration in t#e 9ua&it! o% t#e cargo w#i&e it &a! in t#e #o&d o% t#e vesse& in Mani&a 1a!, t#e $ourt is
una&e to determine %rom t#e agreed statement o% %acts upon w#ic# t#e case was sumitted' T#ere is no
stipu&ation as to w#at t#is cargo o% rice=mea& wou&d #ave roug#t #ad it een t#rown on t#e market in Mani&a
in t#e condition in w#ic# it was w#en it was roug#t into Mani&a 1a!, and e%ore it egan to deteriorate as a
resu&t o% its detention on oard t#e vesse&, nor is t#ere a stipu&ation as to t#e market va&ue in Mani&a o% a
simi&ar cargo o% rice=mea& in good condition at t#e time w#en t#e damaged cargo was so&d' ,n t#e asence o%
an! evidence o% record on w#ic# to ase a %inding as to w#at t#e cargo wou&d #ave roug#t #ad it not
deteriorated in Mani&a 1a!, t#e $ourt is w#o&&! una&e to %i3 t#e damages %or w#ic# t#e s#ipowner s#ou&d e
#e&d responsi&e, un&ess t#e $ourt assume wit#out proo% a va&ue to e set on undamaged rice=mea& in Mani&a
w#ic# neit#er part! inc&uded or intended to inc&ude in t#e agreed statement o% %acts upon w#ic# t#e case was
sumitted %or adAudication'
%. S)ipo.er not lia$le ,or losses resultin* ,ro# ,li*)t o, vessel ,ro# Sai*on! lia$le ,or a#ount o,
+eterioration o, car*o in neutral port
Dnder t#e ru&ings in t#e "amia case, t#e owners o% t#e Bss&ingen are not &ia&e %or &osses resu&ting
%rom t#e %&ig#t o% t#at vesse& %rom "aigon and t#e carr!ing o% t#e cargo to Mani&aC so t#at i% t#e undamaged
cargo was wort# &ess in Mani&a 1a! t#an in t#e port o% "aigon, t#e &oss must e orne ! t#e cargo owner' T#e
measures o% t#e damages %or w#ic# t#e s#ipowner can e #e&d responsi&e is t#e amount o% t#e deterioration
o% t#e cargo in Mani&a 1a!, #e eing #e&d responsi&e t#ere%or, ecause o% t#e master?s %ai&ure to take prompt
measures &ooking to t#e sa&e o% t#is peris#a&e cargoC and ecause o% #is w#o&&! unAusti%ia&e re%usa& to turn it
over to its owners, on demand, a%ter t#e vo!age contemp&ated in t#e c#arter part! #ad een aandoned'
1". 7e. trial .arrante+
"ince t#e $ourt must reverse so muc# o% t#e Audgment entered in t#e court e&ow as a&&ows damages
in t#e sum o% P40,/83'34 %or t#e a&&eged reac# o% t#e contract to transport t#e cargo %rom "aigon to Dunkirk
or @amurg, and is una&e %rom t#e agreed statement o% %acts to %i3 t#e amount o% t#e damages w#ic# s#ou&d
e a&&owed ecause o% t#e %ai&ure o% t#e master, a%ter arriving in Mani&a 1a!, to turn over t#e cargo to its
owners and ;to take suc# measures in t#e interests o% t#e s#ipper as mig#t reasona&! e re9uired o% a prudent
man under t#e e3isting conditions,< t#e $ourt is o% opinion t#at a new tria& s#ou&d e a&&owed on t#e ranc# o%
t#e case'
11. Scope o, ne. trial
"ince t#e $ourt wou&d not #esitate to %i3 t#e amount o% t#e damages su%%ered ! t#e s#ipper as a resu&t
o% t#e deterioration o% t#e cargo in Mani&a 1a! at t#e di%%erence etween t#e proceeds o% t#e sa&e o% t#e
damaged cargo and t#e amount w#ic# cou&d #ave een gotten %or suc# a cargo o% rice=mea& in an undamaged
condition in Mani&a 1a! at t#e time w#en t#e damaged cargo was so&d, i% t#is &atter amount cou&d e
determined %rom t#e record, it wi&& make %or t#e convenience o% t#e parties and an ear&! termination o% t#is
&itigation, to &imit t#e scope o% t#e in9uir! on t#e new tria& to t#e determination o% t#is &atter amount, Audgment
to e entered, t#erea%ter, in con%ormit! wit# t#e doctrine o% &iai&it! announced in t#is case'
[1/]
GuJ#an vs. Eillia# N (GR L>3/%! -/ 8cto$er 1%"3)
First Division, Torres (J): 5 concur
&acts' (n Januar! 1.25, an agent o% Jose 6u*man contracted wit# 1e#n, Me!er T $o', agents o% t#e said
steamer, in t#e sum o% P142, %or t#e towing o% t#e &orc#a Eevada, owned ! 6u*man, to t#e port o% ,&oi&o' (n
5 Januar! 1.25, t#e captain o% t#e steamer Pudat took c#arge o% t#e &orc#a, w#ic# was manned ! a master
and %our sai&ors, and on t#e %o&&owing da!, t#e 4t#, at noon, t#e steamer &e%t t#e port o% Mani&a wit# t#e &orc#a
in towC t#at at aout .:32 p' m' o% t#e same date, as t#e Pudat wit# #er tow was wit#in sig#t o% t#e ,s&and o%
$aras, etween +u*on and ,s&and o% Mindoro, t#e port tow &ine roke, and t#at t#ereupon t#e captain o% t#e
Pudat ordered t#e crew o% t#e Eevada, as t#e &atter neared t#e stern o% t#e steamer, to come on oard t#e
Pudat and to aandon t#e &orc#a' 7s t#e master (arrae*) protested severa& times against suc# order, t#e captain
insisted and t#reatened to cut t#e ot#er tow &ine' ,n conse9uence o% t#e attitude o% t#e captain t#e crew
aandoned t#e &orc#a and oarded t#e steamer and t#e captain t#en ordered t#e aandonment o% t#e &orc#a
and cast #er adri%t ! #aving t#e tow &ine cut, and t#e steamer t#en proceeded on #er vo!age to ,&oi&o' Dpon
arriving at t#e &atter port, on 0 Januar!, t#e master or pi&ot o% t#e &orc#a went to t#e co&&ector o% customs and
entered a protest, in w#ic# #e stated t#at t#e weat#er was %air, t#e sea ca&m, t#at t#e moon was rig#t, and t#at
t#e spot w#ere one o% t#e tow &ines roke was c&ose to t#e ,s&ands o% Mindoro, $aras, and +uan, at an! o%
w#ic# p&aces t#e &orc#a mig#t #ave een &e%t in sa%et!' T#e captain o% t#e Pudat did not enter an! protest at
,&oi&o in order to Austi%! t#e aandonment o% t#e &orc#a nor t#e circumstances connected t#erewit#'
(n 1. Feruar!, 1.25, 7ttorne! 7' @errero, on e#a&% o% Jose 6u*man, %i&ed a comp&aint wit# t#e $F, o%
Mani&a against t#e captain and owners o% t#e steamer Pudat' ,t does not appear t#at t#e captain, Fi&&iam J, o%
t#e Pudat, was ever summoned to appear e%ore t#e court, ut 1e#n, Me!er T $o', on 83 Marc# 1.25 and in
answer to t#e comp&aint, denied eac# and a&& o% t#e a&&egations t#erein contained' Dpon evidence eing
adduced ! 6u*man, 1e#n, Me!er T $o' moved %or t#e dismissa& o% t#e case, and as t#e motion was
overru&ed ! t#e court, t#e %irm e3cepted t#ereto and a%terwards produced its evidence, w#ic# was made o%
record' (n 1. (ctoer, Audgment was rendered sentencing 1e#n, Me!er T $o', to pa! 6u*man t#e sum o%
P.,222 and costs'
T#e Audgment was e3cepted to ! t#e %irm, w#o moved %or a new tria& on t#e ground t#at t#e decision was
contrar! to &aw and to t#e weig#t o% t#e evidence, and ecause t#e %indings o% %act o% t#e Audgment are
contrar! to t#e preponderance o% t#e proo%s' T#is motion was overru&ed and t#e %irm du&! e3cepted t#ereto'
T#e "upreme $ourt a%%irmed t#e Audgment appea&ed %rom, wit# t#e costs against Fi&&iam J and 1e#n, Me!er
T $o'
1. Contract in present case t)at ,or )ire o, service! not a c)arter contract6 5rticles 2- et se9 not
applica$le
T#e contract entered into etween t#e agent o% Jose 6u*man, owner o% t#e &orc#a Eevada, and t#e
%irm o% 1e#n, Me!er T $o', as agents and representatives o% t#e captain and owners o% t#e steamer Pudat, is
not a c#arter part!' ,t is a contract %or t#e #ire o% services ! virtue o% w#ic# t#e said %irm, ! means o% t#e
said steamer, under t#e management o% its captain, o%%icers, and crew, engaged to tow t#e said &orc#a %rom t#is
port o% Mani&a to t#at o% ,&oi&o %or a consideration o% P142' T#e provisions o% artic&es >48 et se9' o% t#e $ode
o% $ommerce wit# re%erence to c#arter parties are not app&ica&e in t#e case ecause t#e &orc#a was not
s#ipped or p&aced on oard t#e steamer, ut, as #ad een agreed to, s#ou&d #ave een towed %rom t#is port o%
,&oi&o'
-. 5rticle 11"1 7CC
7rtic&e 1121 o% t#e $ivi& $ode provides t#at ;T#ose w#o in %u&%i&&ing t#eir o&igations are gui&t! o%
%raud, neg&igence, or de&a!, and t#ose w#o in an! manner w#atsoever act in contravention o% t#e stipu&ations
o% t#e same, s#a&& e suAect to indemni%! %or t#e &osses and t#e damages caused t#ere!'<
3. 5rticle 1"1 7CC
7rtic&e 1>21 o% t#e $ivi& $ode provides t#at ;$arriers o% goods ! &and or ! water s#a&& e suAect,
wit# regard to t#e keeping and preservation o% t#e t#ings entrusted to t#em, to t#e same o&igations as
determined %or innkeepers ! artic&es seventeen #undred and eig#t! t#ree and seventeen #undred and eig#t!
%our' T#e provisions o% t#is artic&e s#a&& e understood wit#out preAudice to w#at is prescried ! t#e $ode o%
$ommerce wit# regard to transportation ! sea and &and'<
/. Captain acte+ .it) #arke+ ne*li*ence an+ per,ect kno.le+*e o, +a#a*e to o.ner
@erein, t#e captain w#o commanded t#e steamer Pudat %ai&ed to comp&! wit# t#e contract %or towage
and acted %or contravention o% w#at #ad een stipu&ated t#erein etween t#e owner o% t#e &orc#a in tow and
t#e agents w#o represented t#e owners o% t#e steamer, and w#en aandoning t#e &orc#a in mid=ocean wit# t#e
%u&& know&edge t#at it wou&d disappear and ecome a &oss, #e acted wit# marked neg&igence and a per%ect
know&edge o% t#e &oss and damage #e was aout to cause t#e owner' T#ere%ore, pursuant to t#e provisions o%
&aw, t#e owner o% t#e &orc#a must e indemni%ied, t#e contract o% towage invo&ving t#e o&igation to use due
di&igence (art' 1125) t#e omission o% w#ic# wou&d imp&! %au&t or neg&igence on t#e part o% t#e o&igee,
ecause t#e &orc#a Eevada was aandoned wit# t#e intent o% casting #er adri%t to ecome a tota& &oss'
2. 5rticle -/ o, t)e Co+e o, Co##erce
7rtic&e >85 o% t#e $ode o% $ommerce imposes on a captain, in case #e #as een wrecked or t#e cargo
o% #is vesse& damaged, t#e dut! o% making t#e corresponding protest e%ore t#e proper aut#orit! at t#e %irst
port w#ere t#e vesse& touc#es, wit#in t#e twent! %our=#ours %o&&owing #is arriva&' @erein, t#e captain o% t#e
Pudat did not make an! protest e%ore an! o%%icer or competent aut#orit! at ,&oi&o stating t#e reasons w#ic#
compe&&ed #im to aandon t#e &orc#a' (n t#e ot#er #and, t#e master or patron o% t#e &ost &orc#a comp&ied wit#
t#is dut! imposed ! &aw and appeared e%ore t#e co&&ector o% customs o% ,&oi&o and set %ort# #is protest in
dup&icate, w#erein, upon re9uest o% t#e patron, a statement o% w#at #ad occurred was inscried'
. 5rticles 24 o, t)e Co+e o, Co##erce
7rtic&e 4/> o% t#e $ode o% $ommerce provide t#at ;T#e owner o% a vesse& and t#e agent s#a&& e
civi&&! &ia&e %or t#e acts o% t#e captain and %or t#e o&igations contracted ! t#e &atter to repair, e9uip, and
provision t#e vesse&, provided t#e creditor proves t#at t#e amount c&aimed was invested t#erein' 1! agent is
understood t#e person entrusted wit# t#e provisioning o% a vesse& or w#o represents #er in t#e port in w#ic#
s#e #appens to e'<
3. 5rticles 243 o, t)e Co+e o, Co##erce
7rtic&e 4/0 o% t#e $ode o% $ommerce provide t#at ;T#e agent s#a&& a&so e civi&&! &ia&e %or t#e
w#ic# t#e vesse& carriedC ut #e ma! e3empt #imse&% t#ere%rom ! aandoning t#e vesse& wit# a&& #er
e9uipment?s and t#e %reig#t #e ma! #ave earned during t#e trip'<
4. Be)n! =eyer M Co.! as party to contract o, to.a*e! $oun+ to in+e#ni,y o.ner o, lorc)a
T#e %irm 1e#n, Me!er T $o' contracted %or t#e towage or conve!ance ! sea o% t#e &orc#a Eevada
%rom Mani&a to ,&oi&o, undouted&! in t#eir capacit! o% agents, c#arged ! t#e owners o% t#e steamer Pudat to
represent t#em in t#e port o% Mani&a' T#e %irm is t#e on&! part! ound to indemni%! t#e owner o% t#e Eevada
in t#e amount o% t#e damages sustained ! #im t#roug# t#e &oss o% t#e &orc#a, considering t#e neg&igent, not
to sa! crimina&, action o% t#e captain, w#o, wit#out an! cause or reason and wit#out an! un%oreseen accident
or stress o% weat#er, wi&&%u&&! aandoned t#e &orc#a, we&&=knowing t#at it wou&d e &ost, as rea&&! #appened'
1e#n, Me!er T $o' were una&e to den! t#e e3istence o% t#e said contract o% towage, and, as a matter o% %act,
t#e! actua&&! tried to recover t#e amount o% t#e consideration %or suc# service w#ic# #ad not een rendered !
t#e steamer Pudat, %or w#ic# t#e! were t#e agents'
[12]
FS vs. Bac)o (GR L>/"%1! -2 =arc) 1%"4)
First Division, $arson (J): > concur
&acts' T#e in%ormation c#arges, in sustance, t#at 1ernae 1ac#o, t#e c#ie% engineer on oard t#e steamer
$armen w#ic# was &!ing at anc#or near $eu, care&ess&! and wit# reck&ess neg&igence re&eased t#e screws
w#ic# #e&d in p&ace t#e man#o&e p&ate on t#e steamer?s oi&er, wit#out taking proper precautions to keep t#e
p&ate %rom %a&&ing into t#e oi&erC t#at as a resu&t t#e p&ate %e&& into t#e oi&er, and p&unging into t#e #ot water
sp&as#ed some o% it t#roug# t#e man#o&e so t#at it %e&& upon a $#inaman named $#an=Oan, sca&ding #im
severe&! t#at #e died t#e %o&&owing da!' 1ac#o was convicted o% t#e crime o% #omicidio por imprudencia
temeraria (#omicide resu&ting %rom reck&ess neg&igence) and sentenced to 5 mont#s and 1 da! o% arresto
ma!or, to pa! P1,222 civi& damages to t#e #eirs o% t#e deceased, and to t#e accessor! and susidiar! pena&ties
prescried ! &aw in suc# cases' 1ac#o appea&ed'
T#e "upreme $ourt reversed t#e Audgment o% conviction and t#e sentence imposed upon 1ac#oC wit# t#e costs
in ot# instances de o%icio'
1. Bac)o as en*ineer .as in exercise o, usual an+ proper per,or#ance o, +uties
@erein, 1ac#o directed one o% #is %iremen to open t#e man#o&e in t#e oi&er on #is steamer,
persona&&! superintended t#e work w#ic# was done in accordance wit# t#e met#od usua&&! adopted on oard
steamers in P#i&ippine waters' T#e man#o&e p&ate, w#ic# is so constructed t#at it can not e taken o%%, is #e&d
in position ! &arge screws in suc# manner t#at w#en t#e o&ts on t#ese screws in suc# manner t#at w#en t#e
o&ts on t#ese screws are &oosened t#e p&ate drops into t#e oi&er, un&ess it e supported ! a cord or rope'
Dnder 1ac#o?s direction, t#e p&ate, w#ic# weig#ed aout 82 pounds, was suspended on a rope kept %or t#at
purpose' T#erea%ter, 1ac#o and t#e %ireman went aout t#eir work in anot#er part o% t#e s#ip' From one to
t#ree minutes, t#e p&ate %e&& into t#e oi&er and sp&as#ed t#e #ot water t#roug# t#e man#o&e on t#e $#inaman
$#an=Oan, w#o died wit#in 85 #ours %rom t#e e%%ect o% t#e sca&ds t#us in%&icted on #is person' B3cept %or t#e
%act t#at t#e p&ate %e&& into t#e oi&er, a&& t#e evidence o% record tends to prove t#at 1ac#o adopted t#e usua&,
proper, and necessar! met#od o% procedure, and t#at in opening t#e man#o&e at t#e time and under t#e
conditions t#en e3isting #e was in t#e usua& and proper per%ormance o% #is duties as engineer'
-. Cause o, acci+ent unkno.n6 7ot)in* to in+icate ne*li*ence o, t)e accuse+
T#e evidence t#rows no &ig#t on t#e true cause o% t#e accident' (1) ,t ma! #ave resu&ted %rom a #idden
de%ect in t#e rope on w#ic# t#e p&ate was suspended, %or w#ic# t#e accused cou&d in no wise e #e&d
responsi&e' (8) ,t ma! #ave resu&ted %rom t#e s&ipping o% one o% t#e knots used ! t#e %ireman in tr!ing t#e
ends o% t#e rope on w#ic# t#e p&ate was suspended (a&t#oug# it mig#t e t#e dut! o% a s#ip?s o%%icer to
e3amine persona&&! a knot tied ! a suordinate, e3treme di&igence cou&d not e re9uired)' (3) T#e %a&& o% t#e
p&ate mig#t #ave een caused ! some misc#ievous or ma&icious person, and indeed t#ere is some evidence in
t#e record w#ic# suggest t#is as t#e true so&ution o% t#e pro&em' T#e rope s#owed evidences o% #aving een
cut, %rom t#e description o% t#e oi&er and t#e parts aout t#e man#o&e' F#atever was t#e cause o% t#e %a&& o%
t#e p&ate, t#ere is not#ing in t#e record to indicate t#at it was due to t#e neg&igence or care&essness o% 1ac#o,
and on t#e contrar! t#ere is evidence to s#ow t#at #e e3ercised a&& t#e care and took a&& t#e precautions
re9uired o% #im in t#e due per%ormance o% #is dut!'
3. Dxtre#e +ili*ence not re9uire+ o, s)ip o,,icers
T#e use%u&ness o% s#ip?s o%%icers wou&d e dangerous&! impaired i% t#e! were re9uired to give t#eir
persona& attention to a&& pett! detai&s, and a s#ip?s o%%icer mig#t we&& #esitate to take command i% #e e #e&d
crimina&&! responsi&e %or ever! accident resu&ting %rom t#e neg&ect o% t#ose under #is command' ,t cannot e
contended t#at it was t#e dut! o% t#e o%%icer to keep suc# a strict watc# on an! particu&ar part o% t#e engine as
to make it impossi&e %or a ma&icious misc#ievous person to give t#e rope a cut wit# a kni%e, wit# per#aps no
ot#er oAect t#an to anno! t#e engineer ! &etting t#e p&ate %a&& into t#e oi&er, so t#at #e wou&d e compe&&ed
to go in a%ter it'
/. 5cci+ents6 Bur+en o, proo, to s)o. ne*li*ence
,n t#e genera& e3perience o% mankind, accidents apparent&! unavoida&e and o%ten ine3p&ica&e are
un%ortunate&! too %re9uent to permit t#e court to conc&ude t#at some one must e crimina&&! &ia&e %or
neg&igence in ever! case w#ere an accident occurs' ,t is t#e dut! o% t#e prosecution in eac# case to prove !
competent evidence not on&! t#e e3istence o% crimina& neg&igence, ut t#at t#e accused was gui&t! t#ereo%'
2. 8penin* o, #an)ole .)ile +ecease+ .as in vicinity +oes not constitute cri#inal ne*li*ence
T#e accused maintained t#at e%ore opening t#e oi&er #e sent t#e deceased to work at anot#er part o%
t#e s#ip, and t#ere is some evidence in support o% #is statement' T#e prosecution introduced testimon! to
prove t#at a%ter t#e accident, t#e accused admitted t#at #e #ad %orgotten t#at t#e deceased was working near
t#e oi&er' 7rguendo, t#e mere %act t#at t#e accused opened t#e man#o&e o% t#e oi&er w#i&e t#e deceased was
working in t#e neig#or#ood constituted suc# crimina& neg&igence as wou&d sustain t#e Audgment o%
conviction' T#e steamer was &!ing 9uiet&! at anc#or, and t#e possii&it! t#at t#e accident ! w#ic# t#e
deceased came to #is deat# wou&d occur was so remote t#at it wou&d e most unreasona&e to #o&d #im
crimina&&! responsi&e %or %ai&ing to anticipate it'
[1], also [, a.ter 1/7]
Gir>Ben S)ippin* an+ =arine Services! 7LRC (GR L>24"11>1-! -" Buly 1%4-)
"econd Division, 1arredo (J): 4 concur, 1 concur in resu&t
&acts' "eamen :oge&io 1isu&a, :uen 7rro*a, Juan 6acutno, +eoni&o 7tok, Ei&o $ru*, 7&varo 7ndrada,
Eemesio 7dug, "imp&icio 1autista, :omeo 7costa, 7nd Jose Bncao #ave a manning contract %or a period o%
1 !ear wit# Vir=Jen "#ipping 7nd Marine "ervices, ,nc' in representation o% its principa& P!oei Tanker $o'
+td' T#e terms and conditions o% said contract were ased on t#e standard contract o% t#e Eationa& "eamen
1oard (E"1)' T#e manning contract was approved ! t#e E"1' 7ware o% t#e pro&em t#at vesse&s not pa!ing
rates imposed ! t#e ,nternationa& Transport Forkers Federation (,TF) wou&d e detained or interdicted in
%oreign ports contro&&ed ! t#e ,TF, Vir=Jen and t#e seamen e3ecuted a side contract to t#e e%%ect t#at s#ou&d
t#e vesse& M-T Janu e re9uired to pa! ,TF rates w#en it ca&&s on an! ,TF contro&&ed %oreign port, t#e seamen
wou&d return to Vir=Aen t#e amounts so paid to t#em' (n 83 Marc# 1.0., t#e master o% t#e vesse& w#o is one
o% t#e seamen invo&ved #erein sent a ca&e to Vir=Jen, w#i&e said vesse& was enroute to 7ustra&ia w#ic# is an
,TF contro&&ed port, stating t#at seamen were not contented wit# t#e sa&ar! and ene%its stipu&ated in t#e
manning contract, and demanded t#at t#e! e given 42I increase t#ereo%, as t#e Gest and on&! so&ution to
so&ve ,TF pro&em'? 7pparent&!, re%erence to G,TF? in seamen?s ca&e made Vir=Jen appre#ensive since t#e
vesse& at t#at time was enroute to 7ustra&ia, an ,TF port, and wou&d e interdicted and detained t#ereat, s#ou&d
t#e seamen denounce t#e e3isting manning contract to t#e ,TF and s#ou&d Vir=Jen re%use or e una&e to pa!
t#e ,TF rates, w#ic# represent more t#an 122I o% w#at is stipu&ated in t#e manning contract' P&aced under
suc# situation, Vir=Jen rep&ied ! ca&e dated 85 Marc# 1.0. to seamen' (n 8> Marc# 1.0., Vir=Jen wrote a
&etter to t#e E"1 denouncing t#e conduct o% t#e seamen' ,n view o% t#e seamen?s conduct and reac# o%
contract, Vir=Jen?s principa&, P!oei Tanker $o', +td' terminated t#e manning contract in a &etter dated 5 7pri&
1.0.' (n > 7pri& 1.0., Vir=Jen wrote t#e E"1 asking permission to cance& t#e manning contract wit# Vir=Jen'
(n 12 7pri& 1.0., t#e E"1 t#roug# its B3ecutive Director $resencio $' Da!ao wrote Vir=Jen aut#ori*ing it to
cance& t#e manning contract' T#e seamen were according&! disemarked in Japan and repatriated to Mani&a'
T#e seamen %i&ed a comp&aint wit# t#e E"1 %or i&&ega& dismissa& and non=pa!ment o% wages' 7%ter tria&, t#e
E"1 %ound t#at t#e termination o% t#e services o% t#e seamen e%ore t#e e3piration o% t#eir emp&o!ment
contract was Austi%ied Gw#en t#e! demanded and in %act received %rom t#e compan! wages over and aove t#e
contracted rates w#ic# in e%%ect was an a&teration and modi%ication o% a va&id and e3isting contract'
T#e seamen appea&ed t#e decision to t#e E+:$ w#ic# reversed t#e decision o% t#e E"1 and re9uired Vir=Jen
to pa! t#e wages and ot#er monetar! ene%its corresponding to t#e une3pired portion o% t#e manning contract
on t#e ground t#at t#e termination o% t#e said contract ! Vir=Jen was wit#out va&id cause' T#erein, Vir=Jen
was ordered to pa! t#e %o&&owing to t#e comp&ainant "eamen w#o #ave not wit#drawn %rom t#e case, name&!:
$apt' :oge&io @' 1isu&a, :uen 7rro*a, Juan 6acutno, +eoni&o 7tok, Ei&o $ru*, 7&varo 7ndrada, Eemesio
7dug, "imp&icio 1autista, :omeo 7costa and Jose Bncao: (1) t#eir earned wages corresponding to t#e period
%rom 1> to 1. 7pri& 1.0.C (8) t#e wages corresponding to t#e une3pired portion o% t#eir contracts, as adAusted
! t#e respondent $ompan! e%%ective 1 Marc# 1.0.C (3) t#e adAusted representation a&&owances o% t#e
comp&ainant "eamen w#o served as o%%icers and w#o #ave not wit#drawn %rom t#e case, name&!: $apt'
:oge&io 1isu&a, :uen 7rro*a, Juan 6acutno, +eoni&o 7tok and Ei&o $ru*C (5) t#eir vacation pa! e9uiva&ent
to U mont#?s pa! a%ter > mont#s o% service and anot#er U mont#?s pa! a%ter t#e comp&etion o% t#e one=!ear
contractC (4) t#eir tanker service onus e9uiva&ent to U mont#?s pa!C and (>) t#eir earned overtime pa! %rom 1
to 1. 7pri& 1.0.' T#e $ourt a&so directed t#e "ecretariat o% t#e E"1 to issue wit#in 4 da!s %rom receipt o% t#e
Decision t#e necessar! c&earances to t#e suspended "eamen' @ence, t#e present petition %or certiorari'
T#e "upreme $ourt granted t#e petition, set aside t#e decision o% t#e E+:$ comp&ained o%, and reinstating
t#e decision o% t#e E"1C wit#out costs'
1. 5rticle --3 o, t)e La$or Co+e6 5ppeal! Li#itations o, t)e 7LRC1s revie.in* aut)ority
7rtic&e 883 o% t#e +aor $ode &itera&&! provides t#at ;Decisions, awards, or orders o% t#e +aor
7riters or compu&sor! aritrators are %ina& and e3ecutor! un&ess appea&ed to t#e $ommission ! an! or ot#
o% t#e parties wit#in 12 da!s %rom receipt o% suc# awards, orders, or decisions' "uc# appea& ma! e
entertained on&! on an! o% t#e %o&&owing grounds: (a) ,% t#ere is a prima %acie evidence o% ause o% discretion
on t#e part o% t#e +aor 7riter or compu&sor! aritratorC () ,% t#e decision, order, or award was secured
t#roug# %raud or coercion, inc&uding gra%t and corruptionC (c) ,% made pure&! on 9uestions o% &awC and(d) ,%
serious errors in t#e %indings o% %acts are raised w#ic# wou&d cause grave or irrepara&e damage or inAur! to
t#e appe&&ant' To discourage %rivo&ous or di&ator! appea&s, t#e $ommission or t#e +aor 7riter s#a&& impose
reasona&e pena&t!, inc&uding %ines or censures, upon t#e erring parties' ,n a&& cases, t#e appe&&ant s#a&& %urnis#
a cop! o% t#e memorandum o% appea&s to t#e ot#er part! w#o s#a&& %i&e an answer not &ater t#an 12 da!s %rom
receipt t#ereo%'<
-. 1" +ays ,ixe+ $y 5rticle --3 conte#plates calen+ar +ays an+ not .orkin* +ays6 :ro#pt
+isposition o, la$or cases
T#e s#ortened period o% ten (12) da!s %i3ed ! 7rtic&e 883 contemp&ates ca&endar da!s and not
working da!s' ,t is precise&! in t#e interest o% &aor t#at t#e &aw #as commanded t#at &aor cases e prompt&!,
i% not peremptori&!, dispose o%' +ong periods %or an! acts to e done ! t#e contending parties can e taken
advantage o% more ! management t#an ! &aor' Most &aor c&aims are decided in t#eir %avor and
management is genera&&! t#e appe&&ant' De&a!, in most instances, gives t#e emp&o!ers more opportunit! not
on&! to prepare even ingenious de%enses, w#at wit# we&&=paid ta&ented &aw!ers t#e! can a%%ord, ut even to
wear out t#e e%%orts and meager resources o% t#e workers, to t#e point t#at not in%re9uent&! t#e &atter eit#er
give up or compromise %or &ess t#an w#at is due t#em'
3. =inister o, La$or )as no ri*)t to a#en+ la.
T#e Minister o% +aor ma! not, under t#e guise o% issuing imp&ementing ru&es o% a &aw as aut#ori*ed
! t#e &aw itse&%, go e!ond t#e c&ear and unmistaka&e &anguage o% t#e &aw and e3pand it at #is discretion'
T#e Minister o% +aor #as no &ega& power to amend or a&ter in an! materia& sense w#atever t#e &aw itse&%
une9uivoca&&! speci%ies or %i3es'
/. Sea#en1s contracts not or+inary contract o, e#ploy#ent
"eamen?s contracts o% t#e nature in present case are not ordinar! ones' T#ere are specia& &aws and
ru&es governing t#em precise&! due to t#e pecu&iar circumstances t#at surround t#em' T#e emp&o!ment
contract in 9uestion is un&ike an! ordinar! contract o% emp&o!ment, %or t#e reason t#at a manning contract
invo&ves t#e interests not on&! o% t#e signatories t#ereto, suc# as t#e &oca& Fi&ipino recruiting agent, t#e %oreign
owner o% t#e vesse&, and t#e Fi&ipino crew memers, ut a&so t#ose o% ot#er Fi&ipino seamen in genera& as we&&
as t#e countr! itse&%'
2. 5rticle 1- o, La$or Co+e
7rtic&e 18 o% t#e +aor $ode provides t#at it is t#e po&ic! o% t#e "tate not on&! <to insure and regu&ate
t#e movement o% workers in con%ormit! wit# t#e nationa& interest? ut a&so Gto insure care%u& se&ection o%
Fi&ipino workers %or overseas emp&o!ment in order to protect t#e good name o% t#e P#i&ippines aroad' ;
. 7SB6 5rticle -" o, La$or Co+e
T#e Eationa& "eamen 1oard (E"1), w#ic# is t#e agenc! created to imp&ement said state po&icies, is
t#us empowered pursuant to 7rtic&e 82 o% t#e +aor $ode ;to secure t#e est possi&e terms and conditions o%
emp&o!ment %or seamen, and to insure comp&iance t#ereo%< not on&! on t#e part o% t#e owners o% t#e vesse&
ut a&so on t#e part o% t#e crew memers t#emse&ves'
3. =annin* contracts to $e approve+ $y 7SB6 Gali+ *roun+s ,or ter#ination o, suc) contracts
$on%orma&! to t#e power vested in t#e E"1, t#e &aw re9uires t#at a&& manning contracts s#a&& e
approved ! said agenc!' ,t &ikewise provides t#at ;it s#a&& e un&aw%u& to sustitute or a&ter an! previous&!
approved and certi%ied emp&o!ment contract wit#out t#e approva& o% E"1< ("ection 34, :u&es and
:egu&ations in t#e recruitment and p&acement o% Fi&ipino seamen aoard %oreign going s#ips) and aut#ori*es
t#e emp&o!er or owner o% t#e vesse& to terminate suc# contract %or Aust causes ("ection 38, ,id)' 7mong suc#
Aust causes %or termination are ;ad conduct and unwanted presence preAudicia& to t#e sa%et! o% t#e s#ip<
(6uideook %or s#ipping emp&o!ers, page /) and materia& reac# o% said contract'
4. Reason ,or strin*ent rules *overnin* &ilipino sea#en a$oar+ ,orei*n>*oin* s)ips
T#e stringent ru&es governing Fi&ipino seamen aoard %oreign=going s#ips are dictated ! nationa&
interest' T#ere are aout 182,222 registered seamen wit# t#e E"1' (n&! aout 42,222 o% t#em are emp&o!ed
and 02,222 or so are sti&& #oping to e emp&o!ed' T#ose Fi&ipino seamen a&read! emp&o!ed on oard %oreign=
going s#ips s#ou&d according&! conduct t#emse&ves wit# utmost propriet! and aide strict&! wit# t#e terms
and conditions o% t#eir emp&o!ment contract, and t#e E"1 s#ou&d see to t#at, in order t#at owners o% %oreign=
owned vesse&s wi&& not on&! e encouraged to renew t#eir emp&o!ment contract ut wi&& moreover e induced
to #ire ot#er Fi&ipino seamen as against ot#er competing %oreign sai&ors'
%. 7SB6 5rticle -" (co+al)
7rtic&e 82 o% t#e +aor $ode provides ;(a) 7 Eationa& "eamen 1oard is #ere! created w#ic# s#a&&
deve&oped and maintain a compre#ensive program %or Fi&ipino seamen emp&o!ed overseas' ,t s#a&& #ave t#e
power and dut!: (1) To provide %ree p&acement services %or seamenC (8) To regu&ate and supervise t#e
activities o% agents or representatives o% s#ipping companies in t#e #iring o% seamen %or overseas
emp&o!mentC and secure t#e est possi&e terms o% emp&o!ment %or contract seamen workers and secure
comp&iance t#erewit#C and (3) To maintain a comp&ete registr! o% a&& Fi&ipino seamen' () T#e 1oard s#a&&
#ave origina& and e3c&usive Aurisdiction over a&& matters or cases inc&uding mone! c&aims, invo&ving
emp&o!er=emp&o!ee re&ations, arising out o% or ! virtue o% an! &aw or contracts invo&ving Fi&ipino seamen %or
overseas emp&o!ment' T#e decision o% t#e 1oard s#a&& e appea&a&e to t#e Eationa& +aor :e&ations
$ommission upon t#e same grounds provided in 7rtic&e 883 #ereo%' T#e decisions o% t#e Eationa& +aor
:e&ations $ommission s#a&& e %ina& and inappea&a&e'<
1". &inality an+ unappeala$ility o, +ecisions o, 7LRC
T#e %ina&it! and unappea&ai&it! o% t#e decisions o% t#e Eationa& +aor :e&ations $ommission
con%erred ! provisions o% t#e +aor $ode in cases o% t#e nature now e%ore t#e "upreme $ourt necessari&!
&imits t#e &atter?s power in t#e premises to t#e e3ercise o% its p&enar! certiorari Aurisdiction'
11. Sea#en $reac)e+ respective e#ploy#ent contracts
T#is is so %or t#e "eamen demanded and in %act received %rom t#e $ompan! wages over and aove
t#eir contracted rates, w#ic# in e%%ect is an a&teration or modi%ication o% a va&id and susisting contractC and
t#e same not #aving een done t#ru mutua& consent and wit#out t#e prior approva& o% t#e 1oard t#e a&teration
or modi%ication is contrar! to t#e provisions o% t#e Eew +aor $ode, as amended, more particu&ar&! 7rt' 35 (i)
t#ereo%'
1-. 5rticle 3/ (i) o, t)e 7e. La$or Co+e6 :ro)i$ite+ practices
7rtic&e 35 (i) states t#at ;,t s#a&& e un&aw%u& %or an! individua&, entit!, &icensee or #o&der o% aut#orit!:
333 (i) To sustitute or a&ter emp&o!ment contracts approved and veri%ied ! t#e Department o% +aor %rom
t#e time o% actua& signing t#ereo% ! t#e parties up to and inc&uding t#e period o% e3piration o% t#e same
wit#out t#e approva& o% t#e Department o% +aorC? 333 ;
13. Revision o, contract not +one t)ru #utual consent o, t)e Co#pany
T#e revision o% t#e contract was not done t#ru mutua& consent %or t#e $ompan! did not vo&untari&!
agree to an increase o% wage, ut was on&! constrained to make a counter=proposa& o% 84I increase to prevent
t#e vesse& %rom eing interdicted and-or detained ! t#e ,TF ecause at t#e time t#e demand %or sa&ar!
increase was made t#e vesse& was enroute to Pwinana, 7ustra&ia (via "enipa#, ,ndonesia), a port w#ere t#e
,TF is strong and mi&itant' 7 perusa& o% t#e $a&es coming %rom t#e "eamen addressed to t#e $ompan! wou&d
s#ow t#e t#reatening manner ! w#ic# t#e desire %or a sa&ar! increase was mani%ested, contrar! to t#eir c&aim
t#at it was mere&! a re9uest'
1/. 7SB cannot sanction ri*)ts o, sea#en ,or )i*)er .a*es .)en consent o, o.ner secure+ $y
t)reat! etc.
F#i&e t#e 1oard recogni*es t#e rig#ts o% t#e "eamen to seek #ig#er wages provided t#e increase is
arrived at t#ru mutua& consent, it cou&d not #owever, sanction t#e same i% t#e consent o% t#e emp&o!er is
secured t#ru t#reats, intimidation or %orce' @erein, t#e $ompan! was compe&&ed to accede to t#e demand o%
t#e "eamen %or a sa&ar! increase to %oresta&& t#e possii&it! o% t#e vesse& eing interdicted ! t#e ,TF at
Pwinana, 7ustra&ia, %or in t#e event t#e vesse& wou&d e detained and-or interdicted t#e $ompan! wou&d
su%%er more &osses t#an pa!ing t#e "eamen 84I increase o% t#eir sa&ar!'
12. (er#ination o, services o, sea#en le*al
T#e termination o% t#e services o% t#e "eamen was &ega& and in accordance wit# t#e provisions o%
t#eir respective emp&o!ment contracts' $onsidering t#e %indings o% t#e 1oard t#at t#e "eamen reac#ed t#eir
contracts, t#eir suse9uent repatriation was Austi%ied' F#i&e it ma! e true t#at t#e "eamen were #ired %or a
de%inite period t#eir services cou&d e terminated prior to t#e comp&etion o% t#e %u&& term t#ereo% %or a Aust and
va&id cause' T#e "eamen?s reac# o% t#eir emp&o!ment contracts and t#e suse9uent termination o% t#e
Manning 7greement o% Vir=Aen "#ipping T Marine "ervices, ,nc' wit# t#e P!oei Tanker, +td', Austi%ied t#e
termination o% t#e "eamen?s services'
1. =onetary clai#s o, sea#en not vali+ nor #eritorious
7s regards t#e c&aim o% t#e "eamen %or t#e pa!ment o% t#eir sa&aries %or t#e une3pired portion o% t#eir
emp&o!ment contracts t#e same s#ou&d e denied' T#is is so ecause o% t#e %indings o% t#e 1oard t#at t#eir
dismissa& was &ega& and %or a Aust cause' 7wards o% t#is nature is proper on&! in cases w#ere a sea%arer is
i&&ega&&! dismissed'
13. 7LRC oversteppe+ $oun+aries o, revie.in* aut)ority an+ .as overlinient
T#e E+:$ overstepped t#e oundaries o% its reviewing aut#orit! and was over&enient' F#et#er or not
t#e seamen #ad reac#ed t#eir contract wit# Vir=Jen is a %actua& issue, t#e pecu&iar nuances o% w#ic# were
etter known to t#e E"1, t#e %act=%inding aut#orit!' ,ndeed, even i% it was not#ing more t#an t#e
interpretation o% t#e ca&egram sent ! t#e seamen to Vir=Jen on 83 Marc# 1.0. t#at were t#e on&! 9uestion to
e reso&ved, t#at is, w#et#er or not it carried wit# it or connoted a t#reat w#ic# natura&&! panicked Vir=Jen,
w#ic#, to e sure, cou&d e a 9uestion o% &aw, sti&&, as t#e $ourt sees it, t#e conc&usion o% t#e E+:$ cannot e
Austi%ied'
14. Sea#en1s con+uct pre?u+icial to vessel an+ #aterial $reac) o, existin* #annin* contract
F#i&e emp&o!ees ma! e %ree to re9uest t#eir emp&o!ers to increase t#eir wages, t#e! s#ou&d not use
t#reat o% suc# a nature and in suc# a situation as to put t#e emp&o!er at t#eir comp&ete merc! and wit# no
c#oice ut to accede to t#eir demands or to %ace ankruptc!' T#is is w#at t#e seamen #erein did, w#ic# is an
act o% ad conduct preAudicia& to t#e vesse&, and a materia& reac# o% t#e e3isting manning contract' ,t #as
adverse conse9uences t#at &ed not on&! to t#e termination o% t#e e3isting manning contract ut to t#e reAection
! P!oei Tanker $o' +td' o% Vir=Jen?s o%%er to supp&! crew memers to t#ree ot#er vesse&s, t#ere! depriving
unemp&o!ed Fi&ipino seamen o% t#e opportunit! to work on said vesse&s'
1%. 7SB6 Co#position an+ po.er
T#e E"1 is not on&! c#arged direct&! wit# t#e administration o% s#ipping companies in t#e #iring o%
seamen %or overseas emp&o!ment ! seeing to it t#at our seamen ;secure t#e est possi&e terms o%
emp&o!ment %or contract seamen workers and secure comp&iance t#erewit#<' ,ts composition as o% t#e time
t#is controvers! arose is wort# noting H %or it is made up o% t#e Minister o% +aor as $#airman, t#e Deput!
Minister as Vice $#airman, and a representative eac# o% t#e Ministries o% Foreign 7%%airs, Eationa& De%ense,
Bducation and $u&ture, t#e $entra& 1ank, t#e 1ureau o% Bmp&o!ment "ervice, a worker?s organi*ation and an
emp&o!ee?s organi*ation and t#e B3ecutive Director o% t#e (verseas Bmp&o!ment Deve&opment 1oard'
(7rtic&e 83, +aor $ode) ,t is suc# a oard t#at #as to approve a&& contracts o% Fi&ipino seamen (7rtic&e 1/,
+aor $ode)' 7nd a%ter suc# approva&, t#e contract ecomes una&tera&e, it eing ;un&aw%u&< under 7rtic&e 35
o% t#e $ode ;%or an! individua&, entit!, &icensee or #o&der o% aut#orit!: (i) to sustitute or a&ter emp&o!ment
contracts approved and veri%ied ! Department o% +aor %rom t#e time o% actua& signing t#ereo% ! t#e parties
up to and inc&uding t#e period o% e3piration o% t#e same wit#out t#e approva& o% t#e Department o% +aor'< ,n
ot#er words, it is not on&! t#at contracts ma! not e a&tered or modi%ied or amended wit#out mutua& consent o%
t#e parties t#eretoC it is %urt#er necessar! to #ave t#e c#ange approved ! t#e Department, ot#erwise, t#e
gui&t! parties wou&d e pena&i*ed'
-". 7LRC6 :o.er
T#e power o% t#e E+:$ in re&ation to t#e works and actuations o% t#e E"1 is on&! appe&&ate,
according to 7rtic&e 82 (), read in re&ation to 7rtic&e 883, principa&&!, over 9uestions o% &aw, since as to
%actua& matters, it ma! e3ercise suc# appe&&ate Aurisdiction on&! ;i% errors in t#e %indings o% %act are raised
w#ic# wou&d cause grave or irrepara&e damage or inAur! to t#e appe&&ant'<
-1. Sea#en kne. t)ey .ere )ire+ ,or .orl+>.i+e voya*es6 ;(& practice
T#e "eamen knew %rom t#e ver! moment t#e! were #ired t#at wor&d=wide vo!ages or destinations
were contemp&ated in t#eir agreement' "o muc# so t#at corresponding steps #ad to e taken to avoid
inter%erence o% or trou&e aout t#e ,TF upon t#e s#ip?s arriva& at ,TF contro&&ed ports' T#e ,TF re9uires t#e
seamen working on an! vesse& ca&&ing at ports contro&&ed ! t#em to e paid t#e rates %i3ed ! t#e ,TF w#ic#
are muc# #ig#er t#an t#ose provided in t#e contracts signed #ere, to t#e e3tent o% causing tremendous &oss i%
not ankruptc! o% t#e emp&o!er'
--. General practice o, )avin* si+e contracts
,n anticipation precise&! o% suc# peri& to t#e emp&o!er and u&timate unemp&o!ment o% t#e seamen, t#e
usua& procedure undenia&! known to t#e seamen o% #aving two pa!ro&&s, one containing t#e actua&&! agreed
rates and t#e ot#er ,TF rates, t#e &atter to e s#own to t#e ,TF in order t#at t#e s#ip ma! not e detained or
interdicted in Pwinana, was %o&&owed' ,t is o% insustantia& moment t#at t#e side agreement or addendum was
not made known to or presented as evidence e%ore t#e E"1' T#e E"1 knows t#at t#e genera& practice is to
#ave suc# side contracts' More important&!, t#e said side contracts are not meant at a&& to a&ter or modi%! t#e
contracts approved ! t#e E"1' :at#er, t#e! are precise&! purported to en%orce t#em to t#e &etter, making it
c&earer t#at even i% t#e s#ips #ave to ca&& at ,TF contro&&ed ports, t#e same s#a&& remain to e t#e rea& and
inding agreement etween t#e parties, in intentiona& disregard o% w#atever t#e ,TF ma! e3act'
-3. 7o $a+ ,ait) in sai+ si+e contracts
T#ere was no ad %ait# in #aving said side contracts, t#e intent t#ereo% eing to put into e%%ect t#e
E"1 directed arrangements t#at wou&d protect t#e s#ip manning industr! %rom unAust and ruinning e%%ects o%
,TF intervention' ,ndeed, e3amining t#e said side agreements, it is not correct to sa! t#at t#e seamen were
caug#t unaware, or ! surprise w#en t#e! were advised t#at t#e s#ip wou&d proceed to Pwinana, 7ustra&ia,
even assuming t#e! #ad een some#ow in%ormed t#at t#e! wou&d sai& to t#e $ariean'
-/. Ealle# :)ilippine S)ippin* vs. =inister o, La$or (1"- SCR5 432) not controllin*
7 care%u& e3amination o% Fa&&em P#i&ippine "#ipping ,nc' vs' T#e Minister o% +aor, 6':' Eo'
42035=30, Feruar! 82, 1./1 s#ows t#at t#e same is dissimi&ar to t#e present case' ,n t#e Fa&&em case, t#ere
was an e3press agreement etween t#e emp&o!er and t#e ,TF representative, under w#ic# said emp&o!er
ound itse&% to pa! t#e crew memers sa&ar! rates simi&ar to t#ose o% ,TF' F#en t#e crew memers in t#e
Fa&&em case demanded t#at t#e! e paid ,TF rates, t#e! were mere&! asking t#eir emp&o!er to comp&! wit#
w#at #ad een agreed upon Fit# t#e ,TF representative, w#ic# conduct on t#eir part cannot e said to e a
vio&ation o% contract ut an e%%ort to urge per%ormance t#ereo%' @erein, Vir=Jen and t#e seamen #ad a side
agreement, w#ere! t#e seamen agreed to return to Vir=Jen w#atever amounts petitioner wou&d e re9uired to
pa! under ,TF rates' ,n ot#er words, Vir=Jen and t#e seamen agreed t#at Vir=Jen wou&d not pa! t#e ,TF rate'
F#en t#e seamen used ,TF as t#reat to secure increase in sa&ar!, t#e! vio&ated t#e manning contract'
Moreover, #erein, Vir=Jen terminated t#e manning contract on&! a%ter t#e E"1 aut#ori*ed it to do so, a%ter it
%ound t#e grounds t#ere%or to e va&id' (n t#e ot#er #and, t#e termination o% t#e manning contract in t#e
Fa&&em case was wit#out prior aut#ori*ation %rom t#e E"1'
-2. D,,ect o, reportin* t)e .a*e sc)e#e to t)e ;(&
:eporting t#e wage sc#eme to t#e ,TF wou&d mean t#at t#e vesse& wou&d e interdicted and detained
in 7ustra&ia un&ess petitioner pa! t#e ,TF rates, w#ic# represent more t#an 122I o% w#at is stipu&ated in t#e
manning contract' Petitioner was t#us %orced to grant private respondents an increase o% 84I in t#eir asic
sa&ar!' T#at suc# grant o% a 84I increase was not vo&untar! is s#own ! t#e %act t#at Vir=Jen immediate&!
denounced t#e seamen?s conduct to E"1 and suse9uent&! asked said agenc! aut#orit! to terminate t#e
manning contract'
-. 7SB )as $etter position t)an 7LRC to appraise relevant nuances o, t)e actuations o, $ot)
parties6 7LRC +ecision set asi+e
"ince t#e E"1, considering its o%%icia& ro&e, is t#e %act=%inding od!, and t#ere is no su%%icient
cogenc! in t#e E+:$?s %inding t#at t#ere was no t#reat emp&o!ed ! t#e seamen on Vir=Jen, and, it appearing
%urt#er t#at t#e we&& prepared Mani%estation and $omment o% t#e "o&icitor 6enera& supports t#e decision o%
t#e E"1, w#ic# od! was in a etter position t#an t#e E+:$ to appraise t#e re&evant nuances o% t#e
actuations o% ot# parties, T#e decision o% t#e E+:$ under 9uestion constitutes grave ause o% discretion and
s#ou&d e set aside in %avor o% t#e E"1?s decision'
-3. La. protectin* ri*)ts o, la$orer aut)oriJes neit)er oppression nor sel,>+estruction o, t)e
e#ployer
,n B& @ogar Fi&ipino Mutua& 1ui&ding and +oan 7ssociation vs' 1ui&ding Bmp&o!ees ,nc', 120 P#i&'
503, citing "an Migue& 1rewer! vs' Eationa& +aor Dnion, .0 P#i&' 30/, t#e $ourt emp#asi*ed: ;Muc# as we
s#ou&d e3pand e!ond economic ort#odo3!, we #o&d t#at an emp&o!er cannot e &ega&&! compe&&ed to
continue wit# t#e emp&o!ment o% a person w#o admitted&! was gui&t! o% mis%easance or ma&%easance towards
#is emp&o!er, and w#ose continuance in t#e service o% t#e &atter is patent&! inimica& to #is interest' T#e &aw in
protecting t#e rig#ts o% t#e &aorer, aut#ori*es neit#er t#e oppression nor se&%=destruction o% t#e emp&o!er'<
-4. Dcono#ic sa$ota*e
"ituations w#erein emp&o!ers are practica&&! &aid in amus# or p&aced in a position not un&ike t#ose in
a #ig#Aack w#et#er in t#e air, &and or mid=sea must e considered to e w#at t#e! rea&&! are: acts o% coercion,
t#reat and intimidation against w#ic# t#e victim #as genera&&! no recourse ut to !ie&d at t#e peri& o%
irrepara&e &oss' 7nd w#en suc# #appenings a%%ect t#e nationa& econom!, t#e! must e treated to e in t#e
nature o% economic saotage' T#e! s#ou&d not e to&erated' T#is $ourt #as to e care%u& not to sanction t#em'
[13]
Ealle# :)il. S)ippin* vs. =inister o, La$or (GR L>2"33/>33! -" &e$ruary 1%41)
First Division, de $astro (J): 5 concur, 1 concur in resu&t
&acts' Jaime $aunca, 7ntonio $arera, B%ren 6arcia, Jose (Aeda, and :odo&%o Pagwagan were #ired !
Fa&&em P#i&ippines "#ipping ,nc' sometime in Ma! 1.04 to work as seamen %or a period o% 12 mont#s on
oard t#e M-V Foermann "anaga, a Dutc# vesse& owned and operated ! Fa&&em?s Buropean principa&s'
F#i&e t#eir emp&o!ment contracts were sti&& in %orce, $aunca, et' a&' were dismissed ! t#eir emp&o!er
(Fa&&em) and were disc#arged %rom t#e s#ip on c#arges t#at t#e! instigated t#e ,nternationa& Transport
Federation (,TF) to demand t#e app&ication o% wor&dwide ,TF seamen?s rates to t#eir crew'
$aunca, et' a&' were repatriated to t#e P#i&ippines on 80 (ctoer 1.04 and upon t#eir arriva& in Mani&a, t#e!
instituted a comp&aint against Fa&&em %or i&&ega& dismissa& and recover! o% wages and ot#er ene%its
corresponding to t#e 4 mont#s? une3pired period o% t#eir s#ipoard emp&o!ment contract' 7%ter t#e #earing
on t#e merits, t#e @earing (%%icer o% t#e "ecretariat (Eationa& "eamen 1oard LE"1M) rendered a decision on
15 Marc# 1.00 %inding $aunca, et' a&' to #ave vio&ated t#eir contract o% emp&o!ment w#en t#e! accepted
sa&ar! rates di%%erent %rom t#eir contract veri%ied and approved ! t#e Eationa& "eamen 1oard' $aunca, et' a&'
%i&ed a motion %or reconsideration wit# t#e 1oard w#ic# modi%ied t#e decision o% t#e "ecretariat in an (rder
o% 1. Decemer 1.00 and ru&ed t#at Fa&&em is &ia&e %or reac# o% contract w#en it ordered t#e dismissa& o%
$aunca, et' a&' and t#eir suse9uent repatriation e%ore t#e e3piration o% t#eir respective emp&o!ment
contracts' T#e $#aiman o% t#e 1oard (E"1) directed Fa&&em to pa! $aunca, et' a&' t#e une3pired portions o%
t#eir contracts and t#eir &eave pa!, &ess t#e amount t#e! received as di%%erentia&s ! virtue o% t#e specia&
agreements entered in :otterdam, and 12I o% t#e tota& amounts recovered as attorne!?s %ees' Fa&&em soug#t
c&ari%ication and reconsideration o% t#e said order and asked %or a con%rontation wit# $aunca, et' a&' to
determine t#e speci%ic adAudications to e made' 7 series o% con%erences were conducted ! t#e 1oard' Dnder
t#e circumstances, t#e 1oard was &e%t wit# no a&ternative ut to issue an (rder 3 dated 7pri& 1.0. %i3ing t#e
amount due $aunca, et' a&' at t#eir 3 mont#s? sa&ar! e9uiva&ent wit#out 9ua&i%ications or deduction' @ence, t#e
petition %or certiorari wit# pre&iminar! inAunction'
T#e "upreme $ourt set aside t#e decision dated 15 Marc# 1.00 o% t#e @earing (%%icer, and a%%irmed t#e
(rders dated 1. Decemer 1.00 and 3 7pri& 1.0. o% t#e Eationa& "eamen 1oard in totoC wit# t#e decision
immediate&! e3ecutor!C wit#out costs'
1. Circu#stances involvin* Caunca! et. al.1s e#ploy#ent6 Contents o, Boint 5,,i+avit
T#e Joint 7%%idavit contains, among ot#ers, ; 333 (4) T#at aside %rom our asic mont#&! sa&ar!, we
are entit&ed to 8 mont#s vacation &eave, dai&! susistence a&&owance o% D"K/'15 eac#, dai&! %ood a&&owance o%
D"K8'42, as we&& as overtime pa! w#ic# we %ai&ed to receive ecause our "#ipoard Bmp&o!ment $ontract
was i&&ega&&! terminatedC (>) T#at w#i&e we were in :otterdam, on or aout Ju&! ., 1.04, representative o% t#e
,TF oarded our vesse& and ta&ked wit# t#e "#ip?s $aptainC (0) T#at t#e %o&&owing da!, t#e representatives o%
t#e ,TF returned and was %o&&owed ! Mr' M'"'P' (g&e w#o is t#e $ompan!?s 7dministrative Manager, again
went to see t#e $aptainC (/) T#at at around 0:22 in t#e evening a&& t#e crew memers were ca&&ed in t#e Mess
@a&&, w#ere t#e ,TF representatives in%ormed us t#at t#e! #ave Aust entered into a ;"pecia& 7greement< wit#
t#e Fa&&em "#ipping Management, +td', represented ! Mr' M'"'P' (g&e, 7dministrative Manager, w#erein
new sa&ar! rates were agreed upon and t#at we were going to e paid our sa&ar! di%%erentia&s in view o% t#e
new ratesC (.) T#at in t#e same meeting, Mr' M'"'P' (g&e a&so spoke w#ere #e to&d t#at a "pecia& 7greement
#as een signed and t#at we wi&& e receiving new pa! rate and enAoined us to work #ard and e good o!sC
(12) T#at t#e same evening we received our sa&ar! di%%erentia&s ased on t#e new rates negotiated %or us !
t#e ,TFC (11) T#at w#i&e we were in t#e Port Duai, "audi 7raia, we were not receiving our pa!, since t#e
"#ip?s $aptain re%used to imp&ement t#e wor&dwide rates and insisted on pa!ing us t#e Far Bast :ateC (18)
T#at t#e Port Duai is one t#at is wit#in t#e For&dwide rates sp#ereC (13) T#at on (ctoer 88, 1.04, Mr' 6reg
Eaciona&, (peration Manager o% respondent corporation, arrived in Duai, "audi 7raia and oarded our s#ip'
(15) T#at on (ctoer 83, 1.04, Mr' Eaciona& ca&&ed a&& t#e crew memers, inc&uding us to a meeting at t#e
Mess @a&& and t#ere #e e3p&ained t#at t#e $ompan! cannot accept t#e wor&dwide rate' T#e "pecia& 7greement
signed ! Mr' (g&e in e#a&% o% t#e $ompan! is not#ing ut a scrap o% paper' Mr' Jaime $aunca t#en asked
Mr' Eaciona&, in view o% w#at #e was sa!ing w#et#er t#e $ompan! wi&& #onor t#e "pecia& 7greement and Mr'
Eaciona& answered ;Oes<' T#at we must accept t#e Far Bast :ates w#ic# was put to a vote' (n&! two voted
%or accepting t#e Far Bast :ates' (14) T#at immediate&! t#erea%ter Mr' Eaciona& &e%t usC (1>) T#at same
evening, Mr' Eaciona& returned and t#reatened t#at #e #as received a ca&e %rom t#e @ome (%%ice t#at i% we
do not accept t#e Far Bast :ate, our services wi&& e terminated and t#ere wi&& e a c#ange in crew' (10) T#at
w#en Mr' Eaciona& &e%t, we ta&ked amongst ourse&ves and decided to accept t#e Far Bast :atesC (1/) T#at in
t#e meeting t#at evening ecause o% t#e t#reat we in%ormed Mr' Eaciona& we were accepting t#e Far Bast :ate
and #e made us sign a document to t#at e%%ectC (1.) T#at we t#e comp&ainants wit# t#e e3ception o% +eopo&do
Mamari& and B%ren 6arcia, were not a&e to sign as we were at t#e time on work sc#edu&es, and Mr' Eaciona&
did not ot#er an!more i% we signed or notC (82) T#at a%ter t#e meeting Mr' Eaciona& ca&ed t#e @ome (%%ice,
in%orming t#em t#at we t#e comp&ainants wit# t#e e3ception o% Messrs' Mamari& and 6arcia were not
accepting t#e Far Bast :atesC (81) T#at in t#e meeting o% (ctoer 84, 1.04, Mr' Eaciona& signed a document
w#ere! #e promised to give no priorit! o% %irst pre%erence in ;oarding a vesse& and t#at we are not
&ack&isted<C (88) T#at in spite o% our #aving accepted t#e Far Bast :ate, our services were terminated and
advised us t#at t#ere was a c#ange in crewC (83) T#at on (ctoer 80, 1.04, w#ic# was our sc#edu&ed %&ig#t
#ome, nood! attended us, not even our c&earance %or our group trave& and conse9uent&! we were not a&e to
oard t#e p&ane, %orcing us to s&eep on t#e %&oor at t#e airport in t#e evening o% (ctoer 80, 1.04C (85) T#at
t#e %o&&owing da! we went ack to t#e #ote& in Duai w#ic# was a two #ours ride %rom t#e airport, w#ere we
were to await anot#er %&ig#t %or #ome via 7ir FranceC (84) T#at we were %ina&&! a&e to &eave %or #ome on
Eovemer 8, 1.04 arriving #ere on t#e 3rd o% EovemerC (8>) T#at we paid %or a&& e3cess aggagesC (80) T#at
Mr' Eaciona& &e%t us stranded, since #e went a#ead on (ctoer 80, 1.04C (8/) T#at immediate&! upon arriving
in Mani&a, we went to respondent $ompan! and saw Mr' Eaciona&, w#o in%ormed us t#at we were not
&ack&isted, #owever, Mr' Mcken*ie, 7dministrative Manager did in%orm us t#at we were a&& &ack&istedC (8.)
T#at we were asking %rom t#e respondent $ompan! our &eave pa!, w#ic# t#e! re%used to give, i% we did not
agree to a D"K122'22 deductionC (32) T#at wit# t#e e3ception o% Messrs' Jaime $aunca, 7mado Manansa&a
and 7ntonio $arera, we received our &eave pa! wit# t#e D"K122'22 deductionC (31) T#at in view o% t#e
written promise o% Mr' Eaciona& in Duai &ast (ctoer 83, 1.04 to give us priorit! and pre%erence in oarding
a vesse& and t#at we were not &ack&isted we #ave on severa& occasions approac#ed #im regarding #is
promise, w#ic# up to t#e present #e #as re%used to #onor'
-. &in+in*s o, t)e Boar+6 7o proo, s)o.in* sea#en conspire+ .it) ;(& in coercin* s)ip
aut)orities to *rant salary increases
,n its (rder o% 1. Decemer 1.00 4 t#e 1oard, t#ru its $#airman, Minister 1&as F' (p&e, #e&d t#at
t#ere is no s#owing t#at t#e seamen conspired wit# t#e ,TF in coercing t#e s#ip aut#orities to grant sa&ar!
increases, and t#e "pecia& 7greement was signed on&! ! Fa&&em "#ipping and t#e ,TF wit#out an!
participation %rom $aunca, et' a&' w#o, according&!, ma! not e c#arged as t#e! were, ! t#e "ecretariat, wit#
vio&ation o% t#eir emp&o!ment contract' T#e 1oard &ikewise stressed t#at t#e crew memers ma! not e
disc#arged unti& a%ter t#e e3piration o% t#e contract w#ic# is %or a de%inite period, and w#ere t#e crew
memers are disc#arged wit#out Aust cause e%ore t#e contract s#a&& #ave een per%ormed, t#e! s#a&& e
entit&ed to co&&ect %rom t#e owner or agent o% t#e vesse& t#eir unpaid sa&aries %or t#e period t#e! were engaged
to render t#e services, app&!ing t#e case o% Madriga& "#ipping $o', ,nc' vs' Jesus (g&ivie, et a&'
3. &in+in*s an+ conclusion o, Boar+ sustaine+6 5cceptance o, )i*)er salaries t)an contracte+
rates not a $asis ,or $reac) o, e#ploy#ent contracts (Constitutional *uarantee ,or pro#otion o, social
.el,are)
T#e %indings and conc&usion o% t#e 1oard s#ou&d e sustained' T#ere is no &ogic in t#e statement
made ! t#e "ecretariat?s @earing (%%icer t#at $aunca, et' a&' are &ia&e %or reac# o% t#eir emp&o!ment
contracts %or accepting sa&aries #ig#er t#an t#eir contracted rates' T#e &atter were not signatories to t#e "pecia&
7greement, nor was t#ere an! s#owing t#at t#e! instigated t#e e3ecution t#ereo%' $aunca, et' a&' s#ou&d not e
&amed %or accepting #ig#er sa&aries since it is ut #uman %or t#em to gra ever! opportunit! w#ic# wou&d
improve t#eir working conditions and earning capacit!' ,t is a asic rig#t o% a&& workingmen to seek greater
ene%its not on&! %or t#emse&ves ut %or t#eir %ami&ies as we&&, and t#is can e ac#ieved t#roug# co&&ective
argaining or wit# t#e assistance o% trade unions' T#e $onstitution itse&% guarantees t#e promotion o% socia&
we&%are and protection to &aor'
/. 7o t)reat a*ainst s)ip aut)orities in acce+in* to t)eir +e#an+s s)o.n6 7o serious #iscon+uct
T#e records %ai& to esta&is# c&ear&! t#e commission o% an! t#reat' 1ut even i% t#ere #ad een suc# a
t#reat, $aunca, et'a&'?s e#avior s#ou&d not e censured ecause it is ut natura& %or t#em to emp&o! some
means o% pressing t#eir demands %or Fa&&em, w#o re%used to aide wit# t#e terms o% t#e "pecia& 7greement,
to #onor and respect t#e same' T#e! were on&! acting in t#e e3ercise o% t#eir rig#ts, and to deprive t#em o%
t#eir %reedom o% e3pression is contrar! to &aw and pu&ic po&ic!' T#ere is no serious misconduct to speak o%
w#ic# wou&d Austi%! $aunca, et' a&'?s dismissa& Aust ecause o% t#eir %irmness in t#eir demand %or t#e
%u&%i&&ment ! Fa&&em o% its o&igation it entered into wit#out an! coercion, specia&&! on t#e part o% $aunca,
et' a&'
2. Ealle# *uilty o, $reac) o, contract
,t is Fa&&em "#ipping w#o is gui&t! o% reac# o% contract w#en t#e! dismissed $aunca, et' a&' wit#out
Aust cause and prior to t#e e3piration o% t#e emp&o!ment contracts'Fa&&em vo&untari&! entered into t#e "pecia&
7greement wit# ,TF and ! virtue t#ereo% t#e crew men were actua&&! given t#eir sa&ar! di%%erentia&s in view
o% t#e new rates' ,t cannot e said t#at it was ecause o% $aunca, et'a&'?s %au&t t#at Fa&&em made a sudden
turn=aout and re%used to #onor t#e specia& agreement'
[>] 4ir ,en hipping 7 =achine ervices v. )L(C, see [1++]
[14]
5$ue* vs. San <ie*o (C5>333>332! 13 <ece#$er 1%/)
7&so de "a&vacion vs' "an Diego, and (c#ing vs' "and Diego
Bn 1anc, Padi&&a (J): / concur
&acts' T#e M-" "an Diego ,, and t#e M-" 1arto&ome, ot# e&onging to 1arto&ome "an Diego, w#i&e engaged
in %is#ing operations around Mindoro ,s&and on 1 (ctoer 1.51 were caug#t ! a t!p#oon as a conse9uence
o% w#ic# t#e! were sunk and tota&&! &ost' 7mado Eu)e* (mac#inist on oard M-" "an Diego ,,), Victoriano
"a&vacion (mac#inist on oard M-" 1arto&ome ") and Francisco (c#ing (captain or patron o% M-" 1arto&ome
") w#i&e acting in t#eir capacities peris#ed in t#e s#ipwreck' "aid vesse&s were not covered ! an! insurance'
Dionisia 7ueg, widow o% 7mado Eu)e*C Marciana "' de "a&vacion, widow o% Victoriano "a&vacionC and
:osario :' (c#ing, widow o% Francisco (c#ing, %i&ed e%ore t#e $F, o% Mani&a an action %or compensation as
provided %or in t#e Forkmen?s $ompensation 7ct' T#e tria& court awarded said compensation to t#e widows'
@ence, t#e appea& to t#e $ourt o% 7ppea&s' 7s t#ere was no 9uestion o% %act invo&ved in t#e appea&, t#e
appe&&ate court %orwarded t#e record to t#e "upreme $ourt'
T#e appea& was pending w#en t#e Paci%ic Far roke out, and continued pending unti& a%ter &ieration, ecause
t#e record o% t#e cases was destro!ed as a resu&t o% t#e att&e waged ! t#e %orces o% &ieration against t#e
enem!' 7s provided ! &aw, t#e record was reconstituted and t#e "upreme $ourt proceeded to dispose o% t#e
appea&' Finding no merit in t#e appea& %i&ed in t#e cases, t#e "upreme $ourt a%%irmed t#e Audgment o% t#e
&ower court, wit# costs against "an Diego'
1. 5rticles 243! 433! /3 o, Co+e o, Co##erce6 Li#ite+ Lia$ility Rule
7rtic&e 4/0 o% t#e $ode o% $ommerce provides t#at i% t#e vesse& toget#er wit# a&& #er tack&e and
%reig#t mone! earned during t#e vo!age are aandoned, t#e agent?s &iai&it! to t#ird persons %or tortuous acts
o% t#e captain in t#e care o% t#e goods w#ic# t#e s#ip carried is e3tinguis#ed' 7rtic&e /30 o% t#e same $ode
provides t#at in cases o% co&&ision, t#e s#ipowners? &iai&it! is &imited to t#e va&ue o% t#e vesse& wit# a&& #er
e9uipment and %reig#t during t#e vo!age' 7rtic&e >53 o% t#e same $ode provides t#at i% t#e vesse&s and %reig#t
are tota&&! &ost, t#e agent?s &iai&it! %or wages o% t#e crew is e3tinguis#ed'
-. Real an+ )ypot)ecary nature o, lia$ility o, t)e s)ipo.ner or a*ent6 History
T#e rea& and #!pot#ecar! nature o% t#e &iai&it! o% t#e s#ipowner or agent emodied in t#e provisions
o% t#e Maritime +aw, 1ook ,,,, $ode o% $ommerce, #ad its origin in t#e prevai&ing conditions o% t#e maritime
trade and sea vo!ages during t#e medieva& ages, attended ! innumera&e #a*ards and peri&s' to o%%set against
t#ese adverse conditions and to encourage s#ipui&ding and maritime commerce it was deemed necessar! to
con%ine t#e &iai&it! o% t#e owner or agent arising %rom t#e operation o% a s#ip to t#e vesse&, e9uipment, and
%reig#t, or insurance, i% an!, so t#at i% t#e s#ipowner or agent aandoned t#e s#ip, e9uipment, and %reig#t, #is
&iai&it! was e3tinguis#ed'
3. :rovisions o, t)e Co+e o, Co##erce )ave no roo# in t)e application o, t)e Eork#en1s
Co#pensation 5ct
T#e Forkmen?s $ompensation 7ct seeks to improve, and aims at t#e ame&ioration o%, t#e condition o%
&aorers and emp&o!ees' ,t is not t#e &iai&it! %or t#e damage or &oss o% t#e cargo or inAur! to, or deat# o%, a
passenger ! or t#roug# t#e misconduct o% t#e captain or master o% t#e s#ipC nor t#e &iai&it! %or t#e &oss o% t#e
s#ip as a resu&t o% co&&isionC nor t#e responsii&it! %or w ages o% t#e crew, ut a &iai&it! created ! a statute to
compensate emp&o!ees and &aorers in cases o% inAur! received ! or in%&icted upon t#em, w#i&e engaged in
t#e per%ormance o% t#eir work or emp&o!ment, or t#e #eirs and dependents o% suc# &aorers and emp&o!ees in
t#e event o% deat# caused ! t#eir emp&o!ment' "uc# $ompensation #as not#ing to do wit# t#e provisions o%
t#e $ode o% $ommerce regarding maritime commerce' ,t is an item in t#e costs o% production w#ic# must e
inc&uded in t#e udget o% an! we&&=managed industr!'
(ransportation La.! -""/ ( 3%" )
/. <istinction $et.een t)e case o, &rancisco vs. <y Liaco an+ Han*co vs. Laserna6 Lis #ota
,n t#e case o% Oangco vs' +aserna, t#e &imitation o% t#e s#ipowner?s &iai&it! to t#e va&ue o% t#e s#ip,
e9uipment, %reig#t, and insurance, i% an!, was t#e &is mota' ,n t#e case o% Francisco vs' D!=+iacco, supra, t#e
app&ication o% t#e Forkmen?s $ompensation 7ct to a master or patron w#o peris#ed as a resu&t o% t#e sinking
o% t#e motoroat o% w#ic# #e was t#e master, was t#e controvers! sumitted to t#e court %or decision'
2. Responsi$ility o, an e#ployer un+er t)e Eork#en1s Co#pensation 5ct
T#e Forkmen?s $ompensation 7ct was enacted to arogate t#e common &aw and our $ivi& $ode
upon cu&pa&e acts and omissions, and t#at t#e emp&o!er need not e gui&t! o% neg&ect or %au&t, in order t#at
responsii&it! ma! attac# to #im' T#e s#ipowner was &ia&e to pa! compensation provided %or in t#e
Forkmen?s $ompensation 7ct, notwit#standing t#e %act t#at t#e motoroat was tota&&! &ost'
. =urillo vs. =en+oJa6 Eork#en1s Co#pensation 5ct repeale+ 5rticles /3 an+ 433 o, t)e Co+e
o, Co##erce
,n t#e case o% Muri&&o vs' Mendo*a, supra, t#e $ourt #e&d t#at ;T#e rig#ts and responsii&ities de%ined
in said 7ct must e governed ! its own pecu&iar provisions in comp&ete disregard o% ot#er simi&ar provisions
o% t#e civi& as we&& as t#e mercanti&e &aw' ,% an accident is compensa&e under t#e Forkmen?s $ompensation
7ct, it must e compensated even w#en t#e workman?s rig#t is not recogni*ed ! or is in con%&ict wit# ot#er
provisions o% t#e $ivi& $ode or o% t#e $ode o% $ommerce' T#e reason e#ind t#is princip&e is t#at t#e
Forkmen?s $ompensation 7ct was enacted ! t#e +egis&ature in arogation o% t#e ot#er e3isting &aws'< T#e
9uoted part o% t#e decision is in answer to t#e contention t#at it was not t#e intention o% t#e +egis&ature to
repea& artic&es >53 and /30 o% t#e $ode o% $ommerce wit# t#e enactment o% t#e Forkmen?s $ompensation
7ct'
3. Coast.ise or interislan+ tra+e cannot )ave narro. #eanin*
"an Diego contends, as a new point, t#at t#e motoroats engaged in %is#ing cou&d not e deemed to e
in t#e coastwise and interis&and trade, as contemp&ated in section 3/ o% t#e Forkmen?s $ompensation 7ct
(7ct 358/, as amended ! 7ct 3/18), inasmuc# as a cra%t engaged in t#e coastwise and interis&and trade is one
t#at carries passengers and-or merc#andise %or #ire etween ports and p&aces in t#e P#i&ippine ,s&ands' T#e
term ;coastwise and interis&and trade< cannot #ave suc# a narrow meaning as to con%ine it to t#e carriage %or
#ire o% passengers and-or merc#andise, on vesse&s etween Ports and P&aces in t#e P#i&ippines, ecause w#i&e
%is#ing is an industr!, i% t#e catc# is roug#t to a port %or sa&e, it is at t#e same time a trade'
4. San <ie*o1s e#ployees covere+ $y Eork#en1s Co#pensation 5ct6 =urillo vs. =en+oJa
,% t#e motor s#ips in 9uestion w#i&e engaged in %is#ing, were to e considered as not engaged in
interis&and and coastwise trade, t#e provisions or t#e $ode o% $ommerce invoked ! t#em regarding
&imitation o% t#e s#ipowner?s &iai&it! or e3tinction t#ereo% w#en t#e s#ipowner aandons t#e s#ip, cannot e
app&ied' 6ranting #owever, t#at t#e motor s#ips run and operated ! t#e appe&&ant were not engaged in t#e
coastwise and interis&and trade, as contemp&ated in section 3/ o% t#e Forkmen?s compensation 7ct, sti&& t#e
deceased o%%icers o% t#e motor s#ips in 9uestion were industria& emp&o!ees wit#in t#e purview o% section 3.,
paragrap# (d), as amended, %or industria& emp&o!ment ;inc&udes a&& emp&o!ment or work at a trade,
occupation or pro%ession e3ercised ! an emp&o!er %or t#e purpose o% gain'< T#e on&! e3ceptions recogni*ed
! t#e 7ct are agricu&ture, c#arita&e institutions and domestic service' Bven emp&o!ees engaged in
agricu&ture %or t#e operation o% mec#anica& imp&ements, are entit&ed to t#e ene%its o% t#e Forkmen?s
$ompensation 7ct' ,n Muri&&o vs' Mendo*a, t#e $ourt #e&d t#at ;our +egis&ature #as deemed it advisa&e to
inc&ude in t#e Forkmen?s $ompensation 7ct a&& accidents t#at ma! occur to workmen or emp&o!ees in
%actories, s#ops and ot#er industria& and agricu&tura& workp&aces as we&& as in t#e interis&and seas o% t#e
7rc#ipe&ago'<
[1%]
=urillo vs. =en+oJa (GR /"-"! 4 <ece#$er 1%34)
Bn 1anc, ,mperia& (J): 4 concur
&acts' $oncepcion Muri&&&o, 7ntonio, $armen, F&avio and Jose +uis Madrid are t#e dependents o% (ctavio
Madrid, now deceased, and 7&%redo Mendo*a is t#e owner and operator o% t#e "' "' Marie, and conducts #is
usiness under t#e name and st!&e o% Mani&a "teams#ip Eavigation $ompan!' (n / Ju&! 1.3>, (ctavio
Madrid was emp&o!ed ! Mendo*a as %irst o%%icer o% t#e "' "' Marie, wit# a sa&ar! o% P112 a mont# p&us
oard during t#e &ast 18 weeks immediate&! preceding #is deat# or an average week&! wage o% P8/'8.' F#i&e
t#e said vesse& was p&!ing o%% t#e coast o% t#e Province o% ,sae&a, at Pa&anan Point, and w#i&e Madrid was
per%orming #is duties as %irst o%%icers, t#e vesse& was struck ! a #eav! t!p#oon, as a resu&t o% w#ic# it sank
wit# a&& t#e o%%icers and memers o% t#e crew peris#ing in t#e disaster' Eotice o% inAur! and c&aim %or
compensation was %i&ed on time ! Muri&&o despite w#ic# Mendo*a re%used and sti&& re%used to pa! t#e
compensation due'
7s widow and c#i&dren o% t#e deceased (ctavio Madrid roug#t an action to recover %rom Mendo*a t#e
compensation a&&eged&! granted t#em ! t#e Forkmen?s $ompensation 7ct ! reason o% t#e deat# o% said
deceased' T#e court rendered Audgment on 1> Eovemer 1.30, ordering Mendo*a to pa! to Muri&&o t#e sum
o% P3,222 wit# &ega& interest t#ereon %rom 83 Eovemer 1.3>, and t#e costs' T#e court, e&ieving t#at t#e
stipu&ation &ikewise sumitted %or decision t#e ot#er 1. cases, a&so ordered Mendo*a, in t#e decision rendered
! it in t#is case, to pa! to t#e ot#er p&ainti%%s t#e sums o% mone! c&aimed as compensation in t#e ot#er
comp&aints %i&ed ! t#em'
Mendo*a appea&ed %rom t#e decision so rendered, ut in t#is appea& and in t#e decision rendered ! t#e
"upreme $ourt, on&! t#e appea& taken in 6: 5>282 wi&& e considered and decided' T#e reason is ecause in
t#is appea& t#e p&ainti%%s in t#e ot#er cases #ave neit#er appeared nor een #eard'
T#e "upreme $ourt a%%irmed t#e decision rendered ! t#e &ower court, w#ic# is t#e on&! one appea&ed %rom,
wit# t#e costs o% t#is instance to Mendo*a'
1. Rolan vs. :ereJ6 E)en *ross inco#e o, e#ployer #ore t)an :-"!"""
,n t#e case o% :o&an vs' Pere* (35 (%%' 6a*', 14./), t#e court #e&d t#at under t#e &aw, as amended, t#e
%act t#at t#e gross income o% t#e emp&o!er during t#e !ear ne3t preceding t#e one in w#ic# t#e accident
occurred was P82,222 or more, as re9uired ! &aw, need not e a&&eged or proven ! t#e p&ainti%%, ut t#at, i%
eing a de%ense o% t#e de%endant, t#e urden is on t#e &atter to a&&ege and esta&is# it' ,n t#e aove=cited case'
-. Su$section (+) o, Section 3%! 5ct 3/-4 (ori*inal)! cite+ in Rolan vs. :ereJ
"usection (d) o% section 3. o% 7ct Eo' 358/ origina&&! read: ;G(d) ;,ndustria& emp&o!ment< in case o%
private emp&o!ers inc&udes a&& emp&o!ment or work at a trade, occupation or pro%ession e3ercised ! an
emp&o!er %or t#e purpose o% gain, t#e gross income o% w#ic# in t#e !ear immediate&! preceding t#e one during
w#ic# t#e accident occurred was not &ess t#an %ort! t#ousand pesos, e3cept agricu&ture, c#arita&e institutions,
and domestic service'?
3. Su$section (+) o, Section 3%! 5ct 3/-4 (as a#en+e+ $y Section 13! 5rc 341-)! cite+ in Rolan vs.
:ereJ
7s amended ! section 13 o% 7ct Eo' 3/18, said susection (d) is couc#ed in t#is wise: ;(d)
;,ndustria& emp&o!ment< in case o% private emp&o!ers inc&udes a&& emp&o!ment or work at a trade, occupation
or pro%ession e3ercised ! an emp&o!er %or t#e purpose o% gain, e3cept agricu&ture, c#arita&e institutions, and
domestic service, ut as to agricu&ture, emp&o!ees %or t#e operation o% mec#anica& imp&ements s#a&& e
entit&ed to t#e ene%its o% t#is 7ct'<
(ransportation La.! -""/ ( 3%- )
/. D,,ect o, o#ission o, p)rase in a#en+e+ provision
F#en t#e said susection was amended, t#e &egis&ature omitted t#e p#rase Gt#e gross income o% w#ic#
in t#e !ear immediate&! preceding t#e one during w#ic# t#e accident occurred was not &ess t#an %ort!
t#ousand pesos'? T#is omission simp&! means t#at %rom t#e taking e%%ect o% t#e amendment, / Decemer
1.32, t#e necessit! to a&&ege and prove t#e amount o% t#e gross income ceased'
2. :urpose o, Section /-! 5ct 3/-4! as a#en+e+ $y Section 1/ o, 5ct 341-
,t is true t#at section 58, as amended ! section 15 o% 7ct 3/18, provides t#at w#en t#e gross income
o% an! trade or occupation e3ercised ! t#e emp&o!er during t#e !ear ne3t preceding t#e one in w#ic# t#e
accident occurred, is &ess t#an P82,222, t#e c&aim %or compensation s#a&& e governed ! t#e provisions o% 7ct
1/05C ut t#e on&! purpose o% t#is provision is to introduce a de%ense in %avor o% t#e emp&o!er so t#at, in t#e
event #is gross income does not reac# said amount, #e ma! invoke #is rig#t to e used under t#e provisions o%
7ct Eo' 1/05C and eing a de%ense %avora&e to t#e de%endant, upon #im, and not upon t#e p&ainti%%, rests t#e
urden o% a&&eging and proving it'<
. Eork#en1s Co#pensation 5ct covers #ariti#e acci+ents occurrin* in t)e :)ilippine .aters
Dn&ike &egis&ations e3isting in t#e Dnited "tates o% 7merica w#erein, aside %rom t#e workmen?s
compensation &aws adopted ! t#e di%%erent "tates, t#e %edera& admira&t! &aws and t#e +ongs#oremen?s and
@aror Forkers? $ompensation 7ct are in %orce, t#e P#i&ippine +egis&ature #as deemed it advisa&e to inc&ude
in t#e Forkmen?s $ompensation 7ct a&& accidents t#at ma! occur to workmen or emp&o!ees in %actories,
s#ops and ot#er industria& and agricu&tura& workp&aces as we&& as in t#e interis&and seas o% t#e arc#ipe&ago'
T#e app&icai&it! o% t#e Forkmen?s $ompensation 7ct to accidents occurring in t#e P#i&ippine seas #as een
discussed %or t#e %irst time in t#e case o% Bnciso vs' D!=+iacco (40 P#i&', 55> et se9'), w#ere t#e 9uestion was
decided a%%irmative&!'
3. Section 34 o, 5ct 3/-4! as a#en+e+ $y Section 1- o, 5ct 341-6 ;nterislan+ tra+e
"ection 3/ o% 7ct Eo' 358/, as amended ! section 18 o% 7ct Eo' 3/18, provides t#at ;t#is 7ct s#a&&
cover t#e &iai&it! o% t#e emp&o!ers towards emp&o!ees engaged in t#e coastwise and interis&and trade, and
a&so in t#e %oreign trade w#en suc# is permissi&e under t#e &aws o% t#e Dnited "tates and t#e P#i&ippine
,s&ands'<
4. Dnciso vs. <y>Liacco6 Eork#en1s co#pensations acts enacte+ to a$ro*ate co##on la. an+
Civil co+e relative to o$li*ation arisin* ,ro# ne*li*ence
,n t#e case o% Bnciso vs' D!=+iacco, supra, t#is court stated t#at t#e consensus o% opinion and o% t#e
decisions o% t#e courts o% various "tates o% t#e Dnion is t#at workmen?s compensation acts #ave een enacted
to arogate t#e common &aw and t#e $ivi& $ode re&ative to o&igations arising %rom nonpunis#a&e %au&t or
neg&igence' ,t #as een repeated&! stated t#at t#e Forkmen?s $ompensation +aw was enacted to arogate t#e
common &aw and our $ivi& $ode upon cu&pa&e acts and omissions, and t#at t#e emp&o!er need not e gui&t!
o% neg&ect or %au&t, in order t#at responsii&it! ma! attac# to #im'
%. Dnciso vs. <y>Liacco6 <iverse #eans o, attainin* purpose o, co#pensation acts
T#e compensation acts, especia&&! t#e pioneer enactments di%%er considera&!, one %rom anot#er, in
man! essentia& aspects' F#i&e t#e purpose soug#t to e accomp&is#ed is t#e same, t#e &egis&atures o% t#e
various states c#ose diverse means %or its attainment' (ne t#ing is c#aracteristic o% a&& o% t#e actsC t#e common
&aw doctrines o% neg&igence are arogated, and in p&ace o% t#e common &aw procedure is sustituted a sc#eme
%or ac#ieving c#eap, speed! Austice' (8/ :' $' +', p' 015')
1". Statutes prescri$in* lia$ility .it)out ,ault vali+6 Si#ilar la.s
T#e compensation acts do create &iai&it! wit#out %au&t, t#e courts #ave uni%orm&! #e&d t#is to e no
oAection to t#eir va&idit!' P#i&ippine Aurisprudence a%%ords numerous e3amp&es o% &iai&it! wit#out %au&t and
t#e deprivation o% propert! wit#out %au&t eing attriuta&e to its owner' "tatutes making rai&road corporations
aso&ute&! &ia&e, wit#out regard to neg&igence, %or inAuries to propert! caused ! %ire escaping %rom t#eir
&ocomotive engines, are c&ear&! statutes creating &iai&it! wit#out %au&t, !et t#ese statues #ave een up#e&d !
a&& t#e courts o% t#e states in w#ic# t#e! #ave een up#e&d ! a&& t#e courts o% t#e state in w#ic# t#e! #ave
een enacted, as we&& as ! t#e "upreme $ourt o% t#e Dnited "tates' 7s a matter o% %act, t#e workmen?s
compensation act does e3act&! t#e same t#ing as t#e sa%et! app&iance actsC it imposes new duties o% care on
t#e emp&o!er = t#e di%%erence eing t#at in one case t#e dut! is announced in de%inite terms, w#ereas in t#e
ot#er it rests in imp&ication' 7s e3pressed ! t#e Dnited "tates "upreme $ourt, Gt#e common &aw ases t#e
emp&o!er?s &iai&it! %or inAuries to t#e emp&o!ee upon t#e ground o% neg&igenceC ut neg&igence is mere&! t#e
disregard o% some dut! imposed ! &awC and t#e nature and e3tent o% t#e dut! ma! e modi%ied ! &egis&ation,
wit# corresponding c#ange in t#e test o% neg&igence'? ' ' '< (8/ :' $' +', pp' 048, 043')
11. Eork#en1s co#pensation act +istinct ,ro# +a#a*es! pay#ents #a+e as co#pensation
T#e workmen?s compensation acts are ased on a new t#eor! o% compensation distinct %rom t#e
t#eories o% damages, pa!ments under t#e acts eing made as compensation, not as indemnit! (70 C. ,., 333:
=o1ile 7 D. (. Co. vs. 'ndustrial Co%%ission o2 'llinois, 3* E. [3d] 33*: =artin vs. 8ennecott Copper
Corporation, 3/3 E. 3!7: "evineKs Case, 13. ). <., 010: "uart vs. i%%ons, 131 ). <., 1!!: 3/1 C. ., /07:
8enne- vs. &oston, 111 ). <., 07: <rie (. Co. vs. Linne5ogel, 30* E., 3*.: "e &iasi vs. )or%and- 9ater Co.,
33* E., 330: chlic5en%a-er vs. Cit- o2 Lighland Par5, 33/ ). 9., 1/+: Andre>ws5i vs. 9olverine Coal Co.,
10* ). 9., +*0: Elanigan vs. Lines, 1.3 P., 1!77).
1-. ;ntention o, le*islature in enactin* Eork#en1s Co#pensation 5ct
T#e intention o% t#e +egis&ature in enacting t#e Forkmen?s $ompensation 7ct was to secure
workmen and t#eir dependents against ecoming oAects o% c#arit!, ! making a reasona&e compensation %or
suc# accidenta& ca&amities as are incidenta& to t#e emp&o!ment'
13. Co#pensation ,or in?uries as ite# in cost o, pro+uction or transportation
Dnder suc# 7ct inAuries to workmen and emp&o!ees are to e considered no &onger as resu&ts o% %au&t
or neg&igence, ut as t#e products o% t#e industr! in w#ic# t#e emp&o!ee is concerned' $ompensation %or suc#
inAuries is, under t#e t#eor! o% suc# statute, &ike an! ot#er item in t#e cost o% production or transportation, and
u&timate&! c#arged to t#e consumer' T#e &aw sustitutes %or &iai&it! %or neg&igence an entire&! new
conceptionC t#at is, t#at i% t#e inAur! arises out o% and in t#e course o% t#e emp&o!ment, under t#e doctrine o%
man?s #umanit! to man, t#e cost o% compensation must e one o% t#e e&ements to e &i9uidated and a&anced
in t#e course o% consumption' ,n ot#er words, t#e t#eor! o% t#e &aw is t#at, i% t#e industr! produces an inAur!,
t#at cost o% t#at inAur! s#a&& e inc&uded in t#e cost o% t#e product o% t#e industr!' @ence t#e provision t#at t#e
inAur! must arise out o% and in t#e course o% t#e emp&o!ment (Moi&e T (' :' $o' vs' ,ndustria& $ommission
o% ,&&inois, 8/ F' L8dM, 88/, 88.)'
1/. 5cci+ents co#pensate+ in+epen+ently o, e#ployer1s ne*li*ence6 Dxceptions
Dnder 7ct 358/, as amended ! 7ct 3/18, accidents are compensated independent&! o% w#et#er or
not t#e emp&o!er #as incurred %au&t or neg&igence, and t#e on&! e3ceptions t#ereto are t#e accidents arising
%rom t#e vo&untar! act o% t#e inAured person, t#ose resu&ting %rom t#e drunkenness o% t#e emp&o!ee w#o #ad
t#e accident, and t#ose caused ! t#e notorious neg&igence t#ereo% (section 5, 7ct 358/)'
12. Section - o, 5ct 3/-4! as a#en+e+ $y Section 1 o, 5ct 341-
"ection 8 o% t#e 7ct no' 358/, as amended ! section 1 o% 7ct 3/18, provides t#at in order t#at an
accident ma! e compensated, it is necessar! t#at it #as arisen out o% and in t#e course o% t#e emp&o!ment'
1. @5risin* out o, e#ploy#entA construe+
7 de%inition o% t#e p#rase arising out o% t#e emp&o!ment t#at #as received wide %avor is t#e one
stating t#at t#is e&ement re9uired ! &aw e3ists w#en t#ere is apparent to t#e rationa& mind, upon consideration
o% a&& o% t#e circumstances, a causa& connection etween t#e conditions under w#ic# t#e work is re9uired to e
(ransportation La.! -""/ ( 3%/ )
per%ormed and t#e resu&ting inAur! (71 C. ,., +0*: =ichigan Aransit Corporation vs. &rown, /+ E. [3d], 3!!,
3!3: 'n re <%plo-ersK Lia1ilit- Assur. Corporation, 1!3 ). <., +.7: 'ndustrial Co%%ission o2 Colorado vs.
<n-eart, 3/+ P., 310, 31/: =ann vs. #laston1ur- 8nitting Co., .+ A., 3+*: .! Conn., 11+: 4incennes &ridge
Co. vs. 'ndustrial Co%%ission, 1*0 ). <., +!3, +!/: Ariangle Auto Painting 7 Ari%%ing Co. vs. 'ndustrial
Co%%ission, 17* ). <., **+, **.: Landon vs. 'ndustrial Co%%ission, 173 ). <. 0., /!: Eran5lin Coal 7
Co5e Co. vs. 'ndustrial Co%%ission, 1/3 ). <., 0.*, /!!: <delweiss #ardens vs. 'ndustrial Co%%ission, 13/
). <., 3+!: Ae;as 'nde%nit- 'ns. Co. vs. =cLaur-, /0 . <. [3d], *+3, *+3). ,t is said t#at an accident #as
arisen in t#e course o% t#e emp&o!ment w#en it #as occurred wit#in t#e period o% t#e emp&o!ment, at a p&ace
w#ere t#e emp&o!ee ma! reasona&! e, and w#i&e #e is reasona&! %u&%i&&ing t#e duties o% #is emp&o!ment
(71 C. ,., +/.: ta5onis vs. Cnited Advertising Co., 10* A., 330: Aa-lor vs. t. PaulKs Cniversalist Church,
10/ A., **7: Elanagan vs. 9e1ster 7 9e1ster, 103 A., 3!1: Lar5e vs. ,ohn Lancoc5 =ut. L. 'ns. Co., .7 A.,
33!).
13. <eter#ination .)et)er +eat) arose out o, e#ploy#ent
,n investigating w#et#er or not t#e deat# o% said o%%icia& arose out o% #is emp&o!ment, a&& o% t#e
circumstances present in t#e case s#ou&d e taken into consideration in order to e a&e to determine w#et#er
or not a causa& connection e3ists etween #is said deat# and t#e conditions under w#ic# #e necessari&! #ad to
%u&%i&& #is duties' T#e deceased was contracted and emp&o!ed to direct and render services in t#e vesse&' F#en
#e accepted t#e emp&o!ment, #e knew t#at #e was in dut! ound to render services in good weat#er as we&& as
w#en t#e vesse& encountered a storm or t!p#oon, and it ma! e stated t#at #e must #ave een aware t#at in
case o% a t!p#oon #is services #as to e rendered in a #ig#er degree, ecause in suc# event it was part o% #is
duties to save t#e vesse&'
14. <eat) o, =a+ri+ co#pensa$le
Taking into consideration a&& o% t#ese circumstances, it is c&ear t#at #is deat# is compensa&e under t#e
&aw on t#e ground t#at a causa& re&ation e3isted etween suc# deat# and t#e conditions under w#ic# #e #ad to
per%orm #is emp&o!ment' ,t is ovious t#at t#e t!p#oon was t#e immediate cause o% t#e sinking o% t#e vesse&
and t#at t#ere e3isted no causa& re&ation etween it and t#e emp&o!ment o% t#e deceased' ,t is evident,
#owever, t#at etween t#e conditions and circumstances under w#ic# t#e deceased disc#arged #is
emp&o!ment and #is deat#, t#ere e3isted t#e causa& connection w#ic# makes t#e accident compensa&e'
1%. D#ployer not responsi$le ,ro# ,orce #a?eure .)en e#ployee not expose+ to a *reater +an*er
t)an usual
T#e doctrine is genera&&! accepted t#at t#e emp&o!er is not responsi&e %or accidents arising %rom
%orce maAeure or an act o% 6od, as it is usua&&! ca&&ed, w#en t#e emp&o!ee #as not een e3posed to a greater
danger t#an usua&' @owever, in t#e case o% t#e deceased and in t#at o% a sai&or, it cannot e denied t#at upon
contracting t#eir services to navigate in t#e waters o% t#e arc#ipe&ago, #aving to render e3traordinar! services
in cases o% t!p#oon, t#e! are e3posed to greater risk t#an usua&, in comparison wit# ot#er emp&o!ees working
on &and'
-". ;n?uries resultin* ,ro# exposure to special or peculiar +an*ers o, ele#ents co#pensa$le un+er
EC5
,nAuries resu&ting %rom e3posure to t#e e&ements are genera&&! c&assed as risks to w#ic# t#e genera&
pu&ic is e3posed' T#e ru&e is genera&&! recogni*ed t#at i% an emp&o!ee, ! reason o% #is duties, is e3posed to a
specia& or pecu&iar danger %rom t#e e&ements, i'e', one greater t#an t#at to w#ic# ot#er persons in t#e
communit! are e3posed, and an une3pected inAur! is sustained ! reason o% t#e e&ements, t#e inAur!
constitutes an accident arising out o% and in t#e course o% t#e emp&o!ment wit#in t#e meaning o% t#e
workmen?s compensation acts' 7nd t#is ru&e #as een recogni*ed and app&ied in &ater cases' (/3 7' +' :'
7nnotation, page 835)'
-1. <eter#inin* .)en risk inci+ental to an+ arisen out o, e#ploy#ent
T#e nature o% t#e emp&o!ment, t#e conditions under w#ic# it was to e and was pursued, t#e e3posure
to proa&e inAur! %rom reasona&! to e e3pected storms o% simi&ar c#aracter were a&& matters incident to suc#
a risk as was #ere underwritten, and t#ere%ore an inAur! maturing suc# a risk cou&d we&& e said to #ave een
incidenta& to and to #ave arisen out o% t#at emp&o!ment'?< (Forkmen?s $ompensation +aw, "c#neider, vo&' ,,
pp' 120>, 1200')
--. Si#ilarity o, acci+ent cause+ $y li*)tnin* an+ one cause+ $y typ)oon
T#ere is simi&arit! etween an accident caused ! &ig#tning and one caused ! a t!p#oon ecause
ot# are %ortuitous events and o% t#e so=ca&&ed acts o% 6od ! reason o% suc# simi&arit! some cases decided !
t#e courts in connection wit# accidents caused ! &ig#tning ma! e cited to etter i&&ustrate t#e doctrine &aid
down ! t#e $ourt'
-3. 5etna Li,e ;nsurance vs. ;n+ustrial Co##ission o, Colora+o
,n t#e case o% 7etna +i%e ,ns' $o' vs' ,ndustria& $ommission o% $o&orado (845 P', ..4), t#e "upreme
$ourt o% said "tate #e&d t#at t#e deat# o% a %arm #and, w#o was struck ! &ig#tning w#i&e driving a team o%
#orses across a #i&& near a wire %ence, was compensa&e as an accident w#ic# arose out o% #is emp&o!ment'
-/. =oo+y vs. (ill#an
,n t#e case o% Mood! vs' Ti&&man (1>3 "' B', 481), t#e "upreme $ourt o% 6eorgia #e&d t#at urns
received ! a workman emp&o!ed to sound a turpentine sti&&, w#ere urns resu&ted %rom t#e sti&&?s catc#ing %ire
! &ig#tning, #ad arisen out o% t#e emp&o!ment and were compensa&e'
-2. =at)is vs. 5s) Grove Li#e
,n t#e case o% Mat#is vs' 7s# 6rove +ime T Port&and $ement $o' (808 P', 1/3), t#e "upreme $ourt o%
Pansas #e&d t#at t#e deat# o% t#e emp&o!ee o% some 9uarries, ! &ig#tning, w#i&e #e was wa&king a&ong t#e
rai&road track on #is wa! %rom one 9uarr! to anot#er, was compensa&e and t#at suc# deat# arose out o% t#e
emp&o!ment'
-. Le$our*eois vs. Lyon Lu#$er
,n t#e cases o% +eourgeois vs' +!on +umer $o' (> +a' 7pp', 81>)C Fontenot vs' +!on +umer $o' (>
+a' 7pp', 1>8), and 6asca vs' Te3as Pipe +ine co' (8 +a' 7pp', 5/3), t#e "upreme $ourt o% +ouisiana #e&d t#at
an emp&o!ee ki&&ed ! &ig#tning w#i&e eating #is &aunc# near a tree at t#e noon #our, was ki&&ed ! an accident
arising out o% #is emp&o!ment and was compensa&e'
-3. 5rticle /3 o, t)e Co+e o, Co##erce
7rtic&e >53 o% t#e $ode o% $ommerce provides t#at ;,% t#e vesse& and #er %reig#t s#ou&d e tota&&!
&ost, ! reason o% capture or wreck, a&& rig#ts o% t#e crew to demand an! wages w#atsoever s#a&& e
e3tinguis#ed, as we&& as t#at o% t#e agent %or t#e recover! o% t#e advances made'<
-4. 5rticle 433 o, t)e Co+e o, Co##erce
7rtic&e /30 o% t#e $ode o% $ommerce provides t#at ;T#e civi& &iai&it! contracted ! t#e s#ipowners
in t#e cases prescried in t#is section, s#a&& e understood as &imited to t#e va&ue o% t#e vesse& wit# a&& #er
appurtenances and a&& t#e %reig#t earned during t#e vo!age'<
-%. Co#pensation in ,avor o, .ork#en an+ e#ployees un+er EC5 to $e pai+ even i, it is not
reco*niJe+ or in con,lict .it) provisions o, t)e Civil Co+ an+ Co+e o, Co##erce
T#e rig#ts and responsii&ities de%ined in t#e Forkmen?s $ompensation 7ct must e governed ! its
own pecu&iar provisions in comp&ete disregard o% ot#er simi&ar provisions in comp&ete disregard o% ot#er
simi&ar provisions o% t#e civi& as we&& as t#e mercanti&e &aw' ,% an accident is compensa&e under t#e
Forkmen?s $ompensation 7ct, it must e compensated even w#en t#e workman?s rig#t is not recogni*ed !
or is in con%&ict wit# ot#er provisions o% t#e $ivi& $ode or o% t#e $ode o% $ommerce' T#e reason e#ind t#is
princip&e is t#at t#e Forkmen?s $ompensation 7ct was enacted ! t#e +egis&ature in arogation o% t#e ot#er
e3isting &aws' Forkmen?s compensation acts %o&&ow t#e natura& and &ogica& evo&ution o% societ! and t#e t#eor!
upon w#ic# t#e! are ased is t#at eac# time an emp&o!ee is ki&&ed or inAured, t#ere is an economic &oss w#ic#
must e made up or compensated in some wa!' T#e urden o% t#is economic &oss s#ou&d e orne ! t#e
industr! rat#er t#an ! societ! as a w#o&e' 7 %und s#ou&d e provided ! t#e industr! %rom w#ic# a %i3ed sum
s#ou&d e set apart as ever! accident occurs to compensate t#e person inAured, or #is dependents, %or #is or
t#eir &oss ("tate vs' ,ndustria& $ommission, 111 E' B', 8..C +' :' 7' 1.1>D, .55)'
3". Hu#anity an+ civiliJation +e#an+ protection ,or .ork#an in every line o, la$or
T#e court is aware o% t#e %act t#at t#e practica& app&ication o% t#e doctrine &aid down wi&& per#aps
occasion great &osses to t#e s#ipowners doing usiness in t#is countr!, ut #umanit! and civi&i*ation demand
protection %or t#e workman in ever! &ine o% &aor, and to %u&%i&& t#is socia& oAective and at t#e same time
avoid ruin, emp&o!ers and s#ipowners s#ou&d emp&o! means to insure t#e stai&it! o% t#eir usiness'
[13"]
=acon+ray vs. <el*a+o Bros. (GR L>13114! -4 5pril 1%")
Bn 1anc, $oncepcion (J): . concur
&acts' De&gado 1ros', as operator o% t#e pier services in t#e Port o% Mani&a, received >/ cartons o% paint,
among ot#er cargoes un&oaded in Mani&a, on 10 7pri& 1.44, %rom M" P+B7"7ETV,++B, o% w#ic#
Macondra! T $o', ,nc' is agent %or transs#ipment to ,&oi&o' F#en t#e cargo was aout to e &oaded on oard
t#e MV J(+(, De&gado 1ros' de&ivered on&! 4. cartons and cou&d not de&iver . cartons %orming part o% t#e
same s#ipment' "#ort&! a%ter t#e departure o% t#e MV J(+( %or ,&oi&o, De&gado 1ros' o%%ered . cartons o%
paint to make up %or t#e s#ortage, ut t#ese . cartons were not accepted ! t#e consignee and, conse9uent&!,
#ad to e so&d at t#e est possi&e price otaina&e, t#ere! reducing t#e va&ue o% t#e &oss o% P82.'./, w#ic#
Macondra!, as agent o% t#e vesse&, paid to t#e consignee' De&gado 1ros' %ai&ed and re%used to pa! said sum o%
P82.'./, despite demands made ! Macondra!'
7ccording&!, Macondra! was constrained to &itigate and incur an o&igation to pa! attorne!?s %ees and
e3penses o% &itigation in t#e amount o% not &ess t#an P322'22 e%ore t#e $F, o% Mani&a' De&gado 1ros'
answered a&&eging t#at it #ad e%%ected a comp&ete de&iver! o% >/ cartons o% paint to Macondra!?s customs
representative, w#o accepted said de&iver! wit#out protest' "oon t#erea%ter, #owever, De&gado 1ros' %i&ed,
wit# t#e permission o% t#e court, a motion to dismiss, upon t#e ground t#at it #as no Aurisdiction over t#e
suAect matter o% t#e comp&aint, t#e amount demanded t#erein eing &ess t#an P8,222' 1! an order dated 8/
"eptemer 1.40, t#e &ower court granted t#e motion and, conse9uent&!, dismissed t#e comp&aint' Macondra!
appea&ed, upon t#e t#eor! t#at t#e case at ar ca&&s %or t#e e3ercise o% admira&t! Aurisdiction, w#ic# is wit#in
t#e origina& e3c&usive aut#orit! o% courts o% %irst instance'
T#e "upreme $ourt a%%irmed t#e order appea&ed %rom, wit# costs against Macondra!'
1. :recise scope o, a+#iralty ?uris+iction
,t #as een said t#at ;t#e precise scope o% admira&t! Aurisdiction is not a matter o% ovious princip&e or
o% ver! accurate #istor!<C t#at ;t#is Aurisdiction is to e interpreted ! an en&arged view o% its nature and
oAects<C t#at t#e ;est guides as to its e3tent< are ;t#e $onstitution, t#e &aws o% $ongress, and t#e decisions
o% t#e "upreme $ourt<C and t#at ;as a resu&t o% t#e e3c&usive Aurisdiction o% a&& admira&t! and maritime cases,
vested< in certain courts, ;t#e court t#emse&ves are t#e so&e Audges o% t#e scope o% suc# Aurisdiction, suAect o%
course to congressiona& &egis&ation'< (1 7m' Jur', 442=441')
-. 5+#iralty +e,ine+ (Corpus Buris Secun+u#)
$orpus Juris "ecundum de%ines admira&t! as ;t#e ranc# o% Aurisprudence regu&ating maritime matters
o% a civi& and crimina& c#aracter, and in a more restricted sense is t#e triuna& administering maritime &aw ! a
pecu&iar and distinct procedure< (8 $'J', p' >5C ita&ics ours), and states t#at admira&t! Aurisdiction covers ;a&&
maritime cases and on&! maritime cases and e3tends to ot# person and res'< (8 $'J'"', p' >4)
3. :resent case +oes not +eal .it) any #ariti#e #atter or .it) t)e a+#inistration an+ application
o, any #ariti#e la.
T#e on&! issues raised in t#e p&eadings are (1) w#et#er or not de%endant #ad %u&&! disc#arged its
o&igation to de&iver t#e >/ cartons o% paint and (8), in t#e negative case, t#e amount o% indemnit! due t#e
p&ainti%% t#ere%or' T#e determination o% t#ese 9uestions does not re9uire t#e app&ication o% an! maritime &aw
and cannot a%%ect eit#er navigation or maritime commerce'
/. <uty o, <el*a+o Bros. si#ilar to any ot)er +epository6 8ri*in o, *oo+s )erein i##aterial
7s custodian o% t#e >/ cartons o% paints it #ad received %rom t#e M" P&easantvi&&e, it was De&gado
1ros'? dut!, &ike t#at o% an! ordinar! depositor!, to take good care o% said goods and to turn t#e same over to
t#e part! entit&ed to its possession, suAect to suc# 9ua&i%ications as ma! #ave va&id&! een imposed in t#e
contract etween t#e parties concerned' "uc# dut! on t#e part o% De&gado 1ros' wou&d e t#e same i% t#e %ina&
destination o% t#e goods were Mani&a, not ,&oi&o, and t#e goods #ad not een imported %rom anot#er state' T#e
%oreign origin o% t#e goods is, under t#e attending circumstances, immateria& to t#e &aw app&ica&e to t#e case
or t#e rig#ts o% t#e parties #erein, or t#e procedure %or t#e sett&ement o% t#eir dispute'
2. E)ere principal #atters $elon* to ?uris+iction o, court o, e9uity
,n case o% controvers! invo&ving ot# maritime and non=maritime suAect matter, w#ere t#e principa&
matter invo&ved e&ongs to t#e Aurisdiction o% a court o% common &aw or o% e9uit!, admira&t! wi&& not take
cogni*ance o% incidenta& maritime matters connected t#erewit# ut wi&& re&egate t#e w#o&e controvers! to t#e
appropriate triuna&'
[>]
Bryan vs. Dastern M 5ustralian SS (GR %/"3! / 7ove#$er 1%1/)
Bn 1anc, More&and (J): 5 concur
&acts' (n or aout t#e end o% Decemer, 1.18, 7&&an 7' 1r!an, et' a&' oug#t o% Bastern T 7ustra&ian "" $o'
+td'??s agent in "#ang#ai two %irst=c&ass tickets %or Mani&a' T#e tickets de&ivered to t#em were in Bng&is# and
ore on t#eir %ace, in &arge print, a statement t#at t#e! were issued suAect to t#e conditions printed on t#e
ack' 7t t#e time t#e tickets were de&ivered to 1r!an in "#ang#ai t#eir attention was not especia&&! drawn to
t#e provisions on t#e ack o% t#e ticket' 1r!an, et' a&' put t#eir aggage on t#e "t' 7&ans (owned ! Bastern
T 7ustra&ian) wit#out pa!ing %or its transportation as %reig#t and trave&ed wit# suc# aggage to Mani&a' T#e
steamer arrived in Mani&a on t#e morning o% 0 Januar! 1.13' "#ort&! a%ter its arriva& 1r!an?s aggage was
taken out o% t#e #o&d o% t#e s#ip %or t#e purpose o% eing p&aced on t#e dock a&ongside o% w#ic# t#e vesse&
was ert#ed' T#e aggage was p&aced in a s&ing, consisting o% a sing&e rope wound once around t#e trunks,
and was swung %rom t#e side o% t#e vesse&' F#i&e sti&& severa& %eet aove t#e w#ar%, t#e emp&o!ee o% Bastern
T 7ustra&ian w#o was operating t#e winc#, ! some act or ot#er, permitted t#e aggage to drop wit# great
rapidit!' in its passage downward it struck t#e side o% t#e s#ip wit# suc# %orce as to re&ease it %rom t#e s&ing
and it dropped into t#e water a&ongside o% t#e s#ip' T#e damages are stipu&ated at P1,1//'
1r!an %i&ed action to recover damages in t#e va&ue o% P1,.14'32 against Bastern T 7ustra&ian, resu&ting %rom
t#e neg&igence o% t#e s#ipping compan! in #and&ing 1r!an?s aggage, w#ere! it %e&& into t#e sea and was
inAured or destro!ed' T#e s#ipping compan!, w#i&e admitting t#e damage caused to 1r!an?s aggage, denied
t#at it was t#e resu&t o% t#e compan!?s neg&igence and set up as a specia& de%ense t#e &imitation o% &iai&it!
esta&is#ed ! t#e contract under w#ic# t#e s#ipping compan! undertook to transport t#e p&ainti%%s %rom t#e
cit! o% @ongkong to Mani&a' T#e tria& court ru&ed in %avor o% 1r!an' T#e s#ipping compan! appea&ed'
T#e "upreme $ourt a%%irmed t#e Audgment, wit# costs against Bastern T 7ustra&ian ""'
1. Con+itions at t)e $ack o, t)e ticket
(ne o% t#e conditions in t#e ticket, printed in &egi&e t!pe, was as %o&&ows:<T#is ticket is issued ! t#e
compan! and accepted ! t#e passenger suAect to t#e %o&&owing conditions: T#e compan! wi&& not #o&d itse&%
responsi&e %or an! &oss or damage passengers ma! sustain %rom t#e %o&&owing causes: From advance in or
de&a!s a%ter advertised date o% sai&ing, eit#er t#roug# t#e per%ormance o% @is MaAest!?s mai& service or an!
ot#er cause, %rom detention on t#e vo!age, or at an! o% t#e intermediate ports, or t#roug# streamers not
meeting, or de&a!s %rom accident, %rom peri&s o% t#e sea, or %rom mac#iner!, oi&ers or stream, or %rom an!
act, neg&ect or de%au&t w#atsoever o% t#e pi&ot, masters, or mariners, nor %rom an! conse9uences arising %rom
an! sanitar! regu&ations or precautions w#ic# t#e compan!?s o%%icers or &oca& government aut#orities ma!
deem necessar!' Persona& aggage' H ,n order to insure as %ar as possi&e t#e sa%e custod! o% &uggage,
passengers s#ou&d persona&&! see t#eir &uggage de&ivered on oard' Bac# adu&t sa&oon passenger ma! carr!,
%ree o% c#arge, ut at #is own risk, 82 cuic %eet o% &uggageC and eac# steerage passenger 12 cuic %eet, under
simi&ar conditions (a&& in e3cess o% t#ese 9uantities must e paid %or at t#e current rate o% %reig#t)C ut t#e
compan! wi&& not #o&d itse&% responsi&e %or an! &oss, or damage to or detention, or overcarriage o% &uggage,
under an! circumstances w#atsoever un&ess it #as een ooked and paid %or as %reig#t'<
-. (esti#ony o, B. S. Stanley <eputy Collector o, Custo#s
Mr' "tan&e! testi%ied: ;F#i&e standing at t#e e3treme end o% Pier Eo' 4, , witnessed a numer o%
trunks eing &i%ted %rom t#e deck o% t#e steams#ip "t' 7&ans to an e&evation o% aout 12 or 18 %eet %rom t#e
deck and practica&&! t#e same #eig#t aove t#e pier' T#e winc#man was instructed to &et go' T#e s&ing dropped
sudden&! and was not c#ecked at t#e proper time, and t#e s&ing o% trunks struck t#e side o% t#e w#ar%, wit# t#e
resu&t t#at t#e trunks were %orced %rom t#e s&ing and %e&& into t#e water' ,t is customar! to use a rope s&ing or a
cargo c#ute running %rom t#e deck to t#e pier' T#e s&ings var! in si*e ut are su%%icient&! &arge to contain a
&arge numer o% trunks and are %ormed o% ropes running in opposite directions %orming a rope net' ,% t#ese
trunks #ad een in a rope s&ing t#e! wou&d not #ave %a&&en in t#e water'<
3. (esti#ony o, ;. G. C)ap#an! c)ie, .)ar,in*er in c)ar*e o, pier 7o. 2
Mr' $#apman testi%ied: ;F#en t#e steams#ip "t' 7&ans came a&ongside t#e pier , took a&& #er &ines
and ert#ed #er in a position %or t#e gangwa! and #atc#wa!s to work' ,mmediate&! a%ter t#e s#ip was made
%ast , re9uested to e in%ormed %rom t#e c#ie% o%%icer w#ere t#e aggage wou&d e disc#arged %romC #e to&d
me #atc# Eo' 5C , went to Eo' & #atc# and asked t#e second o%%icer w#o was t#ere in c#arge o% t#e #atc# w#ere
t#e aggage was to e disc#arged %romC #e said, G:ig#t #ere,? indicating Eo' 5 #atc#' , t#en to&d #im , wou&d
#ave a c#ute t#ere %or #im rig#t awa! and #e answered: G7&& rig#t'? , immediate&! went into t#e pier and
ordered one o% t#e %oremen and t#e men to take a c#ute to Eo' 5 #atc#' , was %o&&owing wit# t#e %oreman and
e#ind t#e c#ute w#en Mr' "tan&e! in%ormed me t#at t#e aggage was over t#e side' T#e c#ute at t#is time
was Aust t#roug# t#e door aout 04 %eet %rom t#e #atc#' (n arriving t#ere , saw t#at t#e s&ing and t#ese trunks
were a&& &!ing in t#e water' T#e stevedore #ad a &ot o% #is men over t#e side picking up t#e trunks wit# t#e
men %rom t#e pier #e&ping'<
/. La.s involvin* contracts execute+ in Dn*lis) colony6 Lex loci contractus
T#e evidence re&ative to t#e &aw governing contracts in @ongkong consists o% t#e testimon! o% a
@ongkong arrister, &earned in t#e &aw o% Bng&and and #er co&onies, and is to t#e e%%ect t#at, under t#e &aw in
%orce at t#e p&ace w#ere t#e contract was made, t#e contract was va&id and en%orcea&e, and t#at it is not
necessar! t#at t#e attention o% persons purc#asing tickets %rom common carriers e drawn specia&&! to t#e
terms t#ereo% w#en printed upon a ticket w#ic# on its %ace s#ows t#at it is issued suAect to suc# conditions'
T#e arrister a&so testi%ied t#at under t#e &aw o% Bng&and and #er co&onies ever!t#ing was done w#ic# was
(ransportation La.! -""/ ( 3%% )
necessar! to make t#e terms printed on t#e ack o% t#e tickets a part o% t#e contract etween t#e parties'
@erein, it is undouted t#at t#e contract %ound upon t#e ack o% t#e tickets is a contract per%ect&! va&id in
Bng&and and #er co&onies and one w#ic# wou&d e en%orced according to its terms in 1ritis# Aurisdictions'
2. Strict rule o, construction' Stipulation in contract too $roa+! cannot co#pre)en+ to inclu+e
ne*li*ent acts as so )ol+in* .oul+ $e contrary to la.6 :rice an+ Co#pany vs. Fnion Li*)tera*e
Co#pany
7n e3emption in genera& words not e3press&! re&ating to neg&igence, even t#oug# t#e words are wide
enoug# to inc&ude &oss ! neg&igence or de%au&t o% carriers? servants, must e construed as &imiting t#e &iai&it!
o% t#e carrier as assurer, and not as re&ieving #im %rom t#e dut! o% e3ercising reasona&e ski&& and care' Dn&ess
t#e contract o% e3emption speci%ica&&! re%ers to e3emption %or neg&igence, it wi&& e construed as simp&!
e3empting t#e carrier %rom #is &iai&it! as insurer or %rom #is common &aw &iai&it! as carrier' ,% it e #e&d t#e
&anguage wou&d e road enoug# to cover ever! possi&e contingenc!, inc&uding t#e neg&igent act o%
de%endant?s servant, it wou&d run counter to t#e esta&is#ed &aw o% Bng&and and t#e Dnited "tates on t#at
suAect' T#us, t#e reasona&eness o% t#e strict ru&e o% construction t#at t#e courts o% Bng&and and o% t#e "tate
o% Eew Oork app&! to contracts restricting t#e &iai&it! o% carriers wit# respect to t#eir neg&igence is apparent
w#en one considers t#at suc# contracts are #e&d to e contrar! to pu&ic Po&ic! and inva&id in t#e Federa&
courts and in most o% t#e "tate courts o% t#e Dnion'
. (esti#ony o, expert .itness +oes not contra+ict rule6 Court not preclu+e+ ,ro# a+visin* itsel,
as to t)e co##on la. o, Dn*lan+
7 critica& e3amination o% t#e deposition o% Mr' Brnest @ami&ton "#arpe, Master o% 7rts and 1ac#e&or
o% $ivi& +aw o% t#e Dniversit! o% (3%ord, 1arrister at +aw o% +ondon, "#ang#ai and @ongkong, and Ping?s
$ounse& at t#e &atter co&on!, does not disc&ose an!t#ing contradictor! to t#e ru&e stated' Mr' "#arpe?s
e3amination was con%ined to t#e 9uestion o% t#e va&idit! o% t#e contract indorsed upon t#e ticket e3empting
t#e s#ipping compan! %rom &iai&it! %or damage to t#eir aggage' ,n view o% t#e accurate answers o% t#e
&earned witness to t#e 9uestions put to #im as to t#e va&idit! o% t#e condition in 9uestion under Bng&is# &aw,
t#ere is no reason to suppose t#at #e wou&d not #ave stated correct&! t#e ru&e as to t#e construction o% t#e
condition #ad #is attention een directed to t#at point' ,n an! event, t#is court is not, ! reason o% t#e opinion
e3pressed ! an e3pert witness, prec&uded %rom advising itse&% as to t#e common &aw o% Bng&and' ("ec' 328,
$ode o% $ivi& Procedure')
[,] 'nternational Larvester v. La%1urgFA%erican Line, see [1+3]
[171] Planters v. CA , seee [1/]
[13-]
:uro#ines ;nc. vs. C5 (GR %1--4! -- =arc) 1%%3)
"econd Division, Eocon (J): 5 concur
&acts' Puromines, ,nc' and Makati 7gro Trading, ,nc' entered into a contract wit# P#i&ipp 1rot#ers (ceanic,
,nc' %or t#e sa&e o% pri&&ed Drea in u&k' (n 88 Ma! 1.//, t#e vesse& M-V ;+i&iana Dimitrova< &oaded on
oard at Ou*#n!, D"": a s#ipment o% 14,422 metric tons pri&&ed Drea in u&k comp&ete and in good order and
condition %or transport to ,&oi&o and Mani&a, to e de&ivered to Puromines' 3 i&&s o% &ading were issued ! t#e
s#ip=agent in t#e P#i&ippines, Maritime Factors ,nc', name&!: 1i&& o% +ading 1 dated 18 Ma! 1.// covering
12,222 metric tons %or disc#arge Mani&aC 1i&& o% +ading 8 o% even date covering 5,222 metric tons %or
un&oading in ,&oi&o $it!C and 1i&& o% +ading 3, same date, covering 1,422 metric tons &ikewise %or disc#arged
in Mani&a' T#e s#ipment covered ! 1i&& o% +ading 8 was disc#arged in ,&oi&o $it! comp&ete and in good
order and condition' @owever, t#e s#ipments covered ! 1i&& o% +adings 1 and 3 were disc#arged in Mani&a
in ad order and condition, caked, #ardened and &ump!, disco&ored and contaminated wit# rust and dirt'
Damages were va&ued at P>/3, 24>'8. inc&uding additiona& disc#arging e3penses'
(ransportation La.! -""/ ( /"" )
$onse9uent&!, Puromines %i&ed a comp&aint wit# t#e tria& court %or reac# o% contract o% carriage against
Maritime Factors ,nc' as s#ip=agent in t#e P#i&ippines %or t#e owners o% t#e vesse& MV ;+i&iana Dimitrova,<
w#i&e P#i&ipp 1rot#ers (ceanic ,nc', was imp&eaded as c#arterer o% t#e said vesse& and proper part! to accord
Puromines comp&ete re&ie% ($ivi& $ase /.=50523)' Maritime Factors, ,nc' %i&ed its 7nswer to t#e comp&aint,
w#i&e P#i&ipp 1ros' %i&ed a motion to dismiss, dated . Feruar! 1./., on t#e grounds t#at t#e comp&aint states
no cause o% actionC t#at it was premature&! %i&edC and t#at Puromines s#ou&d comp&! wit# t#e aritration c&ause
in t#e sa&es contract' T#e motion to dismiss was opposed ! Puromines contending t#e inapp&icai&it! o% t#e
aritration c&ause inasmuc# as t#e cause o% action did not arise %rom a vio&ation o% t#e terms o% t#e sa&es
contract ut rat#er %or c&aims o% cargo damages w#ere t#ere is no aritration agreement' (n 8> 7pri& 1./., t#e
tria& court denied P#i&ipp 1ros'? motion to dismiss'
B&evating t#e matter to t#e $ourt o% 7ppea&s, and on 1> Eovemer 1./., Puromines?s comp&aint was
dismissed' T#e appe&&ate court %ound t#at t#e aritration provision in t#e sa&es contract and-or t#e i&&s o%
&ading is app&ica&e in t#e present case' @ence, t#e specia& civi& action %or certiorari and pro#iition'
T#e "upreme $ourt dismissed t#e petition and a%%irmed t#e decision o% t#e court a 9uo'
1. 5r$itration clause in Sales Contract S121.4."1"14 entere+ $y :uro#ines .it) :)ilipp Brot)ers
8ceanic
T#e "a&es $ontract "141'/'2121/ provided, among ot#ers, an aritration c&ause w#ic# states t#at
;7n! disputes arising under t#is contract s#a&& e sett&ed ! aritration in +ondon in accordance wit# t#e
7ritration 7ct 1.42 and an! statutor! amendment or modi%ication t#ereo%' Bac# part! is to appoint an
7ritrator, and s#ou&d t#e! e una&e to agree, t#e decision o% an Dmpire appointed ! t#em to e %ina&' T#e
7ritrators and Dmpire are a&& to e commercia& men and resident in +ondon' T#is sumission ma! e made a
ru&e o% t#e @ig# $ourt o% Justice in Bng&and ! eit#er part!'<
-. Sales contract co#pre)ensive enou*) to inclu+e clai#s ,or +a#a*es arisin* ,ro# carria*e
T#e sa&es contract is compre#ensive enoug# to inc&ude c&aims %or damages arising %rom carriage and
de&iver! o% t#e goods' 7s a genera& ru&e, t#e se&&er #as t#e o&igation to transmit t#e goods to t#e u!er, and
concomitant t#ereto, t#e contracting o% a carrier to de&iver t#e same'
3. 5rticle 12-3 7CC
7rtiic&e 1483 o% t#e $ivi& $ode provides t#at ;F#ere in pursuance o% a contract o% sa&e, t#e se&&er in
aut#ori*ed or re9uired to send t#e goods to t#e u!er, de&iver! o% t#e goods to a carrier, w#et#er named ! t#e
u!er or not, %or t#e purpose o% transmission to t#e u!er is deemed to e a de&iver! o% t#e goods to t#e u!er,
e3cept in t#e cases provided %or in artic&e 1423, %irst, second and t#ird paragrap#s, or un&ess a contrar! intent
appear' Dn&ess ot#erwise aut#ori*ed ! t#e u!er, t#e se&&er must take suc# contract wit# t#e carrier on e#a&%
o% t#e u!er as ma! e reasona&e, #aving regard to t#e nature o% t#e goods and t#e ot#er circumstances o% t#e
case' ,% t#e se&&er omit so to do, and t#e goods are &ost or damaged in course o% transit, t#e u!er ma! dec&ine
to treat t#e de&iver! to t#e carrier as a de&iver! to #imse&%,, or ma! #o&d t#e se&&er responsi&e in damages'
333<
/. Contract provi+es con+itions relative to +elivery o, *oo+s6 Relevant provisions
T#e disputed sa&es contact provides %or conditions re&ative to t#e de&iver! o% goods, suc# as date o%
s#ipment, demurrage, weig#t as determined ! t#e i&& o% &ading at &oad port and more particu&ar&! t#e
%o&&owing provisions: ;(3) ,ntention is to s#ip in one ottom, appro3imate&! 4,222 metrics tons to Puromines
and appro3imate&! 14,222 metric tons to Makati 7gro' @owever, "e&&ers to #ave rig#t to s#ip materia& as
partia& s#ipment or co=s#ipment in addition to aove' ,n t#e event o% co=s#ipment to a t#ird part! wit#in
P#i&ippines same to e discussed wit# and accepta&e to ot# Puromines and Makati 7gro' (5) "e&&ers to
appoint neutra& surve! %or "e&&er?s account to conduct initia& dra%t surve! at %irst disc#arge port and %ina&
surve! at &ast disc#arge port' "urve!ors resu&ts to e inding and %ina&' ,n t#e event dra%t surve! resu&ts s#ow a
(ransportation La.! -""/ ( /"1 )
9uantit! &ess t#an t#e comined 1i&&s o% +ading 9uantit! %or ot# Puromines and Makati 7gro, "e&&ers to
re%und t#e di%%erence' ,n t#e event t#at dra%t surve! resu&ts s#ow a 9uantit! in e3cess o% comined 1i&&s o%
+ading o% 9uantit! o% ot# Puromines and Makati 7gro t#en 1u!ers to re%und t#e di%%erence' (4) ,t is
e3press&! and mutua&&! agreed t#at neit#er "e&&ers nor vesse&?s (wners #ave an! &iai&it! to separate cargo or
to de&iver cargo separate&! or to de&iver minimum-ma3imum 9uantities stated on individua& 1i&&s o% +ading'
7t eac# port vesse& is to disc#arge in accordance wit# 1u!ers &oca& re9uirements and it is 1u!er?s
responsii&it! to separate individua& 9uantities re9uired ! eac# o% t#em at eac# port during or a%ter
disc#arged'<
2. C)arter party +e,ine+6 0in+s
7merican Aurisprudence de%ines c#arter part! as a contract ! w#ic# an entire s#ip or some principa&
part t#ereo% is &et ! t#e owner to anot#er person %or a speci%ied time or use' $#arter or c#arter parties are o%
two kinds' $#arter o% demise or areoat and contracts o% a%%reig#tment'
. <e#ise or $are$oat c)arter o, t)e vessel
Dnder t#e demise or areoat c#arter o% t#e vesse&, t#e c#arterer wi&& genera&&! e considered as
owner %or t#e vo!age or service stipu&ated' T#e c#arterer mans t#e vesse& wit# #is own peop&e and ecomes,
in e%%ect, t#e owner pro #ac vice, suAect to &iai&it! to ot#ers %or damages caused ! neg&igence' To create a
demise t#e owner o% a vesse& must comp&ete&! and e3c&usive&! re&in9uis# possession, an!t#ing s#ort o% suc# a
comp&ete trans%er is a contract o% a%%reig#tment (time or vo!age c#arter part!) or not a c#arter part! at a&&'
3. Contract o, a,,rei*)t#ent
7 contract o% a%%reig#tment is in w#ic# t#e owner o% t#e vesse& &eases part or a&& o% its space to #au&
goods %or ot#ers' ,t is a contract %or a specia& service to e rendered ! t#e owner o% t#e vesse& and under suc#
contract t#e genera& owner retains t#e possession, command and navigation o% t#e s#ip, t#e c#arterer or
%reig#ter mere&! #aving use o% t#e space in t#e vesse& in return %or #is pa!ment o% t#e c#arter #ire' ,% t#e
c#arter is a contract o% a%%reig#tment, w#ic# &eaves t#e genera& owner in possession o% t#e s#ip as owner %or
t#e vo!age, t#e rig#ts, responsii&ities o% owners#ip rest on t#e owner and t#e c#arterer is usua&&! %ree %rom
&iai&it! to t#ird persons in respect o% t#e s#ip'
4. Responsi$ility to t)ir+ persons ,or *oo+s s)ippe+ ,ollo.s vessel1s possession an+ e#ploye#ent
:esponsii&it! to t#ird persons %or goods s#ipped on oard a vesse& %o&&ows t#e vesse&?s possession
and emp&o!mentC and i% possession is trans%erred to t#e c#arterer ! virtue o% a demise, t#e c#arterer, and not
t#e owner, is &ia&e as carrier on t#e contract o% a%%reig#tment made ! #imse&% or ! t#e master wit# t#ird
persons, and is answera&e %or &oss, damage or non=de&iver! o% goods received %or transportation' 7n owner
w#o retains possession o% t#e s#ip, t#oug# t#e #o&d is t#e propert! o% t#e c#arterer, remains &ia&e as carrier
and must answer %or an! reac# o% dut! as to t#e care, &oading or un&oading o% t#e cargo'
%. Contract re,erre+ in +eter#inin* lia$ility ,or +a#a*es6 5r$itration clause s)oul+ $e respecte+
in any case
7ssuming t#at in t#e present case, t#e c#arter part! is a demise or areoat c#arter, t#en P#i&ipp
1rot#ers is &ia&e to Puromines, ,nc', suAect to t#e terms and conditions o% t#e sa&es contract' (n t#e ot#er
#and, i% t#e contract etween P#i&ipp 1rot#ers and t#e owner o% t#e vesse& MV ;+i&iana Dimitrova< was
mere&! t#at o% a%%reig#tment, t#en it cannot e #e&d &ia&e %or t#e damages caused ! t#e reac# o% contract o%
carriage, t#e evidence o% w#ic# is t#e i&&s o% &ading' ,n an! case, w#et#er t#e &iai&it! o% P#i&ipp 1ros' s#ou&d
e ased on t#e same contract or t#at o% t#e i&& o% &ading, t#e parties are nevert#e&ess o&igated to respect t#e
aritration provisions on t#e sa&es contract and-or t#e i&& o% &ading' Puromines eing a signator! and part! to
t#e sa&es contract cannot escape %rom #is o&igation under t#e aritration c&ause'
1". 5r$itration provision in $ills o, la+in* properly +iscusse+ even i, not raise+ as special or
a,,ir#ative +e,ense
(ransportation La.! -""/ ( /"- )
T#e t#ree i&&s o% &ading were attac#ed to t#e comp&aint as and are t#ere%ore parts t#ereo% and ma! e
considered as evidence a&t#oug# not introduced as suc#' @ence, it was t#en proper %or t#e appe&&ate court to
discuss t#e contents o% t#e i&&s o% &ading (especia&&! t#e aritration provisions t#ereo%), #aving een made
part o% t#e recordC even i% t#e! are not raised as a specia& or a%%irmative de%ense'
11. 5r$itration vali+ an+ constitutional
7ritration #as een #e&d va&id and constitutiona&' Bven e%ore t#e enactment o% :7 /0>, t#e $ourt
#as countenanced t#e sett&ement o% disputes t#roug# aritration' T#e ru&e now is t#at un&ess t#e agreement is
suc# as aso&ute&! to c&ose t#e doors o% t#e courts against t#e parties, w#ic# agreement wou&d e void, t#e
courts wi&& &ook wit# %avor upon suc# amica&e arrangements and wi&& on&! inter%ere wit# great re&uctance to
anticipate or nu&&i%! t#e action o% t#e aritrator'
1-. 5r$itration6 =in+anao :ortlan+ Ce#ent vs. =c<onou*) Construction Co. o, &lori+a
7s pointed out in t#e case o% Mindanao Port&and $ement $orp' v' McDonoug# $onstruction
$ompan! o% F&orida, t#e $ourt said t#at ;"ince t#ere otains #erein a written provision %or aritration as
we&& as %ai&ure on respondent?s part to comp&! t#erewit#, t#e court a 9uo rig#t&! ordered t#e parties to proceed
to t#eir aritration in accordance wit# t#e terms o% t#eir agreement ("ec' > :epu&ic 7ct /0>)' :espondent?s
arguments touc#ing upon t#e merits o% t#e dispute are improper&! raised #erein' T#e! s#ou&d e addressed to
t#e aritrators' T#is proceeding is mere&! a summar! remed! to en%orce t#e agreement to aritrate' T#e dut!
o% t#e court in t#is case is not to reso&ve t#e merits o% t#e parties? c&aims ut on&! to determine i% t#e! s#ou&d
proceed to aritration or not' 7nd a&t#oug# it #as een ru&ed t#at a %rivo&ous or patent&! ase&ess c&aim s#ou&d
not e ordered to aritration it is a&so recogni*ed t#at t#e mere %act t#at a de%ense e3ist against a c&aim does
not make it %rivo&ous or ase&ess'<
13. 5r$itration6 Ben*son vs. C)an
,n t#e case o% 1engson v' $#an, t#e court up#e&d t#e provision o% a contract w#ic# re9uired t#e parties
to sumit t#eir disputes to aritration' T#erein, t#e court #e&d t#at ;t#e tria& court sensi&! said t#at Ga&& t#e
causes o% action a&&eged in t#e p&ainti%%s amended comp&aint are ased upon t#e supposed vio&ations
committed ! t#e de%endants o% t#e G$ontract o% $onstruction o% a 1ui&ding? and t#at Gt#e provisions o%
paragrap# 14 #ereo% &eave a ver! &itt&e room %or dout t#at t#e said causes o% action are emraced wit#in t#e
p#rase Gan! and a&& 9uestions, disputes or di%%erences etween t#e parties #ereto re&ative to t#e construction o%
t#e ui&ding,? w#ic# must e determined ! aritration o% two persons and suc# determination ! t#e
aritrators s#a&& e G%ina&, conc&usive and inding upon ot# parties un&ess t#e! to court, in w#ic# t#e case t#e
determination ! aritration is a condition precedent G%or taking an! court action' 333 Fe #o&d t#at t#e terms
o% paragrap# 14 c&ear&! e3press t#e intention o% t#e parties t#at a&& disputes etween t#em s#ou&d %irst e
aritrated e%ore court action can e taken ! t#e aggrieved part!'<
[173] Calte; v. upicio Lines, see [1]
[174] Lo%e 'nsurance v. A%erican, see [*]
[132]
Liton?ua S)ippin* vs. 7ational Sea#en Boar+ (GR 21%1"! 1" 5u*ust 1%4%)
&acts' +itonAua is t#e du&! appointed &oca& crewing Managing (%%ice o% t#e Fairwind "#ipping $orporation'
T#e M-V Du%ton 1a! is an ocean=going vesse& o% %oreign registr! owned ! t#e :'D' Mu&&ion "#ip 1roking
7genc! +td' (n 11 "eptemer 1.0>, w#i&e t#e Du%ton 1a! was in t#e port o% $eu and w#i&e under c#arter !
Fairwind, t#e vesse&?s master contracted t#e services o%, among ot#ers, 6regorio $andongo to serve as T#ird
Bngineer %or a period o% 18 mont#s wit# a mont#&! wage o% D"K422'22' T#is agreement was e3ecuted e%ore
t#e $eu 7rea Manning Dnit o% t#e E"1' T#erea%ter, $andongo oarded t#e vesse&' (n 8/ Decemer 1.0>,
e%ore e3piration o% #is contract, $andongo was re9uired to disemark at Port Pe&ang, Ma&a!sia, and was
returned to t#e P#i&ippines on 4 Januar! 1.00' T#e cause o% t#e disc#arge was descried in #is "eaman?s 1ook
as ;! owner?s arrange'<
"#ort&! a%ter returning to t#e P#i&ippines, $andongo %i&ed a comp&aint e%ore t#e Eationa& "eamen 1oard
(E"1C E"1=1331=00), %or vio&ation o% contract, against Mu&&ion as t#e s#ipping compan! and +itonAua as
agent o% t#e s#ipowner and o% t#e c#arterer o% t#e vesse&' 7t t#e initia& #earing, t#e E"1 #earing o%%icer #e&d a
con%erence wit# t#e parties, at w#ic# con%erence +itonAua was represented ! one o% its supercargos, Bdmond
$ru*' Bdmond $ru* asked, in writing, t#at t#e #earing e postponed %or a mont# upon t#e ground t#at t#e
emp&o!ee o% +itonAua in c#arge o% t#e case was out o% town' T#e #earing o%%icer denied t#is re9uest and t#en
dec&ared +itonAua in de%au&t' 7t t#e #earing, $andongo testi%ied t#at w#en #e was recruited ! t#e $aptain o%
t#e Du%ton 1a!, t#e &atter was accompanied to t#e E"1 $eu 7rea Manning Dnit ! 8 supercargos sent !
+itonAua to $eu, and t#at t#e 8 supercargos Bdmond $ru* and :enato +itonAua assisted $andongo in t#e
procurement o% #is Eationa& ,nvestigation and "ecurit! 7genc! (E,"7) c&earance' Messrs' $ru* and +itonAua
were a&so present during $an%ongo?s interview ! $aptain @o Ping Oiu o% t#e Du%ton 1a!' (n 10 Feruar!
1.00, t#e #earing o%%icer o% t#e E"1 rendered a Audgment ! de%au&t, ordering :'D' Mu&&ion "#iprokers $o',
+td', and +itonAua "#ipping $o', ,nc', Aoint&! and so&idari&! to pa! $andongo t#e sum o% K5,>40'>3 or its
e9uiva&ent in t#e P#i&ippine currenc! wit#in 12 da!s %rom receipt o% t#e cop! o% t#e Decision t#e pa!ment o%
w#ic# to e coursed t#roug# t#e t#en E"1' +itonAua %i&ed a motion %or reconsideration o% t#e #earing o%%icer?s
decisionC t#e motion was denied'
+itonAua %i&ed an ;7ppea& and-or Motion %or :econsideration o% t#e De%au&t Judgment dated . 7ugust 1.00<
wit# t#e centra& o%%ice o% t#e E"1' E"1 t#en suspended its #earing o%%icer?s decision and &i%ted t#e order o%
de%au&t against +itonAua, t#ere! a&&owing t#e &atter to adduce evidence in its own e#a&%' (n 8> 7pri& 1.0/,
t#e E"1 t#en &i%ted t#e suspension o% t#e #earing o%%icer?s 10 Feruar! 1.00 decision' +itonAua once more
moved %or reconsideration' (n 31 Ma! 1.0., E"1 rendered a decision w#ic# a%%irmed its #earing o%%icer?s
decision o% 10 Feruar! 1.00' @ence, t#e petition %or certiorari'
T#e "upreme $ourt dismissed t#e Petition %or $ertiorari and a%%irmed t#e Decision o% t#e t#en Eationa&
"eamen 1oard dated 31 Ma! 1.0.C wit#out pronouncement as to costs'
1. Groun+s .)ere Liton?ua #ay $e #a+e lia$le on t)e contract o, e#ploy#ent
T#ere are 8 grounds upon w#ic# +itonAua ma! e #e&d &ia&e to $andongo on t#e contract o%
emp&o!ment' T#e %irst asis is t#e c#arter part! w#ic# e3isted etween Mu&&ion, t#e s#ipowner, and Fairwind,
t#e c#arterer' T#e second and et#ica&&! more compe&&ing asis %or #o&ding +itonAua &ia&e on t#e contract o%
emp&o!ment o% $andongo re%ers to t#at t#e c#arterer o% t#e vesse&, Fairwind, c&ear&! ene%itted %rom t#e
emp&o!ment o% $andongo as T#ird Bngineer o% t#e Du%ton 1a!' +itonAua assisted t#e Master o% t#e vesse& in
&ocating and recruiting $andongo as T#ird Bngineer o% t#e vesse& as we&& as 12 ot#er Fi&ipino seamen as crew
memers' ,n so doing, +itonAua certain&! in e%%ect represented t#at it was taking care o% t#e crewing and ot#er
re9uirements o% a vesse& c#artered ! its principa&, Fairwind'
-. (ypes o, c)arter parties
,n modern maritime &aw and usage, t#ere are t#ree (3) distinguis#a&e t!pes o% c#arter parties: (a) t#e
;areoat< or ;demise< c#arterC () t#e ;time< c#arterC and (c) t#e ;vo!age< or ;trip< c#arter'
3. Bare$oat or +e#ise c)arter
7 areoat or demise c#arter is a demise o% a vesse&, muc# as a &ease o% an un%urnis#ed #ouse is a
demise o% rea& propert!' T#e s#ipowner turns over possession o% #is vesse& to t#e c#arterer, w#o t#en
undertakes to provide a crew and victua&s and supp&ies and %ue& %or #er during t#e term o% t#e c#arter' T#e
s#ipowner is not norma&&! re9uired ! t#e terms o% a demise c#arter to provide a crew, and so t#e c#arterer
gets t#e ;are oat<, i'e', wit#out a crew' "ometimes, o% course, t#e demise c#arter mig#t provide t#at t#e
s#ipowner is to %urnis# a master and crew to man t#e vesse& under t#e c#arterer?s direction, suc# t#at t#e
(ransportation La.! -""/ ( /"/ )
master and crew provided ! t#e s#ipowner ecome t#e agents and servants or emp&o!ees o% t#e c#arterer,
and t#e c#arterer (and not t#e owner) t#roug# t#e agenc! o% t#e master, #as possession and contro& o% t#e
vesse& during t#e c#arter period'
/. (i#e c)arter
7 time c#arter, &ike a demise c#arter, is a contract %or t#e use o% a vesse& %or a speci%ied period o% time
or %or t#e duration o% one or more speci%ied vo!ages' ,n t#is case, #owever, t#e owner o% a time= c#artered
vesse& (un&ike t#e owner o% a vesse& under a demise or are= oat c#arter), retains possession and contro&
t#roug# t#e master and crew w#o remain #is emp&o!ees' F#at t#e time c#arterer ac9uires is t#e rig#t to uti&i*e
t#e carr!ing capacit! and %aci&ities o% t#e vesse& and to designate #er destinations during t#e term o% t#e
c#arter'
2. Goya*e or trip c)arter
7 vo!age c#arter, or trip c#arter, is simp&! a contract o% a%%reig#tment, t#at is, a contract %or t#e
carriage o% goods, %rom one or more ports o% &oading to one or more ports o% un&oading, on one or on a series
o% vo!ages' ,n a vo!age c#arter, master and crew remain in t#e emp&o! o% t#e owner o% t#e vesse&'
. C)arterer t)e pro )ac vice o.ner o, t)e vessel in $are$oat c)arter
,t is we&& sett&ed t#at in a demise or are oat c#arter, t#e c#arterer is treated as owner pro #ac vice o%
t#e vesse&, t#e c#arterer assuming in &arge measure t#e customar! rig#ts and &iai&ities o% t#e s#ipowner in
re&ation to t#ird persons w#o #ave dea&t wit# #im or wit# t#e vesse&' ,n suc# case, t#e Master o% t#e vesse& is
t#e agent o% t#e c#arterer and not o% t#e s#ipowner' T#e c#arterer or owner pro #ac vice, and not t#e genera&
owner o% t#e vesse&, is #e&d &ia&e %or t#e e3penses o% t#e vo!age inc&uding t#e wages o% t#e seamen'
3. :resu#ption arisin* ,ro# ,ailure o, Liton?ua to attac) $are$oat c)arter into t)e recor+s o, t)e
case
+itonAua did not p&ace into t#e record o% t#e case a cop! o% t#e c#arter part! covering t#e M-V Du%ton
1a!' ,t is assumed t#en t#at +itonAua was aware o% t#e nature o% a areoat or demise c#arter and t#at i% it did
not see %it to inc&ude in t#e record a cop! o% t#e c#arter part!, w#ic# #ad een entered into ! its principa&, it
was ecause t#e c#arter part! and t#e provisions t#ereo% were not supportive o% t#e position adopted !
+itonAua in t#e present case, position diametrica&&! opposed to t#e &ega& conse9uence o% a areoat c#arter'
Treating Fairwind as owner pro #ac vice, +itonAua #aving %ai&ed to s#ow t#at it was not suc#, +itonAua, as
P#i&ippine agent o% t#e c#arterer, ma! e #e&d &ia&e on t#e contract o% emp&o!ment etween t#e s#ip captain
and $andongo'
4. D9uita$le conse9uence o, $ene,it to t)e c)arterer
T#e c#arterer o% t#e vesse&, Fairwind, c&ear&! ene%itted %rom t#e emp&o!ment o% $andongo as T#ird
Bngineer o% t#e Du%ton 1a!, a&ong wit# 12 ot#er Fi&ipino crew memers recruited ! $aptain @o in $eu at
t#e same occasion' ,% $andongo #ad not agreed to serve as suc# T#ird Bngineer, t#e s#ip wou&d not #ave een
a&e to proceed wit# its vo!age'
%. Circu#stances rein,orcin* e9uita$le conse9uence o, $ene,it to c)arterer
T#e e9uita&e conse9uence o% ene%it to t#e c#arterer is, moreover, rein%orced ! convergence o%
ot#er circumstances o% w#ic# t#e $ourt must take account' (1) T#ere is t#e circumstance t#at on&! t#e
c#arterer, t#roug# +itonAua, was present in t#e P#i&ippines' (8) T#e scope o% aut#orit! or t#e responsii&it! o%
+itonAua was not c&ear&! de&imited'
1". Liton?ua1s co##ission unclear6 Liton?ua1s assistance in t)e recruit#ent o, Can+on*o clear
+itonAua took t#e position t#at its commission was &imited to taking care o% vesse&s owned !
Fairwind' 1ut t#e documentar! aut#ori*ation read into t#e record o% t#e case does not make t#at c&ear at a&&'
T#e words ;our s#ips< ma! we&& e read to re%er ot# to vesse&s registered in t#e name o% Fairwind and
vesse&s owned ! ot#ers ut c#artered ! Fairwind' ,ndeed t#e commercia&, operating re9uirements o% a
vesse& %or crew memers and %or supp&ies and provisions #ave no re&ations#ip to t#e tec#nica& c#aracteri*ation
o% t#e vesse& as owned ! or as mere&! c#artered ! Fairwind' ,n an! case, it is not c&ear %rom t#e
aut#ori*ation given ! Fairwind to +itonAua t#at vesse&s c#artered ! Fairwind (and owned ! some ot#er
companies) were not to e taken care o% ! +itonAua s#ou&d suc# vesse&s put into a P#i&ippine port' T#e
statement o% account w#ic# t#e Du%ton 1a!?s Master #ad signed and w#ic# pertained to t#e sa&ar! o%
$andongo #ad re%erred to a P#i&ippine agenc! w#ic# wou&d take care o% disursing or pa!ing suc# account'
T#ere is no 9uestion t#at t#e P#i&ippine agenc! was t#e P#i&ippine agent o% t#e c#arterer Fairwind' Moreover,
t#ere is a&so no 9uestion t#at +itonAua did assist t#e Master o% t#e vesse& in &ocating and recruiting $andongo
as T#ird Bngineer o% t#e vesse& as we&& as 12 ot#er Fi&ipino seamen as crew memers' ,n so doing, +itonAua
certain&! in e%%ect represented t#at it was taking care o% t#e crewing and ot#er re9uirements o% a vesse&
c#artered ! its principa&, Fairwind'
11. Ea*es constitute #ariti#e lien upon vessel6 Can+on*o in no position to en,orce sai+ lien i,
contrary )ol+in* is #a+e
T#ere is t#e circumstance t#at e3treme #ards#ip wou&d resu&t %or $andongo i% +itonAua, as P#i&ippine
agent o% t#e c#arterer, is not #e&d &ia&e to $andongo upon t#e contract o% emp&o!ment' $&ear&!, $andongo,
and t#e ot#er Fi&ipino crew memers o% t#e vesse&, wou&d e de%ense&ess against a reac# o% t#eir respective
contracts' F#i&e wages o% crew memers constitute a maritime &ien upon t#e vesse&, $andongo is in no
position to en%orce t#at &ien' ,% on&! ecause t#e vesse&, eing one o% %oreign registr! and not ordinari&! doing
usiness in t#e P#i&ippines or making regu&ar ca&&s on P#i&ippine ports cannot e e%%ective&! #e&d to answer %or
suc# c&aims in a P#i&ippine %orum' Dpon t#e ot#er #and, it seems 9uite c&ear t#at +itonAua, s#ou&d it e #e&d
&ia&e to $andongo %or t#e &atter?s c&aims, wou&d e etter p&aced to secure reimursement %rom its principa&
Fairwind' ,n turn, Fairwind wou&d e in an in%inite&! etter position (t#an $andongo) to seek and otain
recourse %rom Mu&&ion, t#e %oreign s#ipowner, s#ou&d Fairwind %ee& entit&ed to reimursement o% t#e amounts
paid to $andongo t#roug# +itonAua'
1-. Result co#pelle+ $y e9uita$le principles an+ +e#an+s o, su$stantial ?ustice
$andongo was proper&! regarded as an emp&o!ee o% t#e c#arterer Fairwind and t#at +itonAua ma!
e#e&d to answer to $andongo %or t#e &atter?s c&aims as t#e agent in t#e P#i&ippines o% Fairwind' T#is resu&t,
%ar %rom constituting a grave ause o% discretion, is compe&&ed ! e9uita&e princip&es and ! t#e demands o%
sustantia& Austice' To #o&d ot#erwise wou&d e to &eave $andongo (and ot#ers w#o ma! %ind t#emse&ves in
#is position) wit#out an! e%%ective recourse %or t#e unAust dismissa& and %or t#e reac# o% #is contract o%
emp&o!ment'
[13], also [179] and [181]
=ariti#e 5*encies M Services vs. C5 (GR 3334! 1- Buly 1%%")
3n!on Ins'ran(e So(!et0 o. Canton, $td. vs. CA )*+ 77/74-
First Division, $ru* (J): 5 concur
&acts' Transcontinenta& Ferti&i*er $ompan! o% +ondon c#artered %rom @ongkong t#e motor vesse& named
;@ongkong ,s&and< %or t#e s#ipment o% /203'34 MT (gross) agged urea %rom Eovorossisk, (dessa, D"":, to
t#e P#i&ippines, t#e parties signing %or t#is purpose a Dni%orm 6enera& $#arter dated . 7ugust 1.0.' (% t#e
tota& s#ipment, 4,522'25 MT was %or t#e account o% 7t&as Ferti&i*er $ompan! as consignee, 3,522'25 to e
disc#arged in Mani&a and t#e remaining 8,222 MT in $eu' T#e goods were insured ! t#e consignee wit# t#e
Dnion ,nsurance "ociet! o% $anton, +td' %or P>,00.,815'22 against a&& risks' Maritime 7gencies T "ervices,
,nc' was appointed as t#e c#arterer?s agent and Macondra! $ompan!, ,nc' as t#e owner?s agent' T#e vesse&
arrived in Mani&a on 3 (ctoer 1.0., and un&oaded part o% t#e consignee?s goods, t#en proceeded to $eu on
1. (ctoer 1.0., to disc#arge t#e rest o% t#e cargo' (n 31 (ctoer 1.0., t#e consignee %i&ed a %orma& c&aim
against Maritime, cop! %urnis#ed Macondra!, %or t#e amount o% P/0,1>3'45, representing $ T F va&ue o% t#e
1,3/3 s#ort&anded ags' (n 18 Januar! 1./2, t#e consignee %i&ed anot#er %orma& c&aim, t#is time against Viva
$ustoms 1rokerage, %or t#e amount o% P3>,232'83, representing t#e va&ue o% 405 ags o% net unrecovered
spi&&age' T#ese c&aims #aving een reAected, t#e consignee t#en went to Dnion, w#ic# on demand paid t#e
tota& indemnit! o% P113,183'/> pursuant to t#e insurance contract'
7s surogee o% t#e consignee, Dnion t#en %i&ed on 1. "eptemer 1./2, a comp&aint %or reimursement o% t#is
amount, wit# &ega& interest and attorne!?s %ees, against @ongkong ,s&and $ompan!, +td', Maritime 7gencies
T "ervices, ,nc' and-or Viva $ustoms 1rokerage' (n 82 7pri& 1./1, t#e comp&aint was amended to drop Viva
and imp&ead Macondra! $ompan!, ,nc' as a new de%endant' (n 5 Januar! 1./5, a%ter tria&, t#e tria& court
rendered Audgment, ordering (a) @ongkong ,s&and $o', +td', and its &oca& agent Macondra! T $o', ,nc' to pa!
Dnion t#e sum o% P/0,1 >3'45 p&us 18I interest %rom 82 7pri& 1./1 unti& t#e w#o&e amount is %u&&! paid,
P1,222'22 as attorne!?s %ees and to pa! U o% t#e costsC and () Maritime 7gencies T "ervices, ,nc', to pa!
Dnion t#e sum o% P3>,232'83, p&us 18I interest %rom 82 7pri& 1./1 unti& t#e w#o&e amount is %u&&! paid,
P>22'22 as attorne!?s %ees and to pa! U o% t#e costs'
Maritime 7gencies T "ervices appea&ed t#e decision to t#e $ourt o% 7ppea&s, w#ic# rendered a decision on
8/ Eovemer 1./>, modi%!ing t#e decision appea& %rom, %inding t#e c#arterer Transcontinenta& Ferti&i*er $o',
+td' represented ! its agent Maritime 7gencies T "ervices, ,nc' &ia&e %or t#e amount o% P/0,1>3'45 p&us
interest at 18I p&us attorne!?s %ees o% P1,222'22' @ongkong ,s&and $os' +td' represented ! Macondra! $o',
,nc' were according&! e3empted %rom an! &iai&it!' Maritime and Dnion %i&ed separate motions %or
reconsideration w#ic# were ot# denied' @ence, t#e petitions'
T#ese two cases were conso&idated and given due course, t#e parties eing re9uired to sumit simu&taneous
memoranda' 7&& comp&ied, inc&uding @ongkong ,s&and $ompan!, +td', and Macondra! $ompan!, ,nc',
a&t#oug# t#e! pointed out t#at t#e! were not invo&ved in t#e petitions' T#e "upreme $ourt set aside t#e
decision o% t#e appe&&ate court, and reinstated t#at o% t#e tria& court as modi%iedC and %urt#er #o&ding t#at t#e
parties s#a&& ear t#eir respective costs'
1. &actual &in+in*s o, t)e trial court
,n #is decision dated 5 Januar! 1./5, Judge 7rtemon de +una o% t#e :egiona& Tria& $ourt o% Mani&a
#e&d t#at t#e $ourt, on t#e asis o% t#e evidence, %inds not#ing to disprove t#e %inding o% t#e marine and cargo
surve!ors t#at o% t#e >>,3.2 ags o% urea %erti&i*er, >4,450 ags were ;disc#arged e3=vesse&< and t#ere were
s#ort&anded< ;1,3/3 ags,< va&ued at P/0,1>3'45' T#is sum s#ou&d e t#e principa& and primar! &iai&it! and
responsii&it! o% t#e carr!ing vesse&' Dnder t#e contract %or t#e transportation o% goods, t#e vesse&?s
responsii&it! commence upon t#e actua& de&iver! to, and receipt ! t#e carrier or its aut#ori*ed agent, unti& its
%ina& disc#arge at t#e port o% Mani&a'
-. Cate*ories o, c)arters
T#ere are t#ree genera& categories o% c#arters, to wit, t#e demise or ;areoat c#arter,< t#e time
c#arter and t#e vo!age c#arter'
3. <e#ise c)arter
7 demise invo&ves t#e trans%er o% %u&& possession and contro& o% t#e vesse& %or t#e period covered !
t#e contract, t#e c#arterer otaining t#e rig#t to use t#e vesse& and carr! w#atever cargo it c#ooses, w#i&e
manning and supp&!ing t#e s#ip as we&&'
/. (i#e c)arter
7 time c#arter is a contract to use a vesse& %or a particu&ar period o% time, t#e c#arterer otaining t#e
rig#t to direct t#e movements o% t#e vesse& during t#e c#artering period, a&t#oug# t#e owner retains possession
and contro&'
2. Goya*e c)arter
7 vo!age c#arter is a contract %or t#e #ire o% a vesse& %or one or a series o% vo!ages usua&&! %or t#e
purpose o% transport in goods %or t#e c#arterer' T#e vo!age c#arter is a contract o% a%%reig#tment and is
considered a private carriage'
. Responsi$ility ,or car*o loss in case o, a voya*e c)arter
7 vo!age c#arter eing a private carriage, t#e parties ma! %ree&! contract respecting &iai&it! %or
damage to t#e goods and ot#er matters' T#e asic princip&e is t#at ;t#e responsii&it! %or cargo &oss %a&&s on
t#e one w#o agreed to per%orm t#e dut! invo&ved< in accordance wit# t#e terms o% most vo!age c#arters' T#is
is true in t#e present cases w#ere t#e c#arterer was responsi&e %or &oading, stowage and disc#arging at t#e
ports visited, w#i&e t#e owner was responsi&e %or t#e care o% t#e cargo during t#e vo!age'
3. :ara*rap) - o, t)e Fni,or# General C)arter
Paragrap# 8 o% t#e Dni%orm 6enera& $#arter reads ;(wners are to e responsi&e %or &oss o% or
damage to t#e goods or %or de&a! in de&iver! o% t#e goods on&! in case t#e &oss, damage or de&a! #as een
caused ! t#e improper or neg&igent stowage o% t#e goods or ! persona& want o% due di&igence on t#e part o%
t#e (wners or t#eir Manager to make t#e vesse& in a&& respects seawort#! and to secure t#at s#e is proper&!
manned, e9uipped and supp&ied or ! t#e persona& act or de%au&t o% t#e (wners or t#eir Manager' 7nd t#e
(wners are responsi&e %or no &oss or damage or de&a! arising %rom an! ot#er cause w#atsoever, even %rom
t#e neg&ect or de%au&t o% t#e $aptain or crew or some ot#er person emp&o!ed ! t#e (wners onoard or as#ore
%or w#ose acts t#e! wou&d, ut %or t#is c&ause, e responsi&e, or %rom unseawort#iness o% t#e vesse& on
&oading or commencement o% t#e vo!age or at an! time w#atsoever' Damage caused ! contact wit# or
&eakage, sme&& or evaporation %rom ot#er goods or ! t#e in%&amma&e or e3p&osive nature or insu%%icient
package o% ot#er goods not to e considered as caused ! improper or neg&igent stowage, even i% in %act so
caused'<
4. Clause 13 o, t)e 5++itional Clauses to C)arterparty
$&ause 10 o% 7dditiona& $&auses to $#arterpart! provides t#at ;T#e cargo s#a&& e &oaded, stowed and
disc#arged %ree o% e3pense to t#e vesse& under t#e Master?s supervision' @owever, i% re9uired at &oading and
disc#arging ports t#e vesse& is to give %ree use o% winc#es and power to drive t#em gear, runners and ropes'
7&so s&ings, as on oard' "#ore winc#men are to e emp&o!ed and t#e! are to e %or $#arterers? or "#ippers?
or :eceivers? account as t#e case ma! e' Vesse& is a&so to give %ree use o% su%%icient &ig#t, as on oard, i%
re9uired %or nig#t work' Time &ost t#roug# reakdown o% winc#es or derricks is not to count as &a!time'<
%. Ho#e ;nsurance vs. 5#erican Stea#s)ip 5*encies6 Stipulations exe#ptin* o.ner ,ro#
lia$ility in c)arter vali+
,n @ome ,nsurance $o' v' 7merican "teams#ip 7gencies, ,nc', t#e tria& court reAected simi&ar
stipu&ations as contrar! to pu&ic po&ic! and, app&!ing t#e provisions o% t#e $ivi& $ode on common carriers
and o% t#e $ode o% $ommerce on t#e duties o% t#e s#ip captain, #e&d t#e vesse& &ia&e in damages %or &oss o%
part o% t#e cargo it was carr!ing' T#e "upreme $ourt reversed, t#erein, dec&aring t#at ;t#e provisions o% our
$ivi& $ode on common carriers were taken %rom 7ng&o=7merican &aw' Dnder 7merican Aurisprudence, a
common carrier undertaking to carr! a specia& cargo or c#artered to a specia& person on&!, ecomes a private
carrier' 7s a private carrier, a stipu&ation e3empting t#e owner %rom &iai&it! %or t#e neg&igence o% its agent is
not against pu&ic po&ic!, and is deemed va&id'
1". Civil Co+e provisions on co##on carrier s)oul+ not $e applie+ i, carrier is actin* as private
carrier! pu$lic not involve+
T#e $ivi& $ode provisions on common carriers s#ou&d not e app&ied w#ere t#e carrier is not acting
as suc# ut as a private carrier' T#e stipu&ation in t#e c#arter part! aso&ving t#e owner %rom &iai&it! %or &oss
due to t#e neg&igence o% its agent wou&d e void on&! i% t#e strict pu&ic po&ic! governing common carriers is
app&ied' "uc# po&ic! #as no %orce w#ere t#e pu&ic at &arge is not invo&ved, as in t#e case o% a s#ip tota&&!
c#artered %or t#e use o% a sing&e part!'
11. Rulin* cannot $ene,it Hon*kon* +ue to s)ortlan+e+ $a*s6 :resu#ption o, ,ault in +a#a*e+
*oo+s covere+ $y clean $ill o, la+in*
T#e present ru&ing cannot ene%it @ongkong, ecause t#ere was no s#owing in t#at case t#at t#e
vesse& was at %au&t' @erein, t#e tria& court %ound t#at 1,3/3 ags were s#ort&anded, w#ic# cou&d on&! mean t#at
t#e! were damaged or &ost on oard t#e vesse& e%ore un&oading o% t#e s#ipment' ,t is not denied t#at t#e
entire cargo s#ipped ! t#e c#arterer in (dessa was covered ! a c&ean i&& o% &ading' 7s t#e ags were in
good order w#en received in t#e vesse&, t#e presumption is t#at t#e! were damaged or &ost during t#e vo!age
as a resu&t o% t#eir neg&igent improper stowage' For t#is t#e s#ip owner s#ou&d e #e&d &ia&e'
1-. :rescription o, action6 &ilin* o, clai# .it)in 1 year! in accor+ance .it) C8GS5
T#e period %or %i&ing t#e c&aim is one !ear, in accordance wit# t#e $arriage o% 6oods ! "ea 7ct' T#is
was adopted and emodied ! our &egis&ature in $ommonwea&t# 7ct >4 w#ic#, as a specia& &aw, prevai&s over
t#e genera& provisions o% t#e $ivi& $ode on prescription o% actions'
13. Section 3() o, Co##on.ealt) 5ct 2
"ection 3(>) o% t#at 7ct provides t#at ;,n an! event, t#e carrier and t#e s#ip s#a&& e disc#arged %rom
a&& &iai&it! in respect o% &oss or damage un&ess suit is roug#t wit#in one !ear a%ter de&iver! o% t#e goods or
t#e date w#en t#e goods s#ou&d #ave een de&iveredC Provided, t#at i% a notice o% &oss %or damageC eit#er
apparent or concea&ed, is not given as provided %or in t#is section, t#at %act s#a&& not e%%ect or preAudice t#e
rig#t o% t#e s#ipper to ring suit wit#in one !ear a%ter t#e de&iver! o% t#e goods or t#e date w#en t#e goods
s#ou&d #ave een de&ivered'<
1/. 5pplication o, t)e prescriptive perio+6 Fnion Car$i+e vs. =anila Railroa+
T#e period was app&ied ! t#e $ourt in t#e case o% Dnion $aride, P#i&ippines, ,nc' v' Mani&a
:ai&road $o', w#ere it was #e&d ;Dnder t#e %acts o% t#is case, we #e&d t#at t#e one=!ear period was correct&!
reckoned ! t#e tria& court %rom Decemer 1., 1.>1, w#en, as agreed upon ! t#e parties and as s#own in t#e
ta&&! s#eets, t#e cargo was disc#arged %rom t#e carr!ing vesse& and de&ivered to t#e Mani&a Port "ervice' T#at
one=!ear period e3pired on Decemer 1., 1.>8' ,nasmuc# as t#e action was %i&ed on Decemer 81, 1.>8, it
was arred ! t#e statute o% &imitations'<
12. 5pplication o, prescriptive perio+6 :resent cases
T#e one=!ear period in t#e present cases s#ou&d commence on 82 (ctoer 1.0., w#en t#e &ast item
was de&ivered to t#e consignee' Dnion?s comp&aint was %i&ed against @ongkong on 1. "eptemer 1./2, ut
tardi&! against Macondra! on 82 7pri& 1./1' T#e conse9uence is t#at t#e action is considered prescried as %ar
as Macondra! is concerned ut not against its principa&, w#ic# is w#at matters an!wa!'
1. C)arterer lia$le ,or +a#a*e+ *oo+s +urin* unloa+in*6 5*ent! )o.ever! cannot $e #a+e lia$le
,or acts o, +isclose+ principal
7s regards t#e goods damaged or &ost during un&oading, t#e c#arterer is &ia&e t#ere%or, #aving
assumed t#is activit! under t#e c#arter part! ;%ree o% e3pense to t#e vesse&'< T#e di%%icu&t! is t#at
Transcontinenta& #as not een imp&eaded in t#ese cases and so is e!ond t#e $ourt?s Aurisdiction' T#e &iai&it!
imposa&e upon it cannot e orne ! Maritime w#ic#, as a mere agent, is not answera&e %or inAur! caused !
its principa&' ,t is a we&&=sett&ed princip&e t#at t#e agent s#a&& e &ia&e %or t#e act or omission o% t#e principa&
on&! i% t#e &atter is undisc&osed'
13. S.itJerlan+ General ;nsurance vs. Ra#ireJ not applica$le
T#e ru&ing in t#e case o% "wit*er&and 6enera& ,nsurance $o', +td' v' :amire* is not app&ica&e' ,n t#at
case, t#e c#arterer represented itse&% on t#e %ace o% t#e i&& o% &ading as t#e carrier' T#e vesse& owner and t#e
(ransportation La.! -""/ ( /"% )
c#arterer did not stipu&ate in t#e $#arterpart! on t#eir separate respective &iai&ities %or t#e cargo' T#e
&oss-damage to t#e cargo was sustained w#i&e it was sti&& on oard or under t#e custod! o% t#e vesse&' 7s t#e
c#arterer was itse&% t#e carrier, it was made &ia&e %or t#e acts o% t#e s#ip captain w#o was responsi&e %or t#e
cargo w#i&e under t#e custod! o% t#e vesse&' 7s %or t#e c#arterer?s agent, t#e evidence s#owed t#at it
represented t#e vesse& w#en it took c#arge o% t#e un&oading o% t#e cargo and issued cargo receipts (or ta&&!
s#eets) in its own name' $&aims against t#e vesse& %or t#e &osses-damages sustained ! t#at cargo were a&so
received and processed ! it' 7s a resu&t, t#e c#arterer?s agent was a&so considered a s#ip agent and so was
#e&d to e so&idari&! &ia&e wit# its principa&' T#e %acts in t#e cases at ar are di%%erent' T#e c#arterer did not
represent itse&% as a carrier and indeed assumed responsii&it! on&! %or t#e un&oading o% t#e cargo, i'e, a%ter t#e
goods were a&read! outside t#e custod! o% t#e vesse&' ,n supervising t#e un&oading o% t#e cargo and issuing
Dai&! (perations :eport and "tatement o% Facts indicating and descriing t#e da!=to=da! disc#arge o% t#e
cargo, Maritime acted in representation o% t#e c#arterer and not o% t#e vesse&' ,t t#us cannot e considered a
s#ip agent' 7s a mere c#arterer?s agent, it cannot e #e&d so&idari&! &ia&e wit# Transcontinenta& %or t#e
&osses-damages to t#e cargo outside t#e custod! o% t#e vesse&' Eota&!, Transcontinenta& was disc&osed as t#e
c#arterer?s principa& and t#ere is no 9uestion t#at Maritime acted wit#in t#e scope o% its aut#orit!'
14. Hon*kon* an+ =acon+ray i#plea+e+ in GR 333/6 ;ssues not ,or#ally raise+ on appeal #ay
$e consi+ere+ in t)e interest o, ?ustice
First o% a&&, we note t#at t#e! were %orma&&! imp&eaded as respondents in 6': Eo' 00>05 and
sumitted t#eir comment and &ater t#eir memorandum, w#ere t#e! discussed at &engt# t#eir position vis=a=vis
t#e c&aims o% t#e ot#er parties' "econd&!, we reiterate t#e ru&e t#at even i% issues are not %orma&&! and
speci%ica&&! raised on appea&, t#e! ma! nevert#e&ess e considered in t#e interest o% Austice %or a proper
decision o% t#e case'
1%. Fnassi*ne+ error closely relate+ to error properly assi*ne+! or upon .)ic) a properly assi*ne+
error +epen+s consi+ere+6 ;nterest o, ?ustice
1esides, an unassigned error c&ose&! re&ated to t#e error proper&! assigned, or upon w#ic# t#e
determination o% t#e 9uestion raised ! t#e error proper&! assigned is dependent, wi&& e considered ! t#e
appe&&ate court notwit#standing t#e %ai&ure to assign it as error' 7t an! rate, t#e $ourt is c&ot#ed wit# amp&e
aut#orit! to review matters, even i% t#e! are not assigned as errors in t#eir appea&, i% it %inds t#at t#eir
consideration is necessar! in arriving at a Aust decision o% t#e case' ,ssues, t#oug# not speci%ica&&! raised in
t#e p&eadings in t#e appe&&ate court, ma!, in t#e interest o% Austice, e proper&! considered ! said court in
deciding a case, i% t#e! are 9uestions raised in t#e tria& court and are matters o% record #aving some earing on
t#e issue sumitted w#ic# t#e parties %ai&ed to raise or t#e &ower court ignored' F#i&e an assignment o% error
w#ic# is re9uired ! &aw or ru&e o% court #as een #e&d essentia& to appe&&ate review, and on&! t#ose assigned
wi&& e considered, t#ere are a numer o% cases w#ic# appear to accord to t#e appe&&ate court a road
discretionar! power to waive t#is &ack o% proper assignment o% errors and consider errors not assigned'
-". Lia$ility o, =acon+ray can no lon*er en,orce+6 an+ =ariti#e cannot $e )el+ lia$le ,or acts o,
kno.n principal
T#e &iai&it! o% Macondra! can no &onger e en%orced ecause t#e c&aim against it #as prescriedC and
as %or Maritime, it cannot e #e&d &ia&e %or t#e acts o% its known principa& resu&ting in inAur! to Dnion'
-1. E)en interest co##ence
T#e interest must a&so e reduced to t#e &ega& rate o% >I, con%orma&! to our ru&ing in :e%ormina v'
Tomo& and 7rtic&e 882. o% t#e $ivi& $ode, and s#ou&d commence, not on 82 7pri& 1./1, ut on 1. "eptemer
1./2, date o% t#e %i&ing o% t#e origina& comp&aint'
[177] Coastwise vs. CA, see [1*]
[134a]
(ransportation La.! -""/ ( /1" )
8uano vs. C5 (GR %2%""! -3 Buly 1%%-)
&acts' Ju&ius $' (uano is t#e registered owner and operator o% t#e motor vesse& known as M-V Don Ju&io
(uano' (n / (ctoer 1./2, (uano &eased t#e said vesse& to F&orentino :a%o&s Jr' under a c#arter part!' T#e
consideration %or t#e &etting and #iring o% said vesse& was P>2,222'22 a mont#, wit# P32,222'22 as down
pa!ment and t#e a&ance o% P32,222'22 to e paid wit#in 82 da!s a%ter actua& departure o% t#e vesse& %rom t#e
port o% ca&&' ,t was a&so e3press&! stipu&ated t#at t#e c#arterer s#ou&d operate t#e vesse& %or #is own ene%it and
s#ou&d not su&et or su=c#arter t#e same wit#out t#e know&edge and written consent o% t#e owner' (n 11
(ctoer 1./2, :a%o&s contracted wit# Market Deve&opers, ,nc' (M7DB) t#roug# its group manager, Ju&ian ('
$#ua, under an agreement denominated as a ;Fi3ture Eote< to transport 13,222 ags o% cement %rom ,&igan
$it! to 6enera& "antos $it!, consigned to "upreme Merc#ant $onstruction "upp&!, ,nc' ("M$",) %or a
%reig#tage o% P5>,142'22' "aid amount was agreed to e pa!a&e to :a%o&s ! M7DB in two insta&&ments, t#at
is, P83,204'22 upon &oading o% t#e cement at ,&igan $it! and t#e a&ance o% P83,204'22 upon comp&etion o%
&oading and receipt o% t#e cement cargo ! t#e consignee' T#e %i3ture note did not #ave t#e written consent o%
(uano' :a%o&s #ad on oard t#e M-V Don Ju&io (uano #is sore cargo (Ae%e de viaAe) w#en it departed %rom
,&igan $it! unti& t#e cargo o% cement was un&oaded in 6enera& "antos $it!, t#e port o% destination' (n 13
(ctoer 1./2, (uano wrote a &etter to M7DB t#roug# its manager, $#ua, ;to strong&! re9uest, i% not demand
to #o&d momentari&! an! pa!ment or partia& pa!ment w#atsoever due M-V Don Ju&io (uano unti& Mr'
F&orentino :a%o&s makes good #is commitment< to petitioner' (n 82 (ctoer 1./2, M7DB, as s#ipper, paid
:a%o&s t#e amount o% P83,204'22 corresponding to t#e %irst insta&&ment o% t#e %reig#tage %or t#e a%orestated
cargo o% cement' T#e entire cargo was t#erea%ter un&oaded at 6enera& "antos $it! Port and de&ivered to t#e
consignee, "M$",, wit#out an! attempt on t#e part o% eit#er t#e captain o% M-V Don Ju&io (uano or t#e said
sore cargo o% :a%o&s, or even o% (uano #imse&% w#o was t#en in 6enera& "antos $it! Port, to #o&d and keep
in deposit eit#er t#e w#o&e or part o% t#e cement cargo to answer %or %reig#tage' Eeit#er was t#ere an! demand
made on :a%o&s, et' a&' %or a ond to secure pa!ment o% t#e %reig#tage, nor to assert in an! manner t#e
maritime &ien %or unpaid %reig#t over t#e cargo ! giving notice t#ereo% to t#e consignee "M$,' T#e cement
was so&d in due course o% trade ! "M$", to its customers in (ctoer and Eovemer 1./2'
(n > Januar! 1./1, (uano %i&ed a comp&aint in t#e :T$ o% $eu against M7DB, as s#ipperC "M$",, as
consigneeC and :a%o&s, as c#arterer, seeking pa!ment o% P83,222'22 representing t#e %reig#t c#arges %or t#e
cement cargo, aside %rom mora& and e3emp&ar! damages in t#e sum o% P142,222'22, attorne!?s %ees and
e3penses o% &itigation' (n 12 Marc# 1./1, M7DB %i&ed its answer, w#i&e 7ng and $#ua %i&ed t#eirs on 12
Feruar! 1./8 and 31 Ma! 1./8, respective&!' :a%o&s was dec&ared in de%au&t %or %ai&ure to %i&e #is answer
despite due service o% summons' (n 84 Ma! 1./4, t#e tria& court rendered a decision in %avor o% (uano, (1)
ordering M7DB, $#ua, "M$",, 7ng ($#ua Pek 6iok) and :a%o&s, Aoint&! and severa&&!, to pa! to (uano t#e
sum o% P83,204'22 corresponding to t#e %irst 42I %reig#t insta&&ment on t#e &atter?s vesse& GM-V Don Ju&io
(uano? inc&uded as part o% t#e purc#ase price paid ! "M$", to M7DB, p&us &ega& interest %rom > Januar!
1./1 date o% %i&ing o% t#e origina& comp&aintC (8) sentencing M7DB, $#ua and :a%o&s, Aoint&! and so&idari&!,
to pa! (uano P42,222'22 in concept, o% mora& and e3emp&ar! damages, and P4,222'22 attorne!?s %eesC and (3)
sentencing "M$", and 7ng, Aoint&! and severa&&!, to pa! (uano P822,222'22 attorne!?s %ees and e3penses o%
&itigation, P5,222'22, inc&uding P1,222'22 incurred ! (uano %or trave& to 6enera& "antos $it! to coordinate
in serving an a&ias summons per s#eri%%?s return o% service, wit# costs against :a%o&s, et'a&'
(n appea&, and on 32 7ugust 1..2, t#e $ourt o% 7ppea&s reversed t#e decision, and aso&ved M7DB, et' a&'
%rom t#e comp&aintC ut a%%irmed t#e decision wit# respect to :a%o&s' (uano %i&ed a motion %or reconsideration
w#ic# was denied ! t#e $ourt o% 7ppea&s on 14 (ctoer 1..2' @ence, t#e petition %or review on certiorari'
T#e "upreme $ourt denied t#e petition and a%%irmed t#e assai&ed Audgment o% t#e $ourt o% 7ppea&s'
1. Contract $in+in* upon contractin* parties6 Contract neit)er ,avor nor pre?u+ice t)ir+ person
,t is a asic princip&e in civi& &aw t#at, wit# certain e3ceptions not otaining in t#e present case, a
contract can on&! ind t#e parties w#o #ad entered into it or t#eir successors w#o assumed t#eir persona&ities
or t#eir Auridica& positions, and t#at, as a conse9uence, suc# contract can neit#er %avor nor preAudice a t#ird
person' @erein, t#e c#arter contract was entered into on&! ! and etween (uano and :a%o&s, and M7DB and
"M$", were neit#er parties t#ereto nor were t#e! aware o% t#e provisions t#ereo%'
-. Giolation o, c)arter party +oes not *ive rise to cause o, action a*ainst su$lessee or su$>
c)arterer6 8.ner1s recourse
T#e vio&ation o% t#e pro#iition in t#e contract against t#e su&ease or su=c#arter o% t#e vesse&
wit#out t#e vesse& owner?s know&edge and written consent does not give rise to a cause o% action against t#e
supposed su&essee or su=c#arterer' T#e act o% t#e c#arterer in su=c#artering t#e vesse&, in spite o% a
categorica& pro#iition ma! e a vio&ation o% t#e contract, ut t#e owner?s rig#t o% recourse is against t#e
origina& c#arterer, eit#er %or rescission or %u&%i&&ment, wit# t#e pa!ment o% damages in eit#er case'
3. 8$li*ations o, contracts li#ite+ to parties #akin* t)e#
T#e o&igation o% contracts is &imited to t#e parties making t#em and, ordinari&!, on&! t#ose w#o are
parties to contracts are &ia&e %or t#eir reac#' Parties to a contract cannot t#ere! impose an! &iai&it! on one
w#o, under its terms, is a stranger to t#e contract, and, in an! event, in order to ind a t#ird person
contractua&&!, an e3pression o% agent ! suc# person is necessar!'
/. =5<D an+ C)ua not lia$le ,or +a#a*es ,or 9uasi>+elict un+er 5rticle 13 7CC
M7DB and $#ua are not to e #e&d &ia&e %or damages %or a 9uasi=de&ict under 7rtic&e 10> o% t#e
$ivi& $ode %or #aving %ai&ed to otain #is consent e%ore entering into an agreement wit# :a%o&s' T#e
o&igation to otain t#e written consent o% (uano e%ore su&easing or su=c#artering t#e vesse& was on :a%o&s
and not on M7DB, #ence t#e &atter cannot e #e&d &ia&e %or t#e supposed non=comp&iance t#erewit#'
2. =5<D an+ C)ua not lia$le ,or +a#a*es ,or 9uasi>+elict un+er 5rtice 131/ ,or in+ucin* Ra,ols
to violate c)arter party
M7DB and $#ua cou&d not e #e&d gui&t! o% inducing :a%o&s to vio&ate t#e origina& c#arter part!' (1)
T#ere is no evidence on record to s#ow t#at M7DB and $#ua #ad know&edge o% t#e pro#iition imposed in
t#e origina& c#arter part! to su&ease or su=c#arter t#e vesse&' (8) 7t t#e time t#e %i3ture note was entered into
etween :a%o&s and M7DB, a written aut#ori*ation signed ! t#e wi%e o% (uano in #is e#a&%, aut#ori*ing
:a%o&s to e3ecute contracts, negotiate %or cargoes and receive %reig#t pa!ments, was s#own ! t#e %ormer to
t#e &atter' 7&t#oug# t#e said aut#ori*ation ma! #ave een made ! t#e wi%e, t#e same, #owever, can evident&!
e proo% o% good %ait# on t#e part o% M7DB and $#ua w#o mere&! re&ied t#ereon' (3) 7s stated in t#e %i3ture
note, t#e agreement etween :a%o&s and M7DB was %or t#e %ormer to transport t#e cement o% t#e &atter using
eit#er t#e ;M-V Don Ju&io (uano or sustitute vesse& at #is discretion'< @ence, t#e decision to use t#e M-V
Don Ju&io (uano in transporting t#e cargo o% M7DB was so&e&! t#at o% :a%o&s'
. <e#an+ o, secon+ ,rei*)t install#ent a rati,ication o, t)e su$>c)arter contract
@erein, (uano is deemed to #ave rati%ied t#e supposed su=c#arter contract entered into ! M7DB
and :a%o&s w#en #e demanded t#e pa!ment o% t#e second %reig#t insta&&ment as provided in t#e agreement
and, &ater, received t#e same ! virtue o% t#e decision o% t#e $F, o% $eu in $ivi& $ase :=1./54, an
interp&eader case %i&ed ! M7DB'
3. :ay#ent not in+ication o, $a+ ,ait) or #alice6 5rticle 1-/" 7CC
T#e act o% M7DB in pa!ing t#e %irst %reig#t insta&&ment to :a%o&s is not an indication o% ad %ait# or
ma&ice' 7rtic&e 1852 o% t#e $ivi& $ode provides t#at ;(p)a!ment s#a&& e made to t#e person in w#ose %avor
t#e o&igation #as een constituted, or #is successor in interest, or an! person aut#ori*ed to receive it'<
$onse9uent&!, M7DB, under t#e %i3ture note, was under o&igation to pa! t#e %reig#t to :a%o&s'
(ransportation La.! -""/ ( /1- )
4. Leases involve+ in a su$lease a*ree#ent6 Ri*)ts an+ o$li*ations o, parties
,n a su&ease arrangement, t#ere are two distinct &eases invo&ved, t#at is, t#e principa& &ease and t#e
su&ease' T#ere are two Auridica& re&ations#ips w#ic# co=e3ist and are intimate&! re&ated to eac# ot#er, ut
w#ic# are nonet#e&ess distinct one %rom t#e ot#er' ,n suc# arrangement, t#e persona&it! o% t#e &essee 9ua
&essee does not disappearC #is rig#ts and o&igations vis=a=vis t#e &essor are not passed on to nor ac9uired !
t#e su&essee' T#e &essor is in t#e main and e3cept on&! in t#e instances speci%ied in t#e $ivi& $ode, a stranger
to t#e re&ations#ip etween t#e &essee=su&essor and t#e su&essee' T#e &essee=su&essor is not an agent o% t#e
&essor nor is t#e &essor an agent o% t#e &essee=su&essor' T#e su&essee #as no rig#t or aut#orit! to pa! t#e
su&ease renta&s to t#e &essor, said renta&s eing due and para&e to t#e &essee=su&essor' @erein, M7DB was
under no o&igation to pa! (uano since t#e %reig#tage was pa!a&e to :a%o&s'
%. 5rticle 12- 7CC! Su$lessee su$si+iary lia$le to lessor6 7o +e#an+ )o.ever .as #a+e a*ainst
su$lessee
7&t#oug# it is provided in 7rtic&e 1>48 o% t#e $ivi& $ode t#at t#e su&essee is susidiari&! &ia&e to t#e
&essor %or an! rent due %rom t#e &essee, t#e su&essee s#a&& not e responsi&e e!ond t#e amount o% rent due
%rom #im, in accordance wit# t#e terms o% t#e su&ease, at t#e time o% t#e e3traAudicia& demand ! t#e &essor'
@erein, (uano made no demand %or pa!ment %rom M7DB' @is &etter dated 13 (ctoer 1./2 was on&! a
re9uest to #o&d momentari&! an! pa!ment due %or t#e use o% M-V Don Ju&io (uano unti& :a%o&s #ad made
good #is o&igations to #im'
1". =5<D coul+ not .it))ol+ pay#ent o, ,rei*)t
,n t#e asence o% an! positive action on t#e part o% (uano, M7DB cou&d not wit##o&d t#e pa!ment o%
t#e %reig#t to :a%o&s' 7s stated in t#e %i3ture note, t#e %irst %reig#t insta&&ment was due and pa!a&e upon
arriva& o% t#e assigned vesse& at t#e port o% &oading' T#e goods were &oaded in t#e vesse& on or e%ore .
(ctoer 1./2, #ence on t#at date t#e %irst %reig#t insta&&ment was a&read! due and demanda&e' To %urt#er
wit##o&d t#e pa!ment o% said insta&&ment wou&d constitute a reac# o% M7DB?s o&igation under t#e
%oregoing contract'
11. Ra,ols1 $ouncin* c)ecks cannot $e ascri$a$le to =5<D
@erein, pa!ments were actua&&! made a%ter 13 (ctoer 1./2 ! :a%o&s to (uano, to wit: (a) two
c#ecks in t#e tota& amount o% P32,222'22 dated (ctoer 13 and 81, 1./2, respective&!C and () a t#ird
postdated c#eck %or P38,222'22 issued on . Eovemer 1./2' T#e %act t#at t#e said c#ecks ounced %or
insu%%icient %unds cannot in an! wa! e ascria&e to M7DB nor can it create or a%%ect an! &iai&it! w#ic#
(uano seeks to impute to M7DB, "M$", and t#eir agents'
1-. 0in+s o, c)arter party
7 c#arter part! ma!, among ot#er c&assi%ications, e o% two kinds: (ne is w#ere t#e owner agrees to carr! a
cargo w#ic# t#e c#arterer agrees to provide, and t#e second is w#ere t#ere is an entire surrender ! t#e owner
o% t#e vesse& to t#e c#arterer, w#o #ires t#e vesse& as one #ires a #ouse, takes #er empt!, and provides t#e
o%%icers and provisions, and, in s#ort, t#e entire out%it' ,n suc# a contract, t#e c#arterer is sustituted in p&ace
o% t#e owner and ecomes t#e owner %or t#e vo!age' T#is second t!pe is a&so known as a areoat c#arter or
ot#erwise re%erred to as a demise o% t#e vesse&' ,n a c#arter part! o% t#e second kind, not on&! t#e entire
capacit! o% t#e s#ip is &et ut t#e s#ip itse&%, and t#e possession is passed to t#e c#arterer' T#e entire contro&
and management o% it is given up to #im' T#e genera& owner &oses #is &ien %or %reig#t, ut t#e &ien itse&% is not
destro!ed, t#e c#arterer is sustituted in #is p&ace, in w#ose %avor t#e &ien continues to e3ist w#en goods are
taken on %reig#t' T#e genera& owner, #owever, #as no remed! %or t#e c#arter o% #is vesse& ut #is persona&
action on t#e covenants o% t#e c#arter part!' ,t is a contract in w#ic# #e trusts in t#e persona& credit o% t#e
c#arterer' T#ere%ore, w#ere t#e c#arter constitutes a demise o% t#e s#ip and t#e c#arterer is t#e owner %or t#e
vo!age, and t#at is t#e kind o% c#arter part! invo&ved in t#e present case, t#e genera& owner #as no &ien on t#e
cargo %or t#e #ire o% t#e vesse&, in t#e asence o% an e3press provision t#ere%or'
13. Lien on unpai+ ,rei*)t availa$le .)en o.ner retains possession o, *oo+s
Bven on t#e assumption t#at (uano #ad a &ien on t#e cargo %or unpaid %reig#t, t#e same was deemed
waived w#en t#e goods were unconditiona&&! re&eased to t#e consignee at t#e port o% destination' 7 carrier #as
suc# a &ien on&! w#i&e it retains possession o% t#e goods, so t#at de&iver! o% t#e goods to t#e consignee or a
t#ird person terminates, or constitutes a waiver o%, t#e &ien' T#e &ien o% a carrier %or t#e pa!ment o% %reig#t
c#arges is not#ing more t#an t#e rig#t to wit##o&d t#e goods, and is insepara&! associated wit# its possession
and dependent upon it'
1/. S)ipo.ner1s lien on ,rei*)t not in t)e nature o, )ypot)ecation
T#e s#ipowner?s &ien %or %reig#t is not in t#e nature o% a #!pot#ecation w#ic# wi&& remain a c#arge
upon t#e goods a%ter #e #as parted wit# possession, ut is simp&! t#e rig#t to retain t#em unti& t#e %reig#t is
paid, and is t#ere%ore &ost ! an unconditiona& de&iver! o% t#e goods to t#e consignee'
12. 5rticle 3 o, Co+e o, Co##erce as #o+i,ie+ $y 5rticle --/1 7CC6 :erio+ .)ere lien su$sists
Dnder 7rtic&e >>0 o% t#e $ode o% $ommerce, t#e period during w#ic# t#e &ien s#a&& susist is 82 da!s'
Parent#etica&&!, t#is #as een modi%ied ! t#e $ivi& $ode, 7rtic&e 8851 w#ereo% provides t#at credits %or
transportation o% t#e goods carried, %or t#e price o% t#e contract and incidenta& e3penses s#a&& constitute a
pre%erred c&aim or &ien on t#e goods carried unti& t#eir de&iver! and %or 32 da!s t#erea%ter' During t#is period,
t#e sa&e o% t#e goods ma! e re9uested, even t#oug# t#ere and ot#er creditors and even i% t#e s#ipper or
consignee is inso&vent' 1ut, t#is rig#t ma! not e made use o% w#ere t#e goods #ave een de&ivered and were
turned over to a t#ird person wit#out ma&ice on t#e part o% t#e t#ird person and %or a va&ua&e consideration'
1. 8verseas &actors vs. Sout) Sea S)ippin* inapplica$le
T#e case o% (verseas Factors, ,nc', et a&' vs' "out# "ea "#ipping $o', et a&' is ine%%ectua& and unavai&ing' ,n
said case, t#e cargo was sti&& in t#e possession o% t#e carrier w#ose o%%icers and crew re%used to un&oad t#e
same un&ess t#e a&ance o% t#e %reig#t was paid' @erein, t#e cargo #ad a&read! een unconditiona&&! de&ivered
to t#e consignee "M$, wit#out protest'
[134$]
7&5 vs. C5 (GR %/23! / 5u*ust 1%%%)
T#ird Division, Purisima (J): 5 concur
&acts' Eationa& Food 7ut#orit! (EF7), t#ru its o%%icers t#en, Bmi& (ng, :ose&inda 6era&de*, :amon "argan
and 7de&ina 7' Oap, entered into a ;+etter o% 7greement %or Vesse& -1arge @ire< wit# @ong%i& "#ipping
$orporation (@ong%i&) %or t#e s#ipment o% 822,222 ags o% corn grains %rom $aga!an de (ro $it! to Mani&a'
EF7 sent @ong%i& a +etter o% 7dvice t#at its (@ong%i&) vesse& s#ou&d proceed to $aga!an de (ro $it!' (n >
Feruar! 1./0, M-V D,7EB-$@7:+,B o% @ong%i& arrived in $aga!an de (ro $it!' @ong%i& noti%ied t#e
Provincia& Manager o% EF7 in $aga!an de (ro, Bduardo 7' Mercado, o% its said vesse&?s readiness to &oad and
t#e &atter received t#e said noti%ication on . Feruar! 1./0' 7 certi%ication o% c#arging rate was t#en issued !
6o&d $it! ,ntegrated Port "ervices, ,nc' (,EP(:T), t#e arrastre %irm in $aga!an de (ro $it!, w#ic# certi%ied
t#at it wou&d take t#em (,EP(:T) 0 da!s, / #ours and 53 minutes to &oad t#e 822,222 ags o% EF7 corn
grains' (n 12 Feruar! 1./0, &oading on t#e vesse& commenced and was terminated on 5 Marc# 1./0' 7s
t#ere was a strike staged ! t#e arrastre workers and in view o% t#e re%usa& o% t#e striking stevedores to attend
to t#eir work, t#e &oading o% said corn grains took 81 da!s, 14 and 1/ minutes to %inis#' (n > Marc# 1./0, t#e
EF7 Provincia& Manager a&&owed MV $@7:+,B-D,7EB to depart %or t#e Port o% Mani&a' (n 11 Marc#
1./0, t#e vesse& arrived at t#e Port o% Mani&a and a certi%ication o% disc#arging rate was issued at t#e instance
o% @ong%i&, stating t#at it wou&d take 18 da!s, > #ours and 88 minutes to disc#arge t#e 822, 222 ags o% corn
grains' Dn%ortunate&!, un&oading on&! commenced on 14 Marc# 1./0 and was comp&eted on 0 7pri& 1./0' ,t
took a tota& period o% 82 da!s, 15 #ours and 33 minutes to %inis# t#e un&oading, due to t#e unavai&ai&it! o% a
ert#ing space %or M-V $@7:+,B-D,7EB' 7%ter t#e disc#arging was comp&eted, EF7 paid @ong%i& t#e
(ransportation La.! -""/ ( /1/ )
amount o% P1,22>,.08'11 covering t#e s#ipment o% corn grains' T#erea%ter, @ong%i& sent its i&&ing to EF7,
c&aiming pa!ment %or %reig#t covering t#e s#ut=out &oad or dead%reig#t as we&& as demurrage, a&&eged&!
sustained during t#e &oading and un&oading o% suAect s#ipment o% corn grains'
F#en EF7 re%used to pa! t#e amount re%&ected in t#e i&&ing, @ong%i& roug#t an action against EF7 and its
o%%icers %or recover! o% dead%reig#t and demurrage, e%ore t#e :T$ in Pasig $it! ($ivi& $ase 44/.8, 1ranc#
1>4)' (n 8. Feruar! 1./., a%ter tria&, t#e :T$ #anded down its decision in %avor o% @ong%i& and against EF7
and its o%%icers, ordering (1) t#e EF7 to pa! @ong%i& (a) P858,3>0'32, in and as pa!ment o% t#e dead%reig#t or
un&oaded cargoC and () P1,148,>/0'42, in and as pa!ment as o% demurrage c&aimC (8) t#e EF7 and its o%%icers
to pa! @ong%i&, Aoint&! and severa&&! t#e amount o% P42,222'22, %or and as attorne!?s %eesC and e3penses o%
&itigation or t#e costs o% t#e suit' T#e tria& court dismissed EF7?s counterc&aim %or &ack o% merit'
(n appea&, and on 8. Eovemer 1..2, t#e $ourt o% 7ppea&s a%%irmed wit# modi%ication t#e Audgment !
de&eting t#ere%rom t#e award o% attorne!?s %ees ($7 6: $V 81853)' @ence, t#e petition %or review on
certiorari'
T#e "upreme $ourt a%%irmed t#e decision o% t#e $ourt o% 7ppea&s wit# modi%icationC ordered EF7 to pa!
@ong%i& "#ipping $orporation t#e amount o% P858,3>0'32 %or dead%reig#tC de&eted t#e award o% P1,148,>/0'42
%or demurrage %or &ack o% proper asisC and aso&ved :ose&inda 6era&de*, :amon "argan and 7de&ina 7' Oap
o% an! &iai&it! to @ong%i&C wit#out pronouncement as to costs'
1. Letter o, 5*ree#ent is a c)arter party6 Classi,ication o, c)arter party
T#e suAect +etter o% 7greement is considered a $#arter Part!' 7 c#arter part! is c&assi%ied into (1)
;areoat< or ;demise< c#arter and (8) contract o% a%%reig#tment' "uAect contract is one o% a%%reig#tment,
w#ere! t#e owner o% t#e vesse& &eases part or a&& o% its space to #au& goods %or ot#ers' ,t is a contract %or
specia& service to e rendered ! t#e owner o% t#e vesse&' Dnder suc# contract t#e s#ip owner retains t#e
possession, command and navigation o% t#e s#ip, t#e c#arterer or %reig#ter mere&! #aving use o% t#e space in
t#e vesse& in return %or #is pa!ment o% t#e c#arter #ire'
-. <ea+,rei*)t +e,ine+
Dnder t#e &aw, t#e cargo not &oaded is considered as dead%reig#t' ,t is t#e amount paid ! or
recovera&e %rom a c#arterer o% a s#ip %or t#e portion o% t#e s#ip?s capacit! t#e &atter contracted %or ut %ai&ed
to occup!'
3. Lia$ility ,or +ea+,rei*)t on c)arterer6 5rticle 4" Co+e o, Co##erce
B3p&icit and succinct is t#e &aw t#at t#e &iai&it! %or dead%reig#t is on t#e c#arterer' T#e &aw in point is
7rtic&e >/2 o% t#e $ode o% $ommerce, w#ic# provides t#at ;7 c#arterer w#o does not comp&ete t#e %u&& cargo
#e ound #imse&% to s#ip s#a&& pa! t#e %reig#tage o% t#e amount #e %ai&s to s#ip, i% t#e captain does not take
ot#er %reig#t to comp&ete t#e &oad o% t#e vesse&, in w#ic# case t#e %irst c#arterer s#a&& pa! t#e di%%erence,
s#ou&d t#ere e an!'<
/. @=ore or lessA construe+
T#e words ;more or &ess< w#en used in re&ation to 9uantit! or distance, are words o% sa%et! and
caution, intended to cover some s&ig#t or unimportant inaccurac!' ,t a&&ows an adAustment to t#e demands o%
circumstances w#ic# do not weaken or destro! t#e statements o% distance and 9uantit! w#en no ot#er guides
are avai&a&e' ,n %act, #erein, t#ere was a communication %rom EF7 7dministrator Bmi& (ng to (scar
"anc#e*, Manager o% @ong%i& "#ipping $orporation, stating c&ear&! t#at t#e vesse& M-V $@7:+,B-D,7EB
was c#artered to ;&oad our 822,222 ags corn grains %rom $aga!an de (ro to Mani&a at P0'32 per 42 kg'-ag'<
T#ere%rom, it can e g&eaned unerring&! t#at t#e c#arter part! was to transport 822,222 ags o% corn grains'
. <ea+,rei*)t +ue
7s t#e &etter o% agreement covered 822,222 ags o% corn grains ut on&! 1>>,0./ ags were un&oaded
at t#e Port o% Mani&a' $onse9uent&!, s#ut=out &oad or dead%reig#t o% 33,821 ags at P0'32 per ag or
P858,3>0'32 s#ou&d e paid ! EF7 to @ong%i& "#ipping $orporation'
3. <e#urra*e +e,ine+
Demurrage is t#e sum %i3ed in a c#arter part! as a remuneration to t#e owner o% t#e s#ip %or t#e
detention o% #is vesse& e!ond t#e numer o% da!s a&&owed ! t#e c#arter part! %or &oading or un&oading or %or
sai&ing'
4. Lia$ility ,or +e#urra*e
+iai&it! %or demurrage, using t#e word in its strict tec#nica& sense, e3ists on&! w#en e3press&!
stipu&ated in t#e contract' "#ipper or c#arterer is &ia&e %or t#e pa!ment o% demurrage c&aims w#en #e e3ceeds
t#e period %or &oading or un&oading as agreed upon or t#e agreed ;&a!da!s<' T#e period %or suc# ma! or ma!
not e stipu&ated in t#e contract' 7 c#arter part! ma! eit#er provide %or a %i3ed &a!da!s or contain genera& or
inde%inite words suc# as ;customar! 9uick dispatc#< or ;as %ast as t#e steamer can &oad'<
%. ;#plication o, @Custo#ary Kuick <ispatc)A
T#e stipu&ation ;+a!da!s (+oading and Dn&oading): $ustomar! Nuick Dispatc#< imp&ies t#at &oading
and un&oading o% t#e cargo s#ou&d e wit#in a reasona&e period o% time' Due di&igence s#ou&d e e3ercised
according to t#e customs and usages o% t#e port or ports o% ca&&' T#e circumstances otaining at t#e time o%
&oading and un&oading are to e taken into account in t#e determination o% ;$ustomar! Nuick Dispatc#'<
F#at is a reasona&e time depends on t#e e3isting as opposed to norma& circumstances, at t#e port o% &oading
and t#e custom o% t#e port'
1". Cause o, +elay not i#puta$le to eit)er o, t)e parties
F#i&e w#at was certi%ied to ! t#e arrastre did not ta&&! wit# t#e actua& period o% &oading and
un&oading, it appears t#at t#e cause o% de&a! was not imputa&e to eit#er o% t#e parties' T#e cause o% de&a!
during t#e &oading was t#e strike staged ! t#e crew o% t#e arrastre operator, and t#e unavai&ai&it! o% a
ert#ing space %or t#e vesse& during t#e un&oading' T#e &ack o% a ert#ing space was understanda&e under t#e
circumstances since t#e Eort# @aror in Mani&a, w#ere t#e un&oading took p&ace, is a &arge port ut t#ere was
congestion due to t#e numer o% s#ips or vesse&s w#ic# were a&& waiting to dock'
11. E)en +elay in loa+in* or unloa+in* +ee#e+ as +e#urra*e
De&a! in &oading or un&oading, to e deemed as a demurrage, runs against t#e c#arterer as soon as t#e
vesse& is detained %or an unreasona&e &engt# o% time %rom t#e arriva& o% t#e vesse& ecause no avai&a&e
ert#ing space was provided %or t#e vesse& due to t#e neg&igence o% t#e c#arterer or ! reason o%
circumstances caused ! t#e %au&t o% t#e c#arterer'
1-. 7&5 cannot $e )el+ lia$le ,or +e#urra*e (as per +elay)
@erein, c#arterer EF7 cou&d not e #e&d &ia&e %or demurrage %or t#e de&a! resu&ting %rom t#e
a%orementioned circumstances' T#e provision ;+a!da!s: $ustomar! Nuick Dispatc#< invoked ! @ong%i& is
unavai&ing as a asis %or re9uiring t#e c#arterer to pa! %or demurrage asent convincing proo% t#at t#e time %or
t#e &oading or un&oading in 9uestion was e!ond t#e ;reasona&e time< wit#in t#e contemp&ation o% t#e
c#arter part!' @ere, t#e de&a! sued upon was sti&& wit#in t#e ;reasona&e time< emraced in t#e stipu&ation o%
;$ustomar! Nuick Dispatc#'<
13. <ili*ence re9uire+ o, c)arter in contract o, a,,rei*)t#ent
,n a contract o% a%%reig#tment, t#e s#ipper or c#arterer mere&! contracts a vesse& to carr! its cargo wit#
t#e corresponding dut! to provide %or t#e ert#ing space %or t#e &oading or un&oading' $#arterer is mere&!
re9uired to e3ercise ordinar! di&igence in ensuring t#at a ert#ing space e made avai&a&e %or t#e vesse&' T#e
c#arterer does not make itse&% an aso&ute insurer against a&& events w#ic# cannot e %oreseen or are
inevita&e' T#e &aw on&! re9uires t#e e3ercise o% due di&igence on t#e part o% t#e c#arterer to scout or &ook %or
a ert#ing space'
1/. Literal #eanin* o, stipulations controllin* in contracts .)ic) are clear
$onsidering t#at suAect contract o% a%%reig#tment contains an e3press provision
;Demurrage-Dispatc#: E(EB,< t#e same &e%t t#e parties wit# no ot#er recourse ut to app&! t#e &itera&
meaning o% suc# stipu&ation' T#e cardina& ru&e is t#at w#ere, as in t#is case, t#e terms o% t#e contract are c&ear
and &eave no dout over t#e intention o% t#e contracting parties, t#e &itera& meaning o% its stipu&ations is
contro&&ing'
12. Eaiver +e,ine+6 @<e#urra*eC<ispatc)' 787DA #ay $e interprete+ as a .aiver o, ri*)t to
clai# ,or +e#urra*e
Faiver is a renunciation o% w#at #as een esta&is#ed in %avor o% one or %or #is ene%it, ecause #e
preAudices nood! t#ere!C i% #e su%%ers &oss, #e is t#e one to &ame' @erein, t#e provision
;Demurrage-Dispatc#: E(EB< can e interpreted as a waiver ! @ong%i& o% t#e rig#t to c&aim %or demurrages'
1. Contract is t)e la. $in+in* $et.een parties
Fe&&=sett&ed is t#e doctrine t#at a contract etween parties w#ic# is not contrar! to &aw, mora&s, good
customs, pu&ic order or pu&ic po&ic!, is t#e &aw inding on ot# o% t#em' @erein, as @ong%i& %ree&! entered
into suAect c#arter part! w#ic# providing %or ;Demurrage-Dispatc#: E(EB,< it cannot escape t#e inevita&e
conse9uence o% its inai&it! to co&&ect demurrage'
13. =5= Realty vs. 7LRC6 8$li*ations incurre+ $y o,,icers! as corporate a*ents! t)ose o, t)e
corporation
,n t#e case o% M7M :ea&t! vs' E+:$, t#e $ourt #e&d t#at a corporation, eing a Auridica& entit!, ma!
act on&! t#roug# its o%%icers, directors and emp&o!ees' (&igations incurred or contracted ! t#em, acting as
suc# corporate agents, are not t#eirs ut t#e direct accountai&it! o% t#e corporation t#e! represent'
14. Dxceptions .)ere personal civil lia$ility #ay attac) to a corporate o,,icer
T#e e3ceptions w#erein persona& civi& &iai&it! ma! attac# to a corporate o%%icer are: (1) F#en
directors and trustees or, in appropriate cases, t#e o%%icers o% a corporation H (a) vote %or or assent to patent&!
un&aw%u& acts o% t#e corporationC () act in ad %ait# or wit# gross neg&igence in directing t#e corporate a%%airsC
(c) are gui&t! o% con%&ict o% interest to t#e preAudice o% t#e corporation, its stock#o&ders or memers, and ot#er
persons' (8) F#en a director or o%%icer #as consented to t#e issuance o% watered stocks, or w#o, #aving
know&edge t#ereo%, did not %ort# wit# %i&e wit# t#e corporate secretar! #is written oAection t#ereto' (3) F#en
a director, trustee or o%%icer #as contractua&&! agreed or stipu&ated to #o&d #imse&% persona&&! and so&idari&!
&ia&e wit# t#e corporation' (5) F#en a director, trustee or o%%icer is made, ! speci%ic provision o% &aw,
persona&&! &ia&e %or #is corporate action'<
1%. Case +oes not ,all un+er any o, exceptions
T#e present case does not %a&& under an! o% suc# e3ceptions' 7 care%u& perusa& o% t#e contract &itigated
upon revea&s t#at 6era&de*, et' a&', as o%%icers o% EF7, did not ind t#emse&ves to e persona&&! &ia&e nor did
t#e! ink an! undertaking t#at s#ou&d EF7 %ai& to pa! @ong%i&?s c&aims, t#e! wou&d e persona&&! &ia&e'
@ong%i& #as not cited an! provision o% &aw under w#ic# t#e o%%icers o% EF7 are &ia&e under t#e contract
entered into' Furt#er, t#ere is not#ing on record to s#ow t#at t#e o%%icers acted in ad %ait# or were gui&t! o%
gross neg&igence, to warrant persona& &iai&it!' Eeit#er t#e tria& court nor t#e $ourt o% 7ppea&s %ound o% ad
%ait# or gross neg&igence on t#e part o% t#e said o%%icers o% EF7'
-". Ba+ ,ait) is a 9uestion o, ,act6 E)at constitutes $a+ ,ait)
1ad %ait# or neg&igence is a 9uestion o% %act and is evidentiar!' ,t #as een #e&d t#at ;ad %ait# does
not simp&! mean ad Audgment or neg&igenceC it imparts a dis#onest purpose or some mora& o&i9uit! and
conscious doing o% wrong' ,t means a reac# o% a known dut! t#roug# some motive or interest or i&&=wi&&C it
partakes o% t#e nature o% %raud'<
[179] =ariti%e vs. CA, see [17+]
[14"]
=arket <evelopers vs. ;5C (GR 3/%34! 4 Septe#$er 1%4%)
First Division, $ru* (J): 5 concur
&acts' (n 82 June 1.0/, Market Deve&opers, ,nc' (M7DB) entered into a written arging and towage contract
wit# 6audioso D! %or t#e s#ipment o% t#e %ormer?s cargo %rom ,&igan $it! to Pa&io, 7k&an, at t#e rate o%
P1'54 per ag' M7DB was a&&owed 5 &a! da!s and agreed to pa! demurrage at t#e rate o% P4,222'22 %or ever!
da! o% de&a!, or in e3cess o% t#e stipu&ated a&&owance' (n 8> June 1.0/, D! sent a arge and a tugoat to
,&igan $it! and &oading o% M7DB?s cargo egan immediate&!' ,t is not c&ear w#o made t#e re9uest, ut upon
comp&etion o% t#e &oading on 8. June 1.0/, t#e parties agreed to divert t#e arge to $u&asi, :o3as $it!, wit#
t#e cargo eing consigned per i&& o% &ading to Modern @ardware in t#at cit!' T#is new agreement was not
reduced to writing' T#e s#ipment arrived in :o3as $it! on 13 Ju&! 1.0/, and t#e cargo was eventua&&!
un&oaded and du&! received ! t#e consignee' T#ere is some dispute as to t#e time consumed %or suc#
un&oading' 7t an! rate, aout > mont#s &ater, D! demanded pa!ment o% demurrage c#arges in t#e sum o%
P52,/44'52 %or an a&&eged de&a! o% / da!s and 5-84 #ours' M7DB ignored t#is demand, and D! %i&ed suit'
D! was sustained ! t#e tria& court, w#ic# ordered M7DB to pa! #im t#e said amount wit# interest p&us
P5,222'22 attorne!?s %ees and t#e cost o% t#e suit' T#is decision was %u&&! a%%irmed on appea& to t#e
,ntermediate 7ppe&&ate $ourt' @ence, t#e petition'
T#e "upreme $ourt granted t#e petitionC reversed t#e decision o% t#e appe&&ate courtC and dismissed $ivi&
$ase : 1/2.4 in t#e :T$ o% $eu, wit# costs against D!'
1. &irst .ritten contract cancelle+ an+ replace+ $y secon+ ver$al contract
7%ter considering t#e issues and t#e arguments o% t#e parties, t#e $ourt %inds t#at it was erroneous %or
t#e tria& and appe&&ate courts to a%%irm t#at t#e origina& contract conc&uded on 82 June 1.0/, continued to
regu&ate t#e re&ations o% t#e parties' F#at it s#ou&d #ave #e&d instead was t#at t#e %irst written contract #ad
een cance&&ed and rep&aced ! t#e second vera& contract ecause o% t#e c#ange in t#e destination o% t#e
cargo' 7&t#oug# t#e rates remained unc#anged at P1'54 per sack o% M7DB?s cargo, t#ere was a sustantia&
di%%erence etween :o3as $it! and Pa&io, 7k&an, as ports o% destination, t#at a%%ected t#e continued
e3istence o% t#e %irst contract'
-. Roxas City a $usier port t)an 0ali$o6 <e#urrer c)ar*es not conte#plate+ in secon+ contract
:o3as $it! is a muc# usier port t#an Pa&io, 7k&an, w#ere un&oading o% its cargo cou&d #ave een
accomp&is#ed %aster ecause o% t#e &ig#ter tra%%ic' T#at is w#! M7DB agreed to pa! demurrage c#arges under
t#e origina& contract ut not under t#e revised vera& agreement' ,ndeed, it wou&d #ave een %oo&#ard! %or
M7DB to assume demurrage c#arges in :o3as $it!, considering t#e crowded condition o% t#e port in t#at
p&ace' "uc# assumption s#ou&d not #ave een &ig#t&! in%erred, especia&&! since it is ased on t#e resurrection
o% a contract a&read! voided ecause o% t#e c#ange in t#e port o% destination' To #o&d t#at t#e o&d agreement
was sti&& va&id and susisting notwit#standing t#is sustantia& c#ange was to impose upon M7DB a condition
#e #ad not, and wou&d not #ave, accepted under t#e new agreement'
3. 5rticle 132 7CC
7rtic&e 134> o% t#e $ivi& $ode provides t#at ;$ontracts s#a&& e o&igator! in w#atever %orm t#e!
ma! #ave een entered into, provided a&& t#e essentia& re9uisites %or t#eir va&idit! are present' @owever, w#en
t#e &aw re9uires t#at a contract e in some %orm in order t#at it ma! e va&id or en%orcea&e, or t#at a contract
e proved in a certain wa!, t#at re9uirement is aso&ute and indispensa&e'<
5. Contract #ay $e oral or .ritten
T#e ru&e in 7rtic&e 134> E$$ was a%%irmed on&! recent&! w#en t#e $ourt said in Tong v' ,ntermediate
7ppe&&ate $ourt t#at ;a contract ma! e entered into in w#atever %orm e3cept w#ere t#e &aw re9uires a
document or ot#er specia& %orm as in t#e contracts enumerated in 7rtic&e 13// o% t#e $ivi& $ode' T#e genera&
ru&e, t#ere%ore, is t#at a contract ma! e ora& or written'<
2. Contract o, a,,rei*)t#ent
7 contract o% a%%reig#tment is a contract wit# t#e s#ipowner to #ire #is s#ip or part o% it, %or t#e
carriage o% goods, and genera&&! takes t#e %orm eit#er o% a c#arter part! or a i&& o% &ading' @erein, t#e contract
e3ecuted ! M7DB and D! was a contract o% a%%reig#tment'
. 5rticle 2- Co+e o, Co##erce
7rtic&e >48 o% t#e $ode o% $ommerce provides t#at ;a c#arter part! must e drawn in dup&icate and
signed ! t#e contracting parties< and enumerates t#e conditions and in%ormation to e emodied in t#e
contract, inc&uding ;t#e &a! da!s and e3tra &a! da!s to e a&&owed and t#e demurrage to e paid %or eac# o%
t#em'<
3. 5rticle 23 Co+e o, Co##erce
7rtic&e >43 o% t#e $ode o% $ommerce provides t#at ;,% t#e cargo s#ou&d e received wit#out a c#arter
part! #aving een signed, t#e contract s#a&& e understood as e3ecuted in accordance wit# w#at appears in t#e
i&& o% &ading, t#e so&e evidence o% tit&e wit# regard to t#e cargo %or determining t#e rig#ts and o&igations o%
t#e s#ip agent, o% t#e captain and o% t#e c#arterer'<
4. ;nterpretation o, 5rticle 2- in relation to 5rticle 23 o, t)e Co+e o, Co##erce
F#i&e t#e ru&e in 7rtic&e >48 c&ear&! s#ows t#at a c#arter part! must e in writing, 7rtic&e >43 admits
t#at t#e c#arter part! ma! e ora&, in w#ic# case t#e terms t#ereo%, not #aving een reduced to writing, s#a&&
e t#ose emodied in t#e i&& o% &ading'
%. 8ral c)arter parties6 Co#pania =ariti#a vs. ;nsurance Co#pany o, 7ort) 5#erica
$on%orma&!, t#e $ourt recogni*ed in $ompa)ia Maritima v' ,nsurance $ompan! o% Eort# 7merica,
t#e e3istence o% a contract o% a%%reig#tment entered into ! te&ep#one, w#ere it was s#own t#at t#is ora&
agreement was &ater con%irmed ! a %orma& and written ooking issued ! t#e s#ipper?s ranc# o%%ice and &ater
carried out ! t#e carrier'
1". La. an+ ?urispru+ence support t)e vali+ity o, a contract not re+uce+ in .ritin*
+aw and Aurisprudence support t#e va&idit! o% a contract not reduced in writing' T#ere is no
Austi%ication eit#er to incorporate in suc# contract t#e stipu&ation %or demurrage in t#e origina& written contract
w#ic# provided %or a di%%erent port o% destination t#an t#at &ater agreed upon ! t#e parties' ,t was precise&!
t#is vita& c#ange in t#e second contract t#at rendered t#at %irst contract ine%%ectua&' ,% t#e rate provided %or in
t#e o&d written contract was maintained in t#e new ora& contract, it was simp&! ecause t#e rates %or Pa&io,
7k&an and $u&asi, :o3as $it!, w#ere t#e same' 1ut t#e demurrage c#arges cannot e deemed stipu&ated a&so
in t#e vera& contract ecause t#e conditions in t#e ports o% 7k&an and :o3as $it! were, un&ike t#e rates, not
t#e same' ,n %act, t#e! were vast&! di%%erent'
11. :arol evi+ence rule inapplica$le6 7o la. #akes it necessary ,or ne. contract o, sa#e su$?ect $e
re+uce+ in .ritin*
T#e paro& evidence ru&e is c&ear&! inapp&ica&e ecause t#at invo&ves t#e vera& modi%ication H
usua&&! not a&&owed H o% a written agreement admitted&! sti&& va&id and susisting' @erein, t#e %irst written
(ransportation La.! -""/ ( /1% )
agreement #ad not mere&! een modi%ied ut actua&&! rep&aced ! t#e second vera& agreement, w#ic# is
per%ect&! va&id even i% not in writing &ike t#e %irst' 7s #as een correct&! #e&d t#at ;Eo princip&e o% &aw makes
it necessar! t#at a new contract upon t#e same suAect etween t#e same persons s#a&& e reduced to writing
ecause t#e o&d contract was written' ;
1-. 7o re9uire#ent ,or pay#ent o, +e#urra*e c)ar*es in t)e $ill o, la+in*
:egarding t#e i&& o% &ading, an e3amination t#ereo% wi&& revea& t#at t#ere is no condition or
re9uirement t#erein %or t#e pa!ment o% demurrage c#arges' Dnder 7rtic&e >43 o% t#e $ode o% $ommerce,
t#ere%ore, t#ere was no reason to read an! stipu&ation %or demurrage into t#e second contract'
13. Fy1s testi#ony )earsay6 Bar*e patron not presente+ at t)e trial
Bven assuming t#at t#e origina& agreement %or demurrage #ad een carried over in t#e second
contract, t#ere is no accepta&e evidence o% t#e de&a! a&&eged&! incurred ! M7DB in t#e un&oading o% its
cargo in :o3as $it!' D!?s testimon! on t#is matter is se&%=serving, &et a&one t#e %act t#at #e admitted&! was not
present at t#e un&oading' @is corrooration is #earsa!' T#is consisted mere&! o% t#e so=ca&&ed statement o%
%acts regarding t#e un&oading o% t#e cargo %rom t#e arge, prepared ! t#e arge patron, a certain Ding Ju&ian'
T#is person was not presented at t#e tria& to testi%! on #is report and cou&d t#ere%ore not e suAected to cross
e3amination'
1/. (i#eliness o, +e#an+ ,or pay#ent o, +e#urrer c)ar*es in+icate real intention o, t)e parties
T#e origina& i&& sent ! D! c#arged M7DB on&! %or t#e %reig#t ut made no mention o% t#e
demurrage c#arges, inasmuc# as t#at said i&& was was made on / Ju&! 1.0/ w#en t#ere was !et no
demurrage' 7s a matter o% %act, un&oading #ad not !et started' T#e un&oading started on 13 Ju&! 1.0/' "ti&&,
a%ter sending M7DB t#e i&&ing dated / Ju&! 1.0/, D! did not make an! additiona& i&&ing %or demurrage
%o&&owing t#e comp&etion o% t#e un&oading on 85 Ju&! 1.0/, as a&&eged' ,t is a&so a matter o% record t#at on 1
"eptemer 1.0/, M7DB remitted to D! a c#eck ;in %u&& pa!ment o% our account,< w#ic# was accepted
wit#out protest and eventua&&! encas#ed ! D!' Furt#ermore, M7DB?s sa&es manager testi%ied t#at M7DB
and D! entered into at &east one more vo!age a%terwards, and t#ere was no demand made t#en %or t#e
demurrage c#arges %or t#e vo!age to :o3as $it!' T#is c&aim #as not een denied' D! sa!s #e made suc#
demand vera&&! severa& times ut o%%ered no corrooration' ,t was on&! on 4 Feruar! 1.0., t#at #e made #is
demand in writing' ,t took a&& o% si3 mont#s e%ore it occurred to D! to make a written demand %or demurrage
a&t#oug# #e sa!s #is severa& vera& demands #ad een consistent&! ignored'
12. <elay +oes not constitute lac)es! $ut re,lects cre+i$ility o, carrier
F#i&e t#e de&a!, standing ! itse&%, is not &ong enoug# to constitute &ac#es, it nevert#e&ess c&ear&!
re%&ects on t#e D!?s credii&it! w#en assessed in re&ation to t#e %acts narrated'
1. Carrier coul+ )ave #et all ar*u#ents! $ut erroneously relie+ on t)e ?u+*#ent o, t)e lo.er
courts
F#i&e D! cou&d #ave met a&& t#e arguments o% M7DB %ronta&&!, #e e&ected to re&! mere&! on t#e
decisions o% t#e tria& court and t#e appe&&ate court, per#aps %ee&ing smug&! t#at #e #ad a&read! won' T#at was
#is error' @e misAudged t#ose Audgments' ,t s#ou&d never e assumed t#at w#en t#e "upreme $ourt sits to
review t#e decisions o% t#e &ower courts, it wi&& mere&! and automatica&&! a%%irm t#em wit#out %urt#er in9uir!
on t#e convenient assumption t#at t#e! are correct' T#at ma! e a presumption, and it is o%ten va&id, ut it is
never conc&usive upon t#e "upreme $ourt' "uc# decisions are a&wa!s e3amined care%u&&! and t#oroug#&! !
t#e $ourt, in t#e &ig#t o% t#e issues and arguments raised ! t#e parties e%ore it, and ma! e modi%ied or even
reversed w#enever warranted to give t#e deserving suitor t#e appropriate re&ie%C as #erein'
[181] &ar!t!4e A#en(!es v. CA, see [17/]
[14-]
(ransportation La.! -""/ ( /-" )
=ari#perio Co#pania 7aviera vs. C5 (GR L>/"-3/! 1/ <ece#$er 1%43)
First Division, Paras (J): 5 concur
&acts' ,n 1.>5 P#i&in Traders $orporation and Dnion ,mport and B3port $orporation entered into a Aoint
usiness venture %or t#e purc#ase o% copra %rom ,ndonesia %or sa&e in Burope' James +iu, President and
6enera& Manager o% t#e Dnion took c#arge o% t#e Buropean market and t#e c#artering o% a vesse& to take t#e
copra to Burope' Peter Oap o% P#i&in on t#e ot#er #and, %ound one P'T' Parkam in Dumai, "umatra w#o #ad
around 5,222 tons o% copra %or sa&e' B3e9uie& Toeg o% ,nterocean was commissioned to &ook %or a vesse& and
#e %ound t#e vesse& ;"" Pa3oi< o% Marimperio $ompa)ia Eaviera, "'7' avai&a&e' P#i&in and Dnion
aut#ori*ed Toeg to negotiate %or its c#arter ut wit# instructions to keep con%identia& t#e %act t#at t#e! are t#e
rea& c#arterers' $onse9uent&! on 81 Marc# 1.>4, in +ondon Bng&and, a ;Dni%orm Time $#arter< %or t#e #ire
o% vesse& ;Pa3oi< was entered into ! t#e owner, Marimperio t#roug# its agents E' T J' V&assopu&os, +td' and
Matt#ews Frig#tson, 1urridge, +td' (Matt#ews), representing ,nterocean "#ipping $orporation, w#ic# was
made to appear as c#arterer, a&t#oug# it mere&! acted in e#a&% o% t#e rea& c#arterers' ,n view o% t#e $#arter,
on 32 Marc# 1.>4 p&ainti%% $#arterer ca&ed a %irm o%%er to P'T' Parkam to u! t#e 5,222 tons o% copra %or
D'"' K1/2'22 per ton, t#e same to e &oaded eit#er in 7pri& or Ma!, 1.>4' T#e o%%er was accepted and
p&ainti%%s opened two irrevoca&e &etters o% $redit in %avor o% P'T' Parkam' (n Marc# 8., 1.>4, t#e $#arterer
was noti%ied ! &etter ! V&assopu&os t#roug# Matt#ews t#at t#e vesse& ;P7J(,< #ad sai&ed %rom @sinkang at
noontime on 80 Marc# 1.>4 and t#at it #ad &e%t on #ire at t#at time and date under t#e Dni%orm Time=$#arter'
T#e $#arterer was #owever twice in de%au&t in its pa!ments w#ic# were supposed to #ave een done in
advance' T#e %irst 14=da! #ire comprising t#e period %rom Marc# 80 to 7pri& 11, 1.>4 was paid despite
%o&&ow=ups on&! on > 7pri& 1.>4 and t#e second 14=da! #ire %or t#e period %rom 7pri& 18 to 7pri& 80, 1.>4
was paid a&so despite %o&&ow=ups on&! on 8> 7pri& 1.>4' (n 15 7pri& 1.>4 upon representation o% Toeg, t#e
Bsso "tandard (i& (@ongkong) $ompan! supp&ied t#e vesse& wit# 522 tons o% unker oi& at a cost o% D"
K>,./8'03' 7&t#oug# t#e &ate pa!ments %or t#e c#arter o% t#e vesse& were received and acknow&edged !
V&assopu&os wit#out comment or protest, said agent noti%ied Matt#ews, ! te&e3 on 83 7pri& 1.>4 t#at t#e
s#ipowners in accordance wit# $&ause > o% t#e $#arter Part! were wit#drawing t#e vesse& %rom $#arterer?s
service and #o&ding said $#arterer responsi&e %or unpaid #irings and a&& &ega& c&aims' (n 8. 7pri& 1.>4, t#e
s#ipowners entered into anot#er c#arter agreement wit# anot#er $#arterer, t#e Eeder&ansc#e "toomvart o%
7msterdam, t#e de&iver! date o% w#ic# was around 3 Ma! 1.>4 %or a trip via ,ndonesia to 7ntwep-@amurg
at an increased c#arter cost' Meanw#i&e, t#e origina& $#arterer again remitted on 32 7pri& 1.>4, t#e amount
corresponding to t#e 3rd 14=da! #ire o% t#e vesse& P7J(,, ut t#is time t#e remittance was re%used'
(n 3 Ma! 1.>4, Dnion and P#i&in %i&ed a comp&aint wit# t#e $ourt o% First ,nstance o% Mani&a, 1ranc# V,,,,
against t#e Dnknown (wners o% t#e Vesse& ;"" Pa3oi<, %or speci%ic per%ormance wit# pra!er %or pre&iminar!
attac#ment' Dnion and P#i&in otained a writ o% pre&iminar! attac#ment o% vesse& ;P7J(,< w#ic# was
anc#ored at Davao on 4 Ma! 1.>., upon t#e %i&ing o% t#e corresponding ond o% P1,>>3,232'22' (n 11 Ma!
1.>4, t#e comp&aint was amended to identi%! t#e de%endant as Marimperio $ompa)ia Eaviera "'7' @owever,
t#e attac#ment was &i%ted on 14 Ma! 1.>. upon Marimperio?s motion and %i&ing o% a counterond %or
P1,>>3,232' (n 1> Marc# 1.>>, ,nterocean "#ipping $orporation %i&ed a comp&aint=in=intervention to co&&ect
w#at it c&aims to e its &oss o% income ! wa! o% commission and e3penses in t#e amount o% P14,222'22 and
t#e sum o% P8,222'22 %or attorne!?s %ees' (n 88 Eovemer 1.>. t#e $F, o% Mani&a rendered its decision in
%avor o% Marimperio, and against Dnion and P#i&in, dismissing t#e amended comp&aint, and ordering t#e &atter
on t#e counterc&aim to pa! Marimperio, Aoint&! and severa&&!, t#e amount o% +/,211'3/ or its e9uiva&ent in
P#i&ippine currenc! o% P0>,323'52, at t#e e3c#ange rate o% P.'52 to 1 %or t#e unearned c#arter #ire due to t#e
attac#ment o% t#e vesse& ;P7J(,< in Davao, p&us premiums paid on t#e counterond as o% 88 7pri& 1.>/ p&us
t#e te&e3 and ca&e c#arges and t#e sum o% P12,222'22 as attorne!?s %ees and costs' T#e tria& court dismissed
t#e comp&aint=in=intervention, ordering ,nterocean to pa! Marimperio t#e sum o% P12,222'22 as attorne!?s
%ees, and t#e costs' Dnion and P#i&in %i&ed a Motion %or :econsideration and-or new tria& o% t#e decision o% t#e
tria& court on 83 Decemer 1.>.' ,nterocean %i&ed its motion %or reconsideration and-or new tria& on 0 Januar!
1.02' 7cting on t#e two motions %or reconsideration, t#e tria& court reversed its stand in its amended decision
(ransportation La.! -""/ ( /-1 )
dated 85 Januar! 1.0/' T#e $ourt rendered Audgment %or Dnion, P#i&in and ,nterocean, and ordered
Marimperio to pa! t#e %ormer t#e sum o% (1) D"K88,422'22 representing t#e remittance o% Dnion and P#i&in
to Marimperio %or t#e %irst 14=da! #ire o% t#e vesse& G"" P7J(,?, inc&uding overtime and an overpa!ment o%
D"K845'22C (8) D"K1>,222'22 corresponding to t#e remittance o% Dnion and P#i&in to Marimperio %or t#e
second 14=da! #ire o% t#e vesse&C (3) D"K>,./8'08 representing t#e cost o% unker oi&, surve! and watering o%
t#e said vesse&C (5) D"K882,222'22 representing t#e unrea&i*ed pro%itsC and (4) P122,222'22, as and %or
attorne!?s %ees' T#e $ourt %urt#er ordered Marimperio to pa! ,nterocean t#e amount o% P14,542'55,
representing t#e &atter?s commission as roker, wit# interest t#ereon at >I per annum %rom t#e date o% t#e
%i&ing o% t#e comp&aint=in=intervention, unti& %u&&! paid, p&us t#e sum o% P8,222'22 as attorne!?s %ees, and to
pa! t#e costs' T#e $ourt ordered t#e dismissa& o% t#e counterc&aims %i&ed ! Marimperio against Dnion, P#i&in
and ,nterocean, as we&& as its motion %or t#e award o% damages in connection wit# t#e issuance o% t#e writ o%
pre&iminar! attac#ment' Marimperio, %i&ed a motion %or reconsideration and-or new tria& o% t#e amended
decision on 1. Feruar! 1.02' Meanw#i&e a new Judge was assigned to t#e Tria& $ourt' (n 12 "eptemer
1.02 t#e tria& court issued its order o% 12 "eptemer 1.02 den!ing Marimperio?s motion %or reconsideration'
(n 7ppea&, t#e $ourt o% 7ppea&s a%%irmed t#e amended decision o% t#e &ower court e3cept t#e portion granting
commission to ,nterocean, w#ic# it reversed t#ere! dismissing t#e comp&aint=in=intervention' ,ts two
motions (1) %or reconsideration and-or new tria& and (8) %or new tria& #aving een denied ! t#e $ourt o%
7ppea&s in its :eso&ution o% 10 Feruar! 1.04 w#ic#, #owever, %i3ed t#e amount o% attorne!?s %ees at
P122,222'22 instead o% K122,222'22, Marimperio %i&ed wit# t#e "upreme $ourt its petition %or review on
certiorari on 1. Marc# 1.04'
T#e "upreme $ourt reversed and set aside t#e decision o% t#e $ourt o% 7ppea&s a%%irming t#e amended
decision o% t#e $F, o% Mani&aC e3cept %or t#at portion o% t#e decision dismissing t#e comp&aint=in=
interventionC and reinstated t#e origina& decision o% t#e tria& court'
1. 5rticle 1311 7CC6 (o .)o# contract $in+in*
7ccording to 7rtic&e 1311 o% t#e $ivi& $ode, a contract takes e%%ect etween t#e parties w#o made it,
and a&so t#eir assigns and #eirs, e3cept in cases w#ere t#e rig#ts and o&igations arising %rom t#e contract are
not transmissi&e ! t#eir nature, or ! stipu&ation or ! provision o% &aw' "ince a contract ma! e vio&ated
on&! ! t#e parties, t#ereto as against eac# ot#er, in an action upon t#at contract, t#e rea& parties in interest,
eit#er as p&ainti%% or as de%endant, must e parties to said contract' T#ere%ore, a party w#o #as not taken part
in it cannot sue or e sued %or per%ormance or %or cance&&ation t#ereo%, un&ess #e s#ows t#at #e #as a rea&
interest a%%ected t#ere!'
-. C)arter party entere+ $et.een =ari#perio an+ ;nterocean6 ;nterocean su$let vessel to Fnion!
.)o in turn su$let t)e sa#e to :)ilin
T#e c#arter part! was entered into etween Marimperio, t#roug# its du&! aut#ori*ed agent in +ondon,
t#e E T J V&assopu&os, +td', and ,nterocean t#roug# t#e &atter?s du&! aut#ori*ed roker, t#e (verseas
"teams#ip $o', ,nc', represented ! Matt#ews, Frig#tson 1urridge +td', %or t#e $#arter o% t#e ;"" P7J(,'<
,nterocean su&et t#e said vesse& to Dnion w#ic# in turn su&et t#e same to P#i&in' ,t is admitted ! Dnion and
P#i&in t#at t#e c#arterer is ,nterocean Bven paragrap# 3 o% t#e comp&aint=in=intervention a&&eges t#at Dnion
and P#i&in were given t#e use o% t#e vesse& ;pursuant to paragrap# 82 o% t#e Dni%orm Time $#arter< w#ic#
precise&! provides %or t#e su&etting o% t#e vesse& ! t#e c#arterer'
3. 5rticle 2- o, t)e Co+e o, Co##erce
7rtic&e >48 o% t#e $ode o% $ommerce provides t#at t#e c#arter part! s#a&& contain, among ot#ers, t#e
name, surname, and domici&e o% t#e c#arterer, and i% #e states t#at #e is acting ! commission, t#at o% t#e
person %or w#ose account #e makes t#e contract' ,t is ovious %rom t#e disc&osure made in t#e c#arter part! !
t#e aut#ori*ed roker, t#e (verseas "teams#ip, t#at t#e rea& c#arterer is t#e ,nterocean "#ipping $ompan!
(w#ic# su&et t#e vesse& to Dnion w#ic# in turn su&et it to P#i&in)'
(ransportation La.! -""/ ( /-- )
/. 7ature o, su$>lease6 :ersonality o, lessee +oes not +isappear in contract o, su$lease
,n a su=&ease, t#ere are two &eases and two distinct Audicia& re&ations a&t#oug# intimate&! connected
and re&ated to eac# ot#er, un&ike in a case o% assignment o% &ease, w#ere t#e &essee transmits aso&ute&! #is
rig#t, and #is persona&it! disappearsC t#ere on&! remains in t#e Auridica& re&ation two persons, t#e &essor and
t#e assignee w#o is converted into a &essee (Moreno, P#i&ippine +aw Dictionar!, 8nd ed', p' 4.5)' ,n ot#er
words, in a contract o% su=&ease, t#e persona&it! o% t#e &essee does not disappearC #e does not transmit
aso&ute&! #is rig#ts and o&igations to t#e su=&esseeC and t#e su=&essee genera&&! does not #ave an! direct
action against t#e owner o% t#e premises as &essor, to re9uire t#e comp&iance o% t#e o&igations contracted wit#
t#e p&ainti%% as &essee, or vice versa (12 Manresa, "panis# $ivi& $ode, 53/)'
2. ;nstances .)ere lessor allo.e+ to $rin* action +irectly a*ainst su$lessee (not vice versa)
T#ere are at &east two instances in t#e $ivi& $ode w#ic# a&&ow t#e &essor to ring an action direct&!
(accion directa) against t#e su=&essee (use and preservation o% t#e premises under 7rtic&e 1>41, and renta&s
under 7rtic&e 1>48)' ,n 7rtic&es 1>41 and 1>48, it is not t#e su=&essee, ut t#e &essor, w#o can ring t#e
action' @erein, it is c&ear t#at t#e su=&essee as suc# cannot maintain t#e suit t#e! %i&ed wit# t#e tria& court ("ee
7' Ma&uenda and $o' v' Bnri9ue*, 5> P#i&' .1>)'
. 5rticle 121 7CC
7rtic&e 1>41 reads ;Fit#out preAudice to #is o&igation toward t#e su=&essor, t#e su=&essee is ound
to t#e &essor %or a&& acts w#ic# re%er to t#e use and preservation o% t#e t#ing &eased in t#e manner stipu&ated
etween t#e &essor and t#e &essee'<
3. 5rticle 12- 7CC
7rtic&e 1>48 reads: ;T#e su=&essee is susidiari&! &ia&e to t#e &essor %or an! rent due %rom t#e &essee'
@owever, t#e su=&essee s#a&& not e responsi&e e!ond t#e amount o% rent due %rom #im, in accordance wit#
t#e terms o% t#e su=&ease, at t#e time o% t#e e3tra=Audicia& demand ! t#e &essor' Pa!ments o% rent in advance
! t#e su=&essee s#a&& e deemed not to #ave een made, so %ar as t#e &essor?s c&aim is concerned, un&ess said
pa!ments were e%%ected in virtue o% t#e custom o% t#e p&ace'<
4. 5*ency .it) an un+isclose+ principal! 5rticle 1443 7CC
,n t#e &aw o% agenc! ;wit# an undisc&osed principa&, t#e $ivi& $ode in 7rtic&e 1//3 reads: ;,% an agent
acts in #is own name, t#e principa& #as no rig#t o% action against t#e persons wit# w#om t#e agent #as
contractedC neit#er #ave suc# persons against t#e principa&' ,n suc# case t#e agent is t#e one direct&! ound in
%avor o% t#e person wit# w#om #e #as contracted, as i% t#e transaction were #is own, e3cept w#en t#e contract
invo&ves t#ings e&onging to t#e principa&' T#e provisions o% t#is artic&e s#a&& e understood to e wit#out
preAudice to t#e actions etween t#e principa& and agent'<
%. Fnion an+ :)ilin not allo.e+ to $rin* action a*ainst a+verse party
T#e true c#arterers o% t#e vesse& were Dnion and P#i&in and t#e! c#artered t#e vesse& t#roug# an
intermediar! w#ic# upon instructions %rom t#em did not disc&ose t#eir names' 7rtic&e 1//3 cannot #e&p Dnion
and P#i&in, ecause a&t#oug# t#e! were t#e actua& principa&s in t#e c#arter o% t#e vesse&, t#e &aw does not
a&&ow t#em to ring an! action against t#e adverse part! and vice=versa'
1". <e,ault o, c)arterer in pay#ent *ives s)ipo.ner ri*)t to rescin+ c)arter party extra?u+icially
T#e de%au&t o% c#arterer in t#e pa!ment o% t#e c#arter #ire wit#in t#e time agreed upon gives
Marimperio a rig#t to rescind t#e c#arter part! e3traAudicia&&!' $&ause > o% t#e $#arter part! speci%ica&&!
provides t#at Marimperio #as t#e rig#t to wit#draw t#e vesse& %rom t#e service o% t#e c#arterers, wit#out
noting an! protest and wit#out inter%erence o% an! court or an! %orma&it! in t#e event t#at t#e c#arterer
de%au&ts in t#e pa!ment o% #ire' T#e pa!ment o% #ire was to e made ever! 14 da!s in advance' @erein, as o%
83 7pri& 1.>4, w#en V&assopu&os noti%ied Matt#ews o% t#e wit#drawa& o% t#e vesse& %rom t#e $#arterers?
service, t#e &atter was a&read! in de%au&t' 7ccording&!, under $&ause > o% t#e c#arter part! t#e owners #ad t#e
rig#t to wit#draw ;"" P7J(,< %rom t#e service o% c#arterers, w#ic# wit#drawa& t#e! did'
11. Contract t)e la. $et.een contractin* parties6 E)en contract provi+es ,or revocation
7 contract is t#e &aw etween t#e contracting parties, and w#en t#ere is not#ing in it w#ic# is contrar!
to &aw, mora&s, good customs, pu&ic po&ic! or pu&ic order, t#e va&idit! o% t#e contract must e sustained' 7
Audicia& action %or t#e rescission o% a contract is not necessar! w#ere t#e contract provides t#at it ma! e
revoked and cance&&ed %or vio&ation o% an! o% its terms and conditions'
[143]
81&arrel vs. =eralco (GR 31---! -% 8cto$er 1%-%)
&acts' T#e "ociet^ Francaise des $#aronnages du Tonkin is engaged in mining coa& in @onga!, Tongking,
$#ina w#i&e t#e Mani&a B&ectric $ompan! (Mera&co) is operating a p&ant %or t#e generation o% e&ectricit! in
t#e $it! o% Mani&a' 7t t#e same time (?Farre& ! $ia' (doing usiness under t#e name Ma&a!sian Eavigation
$ompan!) was a s#ipping compan! engaged in operating %reig#t vesse&s in (rienta& seas' ,n t#e operation
engaged in operating %reig#t vesse&s in (rienta& seas' ,n t#e operation o% its p&ant Mera&co consumers &arge
9uantities o% coa&, and in !ears past it #as taken its supp&ies in part %rom t#e coa& compan! in @onga!' T#e o&d
arrangement under w#ic# Mera&co #ad een purc#asing coa& %rom said compan! #aving een %ound to e
unsatis%actor!, %or some reason or ot#er, to Mer&co, a new contract was entered into, in t#e mont# o% 7ugust
1.83, w#ere! t#e coa& compan! agreed to se&& and Mera&co agreed to u!, in t#e period %rom 1 "eptemer
1.83, to 31 7ugust 1.85, 04,222 tons o% dust coa&, wit# a margin o% 12I more or &ess' ,n t#is contract it was
agreed t#at de&iver! s#ou&d e taken ! Mera&co in &ots o% aout %rom 8,222 to 5,222 tons at regu&ar interva&s,
as cou&d est e arranged to suit ot# purc#asers and se&&ers, t#e purc#asers agreeing to take not &ess t#an
aout >,222 tons per mont# and to send not more t#an one steamer to e &oaded at t#e same time' ,t was a&so
stipu&ated t#at t#e dust coa&, t#e suAect o% t#e sa&e, s#ou&d e &oaded eit#er in t#e stream or a&ongside t#e
w#ar% or 9ua! at @onga!, at t#e option o% t#e coa& compan!, ;wit# 9uick despatc#, vesse&s taking t#eir turn in
&oading'< 7s neit#er t#e coa& compan! nor Mera&co was engaged in operating seagoing vesse&s, it ecame
necessar! %or Mera&co to make arrangement wit# some s#ipping compan! %or t#e service necessar! to
transport t#e coa& to Mani&a' T#is need eing apparent, 6aston (?Farre&, t#e agent o% t#e coa& compan!, in
Mani&a, directed t#e attention o% Mera&co to t#e Ma&a!sian Eavigation $ompan!, t#e trade=name o% (?Farre& !
$ia', as operating vesse&s t#at wou&d e avai&a&e %or transporting t#e coa&' ,n t#is connection it s#ou&d e
noted t#at (?Farre& was agent ot# o% t#e coa& compan! and t#e Ma&a!sian Eavigation $ompan!' 7 contract
etween (?Farre& and Mera&co %or t#e transportation o% t#e coa& purc#ased ! Mera&co %rom t#e coa& compan!
was inked' T#e practice %o&&owed ! t#e parties in t#e per%ormance o% t#is contract was t#at, upon t#e receipt
o% in%ormation in Mani&a ! Mera&co %rom t#e coa& compan!, advising t#at a cargo o% coa& was, or soon wou&d
e avai&a&e in @onga!, t#e message was turned over to (?Farre& ! $ia', and t#e &atter compan! made t#e
arrangements %or t#e sending o% a oat to @onga!' 1ut de&a! in t#e taking on o% coa& occurred in @onga!,
owing to t#e inai&it! o% t#e coa& compan! to de&iver t#e coa& to t#e waiting oats' T#e de&a! was due to t#e
%act t#at t#e cranes o% t#e coa& compan! at @onga! were de%ective and o%ten out o% order' (?Farre&?s oats
were t#us %re9uent&! kept waiting in t#e portC and it in %act appears t#at a&toget#er t#e! were #e&d t#ere id&e
183 da!s, to sa! not#ing o% t#e time occupied in t#e &ading o% t#e s#ips a%ter t#eir turn #ad come %or taking
cargo' Dpon t#e visits t#at (?Farre&?s s#ips made to @onga!, t#e coa& necessar! %or t#e operation o% said s#ips
was t#ere taken on oard wit# t#e assent o% t#e coa& compan!C and in t#e end (?Fare&& ecame indeted, to t#e
coa& compan!, on account o% suc# advances o% coa&, in t#e amount o% @PK81,/10'0.' 7s a resu&t o% t#e
inai&it! o% (?Farre& to &i9uidate t#is c&aim %or coa& advanced it, t#e o%%icers o% t#e &atter ecame re&uctant to
send its vesse&s an! &onger to @onga!, %or %ear t#at t#e s#ips wou&d e &ie&ed %or t#e coa& compan!?s c&aim'
(wing to said causes, de&iveries o% coa& to Mera&co under its contract wit# t#e coa& compan! amounted in
June 1.85, on&! to aout 51,304 tons, or some 1/,>84 tons &ess t#an t#e amount t#at s#ou&d #ave een
(ransportation La.! -""/ ( /-/ )
de&iveredC and t#e on&! de&iver! t#erea%ter made to Mera&co was a s#ipment t#at came on t#e "ea&da in t#e
&atter part o% 7ugust 1.85' T#is oat did not e&ong to t#e Ma&a!sian Eavigation $ompan! ut was otained
! it %rom anot#er owner' Dpon giving notice o% t#e dispatc# o% t#e "ea&da %or coa& in t#e &atter part o% 7ugust
1.85, t#e genera& manager o% Mera&coca&&ed t#e attention o% t#e coa& compan! to t#e %act t#at t#at compan!
was s#ort near&! 82,222 tons in its contractua& de&iveries, and in view o% t#is %act t#e coa& compan! was
advised to consider t#e contract c&osed' T#is step received t#e approva& o% t#e coa& compan!, and contractua&
re&ations etween it and Mera&co terminated' ,n a conversation t#at occurred at aout t#is time etween an
o%%icer o% Mera&co and a representative o% t#e Ma&a!sian Eavigation $ompan!, t#e &atter communicated to t#e
%ormer t#e %act t#at it wou&d e una&e to proceed %urt#er under t#e contract %or t#e transportation o% coa& and,
on e#a&% o% t#e Ma&a!sian Eavigation $ompan!, #e ac9uiesced in t#e termination o% t#e contract e3isting
etween t#em'
7n action was instituted in t#e $F, o% Mani&a ! (?Farre& ! $ia' %or t#e purpose o% recovering %rom Mera&co,
upon 3 causes o% action, t#e aggregate amount o% P1>3,..2, wit# interest, a&&eged to e due to (?Farre& %or
reac# o% contract' T#e t#ree causes are : (1) (?Farre& seeks to recover t#e sum o% P/2,1.2, as compensation
w#ic# it wou&d #ave received #ad a&& o% t#e coa& een de&ivered to it %or transportation, as contemp&ated in t#e
contract wit# Mera&coC (8) (?Farre& seeks to recover t#e sum o% P03,/22, eing t#e amount represented ! t#e
demurrage c&aimed ! it, at t#e rate o% P>22 per da!, %or 183 da!s during w#ic# its s#ips were detained in
@onga! awaiting t#eir turn to take on coa&C (3) (?Farre& seeks to recover t#e sum o% P12,222 %or demurrage o%
a oat at @onga! w#ic# #ad to sai& %or "aigon in a&&ast and wit#out cargo'
7out 5 mont#s a%ter t#e action was egun, (?Farre& ! $ia' was dec&ared inso&vent, and F' J' (?donovan was
appointed assignee in inso&venc!' T#erea%ter t#e action was prosecuted under #is direction, ! aut#orit! o% t#e
court, t#oug# t#e tit&e o% t#e case was not c#anged' ,n t#e course o% t#e proceedings in t#e $F,, t#e case was
conso&idated wit# anot#er action instituted in t#e same court, against t#e same de%endant (Mera&co), ! t#e
"ociet^ Francaise des $#aronnages du Tonkin' Dpon #earing, in t#e case invo&ving (?Farre& and Mer&aco,
t#e tria& court %ound t#at t#e action was not we&& %ounded and aso&ved Mera&co %orm t#e comp&aint wit# costs
against (?Farre&' From t#is Audgment, (?Farre& appea&ed'
T#e "upreme $ourt a%%irmed t#e Audgment appea&ed %rom, wit# costs against (?Farre&'
1. Contents o, t)e contract $et.een 81&arrell an+ =eralco
T#e sustance o% t#e contract etween (?Farre&& and Mera&co provides t#at (1) T#e Ma&a!sian
Eavigation $o' undertakes to transport 04,222 tons o% coa& (12I more or &ess), %rom @onga! to Mani&a at t#e
%reig#t rate o% P5'42, per ton o% 1,21> ki&os, &ess a reate o% 1IC (8) Freig#t to e paid on arriva& o% eac#
s#ipment at Mani&a as per 1-+C (3) +oading to e %or account and risk o% s#ippers according to customar!
9uick despatc# suAect to turn o% minesC (5) For disc#arging at Mani&a t#e Mani&a B&ectric $o' wi&& provide
su%%icient &ig#ters to receive t#e coa& at s#ip side as %ast as t#e s#ip can disc#arge' Demurrage, i% an!, to e at
t#e rate o% P>22 per da! o% %raction t#ereo%C it is understood t#at t#e Mani&a B&ectric $o' wi&& not e compe&&ed
to pa! demurrage %or da!s w#en it s#a&& #ave received at &east 422 tons o% coa&'
-. 81&arrel not entitle+ to recover +a#a*es ,or $reac) o, contract
(?Farre& is not entit&ed to recover damages against Mera&co %or reac# o% t#e contract %or t#e
transportation o% coa&, %or more t#an one reason, name&!, ecause (1) t#e Ma&a!sian Eavigation $ompan!
((?Farre&) was una&e to %u&%i&& its contract to supp&! s#ips %or t#e transportation o% t#e coa& and desisted
t#ere%romC and (8) in t#e end t#e contract was in e%%ect cance&&ed ! mutua& consent'
3. Coal co#pany not an a*ent o, =eralco
T#e t#eor! under&!ing (?Farre&?s case t#roug#out is t#at t#e coa& compan! was agent o% Mera&co in
t#e matters a%%ecting t#e per%ormance o% t#e contract etween (?Farre& and Mera&co' T#ere is no asis %or t#is
contentionC and, on t#e contrar!, t#e position o% (?Farre& as agent ot# o% t#e coa& compan! and Mera&co
indicates t#e impropriet! o% considering t#e coa& compan! as t#e agent o% Mera&co'
/. =eralco not c)ar*ea$le ,or +elays incurre+ $y t)e coal co#pany
T#e di%%icu&t! in w#ic# (?Farre& %ound itse&% was due evident&! to t#e %ai&ure o% t#e coa& compan! to
make prompt de&iveries o% coa& aoard (?Farre&?s oats at @onga!' 1ut Mera&co was in no wise c#argea&e
wit# eit#er t#e causes or conse9uences o% t#ese de&a!s'
2. 7o stipulation o, +e#urra*e inci+ent to +elay at Hon*ay
Dpon care%u& inspection o% t#e contract etween (?Farre&& and Mera&co, t#at t#e stipu&ation %or
demurrage at t#e rate o% P>22 per da!, or %raction t#ereo%, is %ound in t#e paragrap# o% t#e contract w#ic#
dea&s especia&&! wit# t#e disc#arge o% coa& at Mani&a' T#ere is no stipu&ation %or demurrage incident to de&a!
at @onga!C and, on t#e contrar!, it is stipu&ated, in t#e t#ird paragrap# o% t#e contract, t#at &oading at @onga!
s#ou&d e ;according to customar! 9uick despatc# suAect to turn o% mines'<
. @Su$?ect to turn o, #inesA construe+
@erein, emp#asis #as een p&aced upon t#e words customar! 9uick despatc# and t#e ot#er words
suAect to turn o% mines #ave not een taken so muc# into account' ,t appears in t#e proo% t#at t#e vesse&s
desirous o% &anding coa& at @onga! were &aden according to t#e custom o% t#e port, in strict rotation, e3cept in
one instance w#ere a Ma&a!sian s#ip was given pre%erence over, two ot#er s#ips w#ose owners did not oAect'
T#e e3pression ;suAect to turn o% mines< s#ou&d e interpreted to mean t#at t#e &ading o% t#e vesse&s s#ou&d
e suAect to t#e output o% t#e mines and t#at vesse&s s#ou&d e suAect to t#e output o% t#e mines and t#at
vesse&s s#ou&d take t#eir turn in taking on t#e coa&' ,t resu&ts t#at t#e &ading o% t#e coa& was dependent upon
t#e output o% t#e mines and t#e order o% s#ips seeking cargo at t#e &oading p&aces'
3. :urpose o, insertin* @su$?ect to turn o, #inesA in t)e contract
T#e e3pression ;suAect to turn o% mines< was no dout inserted in t#e contract in &ieu o% a stipu&ation
%or demurrage' T#e insertion o% t#at e3pression in c&ause 3 made t#e Ma&a!sian s#ips dependent upon t#e
&oading %aci&ities o% t#e coa& compan! at @onga!, and re&ieved Mera&co %rom an! &iai&it! %or demurrage !
reason o% de&a!s t#at mig#t occur in t#e port incident to t#e otaining and &oading o% t#e coa&'
7rtic&e >4> o% t#e $ode o% $ommerce provides t#at ;,% in t#e c#arter part! t#e time in w#ic# t#e
&oading and un&oading is to take p&ace is not stated, t#e customs o% t#e port w#ere t#ese acts take p&ace s#a&&
e oserved' 7%ter t#e period stipu&ated or t#e customar! one #as passed, and s#ou&d t#ere not e in t#e
%reig#t contract an e3press c&ause %i3ing t#e indemni%ication %or t#e de&a!, t#e captain s#a&& e entit&ed to
demand demurrage %or t#e usua& and e3tra &a! da!s w#ic# ma! #ave e&apsed in &oading and un&oading'<
%. Stipulation as to @su$?ect to turn o, #inesA #akes 5rticle 2 inapplica$le
T#e stipu&ation o% t#e contract making t#e &oading o% coa& suAect to t#e turn o% mines renders artic&e
>4> inapp&ica&e, t#is eing a specia& stipu&ation determining t#e order o% &oading' ,t resu&ts t#at Mera&co
cannot e #e&d responsi&e %or t#e de&a! t#at occurred' "uc# conc&usion is a&so app&ica&e %or de&a! incurred
! one s#ip w#ic# &e%t wit#out cargo'
[14/]
8verseas &actors ;nc. vs. Sout) Sea S)ippin* (GR L>1-134! -3 &e$ruary 1%-)
Bn 1anc, Padi&&a (J): . concur
&acts' (n 3 and . "eptemer 1.45 t#e Eationa& :ice and $orn $orporation (E7:,$) and t#e (verseas
Factors, ,nc' entered into two contracts w#ere! t#e &atter undertook to supp&! t#e %ormer wit# 4,222 metric
tons o% Pangni rice at P'41 per ganta and 4,222 metric tons o% Jos#i rice at P'5. per ganta' (n 12 "eptemer
1.45 t#e E7:,$ esta&is#ed %or its account wit# t#e P#i&ippine Eationa& 1ank (PE1_ in Mani&a two
irrevoca&e &etters o% credit (>8>44 T >8>4>) in t#e amounts o% K48.,184 and K42/,304, in %avor o% t#e
Pakistan Deve&opment $orporation, +td' (PD$), Parac#i, Pakistan' (n 32 (ctoer 1.45, "' M' Oeung,
aut#ori*ed representative o% t#e "out# "ea "#ipping $o', +td', wrote to Jos^ F' Diokno, aut#ori*ed
representative o% t#e (verseas Factors, in Parac#i, Pakistan, enumerating t#e terms and conditions o% t#e
c#arter part! t#e! #ave agreed upon %or s#ipment o% t#e rice to e imported ! t#e (verseas Factors %rom
Pakistan aoard t#e "" (cean Trader owned ! t#e "out# "ea "#ipping' 7t t#e %oot o% t#e &etter, Jos^ F'
Diokno a%%i3ed #is signature signi%!ing #is intention to con%irm t#e terms and conditions t#erein enumerated'
(n t#e same date, 32 (ctoer 1.45, "' M' Oeung, in e#a&% o% t#e "out# "ea "#ipping, and $#ung Pien Tieng,
in e#a&% o% t#e (verseas Factors, entered into a %orma& contract o% c#arter part! in Parac#i, Pakistan,
incorporating t#e terms and conditions enumerated in t#e &etter' (n 18 Eovemer 1.45 t#e terms and
conditions o% t#e c#arter part! regarding t#e rate and pa!ment o% %reig#t were amended ! t#e parties in
@ongkong' (n 5 Eovemer 1.45 Juan 7' Magsino, in e#a&% o% (verseas Factors entered into an agreement
wit# 7du&a!e 7' 1adat, so&e proprietor o% ,v&om $orporation, in Parac#i, Pakistan, w#ere! t#e said
corporation undertook to supp&! t#e (verseas Factors, wit# 4,222 metric tons o% Pangni rice o% t#e 9ua&it!
and speci%ications enumerated in PE1 +etter o% $redit >8>44' 1adruddin @' Mavani undertook to supp&! t#e
(verseas Factors wit# t#e needed Jos#i rice' (n 4 Eovemer 1.45 t#e (verseas Factors and 6ertrudes
$ar&os, co=%inancier o% t#e %ormer in its contract wit# t#e E7:,$ to supp&! it wit# t#e needed rice, Aoint&! and
severa&&! app&ied to t#e "out# "ea "uret! T ,nsurance $o', ,nc' to act as suret! upon a ond demanded ! t#e
"out# "ea "#ipping in t#e amount o% P314,222 to guarantee t#e pa!ment ! t#e c#arterers in @ongkong o% t#e
%reig#t, demurrage, dead %reig#t and ot#er &osses t#at mig#t arise' (n t#e same date, 4 Eovemer 1.45, t#e
(verseas Factors, as principa&, and $ar&os, as co=principa&, and t#e "out# "ea "uret!, as suret!, e3ecuted a
per%ormance ond in t#e amount o% P314,222 in %avor o% t#e "out# "ea "#ipping to guarantee t#e %u&&
pa!ment ! t#e c#arterers at @ongkong o% a&& %reig#t, demurrage, dead %reig#t and ot#er &osses t#at mig#t
arise, wit#in 15 da!s %rom t#e date o% departure o% t#e vesse& %rom Parac#i, Pakistan' From 1> to 83
Eovemer 1.45, 8,4>0'>243 metric tons gross o% Jos#i rice and %rom 82 to 84 Eovemer 1.45, 4,245'2>>8
metric tons gross o% Pangni rice or a tota& o% 0,>81'>014 metric tons o% rice were &oaded on oard t#e ""
(cean Trader in Parac#i, Pakistan' (n 84 and 8. Eovemer t#e i&&s o% &ading covering t#e said s#ipments o%
rice du&! signed ! t#e s#ipper?s agent were issued in t#e name o% t#e PE1, Mani&a, as consignee' ,t appears
in t#e two i&&s o% &ading t#at t#e part! to e noti%ied upon arriva& in Mani&a was t#e E7:,$' (n 84
Eovemer 1.45 t#e "" (cean Trader sai&ed %rom Parac#i, Pakistan and arrived in Mani&a on 1/ Decemer
1.45' T#e captain and crew memers o% t#e "" (cean Trader re%used to un&oad t#e cargo o% rice un&ess t#e
a&ance o% t#e %reig#t and ot#er c#arges due were paid ! t#e c#arterers'
7n action was roug#t on 8. Decemer 1.45 in t#e $ourt o% First ,nstance o% Mani&a pra!ing t#e $ourt to
direct t#e captain and t#e crew o% "" (cean Trader to convert t#e amount in rupees paid ! (verseas Factors
and $ar&os in Parac#i, Pakistan, into 1ritis# ster&ing pounds, computed at t#e &ega& rate o% e3c#ange as
a&&owed ! t#e 6overnment o% PakistanC to de&iver to (verseas Factors and $ar&os t#e i&&s o% &ading o% t#e
cargo o% riceC to permit t#e un&oading ! (verseas Factors and $ar&os o% t#e cargo o% rice %rom t#e "" (cean
Trader pending tria& o% t#e caseC to desist or re%rain %rom inter%ering wit# suc# un&oading upon t#e %i&ing o% an
additiona& suret! ond, i% necessar!, in an amount t#at t#e $ourt ma! %i3 to answer %or damages t#at "out#
"ea "#ipping, 7' Magsa!sa!, and t#e captain and crew o% "" (cean Trader ma! su%%er as a resu&t o% suc#
inAunction, and to pa! t#e costsC and t#e $o&&ector o% $ustoms to see to it t#at t#e cargo o% rice %rom t#e ""
(cean Trader e un&oaded' (verseas Factors and $ar&os a&so pra!ed t#at t#e demurrages soug#t to e
co&&ected ! "out# "ea "#ipping, et' a&' e computed at t#e rate +322 and not at +022 a da!C and %or ot#er Aust
and e9uita&e re&ie% (civi& 85.08)' "out# "ea "#ipping, et' a&' answered t#e comp&aint and set up a
counterc&aim o% P31>,3>5'3/ %or %reig#tage, demurrage, c#arges %or detention and ot#er e3penses o% t#e vesse&
w#i&e on detention' (verseas Factors and $ar&os controverted "out# "ea "#ipping, et' a&'?s counterc&aim' T#e
E7:,$ %i&ed a comp&aint in intervention to protect its interest and t#e "out# "ea "uret! %i&ed a cross=c&aim
against (verseas Factors' 7%ter tria&, t#e $ourt rendered Audgment in %avor o% (verseas Factors and $ar&os
and against "out# "ea "#ippingC #o&ding t#erein t#at (1) t#e tota& amount o% 3>.,222 Pakistan rupees received
! "' M' Oeung was in %u&& pa!ment o% t#e transportation o% t#e rice in 9uestion %rom Parac#i to Mani&a, and
t#at t#e de&a! in t#e un&oading o% suc# rice in Mani&a was not due to (verseas "#ipping and $ar&os? %au&tC and
(8) t#e c&aim %or &ien on t#e s#ipment o% rice #as no &ega& asis %or t#e reason t#at t#e %reig#t #ad a&read! een
paid in Parac#i, Pakistan, e%ore suc# s#ipment arrived in Mani&a' T#e $ourt ordered t#e cance&&ation o% t#e
inAunction ond %i&ed ! (verseas Factors and $ar&os as we&& as t#e per%ormance ond e3ecuted to guarant!
t#e pa!ment o% %reig#t' T#e $ourt dismissed t#e comp&aint wit# respect to 7' Magsa!sa!, ,nc', t#e $aptain
and t#e $rew o% t#e "'"' (cean Trader, and t#e $o&&ector o% $ustoms o% Mani&a, it appearing t#at t#e! #ave
not#ing to do wit# t#e controvers! etween (verseas Factors and "out# "ea "#ipping' T#e $ourt dismissed
t#e counterc&aim, and ordered "out# "ea "#ipping to pa! t#e costs' "out# "ea "#ipping and 7' Magsa!sa!
appea&ed'
T#e "upreme $ourt modi%ied t#e Audgment appea&ed ! ordering (verseas Factors and $ar&os to pa! "out#
"ea "#ipping t#e sums o% P823,55.'40, t#e a&ance o% t#e %reig#tage sti&& unpaid, P>,082 as demurrage in
&oading t#e cargo and P>,082 as demurrage %or detention o% t#e vesse&, wit#out preAudice to an! amount
soug#t to e co&&ected %or demurrage w#ic# is to e sumitted to aritration in +ondon, against w#ic# t#e
e9uiva&ent amount in P#i&ippine currenc! o% t#e sum o% +18,/3/=2=>d or :s11.,881=4=2 as aove stated is set
o%%C and #o&ding t#at "out# "ea "#ipping did not &ose its &ien on t#e cargo o% rice, wit#out pronouncement as
to costs' T#e $ourt dismissed t#e comp&aint and t#e comp&aint in intervention as to t#e ot#er de%endant
appe&&ants, and t#e counterc&aim against "out# "ea "uret!, and t#e &atter?s cross=c&aim'
1. :rincipal ter#s an+ con+itions o, t)e c)arter party
,n t#e &etter written ! "' M' Oeung, aut#ori*ed representative o% t#e appe&&ant s#ipping compan!, to
Jos^ F' Diokno, aut#ori*ed representative o% t#e appe&&ees, on 32 (ctoer 1.45 in Parac#i, Pakistan,
summing up t#e principa& terms and conditions o% t#e c#arter part! agreed upon ! t#em, it appears t#at t#e!
#ave agreed, among ot#ers, as %o&&ows: (1) F:B,6@T: "ter&ing one #undred s#i&&ings (122) per metric ton
gross weig#t, F12 and %ree stowedC (8) P7OMBET (F F:B,6@T: $#arterers to pa! %u&& %reig#t to t#e (wners
at @ongkong in 1ritis# Pound "ter&ing upon signing o% i&& or i&&s o% &ading, s#ip &ost or not &ostC (3)
PB:F(:M7E$B 1(ED : $#arterers to arrange a per%ormance ond in @ongkong satis%actor! to t#e
(wners at @ongkong, &atest e%ore noon on t#e 1
st
Eovemer 1.45 to guarantee t#e due per%ormance o% t#is
c#arter and %u&& pa!ment o% a&& %reig#t at @ongkong wit#in 15 da!s %rom date o% vesse&?s departure %rom
Parac#i' $#arter Part! Form (as adopted 1.88)'
-. (er#s o, contract o, 3" 8cto$er 1%2/
(n 32 (ctoer 1.45, t#e parties e3ecuted in Parac#i, Pakistan, a %orma& contract o% c#arter part! in a
printed %orm o% t#e uni%orm genera& c#arter adopted ! t#e documentar! committee o% t#e $#amer o%
"#ipping o% t#e Dnited Pingdom, as revised in 1.88' $#ung Pien Tieng signed in e#a&% o% t#e appe&&ees and
Oeung "iu Man in e#a&% o% t#e appe&&ant s#ipping compan!' T#e pertinent terms o% t#e contract are: (1) :ate
o% Freig#t: "ter&ing (ne #undred "#i&&ings (122-=) per metric ton, %ree in, %ree out and %ree stowedC (8)
Pa!ment o% Freig#t: T#e %reig#t to e paid in case wit#out discount on signing i&&s o% &ading in 1ritis# Pound
"ter&ing trans%era&e to t#e (wners at @ongkong wit#in %ourteen (15) da!s %rom t#e date o% t#e vesse&?s
departure %rom Parac#i'
3. 5#en+#ent clauses
(n 18 Eovemer 1.45 t#e two c&auses were amended ! adding t#e %o&&owing to t#e %irst c&ause, ;or
according to (wners? option o% Fort! Two Pesos (Pesos 58'=) per metric tons, %ree in, %ree out and %ree
stowed<C and t#e %o&&owing to t#e second c&ause: ;or according to (wners? option o% pa!ment at Mani&a at t#e
rate stated in c&ause Eo' 1'<
/. Stipulation in per,or#ance $on+
,n t#e per%ormance ond e3ecuted and signed ! (verseas Factors and $ar&os in %avor o% "out# "ea
"#ipping and "out# "ea "uret!, it was stipu&ated t#at ;t#e condition o% t#is ond is suc# t#at i% t#e Principa&
and co= Principa& s#a&& we&& and du&! comp&! wit# t#e conditions and stipu&ations enumerated in t#e aove
mentioned agreement c#arter and contract o% c#arter part! as we&& as pa! a&& %reig#t at @ongkong wit#in 15
da!s %rom t#e date o% vesse&?s departure %rom Parac#i, t#en t#is o&igation s#a&& e nu&& and voidC ot#erwise, it
s#a&& remain in %u&& %orce and e%%ect'<
2. 5#ount pai+! a#ount +ue to s)ippin* co#pany
7ccording "out# "ea "#ipping, t#e amount due %rom (verseas Factors and $ar&os as %reig#tage o% t#e
0,>81'>014 metric tons o% rice at 122 s#i&&ings per metric ton was `3/,12/=0=1d and t#at t#e &atter #ad paid it
on&! `13,///=10=.d, as acknow&edged ! Oeung in a &etter to Magsino, agent o% (verseas Factors' @owever,
"out# "ea "#ipping denied #aving received t#e sum o% `18,/3/=2=>d %rom (verseas Factors and $ar&os and
c&aim t#at t#e sum o% 11.,881=4=2 Pakistani rupees t#at Oeung received %rom Mavani cou&d not e credited as
part pa!ment o% t#e %reig#t' 1! t#e evidence presented, t#e sum o% `18,/3/=2=>d (in 1ritis# Pound "ter&ing)
due %or %reig#t on t#e Jos#i rice s#ipped on oard t#e "" (cean Trader #as not !et een paid to "out# "ea
"#ipping ! (verseas Factors and $ar&os in accordance wit# t#eir contract' Moreover, pa!ment o% t#e sum o%
11.,881=4=2 Pakistani rupees to Oeung made ! Mavani in c#eck was #e&d ! Pa*i T Pa*i mere&! %or t#e
account o% (verseas Factors and $ar&os pending 6overnment approva& %or trans%er to t#e (%%ice o% "out# "ea
"#ipping in @ongkong'
. Sout) Sea S)ippin*1s option to +e#an+ pay#ent in Britis) poun+s or in :)ilippine currency
Dnder t#e c#arter part!, "out# "ea "#ipping #as t#e option to demand pa!ment o% t#e %reig#t in
1ritis# pounds ster&ing pa!a&e in @ongkong at t#e rate o% 122 s#i&&ings per metric ton or P58, P#i&ippine
currenc!, per metric ton' T#e amount due as %reig#tage %or 0,>81'>014 metric tons o% rice computed at P58,
P#i&ippine currenc!, per metric ton, is P382,112'82' Deducting t#ere%rom t#e sum o% +13,///'10=.d or
P11>,>>2'>8, computed at P/'52 to `1 or P58 to `4 per metric ton, t#ere is sti&& due "out# "ea "#ipping t#e
sum o% P823,55.'40, P#i&ippine currenc!'
3. Clause 2 o, t)e c)arter party
$&ause 4 o% t#e c#arter part! provides ;$argo to e roug#t a&ongside in suc# a manner as to ena&e
vesse& to take t#e goods wit# #er own tack&e and to &oad t#e %u&& cargo in nine (.) running da!s %ree o% e3pense
to t#e vesse&' $#arterers to procure and pa! t#e necessar! men on s#ore or on oard t#e &ig#ters to do t#e
work t#ere, vesse& on&! #eaving t#e cargo on oard' 7n! pieces and-or packages o% cargo over two tons
weig#t, s#a&& e &oaded, stowed and disc#arged ! $#arterers at t#eir risk and e3pense' Time s#a&& commence
at 1 p'm' on t#e 32t# (ctoer 1.45' Time &ost in waiting %or ert# to count as &oading time'<
4. Clause 3 o, t)e c)arter party
$&ause 0 o% t#e c#arter part! provides ;Four running da!s on demurrage at t#e rate o% +322' H
"ter&ing per da! or pro rata %or an! part o% a da!, pa!a&e da! ! da!, at @ongkong to e a&&owed Merc#ants
a&toget#er at ports o% &oading and disc#arging, +122' H per da! %or despatc#'<
%. Clause 11 o, t)e c)arter party
$&ause 11 o% t#e c#arter part! provides ;"#ou&d t#e cargo not e roug#t a&ongside to &oad (w#et#er
in ert# or not) on or e%ore t#e /t# Eov' 1.45' (wners #ave t#e option o% cance&&ing t#is contract'<
1". Clause -" o, t)e c)arter party
$&ause 82 o% t#e c#arter part! provides ;7n! dispute arising under t#is c#arter to e re%erred to
aritration in +ondon, one 7ritrator to e nominated ! t#e (wners and t#e ot#er ! t#e $#arterers, and in
case t#e 7ritrators s#a&& not agree t#en to t#e decision o% an Dmpire to e appointed ! t#em, t#e 7ward o%
t#e 7ritrators or t#e Dmpire to e %ina& and inding upon ot# parties'<
(ransportation La.! -""/ ( /-% )
11. 8verseas &actors an+ Carlos cannot $e c)ar*e+ ,or +e#urra*e on re#ainin* 13 +ays o, +elay
(verseas Factors and $ar&os cannot e c#arged wit# +=022 a da! %or demurrage on t#e remaining 13
da!s o% de&a! ecause t#e! are on&! answera&e %or t#at muc# ;%or a&& detention c#arges< ;i% t#e s#ip is so
detained a%ter &oading o% t#e cargo'< T#e departure o% t#e vesse& was not de&a!ed a%ter t#e cargo was %ina&&!
&oaded' 7s a matter o% %act it sai&ed %or Mani&a on 84 Eovemer 1.45 a%ter it was &oaded'
1-. Clause 2 o, t)e c)arter party
$&ause > o% t#e c#arter part! provides ;$argo to e received ! Merc#ants at t#eir risk and e3pense
a&ongside t#e vesse& not e!ond t#e reac# o% #er tack&e and to e disc#arged in seven (0) running da!s, %ree o%
e3penses to t#e vesse&' Time to commence at 1 p'm' i% notice o% readiness to disc#arge is given e%ore noon,
and at > a'm' ne3t working da! i% notice given during o%%ice #ours a%ter noon' Time &ost in waiting %or ert# to
count as disc#arging time'<
13. Sout) Sea S)ippin* entitle+ / runnin* +ays on +e#urra*e ,or +etention6 <e#urra*e ,or
re#ainin* +etention su$?ect to ar$itration in Lon+on
1ecause o% t#e re%usa& o% (verseas Factors and $ar&os to pa! t#e a&ance o% t#e %reig#t and ot#er
c#arges, t#e captain and crew o% t#e vesse& re%used to un&oad t#e cargo and t#e vesse& was p&aced under
detention %rom 1:22 p'm' o% 80 Decemer 1.45 to >:22 a'm' o% 4 Januar! 1.44' During t#at time t#e cargo
was un&oaded pursuant to t#e order o% t#e $ourt and deposited in t#e ware#ouse o% t#e E7:,$' T#e un&oading
was %inis#ed at >:22 a'm' o% 4 Januar! 1.44 resu&ting in / da!s and 10 #ours o% detention' Dnder c&ause 0 o%
t#e c#arter part!, "out# "ea "#ipping is entit&ed to co&&ect %rom (verseas Factors and $ar&os 5 running da!s
on demurrage %or detention at t#e rate o% +322 or a tota& o% +1,822' $omputed at t#e rate o% e3c#ange
prevai&ing in Januar! 1.44, w#ic# is P4'>2 to +1, "out# "ea "#ipping s#ou&d e paid t#e sum o% P>,082,
P#i&ippine currenc!' T#e demurrage %or t#e remaining detention o% 5 da!s and 10 #ours and ot#er c#arges
c&aimed ! "out# "ea "#ipping are suAect to aritration in +ondon pursuant to c&ause 82 o% t#e c#arter part!'
1/. 5rticle 2 o, Co+e o, Co##erce! 75R;C vs. =aca+ae*
7s #e&d in t#e case o% Eationa& :ice and $orn $orporation vs' Macadaeg, t#e %act t#at t#e %reig#t was
a&read! inc&uded in t#e purc#ase price paid ! it to t#e appe&&ees did not %ree t#e cargo o% rice %rom t#e
carrier?s &ien provided %or in artic&e >>4 o% t#e $ode o% $ommerce, i% t#e %reig#t #as not !et een %u&&! paid !
t#e c#arterer'
12. Clause 4 o, C)arter party
$&ause / o% t#e c#arter part! provides: ;(wners s#a&& #ave a &ien on t#e cargo %or %reig#t, dead=
%reig#t, demurrage and damages %or detention' $#arterers s#a&& remain responsi&e %or dead=%reig#t and
demurrage (inc&uding damages %or detention), incurred at port o% &oading' $#arterers s#a&& a&so remain
responsi&e %or %reig#t and demurrage (inc&uding damages %or detention) incurred at port o% disc#arge, ut
on&! to suc# e3tent as t#e (wners #ave een una&e to otain pa!ment t#ereo% ! e3ercising t#e &ien on t#e
cargo'<
1. Clause re9uirin* c)arterer to ,ile a per,or#ance $on+ in ,avor o, s)ipo.ners not a .aiver o,
s)ipo.ner1s or carrier1s lien on car*o
T#e &ast part o% t#e &etter, w#ic# sa!s: ;T#is agreement is suAect to t#e arrangement o% t#e
per%ormance ond eing computed e%ore t#e time as speci%ied aove' Two copies o% t#e %orma& $#arter Part!
s#a&& e signed immediate&! upon con%irmation o% t#e per%ormance ond eing esta&is#ed at t#e stipu&ated
ank,< s#ows t#at t#e &etter was written e%ore t#e %orma& contract o% c#arter part! was e3ecuted ! t#e
parties' @ence it cannot e said t#at t#e s#ipowners waived t#eir &ien provided %or in t#e %orma& contract o%
c#arter part!'
13. Surety1s o$li*ation in per,or#ance $on+ extin*uis)e+ $y novation
T#e addendum o% t#e c#arter part! contract e3ecuted ! t#e parties on 18 Eovemer 1.45 in
@ongkong var!ing t#e c&auses on t#e rate and pa!ment o% %reig#t wit#out t#e consent o% t#e suret! was a
novation o% t#e contract' For t#at reason t#e suret!?s o&igation in t#e per%ormance ond was e3tinguis#ed'
14. 5#ount pai+ $y =ayani to $e set o,, a*ainst su# +ue to s)ipo.ner ,or ,rei*)t or +e#urra*e
T#e sum o% :s11.,881=4=2 e9uiva&ent to `18,/3/=2=>d paid ! 1adruddin @' Mavani %or t#e account
o% (verseas Factors and $ar&os to pa! t#e %reig#t o% 8,4>0'>243 metric tons gross o% Jos#i rice and received
! "' M' Oeung as agent or representative o% "out# "ea "#ipping s#ou&d e set o%% against t#e sum due t#e
&atter %or %reig#t and demurrages, at t#e o%%icia& rate o% e3c#ange in Parac#i, Pakistan, on t#e da! o% receipt
t#ereo% ! t#e agent o% "out# "ea "#ipping, %or aside %rom t#e %act t#at t#e &atter s#ou&d not e a&&owed to
enric# itse&% at t#e e3pense o% (verseas Factors and $ar&os, t#e %or%eiture o% t#e amount to e deposited wit#
t#e $#artered 1ank o% ,ndia, 7ustra&ia and $#ina in Parac#i to t#e credit o% "out# "ea "#ipping, o%%ered !
Magsino, t#e agent o% (verseas Factors and $ar&os, to pa! t#e %reig#t o% t#e cargo o% rice was not accepted !
"' M' Oeung, t#e agent o% t#e s#ipowners'
1%. Le*al rate o, interest ,or +i,,erence6 Reckonin* perio+
T#e di%%erence a%ter t#e set o%% in %avor o% an! part! s#a&& ear t#e &ega& rate o% interest, to wit: i% in
%avor o% (verseas Factors and $ar&os, %rom t#e date o% receipt o% t#e amount in Parac#i, Pakistan, ! t#e
agent o% "out# "ea "#ippingC or, i% in %avor o% "out# "ea "#ipping, %rom t#e date o% t#e %i&ing o% its
counterc&aim %or t#e amount o% %reig#t and demurrages'
[185] a%ar =ining v. )ordeutscher Llo-d, see [07]
[18/] weet Lines v. CA, see [.3]
[187] ,uan Bs%ael 7 Co. v. &arreto 7 Co. , see [130]
[144]
:)oenix 5ssurance Co. Lt+. vs. FS Lines GR L>-/"33! -- &e$ruary 1%4)
Bn 1anc, 1eng*on JP (J): / concur
&acts' (n 8. June 1.>8, 6enera& Motors s#ipped and consigned on a $,F asis to Davao Parts and "ervice,
,nc' (DP") at Davao $it! %rom Eew Oork aoard t#e Dnited "tates +ines (D" +ines)? vesse& "" ;Pioneer
Moor< a cargo o% truck spare parts in 84 cases and 5 crates (8 pieces uno3ed), %or w#ic# D" +ines issued a
s#ort %orm i&& o% &ading T=1, and w#ic# s#ipment was insured against &oss and damage wit# P#oeni3
7ssurance $o', +td' T#e s#ort %orm i&& o% &ading T=1 indicated Mani&a as t#e port o% disc#arge and Davao
$it! as t#e p&ace w#ere t#e goods were to e transs#ipped, and e3press&! incorporated ! re%erence t#e
provisions contained in t#e carrier?s regu&ar &ong %orm i&& o% &ading' T#e "" ;Pioneer Moor< on 8/ Ju&! 1.>8
disc#arged at Mani&a to t#e custod! o% t#e Mani&a Port "ervice w#ic# was t#en t#e operator o% t#e arrastre
service at t#e Port o% Mani&a, t#e cargo, comp&ete ut wit# t#e e3ception o% two cases, name&!, $ases 313.
and 315/ va&ued at P1,5./'84' (n 32 Ju&! 1.>8, t#e +u*on 1rokerage $orporation, customs roker #ired !
t#e D" +ines, %i&ed in e#a&% o% t#e &atter a provisiona& c&aim against t#e Mani&a Port "ervice %or s#ort=&anded,
s#ort=de&ivered and-or &anded in ad order cargo e3=D" +ines? vesse&' (n 32 7ugust 1.>8, t#e cargo, wit# t#e
e3ception o% $rates 313. and 315/ w#ic# were not disc#arged at t#e Mani&a Port, and $rates 3>5/ and 3>5.
w#ic# were disc#arged at t#e Mani&a Port ut were &ost in t#e custod! o% t#e Mani&a Port "ervice, was
transs#ipped ! D" +ines to Davao t#roug# a vesse& o% its Davao agent, $o&umian :ope $ompan!, and du&!
received in good order ! t#e DP"' DP" %i&ed on 8> Decemer 1.>8 a %orma& c&aim wit# t#e D" +ines
t#roug# t#e &atter?s agent, $o&umian :ope, %or t#e va&ue o% $rates 313., 315/, 3>5/ and 3>5. in t#e tota&
sum o% P8,212'30' T#e D" +ines, a%ter proper veri%ication, paid DP" t#e sum o% P1,54/'84, representing t#e
va&ue o% $rates 313. and 315/, w#en it was discovered t#at t#ese 8 crates #ad een over&anded in @ono&u&u,
ut re%used to pa! %or t#e va&ue o% $rates 3>5/ and 3>5. %or t#e reason t#at t#ese crates #ad een &ost w#i&e in
t#e custod! o% t#e Mani&a Port "ervice' T#e two crates (313. and 315/) w#ic# were over&anded in @ono&u&u
and %or w#ic# D" +ines paid DP" t#e sum o% P1,54/'84, were &ater recovered and returned to DP" and t#e
&atter re%unded D" +ines %or t#e sum it paid' ,n view o% D" +ines G re%usa& to pa! %or t#e two crates (3>5/ and
3>5.) w#ic# were &ost w#i&e in t#e custod! o% t#e Mani&a Port "ervice, Per T $ompan!, +td', agent o%
P#oeni3 7ssurance in t#e P#i&ippines, and insurer o% DP" paid to t#e &atter t#e va&ue o% said crates in t#e sum
o% P448,18' (n 84 Marc# 1.>3, t#e D" +ines, t#roug# $o&umian :ope, ! &etter in%ormed t#e DP" t#at it
was %i&ing a c&aim %or t#e unde&ivered crates wit# t#e Mani&a Port "ervice' 7nd true to its word, it %i&ed on 32
Marc# 1.>3 a %orma& c&aim wit# t#e Mani&a Port "ervice %or t#e va&ue o% $rates 3>5/ and 3>5., ut t#e &atter
dec&ined to #onor t#e same' (n 8> June 1.>3, D" +ines, t#roug# $o&umian :ope, its Davao agent, in%ormed
t#e DP", inter a&ia, t#at t#e Mani&a Port "ervice #ad not !et sett&ed its c&aim, and t#at t#e 1=!ear period
provided ! &aw wit#in w#ic# to ring action against t#e Mani&a Port "ervice %or t#e two crates (3>5/ and
3>5.) wou&d e3pire on 8/ Ju&! 1.>3' P#oeni3 7ssurance, t#roug# Per T $ompan!, its agent in t#e
P#i&ippines, wrote on 85 Ju&! 1.>3 t#e D" +ines e3pressing its appreciation to t#e &atter %or taking action
against t#e Mani&a Port "ervice' ,n t#e same &etter it re9uested %or an e3tension o% time to %i&e suit against t#e
D" +ines, e3p&aining t#at it cou&d not %i&e suit against an! entit! (inc&uding t#e Mani&a Port "ervice) e3cept
t#e D" +ines wit# w#om its surogee, t#e DP", was in contract'
Eo rep&! #aving een received ! it %rom t#e D" +ines, t#e P#oeni3 7ssurance on 8. Ju&! 1.>3 %i&ed a suit
pra!ing t#at Audgment e rendered against t#e %ormer %or t#e sum o% P448'18, wit# interest at t#e &ega& rate,
p&us attorne!?s %ees and e3penses o% &itigation' (n 1> 7ugust 1.>3, t#e D" +ines %i&ed its answer wit#
counterc&aim, w#i&e P#oeni3 7ssurance %i&ed its answer to said counterc&aim on 8> 7ugust 1.>3' 7%ter tria&,
t#e &ower court ($F, o% Mani&a) on 31 (ctoer 1.>5 rendered a decision dismissing P#oeni3 7ssurance?s
comp&aint' @ence, t#e appea&'
T#e "upreme $ourt a%%irmed t#e decision appea&ed %rom, wit# costs against P#oeni3 7ssurance'
1. Bill o, la+in* $ot) a receipt an+ a contract
contract to transport and de&iver t#e same as t#erein stipu&ated' 7s a receipt, it recites t#e date and p&ace o%
s#ipment, descries t#e goods as to 9uantit!, weig#t, dimensions, identi%ication marks and condition, 9ua&it!,
and va&ue' 7s a contract, it names t#e contracting parties, w#ic# inc&ude t#e consignee, %i3es t#e route,
destination, and weig#t rate or c#arges, and stipu&ates t#e rig#ts and o&igations assumed ! t#e parties'
-. Contents o, Section 1 o, Bill o, La+in* (S)ort ,or#)
T#e 1i&& o% +ading (s#ort %orm) T=1 dated 8. June 1.>8 provides under "ection 1 t#ereo% t#at, ;,t is
agreed t#at t#e receipt, custod!, carriage, de&iver! and transs#ipping o% t#e goods are suAect to t#e terms
appearing on t#e %ace and ack #ereo% and a&so to t#e terms contained in t#e carrier?s regu&ar &ong %orm i&& o%
&ading, used in t#is service, inc&uding an! c&auses present&! eing stamped or endorsed t#ereon w#ic# s#a&& e
deemed to e incorporated in t#is i&& o% &ading, w#ic# s#a&& govern t#e re&ations, w#atsoever t#e! ma! e,
etween s#ipper, consignee, carrier and s#ip in ever! contingenc!, w#eresoever and w#ensoever occuring and
w#et#er t#e carrier e acting as suc# or as ai&ee'<
3. Contents o, t)e Bill o, La+in* (re*ular lon* ,or#)
T#e regu&ar &ong %orm 1i&& o% +ading provides, inter a&ia, t#at ;T#e carrier s#a&& not e &ia&e in an!
capacit! w#atsoever %or an! &oss or damage to t#e goods w#i&e t#e goods are not in its actua& custod!' T#e
carrier or master, in t#e e3ercise o% its or #is discretion and a&t#o? transs#ipment or %orwarding o% t#e goods
ma! not #ave een contemp&ated or provided %or #erein, ma! at port o% disc#arge or an! ot#er p&ace
w#atsoever transs#ip or %orward t#e goods or an! part t#ereo% ! an! means at t#e risk and e3pense o% t#e
goods and at an! time, w#et#er e%ore or a%ter &oading on t#e s#ip named #erein and ! an! route, w#et#er
wit#in or outside t#e scope o% t#e vo!age or e!ond t#e port o% disc#arge or destination o% t#e goods and
wit#out notice to t#e s#ipper or consignee' T#e carrier or master ma! de&a! suc# transs#ipping or %orwarding
%or an! reason, inc&uding ut not &imited to a waiting a vesse& or ot#er means o% transportation w#et#er ! t#e
carrier or ot#ers' T#e carrier or master in making arrangements wit# an! person %or or in connection wit# a&&
transs#ipping or %orwarding o% t#e goods or t#e use o% an! means o% transportation not used or operated ! t#e
carrier, s#a&& e considered so&e&! t#e agent o% t#e s#ipper and consignee and wit#out an! ot#er responsii&it!
w#atsoever or %or t#e cost t#ereo% ' T#e receipt, custod!, carriage and de&iver! o% t#e goods ! an! suc#
person or on=carrier and a&& transs#ipping and %orwarding s#a&& e suAect to a&& t#e provisions w#atsoever o%
suc# person?s or on=carrier?s %orm o% i&& o% &ading or agreement t#en in use, w#et#er or not issued and even
t#oug# suc# provisions ma! e &ess %avora&e to t#e s#ipper or consignee in an! respect t#an t#e provisions o%
t#is i&& o% &ading' T#e s#ipper and consignee aut#ori*e t#e carrier or master to arrange wit# an! suc# person
or on=carrier t#at t#e &owest va&uation or &imitation o% &iai&it! contained in t#e i&& o% &ading or ot#er
agreement o% suc# person on on=carrier s#a&& app&!' 7&& responsii&it! o% t#e carrier in an! capacit! s#a&&
a&toget#er cease and t#e goods s#a&& e deemed de&ivered ! it and t#is contract o% carrier s#a&& e deemed
%u&&! per%ormed on actua& or constructive de&iver! o% t#e goods to itse&% as suc# agent o% t#e s#ipper and
consignee or to an! suc# person or on=carrier at port o% disc#arge %rom s#ip or e&sew#ere in case o% an ear&ier
transs#ipment' T#e s#ipper and consignee s#a&& e &ia&e to t#is carrier %or and s#a&& indemni%! it against a&&
e3pense o% %orwarding and transs#ipping, inc&uding an! increase in or additiona& %reig#t or ot#er c#arges
w#atsoever' Pending or during %orwarding or transs#ipping t#is carrier or t#e master ma! store t#e goods
as#ore or a%&oat so&e&! as agent o% t#e s#ipper and at t#e risk and e3pense o% t#e goods and t#is carrier s#a&&
not e responsi&e %or t#e acts, neg&ect, de&a! or %ai&ure to act o% an!one to w#om t#e goods are entrusted or
de&ivered %or storage, #and&ing, or an! service incidenta& t#ereto' ,n case t#e carrier issues a i&& o% &ading
covering transportation ! a &oca& or ot#er carrier prior to t#e goods eing de&ivered to and put into t#e
p#!sica& custod! o% t#e carrier, it s#a&& not e under an! responsii&it! or &iai&it! w#atsoever %or an! &oss or
damage to t#e goods occurring prior to or unti& t#e actua& receipt or custod! o% t#e goods ! it at t#e port or
p&ace o% transs#ipment and in arranging %or t#e transportation to suc# port or p&ace w#ere t#e goods are put in
its p#!sica& custod!, it acts so&e&! as t#e agent o% t#e s#ipper'<
/. FS Lines not lia$le ,or loss o, crates6 Bill o, La+in*' Carrier not lia$le ,or *oo+s not in its
custo+y
@erein, t#e crates were &ost w#i&e in t#e possession and custod! o% t#e Mani&a Port "ervice' "ince t#e
&ong %orm o% 1i&& o% +ading provides t#at ;T#e carrier s#a&& not e &ia&e in an! capacit! w#atsoever %or an!
&oss or damage to t#e goods w#i&e t#e goods are not in its actua& custod!<, D" +ines cannot e #e&d
responsi&e %or t#e &oss o% said crates' ,t is #ard&! %air to make D" +ines accounta&e %or a &oss not due to its
acts or omissions or over w#ic# it #ad no contro&'
2. FS Lines not lia$le ,or loss o, crates6 Bill o, La+in*' Carrier +i+ not un+ertake +elivery o,
car*o in <avao City
@erein, t#e D" +ines did not undertake to carr! and de&iver sa%e&! t#e cargo to t#e consignee in
Davao $it!' T#e s#ort %orm 1i&& o% +ading states in no uncertain terms t#at t#e port o% disc#arge o% t#e cargo
is Mani&a, ut t#at t#e same was to e transs#ipped e!ond t#e port o% disc#arge to Davao $it!' Pursuant to
t#e terms o% t#e &ong %orm 1i&& o% +ading, D" +ines? responsii&it! as a common carrier ceased t#e moment
t#e goods were un&oaded in Mani&aC and in t#e matter o% transs#ipment, D" +ines acted mere&! as an agent o%
t#e s#ipper and consignee' Furt#er, t#e cargo was not transs#ipped wit# t#e use o% transportation used or
operated ! D" +ines' 7&t#oug# t#e vesse& used %or transs#ipment is owned and operated ! D" +ines? Davao
agent, $o&umian :ope, ut t#ere is no proo% t#at said vesse& is owned or operated ! D" +ines'
. Clai# S t)at exculpation ,ro# lia$ility +o not apply .)en ,ull car*o ,rei*)t pai+ up to an+
$eyon+ point o, stipulate+ +isc)ar*e S .it)out #erit
T#e receipt o% %u&& cargo %reig#t up to Davao $it! cannot render inoperative t#e provisions o% t#e 1i&&
o% +ading inasmuc# as suc# a situation is not provided t#erein as an e3ception' Eo e3ceptions appear in t#e
1i&&s o% +ading (s#ort and &ong %orms)' 1esides, it is %or t#e convenience o% ot# parties t#at %u&& %reig#t up to
Davao $it! #ad een prepaid, ot#erwise t#ere wou&d #ave een need to make %urt#er arrangements regarding
t#e transs#ipment o% t#e cargo to Davao $it!' 7%ter a&&, t#e &ong %orm 1i&& o% +ading provides t#at, ;T#e
s#ipper and consignee s#a&& e &ia&e to t#is carrier %or and s#a&& indemni%! it against a&& e3pense o%
%orwarding and transs#ipping, inc&uding an! increase in or additiona& %reig#t or ot#er c#arges w#atsoever'<

3. FS Lines1 ,ilin* o, clai# .it) =anila :ort Service not an a+#ission o, lia$ility $ut in keepin*
.it) +uties as a*ent o, t)e consi*nee
T#e %i&ing o% a c&aim ! D" +ines wit# t#e Mani&a Port "ervice %or t#e va&ue o% t#e &osses cannot e
considered an indication t#at it is answera&e %or cargo &osses up to Davao $it!' (n t#e contrar!, it is a
convincing proo% t#at said part! was not remiss in its duties as agent o% t#e consignee' T#at D" +ines
captioned its c&aim against t#e Mani&a Port "ervice as ;"" GPioneer Moor? Vo!' 84, :e' 12>0 Eew
Oork-Davao via Mani&a 1-+ T=1 31 Packages Truck "pare Parts $ons: Davao Parts T "upp&! ,nc',< &ikewise,
is no proo% t#at D" +ines knowing&! assumed &iai&it! %or cargo &osses up to Davao $it!' ,t mere&! s#owed
t#at t#e goods wou&d #ave to e, as indeed t#e! were, %irst un&oaded in Mani&a and t#erea%ter transs#ipped to
Davao $it!'
4. Contract is la. $et.een t)e contractin* parties
,n t#is Aurisdiction, it is a statutor! and decisiona& ru&e o% &aw t#at a contract is t#e &aw etween t#e
contracting parties, and w#ere t#ere is not#ing in it w#ic# is contrar! to &aw, mora&s, good customs, pu&ic
po&ic!, or pu&ic order, t#e va&idit! o% t#e contract must e sustained' @erein, t#roug# t#e s#ort %orm 1i&& o%
+ading, incorporating ! re%erence t#e terms o% t#e regu&ar &ong %orm i&& o% &ading, t#e D" +ines
acknow&edged t#e receipt o% t#e cargo o% truck spare parts t#at it carried, and stated t#e conditions under
w#ic# it was to carr! t#e cargo, t#e p&ace w#ere it was to e transs#ipped, t#e entit! to w#ic# de&iver! is to e
made, and t#e rate o% compensation %or t#e carriage' T#is it de&ivered to t#e DP" as evidence o% a contract
etween t#em' 1! receiving t#e i&& o% &ading, DP" assented to t#e terms o% t#e consignment contained
t#erein, and ecame ound t#ere!, so %ar as t#e conditions named are reasona&e in t#e e!es o% t#e &aw' "ince
neit#er P#oeni3 7ssurance nor D" +ines a&&ege t#at an! provision t#erein is contrar! to &aw, mora&s, good
customs, pu&ic po&ic!, or pu&ic order, t#e va&idit! o% t#e 1i&& o% +ading must e sustained and t#e provisions
t#erein proper&! app&ied to reso&ve t#e con%&ict etween t#e parties'
[189] &elgian Dverseas Chartering vs. PE'C, see [3+]
[1%"]
(elen*tan Bros. M Sons. Gs. C5 (GR 11"241! -1 Septe#$er 1%%/)
"econd Division, Mendo*a (J): 3 concur, 1 took no part
&acts' Pawasaki Pis#en Pais#a, +td' (P=+ine) is a %oreign s#ipping compan! doing usiness in t#e
P#i&ippines, its s#ipping agent eing t#e "mit#, 1e&& T $o', ,nc' ,t is a memer o% t#e Far Bast $on%erence,
t#e od! w#ic# %i3es rates ! agreement o% its memer=s#ipowners' T#e con%erence is registered wit# t#e D'"'
Federa& Maritime $ommission' (n / Ma! 1.0., t#e Van :eekum Paper, ,nc' entered into a contract o%
a%%reig#tment wit# t#e P=+ine %or t#e s#ipment o% 5>/ ro&&s o% container oard &iners %rom "avanna#, 6eorgia
to Mani&a' T#e s#ipment was consigned to +a "uerte $igar T $igarette Factor!' T#e contract o% a%%reig#tment
was emodied in 1i&& o% +ading >28 issued ! t#e carrier to t#e s#ipper' T#e e3penses o% &oading and
un&oading were %or t#e account o% t#e consignee' T#e s#ipment was packed in 18 container vans and &oaded
on oard t#e carrier?s vesse&, "" Verra*ano 1ridge' 7t Tok!o, Japan, t#e cargo was trans#ipped on two vesse&s
o% t#e P=+ine' 12 container vans were &oaded on t#e "" Far Bast Friends#ip, w#i&e 8 were &oaded on t#e ""
@angang 6&or!' "#ort&! t#erea%ter, t#e consignee (Te&engtan 1ros' T "ons, ,nc') received %rom t#e s#ipper
p#otocopies o% t#e i&& o% &ading, consu&ar invoice and packing &ist, as we&& as notice o% t#e estimated time o%
arriva& o% t#e cargo' (n 11 June 1.0., t#e "" Far Bast Friends#ip arrived at t#e port o% Mani&a' 7side %rom t#e
regu&ar advertisements in t#e s#ipping section o% t#e 1u&&etin Toda! announcing t#e arriva& o% its vesse&s,
Te&engtan was noti%ied in writing o% t#e s#ip?s arriva&, toget#er wit# in%ormation t#at container demurrage at
t#e rate o% P5'22 per &inear %oot per da! %or t#e %irst 4 da!s and P/'22 per &inear %oot per da! a%ter t#e 4t# da!
wou&d e c#arged un&ess t#e consignee took de&iver! o% t#e cargo wit#in 12 da!s' (n 81 June 1.0., t#e ot#er
vesse& "" @angang 6&or!, carr!ing Te&engtan?s two ot#er vans, arrived and was disc#arged o% its contents t#e
ne3t da!' (n t#e same da! t#e s#ipping agent "mit#, 1e&& T $o' re&eased t#e De&iver! Permit %or 18
containers to t#e roker upon pa!ment o% %reig#t c#arges on t#e i&& o% &ading' T#e ne3t da!, t#e ,s&and
1rokerage $o' presented, in e#a&% o% Te&engtan, t#e s#ipping documents to t#e $ustoms Marine Division o%
t#e 1ureau o% $ustoms' 1ut t#e &atter re%used to act on t#em ecause t#e mani%est o% t#e "" Far Bast
Friends#ip covered on&! 12 containers, w#ereas t#e i&& o% &ading covered 18 containers' T#e roker,
t#ere%ore, sent ack t#e mani%est to t#e s#ipping agent wit# t#e re9uest t#at t#e mani%est e amended' "mit#,
1e&& T $o' re%used on t#e ground t#at an amendment, as re9uested, wou&d vio&ate "ection 1224 o% t#e Tari%%
and $ustoms $ode re&ating to unmani%ested cargo' +ater, #owever, it agreed to add a %ootnote reading ;Two
container vans carried ! t#e "" @angang 6&or! to comp&ete t#e s#ipment o% twe&ve containers under t#e i&&
o% &ading'< (n 8. June 1.0. t#e mani%est was picked up %rom t#e o%%ice o% t#e s#ipping agent ! an emp&o!ee
o% t#e ,1$ and %i&ed wit# t#e 1ureau o% $ustoms' T#e mani%est was approved %or re&ease on 3 Ju&! 1.0.' ,1$
wrote "mit#, 1e&& T $o' to make o% record t#at entr! o% t#e s#ipment #ad een de&a!ed ! t#e error in t#e
mani%est' (n 11 Ju&! 1.0., w#en t#e ,1$ tried to secure t#e re&ease o% t#e cargo, it was in%ormed ! P=+ine?s
and "mit# 1e&& T $o'?s co&&ection agent, t#e $1$" 6uaranteed Fast $o&&ection "ervices, t#at t#e %ree time %or
removing t#e containers %rom t#e container !ard #ad e3pired on 8> June 1.0., in t#e case o% t#e "" Far Bast
Friends#ip, and on . Ju&!, in t#e case o% t#e "" @angang 6&or!, and t#at demurrage c#arges #ad egun to run
on 80 June 1.0. wit# respect to t#e 12 containers on t#e "" Far Bast Friends#ip and on 12 Ju&! 1.0. wit#
respect to t#e 8 containers s#ipped on oard t#e "" @angang 6&or!' (n 13 Ju&! 1.0., Te&engtan paid
P50,>/2'22 representing t#e tota& demurrage c#arges on a&& t#e containers, ut it was not a&e to otain its
goods' (n 1> Ju&! 1.0. it was a&e to otain t#e re&ease o% 8 containers and on 10 Ju&! 1.0. o% one more
container' ,t was a&e to otain on&! a partia& re&ease o% t#e cargo ecause o% t#e reakdown o% t#e arrastre?s
e9uipment at t#e container !ard' T#is matter was reported ! ,1$ in &etters o% comp&aint sent to t#e P#i&ippine
Ports 7ut#orit!' ,n addition, on 1> Ju&! 1.0., Te&engtan sent a &etter dated 18 Ju&! 1.0. to "mit#, 1e&& T $o',
re9uesting reconsideration o% t#e demurrage c#arges, on t#e ground t#at t#e de&a! in c&aiming t#e goods was
due to t#e a&&eged &ate arriva& o% t#e s#ipping documents, t#e de&a! caused ! t#e amendment o% t#e mani%est,
and t#e %act t#at 8 o% t#e containers arrived separate&! %rom t#e ot#er 12 containers' (n 1. Ju&! 1.0.
Te&engtan paid additiona& c#arges in t#e amount o% P82,1>2'22 %or t#e period Ju&! 15=1., 1.0. to secure t#e
re&ease o% its cargo, ut sti&& Te&engtan was una&e to get an! cargo %rom t#e remaining . container vans' ,t
was on&! t#e ne3t da!, Ju&! 82, 1.0., t#at it was a&e to #ave 8 more containers re&eased %rom t#e container
!ard, ringing to 4 t#e tota& numer o% containers w#ose contents #ad een de&ivered to it' "use9uent&!,
Te&engtan re%used to pa! an! more demurrage c#arges on t#e ground t#at t#ere was no agreement %or t#eir
pa!ment in t#e i&& o% &ading and t#at t#e de&a! in t#e re&ease o% t#e cargo was not due to its %au&t ut to t#e
reakdown o% t#e e9uipment at t#e container !ard' ,n a&&, petitioner #ad paid demurrage c#arges %rom June 80
to Ju&! 1., 1.0. in t#e tota& amount o% P>0,/52'22' (n 82 Ju&! 1.0., Te&engtan wrote "mit#, 1e&& T $o' %or a
re%und o% t#e demurrage c#arges, ut t#e &atter rep&ied on 84 Ju&! 1.0. t#at as memer o% t#e Far Bast
$on%erence, it cou&d not modi%! t#e ru&es or aut#ori*e re%unds o% t#e stipu&ated tari%%s'
Te&engtan, t#ere%ore, %i&ed a suit in t#e :T$ %or speci%ic per%ormance to compe& P=+ine, t#roug# its s#ipping
agent, t#e "mit#, 1e&& T $o', to re&ease 0 container vans consigned to it %ree o% c#arge and %or a re%und o%
P>0,/52'22 w#ic# it #ad paid, p&us attorne!?s %ees and ot#er e3penses o% &itigation' Te&engtan a&so asked %or
t#e issuance o% a writ o% pre&iminar! inAunction to restrain private respondents %rom c#arging additiona&
demurrage' T#erea%ter, a writ was issued a%ter Te&engtan #ad posted a ond o% P42,222'22 and t#e container
vans were re&eased to t#e petitioner' (n 1. Marc# 1./>, #owever, t#e :T$ dismissed Te&engtan?s comp&aint'
T#e :T$, t#ere%ore, ordered Te&engtan to pa! P=+ine, t#roug# "mit# 1e&& T $o', t#e sum o% P3>,5/2'22
representing demurrage c#arges %or t#e detention o% 0 %ort!=%ooter container vans %rom Ju&! 82 to 7ugust 0,
1.0., wit# &ega& interest commencing on 0 7ugust 1.0. unti& %u&&! paidC and t#e sum o% P12,222'22, ! wa!
o% attorne!?s %ees'
(n appea&, t#e case was a%%irmed wit# modi%ication ! t#e $ourt o% 7ppea&s, de&eting t#e award o% attorne!?s
%eesC wit# costs against Te&engtan' @ence, t#e petition %or review'
T#e "upreme $ourt set aside t#e decision appea&ed %rom, and rendered anot#er one, ordering P=+ine, and
"mit# 1e&& TD $o' to pa! to Te&engtan t#e sum o% P3.,3>2'22 ! wa! o% re%und, wit# &ega& interest'
1. Clause -3! Bill o, la+in*
$&ause 83 o% t#e i&& o% &ading provides t#at ;t#e ocean carrier s#a&& #ave a &ien on t#e goods, w#ic#
s#a&& survive de&iver!, %or a&& %reig#t, dead %reig#t, demurrage, damages, &oss, c#arges, e3penses and an! ot#er
sums w#atsoever pa!a&e or c#argea&e to or %or t#e account o% t#e Merc#ant under t#is i&& o% &ading'<
-. Clause -%! Bill o, la+in*
$&ause 8. o% t#e i&& o% &ading provides t#at ;t#e terms o% t#e ocean carrier?s app&ica&e tari%%,
inc&uding tari%%s covering intermoda& transportation on %i&e wit# t#e Federa& Maritime $ommission and t#e
,nterstate $ommission or an! ot#er regu&ator! od! w#ic# governs a portion o% t#e carriage o% goods, are
incorporated #erein'<
3. Rule -1 o, t)e &ar Dast Con,erence (ari,, 7o. -4>&=C 7o. 1- Rules an+ Re*ulations
:u&e 81 provides ;(D) Free Time, Demurrage, and B9uipment Detention at Ports in t#e P#i&ippines' Eote:
P#i&ippine $ustoms +aw prescries a&& cargo disc#arged %rom vesse&s to e given into custod! o% t#e
6overnment 7rrastre $ontractor, appointed ! P#i&ippine $ustoms w#o undertakes de&iver! to t#e consignee'
333 Demurrage c#arges on $ontainers wit# $O $argo' (1) Free time wi&& commence at /:22 a'm' on t#e %irst
working ca&endar da! %o&&owing comp&etion o% disc#arge o% t#e vesse&' ,t s#a&& e3pire at 18:22 p'm' (midnig#t)
on t#e tent# working ca&endar da!, e3c&uding "aturda!s, "unda!s and #o&ida!s' Fork stoppage at a termina&
due to &aor dispute or ot#er %orce maAeure as de%ined ! t#e con%erence preventing de&iver! o% cargo or
containers s#a&& e e3c&uded %rom t#e ca&cu&ation o% t#e %ree time %or t#e period o% t#e work stoppage' (8)
Demurrage c#arges are incurred e%ore t#e container &eaves t#e carrier?s designated $O, and s#a&& e
app&ica&e on t#e container commencing t#e ne3t working ca&endar da! %o&&owing e3piration o% t#e a&&owa&e
%ree time unti& t#e consignee #as taken de&iver! o% t#e container or #as %u&&! stripped t#e container o% its
contents in t#e carrier?s designated $O' Demurrage c#arges s#a&& e assessed #ereunder: (rdinar! containers
H P5'22 per &inear %oot o% t#e container per da! %or t#e %irst %ive da!sC P/'22 per &inear %oot o% t#e container
per da!, t#erea%ter'
/. <e#urra*e +e,ine+6 =a*ellan =arketin* vs. C5
Demurrage, in its strict sense, is t#e compensation provided %or in t#e contract o% a%%reig#tment %or
t#e detention o% t#e vesse& e!ond t#e time agreed on %or &oading and un&oading' Bssentia&&!, demurrage is t#e
c&aim %or damages %or %ai&ure to accept de&iver!' ,n a road sense, ever! improper detention o% a vesse& ma! e
considered a demurrage' +iai&it! %or demurrage, using t#e word in its strict&! tec#nica& sense, e3ists on&!
w#en e3press&! stipu&ated in t#e contract' Dsing t#e term in Lits roader sense, damages in t#eM nature o%
demurrage are recovera&e %or a reac# o% t#e imp&ied o&igation to &oad or un&oad t#e cargo wit# reasona&e
dispatc#, ut on&! ! t#e part! to w#om t#e dut! is owed and on&! against one w#o is a part! to t#e s#ipping
contract'
2. =eanin* o, +e#urra*e in Clause -3 clari,ie+ $y Clause -% o, t)e $ill o, la+in* (in relation to
Rule -1 o, t)e &ar Dast Con,erence (ari,, 7o. -4>&=C 7o. 1-)
@erein, Te&engtan contends t#at t#e i&& o% &ading does not provide %or t#e pa!ment o% container
demurrage, as $&ause 83 o% t#e i&& o% &ading on&! sa!s ;demurrage,< i'e', damages %or t#e detention o%
vesse&s, and #ere t#ere is no detention o% vesse&s' F#atever ma! e t#e merit o% Te&engtan?s contention as to
t#e meaning o% t#e word ;demurrage< in c&ause 83 o% t#e i&& o% &ading, t#e %act is t#at c&ause 8.(a) a&so o% t#e
i&& o% &ading, in re&ation to :u&e 81 o% t#e Far Bast $on%erence Tari%% Eo' 8/=FM$ Eo' 18, speci%ica&&!
provides %or t#e pa!ment ! t#e consignee o% demurrage %or t#e detention o% containers and ot#er e9uipment
a%ter t#e so=ca&&ed ;%ree time'<
. Bill o, la+in*! $ot) a receipt an+ contract
7 i&& o% &ading operates ot# as a receipt and a contract' 7s a contract, it names t#e contracting
parties w#ic# inc&ude t#e consignee, %i3es t#e route, destination, %reig#t rate or c#arges, and stipu&ates t#e
rig#ts and o&igations assumed ! t#e parties' 1! receiving t#e i&& o% &ading, Te&engtan 1ros' assented to t#e
terms o% t#e consignment contained t#erein, and ecame ound t#ere!, so %ar as t#e conditions named are
reasona&e in t#e e!es o% t#e &aw' "ince neit#er appe&&ant nor appe&&ee a&&eges t#at an! provision t#erein is
contrar! to &aw, mora&s, good customs, pu&ic po&ic! or pu&ic order H and indeed we %ound none H t#e
va&idit! o% t#e 1i&& o% +ading must e sustained and t#e provisions t#erein proper&! app&ies to reso&ve t#e
con%&ict etween t#e parties'
3. Dn,orce#ent o, &ar Dast Con,erence an+ t)e &e+eral =ariti#e Co##ission is in accor+ance
.it) R5 1/"3! T 1
T#e en%orcement o% t#e ru&es o% t#e Far Bast $on%erence and t#e Federa& Maritime $ommission is in
accordance wit# :epu&ic 7ct Eo' 1520, a 1 o% w#ic# dec&ares t#at t#e P#i&ippines, in common wit# ot#er
maritime nations, recogni*es t#e internationa& c#aracter o% s#ipping in %oreign trade and e3isting internationa&
practices in maritime transportation and t#at it is part o% t#e nationa& po&ic! to cooperate wit# ot#er %riend&!
nations in t#e maintenance and improvement o% suc# practices'
4. Contract o, a+)esion vali+6 Servan+o v. :)ilippine Stea# 7avi*ation
7s #e&d in "ervando v' P#i&ippine "team Eavigation, ;F#i&e it ma! e true t#at petitioner #ad not
signed t#e p&ane ticket, #e is nevert#e&ess ound ! t#e provisions t#ereo%' ;"uc# provisions #ave een #e&d to
e a part o% t#e contract o% carriage, and va&id and inding upon t#e passenger regard&ess o% t#e &atter?s &ack o%
know&edge or assent to t#e regu&ation<' ,t is w#at is known as a contract o% ;ad#esion,< in regards to w#ic# it
#as een said t#at contracts o% ad#esion w#erein one part! imposes a read! made %orm o% contract on t#e
ot#er, as t#e p&ane ticket in t#e case at ar, are contracts not entire&! pro#iited' T#e one w#o ad#eres to t#e
contract is in rea&it! %ree to reAect it entire&!C i% #e ad#eres, #e gives #is consent' ;

%. (elen*tan cannot $e #a+e lia$le ,or +e#urra*e .)en +elay in release o, *oo+s not +ue to its
,ault6 =o+i,ication o, t)e #ani,est
@erein, Te&engtan cannot e #e&d &ia&e %or demurrage starting 80 June 1.0. on t#e 12 containers
w#ic# arrived on t#e "" Far Bast Friends#ip ecause t#e de&a! in otaining re&ease o% t#e goods was not due
to its %au&t' T#e evidence s#ows t#at ecause t#e mani%est issued ! P=+ine, t#roug# t#e "mit#, 1e&& T $o',
stated on&! 12 containers, w#ereas t#e i&& o% &ading a&so issued ! t#e P=+ine s#owed t#ere were 18
containers, t#e 1ureau o% $ustoms re%used to give an entr! permit to Te&engtan' For t#is reason, Te&engtan?s
roker, t#e ,1$, #ad to see t#e "mit#, 1e&& T $o' on 88 June 1.0. ut t#e &atter did not immediate&! do
somet#ing to correct t#e mani%est' "mit#, 1e&& T $o' was asked to ;amend< t#e mani%est, ut it re%used to do
so on t#e ground t#at t#is wou&d vio&ate t#e &aw' ,t was on&! on 8. June 1.0. t#at it t#oug#t o% adding instead
o% %ootnote to indicate t#at 8 ot#er container vans H to account %or a tota& o% 18 container vans consigned to
petitioner H #ad een &oaded on t#e ot#er vesse& "" @angang 6&or!'
1". &ootnote not a++e+ -- Bune 1%3%6 #ore pro$a$le t)at #ani,est correcte+ -% Bune 1%3%
@erein, t#ere is not#ing in t#e testimonies o% witnesses o% eit#er part! to support t#e %inding t#at t#e
%ootnote, e3p&aining t#e apparent discrepanc! etween t#e i&& o% &ading and t#e mani%est, was added on 88
June 1.0. ut t#at Te&engtan?s representative did not return to pick up t#e mani%est unti& 8. June 1.0.' To t#e
contrar!, it is more proa&e t#at t#e mani%est was corrected on&! on 8. June 1.0., (! w#ic# time t#e ;%ree
time< #ad a&read! e3pired), ecause "mit#, 1e&& T $o' did not immediate&! know w#at to do as it insisted it
cou&d not amend t#e mani%est and on&! t#oug#t o% adding a %ootnote on 8. June 1.0. upon t#e suggestion o%
t#e ,1$'
11. <e#urrer co##ence+ 3 Buly 1%3% as to 1" containers! an+ 1" Buly 1%3% as to ot)er - containers
8. June 1.0. was a Frida!' ,t is proa&e t#at t#e corrected mani%est was presented to t#e 1ureau o%
$ustoms on&! on Monda!, 8 Ju&! 1.0. and, t#ere%ore, it was on&! on Ju&! 3 t#at it was approved' ,t was,
t#ere%ore, on&! %rom t#is date (3 Ju&! 1.0.) t#at Te&engtan cou&d #ave c&aimed its cargo and c#arged %or an!
de&a! in removing its cargo %rom t#e containers' Fit# respect to t#e ot#er two containers w#ic# arrived on t#e
"" @angang 6&or!, demurrage was proper&! considered to #ave accrued on 12 Ju&! 1.0. since t#e ;%ree time<
e3pired on Ju&! .'
1-. :erio+ o, +elay stoppe+ on 13 Buly 1%3%
T#e period o% de&a!, #owever, %or a&& t#e 18 containers must e deemed to #ave stopped on 13 Ju&!
1.0., ecause on t#is date Te&engtan paid P50,>/2'22' ,% it was not a&e to get its cargo %rom t#e container
vans, it was ecause o% t#e reakdown o% t#e s#i%ters or cranes' T#is reakdown cannot e &amed on
Te&engtan since t#ese were cranes o% t#e arrastre service operator' ,t wou&d e unAust to c#arge demurrage
a%ter 13 Ju&! 1.0. since t#e de&a! in empt!ing t#e containers was not due to t#e %au&t o% Te&engtan' ,ndeed,
t#ere is no reason w#! Te&engtan s#ou&d not get its cargo a%ter pa!ing a&& demurrage c#arges due on 13 Ju&!
1.0.' ,% it paid P82,1/2'22 more in demurrage c#arges a%ter said date it was on&! ecause "mit# 1e&& T $o'
wou&d not re&ease t#e goods'
13. Lia$ility ,or +e#urra*e in t)e a#ount o, :-4!/4"6 8verpay#ent o, :3%!3"
@erein, Te&engtan can e #e&d &ia&e %or demurrage on&! %or t#e period Ju&! 3=13, 1.0. and t#at in
accordance wit# t#e stipu&ation in its i&& o% &ading, it is &ia&e %or demurrage on&! in t#e amount P8/,5/2'22'
T#ere is an overpa!ment o% P3.,3>2'22 w#ic# s#ou&d e re%unded to Te&engtan'
[190] 'ntKl Larvester v. La%1urgFA%erican Line, see [1+3]
[1%1]
<e la Riva vs. LiJarra*a Her#anos (GR L>-//! 3 Banuary 1%"3)
First Division, Trace! (J): 4 concur
&acts' Teodoro $arran*a ui&t at 7timonan in Ta!aas two oats on t#e ora& order o% 7ntonio de &a :iva, to e
paid %or t#roug# t#e #ouse o% 6utierre* @ermanos at Mani&a, wit# w#ic# at t#e time ot# parties #ad standing
accounts, t#e e3act price eing &e%t to e determined ! t#eir cost' From time to time mone!s were advanced
$arran*a ! 6utierre* @ermanos, ut wit#out an! c#arge on t#e ooks against de &a :iva or an! adAustment o%
t#e accounts as etween t#e parties, w#ic# was de%erred unti& t#e usiness s#ou&d e c&osed' 7%ter some
mont#s, t#e oats eing %inis#ed, 1e#n, Me!er T $o', w#o at t#at time were a&so de &a :iva?s correspondents
at Mani&a, c#artered o% 6utierre* @ermanos t#e steamer Maga&&anes, w#ic# carried t#em to Mani&a under a
i&& o% &anding signed ! t#e captain, in w#ic# Teodoro $arran*a was named s#ipper and 1e#n, Me!er, and
$o' consignees, de&iver! eing directed to t#em, ut not on t#eir order' (n some date not s#own, a%ter t#e
arriva& o% t#e oats at Mani&a, t#is order was indorsed ! t#e consignees wit# a direction %or t#eir de&iver! to
de &a :iva' Dpon seeking t#em under t#is order, de &a :iva %ound t#em in t#e possession o% t#e s#eri%% under
an attac#ment in %avor o% +i*arraga @ermanos'
IActual disposition o2 the lower court not %adeJ. T#e "upreme $ourt reversed t#e Audgment o% t#e $F, wit#
t#e costs o% t#at court, ut not o% t#is instanceC ordered t#at a%ter e3piration o% 82 da!s Audgment e entered in
accordance #erewit# and 12 da!s t#erea%ter t#e record e remanded to t#e court %rom w#ence it came %or
proper action'
1. CarranJa o.ne+ $oats until t)eir le*al trans,er6 +e la Riva ,aile+ to esta$lis) )is title to t)e
$oats
Teodoro $arran*a ui&t t#ese oats, not as a mandator!, o% de &a :iva ut on #is own account,
retaining t#e owners#ip o% t#em unti& t#eir &ega& trans%er' T#is was not a%%ected ! reason o% t#e pa!ments
advanced ! 6utierre* @ermanos t#roug# t#e unAusted accounts o% t#e parties, nor ! t#e s#ipment o% t#e
oats or t#e remittance o% t#e i&& o% &ading o% 1e#n, Me!er T $o', w#o were mere&! t#e consignees o% t#e
ui&der and represented #im, nor !et ! t#e indorsement o% t#e consignees' @ad t#e i&& o% &ading run to t#eir
order, t#en tit&e wou&d #ave passed ! t#e indorsement o% it, or #ad it een pa!a&e to t#e earer, t#en in t#at
case ! t#e mere de&iver! o% it' ($ode o% $ommerce, art' 02/') 1! terms, #owever, t#e %reig#t was de&ivera&e
to t#e consignees ! name and t#eir interest cou&d e trans%erred on&! ! document purporting to conve! t#e
propert!' T#ere%ore de &a :iva %ai&ed to esta&is# #is tit&e as against t#e s#eri%% under t#e attac#ment'
[>]
&anco Agricola - Pecuario v. <l "orado Arading
[1%-]
PC Ail%ent v. =acondra-
[1%3]
Litton v. P)&
[1%/]
Driental Co%%ercial v. La )aviera Eilipina
[195] )ational develop%ent Co, v. CA, see [0!]
[1%]
:)ilippine Ho#e 5ssurance vs. C5 (GR 1"%%%! -" Bune 1%%)
First Division, Papunan (J): 5 concur
&acts' Bastern "#ipping +ines, ,nc' (B"+,) &oaded on oard "" Bastern B3p&orer in Poe, Japan, t#e
%o&&owing s#ipment %or carriage to Mani&a and $eu, %reig#t pre=paid and in good order and condition, vi*: (a)
two (8) o3es interna& comustion engine parts, consigned to Fi&&iam +ines, ,nc' under 1i&& o% +ading
2588/3C () ten (12) metric tons (335 ags) ammonium c#&oride, consigned to (rca?s $ompan! under 1i&& o%
+ading P$B=18C (c) two #undred (822) ags 6&ue 322, consigned to Pan (rienta& Matc# $ompan! under 1i&&
o% +ading P$B=/C and (d) garments, consigned to Ding Ve&a!o under 1i&&s o% +ading Eos' PM7=03 and
PM7=05' F#i&e t#e vesse& was o%% (kinawa, Japan, a sma&& %&ame was detected on t#e acet!&ene c!&inder
&ocated in t#e accommodation area near t#e engine room on t#e main deck &eve&' 7s t#e crew was tr!ing to
e3tinguis# t#e %ire, t#e acet!&ene c!&inder sudden&! e3p&oded sending a %&as# o% %&ame t#roug#out t#e
accommodation area, t#us causing deat# and severe inAuries to t#e crew and instant&! setting %ire to t#e w#o&e
superstructure o% t#e vesse&' T#e incident %orced t#e master and t#e crew to aandon t#e s#ip' T#erea%ter, ""
Bastern B3p&orer was %ound to e a constructive tota& &oss and its vo!age was dec&ared aandoned' "evera&
#ours &ater, a tugoat under t#e contro& o% Faked "a&vage $o' arrived near t#e vesse& and commenced to tow
t#e vesse& %or t#e port o% Ea#a, Japan' Fire %ig#ting operations were again conducted at t#e said port' 7%ter t#e
%ire was e3tinguis#ed, t#e cargoes w#ic# were saved were &oaded to anot#er vesse& %or de&iver! to t#eir
origina& ports o% destination' B"+, c#arged t#e consignees severa& amounts corresponding to additiona& %reig#t
and sa&vage c#arges, as %o&&ows: (a) %or t#e goods covered ! 1i&& o% +ading 2588/3, B"+, c#arged t#e
consignee t#e sum o% P1,.80'>4, representing sa&vage c#arges assessed against t#e goodsC () %or t#e goods
covered ! 1i&& o% +ading P$B=18, B"+, c#arged t#e consignee t#e sum o% P8,./2'>5 %or additiona& %reig#t
and P/8>'15 %or sa&vage c#arges against t#e goodsC (c) %or t#e goods covered ! 1i&& o% +ading P$B=/, B"+,
c#arged t#e consignee t#e sum o% P3,8.8'8> %or additiona& %reig#t and P5,132'>/ %or sa&vage c#arges against
t#e goodsC and (d) %or t#e goods under 1i&&s o% +ading PM7=03 and PM7=05, B"+, c#arged t#e consignee
t#e sum o% P/,330'2> %or sa&vage c#arges against t#e goods' T#e c#arges were a&& paid P#i&ippine @ome
7ssurance $orporation (P@7") under protest %or and in e#a&% o% t#e consignees'
P@7$, as surogee o% t#e consignees, t#erea%ter %i&ed a comp&aint e%ore t#e :T$ o% Mani&a, 1ranc# 3.,
against B"+, to recover t#e sum paid under protest on t#e ground t#at t#e same were actua&&! damages
direct&! roug#t aout ! t#e %au&t, neg&igence, i&&ega& act and-or reac# o% contract o% B"+,' T#e tria& court
dismissed P@7$?s comp&aint and ru&ed in %avor o% B"+,'
(n appea& to t#e $ourt o% 7ppea&s, t#e appe&&ate court a%%irmed t#e tria& court?s %indings and conc&usions'
@ence, t#e present petition %or review'
T#e "upreme $ourt reversed and set aside t#e Audgment appea&ed %rom, and order Bastern "#ipping +ines,
,nc' to return to P#i&ippine @ome 7ssurance $orporation t#e amount it paid under protest in e#a&% o% t#e
consignees #erein'
1. 8nly 9uestions o, la. allo.e+ in petition ,or revie.6 Dxceptions
F#i&e it is a we&&=sett&ed ru&e t#at on&! 9uestions o% &aw ma! e raised in a petition %or review under
:u&e 54 o% t#e :u&es o% $ourt, it is e9ua&&! we&&=sett&ed t#at t#e same admits o% t#e %o&&owing e3ceptions,
name&!: (a) w#en t#e conc&usion is a %inding grounded entire&! on specu&ation, surmises or conAecturesC ()
w#en t#e in%erence made is mani%est&! mistaken, asurd or impossi&eC (c) w#ere t#ere is a grave ause o%
discretionC (d) w#en t#e Audgment is ased on a misappre#ension o% %actsC (e) w#en t#e %indings o% %act are
con%&ictingC (%) w#en t#e $ourt o% 7ppea&s, in making its %indings, went e!ond t#e issues o% t#e case and t#e
same is contrar! to t#e admissions o% ot# appe&&ant and appe&&eeC (g) w#en t#e %indings o% t#e $ourt o%
7ppea&s are contrar! to t#ose o% t#e tria& courtC (#) w#en t#e %indings o% %act are conc&usions wit#out citation
o% speci%ic evidence on w#ic# t#e! are asedC (i) w#en t#e %acts set %ort# in t#e petition as we&& as in t#e
petitioners? main and rep&! rie%s are nor disputed ! t#e respondentsC and (A) w#en t#e %inding o% %act o% t#e
$ourt o% 7ppea&s is premised on t#e supposed asence o% evidence and is contradicted ! t#e evidence on
record' 4 T#us, i% t#ere is a s#owing, as in t#e present case, t#at t#e %indings comp&ained o% are tota&&! devoid
o% support in t#e records, or t#at t#e! are so g&aring&! erroneous as to constitute grave ause o% discretion, t#e
same ma! e proper&! reviewed and eva&uated ! t#e "upreme $ourt'
-. Goo+s not lost nor +a#a*e+ in transit $y ,ire t)at raJe+ carrier6 :roper issue
@erein, t#e outset t#at t#e goods suAect o% t#e present controvers! were neit#er &ost nor damaged in
transit ! t#e %ire t#at ra*ed t#e carrier' ,n %act, t#e said goods were a&& de&ivered to t#e consignees, even i% t#e
transs#ipment took &onger t#an necessar!' F#at is at issue t#ere%ore is not w#et#er or not t#e carrier is &ia&e
%or t#e &oss, damage, or deterioration o% t#e goods transported ! t#em ut w#o, among t#e carrier, consignee
or insurer o% t#e goods, is &ia&e %or t#e additiona& c#arges or e3penses incurred ! t#e owner o% t#e s#ip in t#e
sa&vage operations and in t#e transs#ipment o% t#e goods via a di%%erent carrier'
3. &ire not an act o, Go+ unless cause+ $y natural +isaster or casualty not attri$uta$le to )u#an
a*ency
,n P#i&ippine Aurisprudence, %ire ma! not e considered a natura& disaster or ca&amit! since it a&most
a&wa!s arises %rom some act o% man or ! #uman means' ,t cannot e an act o% 6od un&ess caused ! &ig#tning
or a natura& disaster or casua&t! not attriuta&e to #uman agenc!' @erein, it is not disputed t#at a sma&& %&ame
was detected on t#e acet!&ene c!&inder and t#at ! reason t#ereo%, t#e same e3p&oded despite e%%orts to
e3tinguis# t#e %ire' T#ere was no s#owing, and none was a&&eged ! t#e parties, t#at t#e %ire was caused ! a
natura& disaster or ca&amit! not attriuta&e to #uman agenc!' (n t#e contrar!, t#ere is strong evidence
indicating t#at t#e acet!&ene c!&inder caug#t %ire ecause o% t#e %au&t and neg&igence o% B"+,, its captain and
its crew'
/. Dvi+ence o, ne*li*ence6 E)ere acetylene cylin+er .as store+
(ransportation La.! -""/ ( //" )
T#e acet!&ene c!&inder w#ic# was %u&&! &oaded s#ou&d not #ave een stored in t#e accommodation
area near t#e engine room w#ere t#e #eat generated t#ere%rom cou&d cause t#e acet!&ene c!&inder to e3p&ode
! reason o% spontaneous comustion' B"+, s#ou&d #ave easi&! %oreseen t#at t#e acet!&ene c!&inder,
containing #ig#&! in%&amma&e materia&, was in a rea& danger o% e3p&oding ecause it was stored in c&ose
pro3imit! to t#e engine room' Furt#er, B"+, s#ou&d #ave known t#at ! storing t#e acet!&ene c!&inder in t#e
accommodation area supposed to e reserved %or passengers, it unnecessari&! e3posed its passengers to grave
danger and inAur!' $urious passengers, ignorant o% t#e danger t#e tank mig#t #ave on #umans and propert!,
cou&d #ave #and&ed t#e same or cou&d #ave &ig#ted and smoke cigarettes w#i&e repairing in t#e
accommodation area' T#e %act t#at t#e acet!&ene c!&inder was c#ecked, tested and e3amined and suse9uent&!
certi%ied as #aving comp&ied wit# t#e sa%et! measures and standards ! 9ua&i%ied e3perts e%ore it was &oaded
in t#e vesse& on&! s#ows to a great e3tent t#at neg&igence was present in t#e #and&ing o% t#e acet!&ene c!&inder
a%ter it was &oaded and w#i&e it was on oard t#e s#ip' ,ndeed, #ad B"+, and its agents not een neg&igent in
storing t#e acet!&ene c!&inder near t#e engine room, t#en t#at same wou&d not #ave &eaked and e3p&oded
during t#e vo!age'
2. State#ent o, &acts an+ =arine 7ote o, :rotest' Hearsay evi+ence )as no pro$ative value6
Section 3! Rule 13"
T#e documents Q "tatement o% Facts and t#e Marine Eote o% Protest issued ! $aptain Tiurcio 7'
+ica!&ica! H are #earsa! evidence since $apt' +ica!&ica!, Master o% "'"' Bastern B3p&orer w#o issued t#e
said documents, was not presented in court to testi%! to t#e trut# o% t#e %acts #e stated t#erein' ,nstead, B"+,
presented Junpei Maeda, its 1ranc# Manager in Tok!o and Ooko#ama, Japan, w#o evident&! #ad no persona&
know&edge o% t#e %acts stated in t#e documents at issue' ,t is c&ear %rom "ection 3>, :u&e 132 o% t#e :u&es o%
$ourt t#at an! evidence, w#et#er ora& or documentar!, is #earsa! i% its proative va&ue is not ased on t#e
persona& know&edge o% t#e witness ut on t#e know&edge o% t#e witness ut on t#e know&edge o% some ot#er
person not on t#e witness stand' $onse9uent&!, #earsa! evidence, w#et#er oAected to or not, #as no proative
va&ue un&ess t#e proponent can s#ow t#at t#e evidence %a&&s wit#in t#e e3ceptions to t#e #earsa! evidence ru&e'
,t is e3c&uded ecause t#e part! against w#om it is presented is deprived o% #is rig#t and opportunit! to cross=
e3amine t#e persons to w#om t#e statements or writings are attriuted'
. General or *ross avera*es6 &or#alities un+er 5rticles 413 an+ 41/ o, t)e Co+e o, Co##erce
)o.ever .ere not co#plie+ .it)
7s a ru&e, genera& or gross averages inc&ude a&& damages and e3penses w#ic# are de&ierate&! caused
in order to save t#e vesse&, its cargo, or ot# at t#e same time, %rom a rea& and known risk' F#i&e t#e instant
case ma! tec#nica&&! %a&& wit#in t#e purview o% t#e said provision, t#e %orma&ities prescried under 7rtic&e /13
and /15 o% t#e $ode o% $ommerce in order to incur t#e e3penses and cause t#e damage corresponding to
gross average were not comp&ied wit#' $onse9uent&!, B"+,?s c&aim %or contriution %rom t#e consignees o%
t#e cargo at t#e time o% t#e occurrence o% t#e average turns to naug#t'
3. Re,un+ ,or a++itional ,rei*)t an+ salva*e c)ar*es .arrante+
Prescinding %rom t#e %oregoing premises, t#e cargo consignees cannot e made &ia&e to t#e carrier
%or additiona& %reig#t and sa&vage c#arges' $onse9uent&!, t#e carrier must re%und to P#i&ippine @ome
7ssurance t#e amount it paid under protest %or additiona& %reig#t and sa&vage c#arges in e#a&% o% t#e
consignee'
[1%3]
5. =a*saysay ;nc. vs. 5*an (GR L>3%3! 31 Banuary 1%22)
Bn 1anc, :e!es 7' (J): / concur
&acts' T#e " " ;"an 7ntonio<, a vesse& owned and operated ! 7' Magsa!sa! ,nc', &e%t Mani&a on > (ctoer
1.5., ound %or 1asco, 1atanes, via 7parri, $aga!an, wit# genera& cargo e&onging to di%%erent s#ippers,
(ransportation La.! -""/ ( //1 )
among t#em 7nastacio 7gan' T#e vesse& reac#ed 7parri on t#e 12t# o% t#at mont#, and a%ter a da!?s stopover
in t#at port, weig#ed anc#or to proceed to 1asco' 1ut w#i&e sti&& in port, it ran aground at t#e mout# o% t#e
$aga!an river, and, attempts to re%&oat it under its own power #aving %ai&ed, Magsa!sa! #ad it re%&oated ! t#e
+u*on "tevedoring $o' at an agreed compensation' T#e stranding o% Magsa!sa!?s vesse& was due to t#e
sudden s#i%ting o% t#e sandars at t#e mout# o% t#e river w#ic# t#e port pi&ot did not anticipate' (nce a%&oat,
t#e vesse& returned to Mani&a to re%ue& and t#en proceeded to 1asco, t#e port o% destination' T#ere t#e cargoes
were de&ivered to t#eir respective owners or consignees, w#o, wit# t#e e3ception o% 7gan, made a deposit or
signed a ond to answer %or t#eir contriution to t#e average'
(n t#e t#eor! t#at t#e e3penses incurred in %&oating t#e vesse& constitute genera& average to w#ic# ot# s#ip
and cargo s#ou&d contriute, Magsa!sa! roug#t t#e action in t#e $F, o% Mani&a to make 7gan pa! #is
contriution, w#ic#, as determined ! t#e average adAuster, amounts to P/51'52' 7gan, in #is answer, denies
&iai&it! %or t#is amount, a&&eging, among ot#er t#ings, t#at t#e stranding o% t#e vesse& was due to t#e %au&t,
neg&igence and &ack o% ski&& o% its master, t#at t#e e3penses incurred in putting it a%&oat did not constitute
genera& average, and t#at t#e &i9uidation o% t#e average was not made in accordance wit# &aw' 7%ter tria&, t#e
&ower court %ound %or Magsa!sa! and rendered Audgment against 7gan %or t#e amount o% t#e c&aim, wit# &ega&
interests' From t#is Audgment, 7gan #as appea&ed direct&! to t#e "upreme $ourt'
T#e "upreme $ourt reversed t#e decision appea&ed %rom, and dismissed Magsa!sa!?s comp&aintC wit# costs'
1. La. on avera*es
T#e &aw on averages is contained in t#e $ode o% $ommerce' Dnder t#at &aw, averages are c&assi%ied
into simp&e or particu&ar and genera& or gross' 6enera&&! speaking, simp&e or particu&ar averages inc&ude a&&
e3penses and damages caused to t#e vesse& or cargo w#ic# #ave not inured to t#e common ene%it (7rt' /2.,
and are, t#ere%ore, to e orne on&! ! t#e owner o% t#e propert! w#ic# gave rise to t#e same (7rt' /12)C w#i&e
genera& or gross averages inc&ude ;a&& t#e damages and e3penses w#ic# are de&ierate&! caused in order to
save t#e vesse&, its cargo, or ot# at t#e same time, %rom a rea& and known risk< (7rt' /11)' 1eing %or t#e
common ene%it, gross averages are to e orne ! t#e owners o% t#e artic&es saved (7rt' /18)'
-. Dxpenses are o, particular avera*es (5rticle 4"% [-])! not *eneral avera*es (not 5rticle 411 [])
,n c&assi%!ing averages into simp&e or particu&ar and genera& or gross and de%ining eac# c&ass, t#e
$ode (7rt' /2. and /11) at t#e same time enumerates certain speci%ic cases as coming specia&&! under one or
t#e ot#er denomination' @erein, w#i&e t#e e3penses incurred in putting Magsa!sa!?s vesse& a%&oat ma! we&&
come under numer 8 o% artic&e /2. H w#ic# re%ers to e3penses su%%ered ! t#e vesse& ;! reason o% an
accident o% t#e sea or %orce maAeure< H and s#ou&d t#ere%ore e c&assi%ied as particu&ar average, t#e said
e3penses do not %it into an! o% t#e speci%ic cases o% genera& average enumerated in artic&e /11' Eumer > o%
7rtic&e /11 does mention ;e3penses caused in order to %&oat a vesse&,< ut it speci%ica&&! re%ers to ;a vesse&
intentiona&&! stranded %or t#e purpose o% saving it< and wou&d #ave no app&ication w#ere, as in t#e present
case, t#e stranding was not intentiona&'
3. Re9uisites ,or *eneral avera*e6 (olentino in )is co##entaries on t)e Co+e o, Co##erce
(1) T#ere must e a common danger' T#is means, t#at ot# t#e s#ip and t#e cargo, a%ter it #as een
&oaded, are suAect to t#e same danger, w#et#er during t#e vo!age, or in t#e port o% &oading or un&oadingC t#at
t#e danger arises %rom accidents o% t#e sea, dispositions o% t#e aut#orit!, or %au&ts o% men, provided, t#at t#e
circumstance producing t#e peri& s#ou&d e ascertained and imminent = or ma! rationa&&! e said to e certain
and imminent' T#is &ast re9uirement e3c&udes measures undertaken against a distant peri&' (8) T#at %or t#e
common sa%et! part o% t#e vesse& or o% t#e cargo or ot# is sacri%iced de&ierate&!' (3) T#at %rom t#e e3penses
or damages caused %o&&ows t#e success%u& saving o% t#e vesse& and cargo' (5) T#at t#e e3penses or damages
s#ou&d #ave een incurred or in%&icted a%ter taking proper &ega& steps and aut#orit!'
/. Re9uisite 1 not present6 Sa,ety o, property! not voya*e! true ,oun+ation o, *eneral avera*e
(ransportation La.! -""/ ( //- )
Fit# respect to t#e %irst re9uisite, t#e evidence does not disc&ose t#at t#e e3penses soug#t to e
recovered %rom de%endant were incurred to save vesse& and cargo %rom a common danger' T#e vesse& ran
aground in %ine weat#er inside t#e port at t#e mout# o% a river, a p&ace descried as ;ver! s#a&&ow<' ,t wou&d
t#us appear t#at vesse& and cargo were at t#e time in no imminent danger or a danger w#ic# mig#t ;rationa&&!
e soug#t to e certain and imminent'< ,t is conceiva&e t#at, i% &e%t inde%inite&! at t#e merc! o% t#e e&ements,
t#e! wou&d run t#e risk o% eing destro!ed, ut as stated, ;t#is &ast re9uirement e3c&udes measures undertaken
against a distant peri&'< ,t is t#e de&iverance %rom an immediate, impending peri&, ! a common sacri%ice, t#at
constitutes t#e essence o% genera& average' @erein, t#ere is no proo% t#at t#e vesse& #ad to e put a%&oat to save
it %rom an imminent danger' T#e vesse& #ad to e sa&vaged in order to ena&e it ;to proceed to its port o%
destination'< ,t is t#e sa%et! o% t#e propert!, and not o% t#e vo!age, w#ic# constitutes t#e true %oundation o%
genera& average'
2. Re9uisite - not present6 Car*o not in i##inent peril
7s to t#e second re9uisite, t#e e3penses in 9uestion were not incurred %or t#e common sa%et! o%
vesse& and cargo, since t#e!, or at &east t#e cargo, were not in imminent peri&' T#e cargo cou&d, wit#out need
o% e3pensive sa&vage operation, #ave een un&oaded ! t#e owners i% t#e! #ad een re9uired to do so'
. Re9uisite 36 Sacri,ice ,or $ene,it o, vessel an+ not purpose o, savin* car*o
Fit# respect to t#e t#ird re9uisite, t#e sa&vage operation was a successC #owever, as t#e sacri%ice was
%or t#e ene%it o% t#e vesse& H to ena&e it to proceed to destination H and not %or t#e purpose o% saving t#e
cargo, t#e cargo owners are not in &aw ound to contriute to t#e e3penses'
3. Re9uisite / nee+ not $e prove+ in li*)t o, circu#stances
T#e %ina& re9uisite #as not een proved, %or it does not appear t#at t#e e3penses in 9uestion were
incurred a%ter %o&&owing t#e procedure &aid down in artic&es /13 et se9'
[>]
5ustria vs. C5 (GR 1333-3! % =arc) -""")
"econd Division, Nuisuming (J): 5 concur
&acts' (n . Ju&! 1./. at around 0:22 p'm' a&ong t#e (&ongapo=6apan :oad in t#e vicinit! o% aranga!
$aetican, 1aco&or, Pampanga, 7&erto P' 7ustria was driving #is Ford Fiera wit# 12 passengers' T#e! came
%rom t#e Mani&a ,nternationa& 7irport ound to Dina&upi#an, 1ataan' (ne o% t#e ve#ic&e?s tire sudden&! #it a
stone &!ing in t#e road, w#i&e t#us cruising, w#ic# caused 7ustria to &ose contro& and co&&ide wit# t#e rear o%
an improper&! parked cargo truck trai&er driven ! :o&ando M' F&ores' 7s a resu&t o% t#e co&&ision, 4
passengers (7rmin N' Mana&ansan, M!&ene "' 6igante, +u*viminda "' Diwa, Mark "' Diwa, and Virginia
+apid Vda' de Diwa LZM) su%%ered var!ing degrees o% inAuries' F#i&e tria& ensued, accused truck driver F&ores
remained at=&arge'
7ustria and #is co=accused was c#arged in an in%ormation dated 80 7ugust 1..2' T#e in%ormation was
amended to correct&! state t#e name o% co=accused :o&ando M' F&ores, w#ic# was :o&ando Torres in t#e
origina& ,n%ormation' T#e in%ormation accused 7ustria and F&ores o% t#e crime o% reck&ess imprudence
resu&ting in @omicide and mu&tip&e p#!sica& inAuries' (n 81 Marc# 1..5, t#e tria& court promu&gated its
decision, %inding 7ustria gui&t! e!ond reasona&e, sentenced #im to su%%er an indeterminate pena&t! o%
imprisonment o% 8 mont#s and 1 da! o% arresto ma!or, as minimum, to 8 !ears, 12 mont#s and 82 da!s o%
Prision $orrecciona&, as ma3imum, and ordered 7ustria to pa! t#e #eirs o% Virginia +apid Vda' de Diwa t#e
amount o% P42,222'22 as indemnit!C P>,382'22 as and %or actua& e3penses incurred ! +u*viminda Diwa,
representing medica& and %unera& e3pensesC and cost o% suit' 7ustria %i&ed a motion %or reconsideration dated 5
7pri& 1..5' (n 12 June 1..5, t#e court modi%ied its decision, to t#e e%%ect t#at t#e $ourt %ound 7ustria gui&t!
e!ond reasona&e dout o% t#e crime o% :eck&ess ,mprudence :esu&ting in "erious P#!sica& ,nAuries,
sentenced #im to su%%er an indeterminate pena&t! o% imprisonment o% 1 mont# and 1 da! 5 mont#s o% arresto
ma!orC and ordered #im to indemni%! +u*viminda Diwa t#e amount o% P1,354'04C Mark Diwa t#e amount o%
P5,01>'31C and M!&ene 6igante t#e amount o% P>,1..'>8 as and %or actua& damages incurred' T#e court made
no pronouncement as to #is civi& &iai&it! to 7rmin Mana&ansan considering t#at t#e &atter %i&ed a separate civi&
action against 7ustria e%ore t#e :T$ o% 1ataan'
7ustria time&! appea&ed #is conviction e%ore t#e $ourt o% 7ppea&s, w#ic# a%%irmed, on 13 7ugust 1..0, t#e
&ower court?s decision wit# modi%ications t#at a straig#t pena&t! o% 1 mont# and 1 da! o% arresto ma!or %or t#e
imprisonment o% t#e accused is imposedC and t#e award in %avor o% M!&ene 6igante o% P>,1..'>8 is de&eted'
7ustria?s motion %or reconsideration was denied on 84 Marc# 1../' @ence, t#e petition %or review on
certiorari'
T#e "upreme $ourt denied t#e petition, and a%%irmed t#e assai&ed decision o% t#e $ourt o% 7ppea&sC wit# costs
against 7ustria'
1. &in+in* o, ,act o, t)e Court o, 5ppeals $in+in* an+ conclusive upon t)e Supre#e Court
7s a genera& ru&e, %indings o% %act o% t#e $ourt o% 7ppea&s are inding and conc&usive upon t#e
"upreme $ourt, and t#e $ourt wi&& not norma&&! distur suc# %actua& %indings un&ess t#e %indings o% t#e court
are pa&pa&! unsupported ! t#e evidence on record or un&ess t#e Audgment itse&% is ased on misappre#ension
o% %acts' T#e $ourt %ound no pa&pa&e %actua& error t#at wou&d warrant a reversa& o% t#e appe&&ate courts?
%actua& determination'
-. &actual ,in+in* o, t)e appellate court as to 5ustria1s ne*li*ence
T#e appe&&ate court, in determining 7ustria?s neg&igence, oserved: ;,n #is direct e3amination, t#e
appe&&ant admitted t#at #e saw t#e trai&er at a distance o% aout > meters ut at t#e same time stated t#at t#e
distance o% t#e %ocus o% t#e ve#ic&e?s #ead&ig#t in dim position was 82 meters' T#ese inconsistent statements,
taken toget#er wit# #is c&aim on cross=e3amination t#at #e saw t#e trai&er on&! w#en #e umped it, on&! s#ow
t#at #e was driving muc# %aster t#an 32 ki&ometers per #our' 7ssuming t#at #e was driving #is ve#ic&e at t#at
speed o% 32 ki&ometers per #our, appe&&ant wou&d #ave not &ost contro& o% t#e ve#ic&e a%ter it #it t#e stone
e%ore t#e co&&ision' Dnder t#ese circumstances, t#e appe&&ant did not e3ercise t#e necessar! precaution
re9uired o% #im' @e was neg&igent'<
3. 7e*li*ence o, 5ustria is i##e+iate an+ proxi#ate cause o, t)e collision6 :)oenix Construction
vs. ;5C
F#i&e t#e $ourt notes simi&arities o% t#e %actua& mi&ieu o% P#oeni3 to t#at o% t#e present case, t#e
$ourt is una&e to agree wit# 7ustria t#at t#e truck driver s#ou&d e #e&d so&e&! &ia&e' ,n P#oeni3, t#e driver
o% t#e improper&! parked ve#ic&e was &ia&e and t#e driver o% t#e co&&iding car contriutori&! &ia&e' @erein,
t#at 7ustria #ad no opportunit! to avoid t#e co&&ision is o% #is own making and t#is s#ou&d not re&ieve #im o%
&iai&it!' Patent&!, t#e neg&igence o% 7ustria as driver o% t#e Ford Fiera is t#e immediate and pro3imate cause
o% t#e co&&ision'
/. =ateriality o, #e+ical certi,icates an+ receipts presente+ as to a.ar+ o, +a#a*es to t)e <i.as
T#e materia&it! o% medica& certi%icates and receipts presented is amp&! supported ! evidence on
record' @erein, t#e award o% &iai&it! ! t#e tria& court to +u*viminda Diwa and Mark Diwa was Austi%ied
ecause t#e e3penses %or #ospita&i*ation and treatments were incurred as a direct resu&t o% t#e co&&ision caused
! t#e appe&&ant?s neg&igence' T#e %act t#at t#e doctors did not testi%! on t#e medica& certi%icates is o% no
moment' 7ppe&&ant?s counse& admitted t#eir due e3ecution and genuineness during t#e tria&'
2. 5ustria convicte+ o, reckless i#pru+ence resultin* in serious p)ysical in?uries! not si#ple
ne*li*ence
(ransportation La.! -""/ ( /// )
T#e appe&&ate court did not %ind 7ustria gui&t! o% simp&e neg&igence, it mere&! a%%irmed t#e %indings o%
t#e tria& court convicting t#e accused e!ond reasona&e dout %or t#e crime o% :eck&ess ,mprudence resu&ting
in "erious P#!sica& ,nAuries' T#e appe&&ate court on&! modi%ied t#e tria& court?s decision ! imposing t#e
straig#t pena&t! o% 1 mont# and 1 da! o% arresto ma!or and de&eted t#e award in %avor o% M!&ene 6igante in
t#e amount o% P>,1..'>8'
. 5rticle 32! Revise+ :enal Co+e
7rtic&e 3>4 o% t#e :evised Pena& $ode (,mprudence and neg&igence) provides t#at ;an! person w#o,
! reck&ess imprudence, s#a&& commit an! act w#ic#, #ad it een intentiona&, wou&d constitute a grave %e&on!,
s#a&& su%%er t#e pena&t! o% arresto ma!or in its ma3imum period to prision correcciona& in its medium periodC
i% it wou&d #ave constituted a &ess grave %e&on!, t#e pena&t! o% arresto ma!or in its minimum and medium
periods s#a&& e imposedC i% it wou&d #ave constituted a &ig#t %e&on!, t#e pena&t! o% arresto menor in its
ma3imum period s#a&& e imposed' 333 ,n t#e imposition o% t#ese pena&ties, t#e courts s#a&& e3ercise t#eir
sound discretion, wit#out regard to t#e ru&es prescried in artic&e si3t!=%our'<
3. ;#position o, strai*)t penalty vali+6 <eter#ination o, perio+s o, penalty entirely to t)e
+iscretion o, t)e court
T#e $ourt %ound not#ing oAectiona&e &ega&&! in t#e imposition o% a straig#t pena&t! o% 1 mont# and
1 da! o% arresto ma!or ! t#e appe&&ate court against 7ustria' T#e pena&t! imposed is we&& wit#in t#e &imits
%i3ed ! &aw and wit#in t#e sound discretion o% t#e respondent court as we&&' "ince t#e determination o% t#e
minimum and ma3imum periods o% t#e pena&t! as provided ! &aw is &e%t entire&! to t#e discretion o% t#e
appe&&ate court, its e3ercise o% t#at discretion wi&& not e distured on appea&, un&ess t#ere is a c&ear ause'
[1%4]
S#it) Bell vs. C5 (GR 2-%/! -" =ay 1%%1)
Bn 1anc, Fe&iciano (J): 15 concur
&acts' (n 3 Ma! 1.02, 3:42 a'm', on t#e approac#es to t#e port o% Mani&a near $aa&&o ,s&and, a co&&ision
took p&ace etween t#e M-V ;Don $ar&os,< an inter=is&and vesse& owned and operated ! $ar&os 7' 6o T#ong
and $ompan! (;6o T#ong<), and t#e M-" ;Ootai Maru,< a merc#ant vesse& o% Japanese registr!' T#e ;Don
$ar&os< was t#en sai&ing sout# ound &eaving t#e port o% Mani&a %or $eu, w#i&e t#e ;Ootai Maru< was
approac#ing t#e port o% Mani&a, coming in %rom Poe, Japan' T#e ow o% t#e ;Don $ar&os< rammed t#e
portside (&e%t side) o% t#e ;Ootai Maru< in%&icting a 3 cm' gaping #o&e on #er portside near @atc# 3, t#roug#
w#ic# seawater rus#ed in and %&ooded t#at #atc# and #er ottom tanks, damaging a&& t#e cargo stowed t#erein'
T#e consignees o% t#e damaged cargo got paid ! t#eir insurance companies'
T#e insurance companies in turn, #aving een surogated to t#e interests o% t#e consignees o% t#e damaged
cargo, commenced actions against 6o T#ong %or damages sustained ! t#e various s#ipments in t#e t#en $F,
o% Mani&a' 8 cases were %i&ed in t#e $F, o% Mani&a' T#e %irst case, $ivi& $ase /84>0, was commenced or 13
Marc# 1.01 ! "mit# 1e&& and $ompan! (P#i&ippines), ,nc' and "umitomo Marine and Fire ,nsurance
$ompan! +td', against 6o T#ong, in 1ranc# 3, w#ic# was presided over ! Judge 1ernardo P' Fernande*'
T#e second case, $ivi& $ase /844>, was %i&ed on 14 Marc# 1.01 ! "mit# 1e&& and $ompan! (P#i&ippines),
,nc' and Tok!o Marine and Fire ,nsurance $ompan!, ,nc' against 6o T#ong in 1ranc# 5, w#ic# was presided
over ! t#en Judge, &ater 7ssociate Justice o% t#is $ourt, "era%in :' $uevas' $ivi& $ases /84>0 (Judge
Fernande*) and /844> (Judge $uevas) were tried under t#e same issues and evidence re&ating to t#e co&&ision
etween t#e ;Don $ar&os< and t#e ;Ootai Maru< t#e parties in ot# cases #aving agreed t#at t#e evidence on
t#e co&&ision presented in one case wou&d e simp&! adopted in t#e ot#er' ,n ot# cases, t#e Mani&a $F, #e&d
t#at t#e o%%icers and crew o% t#e ;Don $ar&os< #ad een neg&igent, t#at suc# neg&igence was t#e pro3imate
cause o% t#e co&&ision and according&! #e&d 6o T#ong &ia&e %or damages to t#e insurance companies' Judge
Fernande* awarded t#e insurance companies P1.,//.'0. wit# &ega& interest p&us P3,222'22 as attorne!?s %eesC
w#i&e Judge $uevas awarded t#e insurance companies on two (8) c&aims D"K>/,>52'22 or its e9uiva&ent in
P#i&ippine currenc! p&us attorne!?s %ees o% P32,222'22, and P1.,1>3'28 p&us P4,222'22 as attorne!?s %ees,
respective&!'
T#e decision o% Judge Fernande* in $ivi& $ase /84>0 was appea&ed ! 6o T#ong to t#e $ourt o% 7ppea&s
($7=6: >1382=:)' T#e decision o% Judge $uevas in $ivi& $ase /844> was a&so appea&ed ! 6o T#ong to t#e
$ourt o% 7ppea&s ($7=6: >182>=:)' "ustantia&&! identica& assignments o% errors were made ! 6o T#ong in
t#e 8 appea&ed cases e%ore t#e $ourt o% 7ppea&s' ,n $7=6: >1382=:, t#e $ourt o% 7ppea&s t#roug# :e!es,
+'1', J', rendered a Decision on / 7ugust 1.0/ a%%irming t#e Decision o% Judge Fernande*' 6o T#ong moved
%or reconsideration, wit#out success'
6o T#ong t#en went to t#e "upreme $ourt on Petition %or :eview, t#e Petition (6: +=5//3.C $ar&os 7' 6o
T#ong and $ompan! v' "mit# 1e&& and $ompan! LP#i&ippinesM, ,nc', et a&')' ,n its :eso&ution dated >
Decemer 1.0/, t#e "upreme $ourt, denied t#e Petition %or &ack o% merit' 6o T#ong %i&ed a Motion %or
:econsiderationC t#e Motion was denied ! t#e "upreme $ourt on 85 Januar! 1.0.'
,n $7=6: >182>=:, t#e $ourt o% 7ppea&s, on 8> Eovemer 1./2, reversed t#e $uevas Decision and #e&d t#e
o%%icers o% t#e ;Ootai Maru< at %au&t in t#e co&&ision wit# t#e ;Don $ar&os,< and dismissed t#e insurance
companies? comp&aint' "mit# 1e&& T $o' and t#e Tok!o Marine T Fire ,nsurance $o' ,nc' asked %or
reconsideration, to no avai&' @ence, t#e petition %or review on certiorari'
T#e "upreme $ourt reversed and set aside t#e Decision o% t#e $ourt o% 7ppea&s dated 8> Eovemer 1./2 in
$7=6: >182>=:, and reinstated and a%%irmed t#e decision o% t#e tria& court dated 88 "eptemer 1.04 in its
entiret!C wit# costs against 6o T#ong'
1. =inute resolutions6 D,,ect
T#at t#e "upreme $ourt denied 6o T#ong?s Petition %or :eview in a minute :eso&ution did not in an!
wa! diminis# t#e &ega& signi%icance o% t#e denia& so decreed ! t#e $ourt' T#e "upreme $ourt is not
compe&&ed to adopt a de%inite and stringent ru&e on #ow its Audgment s#a&& e %ramed' ,t #as &ong een sett&ed
t#at t#e "upreme $ourt #as discretion to decide w#et#er a ;minute reso&ution< s#ou&d e used in &ieu o% a %u&&=
&own decision in an! particu&ar case and t#at a minute :eso&ution o% dismissa& o% a Petition %or :eview on
$ertiorari constitutes an adAudication on t#e merits o% t#e controvers! or suAect matter o% t#e Petition' ,t #as
een stressed ! t#e $ourt t#at t#e grant o% due course to a Petition %or :eview is ;not a matter o% rig#t, ut o%
sound Audicia& discretionC and so t#ere is no need to %u&&! e3p&ain t#e $ourt?s denia&' For one t#ing, t#e %acts
and &aw are a&read! mentioned in t#e $ourt o% 7ppea&s? opinion'< 7 minute :eso&ution den!ing a Petition %or
:eview o% a Decision o% t#e $ourt o% 7ppea&s can on&! mean t#at t#e "upreme $ourt agrees wit# or adopts t#e
%indings and conc&usions o% t#e $ourt o% 7ppea&s, in ot#er words, t#at t#e Decision soug#t to e reviewed and
set aside is correct'
-. Res Bu+icata6 Su$stantial i+entity o, t)e parties
T#e parties in $7=6:' >1382=: invo&ved "mit# 1e&& and $ompan! (P#i&ippines), ,nc', and "umitomo
Marine and Fire ,nsurance $o', +td' w#i&e t#e present case invo&ved "mit# 1e&& and $o' (P#i&ippines), ,nc'
and Tok!o Marine and Fire ,nsurance $o', +td' ,n ot#er words, t#ere was a common petitioner in t#e 8 cases,
a&t#oug# t#e co=petitioner in one was an insurance compan! di%%erent %rom t#e insurance compan! co=
petitioner in t#e ot#er case' T#e co=petitioner in ot# cases, #owever, was an insurance compan! and t#at ot#
petitioners in t#e 8 cases represented t#e same interest, i'e', t#e cargo owner?s interest as against t#e #u&&
interest or t#e interest o% t#e s#ipowner' More important&!, ot# cases #ad een roug#t against t#e same
de%endant, 6o T#ong, t#e owner o% t#e vesse& ;Don $ar&os'< ,n sum, $7=6: >1382=: and $7=6: >182>=:
e3#iited sustantia& identit! o% parties'
3. Res Bu+icata6 Cause o, action an+ ?u+*#ents t)e sa#e
7&t#oug# t#e suAect matters o% t#e 8 suits were not identica&, in t#e sense t#at t#e cargo w#ic# #ad
een damaged in t#e one case and %or w#ic# indemnit! was soug#t, was not t#e ver! same cargo w#ic# #ad
een damaged in t#e ot#er case indemnit! %or w#ic# was a&so soug#t' T#e cause o% action was, #owever, t#e
same in t#e 8 cases, i'e', t#e same rig#t o% t#e cargo owners to t#e sa%et! and integrit! o% t#eir cargo #ad een
vio&ated ! t#e same casua&t!, t#e ramming o% t#e ;Ootai Maru< ! t#e ;Don $ar&os'< T#e Audgments in ot#
cases were %ina& Audgments on t#e merits rendered ! t#e 8 divisions o% t#e $ourt o% 7ppea&s and ! t#e
"upreme $ourt, t#e Aurisdiction o% w#ic# #as not een 9uestioned'
/. Res Bu+icata6 5$sence o, i+entity o, su$?ect #atter +oes not preclu+e application o, res ?u+icata
Dnder t#e circumstances, t#e $ourt e&ieves t#at t#e asence o% identit! o% suAect matter, t#ere eing
sustantia& identit! o% parties and identit! o% cause o% action, wi&& not prec&ude t#e app&ication o% res Audicata'
2. Res Bu+icata6 Concepts o, @$ar $y ,or#er ?u+*#entA an+ conclusiveness o, ?u+*#entA6
(in*son vs. C5
,n Tingson v' $ourt o% 7ppea&s, t#e $ourt distinguis#ed one %rom t#e ot#er t#e 8 concepts emraced
in t#e princip&e o% res Audicata, i'e', ;ar ! %ormer Audgment< and ;conc&usiveness o% Audgment:< T#ere is no
9uestion t#at w#ere as etween t#e %irst case w#ere t#e Audgment is rendered and t#e second case w#ere suc#
Audgment is invoked, t#ere is identit! o% parties, suAect=matter and cause o% action, t#e Audgment on t#e
merits in t#e %irst case constitutes an aso&ute ar to t#e suse9uent action not on&! as to ever! matter w#ic#
was o%%ered and received to sustain or de%eat t#e c&aim or demand, ut a&so as to an! ot#er admissi&e matter
w#ic# mig#t #ave een o%%ered %or t#at purpose and to a&& matters t#at cou&d #ave een adAudged in t#at case'
T#is is designated as Gar ! %ormer Audgment'? 1ut w#ere t#e second action etween t#e same parties is upon
a di%%erent c&aim or demand, t#e Audgment in t#e prior action operates as an estoppe& on&! as to t#ose matters
in issue or points controverted, upon t#e determination o% w#ic# t#e %inding or Audgment was rendered' ,n
%ine, t#e previous Audgment is conc&usive in t#e second case, on&! as t#ose matters actua&&! and direct&!
controverted and determined and not as to matters mere&! invo&ved t#erein' T#is is t#e ru&e on Gconc&usiveness
o% Audgment? emodied in sudivision (c) o% "ection 5. o% :u&e 3. o% t#e :evised :u&es o% $ourt'<
. Res Bu+icata6 Concepts o, @$ar $y ,or#er ?u+*#entA an+ conclusiveness o, ?u+*#entA6 LopeJ
vs. Reyes
,n +ope* v' :e!es, t#e $ourt e&aorated %urt#er t#e distinction etween ar ! %ormer Audgment w#ic#
ars t#e prosecution o% a second action upon t#e same c&aim, demand or cause o% action, and conc&usiveness
o% Audgment w#ic# ars t#e re&itigation o% particu&ar %acts or issues in anot#er &itigation etween t#e same
parties on a di%%erent c&aim or cause o% action' ;T#e doctrine o% res Audicata #as two aspects' T#e %irst is t#e
e%%ect o% a Audgment as a ar to t#e prosecution o% a second action upon t#e same c&aim, demand or cause o%
action' T#e second aspect is t#at it prec&udes t#e re&itigation o% a particu&ar %act or issues in anot#er action
etween t#e same parties on a di%%erent c&aim or cause o% action' T#e genera& ru&e prec&uding t#e re&itigation
o% materia& %acts or 9uestions w#ic# were in issue and adAudicated in %ormer action are common&! app&ied to
a&& matters essentia&&! connected wit# t#e suAect matter o% t#e &itigation' T#us, it e3tends to 9uestions
Gnecessari&! invo&ved in an issue, and necessari&! adAudicated, or necessari&! imp&ied in t#e %ina& Audgment,
a&t#oug# no speci%ic %inding ma! #ave een made in re%erence t#ereto, and a&t#oug# suc# matters were
direct&! re%erred to in t#e p&eadings and were not actua&&! or %orma&&! presented' Dnder t#is ru&eC i% t#e record
o% t#e %ormer tria& s#ows t#at t#e Audgment cou&d not #ave een rendered wit#out deciding t#e particu&ar
matter, it wi&& e considered as #aving sett&ed t#at matter as to a&& %uture actions etween t#e parties, and i% a
Audgment necessari&! presupposes certain premises, t#e! are as conc&usive as t#e Audgment itse&%' :easons %or
t#e ru&e are t#at a Audgment is an adAudication on a&& t#e matters w#ic# are essentia& to support it, and t#at
ever! proposition assumed or decided ! t#e court &eading up to t#e %ina& conc&usion and upon w#ic# suc#
conc&usion is ased is as e%%ectua&&! passed upon as t#e u&timate 9uestion w#ic# is %ina&&! so&ved'?<
3. <ecision in C5>GR 13-">R conclusive as to ne*li*ence o, <on Carlos
@erein, t#e issue o% w#ic# vesse& (;Don $ar&os< or ;Ootai Maru<) #ad een neg&igent, or so neg&igent
as to #ave pro3imate&! caused t#e co&&ision etween t#em, was an issue t#at was actua&&!, direct&! and
e3press&! raised, controverted and &itigated in $7=6: >1382=:C w#ere it was %ound t#at ;Don $ar&os< to #ave
een neg&igent' T#at Decision was a%%irmed ! t#e "upreme $ourt in 6: +=5//3. in a :eso&ution dated >
Decemer 1.0/' T#e :e!es Decision t#us ecame %ina& and e3ecutor! appro3imate&! 8 !ears e%ore t#e "ison
Decision was promu&gated' 7pp&!ing t#e ru&e o% conc&usiveness o% Audgment, t#e 9uestion o% w#ic# vesse& #ad
een neg&igent in t#e co&&ision etween t#e 8 vesse&s, #ad &ong een sett&ed ! t#e "uprme $ourt $ourt and
cou&d no &onger e re&itigated in $7=6: >182>=:' 6o T#ong was certain&! ound ! t#e ru&ing or Audgment
o% :e!es, +'1', J' and t#at o% t#e "upreme $ourt'
4. Co#pro#ise +e,ine+
7 compromise is an agreement etween 8 or more persons w#o, in order to %oresta&& or put an end to a
&aw suit, adAust t#eir di%%erences ! mutua& consent, an adAustment w#ic# ever!one o% t#em pre%ers to t#e #ope
o% gaining more, a&anced ! t#e danger o% &osing more'
%. Co#pro#ise a*ree#ent not an a+#ission t)at anyt)in* is +ue! not a+#issi$le in evi+ence
a*ainst person #akin* t)e o,,er
1! virtue o% t#e compromise agreement, t#e owner o% t#e ;Ootai Maru< paid a sum o% mone! to t#e
owner o% t#e ;Don $ar&os'< Eow#ere, #owever, in t#e compromise agreement did t#e owner o% t#e ;Ootai
Maru< admit or concede t#at t#e ;Ootai Maru< #ad een at %au&t in t#e co&&ision' T#e %ami&iar ru&e is t#at ;an
o%%er o% compromise is not an admission t#at an!t#ing is due, and is not admissi&e in evidence against t#e
person making t#e o%%er'< 7n o%%er to compromise does not, in &ega& contemp&ation, invo&ve an admission on
t#e part o% a de%endant t#at #e is &ega&&! &ia&e, nor on t#e part o% a p&ainti%% t#at #is c&aim or demand is
ground&ess or even dout%u&, since t#e compromise is arrived at precise&! wit# a view to avoiding %urt#er
controvers! and saving t#e e3penses o% &itigation' ,t is o% t#e ver! nature o% an o%%er o% compromise t#at it is
made tentative&!, #!pot#etica&&! and in contemp&ation o% mutua& concessions'
1". Basis o, rule on co#pro#ises
T#e aove ru&e on compromises is anc#ored on pu&ic po&ic! o% t#e most insistent and asic kindC t#at
t#e incidence o% &itigation s#ou&d e reduced and its duration s#ortened to t#e ma3imum e3tent %easi&e'
11. 5+#inistrative procee+in*s $e,ore t)e Boar+ o, =arine ;n9uiry6 <ecision o, :CG re#ains in
e,,ect
@erein, t#e decision o% t#e (%%ice o% t#e President up#o&ding t#e e&ated reversa& ! t#e Ministr! o%
Eationa& De%ense o% t#e P$6?" decision #o&ding t#e ;Don $ar&os< so&e&! &ia&e %or t#e co&&ision, is so deep&!
%&awed as not to warrant an! %urt#er e3amination' Dpon t#e ot#er #and, t#e asic decision o% t#e P$6 #o&ding
t#e ;Don $ar&os< so&e&! neg&igent in t#e co&&ision remains in e%%ect'
1-. Rule 14 (a) o, t)e ;nternational Rules o, t)e Roa+
:u&e 1/ (a) o% t#e ,nternationa& :u&es o% t#e :oad, provides ;(a) F#en two power=driven vesse&s are
meeting end on, or near&! end on, so as to invo&ve risk o% co&&ision, eac# s#a&& a&ter #er course to staroard, so
t#at eac# ma! pass on t#e port side o% t#e ot#er' T#is :u&e on&! app&ies to cases w#ere vesse&s are meeting end
on or near&! end on, in suc# a manner as to invo&ve risk o% co&&ision, end does not app&! to two vesse&s w#ic#
must, i% ot# keep on t#eir respective course, pass c&ear o% eac# ot#er' T#e on&! cases to w#ic# it does app&!
are w#en eac# o% two vesse&s is end on, or near&! end on, to t#e ot#erC in ot#er words, to cases in w#ic#, !
da!, eac# vesse& sees t#e masts o% t#e ot#er in a &ine or near&! in a &ine wit# #er ownC and ! nig#t to cases in
w#ic# eac# vesse& is in suc# a position as to see ot# t#e side&ig#ts o% t#e ot#er' ,t does not app&!, ! da!, to
cases in w#ic# a vesse& sees anot#er a#ead crossing #er own courseC or, ! nig#t, to cases w#ere t#e red &ig#t
o% one vesse& is opposed to t#e red &ig#t o% t#e ot#er or w#ere t#e green &ig#t o% one vesse& is opposed to t#e
green &ig#t o% t#e ot#er or w#ere a red &ig#t wit#out a green &ig#t or a green &ig#t wit#out a red &ig#t is seen
a#ead, or w#ere ot# green and red &ig#ts are seen an!w#ere ut a#ead'<
13. &actors constitutin* ne*li*ence on part o, @<on CarlosA6 Rule 14 (a) o, t)e ;nternational Rules
o, t)e Roa+
T#e %irst o% t#e %actors, w#ic# are constitutive o% neg&igence on t#e part o% t#e ;Don $ar&os,< was t#e
%ai&ure o% t#e ;Don $ar&os< to comp&! wit# t#e re9uirements o% :u&e 1/ (a) o% t#e ,nternationa& :u&es o% t#e
:oad (;:u&es<)' @erein, ;Don $ar&os< was overtaking anot#er vesse&, t#e ;Don Francisco< and was t#en at
t#e staroard (rig#t side) o% t#e a%oresaid vesse& at 3'52 a'm' ,t was in t#e process o% overtaking ;Don
Francisco<? t#at ;Don $ar&os< was %ina&&! roug#t into a situation w#ere #e was meeting end=on or near&! end
=on GOotai Maru? t#us invo&ving risk o% co&&ision' For #er part, t#e ;Ootai Maru< did comp&! wit# its
o&igations under :u&e 1/ (a)' 7s t#e ;Ootai Maru< %ound #erse&% on an ;end=on< or a ;near&! end=on<
situation vis=a=vis t#e ;Don $ar&os,< and as t#e distance etween t#em was rapid&! s#rinking, t#e ;Ootai
Maru< turned staroard (to its rig#t) and at t#e same time gave t#e re9uired signa& consisting o% one s#ort #orn
&ast' T#e ;Don $ar&os< turned to portside (to its &e%t), instead o% turning to staroard as demanded ! :u&e 1/
(a)' T#e ;Don $ar&os< a&so vio&ated :u&e 8/ (c) %or it %ai&ed to give t#e re9uired signa& o% two (8) s#ort #orn
&asts meaning ;, am a&tering m! course to port'< F#en t#e ;Ootai Maru< saw t#at t#e ;Don $ar&os< was
turning to port, t#e master o% t#e ;Ootai Maru< ordered t#e vesse& turned ;#ard staroard< at 3:54 a'm' and
stopped #er enginesC at aout 3:5> a'm' t#e ;Ootai Maru< went ;%u&& astern engine'< T#e co&&ision occurred at
e3act&! 3:42 a'm'
1/. &actors constitutin* ne*li*ence on part o, @<on CarlosA6 :roper lookout
T#e second circumstance constitutive o% neg&igence on t#e part o% t#e ;Don $ar&os< was its %ai&ure to
#ave on oard t#at mig#t a ;proper &ook=out< as re9uired ! :u&e , (1)' Dnder :u&e 8. o% t#e same set o%
:u&es, a&& conse9uences arising %rom t#e %ai&ure o% t#e ;Don $ar&os< to keep a ;proper &ook=out< must e
orne ! t#e ;Don $ar&os'<
12. :roper look out +e,ine+
7 ;proper &ook=out< is one w#o #as een trained as suc# and w#o is given no ot#er dut! save to act as
a &ook=out and w#o is stationed w#ere #e can see and #ear est and maintain good communication wit# t#e
o%%icer in c#arge o% t#e vesse&, and w#o must, o% course, e vigi&ant'
1. E)o is not a proper look out
T#e G&ook=out? s#ou&d #ave no ot#er dut! to per%orm' ($#amer&ain v' Fard, 81, E'('F' >8, D'"' 45/,
401)' @e #as on&! one dut!, t#at w#ic# its name imp&ies H to keep a G&ook=out?' "o a deck#and w#o #as ot#er
duties, is not a proper G&ook=out? (1rook&!n Perr! $o' v' D'"', 188, Fed' >.>)' T#e navigating o%%icer is not a
su%%icient G&ook=out? (+arcen 1' M!rt&e, 55 Fed' 00.) H 6ri%%in on $o&&ision, pages 800=80/)' Eeit#er t#e
captain nor t#e L#e&msmanM in t#e pi&ot#ouse can e considered to e a G&ook=out? wit#in t#e meaning o% t#e
maritime &aw' Eor s#ou&d #e e stationed in t#e ridge' @e s#ou&d e as near as practica&e to t#e sur%ace o%
t#e water so as to e a&e to see &ow=&!ing &ig#ts (6ri%%in on $o&&ision, page 803)' @erein, it is #ard&!
proa&e t#at neit#er 6erman or +eo Bnri9ue* ma! 9ua&i%! as G&ook=out? in t#e rea& sense o% t#e word' T#e
%ai&ure o% t#e ;Don $ar&os< to recogni*e in a time&! manner t#e risk o% co&&ision wit# t#e ;Ootai Maru<
coming in %rom t#e opposite direction, was at &east in part due to t#e %ai&ure o% t#e ;Don $ar&os< to maintain a
proper &ook=out'
1/. &actors constitutin* ne*li*ence on part o, @<on CarlosA6 Secon+ =ate in co##an+
T#e t#ird %actor constitutive o% neg&igence on t#e part o% t#e ;Don $ar&os< re&ates to t#e %act t#at
"econd Mate 1enito 6erman was, immediate&! e%ore and during t#e co&&ision, in command o% t#e ;Don
$ar&os,< a&t#oug# its captain, $aptain :ivera, was ver! muc# in t#e said vesse& at t#e time' T#ere was no
e3p&anation as to w#! t#e second mate was at t#e #e&m o% t#e a%oresaid vesse& w#en $aptain :ivera did not
appear to e under an! disai&it! at t#e time' T#e %act t#at second mate 6erman was a&&owed to e in
command o% GDon $ar&os? and not t#e c#ie% or t#e sai&ing mate in t#e asence o% $aptain :ivera, gives rise to
no ot#er conc&usion e3cept t#at said vesse& #ad no c#ie% mate' Forst sti&& aside %rom 6erman?s eing on&! a
(ransportation La.! -""/ ( //% )
second mate, is #is apparent &ack o% su%%icient know&edge o% t#e asic and genera&&! esta&is#ed ru&es o%
navigation (e'g' necessit! o% &ook=out)' T#ere is, t#ere%ore, ever! reasona&e ground to e&ieve t#at #is
inai&it! to grasp actua& situation and t#e imp&ication roug#t aout ! inade9uac! o% e3perience and
tec#nica& know=#ow was main&! responsi&e and decided&! accounted %or t#e co&&ision o% t#e vesse&s invo&ved
in t#e case'
12. 7o exclusive o$li*ation upon one o, t)e vessels to avoi+ t)e collision
1! imposing an e3c&usive o&igation upon one o% t#e vesse&s, t#e ;Ootai Maru,< to avoid t#e co&&ision,
t#e $ourt o% 7ppea&s not on&! c#ose to over&ook a&& t#e aove %acts constitutive o% neg&igence on t#e part o%
t#e ;Don $ar&osC< it a&so in e%%ect used t#e ver! neg&igence on t#e part o% t#e ;Don $ar&osC< to aso&ve it %rom
responsii&it! and to s#i%t t#at responsii&it! e3c&usive&! onto t#e ;Ootai Maru< t#e vesse& w#ic# #ad oserved
care%u&&! t#e mandate o% :u&e 1/ (a)'
1. Frrutia vs. Baco River :lantation not applica$le
T#e case o% 6' Drrutia and $ompan! v' 1aco :iver P&antation $ompan! is simp&! inappropriate and
inapp&ica&e' For t#e co&&ision in t#e Drrutia case was etween a sai&ing vesse&, on t#e one #and, and a power=
driven vesse&, on t#e ot#erC t#e :u&es, o% course, imposed a specia& dut! on t#e power=driven vesse& to watc#
t#e movements o% a sai&ing vesse&, t#e &atter eing necessari&! muc# s&ower and muc# &ess maneuvera&e t#an
t#e power=driven one' @erein, ot# t#e ;Don $ar&os< and t#e ;Ootai Maru< were power=driven and ot# were
e9uipped wit# radarC t#e ma3imum speed o% t#e ;Ootai Maru< was t#irteen (13) knots w#i&e t#at o% t#e ;Don
$ar&os< was e&even (11) knots' Moreover, as a&read! noted, t#e ;Ootai Maru< precise&! took &ast minute
measures to avert co&&ision as it saw t#e ;Don $ar&os< turning to portside: t#e ;Ootai Maru< turned ;#ard
staroard< and stopped its engines and t#en put its engines ;%u&& astern'<
[1%%]
=anila vs. 5tlantic Gul, an+ :aci,ic Co. (GR /21"! 1% <ece#$er 1%"4)
Bn 1anc, Trace! (J): > concur
&acts' (n 82 Eovemer 1.2>, T#e cit!?s &aunc# Jan, towing si3 sma&& scows up t#e :iver Pasig at "anta 7na
came into co&&ision wit# a &arge &ig#ter, #eavi&! &aden, towed ! t#e &aunc# (riente o% 7t&antic, 6u&% T Paci%ic
$o' "#e was run aground wit# #er %rame near t#e port ow smas#ed in' T#e $it! o% Mani&a %i&ed an action %or
damages against t#e compan!' T#e $F, o% Mani&a awarded t#e cit! P1,282'42 damages %or inAuries to a &aunc#
in a co&&ision' 7t&antic 6u&% appea&ed'
T#e "upreme $ourt T#e Audgment o% t#e $ourt o% First ,nstance is a%%irmed, wit# t#e costs o% t#is instance' "o
ordered'
1. (esti#onies o, t)e parties1 .itnesses as to t)e antece+ents to t)e collision
,t is proved t#at t#e Jan carried &ig#tsC t#at ot# s#e and t#e scows s#e was towing were proper&!
manned, and according to t#e testimon! o% t#e cit!?s witnesses as soon as t#e! saw t#e &ig#t a#ead o% t#e
(riente t#eir w#ist&e was &own and on receiving an answering w#ist&e, in order to avoid a s#ock, t#e! veered
to staroard, &eaving t#e c#anne& and running into s#oa& water' 7t&antic 6u&%?s witnesses admit t#at t#e! saw
t#e Jan and its tow wit# t#e &ig#ts t#ereon and &ew t#eir own w#ist&e, ut sa! t#at t#e! did not #ear an!
w#ist&e %rom t#e ot#er &aunc#, w#ic# kept t#e midd&e o% t#e streamC t#at t#eir oat was a&so put to staroard
and t#e &aunc#es success%u&&! passed one anot#er, ut t#eir scow in tow, eing s&ow in c#anging direction,
struck against t#e Jan, and t#e! c&aim t#at t#e! did a&& in t#eir power to avoid a co&&ision in=view o% t#e
di%%icu&t! o% contro&&ing t#e oat on t#eir course downstream' ,t appears t#at t#is tow was secured to t#eir
&aunc# ! a sing&e ca&e, %orking in t#e s#ape o% t#e &etter ;O< so t#at eac# end was %astened to one side o% t#e
&ig#ter'
-. Dxpert .itnesses1 testi#ony6 Boat a*ainst current 9uicker to #in+ )er )el#! etc.
T#e testimon! o% e3pert witnesses s#ows, and it is indeed o% common know&edge, t#at a oat going
against t#e current is 9uicker to mind #er #e&m t#an one orne a&ong ! it, and t#e cit!?s e3pert a&so testi%ied
t#at w#ereas in ocean tows severa& ca&es were used, on t#e :iver Pasig it was customar! to emp&o! ut one
in order to &eave t#e vesse& under tow greater %reedom o% movement and t#ere%ore etter se&%=contro&'
3. 7o i#portance as to c)aracter o, captain1s per#it
T#e $ourt attac#ed no importance to t#e c#aracter o% t#e permit o% t#e (riente?s captain as a cause o%
t#e accident'
/. <eter#ination o, location o, $oats not necessary
@erein, 7t&antic 6u&% #as soug#t to s#ow ! witnesses t#at t#e c#anne& was so ostructed ! a oat
a&ongside eac# ank a s#ort distance %rom t#e scene o% t#e accident t#at it was impossi&e %or t#e (riente and
its tow to so maneuver as to escape t#e s#ock, ut t#e testimon! o% t#ese witnesses is not de%inite as to t#e
&ocation o% t#ese oats at t#e time o% t#e accident, nor does t#e conse9uence soug#t to e deduced %rom t#eir
&ocation, i% proved, appear to t#e $ourt a necessar! one'
2. Lack o, ru++er or any person to +irect $oat +eprive control o, t)e sco.1s #ove#ent
7oard t#is &ig#ter t#ere was no &ig#t, t#ere was no crew, and it seems t#ere was no rudder' T#e
asence o% t#e &ig#t ma! not #ave contriuted to t#e accident, ut t#e &ack o% a rudder and o% an! person to
direct t#e oat so c&ear&! deprived it o% contro& o% its own movements t#at we are satis%ied t#at w#en under
tow o% t#e %orked rope it was not #andi&! managea&e' T#ere%ore, instead o% %o&&owing appro3imate&! in t#e
wake o% t#e &aunc#, it struck out on a tangent t#ereto, t#us causing t#e co&&ision' ,n %ine, t#e accident occurred
%or t#e reason t#at t#e scow o% t#e de%endant was unmanagea&e ecause s#e was not proper&! provided wit#
#e&m and steersman'
[-""]
=arine (ra+in* vs. Govern#ent (GR 13/--! 4 7ove#$er 1%14)
Bn 1anc, Ma&co&m (J): 4 concur
&acts' (n 12 7ugust 1.14, t#e Marine Trading $o' ,nc' owned a &aunc# named 7ctive and t#e 6overnment o%
t#e P#i&ippine ,s&ands owned a &aunc# named 1o#o&' 1ot# &aunc#es were in use upon t#e Pasig :iver in t#e
cit! o% Mani&a' 7out /:22 a'm' o% said date, in t#e Pasig :iver, e&ow and near t#e ridge o% "pain, t#e
&aunc# 1o#o& was towing up t#e river two rudder&ess scows or &ig#ters, one e#ind t#e ot#er' T#e scow
nearest t#e &aunc# was aout 4 meters e#ind, was empt!, and was #ig# in t#e water' T#e second &ig#ter was
tied to t#e rear o% t#e %irst one, wit# a distance o% aout 8 meters intervening, was &oaded, and was &ower in
t#e water' T#e 7ctive was coming down t#e river %rom Pandacan toward Mani&a 1a!' T#e patron o% t#e 7ctive
&ew one &ast o% #is w#ist&e, and t#e patron o% t#e 1o#o& answered wit# one w#ist&e, w#ic# indicated t#at t#e
7ctive #ad a c&ear wa! and s#ou&d pass to staroard' F#en under t#e ridge o% "pain, t#e 7ctive passed t#e
1o#o& and t#e %irst scow towed ! it' 1ut w#en t#e 7ctive was aout to pass t#e second scow, t#e &atter
swerved to t#e &e%t, and its %orward &e%t end corner struck t#e 7ctive on t#e port side etween t#e cain and t#e
ow wit# suc# %orce and impact t#at t#e &aunc# sank immediate&!' T#e 7ctive was in good condition and state
o% operation e%ore t#e co&&ision occurred' T#e &aunc# was so serious&! damaged ! t#e co&&ision and t#e
sinking t#at it took t#e sum o% P.,>00 to repair it'
7ct 8>32 empowered t#e Marine Trading to ring action in t#e F, o% Mani&a to determine t#e responsii&it!
and &iai&it! %or a co&&ision etween its &aunc# 7ctive and a scow towed ! t#e 6overnment &aunc# 1o#o&, and
to %i3 t#e damages, i% an!, to w#ic# t#e %ormer is entit&ed on account o% t#e co&&ision' 7cting under t#is
aut#orit!, t#e Marine Trading $ompan! egan action to recover as damages %rom t#e 6overnment o% t#e
P#i&ippine ,s&ands t#e sum o% P.,>00, wit# interest and costs, ecause o% t#e reck&ess and neg&igent acts o% t#e
6overnment?s agent and emp&o!ee' T#e 7ttorne!=6enera& interposed a genera& denia&' Judgment was rendered
! t#e @onora&e 6eorge :' @arve!, Audge o% %irst instance, %or t#e amount pra!ed %or ! t#e compan!, wit#
&ega& interest %rom 84 "eptemer 1.1>, t#e date o% %i&ing t#e comp&aint, and costs o% suit'
T#e "upreme $ourt a%%irmed t#e Audgment appea&ed %rom, wit# t#e modi%ication %or t#e de&etion o% t#e
interest and costsC wit#out specia& %inding as to costs in t#is instance'
1. 5pplica$le provisions o, la.
T#e app&ica&e provisions o% &aw are %ound in 7rtic&es /8>, /80, /8/, and /32 o% t#e $ode o%
$ommerce, and in t#e P#i&ippine Marine :egu&ations issued ! t#e ,nsu&ar $o&&ector o% $ustoms' T#ese
provisions o% &aw and t#ese regu&ations, in re&ation to t#e %acts, present t#e issue o% w#et#er or not t#e
accident occurred t#roug# t#e neg&igence o% t#e 1o#o& on&!, or w#et#er ot# &aunc#es can e &amed %or t#e
co&&ision' ,% t#e %irst e t#e #o&ding, t#en, under t#e &aw, Marine Trading $o' can recover' ,% t#e second e t#e
resu&t, Marine Trading $o' cannot recover' @erein, neg&igence was attriuta&e on t#e part o% t#e patron o% t#e
1o#o& in operating #is &aunc# and t#e scow in suc# a wa! as to endanger t#e 7ctive and its occupants' T#ere
was no neg&igence on t#e part o% t#e patron o% t#e 7ctive'
-. Dvi+ence +e#onstratin* ne*li*ence o, Bo)ol
Eeg&igence on t#e part o% t#e 1o#o& is demonstrated ! t#e %o&&owing: (1) T#e patron o% t#e 1o#o&
gave t#e w#ist&e w#ic# indicated t#at t#e 7ctive #ad a c&ear wa! and s#ou&d pass to t#e staroard, and did not
give %our &asts o% t#e w#ist&e in 9uick succession in order to denote danger' (8) T#e two scows in tow ! t#e
1o#o& were apparent&! not proper&! %astened toget#er, as re9uired ! "ection 1.0 o% t#e P#i&ippine Marine
:egu&ations' (3) T#e two &aunc#es passed eac# ot#er under t#e ridge o% "pain, and t#e 1o#o&, instead o%
steering so as to avoid danger o% a co&&ision etween t#e 7ctive and its scows, kept its course and crowded t#e
7ctive a&most against a uo!' F#i&e, in accordance wit# paragrap# 1>3 o% t#e P#i&ippine Marine :egu&ations,
steam vesse&s towing #ave t#e rig#t o% wa! over steam vesse&s not towing t#is does not mean t#at t#e vesse&
wit# a tow can usurp t#e entire river so as to %orce anot#er vesse& into t#e ank' ,n con%ormit! wit# t#e
doctrine cited ! appe&&ant, t#at t#e pre%erred steamer wi&& not e #e&d in %au&t %or maintaining #er course and
speed, t#is is on&! true so &ong as it is possi&e %or t#e ot#er vesse& to avoid #er ! t#e proper maneuver'
3. State never pays interest an+ costs until it expressly en*a*es to +o so
T#e "tate (in t#is Aurisdiction, t#e 6overnment o% t#e P#i&ippine ,s&ands) never pa!s interest un&ess it
e3press&! engages to do so' T#is is especia&&! true in case t#e c&aim is an un&i9uidated one' 7mong ot#er
aut#orities, it was #e&d in 7ngarica vs' 1a!ard (L1///M, 180 D'"', 841) t#at ;t#e Dnited "tates are not &ia&e to
pa! interest on c&aims against t#em, in t#e asence o% e3press statutor! provision to t#at e%%ect' ,t #as een
esta&is#ed, as a genera& ru&e, in t#e practice o% t#e government, t#at interest is not a&&owed on c&aims against
it, w#et#er suc# c&aims originate in contract or in tort, and w#et#er t#e! arise in t#e ordinar! usiness o%
administration or under private acts o% re&ie%, passed ! $ongress on specia& app&ication' T#e on&! recogni*ed
e3ceptions are w#ere t#e government stipu&ates to pa! interest and w#ere interest is given e3press&! ! an 7ct
o% $ongress, eit#er ! t#e name o% interest or ! t#at o% damages'< T#e ru&e is e9ua&&! we&& esta&is#ed t#at
t#e "tate is not &ia&e %or costs un&ess t#e statute e3press&! makes it so' T#ere%ore, 7ct 8>32 on&! aut#ori*ed
t#e court to %i3 t#e damages i% an!, and to enter Audgment according&!' Dn&ess damages can e interpreted to
inc&ude interest and costs, p&ainti%% cannot recover t#e same' T#is appearing to e a strained interpretation, t#e
$ourt #o&ds to t#e view t#at since t#e government #as not stipu&ated to pa! interest or costs, t#e courts s#ou&d
not inc&ude t#ese items in t#e Audgment'
[>], also [F a2ter 3!0]
5. Frrutia M Co. vs. Baco River :lantation (GR 332! -2 =arc) 1%13)
First Division, More&and (J): 3 concur
&acts' Euestra "enora de& Pi&ar, owned ! 7' Drrutia T $o' and t#e sc#ooner Mang!an, owned ! 1aco
:iver P&antation $o', co&&ided in t#e ear&! morning o% / 7pri& 1.12, in Verde ,s&and Eort# Passage' T#e sai&
vesse& was sai&ing wit# a %res# ree*e dead astern, #er sai&s wing and wing' T#e steamer was seen ! t#ose on
oard t#e sai&ing vesse& some time e%ore t#e actua& co&&ision, sai&ing erratica&&!' T#e sai& vesse& kept #er
course stead! unti& Aust e%ore t#e actua& contract w#en #er #e&msman t#rew #er #ard to port in an e%%ort to
avoid t#e co&&ision' T#e movement, #owever, was unsuccess%u& and t#e sai& vesse& rammed t#e steamer sank
and / &ives were &ost' T#e sai& vesse& was considera&! inAured'
7n action was roug#t ! t#e owners o% t#e steams#ip against t#e owners o% t#e sai& vesse&, to recover t#e
va&ue o% t#e destro!ed steamer and t#e damages caused ! reason o% its destruction, a&&eging as a asis
t#ere%ore t#e neg&igence o% t#e sai& vesse&' 1aco :iver P&antation denied t#e materia& a&&egations o% t#e
comp&aint and set up a counterc&aim %or damages, a&&eging as grounds t#ere%ore t#at t#e inAuries sustained !
t#e sai& vesse& were due to t#e gross neg&igence o% t#ose #and&ing Drrutia?s steamer' 1e%ore t#e action was
tried, M' 6ar*a made an app&ication to intervene under t#e provisions o% section 181 o% t#e $ode o% $ivi&
Procedure, #e a&&eging in support o% #is app&ication t#ousand pesos? wort# o% merc#andise as %reig#t, w#ic#
was &ost as a resu&t o% t#e co&&ision' T#e case turns upon t#e 9uestion w#ic# o% t#e vesse&s was neg&igence in
%ai&ing to con%orm to t#e ,nternationa& :u&es %or t#e Prevention o% $o&&isions at "ea' T#e tria& court %ound t#at
t#ose managing t#e steamer were gui&t! o% gross neg&igence and t#at %or t#at reason Drrutia cou&d recover
not#ing' T#e tria& court a&so %ound t#at 1aco :iver P&antation contriuted neg&ect to t#e co&&ision, and t#us
was not &ikewise entit&ed to recover %rom t#e ot#er an! damages w#ic# ma! #ave occurred' @ence, t#e appea&'
T#e "upreme $ourt a%%irmed Audgment o% t#e tria& court in so %ar as it %inds against Drrutia and t#e intervenerC
and reversed and cause remanded as to t#at portion w#ic# dismisses t#e counterc&aim o% t#e 1aco :iver
P&antation $ompan!, wit# instructions to t#e tria& court to enter Audgment in %avor o% 1aco :iver P&antation,
and against 6' Drrutia T $ompan!, %or t#e sum o% P5,212'.., and costs' Eo costs on t#is appea&'
1. 5rticle -" o, t)e ;nternational Rules ,or t)e :revention o, Collisions at Sea
7rtic&e 82 o% t#e ,nternationa& :u&es %or t#e Prevention o% $o&&isions at "ea is as %o&&ows: ;,% two
s#ips, one o% w#ic# is a sai&ing s#ip and t#e ot#er as steam s#ip, are proceeding in suc# directions as to
invo&ve risk o% co&&ision, t#e steam s#ip s#a&& keep out o% t#e wa! o% t#e sai&ing s#ip'<
-. 5rticle -1 o, t)e ;nternational Rules ,or t)e :revention o, Collisions at Sea
7rtic&e 81 is as %o&&ows: ;F#ere ! an! o% t#ese ru&es one o% two vesse&s is to keep out o% t#e wa!, t#e
ot#er s#a&& keep #er course and speed'<
3. ()ree +ivisions o, ti#e or Jones in a collision
6enera&&! speaking, in co&&isions etween vesse&s t#ere e3ist t#ree divisions o% time, or *ones: T#e
%irst division covers a&& t#e time up to t#e moment w#en t#e risk o% co&&ision ma! e said to #ave egun'
Fit#in t#is *one no ru&e is app&ica&e ecause none is necessar!' Bac# vesse& is %ree to direct its course as it
deems est wit#out re%erence to t#e movements o% t#e ot#er vesse&' T#e second division covers t#e time
etween t#e moment w#en t#e risk o% co&&ision egins and t#e moment w#en it #as ecome a practica&
certaint!' T#e t#ird division covers t#e time etween t#e moment o% actua& contact'
/. Drror in extri#is
@erein, it was during t#e time w#en t#e sai& vesse& was passing t#roug# t#e t#ird *one t#at it c#anged
its course to port in order to avoid, i% possi&e, t#e co&&ision' T#is act ma! e said to #ave een done in
e3tremis, and, even i% wrong, t#e sai&ing vesse& is not responsi&e %or t#e resu&t'
2. :resu#ption a*ainst stea# vessel6 Golu#e -2 o, t)e 5#erican an+ Dn*lis) Dncyclope+ia o,
La.! pa*e %-
T#e ru&e re&ative to t#e presumption %avoring sai& vesse&s is conservative&! stated in vo&ume 84 o% t#e
7merican and Bng&is# Bnc!c&opedia o% +aw, page .8>: ;"uAect to t#e genera& ru&es o% evidence in co&&ision
cases as to t#e urden o% proo%, in t#e case o% a co&&ision etween a steam vesse& and a sai& vesse&, t#e
presumption is against t#e steam vesse&, and s#e must s#ow t#at s#e took t#e proper measures to avoid a
co&&ision'<
. Hu*)es! on 5+#iralty6 Stea#er #ust keep out o, .ay o, sail vessel
@ug#es on 7dmira&t!, page 858, dec&ares t#e &aw t#us: ;7 steamer must keep out o% t#e wa! o% a sai&
vesse&' ,n doing so s#e must a&&ow t#e sai& vesse& a wide ert# 7 steamer ma! take #er own met#od o% passing
a sai& vesse&' T#e mere approac# o% t#e two vesse&s does not ring aout risk o% co&&ision' T#e steamer ma!
assume t#at t#e sai& vesse& wi&& do #er dut! and do not#ing to emarrass #er' @ence t#e steamer ma! s#ape #er
course so as to avoid t#e sai& vesse&'<
3. Hu*)es! on 5+#iralty6 Drror in extri#is
T#e ru&e t#at vesse& ma! eac# assume t#at t#e ot#er wi&& oe! t#e &aw is one o% t#e most important in
t#e &aw o% co&&ision' Fere it ot#erwise and were vesse&s re9uired to take a&& sorts o% measures to keep out o%
t#e wa!, w#en t#e! are not in eac# ot#er?s wa!, navigation wou&d e impossi&e' T#ere is, #owever, one
important 9ua&i%ication w#ic# must e orne in mind' ,t is t#at a steamer must not approac# so near a sai&ing
vesse&s, and on suc# a course as to a&arm a man o% ordinar! ski&& and prudence' ,% t#e man on t#e sai&ing
vesse& makes an improper maneuver, #e is not responsi&e' ,t is w#at is ca&&ed an Gerror in e3tremis'? T#e
&eading case on t#e suAect is T#e +uci&&e (14 Fa&&ace, >0>)' ,n t#at case a steamer and sc#ooner were
approac#ing on converging courses on&! #a&% a point apart, so t#at t#e! wou&d #ave come wit#in t#irt! !ards
o% eac# ot#er, and t#at in $#esapeake 1a!' T#e court #e&d t#at t#is was too c&ose and condemned t#e steamer'<
4. Hu*)es! on 5+#iralty6 Gessel .it) ri*)t o, .ay o$li*ate+ to pursue )er course
(n page 854 t#e same aut#or sa!s ;7rtic&e 81 renders it o&igator! on t#e vesse& w#ic# #as t#e rig#t
o% wa! to pursue #er course' "#e must re&! on t#e ot#er vesse& to avoid t#e co&&ision and not emarrass #er !
an! maneuver' 7&& s#e need do is to do not#ing' T#en t#e ot#er vesse& knows w#at to e3pect and navigates
according&!' ,n co&&isions etween steam and sai& vesse&s t#e steamer?s de%ense is a&most invaria&! t#at t#e
sai& vesse& c#anged #er course'<
%. Hu*)es! on 5+#iralty6 Rules o, navi*ation i#perative
(n page 844 o% t#e same work appears t#e %o&&owing ;,n T#e $&ara Davidson (58 Fe', 0>3), t#e
court said: ;1ut , do not %ind m!se&% at &iert! to ignore t#e in9uir! w#et#er a statutor! ru&e o% navigation was
vio&ated ! t#e sc#ooner' T#ese ru&es are t#e &aw o% &aws in cases o% co&&ision' T#e! admit o% no option or
c#oice' Eo navigator is at &iert! to set up #is discretion against t#em' ,% t#ese ru&es were suAect to t#e
caprice or e&ection o% master and pi&ots, t#e! wou&d e not on&! use&ess, ut worse t#an use&ess' T#e ru&es are
imperative' T#e! !ie&d to necessit!, indeed, ut on&! to actua& and ovious necessit!' ,t is not stating t#e
princip&es too strong&! to sa! t#at not#ing ut imperious necessit! or some overpowering vis maAor wi&&
e3cuse a sai& vesse& in c#anging #er course w#en in t#e presence o% a steamer in motion'? ;
1". Spencer! on =arine Collisions6 @to keep out o, t)e .ayA construe+
"pencer on Marine $o&&isions, page 145, sa!s ;T#e duties imposed upon vesse&s are o% a mutua&
c#aracterC and w#ere t#e statute directs on to give wa! to t#e ot#er, it imposes an e9ua& dut! upon t#e &atter to
continue to its wou&d e %or t#e ot#er to re%use to !ie&d t#e rig#t o% wa!' ,t is one o% t#e conditions o% t#e dut!
Gto keep out o% t#e wa!,? t#at t#e vesse& s#a&& act inte&&igent&!, and a%%ord reasona&e evidence o% #er intentionC
w#i&e it is dout%u& w#at t#e ot#er wi&& do, t#e %ormer s#ou&d #o&d #er course' +ike a&& ot#er ru&es %or t#e
prevention o% co&&isions at sea, t#ere ma! e specia& circumstances w#ic# wou&d warrant a s#ip in departing
%rom #er course, w#ere co&&ision appears inevita&e ! pursuing itC indeed, it is no ot#er a&ternative, a vesse&
s#ou&d #o&d #er course w#en in a position re9uired to do so ! t#e statute'<
11. Spencer! on =arine Collisions6 <uty to keep course not a privile*e con,erre+ $ut an o$li*ation
i#pose+
(n page 1/1 t#e same aut#or sa!s: ;T#e dut! o% one vesse& to keep #er course is not intended ! t#e
ru&es as a privi&ege con%erred, ut as a o&igation imposed, in order to ena&e t#e ot#er vesse& wit# certain&!
t#at t#e ot#er is not doing #er dut!, and t#at t#e situation imperative&! demands a departure %orm t#e ru&es' ,t
is t#e dut! o% t#e vesse& re9uired to keep out o% t#e wa! to give an ear&! and inte&&igi&e e3pression o% #er
intentions to do soC and w#i&e t#ere is an! dout as to w#at #er actions wi&& e, t#e vesse& re9uired to #o&d #er
course ma! presume t#at t#e ot#er wi&& act inte&&igent&! and &aw%u&&!, and s#e s#ou&d #o&d #er course unti& t#e
contrar! appears' ,t is no e3cuse %or a vesse& taking a course %oridden ! &aw t#at t#e un&aw%u& course was
t#e est one'<
1-. 5#erican an+ Dn*lis) Dncyclope+ia o, la.6 Sail vessel ?usti,ie+ to )ol+ course to t)e last
#inute possi$le ,n t#e 7merican and Bng&is# Bnc!c&opedia o% &aw (vo&' 84, p' .84) t#e ru&e is
stated as %o&&ows: ;1ut it must e a strong case w#ic# puts t#e sai& vesse& in t#e wrong %or oe!ing t#e ru&e to
#o&d #er course, %or t#e court must c&ear&! see, not on&! t#at a deviation %rom t#e ru&e wou&d #ave prevented
t#e co&&ision, ut t#at t#e o%%icer in c#arge o% t#e sai& vesse& was gui&t! o% neg&igence or a cu&pa&e want o%
seamans#ip in not perceiving t#e necessit! %or a departure %orm t#e ru&e and acting according&!' T#e sai&
vesse& is Austi%ied in #o&ding #er course to t#e &ast minute possi&e %or t#e steams#ip to avoid #er ! making
t#e necessar! maneuver'<
13. St Bo)n vs. :aine
,n t#e case o% "t' Jo#n vs' Paine (12 @ow', 440), t#e co&&ision was etween a sc#ooner and a steamer'
T#e $ourt #e&d t#erein: ;7s a genera& ru&e, t#ere%ore, w#en meeting a sai&ing vesse&, w#et#er c&ose #au&ed or
wit# t#e wind %ree, t#e &atter #as a rig#t to keep #er course, and it is t#e dut! o% t#e steamer to adopt suc#
precautions as wi&& avoid #er' 1! an ad#erence to t#is ru&e on t#e part o% t#e sai&ing vesse& t#e steamer wit#
proper &ookout wi&& e ena&ed, w#en approac#ing in an opposite direction, to adopt t#e necessar! measures to
avoid t#e danger, and s#e wi&& #ave a rig#t to assume t#at t#e sai&ing vesse& wi&& keep #er course' ,% t#e &atter
%ai&s to do t#is, t#e %au&t wi&& e attriuta&e to #er, and t#e master o% t#e steamer wi&& e responsi&e on&! %or
as %air e3ertion o% t#e power o% #is vesse& to avoid t#e co&&ision under une3pected c#ange o% t#e course o% t#e
ot#er vesse&, and t#e circumstances o% t#e case'<
1/. ()e Genesse C)ie, vs. &itJ)u*)
T#e 6enesee $#ie% vs' Fit*#ug# (18 @ow', 553) pertains to a co&&ision etween a steamer, T#e
6enesee $#ie%, and a sai& vesse&' T#e two watc#ed eac# ot#er %or some time e%ore t#e co&&ision' T#e sai&ing
vesse& kept #er course unti& in e3tremis w#en s#e made a wrong maneuver' T#e court said: ;T#e steamoat
#ad t#e entire command o% #er course and a wide water, ! w#ic# s#e mig#t #ave passed t#e $ua on eit#er
side, and at a sa%e distance' "#e was going at t#e rate o% eig#t mi&es an #our' 7nd i% proper care #ad een taken
on oard t#e 6enesee $#ie%, a%ter t#e sc#ooner was %irst seen, it wou&d seem to e a&most impossi&e t#at a
co&&ision cou&d #ave #appened wit# a vesse& moving so s&ow&! and s&uggis#&! t#roug# t#e water even i% s#e
was care&ess&! or inAudicious&! managed' T#ere was no necessit! %or passing so near #er as to create t#e
#a*ard' T#e steamoat cou&d c#oose its own distance' 7nd t#e captain and crew o% t#e $ua appear to #ave
een watc#%u& and attentive %rom t#e time t#e prope&&er was discovered' Eor do we deem it materia& to in9uire
w#et#er t#e order o% t#e captain at t#e moment o% co&&ision was Audicious or not' @e saw t#e steamoat
coming direct&! upon #imC #er speed not diminis#edC nor an! measures taken to avoid a co&&ision' 7nd i%, in
t#e e3citement and a&arm o% t#e moment, a di%%erent order mig#t #ave een more %ortunate, it was t#e %au&t o%
t#e prope&&er to #ave p&aced #im a situation w#ere t#ere was no time %or t#oug#tC and s#e is responsi&e %or
t#e conse9uences' "#e #ad t#e power to #ave passed at a sa%er distance, and #as no rig#t to p&ace t#e sc#ooner
in suc# Aeopard!, t#at t#e error o% a moment mig#t cause #er destruction, and endanger t#e &ives o% t#ose on
oard' 7nd i% an error was committed under suc# circumstances it was not a %au&t'<
12. ()e 8tta.a
,n t#e case o% T#e (ttawa (3 Fa&&', 8>.), t#e court said: ;:u&es o% navigation are o&igator! %rom t#e
time t#e necessit! %or precaution egins, and continue to e app&ica&e as t#e vesse&s advance, so &ong as t#e
means and opportunit! to avoid t#e danger remainC ut t#e! do not app&! to a vesse& re9uired to keep #er
course a%ter t#e approac# is so near t#at t#e co&&ision is inevita&e, and are e9ua&&! inapp&ica&e to vesse&s o%
ever! description w#i&e t#e! are !et so distant %rom eac# ot#er t#at measures o% precaution #ave not ecome
necessar!'<
1. E)at rules apply in t)e t)ree Jones
,n t#e %irst *one no ru&es app&!' ,n t#e second t#e urden is on t#e vesse& re9uired to keep awa! and
void t#e danger' T#e t#ird *one covers t#e period in w#ic# errors in e3tremis occurC and t#e ru&e is t#at t#e
vesse& w#ic# #as %orced t#e privi&eged vesse& into danger is responsi&e even i% t#e privi&eged vesse& #as
committed an error wit#in t#at *one'
13. Lucille vs. Respass6 <uty o, t)e sailin* vessel to keep )er course
T#e dut! o% t#e sai&ing vesse& to keep #er course is we&& e3emp&i%ied in t#e &eading case o% t#e +uci&&e
vs' :espass (14 Fa&&', >0>), w#ic# was a co&&ision etween a sc#ooner and a steamer' 1ot# vesse&s saw eac#
ot#er in time to #ave avoided t#e co&&isions' ;T#e princip&es o% &aw app&ica&e to t#e case are we&& sett&ed'
T#e! are not disputed ! eit#er part!' ,n t#e case o% T#e $arro& (/ Fa&&', 328), it is t#us &aid down, GEautica&
ru&es re9uire t#at w#ere a steams#ip and sai&ing vesse& are approac#ing eac# ot#er %rom opposite directions, or
on intersecting &ine, t#e steams#ip %rom t#e moment t#e sai&ing vesse& is seen, s#a&& watc# wit# t#e #ig#est
di&igence #er course and movements so as to e a&e to adopt suc# time&! means o% precaution as wi&&
necessari&! prevent t#e two oats %rom coming in contract' Fau&t on t#e part o% t#e sai&ing vesse& at t#e
moment preceding a co&&ision does not aso&ve a steamer w#ic# #as su%%ered #erse&% and a sai&ing vesse& to get
in suc# dangerous pro3imit! as to cause inevita&e a&arm and con%usion and co&&ision as a conse9uence' T#e
steamer, as #aving committed a %ar greater %au&t in a&&owing suc# pro3imit! to e roug#t aout, is c#argea&e
wit# a&& t#e damages resu&ting %rom a co&&ision'? T#e ru&e &aid down in t#e case o% T#e Fannie (11 Fa&', 83/) is
sti&& more app&ica&e to t#e case e%ore us' ,t was #e&d t#at a sc#ooner meeting a steamer approac#ing #er on a
para&&e& &ine, wit# t#e di%%erence o% #a&% a point in t#e course o% t#e two, oug#t to #ave kept in #er courseC t#at
a steamer approac#ing a sai&ing vesse& is ound to keep out o% #er wa!, and to a&&ow #er a %ree and
unostructed passage' F#atever is necessar! %or #is it is #er dut! to do, and avoid w#atever ostructs or
endangers t#e sai&ing vesse& in #er course' ,%, t#ere%ore, t#e sai&ing vesse& does not c#ange #er course so as to
emarrass t#e steamer, and render it di%%icu&t %or #er to avoid a co&&ision, t#e steamer a&one is answera&e %or
t#e damage o% a co&&ision, i% t#ere is one'<
14. ()e Sea Gull6 <uties o, stea#ers an+ sailin* vessels
,n t#e case o% T#e "ea 6u&& (83 Fa&&', 1>4), t#e court said: ;"teamer approac#ing a sai& s#ip in suc# a
direction as to invo&ve risk o% co&&ision are re9uired to keep out o% t#e wa! o% t#e sai& s#ipC ut t#e sai& s#ip is
re9uired to keep #er course un&ess t#e circumstances are suc# as to render a departure %rom t#e ru&e necessar!
in order to avoid immediate danger' Vesse&s wit# sai&s eing re9uired to keep t#eir course, t#e dut! o%
adopting t#e necessar! measures o% precaution to keep out o% t#e wa! is devo&ved upon t#e steamer suAect
on&! to t#e condition t#at t#e sai& s#ip s#a&& keep #er course and do not act to emarrass t#e steamer in #er
e%%orts to per%orm #er dut!' Dout&ess t#e steamer ma! go to t#e rig#t or &e%t i% s#e can keep out o% t#e wa!,
ut i% not and t#e approac# is suc# as to invo&ve risk o% co&&ision s#e is re9uired to s&acken #e speed, or, i%
necessar!, stop and reverse, and i% s#e %ai&s to per%orm #er dut! as re9uired ! t#e ru&es o% navigation s#e is
responsi&e %or t#e conse9uences i% t#e sai& vesse& is wit#out %au&t'<
1%. ()e Sea Gull6 Drror in extri#is
:u&es o% navigation continue to e app&ica&e as &ong as t#e means and opportunit! remain to avoid
t#e danger, ut t#e! do not app&! to a vesse& re9uired to keep #er course a%ter t#e wrong%u& approac# o% t#e
opposite vesse& is so near t#at a co&&ision is inevita&e' Eor wi&& an error committed ! t#e sai& vesse& under
suc# circumstances o% peri&, i% s#e is ot#erwise wit#out %au&t, impair t#e rig#t o% t#e sai& vesse& to recover %or
t#e inAuries occasioned ! t#e co&&ision, %or t#e p&ain reason t#at t#ose w#o produce t#e peri& and put t#e sai&
vesse& in t#at situation are c#argea&e wit# t#e error and must answer %or t#e conse9uences' ("teams#ip $o'
vs' :uma&&, 81 @ow', 3/3') "uAect to t#at e3ception t#e sai& vesse& must keep #e course'
-". ()e Bene,actor
,n t#e case o% T#e 1ene%actor (128 D' "', 815), t#e court &aid down t#e %o&&owing conc&usions: ;(1)
Dpon t#e steams#ip and sc#ooner discovering eac# ot#er proceeding in suc# directions as to invo&ve risk o%
co&&ision, as stated in t#e %oregoing %indings o% %act, it was t#e rig#t and dut! o% t#e sc#ooner to keep #er
course, and t#e dut! o% t#e steams#ip was in %au&t in %ai&ing to per%orm t#at dut!C (8) ,t was a&so t#e dut! o%
t#e steams#ip under t#e circumstances stated, to pursue a course w#ic# s#ou&d not need&ess&! put t#e sc#ooner
in imminent peri&C and t#e steams#ip was in %au&t in %ai&ing to per%orm t#at dut!C (3) ,t was dut! o% t#e
steams#ip, e%ore t#e time w#en s#e did so, to s&acken #er speed or stop, and t#e steams#ip was in %au&t in
%ai&ing to per%orm t#at dut!C (5) ,%, w#en a co&&ision #ad ecome imminent ! reason o% t#e %au&t o% t#e
steams#ip, an! error was committed in e3tremis ! t#ose in c#arge o% t#e sc#ooner, t#e sc#ooner is not
responsi&e t#ere%orC (4) T#e steams#ip #ad no rig#t, under t#e circumstance stated, need&ess&! to p&ace #erse&%
in suc# c&ose pro3imit! to t#e sc#ooner t#at t#e error o% a moment wou&d ring destructionC and (>) T#e
co&&ision was occasioned ! t#e %au&t o% t#e steams#ip, and t#e steams#ip s#ou&d e condemned t#ere%or'<
-1. ()e Ba+*er State6 Stea#er pri#a ,acie at ,ault
,n t#e case o% T#e 1adger "tate (/ Fed' :ep', 48>), t#e court said: ;F#ere a sai&ing vesse& and one
prope&&ed ! steam are approac#ing eac# ot#er ow on, t#e steamer must give wa!' ,n case o% a co&&ision
etween suc# vesse&s, t#e steamer is prima %acie in %au&t'<
--. ()e Gate City6 Bur+en o, avoi+in* collision upon t)e stea#er
,n t#e case o% T#e 6ate $it! (.2 Fed' :ep', 315), t#e court #e&d t#at ;t#e ru&e re9uiring a sai&ing
vesse& meeting a steamer to #o&d #er course is a road and genera& one intended to put t#e urden o% avoiding
a co&&ision upon t#e steamerC and, i% t#e sai&ing vesse& departs %rom t#e inAunction t#e urden is on #er to s#ow
some reasona&e e3cuse t#ere%or' 7 disregard o% t#e ru&e not demanded ! a c&ear&! e3isting e3igenc! s#ou&d
not e e3cused' T#ere%ore, s#e wi&& not #e&d in %au&t %or ad#ering to #er course, a&t#oug# t#e steamer seems to
e maneuvering in an uncertain and dangerous wa!'<
-3. Recovery o, +a#a*es .)ic) reasona$ly an+ naturally ,lo.e+ ,ro# t)e collision
T#ere is su%%icient evidence in t#e record to %i3 suc# damages wit# reasona&e accurac!' ,t was proved
upon t#e tria& t#at it wou&d re9uire an e3penditure o% P3,484 to put t#e sai& vesse& in t#e condition in w#ic# it
was e%ore t#e inAur!C t#at it cost P854 to get t#e vesse& to Mani&a a%ter t#e inAur!C t#at t#e va&ue o% t#e
supp&ies &ost was P852'..' T#e evidence re&ative to t#e &oss o% earnings is not su%%icient to permit t#e court to
%ormu&ate an! conc&usion in re&ation t#ereto, even i% it e considered a proper item o% damage'
-/. ;ntervenor )a+ no le*al interest in t)e #atter in liti*ation
T#e intervener #ad no ;&ega& interest in t#e matter in &itigation, or in t#e success o% eit#er o% t#e
parties, or an interest against ot#'< T#eir action was persona&, invo&ved no rig#ts in propert! w#ic# e3tended
e!ond t#eir immediate se&ves, and touc#ed no t#ird part! in an! o% t#e rami%ications o% t#ose rig#ts'
-2. :)ilippine S)ippin* vs. Ger*ara case not applie+6 Li#ite+ lia$ility rule +oes not apply since
vessel .as insure+
,n t#e case o% P#i&ippine "#ipping $o' vs' Vergara (> P#i&' :ep', 8/1), t#at, in accordance wit# artic&es
/30 and /8> o% t#e $ode o% $ommerce, t#e de%endant in an action cannot e #e&d responsi&e in damages
w#en t#e s#ip causing t#e inAur! was w#o&&! &ost ! reason o% t#e accident' "uc# #o&ding cannot e app&ied
#erein %or t#e reason t#at t#e vesse& &ost was insured and t#at de%endant co&&ected t#e insurance' T#at eing t#e
case, t#e insurance mone! sustitutes t#e vesse& and must e used, so %ar as necessar!, to pa! t#e Audgment
rendered in t#e present case'
-. :lace vs. 7ort.ic) an+ 7H (rans. Co. not applie+6 5rticle 114 7CC! 5rticle - Co+e o,
Co##erce
,n t#e case o% P&ace vs' Eortwic# and E' O' Trans' $o' (11/ D' "', 5>/), it was #e&d t#at, under t#e
provision o% t#e 7ct o% $ongress re&ative t#ereto, insurance mone! otained ! reason o% t#e &oss o% a vesse&
causing damages was not suAect to t#e pa!ment o% t#e damages sustained ! t#e neg&igence o% t#e vesse& &ost
! reason o% t#e accident in w#ic# t#e damages occurred' T#e $ourt does not %o&&ow t#at case ecause we are
met in t#is Aurisdiction wit# artic&e 11/> o% t#e $ivi& $ode, w#ic# provides t#at ;a%ter t#e o&igation is
e3tinguis#ed ! t#e &oss o% t#e t#ing, a&& t#e actions w#ic# t#e detor ma! #ave against t#ird persons, !
reason t#ereo%, s#a&& pertain to t#e creditor,< and wit# artic&e 8 o% t#e $ode o% $ommerce, w#ic# provides t#at
w#ere t#e $ode o% $ommerce is si&ent as to t#e &aw re&ating to t#e matters o% w#ic# it treats t#ose matters
s#a&& e governed ! t#e provisions o% t#e $ivi& $ode'
-3. 5rticle 114 applica$le to #oney o$taine+ ,ro# insurance6 5#ount collecte+ cannot excee+
a#ount o, insurance receive+
7rtic&e 11/> is, under t#e "panis# Aurisprudence, app&ica&e to mone! otained %rom t#e insurance o%
t#e t#ing &ost or destro!ed, t#ere can e no dout' (Manresa, vo&' /, 343') T#e Audgment in t#is case is,
t#ere%ore, co&&ecti&e, ut t#e amount co&&ected cannot e3ceed t#e amount o% insurance mone! actua&&!
received'
-4. Reservation o, B. =orelan+ on t)e applica$ility o, 5rticle 114
T#e writer o% t#e opinion #ad douts o% t#e app&icai&it! o% artic&e 11/>, re%erred toC ut #as !ie&ded to
t#e &earning o% t#e maAorit! re&ative to t#e :oman and "panis# Aurisprudence on t#is point'
[>], also [, a.ter 204]
GersoJa vs. Li# (GR -"1/2! 12 7ove#$er 1%-3)
"econd Division, "treet (J): 4 concur
&acts' 7t aout 4:22 p'm' o% . Marc# 1.81, t#e coastwise steamer 1an Oek &e%t t#e port o% Eaga on t#e 1ico&
:iver, in t#e Province o% $amarines "ur, wit# destination to t#e $it! o% Mani&a' 7t t#e time o% #er departure
%rom said port t#e sea was approac#ing to #ig# tide ut t#e current was sti&& running in t#roug# t#e 1ico&
:iver, wit# t#e resu&t t#at t#e 1an Oek #ad t#e current against #er' 7s t#e s#ip approac#ed t#e Ma&ong end
o% t#e 1ico& :iver, in t#e Municipa&it! o% 6ain*a, anot#er vesse&, t#e Per&a, was sig#ted coming up t#e river
on t#e wa! to Eaga' F#i&e t#e oats were !et more t#an a ki&ometer apart, t#e 1an Oek gave two &asts wit#
#er w#ist&e, t#us indicating an intention to pass on t#e &e%t, or to #er own port side' ,n rep&! to t#is signa& t#e
Per&a gave a sing&e &ast, t#ere! indicating t#at s#e disagreed wit# t#e signa& given ! t#e 1an Oek and
wou&d maintain #er position on t#e rig#t, t#at is, wou&d keep to t#e staroard' T#e 1an Oek made no rep&! to
t#is signa&' 7s t#e Per&a was navigating wit# t#e current, t#en running in %rom t#e sea, t#is vesse&, under
paragrap# 1>3 o% $ustoms Marine $ircu&ar 43, #ad t#e rig#t o% wa! over t#e 1an Oek, and t#e o%%icers o% t#e
Per&a interpreted t#e action o% t#e 1an Oek in not rep&!ing to t#e Per&a?s signa& as an indication o%
ac9uiescence o% t#e o%%icers o% t#e 1an Oek in t#e determination o% t#e Per&a to keep to t#e staroard' T#e
river at t#is point is aout 842 %eet wide, and t#e courses t#us eing respective&! pursued ! t#e two vesse&s
necessari&! tended to ring t#em into a #ead=on co&&ision' F#en t#e danger o% suc# an occurrence ecame
imminent, $aptain 6arrido o% t#e Per&a, seeing t#at #e was s#ut o%% ! t#e 1an Oek %rom passing to t#e rig#t,
put #is vesse& to port, intending to avoid co&&ision or minimi*e its impact ! getting %art#er out into t#e
stream' 7n additiona& reason %or t#is maneuver is t#at t#e captain o% t#e 1an Oek waived #is #and to 6arrido,
indicating t#at t#e &atter s#ou&d turn #is vesse& towards t#e midd&e o% t#e stream' 7t aout t#e same time t#at
t#e Per&a was t#us de%&ected %rom #er course t#e engine on t#e 1an Oek was reversed and t#ree &asts were
given ! t#is vesse& to indicate t#at s#e was acking' F#en t#e engine is reversed, a vesse& swings to t#e rig#t
or &e%t in accordance wit# t#e direction in w#ic# t#e &ades o% t#e prope&&er are setC and as t#e 1an Oek egan
to ack, #er ow was t#rown out into t#e stream, a movement w#ic# was assisted ! t#e current o% t#e river'
1! t#is means t#e 1an Oek was roug#t to occup! an o&i9ue position across t#e stream at t#e moment t#e
Per&a was passingC and t#e ow o% t#e 1an Oek cras#ed into t#e staroard umpers o% t#e Per&a, carr!ing awa!
e3terna& parts o% t#e s#ip and in%&icting materia& damage on t#e #u&&' To e%%ect t#e repairs t#us made necessar!
to t#e Per&a cost #er owners t#e sum o% P10,/80, inc&uding e3penses o% surve!'
Vicente Ver*osa and :ui*, :ementeria ! $ompania, as owners o% t#e coastwise vesse& Per&a, instituted t#e
action e%ore t#e $F, o% Mani&a, against "i&vino +im and "i! $ong 1ieng T $ompan!, ,nc', as owner and
agent, respective&!, o% t#e vesse& 1an Oek, %or t#e purpose o% recovering a sum o% mone! a&&eged to e t#e
damages resu&ting to Verso*a, et' a&' %rom t#e co&&isionC a&&eging t#at said co&&ision was due to t#e
ine3perience, care&essness and &ack o% ski&& on t#e part o% t#e captain o% t#e 1an Oek and to #is %ai&ure to
oserve t#e ru&es o% navigation appropriate to t#e case' +im, et' a&' answered wit# a genera& denia&, and !
wa! o% specia& de%ense asserted, among ot#er t#ings, t#at t#e co&&ision was due e3c&usive&! to t#e ine3perience
and care&essness o% t#e captain and o%%icers o% t#e steams#ip Per&aC %or w#ic# reason +im et' a&', in turn, !
wa! o% counterc&aim, pra!ed Audgment %or t#e damages su%%ered ! t#e 1an Oek %rom t#e same co&&ision' 7t
t#e #earing t#e tria& Audge aso&ved +im, et' a&' %rom t#e comp&aint and &ikewise aso&ved Ver*osa, et'a&' %rom
+im, et' a&'?s counterc&aim' From t#is Audgment ot# parties appea&ed'
T#e "upreme $ourt a%%irmed t#e Audgment appea&ed %rom inso%ar as it aso&ves Verso*a, et' a&', and entered
Audgment %or Verso*a, et' a&' to recover Aoint&! and severa&&! %rom "i&vino +im and "i! $ong 1ieng T $o' t#e
sum o% P10,/80'22, wit# interest %rom t#e date o% t#e institution o% t#e action, wit#out specia& pronouncement
as to costs o% eit#er instance'
1. Su,,iciency o, t)e protest
@erein, wit#in 85 #ours a%ter t#e arriva& o% t#e Per&a at t#e port o% Eaga, $aptain 6arrido appeared
e%ore Vicente :odi, t#e au3i&iar! Austice o% t#e peace o% t#e municipa&it! o% Eaga, and made e%ore t#at
o%%icer t#e sworn protest' T#is protest is su%%icient to answer a&& t#e re9uirements o% artic&e /34 o% t#e $ode o%
$ommerce' 7 regu&ar Austice o% t#e peace wou&d wit#out dout e competent to take a marine protest, and t#e
same aut#orit! must e conceded to t#e au3i&iar! Austice in t#e asence o% an! s#owing in t#e record to t#e
e%%ect t#at t#e Austice o% t#e peace #imse&% was acting at t#e time in t#e municipa&it!'
-. 5uxiliary ?ustice o, t)e peace! also as @ex>o,,icio notary pu$licA6 Bu+icial notice o, situation in
7a*a
,n #is certi%icate to t#e protest, Vicente :ode added to t#e appe&&ation o% au3i&iar! Austice o% t#e peace,
%o&&owing #is name, t#e additiona& designation ;notar! pu&ic e3=o%%icio'< @owever, under susection (c) o%
section 858 o% t#e 7dministrative $ode, it is p&ain t#at an au3i&iar! Austice o% t#e peace is not an e3=o%%icio
notar! pu&ic' ,t resu&ts t#at t#e taking o% t#is protest must e ascried to t#e o%%icer in #is c#aracter as
au3i&iar! Austice o% t#e peace and not in t#e c#aracter o% notar! pu&ic e3=o%%icio ,t is #ard&! necessar! to add
t#at t#is court takes Audicia& notice o% t#e %act t#at Eaga is not a port o% entr! and t#at no customs o%%icia& o%
rank is t#ere stationed w#o cou&d #ave taken cogni*ance o% t#is protest'
3. &ault attri$ute+ exclusively to t)e ne*li*ence an+ inattention o, t)e captain an+ pilot in c)ar*e
o, t)e Ban Hek
@erein, t#e Per&a undouted&! #ad t#e rig#t o% wa!, since t#is vesse& was navigating wit# t#e current,
and t#e o%%icers in c#arge o% t#e Per&a were correct in assuming, %rom t#e %ai&ure o% t#e 1an Oek to respond to
t#e sing&e &ast o% t#e Per&a, t#at t#e o%%icers in c#arge o% t#e 1an Oek recogni*ed t#at t#e Per&a #ad a rig#t o%
wa! and ac9uiesced in #er reso&ution to keep to t#e rig#t'
/. Ban Hek1s excuses not convincin*
@erein, t#e e3cuse urged %or t#e 1an Oek is t#at t#is vesse& is somew#at &arger t#an t#e Per&a and t#at
it was desira&e %or t#e 1an Oek to keep on t#e side o% t#e &ong are o% t#e curve o% t#e riverC and in t#is
connection it is suggested t#at t#e river is deeper on t#e outer edge o% t#e end t#at on t#e inner edge' ,t is
a&so stated t#at on a certain previous occasion t#e 1an Oek on coming out %rom t#is port #ad gotten stuck in
t#e mud in t#is end ! dipping too %ar to t#e rig#t' Moreover, it is said to e t#e practice o% s#ips in
navigating t#is stream to keep nearer t#e outside t#an to t#e inside o% t#e end' T#ese suggestions are ! no
means convincing' ,t appears in evidence t#at t#e river ottom #ere is composed o% mud and si&t, and as t#e
tide at t#e time o% t#is incident was near&! at its %&ood, t#ere was amp&e dept# o% water to #ave accommodated
t#e 1an Oek o% s#e #ad kept to t#at part o% t#e stream w#ic# it was proper %or #er to occup!' Fe ma! %urt#er
oserve t#at t#e disparit! in t#e si*e o% t#e vesse&s was not suc# as to dominate t#e situation and deprive t#e
Per&a o% t#e rig#t o% wa! under t#e conditions stated' 1&ame %or t#e co&&ision must t#ere%ore, as a&read! stated,
e attriuted to t#e 1an Oek'
2. 5ssu#ption t)at approac)in* vessel .ill o$serve t)e re*ulations prescri$e+ ,or navi*ation
Eo %au&t can e attriuted to t#e o%%icers navigating t#e Per&a eit#er in maintaining t#e course w#ic#
#ad een determined upon %or t#at vesse& in con%ormit! wit# t#e marine regu&ations app&ica&e to t#e case or
in de%&ecting t#e vesse& towards t#e midd&e o% t#e stream a%ter t#e danger o% co&&ision ecame imminent'
7mong ru&es app&ica&e to navigation none is etter %ounded on reason and e3perience t#an t#at w#ic#
re9uires t#e navigating o%%icers o% an! vesse& to assume t#at an approac#ing vesse& wi&& oserve t#e
regu&ations prescried %or navigation (6' Drrutia T $o' vs' 1aco :iver P&antation $o', 8> P#i&', >38, >30)'
7n! ot#er ru&e wou&d introduce guess work into t#e contro& o% s#ips and produce uncertaint! in t#e operation
o% t#e regu&ations'
. Li#it o, ri*)t o, recovery in present case
T#e sum o% P10,/80 represents t#e &imit o% Ver*osa?s rig#t o% recover!' (n t#e origina& comp&aint
recover! is soug#t %or an additiona& amount o% P1/,222, most o% w#ic# consists o% damages supposed to #ave
een incurred %rom t#e inai&it! o% t#e Per&a to maintain #er regu&ar sc#edu&e w#i&e &aid up in t#e dock
undergoing repairs' T#e damages t#us c&aimed, in addition to eing somew#at o% a specu&ative nature, are not
su%%icient&! proved to warrant t#e court in a&&owing t#e same'
3. 5rticle 4- o, t)e Co+e o, Co##erce6 @7avieroA construe+ as @o.nerA alone ,or t)e purposes
o, t)e provision
,n artic&e /8> o% t#e $ode o% $ommerce it is dec&ared t#at t#e owner o% an! vesse& s#a&& e &ia&e %or
t#e indemnit! due to an! ot#er vesse& inAured ! t#e %au&t, neg&igence, or &ack o% ski&& o% t#e captain o% t#e
%irst' T#e $ourt sa!s ;owner,< w#ic# is t#e word used in t#e current trans&ation o% t#e artic&e in t#e "panis#
$ode o% $ommerce' ,t is to e oserved, #owever, t#at t#e "panis# te3t itse&% uses t#e word navieroC and t#ere
is some amiguit! in t#e use o% said word in t#is artic&e, owing to t#e %act t#at naviero in "panis# #as severa&
meanings' T#e aut#or o% t#e artic&e w#ic# appears under t#e word naviero in t#e Bncic&opedia Juridica
Bspa)o&a te&&s us t#at in "panis# it ma! mean eit#er owner, out%itter, c#arterer, or agent, t#oug# #e sa!s t#at
t#e %undamenta& and correct meaning o% t#e word is t#at o% ;owner'< T#at naviero, as used in t#e "panis# te3t
o% artic&e /8>, means owner is %urt#er to e in%erred %rom artic&e /30, w#ic# &imits t#e civi& &iai&it! e3pressed
in artic&e /8> to t#e va&ue o% t#e vesse& wit# a&& #er appurtenances and a&& t#e %reig#t earned during t#e
vo!age' T#ere wou&d #ave een no propriet! in &imiting &iai&it! to t#e va&ue o% t#e vesse& un&ess t#e owner
were understood to e t#e person &ia&e' ,t is t#ere%ore c&ear t#at ! specia& provision o% t#e $ode o%
$ommerce t#e owner is made responsi&e %or t#e damage caused ! an accident o% t#e kind under
consideration in t#e present case' ,n more t#an one case t#e court #as #e&d t#e owner &ia&e, w#en sued a&one
(P#i&ippine "#ipping $o' vs' 6arcia Vegara, > P#i&', 8/1C 6' Drrutia T $o' vs' 1aco river P&antation $o', 8>
P#i&', >38)'
4. Bot) o.ner an+ a*ent responsi$le6 5rticle 1%"- 7CC! an+ 5rticle 24 Co+e o, Co##erce
@erein, w#i&e "i&vino +im is &ia&e %or damages in t#e c#aracter o% owner, it does not necessari&!
%o&&ow t#at "i! $ong 1ieng T $o', as c#arterer or agent (casa naviera), is e3empt %rom &iai&it!' 1ot# t#e
owner and agent can e #e&d responsi&e w#ere ot# are imp&eaded toget#er' ,n P#i&ippine "#ipping $o' vs'
6arcia Vergara (> P#i&', 8/1), it seems to #ave een accepted as a matter o% course t#at ot# owner and agent
o% t#e o%%ending vesse& are &ia&e %or t#e damage done' T#e &iai&it! o% t#e naviero, in t#e sense o% c#arterer or
agent, i% not e3pressed in artic&e /8> o% t#e $ode o% $ommerce, is c&ear&! deduci&e %rom t#e genera& doctrine
o% Aurisprudence stated in artic&e 1.28 o% t#e $ivi& $ode, and it is a&so recogni*ed, ut more especia&&! as
regards contractua& o&igations, in artic&e 4/> o% t#e $ode o% $ommerce' 1ot# t#e owner and agent (naviero)
s#ou&d e dec&ared to e Aoint&! and severa&&! &ia&e, since t#e o&igation w#ic# is t#e suAect o% t#is action
#ad its origin in a tortious act and did not arise %rom contract'
%. 5rticle 1133 7CC no applica$le
7rtic&e 1130 o% t#e $ivi& $ode, dec&aring t#at Aoint o&igations s#a&& e apportiona&e un&ess ot#erwise
provided, #as no app&ication to o&igations arising %rom tort'
[,], &an!la Stea4s!" vs. Insa A5d'la4an, see [,] a.ter [149]
[-"1]
Govern#ent vs. :)ilippine Stea#s)ip Co. (GR 14%23! 1 Banuary 1%-3)
Bn 1anc, "treet (J): / concur
&acts' 7t aout 12 p'm' on 12 Feruar! 1.82, t#e coastwise vesse& ,sae& (owned ! Fernande* @ermanos),
e9uipped wit# motor and sai&s, &e%t t#e port o% Mani&a wit# primar! destination to 1a&a!an, 1atangas,
carr!ing, among its cargo, .11 sacks o% rice e&onging to t#e 6overnment o% t#e P#i&ippine ,s&ands and
consigned to points in t#e sout#' 7%ter t#e oat #ad een under weig# %or aout 5 #ours, and #ad passed t#e
"an Eico&as +ig#t near t#e entrance into Mani&a 1a!, t#e watc# and t#e mate on t#e ridge o% t#e ,sae&
discerned t#e &ig#t o% anot#er vesse&, w#ic# proved to e t#e 7ntipo&o (owned ! P#i&ippine "teams#ip $o'
,nc'), a&so a coastwise vesse&, on its wa! to Mani&a and coming towards t#e ,sae&' 7t aout t#e same time
ot# t#e watc# and mate on t#e ridge o% t#e 7ntipo&o a&so saw t#e ,sae&, t#e two vesse&s eing t#en aout
one mi&e and a #a&% or two mi&es apart' Bac# vesse& was going appro3imate&! at t#e speed o% > mi&es an #our,
and in aout 12 minutes t#e! #ad toget#er traversed t#e intervening space and were in c&ose pro3imit! to eac#
ot#er' F#en t#e mate o% t#e 7ntipo&o, w#o was t#en at t#e w#ee&, awoke to t#e danger o% t#e situation and
saw t#e ,sae& ;a&most on top o% #im,< to use t#e words o% t#e committee on marine accidents reporting t#e
incident, #e put #is #e&m #ard to t#e staroard' 7s c#ance wou&d #ave it, #owever, t#e mate on t#e ,sae& at
t#is critica& Auncture &ost #is wits and, in disregard o% t#e regu&ations and o% common prudence, at once p&aced
#is own #e&m #ard to port, wit# t#e resu&t t#at #is oat veered around direct&! in t#e pat# o% t#e ot#er vesse&
and a co&&ision ecame inevita&e' Dpon t#is t#e mate on t#e 7ntipo&o %ortunate&! stopped #is engines, ut t#e
,sae& continued wit# %u&& speed a#ead, and t#e two vesse&s came toget#er near t#e ows' T#e ,sae&
immediate&! sank, wit# tota& &oss o% vesse& and cargo, t#oug# t#e memers o% #er crew were picked up %rom
t#e water and saved'
T#e 6overnment o% t#e P#i&ippine ,s&ands soug#t to recover t#e sum o% P15,>5/'84, t#e a&&eged va&ue o% .11
sacks o% rice w#ic# were &ost at sea on 11 Feruar! 1.82' ,n t#e $F, Audgment was entered %or t#e recover! !
t#e 6overnment %rom t#e P#i&ippine "teams#ip $ompan!, ,nc', o% t#e %u&& amount c&aimed, wit# interest %rom
t#e date o% %i&ing o% t#e comp&aint' From t#is Audgment, said compan! appea&ed'
T#e "upreme $ourt a%%irmed t#e Audgment appea&ed %romC wit# costs against P#i&ippine "teams#ip $o' ,nc'
1. 7e*li*ence i#puta$le to $ot) vessels! t)ou*) +i,,erin* in c)aracter an+ +e*ree .it) respect to
eac)
Eeg&igence was imputa&e to ot# vesse&s, t#oug# di%%ering somew#at in c#aracter and degree wit#
respect to eac#' T#e mate o% t#e 7ntipo&o was c&ear&! neg&igent in #aving permitted t#at vesse& to approac#
direct&! towards t#e ,sae& unti& t#e two were in dangerous pro3imit!' For t#is t#ere was no e3cuse w#atever,
since t#e naviga&e sea at t#is point is wide and t#e incoming steamer cou&d easi&! #ave given t#e outgoing
vesse& a wide ert#' (n t#e ot#er #and it is not c&ear t#at t#e ,sae& was c#argea&e wit# neg&igence in keeping
on its courseC %or t#is oat #ad its Ai sai& #oisted, and ma! %or t#at reason e considered to #ave #ad t#e rig#t
o% wa!'
-. 7e*li*ence c)ar*ea$le to ;sa$el ,or inco#petent .ay t)e vessel .as )an+le+
Eeg&igence s#ort&! preceding t#e moment o% co&&ision is undouted&! c#argea&e to t#e ,sae&, %or t#e
incorrect and incompetent wa! in w#ic# t#is vesse& was t#en #and&ed' T#e e3p&anation ma! e %ound in t#e
%act t#at t#e mate on t#e ,sae& #ad een on continuous dut! during t#e w#o&e preceding da! and nig#tC and
eing a&most aso&ute&! e3#austed, #e proa&! was eit#er do*ing or inattentive to dut! at t#e time t#e ot#er
vesse& approac#ed'
3. Responsi$ility rests on stea#er .)ic) allo.e+ +an*erous proxi#ity to a sailin* vessel
,t resu&ts t#at ot# vesse&s were at %au&tC and a&t#oug# t#e neg&igence on t#e part o% t#e mate o% t#e
incoming vesse& preceded t#e neg&igence on t#e part o% t#e mate o% t#e outgoing vesse& ! an apprecia&e
interva& o% time, t#e %irst vesse& cannot on t#at account e aso&ved %rom responsii&it!' ,ndeed, in 6' Drrutia
T $o' vs' 1aco :iver P&antation $o', supra, t#is court %ound reason %or #o&ding t#at t#e responsii&it! rested
e3c&usive&! on a steamer w#ic# #ad a&&owed dangerous pro3imit! to a sai&ing vesse& to e roug#t aout under
somew#at simi&ar conditions'
/. E)ere $ot) vessels are to $la#e! $ot) soli+arily lia$le6 E)en one sinks! $ur+en ,alls to o.ner
o, ot)er s)ip
F#ere ot# vesse&s are to &ame, ot# s#a&& e so&idari&! responsi&e %or t#e damage occasioned to
t#eir cargoes' 7s t#e ,sae& was a tota& &oss and cannot sustain an! part o% t#is &iai&it!, t#e urden o%
responding to t#e 6overnment o% t#e P#i&ippine ,s&ands, as owner o% t#e rice emarked on t#e ,sae&, must %a&&
w#o&&! upon t#e owner o% t#e ot#er s#ip, t#at is, upon t#e de%endant, t#e P#i&ippine "teams#ip $ompan!, ,nc'
2. 5pplication o, 5rticle 4-3
T#e app&ication o% artic&e /80 o% t#e $ode o% $ommerce is not &imited ! artic&e /8/ to t#e case
w#ere it cannot e determined w#ic# o% t#e two vesse&s was t#e cause o% t#e co&&ision' (n t#e contrar! artic&e
/8/ must e considered as an e3tension o% artic&e /80 to an additiona& case' ,n ot#er words, under t#e two
artic&es comined t#e ru&e o% &iai&it! announced in artic&e /80 is app&ica&e not on&! to t#e case w#ere ot#
vesse&s ma! e s#own to e actua&&! &amewort#! ut a&so to t#e case w#ere it is ovious t#at on&! one was at
%au&t ut t#e proo% does not s#ow w#ic#'
[-"-]
:icart vs. S#it) (GR L>1--1%! 12 =arc) 1%14)
Bn 1anc, "treet (J): > concur, 1 reserved vote
&acts' (n 18 Decemer 1.18, on t#e $ar&atan 1ridge, at "an Fernando, +a Dnion, 7mado Picart was riding
on #is pon! over said ridge' 1e%ore #e #ad gotten #a&% wa! across, Frank "mit# Jr' approac#ed %rom t#e
opposite direction in an automoi&e, going at t#e rate o% aout 12 or 18 mi&es per #our' 7s "mit# neared t#e
ridge #e saw a #orseman on it and &ew #is #orn to give warning o% #is approac#' @e continued #is course
and a%ter #e #ad taken t#e ridge #e gave two more successive &asts, as it appeared to #im t#at t#e man on
#orseack e%ore #im was not oserving t#e ru&e o% t#e road' Picart saw t#e automoi&e coming and #eard t#e
warning signa&s' @owever, eing pertured ! t#e nove&t! o% t#e apparition or t#e rapidit! o% t#e approac#, #e
pu&&ed t#e pon! c&ose&! up against t#e rai&ing on t#e rig#t side o% t#e ridge instead o% going to t#e &e%t' 7s t#e
automoi&e approac#ed, "mit# guided it toward #is &e%t, t#at eing t#e proper side o% t#e road %or t#e mac#ine'
,n so doing "mit# assumed t#at t#e #orseman wou&d move to t#e ot#er side' T#e pon! #ad not as !et e3#iited
%rig#t, and t#e rider #ad made no sign %or t#e automoi&e to stop' "eeing t#at t#e pon! was apparent&! 9uiet,
"mit#, instead o% veering to t#e rig#t w#i&e !et some distance awa! or s&owing down, continued to approac#
direct&! toward t#e #orse wit#out diminution o% speed' F#en #e #ad gotten 9uite near, t#ere eing t#en no
possii&it! o% t#e #orse getting across to t#e ot#er side, "mit# 9uick&! turned #is car su%%icient&! to t#e rig#t to
escape #itting t#e #orse a&ongside o% t#e rai&ing w#ere it was t#en standingC ut in so doing t#e automoi&e
passed in suc# c&ose pro3imit! to t#e anima& t#at it ecame %rig#tened and turned its od! across t#e ridge
wit# its #ead toward t#e rai&ing' ,n so doing, it was struck on t#e #ock o% t#e &e%t #ind &eg ! t#e %&ange o% t#e
car and t#e &im was roken' T#e #orse %e&& and its rider was t#rown o%% wit# some vio&ence' 7s a resu&t o% its
inAuries t#e #orse died' Picart received contusions w#ic# caused temporar! unconsciousness and re9uired
medica& attention %or severa& da!s'
7mado Picart soug#t to recover o% "mit# t#e sum o% P31,122, as damages a&&eged to #ave een caused ! an
automoi&e driven ! t#e &atter' T#e $F, o% t#e Province o% +a Dnion aso&ved "mit# %rom &iai&it!' Picart
appea&ed'
T#e "upreme $ourt reversed t#e Audgment o% t#e &ower court, and rendered Audgment t#at Picart recover o%
"mit# t#e sum o% P822, wit# costs o% ot# instances' T#e court #e&d t#at t#e sum awarded was estimated to
inc&ude t#e va&ue o% t#e #orse, medica& e3penses o% Picart, t#e &oss or damage occasioned to artic&es o% #is
appare&, and &aw%u& interest on t#e w#o&e to t#e date o% t#is recover!C and t#at t#e ot#er damages c&aimed !
Picart are remote or ot#erwise o% suc# c#aracters as not to e recovera&e'
1. 5uto#o$ile +river (S#it)) *uilty o, ne*li*ence
"mit#, in maneuvering #is car in t#e manner descried, was gui&t! o% neg&igence suc# as gives rise to
a civi& o&igation to repair t#e damage done' 7s "mit# started across t#e ridge, #e #ad t#e rig#t to assume
t#at t#e #orse and rider wou&d pass over to t#e proper sideC ut as #e moved toward t#e center o% t#e ridge it
was demonstrated to #is e!es t#at t#is wou&d not e doneC and #e must in a moment #ave perceived t#at it was
too &ate %or t#e #orse to cross wit# sa%et! in %ront o% t#e moving ve#ic&e' ,n t#e nature o% t#ings t#is c#ange o%
situation occurred w#i&e t#e automoi&e was !et some distance awa!C and %rom t#is moment it was not &onger
wit#in t#e power o% Picart to escape eing run down ! going to a p&ace o% greater sa%et!' T#e contro& o% t#e
situation #ad t#en passed entire&! to "mit#C and it was #is dut! eit#er to ring #is car to an immediate stop or,
seeing t#at t#ere were no ot#er persons on t#e ridge, to take t#e ot#er side and pass su%%icient&! %ar awa!
%rom t#e #orse to avoid t#e danger o% co&&ision' ,nstead o% doing t#is, "mit# ran straig#t on unti& #e was a&most
upon t#e #orse' F#en "mit# e3posed t#e #orse and rider to t#is danger #e was neg&igent in t#e e!e o% t#e &aw'
-. (est in +eter#inin* ne*li*ence6 Fse o, reasona$le care an+ caution .)ic) an or+inary pru+ent
person .oul+ )ave use+
,n doing t#e a&&eged neg&igent act, did t#e actor use t#at reasona&e care and caution w#ic# an
ordinari&! prudent person wou&d #ave used in t#e same situationS ,% not, t#en #e is gui&t! o% neg&igence' T#e
&aw, in e%%ect, adopts t#e standard supposed to e supp&ied ! t#e imaginar! conduct o% t#e discreet
pater%ami&ias o% t#e :oman &aw' T#e e3istence o% neg&igence in a given case is not determined ! re%erence to
t#e persona& Audgment o% t#e actor in t#e situation e%ore #im' T#e &aw considers w#at wou&d e reck&ess,
&amewort#!, or neg&igent in t#e man o% ordinar! inte&&igence and prudence and determines &iai&it! ! t#at'
3. 7ature o, con+uct o, a pru+ent #an
F#at wou&d constitute t#e conduct o% a prudent man in a given situation must o% course e a&wa!s
determined in t#e &ig#t o% #uman e3perience and in view o% t#e %acts invo&ved in t#e particu&ar case' 7stract
specu&ation cannot e o% muc# va&ueC as reasona&e men govern t#eir conduct ! t#e circumstances w#ic# are
e%ore t#em or known to t#em, and #ence t#e! can e e3pected to take care on&! w#en t#ere is somet#ing
e%ore t#em to suggest or warn o% danger' :easona&e %oresig#t o% #arm is a&wa!s necessar! e%ore
neg&igence can e #e&d to e3ist' ,n %ine, t#e proper criterion %or determining t#e e3istence o% neg&igence in a
given case is t#is: $onduct is said to e neg&igent w#en a prudent man in t#e position o% t#e tort%easor wou&d
#ave %oreseen t#at an e%%ect #arm%u& to anot#er was su%%icient&! proa&e to warrant #is %oregoing t#e conduct
or guarding against its conse9uences'
/. <octrine o, last ,air c)ance
@erein, it goes wit#out sa!ing t#at Picart #imse&% was not %ree %rom %au&t, %or #e was gui&t! o%
antecedent neg&igence in p&anting #imse&% on t#e wrong side o% t#e road' 1ut as t#e &aw imposed on "mit# t#e
dut! to guard against t#e t#reatened #arm, #e was a&so neg&igentC and in suc# case t#e pro&em a&wa!s is to
discover w#ic# agent is immediate&! and direct&! responsi&e' ,t wi&& e noted t#at t#e neg&igent acts o% t#e
two parties were not contemporaneous, since t#e neg&igence o% "mit# succeeded t#e neg&igence o% Picart !
an apprecia&e interva&' Dnder t#ese circumstances t#e &aw is t#at t#e person w#o #as t#e &ast %air c#ance to
avoid t#e impending #arm and %ai&s to do so is c#argea&e wit# t#e conse9uences, wit#out re%erence to t#e
prior neg&igence o% t#e ot#er part!'
2. Rakes vs. 5tlantic! Gul, an+ :aci,ic Co.6 Contri$utory ne*li*ence +oes not constitute a $ar to
recover
,n :akes vs' 7t&antic, 6u&% and Paci%ic $o'(0 P#i&' :ep', 34.), t#e $ourt #e&d t#at w#i&e contriutor!
neg&igence on t#e part o% t#e person inAured did not constitute a ar to recover, it cou&d e received in
evidence to reduce t#e damages w#ic# wou&d ot#erwise #ave een assessed w#o&&! against t#e ot#er part!'
. Rakes vs. 5tlantic Gul,6 &acts t)erein
T#e de%endant compan! #ad t#ere emp&o!ed t#e p&ainti%%, a &aorer, to assist in transporting iron rai&s
%rom a arge in Mani&a #aror to t#e compan!?s !ards &ocated not %ar awa!' T#e rai&s were conve!ed upon
cars w#ic# were #au&ed a&ong a narrow track' 7t a certain spot near t#e water?s edge t#e track gave wa! !
reason o% t#e comined e%%ect o% t#e weig#t o% t#e car and t#e insecurit! o% t#e road ed' T#e car was in
conse9uence upsetC t#e rai&s s&id o%%C and t#e p&ainti%%?s &eg was caug#t and roken' ,t appeared in evidence
t#at t#e accident was due to t#e e%%ects o% a t!p#oon w#ic# #ad dis&odged one o% t#e supports o% t#e track' T#e
court %ound t#at t#e de%endant compan! was neg&igent in #aving %ai&ed to repair t#e ed o% t#e track and a&so
t#at t#e p&ainti%% was, at t#e moment o% t#e accident, gui&t! o% contriutor! neg&igence in wa&king at t#e side o%
t#e car instead o% eing in %ront or e#ind' ,t was #e&d t#at w#i&e t#e de%endant was &ia&e to t#e p&ainti%% !
reason o% its neg&igence in #aving %ai&ed to keep t#e track in proper repair, nevert#e&ess t#e amount o% t#e
damages s#ou&d e reduced on account o% t#e contriutor! neg&igence o% t#e p&ainti%%' 7s wi&& e seen t#e
de%endant?s neg&igence in t#at case consisted in an omission on&!' T#e &iai&it! o% t#e compan! arose %rom its
responsii&it! %or t#e dangerous condition o% its track'
3. <is#issal o, cri#inal procee+in*s +oes not a,,ect civil lia$ility
@erein, soon a%ter t#e accident occurred, Picart caused crimina& proceedings to e instituted e%ore a
Austice o% t#e peace c#arging "mit# wit# t#e in%&iction o% serious inAuries (&esiones graves)' 7t t#e pre&iminar!
investigation, "mit# was disc#arged ! t#e magistrate and t#e proceedings were dismissed' $onceding t#at
t#e ac9uitta& o% "mit# at a tria& upon t#e merits in a crimina& prosecution %or t#e o%%ense mentioned, it wou&d
not constitute res adAudicata upon t#e 9uestion o% #is civi& &iai&it! arising %rom neg&igence'
[-"3]
FS vs. S#it) Bell (GR 143! 3" Septe#$er 1%"2)
S, Jo#nson (J): 5 concur, 1 took no part
&acts' (n > Eovemer 1.28, at aout 11:22 p'm' and near t#e mout# o% t#e Pasig :iver, t#e Eav! oat
1arce&o co&&ided wit# a casco t#at was t#en and t#ere eing towed ! t#e &aunc# 7&e3andra' T#e &aunc#
7&e3andra is t#e propert! o% "mit# 1e&& T $o'
7n action was %i&ed ! t#e Dnited "tates against "mit# 1e&& T $o' in t#e $F, o% Mani&a, to recover t#e sum o%
K1,>22 %or damages occasioned ! t#e co&&ision' T#e in%erior court %ound t#at "mit# 1e&& T $o' #ad not
comp&ied wit# t#e ru&es o% navigation in Mani&a 1a!, in t#at it %ai&ed to disp&a! &ig#ts in accordance wit# suc#
regu&ations, and t#at, ! reason o% suc# %ai&ure, t#e co&&ision and conse9uent damages occurred' @owever, t#e
&ower court did not ru&e t#e case in %avor o% t#e Dnited "tates as it #as not comp&ied wit# 7rtic&e /34 o% t#e
$ode o% $ommerce' T#e Dnited "tates appea&ed'
T#e "upreme $ourt a%%irmed t#e decision o% t#e in%erior court, and ordered t#at "mit# 1e&& recover o% t#e
Dnited "tates #is costs in t#e action, and at t#e e3piration o% 82 da!s Audgment s#ou&d e entered in
accordance #erewit#, and t#e cause e remanded to t#e court e&ow %or e3ecution o% said Audgment'
7rtic&e /34 provides: ;T#e action %or t#e recover! o% &oss and damages arising %rom co&&isions can not
e admitted i% a sworn statement or dec&aration is not presented wit#in twent!=%our #ours to competent
aut#orit! o% t#e point w#ere t#e co&&ision took p&ace, or t#at o% t#e %irst port o% arriva& o% t#e vesse&'<
-. 5rticle 432 o, Co+e o, Co##erce applies to all persons en*a*e+ in tra,,ic6 :rotest a prere9uisite
,or action ,or +a#a*es
7rtic&e /34 o% t#e $ommercia& $ode app&ies to a&& persons engaged in tra%%ic upon t#e waters o% t#e
P#i&ippine 7rc#ipe&ago' "mit# 1e&& T $o' #as as muc# rig#t to insist upon comp&iance wit# t#e provision o%
t#e code w#ere t#e damages were done to a oat operated ! t#e 6overnment as i% suc# oat #ad een
operated ! a private individua& or compan!' T#is provision o% t#e $ommercia& $ode, re9uiring protest to e
made and presented to t#e proper aut#orit! wit#in 85 #ours a%ter t#e co&&ision, or a%ter t#e arriva& o% t#e
inAured oat in port, is a prere9uisite to t#e ringing o% an action %or damages' 1! #aving %ai&ed to comp&!
wit# t#is provisions o% t#e $ommercia& $ode it can not maintain t#e action %or damages'
[204 ]Lope$ v. "uruelo, see [F a2ter 10/]
[,] 4erso$a and (ui$ v. Li%, see [F a2ter 3!!]
[>]
:)ilippine S)ippin* Co. vs. Ger*ara (GR 1""! 1 Bune 1%")
"econd Division, 7re&&ano ($J): 5 concur
&acts' T#e P#i&ippine "#ipping $ompan!, t#e owner o% t#e steams#ip Euestra "ra' de +ourdes, c&aims an
indemni%ication o% P55,222 %or t#e &oss o% t#e said s#ip as a resu&t o% a co&&ision' Onc#usti T $o' a&so c&aimed
P85,024'>5 as an indemni%ication %or t#e &oss o% t#e cargo o% #emp and copra3 carried ! t#e said s#ip on #er
&ast trip' Francisco 6arcia Vergara, was t#e owner o% t#e steams#ip Eavarra, w#ic# co&&ided wit# t#e +ourdes'
From t#e Audgment o% t#e tria& court t#e P#i&ippine "#ipping $ompan! and Vergara appea&ed, ut t#e &atter
#as %ai&ed to prosecute #is appea& ! a i&& o% e3ceptions or ot#erwise' T#e on&! appe&&ant w#o #as prosecuted
t#e appea&, P#i&ippine "#ipping $o', now reduced its c&aim to P1/,222, t#e va&ue o% t#e co&&iding vesse&'
T#e "upreme $ourt #e&d t#at Vergara is &ia&e %or t#e indemni%ication to w#ic# P#i&ippine "#ipping is entit&ed
! reason o% t#e co&&ision, ut #e is not re9uired to pa! suc# indemni%ication o% t#e reason t#at t#e o&igation
t#us incurred #as een e3tinguis#ed on account o% t#e &oss o% t#e t#ing ound %or t#e pa!ment t#ereo%, and in
t#is respect t#e Audgment o% t#e court e&ow is a%%irmed e3cept in so %ar as it re9uires P#i&ippine "#ipping to
pa! t#e costs o% t#e action, w#ic# is not e3act&! properC t#at a%ter t#e e3piration o% 82 da!s &et Audgment e
entered in accordance #erewit# and 12 da!s t#erea%ter t#e record e remanded to t#e $ourt o% First ,nstance
%or e3ecution'
7rtic&e /30 o% t#e $ode $ommerce provides: ;T#e civi& &iai&it! contracted ! t#e s#ipowners in t#e
cases prescried in t#is section s#a&& e understood as &imited to t#e va&ue o% t#e vesse& wit# a&& #er e9uipment
and a&& t#e %reig#t mone! earned during t#e vo!age'< T#is section is a necessar! conse9uence o% t#e rig#t to
aandon t#e vesse& given to t#e s#ipowner in artic&e 4/0 o% t#e code, and it is one o% t#e man! super%&uities
contained in t#e code' (+oren*o 1enito, ;+ecciones,< 348')
-. 5rticle 243 o, t)e Co+e o, Co##erce
7rtic&e 4/0 o% t#e $ode o% $ommerce provides t#at ;t#e agent s#a&& a&so t#e civi&&! &ia&e %or t#e
w#ic# t#e vesse& carried, ut #e ma! e3empt #imse&% t#ere%rom ! aandoning t#e vesse& wit# a&& #er
e9uipments and t#e %reig#t #e ma! #ave earned during t#e trip'<
3. 5rticle 2%" o, t)e Co+e o, Co##erce
7rtic&e 4.2 o% t#e $ode o% $ommerce provides t#at ;t#e part owners o% a vesse& s#a&& e civi&&! &ia&e,
in t#e proportion o% t#eir contriution to t#e common %und, %or t#e resu&ts o% t#e acts o% t#e captain re%erred to
in artic&e 4/0' Bac# part owner ma! e3empt #imse&% %rom t#is &iai&it! ! t#e aandonment, e%ore a notar!, o%
t#e part o% t#e vesse& e&onging to #im'<
/. ;ntent o, t)e Co+e o, Co##erce
T#e ;B3posicion de motivos< o% t#e $ode o% $ommerce contains t#e %o&&owing: ;T#e present code
(1/8.) does not determine t#e Auridica& status o% t#e agent w#ere suc# agent is not #imse&% t#e owner o% t#e
vesse&' T#is omission is supp&ied ! t#e proposed code, w#ic# provides in accordance wit# t#e princip&es o%
maritime &aw t#at ! agent it is to e understood t#e person intrusted wit# t#e provisioning o% t#e vesse&, or
t#e one w#o represents #er in t#e port in w#ic# s#e #appens to e' T#is person is t#e on&! one w#o represents
t#e vesse& H t#at is to sa!, t#e on&! one w#o represents t#e interest o% t#e owner o% t#e vesse&' T#is provision
#as t#ere%ore c&eared t#e dout w#ic# e3isted as to t#e e3tent o% t#e &iai&it!, ot# o% t#e agent and %or t#e
owner o% t#e vesse&' "uc# &iai&it! is &imited ! t#e proposed code to t#e va&ue o% t#e vesse& and ot#er t#ings
appertaining t#ereto'<
2. <istinction $et.een la.,ul o$li*ation +ue la.,ul acts! an+ lia$ility ,or unla.,ul acts
T#is is t#e di%%erence w#ic# e3ist etween t#e &aw%u& acts and &aw%u& o&igation o% t#e captain and t#e
&iai&it! w#ic# #e incurs on account o% an! un&aw%u& act committed ! #im' ,n t#e %irst case, t#e &aw%u& acts
and o&igations o% t#e captain ene%icia& to t#e vesse& ma! e en%orced as against t#e agent %or t#e reason t#at
suc# o&igations arise %rom t#e contract o% agenc! (provided, #owever, t#at t#e captain does not e3ceed #is
aut#orit!), w#i&e as to an! &iai&it! incurred ! t#e captain t#roug# #is un&aw%u& acts, t#e s#ip agent is simp&!
susidiari&! civi&&! &ia&e' T#is &iai&it! o% t#e agent is &imited to t#e vesse& and it does not e3tend %urt#er' For
t#is reason t#e $ode o% $ommerce makes agent &ia&e to t#e e3tent o% t#e va&ue o% t#e vesse&, as to t#e codes
o% t#e principa& maritime nations provided, wit# t#e vesse&, and not individua&&!' "uc# is a&so t#e spirit o% our
code'
. Real an+ Hypot)ecary nature o, #ariti#e la. (=a+aria*a)
T#at w#ic# distinguis#es t#e maritime %rom t#e civi& &aw and even %rom t#e mercanti&e &aw in genera&
is t#e rea& and #!pot#ecar! nature o% t#e %ormer, and t#e man! securities o% a rea& nature t#at maritime
customs %rom time immemoria&, t#e &aws, t#e codes, and t#e &ater Aurisprudence, #ave provided %or t#e
protection o% t#e various and con%&icting interest w#ic# are ventured and risked in maritime e3peditions, suc#
as t#e interests o% t#e vesse& and o% t#e agent, t#ose o% t#e owners o% t#e cargo and consignees, t#ose w#o
sa&vage t#e s#ip, t#ose w#o make &oans upon t#e cargo, t#ose o% t#e sai&ors and memers o% t#e crew as to
t#eir wages, and t#ose o% a constructor as to repairs made to t#e vesse&'
3. Dvi+ence o, @realA nature o, #ariti#e la.6 Eay ,or a*ent to exe#pt sel, ,ro# lia$ility
(=a+aria*a)
7s evidence o% t#is ;rea&< nature o% t#e maritime &aw we #ave (1) t#e &imitation o% t#e &iai&it! o% t#e
agents to t#e actua& va&ue o% t#e vesse& and t#e %reig#t mone!, and (8) t#e rig#t to retain t#e cargo and t#e
emargo and detention o% t#e vesse& even cases w#ere t#e ordinar! civi& &aw wou&d not a&&ow more t#an a
persona& action against t#e detor or person &ia&e' ,t wi&& e oserved t#at t#ese rig#ts are corre&ative, and
natura&&! so, ecause i% t#e agent can e3empt #imse&% %rom &iai&it! ! aandoning t#e vesse& and %reig#t
mone!, t#us avoiding t#e possii&it! o% risking #is w#o&e %ortune in t#e usiness, it is a&so Aust t#at #is
maritime creditor ma! %or an! reason attac# t#e vesse& itse&% to secure #is c&aim wit#out waiting %or a
sett&ement o% #is rig#ts ! a %ina& Audgment, even to t#e preAudice o% a t#ird person' T#is repea&s t#e civi& &aw
to suc# an e3tent t#at, in certain cases, w#ere t#e mortgaged propert! is &ost no persona& action &ies against t#e
owner or agent o% t#e vesse&' For instance, w#ere t#e vesse& is &ost t#e sai&ors and memers o% t#e crew can
not recover t#eir wagesC in case o% co&&ision, t#e &iai&it! o% t#e agent is &imited as a%oresaid, and in case o%
s#ipwrecks, t#ose w#o &oan t#eir mone! on t#e vesse& and cargo &ose a&& t#eir rig#ts and can not c&aim
reimursement under t#e &aw'
4. Reasons .)y privile*es cannot $e +one a.ay (=a+aria*a)
T#ere are two reasons w#! it is impossi&e to do awa! wit# t#ese privi&eges, to wit: (1) T#e risk to
w#ic# t#e t#ing is e3posed, and ( 8 ) t#e Grea&? nature o% maritime &aw, e3c&usive&! Grea&,? according to w#ic#
t#e &iai&it! o% t#e parties is &imited to a t#ing to w#ic# is at merc! o% t#e waves' ,% t#e agent is on&! &ia&e
wit# t#e vesse& and %reig#t mone! and ot# ma! e &ost t#roug# t#e accidents o% navigation it is on&! Aust t#at
t#e maritime creditor #ave some means o% oviating t#is precarious nature o% #is rig#ts ! detaining t#e s#ip,
#is on&! securit!, e%ore it is &ost'
%. Liens t)at a purc)aser o, a vessel .oul+ $e o$li*e+ to respect an+ reco*niJe (=a+aria*a)
T#e &iens, tacit or &ega&, w#ic# ma! e3ist upon t#e vesse& and w#ic# a purc#aser o% t#e same wou&d e
o&iged to respect and recogni*e H in addition to t#ose e3isting in %avor o% t#e "tate ! virtue o% t#e
privi&eges w#ic# are granted to it ! a&& t#e &aws H pi&ot, tonnage, and port dues and ot#er simi&ar c#arges, t#e
wages o% t#e crew earned during t#e &ast vo!age as provided in artic&e >5>, o% t#e $ode o% $ommerce, sa&vage
dues under artic&e /58, t#e indemni%ication due to t#e captain o% t#e vesse& in case #is contract is terminated
on account o% t#e vo&untar! sa&e o% t#e s#ip and t#e inso&venc! o% t#e owner as provided in artic&e >2/, and
ot#er &iai&ities arising %rom co&&isions under artic&e /30 and /3/'
L=M
C)in Guan vs. Co#pania =ariti#a (GR /2"3"! -4 7ove#$er 1%34)
Bn 1anc, $oncepcion (J): 4 concur
&acts' (n 3 Ju&! 1.33 t#e agent consignee o% $#in 6uan in t#e $it! o% Mani&a, (ng 7ng $#uan, &oaded on
t#e steams#ip $orregidor %or t#e port o% $a&ivo, Province o% $api*, >2 sacks o% ;7nc#or< %&our va&ued at
P1/1, e&onging to $#in 6uan and consigned to #im' (n 4 June 1.33, t#e steams#ip $orregidor, under t#e
command o% its captain, 7rcadio $astisima, &e%t t#e port o% Mani&a %or t#at o% $a&ivo, Province o% $api*, and
ot#er sout#ern ports, ringing on oard, wit# ot#er cargo, t#e >2 sacks o% %&our a%orementioned' (n t#e nig#t
o% said date, w#i&e t#e $orregidor was navigating in t#e waters o% Mani&a 1a!, it co&&ided wit# t#e steams#ip
$eu, w#ic# is a&so owned ! t#e same compan!' 7s a resu&t o% t#e co&&ision, t#e $orregidor sank wit# a&& its
cargo' $ompa)[a Maritima and 7rcadio $astisima re%used to pa! $#in 6uan t#e va&ue o% t#e >2 sacks o% %&our
in spite o% $#in 6uan?s demands'
7n action was instituted ! $#in 6uan against t#e $ompa)[a Mar[tima, owner o% t#e steams#ip $eb, w#ic#
caused t#e co&&ision, to recover t#e va&ue o% >2 sacks o% %&our &oaded on t#e $orregidor' Judgment #aving een
rendered against t#e $ompania Maritima in t#e amount o% P1/1 wit# &ega& interest %rom t#e %i&ing o% t#e
comp&aint' T#e &atter appea&ed to t#e "upreme $ourt to #ave said Audgment reversed'
T#e "upreme $ourt reversed t#e Audgment appea&ed %rom wit#out preAudice to t#e rig#t o% $#in 6uan to
otain pa!ment o% t#e va&ue o% >2 sacks o% %&our wit# &ega& interest %rom t#e amount o% t#e insurance o% t#e
$orregidor, i% it was insuredC ot#erwise, %rom t#e %reig#ts earned during t#e vo!ageC wit#out pronouncement
as to costs'
1. 5rticle 433 o, t)e Co+e o, Co##erce6 as )el+ in G. Frrutia M Co. vs. Baco River :lantation Co.
F#i&e it was #e&d in t#e case o% P#i&ippine "#ipping $o' vs' Vergara (> P#i&' :ep', 8/1), t#at, in
accordance wit# artic&es /30 and /8> o% t#e $ode o% $ommerce, t#e de%endant in an action cannot e #e&d
responsi&e in damages w#en t#e s#ip causing t#e inAur! was w#o&&! &ost ! reason o% t#e accident, t#e $ourt
did not app&! it in Drrutia vs' 1aco :iver P&antation %or t#e reason t#at t#e vesse& &ost was insured and t#at t#e
de%endant co&&ected t#e insurance' T#at eing t#e case, t#e insurance mone! sustitutes t#e vesse& and must e
used, so %ar as necessar!, to pa! t#e Audgment rendered in t#e case'
-. S)ipo.ner not lia$le ,or +a#a*es .)en s)ip responsi$le ,or collision totally lost
,n t#e case o% 6' Drrutia T $o' vs' 1aco :iver P&antation $ompan!, it was #e&d t#at in accordance
wit# t#e provisions o% artic&e /30 and /8> o% t#e $ode o% $ommerce, t#e s#ipowner is not &ia&e in damages
w#en t#e s#ip responsi&e %or t#e co&&ision #as een tota&&! &ost' ,n suc# case, t#e amount o% t#e insurance
sustitutes %or t#e va&ue o% t#e s#ip and s#ou&d e app&ied to t#e pa!ment o% t#e Audgment rendered in %avor o%
p&ainti%%' ,% t#e s#ip was not insured, t#en t#e %reig#ts earned s#a&& answer %or t#e civi& &iai&it! o% t#e
s#ipowner according to artic&e /30'
[,] Crrutia 7 Co. v. &aco (iver Plantation, see [F a2ter 3!!]
[205] Aan Chiong ian v. 'nchausti, see [13+]
[-"], also [23/]
=anila Railroa+ vs. =acon+ray (GR L>1-/32! -1 =arc) 1%14)
First Division, "treet (J): > concur, 8 took no part
&acts' (n > 7pri& 1.14, t#e steamer "eward, owned ! Macondra! T $o', &e%t "aigon %or t#e P#i&ippines
,s&ands, encountering a moderate&! #ig# sea' T#e s#ip was &aden wit# a cargo o% rice, t#e weig#t o% w#ic#,
taken in connection wit# t#e condition o% t#e sea, caused t#e vesse& to spring a &eak, and #er master %e&t
compe&&ed to return to "aigon' 7t t#is Auncture t#e steams#ip @ondagua, owned ! Mani&a :ai&road $o', was
sig#ted, w#ereupon t#e "eward %&ew t#e internationa& code signa& ;,n distressC want immediate assistance'<
T#e @ondagua c#anged #er course and approac#ed t#e "eward, t#e &atter in succession disp&a!ing t#e
%o&&owing signa&s: ;, #ave sprung a &eakC< ;, wis# to e taken in towC< ;$an !ou spare #awserC< and ;T#e &eak
is gaining rapid&!'< ,n response to signa&s %rom t#e @ondagua t#e "eward sent #er own oat to t#e @ondagua
%or a #eaving &ine, ! means %or w#ic# a #awser was passed %rom t#e @ondagua to t#e "eward and t#e %ormer,
wit# t#e &atter in tow, t#en proceeded at #a&% speed towards "aigon' "#ort&! a%terwards, t#e "eward signa&ed
;T#e &eak is gaining rapid&!,< a%ter w#ic# t#e @ondagua went %u&& speed a#ead, unti& t#e arriva& o% ot#
vesse&s at $ape "t' James, at t#e mout# o% t#e "aigon :iver, w#ere t#e! anc#ored' T#e towing occupied some
5 or 4 #ours, and covered a distance o% 84 or 32 mi&es' T#e "eward?s engines were kept working unti& wit#in
an #our o% #er arriva& at $ape "t' James, w#en t#e water reac#ed t#e engine room and put out t#e %ires under
t#e main oi&er, &eaving on&! t#e au3i&iar! oi&er in use'
7n action was instituted ! t#e Mani&a :ai&road $ompan!, upon 85 Feruar! 1.1>, in t#e $F, o% Mani&a to
recover o% Macondra! T $o' t#e sum o% P04,222, t#e a&&eged va&ue o% sa&vage service rendered on > 7pri&
1.14, ! t#e steamer @ondagua to t#e steamer "eward' 7t t#e #earing, Audgment was rendered in %avor o%
Mani&a :ai&road %or t#e sum o% P5,222' From t#is Audgment ot# parties #ave appea&ed, Mani&a :ai&road
insisting t#at t#e amount a&&owed ! t#e &ower court is inade9uate, Macondra! insisting t#at it is e3cessive'
T#e "upreme $ourt a%%irmed t#e tria& court?s %inding t#at t#e va&ue o% t#e vesse& w#en saved was proper&!
%i3ed at P82,222' T#e $ourt a&so, under a&& t#e circumstances, t#oug#t t#at t#e sum o% P1,222 is ade9uate %or
t#e service rendered' T#e "upreme $ourt a%%irmed t#e Audgment o% t#e &ower court wit# t#e modi%ication t#at
t#e award must according&! e reduced to t#e sum o% P1,222, wit# interest at >I per annum %rom 85 Feruar!
1.1>, and %or t#is amount e3ecution wi&& issue' Eo specia& %inding wi&& e made as to costs o% t#is instance'
1. Salva*e o, $ot) s)ip an+ car*o6 salva*e allo.ance
F#ere a s#ip and its cargo are saved toget#er, as a resu&t o% services carried on wit# a view to saving
ot#, t#e sa&vage a&&owance s#ou&d e apportioned etween t#e s#ip and cargo in t#e proportion o% t#eir
respective va&ues, t#e same as in a case o% genera& averageC and neit#er is &ia&e %or t#e sa&vage due %rom t#e
ot#er' (34 $!c', 002C see a&so 85 7m' T Bng' Bnc!c' +aw, 8d ed', p' 181., T#e 7&aska, 83 Fed', 4.0, T#e
$o&one& 7dams, 1. Fed', 0.4') T#e sa&vor must a&wa!s ear in mind t#at t#e interests in s#ip and in cargo are
on&! severa&&! &ia&e, eac# %or its proportionate s#are o% t#e sa&vage remuneration' ,% one w#o #as sa&ved ot#
s#ip and cargo rings e%ore t#e court in #is sa&vage action on&! %or suc# an amount o% reward as t#e court
%inds to e due in respect o% t#e va&ue o% t#at propert! w#ic# is e%ore t#at court' (Penned! on +aw o% $ivi&
"a&vage, p' 1/>')
-. Car*o1s s)are in t)e $ur+en o, t)e salva*e re#uneration6 ()e =ary :leasant
,n t#e case o% T#e Mar! P&easant ("wa', 885), w#ere sa&vage services #ad een rendered to t#e
vesse& #erse&% and to t#e cargo aoard o% #er, t#e sa&vors proceed against t#e s#ip a&one' 7ccording to Dr'
+us#ington, t#e rea& di%%icu&t! is, t#at t#ere is no proceeding against t#e cargo' T#e di%%icu&t! arises %rom t#e
circumstance, ecause ;w#en t#e court considers t#e services rendered to t#e s#ip and cargo, it a&wa!s
estimates t#e amount o% sa&vage remuneration according to t#e va&ue o% t#e s#ip and cargo taken toget#er' ,t is
contrar! to a&& princip&es o% Austice, i% a cargo #as received and een ene%ited ! t#e services so rendered, t#at
t#e w#o&e urden o% t#e sa&vage remuneration s#ou&d %a&& on t#e s#ip itse&%'
3. Salva*e c)ar*e a +ivisi$le $ur+en $et.een portions o, car*o $elon*in* to +i,,erent o.ners6
$esi+es $et.een s)ip an+ car*o
Eot on&! is t#e sa&vage c#arge a separate and divisi&e urden as etween s#ip and cargo, ut a&so as
etween portions o% t#e cargo e&onging to di%%erent owners' ,t is true t#at t#e sa&vage service was in one
sense entireC ut it certain&! cannot e deemed entire %or t#e purpose o% %ounding a rig#t against a&& t#e
c&aimants Aoint&!, so as to make t#em a&& Aoint&! responsi&e %or t#e w#o&e sa&vageC on t#e contrar!, eac#
c&aimant is responsi&e on&! %or t#e sa&vage proper&! due and c#argea&e on t#e gross proceeds or sa&es o% #is
own propert! pro rata' ,t wou&d e made c#argea&e wit# t#e pa!ment o% t#e w#o&e sa&vage, w#ic# wou&d e
against t#e c&earest princip&es o% &aw on t#is suAect'
/. Rule o, lia$ility sa#e as .)en personal action is institute+ $y o.ners a*ainst eac) ot)er
T#ere is no common &iai&it! %or t#e amounts due %rom t#e s#ip or ot#er portions o% t#e cargo w#en
t#e s#ip and cargo, or eit#er, are roug#t into t#e custod! o% t#e court as a resu&t o% a proceeding in rem' T#e
ru&e o% &iai&it! must e t#e same w#ere a persona& action in instituted against t#e owners o% t#e one or t#e
ot#er' T#e persona& &iai&it! o% eac# must e &imited to t#e proportion o% t#e sa&vage c#arge w#ic# s#ou&d e
orne ! #is own propert!'
2. Lia$ility o, s)ipo.ner .)en s)ip unsea.ort)y6 7o recovery a*ainst o.ner o, car*o .)en not
#a+e a party in action
,% it #ad een a&&eged and proved t#at t#e s#ip was unseawort#! w#en s#e put to sea or t#at t#e
necessit! %or t#e sa&vage service was due to t#e neg&igence o% t#e master, or o% t#e s#ip?s owner, t#e &atter
mig#t #ave een &ia&e, at &east etween #imse&% and t#e s#ipper, %or t#e entire cost o% t#e service, and t#is
possi&! mig#t #ave c#anged t#e c#aracter o% t#e s#ip?s &iai&it! to t#e sa&vorC or, again, i% t#e c&aim %or
compensation #ad een &imited to t#e va&ue o% t#e service, considered on t#e simp&e asis o% work and &aor
done, it wou&d #ave een proper to assess t#e entire cost o% t#e service against t#e s#ip owner, ecause t#e
service was rendered at t#e re9uest o% t#e master' 1ut w#en t#e c&aim is put upon t#e asis o% sa&vage, t#e
%i3ing o% t#e compensation goes e!ond t#e &imits o% a 9uantum meruit %or t#e work and &aor done and
invo&ves t#e assessment o% a ount!' T#e amount to e a&&owed upon a c&aim o% t#is c#aracter is in part
determined upon considerations o% e9uit! and pu&ic po&ic!C and it is not proper to make t#e s#ip, or t#e s#ip?s
owner, &ia&e %or t#e w#o&e, in t#e asence o% some statutor! provision, or ot#er positive ru&e o% &aw, %i3ing
suc# &iai&it! on t#e s#ip owner' ,t resu&ts t#at, as t#e owner o% t#e cargo #as not een made a part!, no
recover! can e #ad in t#is action in regard to t#e service rendered to t#e cargo'
. Circu#stances consi+ere+ in ,ixin* a#ount o, co#pensation ,or salva*e service
,n %i3ing t#e amount o% compensation to e awarded %or sa&vage service, t#e principa& circumstances
to e taken into consideration are: (1) T#e &aor e3pended ! t#e sa&vors in rendering t#e sa&vage serviceC (8)
T#e promptitude, ski&&, and energ! disp&a!ed in rendering t#e service and saving t#e propert!C (3) T#e va&ue
o% t#e propert! emp&o!ed ! t#e sa&vors in rendering t#e service, and t#e danger to w#ic# suc# propert! was
e3posedC (5) T#e risk incurred ! t#e sa&vors in rescuing t#e propert! %rom t#e impending peri&C (4) T#e va&ue
o% t#e propert! sa&vedC and (>) T#e degree o% danger %rom w#ic# t#e propert! was rescued'
3. Circu#stances in t)e present case
@erein, t#e @ondagua was de&a!ed in #er vo!age aout . #ours, during 4 o% w#ic# s#e was engaged
in towing t#e "eward' T#is de&a! caused #er to enter at ,&oi&o, t#e port o% #er destination, in t#e ear&! #ours o%
t#e morning o% t#e da! o% #er arriva& instead o% t#e &ate a%ternoon o% t#e previous da!C ut t#e un&oading o% #er
cargo was not t#ere! retarded' $onsidered on t#e asis o% c#arter part! contract under w#ic# s#e was
considered reasona&e compensation %or #er use, inc&uding t#e services o% o%%icers and crew' T#e service
rendered did not invo&ve an! %urt#er e3penditure o% &aor on t#e part o% t#e sa&vors t#an suc# as was
common&! incident to working t#e s#ip' Eo unusua& disp&a! o% ski&& and energ! on t#eir part was re9uiredC and
t#e condition o% t#e sea was not suc# as to invo&ve an! specia& risk eit#er to t#e @ondagua or #er crew'
Fina&&!, t#e danger %rom w#ic# t#e "eward was rescued was rea&, as t#e s#ip w#en taken in tow was
con%ronted ! a serious peri&'
4. :urpose o, a.ar+ o, salva*e service
,n determining t#e amount o% t#e award to e a&&owed in cases o% t#is kind t#e aim s#ou&d e to #o&d
out to sea%aring men a %air inducement to t#e per%ormance o% sa&vage services wit#out %i3ing a sca&e o%
compensation so #ig# as to cause vesse&s in need o% suc# services to #esitate and dec&ine to receive t#em
ecause o% t#e ruinous cost' T#at t#e sa&vor is entit&ed, as o% ount!, to somet#ing more t#an mere
remuneration %or #is own work and t#e risk incurred ! #im, is concededC ut certain&! t#e interests o%
commerce wou&d not e promoted ! t#e encouragement o% e3oritant c#arges' Towage is not considered a
sa&vage service o% #ig# order o% meritC and w#en t#e risk is inconsidera&e and ot#er conditions %avora&e, t#e
compensation to e a&&owed s#ou&d e modest in its amount'
[-"3] also [, a.ter 207]
Stan+ar+ 8il Co. o, 7e. Hork vs. LopeJ Castelo (GR 13%2! 14 8cto$er 1%-1)
First Division, "treet (J): 8 concur, 1 concur in resu&t
&acts' 1! contract o% c#arter dated / Feruar! 1.14, Manue& +ope* $aste&o, as owner, &et t#e sma&&
interis&and steamer 1atangue)o %or t#e term o% 1 !ear to Jose +im $#umu9ue %or use in t#e conve!ing o%
cargo etween certain ports o% t#e P#i&ippine ,s&ands ,n t#is contract it was stipu&ated t#at t#e o%%icers and
crew o% t#e 1atangue)o s#ou&d e supp&ied ! t#e owner, and t#at t#e c#arterer s#ou&d #ave no ot#er contro&
over t#e captain, pi&ot, and engineers t#an to speci%! t#e vo!ages t#at t#e! s#ou&d make and to re9uire t#e
owner to discip&ine or re&ieve t#em as soon as possi&e in case t#e! s#ou&d %ai& to per%orm t#e duties
respective&! assigned to t#em' F#i&e t#e oat was eing t#us used ! t#e c#arterer in t#e interis&and trade, t#e
"tandard (i& $ompan! de&ivered to t#e agent o% t#e oat in Mani&a a 9uantit! o% petro&eum to e conve!ed to
t#e port o% $asiguran, in t#e Province o% "orsogon' For t#is consignment a i&& o% &ading o% t#e usua& %orm was
de&ivered, wit# t#e stipu&ation t#at %reig#t s#ou&d e paid at t#e destination' "aid i&& o% &ading contained no
provision wit# respect to t#e storage o% t#e petro&eum, ut it was in %act p&aced upon t#e deck o% t#e s#ip and
not in t#e #o&d' F#i&e t#e oat was on #er wa! to t#e port mentioned, and o%% t#e western coast o% "orsogon, a
vio&ent t!p#oon passed over t#at region, and w#i&e t#e storm was at its #eig#t t#e captain was compe&&ed %or
t#e sa%et! o% a&& to Aettison t#e entire consignment o% petro&eum consisting o% 822 cases' F#en t#e storm
aated t#e s#ip made port, and 13 cases o% t#e petro&eum were recovered, ut t#e remainder was w#o&&! &ost'
To recover t#e va&ue o% t#e petro&eum t#us Aettisoned ut not recovered, an action was instituted ! t#e
"tandard (i& $ompan! against t#e owner o% t#e s#ip in t#e $F, o% Mani&a, w#ere Audgment was rendered in
%avor o% "tandard (i&' From t#is Audgment +ope* $aste&o appea&ed'
T#e "upreme $ourt a%%irmed t#e Audgment appea&ed %rom wit# modi%ications, and wit# costs'
1. 8l+ Rule' Loss o, car*o on +eck! as a *eneral rule! not consi+ere+ a *eneral avera*e loss6
Rationale
T#e cargo (petro&eum) was carried upon deckC and it is a genera& ru&e, ot# under t#e "panis#
$ommercia& $ode and under t#e doctrines prevai&ing in t#e courts o% admira&t! o% Bng&and and 7merica, as
we&& as in ot#er countries, t#at ordinari&! t#e &oss o% cargo carried on deck s#a&& not e considered a genera&
average &oss' T#is is c&ear&! e3pressed in :u&e , o% t#e Oork=7ntwerp :u&es, as %o&&ows: ;Eo Aettison o% deck
cargo s#a&& e made good as genera& average'< T#e reason %or t#is ru&e is %ound in t#e %act t#at deck cargo is in
an e3tra #a*ardous position and, i% on a sai&ing vesse&, its presence is &ike&! to ostruct t#e %ree action o% t#e
crew in managing t#e s#ip' Moreover, especia&&! in t#e case o% sma&& vesse&s, it renders t#e oat top=#eav! and
t#us ma! #ave to e cast overoard sooner t#an wou&d e necessar! i% it were in t#e #o&dC and natura&&! it is
a&wa!s t#e %irst cargo to go over in case o% emergenc!' ,ndeed, in susection 1 o% artic&e /14 o% t#e $ode o%
$ommerce, it is e3press&! dec&ared t#at deck cargo s#a&& e cast overoard e%ore cargo stowed in t#e #o&d'
-. 7e. Rule' 8l+ rule #a+e +urin* +ays o, sailin* vessels! less .ei*)ty .it) re,erence to present
coast.ise tra+e
T#e ru&e, den!ing deck cargo t#e rig#t to contriution ! wa! o% genera& average in case o% Aettison,
was %irst made in t#e da!s o% sai&ing vesse&sC and wit# t#e advent o% t#e steams#ip as t#e principa& conve!er o%
cargo ! sea, it #as een %e&t t#at t#e reason %or t#e ru&e #as ecome &ess weig#t!, especia&&! wit# re%erence to
coastwise tradeC and it is now genera&&! #e&d t#at Aettisoned goods carried on deck, according to t#e custom o%
trade, ! steam vesse&s navigating coastwise and in&and waters, are entit&ed to contriution as a genera&
average &oss (85 :' $' +', 151.)'
3. Reco*nition o, ne. rule6 5rticle 4"% (3) an+ 5rticle 422 o, t)e Co+e o, Co##erce
:ecognition is given to t#e idea in two di%%erent artic&es in t#e "panis# $ode o% $ommerce' ,n t#e
%irst it is in e%%ect dec&ared t#at, i% t#e marine ordinances a&&ow cargo to e &aden on deck in coastwise
navigation, t#e damages su%%ered ! suc# merc#andise s#a&& not e dea&t wit# as particu&ar average (art' /2.
L3M, $omm' $ode)C and in t#e ot#er it is stated t#at merc#andise &aden on t#e upper deck o% t#e vesse& s#a&&
contriute in t#e genera& average i% it s#ou&d e savedC ut t#at t#ere s#a&& e no rig#t to indemnit! i% it s#ou&d
e &ost ! reason o% eing Aettisoned %or t#e genera& sa%et!, e3cept w#en t#e marine ordinances a&&ow its
s#ipment in t#is manner in coastwise navigation (art /44, $omm' $ode)'
/. =arine Re*ulations re9uire *asoline (+ue to its in,la##a$le nature) to $e carrie+ on +eck! not
in t)e )ol+
T#e Marine :egu&ations in %orce in t#ese ,s&ands contain provisions recogni*ing t#e rig#t o% vesse&s
engaged in t#e interis&and trade to carr! deck cargoC and e3press provision is made as to t#e manner in w#ic#
it s#a&& e estowed and protected %rom t#e e&ements (P#i&' Mar' :eg' L1.13M, par' 83) ' ,ndeed, t#ere is one
commodit!, name&!, gaso&ine, w#ic# %rom its in%&amma&e nature is not permitted to e carried in t#e #o&d o%
an! passenger vesse&, t#oug# it ma! e carried on t#e deck i% certain precautions are taken' T#ere is no
e3press provision dec&aring t#at petro&eum s#a&& e carried on deck in an! caseC ut #aving regard to its
in%&amma&e nature and t#e known practices o% t#e interis&and oats, it cannot e denied t#at t#is commodit!
a&so, as we&& as gaso&ine, ma! e &aw%u&&! carried on deck in our coastwise trade'
2. Reason ,or a+optin* #ore li$eral rule as to +eck car*o on vessels use+ in coast.ise tra+e t)an
t)ose upon ,or or+inary ocean tra,,ic
T#e reason %or adopting a more &iera& ru&e wit# respect to deck cargo on vesse&s used in t#e
coastwise trade t#an upon t#ose used %or ordinar! ocean orne tra%%ic is to e %ound o% course in t#e
circumstance t#at in t#e coastwise trade t#e oats are sma&& and vo!ages are s#ort, wit# t#e resu&t t#at t#e
coasting vesse& can use more circumspection aout t#e condition o% t#e weat#er at t#e time o% departureC and
i% t#reatening weat#er arises, s#e can o%ten reac# a port o% sa%et! e%ore disaster overtakes #er' 7not#er
consideration is t#at t#e coastwise trade must as a matter o% pu&ic po&ic! e encouraged, and domestic tra%%ic
must e permitted under suc# conditions as are practica&&! possi&e, even i% not a&toget#er idea&'
. @7avieroA construe+
T#ere is a discrepanc! etween t#e meaning o% naviero, in artic&e 4/> o% t#e $ode o% $ommerce,
w#ere t#e word is used in contradistinction to t#e term ;owner o% t#e vesse&< (propietario), and in artic&e 4/0
w#ere it is used a&one, and apparent&! in a sense road enoug# to inc&ude t#e owner' Fundamenta&&! t#e word
;naviero< must e understood to re%er to t#e person undertaking t#e vo!age, w#o in one case ma! e t#e
owner and in anot#er t#e c#arterer' @erein, #owever, t#is is not vita& to t#e present discussion'
3. 8.ner o, vessel civilly lia$le ,or t)e acts o, t)e captain
,t is universa&&! recogni*ed t#at t#e captain is primari&! t#e representative o% t#e ownerC and artic&e
4/> o% t#e $ode o% $ommerce e3press&! dec&ares t#at ot# t#e owner o% t#e vesse& and t#e naviero, or
c#arterer, s#a&& e civi&&! &ia&e %or t#e acts o% t#e master' 1! t#e e3press provision o% t#e $ode, t#e owner o%
t#e vesse& is civi&&! &ia&e %or t#e acts o% t#e captainC and #e can on&! escape %rom t#is civi& &iai&it! !
aandoning #is propert! in t#e s#ip and an! %reig#t t#at #e ma! #ave earned on t#e vo!age (arts' 4/0, 4//,
$ode o% $omm')'
4. <uty o, t)e captain to initiate procee+in*s as to *ross avera*e6 Captain re#iss in +uty in
present case
1! artic&e /48 o% t#e $ode o% $ommerce=t#e captain is re9uired to initiate t#e proceedings %or t#e
adAustment, &i9uidation, and distriution o% an! gross average to w#ic# t#e circumstances o% t#e vo!age ma!
#ave given originC and it is t#ere%ore #is dut! to take t#e proper steps to protect an! s#ipper w#ose goods ma!
#ave een Aettisoned %or t#e genera& sa%et!' ,n ordinar! practice t#is wou&d e primari&! accomp&is#ed !
re9uiring t#e consignees o% ot#er cargo, as a condition precedent to t#e de&iver! o% t#eir goods to t#em, to give
a su%%icient ond to respond %or t#eir proportion o% t#e genera& average' @erein, t#e captain o% t#e vesse& did
not take t#ose stepsC and t#e %ai&ure o% t#e captain to take t#ose steps gave rise to a &iai&it! %or w#ic# t#e
owner o% t#e s#ip must answer'
%. Li9ui+ation not a con+ition prece+ent to lia$ility o, s)ipo.ner to s)ipper .)ose property )as
$een ?ettisone+
7rtic&e /48 and re&ated provisions are intended to supp&! t#e s#ipowner, acting o% course in t#e person
o% t#e captain, wit# a means w#ere! #e ma! escape earing t#e entire urden o% t#e &oss and ma! distriute it
among a&& t#e persons w#o oug#t to participate in s#aring itC ut t#e making o% t#e &i9uidation is not a
condition precedent to t#e &iai&it! o% t#e s#ipowner to t#e s#ipper w#ose propert! #as een Aettisoned'
1". Ri*)t o, s)ipo.ner or s)ipper to #aintain action a*ainst captain6 S)ipper #ay *o at once upon
t)e o.ner
,% t#e captain does not comp&! wit# t#e artic&e re&ating to t#e adAustment, &i9uidation, and distriution
o% t#e genera& average, t#e ne3t artic&e (/48) gives to t#ose concerned H w#et#er s#ipowner (naviero) or
s#ipper H t#e rig#t to maintain an action against t#e captain %or indemni%ication %or t#e &ossC ut t#e
recognition o% t#is rig#t o% action does not ! an! means invo&ve t#e suppression o% t#e rig#t o% action w#ic#
is e&sew#ere recogni*ed in t#e s#ipper against t#e s#ip?s owner' T#e s#ipper ma! go at once upon t#e owner
and t#e &atter, i% so minded, ma! #ave #is recourse %or indemni*ation against #is captain'
11. S)ipper #ay *o at once upon t)e o.ner
T#e owner o% t#e s#ip ordinari&! #as vast&! more capita& emarked upon a vo!age t#an #as an!
individua& s#ipper o% cargo' Moreover, t#e owner o% t#e s#ip, in t#e person o% t#e captain, #as comp&ete and
e3c&usive contro& o% t#e crew and o% t#e navigation o% t#e s#ip, as we&& as o% t#e disposition o% t#e cargo at t#e
end o% t#e vo!age' ,t is t#ere%ore proper t#at an! person w#ose propert! ma! #ave een cast overoard !
order o% t#e captain s#ou&d #ave a rig#t o% action direct&! against t#e s#ip?s owner %or t#e reac# o% an! dut!
w#ic# t#e &aw ma! #ave imposed on t#e captain wit# respect to suc# cargo'
1-. ;ntent o, t)e Co+e
T#e evident intention o% t#e $ode, taken in a&& o% its provisions, is to p&ace t#e primar! &iai&it! upon
t#e person w#o #as actua& contro& over t#e conduct o% t#e vo!age and w#o #as most capita& emarked in t#e
venture, name&!, t#e owner o% t#e s#ip, &eaving #im to otain recourse, as it is ver! eas! to do, %rom ot#er
individua&s w#o #ave een drawn into t#e venture as s#ippers'
13. 5#ount to $e recovere+
T#e tota& va&ue o% t#e Aettisoned cargo, e&onging part&! to "tandard (i& and part&! to anot#er s#ipper,
was P//2'34, o% w#ic# P01.'.4 represented t#e va&ue o% "tandard (i&?s petro&eum' Dpon t#e apportionment
o% t#is tota& &oss among t#e di%%erent interests invo&ved, to wit, va&ue o% s#ip, va&ue o% cargo, and t#e earned
ut &ost %reig#t, it appears t#at t#e amount o% t#e &oss apportiona&e to "tandard (i& is P11'8/' Deducting t#is
%rom t#e va&ue o% t#e petro&eum, t#e resu&t, is t#e amount o% P02/'>0, w#ic# is t#e amount %or w#ic# Audgment
s#ou&d e given'
[,] #. =artini Ltd. v. =acondra- 7 Co. , see [/0]
[,] tandard Dil v. Lope$ Castelo, see [3!7]
[-"4]
Bar9ue vs. S#it) Bell (GR 3-%4! 11 7ove#$er 1%3")
Bn 1anc (strand (J): 4 concur
&acts' Francisco Jar9ue was t#e owner o% t#e motoroat Pandan and #e&d a marine insurance po&ic! %or t#e
sum o% P54,222 on t#e oat, t#e po&ic! eing issued ! t#e Eationa& Dnion Fire ,nsurance $ompan! and
according to t#e provisions o% a ;rider< attac#ed to t#e po&ic!, t#e insurance was against t#e ;aso&ute tota&
&oss o% t#e vesse& on&!'< (n 31 (ctoer 1.8/, t#e s#ip ran into ver! #eav! sea o%% t#e ,s&and o% Tic&in, and it
ecame necessar! to Aettison a portion o% t#e cargo' 7s a resu&t o% t#e Aettison, t#e Eationa& Dnion Fire
,nsurance $ompan! was assessed in t#e sum o% P8,>12'/> as its contriution to t#e genera& average' T#e
insurance compan!, insisting t#at its o&igation did not e3tend e!ond t#e insurance o% t#e ;aso&ute tota& &oss
o% t#e vesse& on&!, and to pa! proportionate sa&vage o% t#e dec&ared va&ue,< re%used to contriute to t#e
sett&ement o% t#e genera& average'
Jar9ue instituted t#e present action, and a%ter tria& t#e court e&ow rendered Audgment in %avor o% Jar9ue and
ordered t#e Eationa& Dnion Fire ,nsurance $ompan! to pa! t#e %ormer t#e sum o% P8,>12'/> as its part o% t#e
indemnit! %or t#e genera& average roug#t aout ! t#e Aettison o% cargo' T#e insurance compan! appea&ed to
t#e "upreme $ourt'
T#e "upreme $ourt a%%irmed t#e appea&ed Audgment wit# t#e costs against Dnion Fire ,nsurance $o'
1. Contents o, t)e insurance contract' clause
T#e insurance contract is printed in t#e Bng&is# common %orm o% marine po&icies' (ne o% t#e c&auses
o% t#e document origina&&! read as %o&&ows: ;Touc#ing t#e 7dventures and Peri&s w#ic# t#e said Eationa&
Dnion Fire ,nsurance $ompan! is content to ear, and to take upon t#em in t#is Vo!ageC t#e! are o% t#e "eas,
Men=o%=Far, Fire, Pirates, T#ieves, Jettison, +etters o% Mart and $ountermart, "urprisa&s, and Takings at "ea'
7rrests, :estraints and Detainments, o% a&& Pings, Princes and Peop&e o% w#at Eation, $ondition or Nua&it!
soeverC 1arratr! o% t#e Master and Marines, and o% a&& ot#er Peri&s, +osses and Mis%ortunes, t#at #ave or s#a&&
come to t#e @urt, Detriment, or Damage o% t#e said Vesse& or an! part t#ereo%C and in case o% an! +oss or
Mis%ortunes, it s#a&& e &aw%u& %or t#e 7ssured, #is or t#eir Factors, "ervants, or assigns, to sue, &aour and
trave& %or, in and aout t#e De%ence' "a%eguard, and recover! o% t#e said Vesse& or an! part t#ereo%, wit#out
PreAudice to t#is ,nsuranceC to t#e $#arges w#ereo% t#e said $ompan!, wi&& contriute, according to t#e rate
and 9uantit! o% t#e sum #erein assured' 7nd it is agreed t#at t#is Friting or Po&ic! o% ,nsurance s#a&& e o% as
muc# %orce and Virtue as t#e surest Friting or Po&ic! o% ,nsurance made in +(ED(E'<
-. Contents o, t)e insurance ocntract' ri+er
7ttac#ed to t#e po&ic! over and aove t#e said c&ause is a ;rider< containing t!pewritten provisions,
among w#ic# appears in capita&i*ed t!pe t#e %o&&owing c&ause: ;767,E"T T@B 71"(+DTB T(T7+ +(""
(F T@B VB""B+ (E+O, 7ED T( P7O P:(P(:T,(E7TB "7+V76B $@7:6B" (F T@B DB$+7:BD
V7+DB'< 7t t#e ottom o% t#e same rider %o&&owing t#e t!pewritten provisions t#erein set %ort# are t#e
%o&&owing words: ;7ttac#ing to and %orming part o% t#e Eationa& Dnion Fire ,nsurance $o', @u&& Po&ic! Eo'
1244'<
3. Eritten portion prevails over printe+ portion! .)en repu*nance exists $et.een t)e#
,n case repugnance e3ists etween written and printed portions o% a po&ic!, t#e written portion
prevai&s, and t#ere can e no 9uestion t#at as %ar as an! inconsistenc! e3ists, t#e aove=mentioned t!ped
;rider< prevai&s over t#e printed c&ause it covers' "ection 8.1 o% t#e $ode o% $ivi& Procedure provides t#at
;w#en an instrument consists part&! o% written words and part&! o% a printed %orm and t#e two are
inconsistent, t#e %ormer contro&s t#e &atter'<
/. Lia$ility ,or contri$ution to *eneral avera*e $ase+ on 9uasi>contract i#plie+ $y la.! not to
contractual stipulations
,n t#e asence o% positive &egis&ation to t#e contrar!, t#e &iai&it! o% t#e de%endant insurance compan!
on its po&ic! wou&d, per#aps, e &imited to ;aso&ute &oss o% t#e vesse& on&!, and to pa! proportionate sa&vage
o% t#e dec&ared va&ue'< 1ut t#e po&ic! was e3ecuted in t#is Aurisdiction and ;warranted to trade wit#in t#e
waters o% t#e P#i&ippine 7rc#ipe&ago on&!'< @ere t#e &iai&it! %or contriution in genera& average is not ased
on t#e e3press terms o% t#e po&ic!, ut rests upon t#e t#eor! t#at %rom t#e re&ation o% t#e parties and %or t#eir
ene%it, a 9uasi contract is imp&ied ! &aw'
2. 5rticle 42% o, t)e Co+e o, Co##erce6 in ,orce! #an+atory
7rtic&e /4. o% t#e $ode o% $ommerce, sti&& in %orce, provides ;t#e underwriters o% t#e vesse&, o% t#e
%reig#t, and o% t#e cargo s#a&& e o&iged to pa! %or t#e indemnit! o% t#e gross average in so %ar as is re9uired
o% eac# one o% t#ese oAects respective&!'< T#e artic&e is mandator! in its terms, and t#e insurers, w#et#er %or
t#e vesse& or %or t#e %reig#t or %or t#e cargo, are ound to contriute to t#e indemnit! o% t#e genera& average'
7nd t#ere is not#ing un%air in t#at provisionsC it simp&! p&aces t#e insurer on t#e same %ooting as ot#er
persons w#o #ave an interest in t#e vesse&, or t#e cargo t#erein, at t#e time o% t#e occurrence o% t#e genera&
average and w#o are compe&&ed to contriute'
. Bettison o, car*o necessary to save s)ip6 Bene,it inure+ to t)e un+er.riter
T#e s#ip was in grave peri& and t#at t#e Aettison o% part o% t#e cargo was necessar!' ,% t#e cargo was in
peri& to t#e e3tent o% ca&& %or genera& average, t#e s#ip must a&so #ave een in great danger, possi&! su%%icient
to cause its aso&ute &oss' T#e Aettison was t#ere%ore as muc# to t#e ene%it o% t#e underwriter as to t#e owner
o% t#e cargo' ,% no Aettison #ad taken p&ace and i% t#e s#ip ! reason t#ereo% #ad %oundered, t#e underwriter?s
&oss wou&d #ave een man! times as &arge as t#e contriution now demanded'
[-"%]
(axica$ 8perators v. ()e Boar+ o, (ransportation [GR L>2%-3/! 3" Septe#$er 1%4-]
Bn 1anc, Me&encio=@errera (p): 18 concur, 8 concur in t#e resu&t
&acts' Ta3ica (perators o% Metro Mani&a, ,nc' (T(MM,) is a domestic corporation composed o% ta3ica
operators, w#o are grantees o% $erti%icates o% Pu&ic $onvenience to operate ta3icas wit#in t#e $it! o%
Mani&a and to an! ot#er p&ace in +u*on accessi&e to ve#icu&ar tra%%ic' 7ce Transportation $orporation and
Fe&icisimo $aigao are two o% t#e memers o% T(MM,, eac# eing an operator and grantee o% suc# certi%icate
o% pu&ic convenience'
(n 12 (ctoer 1.00, 1oard o% Transportation (1(T) issued Memorandum $ircu&ar 00=58 w#ic# p#ases out
o&d and di&apidated ta3isC re%using registration to ta3i units wit#in t#e Eationa& $apito& :egion #aving !ear
mode&s over > !ears o&d' Pursuant to t#e aove 1(T circu&ar, Director o% t#e 1ureau o% +and Transportation
(1+T) issued ,mp&ementing $ircu&ar 48, dated 14 7ugust 1./2, instructing t#e :egiona& Director, t#e MV
:egistrars and ot#er personne& o% 1+T, a&& wit#in t#e E$:, to imp&ement said $ircu&ar, and %ormu&ating a
sc#edu&e o% p#ase=out o% ve#ic&es to e a&&owed and accepted %or registration as pu&ic conve!ances' ,n
accordance t#erewit#, cas o% mode& 1.01 were p#ase=out in registration !ear 1.0/C t#ose o% mode& 1.08, in
1.0.C t#ose o% mode& 1.03, in 1./2C and t#ose o% mode& 1.05, in 1./1'
(n 80 Januar! 1./1, petitioners %i&ed a Petition wit# t#e 1(T ($ase /2=0443), seeking to nu&&i%! M$ 00=58
or to stop its imp&ementationC to a&&ow t#e registration and operation in 1./1 and suse9uent !ears o% ta3icas
o% mode& 1.05, as we&& as t#ose o% ear&ier mode&s w#ic# were p#ased=out, provided t#at, at t#e time o%
registration, t#e! are roadwort#! and %it %or operation' (n 1> Feruar! 1./1, petitioners %i&ed e%ore t#e 1(T
a ;Mani%estation and Drgent Motion<, pra!ing %or an ear&! #earing o% t#eir petition' T#e case was #eard on 82
Feruar! 1./1' (n 8/ Eovemer 1./1, petitioners %i&ed e%ore t#e same 1oard a ;Mani%estation and Drgent
Motion to :eso&ve or Decide Main Petition< pra!ing t#at t#e case e reso&ved or decided not &ater t#an 12
Decemer 1./1 to ena&e t#em, in case o% denia&, to avai& o% w#atever remed! t#e! ma! #ave under t#e &aw
%or t#e protection o% t#eir interests e%ore t#eir 1.04 mode& cas are p#ased=out on 1 Januar! 1./8'
Petitioners, t#roug# its President, a&&eged&! made persona& %o&&ow=ups o% t#e case, ut was &ater in%ormed t#at
t#e records o% t#e case cou&d not e &ocated' (n 8. Decemer 1./1, t#e present Petition was instituted'
T#e "upreme $ourt denied t#e writs pra!ed %or and dismissed t#e petitionC wit#out costs'
1. :roce+ural an+ Su$stantive <ue :rocess6 Statutory Construction' @=ayA
PD 121 grants to t#e 1oard o% Transportation t#e power to %i3 Aust and reasona&e standards,
c&assi%ication, regu&ations, practices, measurements, or service to e %urnis#ed, imposed, oserved, and
%o&&owed ! operators o% pu&ic uti&it! motor ve#ic&es' "ection 8 o% said Decree provides procedura&
guide&ines %or said agenc! to %o&&ow in t#e e3ercise o% its powers' +eewa! was accorded t#e 1oard giving it a
wide range o% c#oice in gat#ering necessar! in%ormation or data in t#e %ormu&ation o% an! po&ic!, p&an or
program' ,t is not mandator! t#at it s#ou&d %irst ca&& a con%erence or re9uire t#e sumission o% position papers
or ot#er documents %rom operators or persons w#o ma! e a%%ected, t#is eing on&! one o% t#e options open to
t#e 1oard, w#ic# is given wide discretionar! aut#orit!'
-. <ispensin* .it) a pu$lic )earin* prior to issuance o, Circulars not violative o, proce+ural +ue
process
Dispensing wit# a pu&ic #earing prior to t#e issuance o% t#e $ircu&ars is not vio&ative o% procedura&
due process' Previous notice and #earing as e&ements o% due process, are constitutiona&&! re9uired %or t#e
protection o% &i%e or vested propert! rig#ts, as we&& as o% &iert!, w#en its &imitation or &oss takes p&ace in
conse9uence o% a Audicia& or 9uasi=Audicia& proceeding, genera&&! dependent upon a past act or event w#ic#
#as to e esta&is#ed or ascertained' ,t is not essentia& to t#e va&idit! o% genera& ru&es or regu&ations
promu&gated to govern %uture conduct o% a c&ass or persons or enterprises, un&ess t#e &aw provides ot#erwise'
($entra& 1ank vs' $&orie& and 1anco Fi&ipino)
3. 5+option o, a reasona$le stan+ar+6 Re9uire#ent o, +ue process #et
,t is impractica& to suAect ever! ta3ica to constant and recurring eva&uation to determine its road=
wort#iness, not to speak o% t#e %act t#at it can open t#e door to t#e adoption o% mu&tip&e standards, possi&e
co&&usion, and even gra%t and corruption' 7 reasona&e standard must e adopted to app&! to a&& ve#ic&es
a%%ected uni%orm&!, %air&!, and Aust&!' T#e span o% si3 !ears supp&ies t#at reasona&e standard' T#e product o%
e3perience s#ows t#at ! t#at time ta3is #ave %u&&! depreciated, t#eir cost recovered, and a %air return on
investment otained' T#e! are a&so genera&&! di&apidated and no &onger %it %or sa%e and com%orta&e service to
t#e pu&ic specia&&! considering t#at t#e! are in continuous operation practica&&! 85 #ours ever!da! in t#ree
s#i%ts o% eig#t #ours per s#i%t' Fit# t#at standard o% reasona&eness and asence o% aritrariness, t#e
re9uirement o% due process #as een met'
/. D9ual :rotection o, t)e La.6 Su$stantial +istinction6 Rationale o, initial i#ple#entation in
=etro =anila
B9ua& protection c&ause does not imp&! t#at t#e same treatment e accorded a&& and sundr!' ,t app&ies
to t#ings or persons identica&&! or simi&ar&! situated' ,t permits o% c&assi%ication o% t#e oAect or suAect o% t#e
&aw provided c&assi%ication is reasona&e or ased on sustantia& distinction, w#ic# make %or rea& di%%erences,
and t#at it must app&! e9ua&&! to eac# memer o% t#e c&ass' F#at is re9uired under t#e e9ua& protection c&ause
is t#e uni%orm operation ! &ega& means so t#at a&& persons under identica& or simi&ar circumstance wou&d e
accorded t#e same treatment ot# in privi&ege con%erred and t#e &iai&ities imposed'T#e c#a&&enged $ircu&ars
satis%! t#e %oregoing criteria' T#e $ircu&ar was en%orced initia&&! in Metro Mani&a is t#at ta3icas in said
metropo&is, compared to t#ose o% ot#er p&aces, are suAected to #eavier tra%%ic pressure and more constant use
(common know&edge)' $onsidering t#at tra%%ic conditions are not t#e same in ever! cit!, a sustantia&
distinction e3ists so t#at in%ringement o% t#e e9ua& protection c&ause can #ard&! e success%u&&! c&aimed' T#e
imp&ementation o% t#e $ircu&ar outside Metro Mani&a was a&so envisioned in M$ 00=58 as its provision
provides t#at ;%or an order&! imp&ementation o% t#is Memorandum $ircu&ar, t#e ru&es W s#a&& immediate&! e
e%%ective in Metro Mani&a' ,ts imp&ementation outside Metro Mani&a s#a&& e carried out on&! a%ter t#e proAect
#as een imp&emented in Metro Mani&a and on&! a%ter t#e date #as een determined ! t#e 1oard'< Furt#er,
t#e imp&ementation o% t#e $ircu&ars in $eu $it! is a&read! eing e%%ected, wit# t#e 1(T in t#e process o%
conducting studies regarding t#e operation o% ta3icas in ot#er cities'
2. Rationale $e)in+ exercise o, police po.er
T#e overriding consideration is t#e sa%et! and com%ort o% t#e riding pu&ic %rom t#e dangers posed !
o&d and di&apidated ta3is' T#e "tate, in t#e e3ercise o% its po&ice power, can prescrie regu&ations to promote
t#e #ea&t#, mora&s, peace, good order, sa%et! and genera& we&%are o% t#e peop&e' ,t can pro#iit a&& t#ings
#urt%u& to com%ort, sa%et! and we&%are o% societ!' ,t ma! a&so regu&ate propert! rig#ts' T#e necessities
imposed ! pu&ic we&%are ma! Austi%! t#e e3ercise o% governmenta& aut#orit! to regu&ate even i% t#ere!
certain groups ma! p&ausi&! assert t#at t#eir interests are disregarded'
[-1"]
7apocor vs. C5 (GR 1131"3! 13 Bune 1%%3)
*ro6t $!n7 vs. CA )*+ 11/000-
First Division, @ermosisima Jr' (J): 3 concur, 1 on &eave
&acts' 6rowt# +ink is a du&! registered domestic corporation w#i&e EP$ is a du&! organi*ed government
corporate entit! w#i&e t#e individua& $onrado D' de& :osario and Marce&ino ,&ao are o%%icers and-or memers
o% t#e EO$ 1oard o% Directors, e3cept t#at $onrado De& :osario and $rispin T' Da&do are no &onger
connected wit# EP$'
7s a matter o% procedure, EP$ dea&t on&! wit# accredited supp&iers and EP$ recogni*ed 6rowt# +ink as du&!
accredited' 7t t#e start in 1./8 6rowt# +ink comp&ied wit# t#e accreditation re9uirements o% EP$ !
sumitting vo&uminous documents &ike t#e artic&es o% incorporation o% 6+,, corporate pro%i&e, appointment o%
6rowt# +ink as e3c&usive supp&ier and distriutor o% spare parts ! %oreign manu%acturers, supp&iers?
warranties, cata&ogues, compan! pro%i&e and ot#er in%ormation aout %oreign supp&iers' 7nd, more
important&!, it did not an!more undergo t#e same process and suse9uent iddings t#at 6rowt# +ink
participated in' "o t#at t#e accreditation was a continuing one and not on a per transaction asis' "ince 1./8
w#en, as admitted, 6rowt# +ink was pre=9ua&i%ied as EP$ supp&ier, up to t#e time in 1./0 w#en EP$ re%used
to do usiness wit# t#e %ormer, t#e &atter #ad numerous sa&es t#roug# pu&ic iddings wit# a tota& va&ue o%
over P>2 mi&&ion' 6rowt# +ink was t#e &owest idder and t#e most advantageous idder in severa& ot#er
iddings ut EP$ did not issue t#e awards' (n 13 Feruar! 1./0 EP$ announced its decision to stop
transacting usiness wit# 6rowt# +ink and was &ack&isted due to vio&ation o% t#e conditions o% t#e contract,
i'e' t#at 6rowt# +ink supp&ied second #and piston skirts, t#at piston rings supp&ied ! it did not reac# t#e
re9uired running #ours, and t#at 6rowt# +ink supp&ied e3#aust va&ve odies manu%actured ! FuAi Diese& +td'
w#ic# was not &icensed ! "BMT' 6rowt# +ink re%uted t#e c#arges in severa& &etters and was asking %or
opportunit! to e #eard at a %orma& #earing on t#e re9uest %or reconsideration ut same was not acted upon !
EP$'
6rowt# +ink %i&ed a petition %or mandamus wit# pre&iminar! inAunction and damages wit# t#e tria& court on /
Feruar! 1.//' T#e tria& court reso&ved 6rowt# +ink?s app&ication %or pre&iminar! mandator! inAunction in an
order dated 3 June 1.// ordering t#at EP$, during t#e pendenc! o% said motion %or reconsideration and w#i&e
t#e same is unreso&ved %ina&&! ! t#e $ourt, to temporari&! &i%t t#e suspension o% 6rowt# +ink as du&!
accredited EP$ supp&ier, cance& its name %rom EP$?s &ack&ist, and a&&ow 6rowt# +ink to participate and-or
sumit its id proposa&s at EP$ iddings, upon t#e same ond o% P8,854,/81'43 previous&! %i&ed ! 6rowt#
+inkC %inding t#at t#e EP$ condemned 6rowt# +ink as a &ack&isted idder and supp&ier wit#out #earing and
t#us deprived it o% its rig#ts wit#out due process' Eapocor?s motion %or reconsideration o% t#e order was
denied on 80 "eptemer 1.//' 7%ter tria& on t#e merits, t#e court a 9uo rendered t#e decision dated 12
"eptemer 1..1 in %avor o% 6rowt# +ink' T#e tria& court %ound t#e EP$ gui&t! o% gross evident ad %ait# in its
dea&ings wit# 6rowt# +ink as its du&! accredited supp&ier' $onse9uent&!, it ordered t#e EP$ and its o%%icers
and memers o% t#e 1oard o% Directors, to Aoint&! and severa&&! pa! 6rowt# +ink (a) P832,222'22
representing t#e cost o% t#e rep&aced piston skirts under P( 2/>>43 p&us 18I interest per annum %rom . 7pri&
1./> unti& %u&&! paidC () P1>,/02'22 w#ic# was t#e amount deducted ! EP$ %rom 6rowt# +ink?s
outstanding co&&ecti&es, p&us 18I interest per annum %rom 1/ Eovemer 1./4 unti& %u&&! paidC (c)
P155,222'22 %or pa!ment o% items de&ivered under P( 2.4534 p&us 18I interest per annum %rom 13
Eovemer 1./> unti& %u&&! paidC (d) P80,>42'22 %or pa!ment o% items de&ivered under P( 2.>354 p&us 18I
interest per annum %rom 5 7pri& 1./0 unti& %u&&! paidC (e) P1/8,202'22 %or pa!ment o% items de&ivered under
P( 2.>>8> p&us 18I interest per annum %rom 5 7pri& 1./0 unti& %u&&! paidC (%) P10>,34>'22 representing
unrea&i*ed commission on t#e cance&&ed ,ndent (rder 2/115 dated 85 Ma! 1./4 p&us 18I interest per annum
%rom Eovemer 1./4 unti& %u&&! paidC (g) P1,85.,054'22 representing unrea&i*ed commission on t#e Foreign
,n9uir! F8c/5=3-4=1280 and 128/Tr %or Pie&stick Bngine "pares, p&us 18I interest per annum %rom
"eptemer 1./> unti& %u&&! paidC (#) P>,81>,4/3'22 representing unrea&i*ed commissions on various items
idded w#ere 6rowt# +ink was t#e &owest idder ut w#ic# was not awarded ! EP$ to it, P&us 18I interest
per annum %rom Ju&! 1./> unti& %u&&! paidC (i) P1,51.,/43'22 representing unpaid commission %rom t#e
disregarded &owest id o% 6rowt# +ink?s principa& on EP$ Foreign ,n9uir! FP"/4=11-8>=1877, FP"/4=
11-8>=18177 and FP"/4=11- >=22477, p&us 18I interest per annum %rom (ctoer 1./0 unti& %u&&! paidC (A)
P8,222,222'22 %or compensator! damages su%%ered ! 6rowt# +ink due to &oss o% usiness re&ations#ip and
standing in t#e P#i&ippines and aroadC (k) P1,422,222'22 %or mora& and e3emp&ar! damages su%%ered !
6rowt# +inkC (&) P32,222'22 p&us 32I o% t#e principa& amount recovera&e, as and %or attorne!?s %eesC (m)
P52,222'22 as &itigation e3penses (premiums paid on t#e inAunction ond, etc')C and (n) $osts o% suit'
:e%using to concede its so&idar! &iai&it! %or t#e a%oregoing amounts, t#e EP$, and its o%%icers and memers
o% its 1oard o% Directors appea&ed t#e tria& court?s decision to t#e $ourt o% 7ppea&s' T#e respondent $ourt o%
7ppea&s in e%%ect a%%irmed t#e tria& court?s %indings o% gross evident ad %ait# on t#e part o% EP$' 1ut w#i&e
t#e appe&&ate court a%%irmed t#e tria& court?s %inding o% gross evident ad %ait# on t#e part o% EP$, it reversed
t#e tria& court inso%ar as it %ound EP$ &ia&e %or amounts c&aimed ! 6rowt# +ink to e unrea&i*ed
commissions proper&! accruing to t#em #ad t#e EP$ recogni*ed t#em as t#e &owest and most advantageous
idder under severa& %oreign in9uiries' 7s to t#e awards %or compensator!, mora& and e3emp&ar! damages, t#e
$ourt o% 7ppea&s %ound va&id asis t#ere%or under t#e circumstances or t#ese conso&idated cases, ut t#e
appe&&ate court was no &ess struck ! t#e enormit! o% t#e amounts awarded ! t#e tria& court as damages' T#us
it reduced t#e same to to P1,222,222'22 %or compensator! damages and to P422,222'22 %or mora& and
e3emp&ar! damages' T#e appe&&ate court overturned t#e %inding t#at t#e o%%icers and memers o% t#e 1oard o%
Directors o% t#e EP$ s#ou&d e made Aoint&! and so&idari&! &ia&e wit# t#e EP$, inasmuc# as t#e! were sued
in t#eir o%%icia& capacities' From t#e Decision o% t#e $ourt o% 7ppea&s, ot# 6rowt# +ink and t#e EP$ and its
o%%icers and memers o% t#e 1oard o% Directors'
T#e "upreme $ourt dismissed t#e instant conso&idated petitions %or &ack o% meritC wit#out pronouncement as
to costs'
1. ;ssue on a#ount o, attorney1s ,ees *rante+ .aive+
@erein, EP$ never assigned t#e issue o% t#e e3oritant amount awarded to 6rowt# +ink as and !
wa! o% attorne!?s %ees, as an error on appea&' T#us, inso%ar as t#e amount o% t#e attorne!?s %ees granted ! t#e
tria& court is concerned, t#e same must e deemed no &onger open to modi%ication, muc# &ess, reduction, t#e
person supposed&! aggrieved t#ere! #aving resonant&! een si&ent on t#is issue in its appea& e%ore t#e
appe&&ate court'
-. 5ttorney1s ,ees *rante+ #ay $e )u*e $y or+inary stan+ar+s! re#ains .arrante+
7t an! rate, t#e "upreme $ourt court, in at &east two (8) occasions, #as a&&owed an award o% 82I to
84I o% t#e tota& indetedness invo&ved in t#e &itigation' @erein, 6rowt# +ink pra!ed %or and was awarded !
t#e tria& court, t#e amount o% P32,222'22 and 32I o% t#e amount recovera&e, as and ! wa! o% attorne!?s
%ees' F#i&e said amount ma! itse&% e #uge ! ordinar! standards, t#e $ourt e&ieves t#at t#e same is
warranted w#en tested against t#e criteria t#at serve as reg&ementar! guide %or t#e courts to determine t#e
proper amount o% attorne!?s %ees due t#e winning part!'
3. Grant o, exe#plary +a#a*es a le*al ?usti,ication ,or t)e a.ar+ o, attorney1s ,ees
7nent t#e c&aim o% EP$ t#at t#e decision o% t#e tria& court does not contain an! discussion o% t#e
asis %or t#e award o% attorne!?s %ees, su%%ice it to sa! t#at t#e tria& court undisputed&! awarded e3emp&ar!
damages, w#ic# award is itse&% a &ega& Austi%ication, under 7rtic&e 882/ 10 o% t#e $ivi& $ode, %or t#e award o%
attorne!?s %ees'

/. (ec)nicalities t)at +e,eat su$stantial ?ustice cannot +eprive parties o, statutory ri*)t to appeal
Tec#nica&ities t#at de%eat sustantia& Austice are, ! t#e "upreme $ourt?s po&ic!, an unpre%erred asis
to deprive parties o% t#eir statutor! rig#t to appea& a decision t#at is %ata&&! %&awed in certain respects' @erein,
it cannot e said t#at t#e decision o% t#e tria& court s#ou&d e deemed %ina& and e3ecutor! inso%ar as EP$?s
o%%icers and memers o% t#e 1oard o% Directors are concerned, ecause t#e! did not appea& t#e tria& court?s
decision' T#e caption o% EP$?s Eotice o% 7ppea& and Motion %or :econsideration, w#ic# state, ;E7T,(E7+
P(FB: $(:P(:7T,(E, BT 7+', :espondents'< "igni%icant&!, 6rowt# +ink?s (pposition to t#e Motion %or
:econsideration made re%erence to t#e EP$ o%%icers and memers o% t#e 1oard o% Directors, in its arguments'
2. Soli+arily lia$ility o, 7:C an+ its o,,icers an+ #e#$ers o, t)e Boar+ o, <irectors patently
$aseless
T#e %inding o% so&idar! &iai&it! among t#e EP$ and its o%%icers and memers o% t#e 1oard o%
Directors, is patent&! ase&ess' T#e decision o% t#e tria& court contains no suc# a&&egation, %inding or
conc&usion regarding particu&ar acts committed ! said o%%icers and memers o% t#e 1oard o% Directors t#at
s#ow t#em to #ave een individua&&! gui&t! o% unmistaka&e ma&ice, ad %ait#, or i&&=motive in t#eir persona&
dea&ings wit# 6rowt# +ink' ,n %act, it was on&! in t#e dispositive portion o% t#e decision o% t#e court a 9uo
t#at so&idar! &iai&it! as suc# was %irst mentioned'
. 8,,icers an+ $oar+ #e#$ers #erely no#inal parties6 7:C alone lia$le ,or its corporate acts as
+uly aut)oriJe+ $y its o,,icers an+ +irectors
EP$?s o%%icers and memers o% t#e 1oard o% Directors were sued mere&! as nomina& parties in t#eir
o%%icia& capacities as suc#' T#e! were imp&eaded ! 6rowt# +ink not in t#eir persona& capacities as
individua&s ut in t#eir o%%icia& capacities as o%%icers and memers o% t#e 1oard o% Directors t#roug# w#om
t#e EP$ conducts usiness and undertakes its operations pursuant to its avowed corporate purposes'
T#ere%ore, as a ona%ide government corporation, EP$ s#ou&d a&one e &ia&e %or its corporate acts as du&!
aut#ori*ed ! its o%%icers and directors' T#ere was not#ing in 6rowt# +ink?s petition nor in t#e mass o%
evidence pro%%ered, t#at esta&is#ed t#e %actua& or &ega& asis to #o&d t#e o%%icers and memers o% t#e 1oard o%
Directors o% t#e EP$ Aoint&! and severa&&! &ia&e wit# t#e EP$ %or t#e damages su%%ered ! 6rowt# +ink
ecause o% acts o% gross evident ad %ait# on t#e part o% t#e EP$ as a corporate entit! acting t#roug# its
o%%icers and directors'
3. Corporation veste+ .it) separate +istinct personality ,ro# t)ose persons co#posin* it6 :iercin*
t)e veil o, corporate ,iction
7 corporation is invested ! &aw wit# a separate persona&it!, separate and distinct %rom t#at o% t#e
persons composing it as we&& as %rom an! ot#er &ega& entit! to w#ic# it ma! e re&ated' 7 corporation is an
arti%icia& person and can transact its usiness on&! t#roug# its o%%icers and agents' Eecessari&!, someod! #as
to act %or it' T#e separate persona&it! o% t#e corporation ma! e disregarded, or t#e vei& o% corporate %iction
pierced and t#e individua& stock#o&ders ma! e persona&&! &ia&e to o&igations o% t#e corporation on&! w#en
t#e corporation is used as a c&oak or cover %or %raud or i&&ega&it!, or to work an inAustice, or w#ere necessar! to
ac#ieve e9uit! or w#en necessar! %or t#e protection o% creditors'
4. ;rrepara$le +a#a*e .rou*)t on Gro.t) Link1s $usiness an+ reputation calls ,or reparation
T#e $ourt empat#i*ed wit# 6rowt# +ink, especia&&! wit# its owner=president, Teodoro Migue&, w#ose
sincere testimon! as to t#e irrepara&e damage wroug#t on #is usiness and persona& reputation ! EP$?s act
o% &ack&isting #is compan!, does ca&& %or some reparation in t#e %orm o% sustantia& damages'
%. Su$stantial +a#a*es +o not translate into excessive +a#a*es
T#e award o% damages as Gwe&& as attorne!?s %ees &ies upon t#e discretion o% t#e court in t#e conte3t o%
t#e %acts and circumstances o% eac# case, and t#is Audicia& discretion is &arge&! addressed towards tempering
an! tendenc! to award e3cessive damages so muc# so t#at it stands vu&nera&e to and actua&&! magneti*es,
attacks as to its eing a resu&t o% passion, preAudice or corruption' @erein, P8,222,222'22 as compensator!
damages and P1,422,222'22 as mora& and e3emp&ar! damages, are too muc#' F#i&e EP$ ma! e accounta&e
%or &ost pro%its t#at 6rowt# +ink ma! #ave gained %rom its dea&ings wit# t#e EP$ itse&%, EP$ cannot e made
to ear t#e urden o% answering %or w#at ot#er pro%its t#at 6rowt# +ink ma! #ave earned %rom ot#er contracts
wit# ot#er companies' EP$ ma! #ave accredited 6rowt# +ink as a supp&ier, ut it did not t#ere! ecome
6rowt# +ink?s insurer %or a&& and an! pro%ita&e contracts t#at 6rowt# +ink ma! otain'
1". 7on>+enial o, alle*ation in t)e co#plaint results in a+#issions t)ereo,6 Dxceptions
T#e genera& ru&e is t#at non=denia& o% a&&egations in t#e comp&aint resu&ts in admissions t#ereo%' T#is
ru&e, #owever, is, Aust &ike an! ot#er ru&e, not aso&ute and corresponding&! admits o% e3ceptions' T#us, in
spite o% t#e presence o% Audicia& admissions in a part!?s p&eading, t#e tria& court is sti&& given &eewa! to
consider ot#er evidence presented' T#is ru&e s#ou&d app&! wit# more reason w#en t#e parties #ad agreed to
sumit an issue %or reso&ution o% t#e tria& court on t#e asis o% t#e evidence presented'
11. 5+#issions not necessarily evi+ence
"tatements made in an 7nswer are mere&! statements o% %act w#ic# t#e part! %i&ing it e3pects to prove,
ut t#e! are not evidence' Fit# more reason, statements made in t#e comp&aint, or in t#is case, in t#e Petition
%or Mandamus wit# Pre&iminar! Mandator! ,nAunction and Damages, w#ic# are not direct&! re%uted in t#e
7nswer, are deemed admissions ut neit#er are t#e! evidence t#at wi&& prevai& over documentar! proo%s'
1-. <iscretion o, t)e 7:C to re?ect any or all $i+s
Judicia& admissions cannot prevai& over t#e ru&es and regu&ations governing t#e idding %or EP$
contracts, w#ic# necessari&! and in#erent&! inc&ude t#e reservation ! t#e EP$ o% its rig#t to reAect an! or a&&
ids' T#is discretion is o% suc# wide &atitude t#at t#e courts wi&& not genera&&! inter%ere wit# t#e e3ercise
t#ereo% ! t#e government, un&ess it is apparent t#at it is used as a s#ie&d to a %raudu&ent award or an
un%airness or inAustice is c&ear&! s#own' @erein, ! its own assertion, 6rowt# +ink #as een a regu&ar idder
%or EP$ contracts' ,t cannot den!, muc# &ess pretend ignorance o%, t#e reserved discretion o% t#e EP$ to
accept or reAect an! id' ,t is not EP$?s ministeria& dut! to make an automatic award to 6rowt# +ink even i% it
was t#e &owest idder' Mandamus wi&& not &ie to compe& t#e acceptance o% t#e id o% an unsuccess%u& idder'
13. Section 3%3 o, t)e 7ational 5ccountin* an+ 5u+itin* =anual6 Reservation o, ri*)ts to re?ect
any or all $i+s
"ection 3.3 (:eservation o% rig#ts to reAect an! or a&& ids)o% t#e Eationa& 7ccounting and 7uditing
Manua& provides t#at ;T#e contract wi&& e awarded to t#e contractor w#ose proposa& appears to e t#e most
advantageous to t#e 6overnment, ut t#e rig#t s#a&& e reserved to reAect an! or a&& ids, to waive an!
in%orma&it! in t#e ids received, and to accept or reAect an! items o% an! id un&ess suc# id is 9ua&i%ied !
speci%ic &imitationsC a&so to disregard t#e id o% an! %ai&ing idder, known as suc# to t#e agenc! #ead or
director, or an! id w#ic# is ovious&! una&anced or e&ow w#at t#e work can e done %or' T#e rig#t s#a&&
a&so e reserved to reAect t#e id o% a idder w#o #as previous&! %ai&ed to per%orm proper&! or comp&ete on
time contracts o% a simi&ar nature, or a id o% a idder w#o is not in a position to per%orm t#e contract' ,n %ine,
E7P($(: #as t#e rig#t to reAect an! and a&& ids, not on&! o% L6rowt# +inkM ut o% a&& ot#er idders, as we&&,
i% warranted'<
1/. C)an*e o, t)eory as to unrealiJe+ co##issions procee+in* ,ro# ,acts ,oun+e+ on contract to
,acts esta$lis)in* culpa$ility un+er 9uasi>+elict
6rowt# +ink?s c&aims %or unrea&i*ed commissions are made proceeding not %rom %acts %ounded on
contract ut %rom %acts esta&is#ing EP$?s cu&pai&it! under 9uasi=de&ict' T#ere was no suc# a&&egation in
6rowt# +ink?s petition, no %actua& %inding in t#e decision o% t#e tria& court and no error assigned e%ore t#e
$ourt o% 7ppea&s, as to an!t#ing aout EP$?s &iai&it! %or unrea&i*ed commissions ased on 9uasi=de&ict' T#e
c#ange o% t#eor! at a e&ated stage o% t#e proceedings is not surprising, ecause 6rowt# +ink indeed #as no
per%ected contract w#atsoever to s#ow in order to prove t#at its c&aims %or unrea&i*ed commissions are
an!t#ing more t#an an attempt to co&&ect on mere proposa&=ids t#at ma! #ave een t#e &owest and most
advantageous in t#eir c&ass ut nonet#e&ess remain suAect to t#e e3p&icit reservation ! t#e EP$ o% its
prerogative to reAect an! or a&& ids'
[-11]
G=CR vs. Bell (eleco#s [G.R. 7o. 1-/%. 5pril 3"! 1%%3.]
8intanar vs. &ell Aeleco%s [#.(. )o. 13+/3+]
First Division, @ermosisima Jr' (J): 8 concur, 1 concur in resu&t, 1 took no part'
&acts' (n 1. (ctoer 1..3, 1e&& Te&ecommunication P#i&ippines, ,nc' (1e&&Te&) %i&ed wit# t#e Eationa&
Te&ecommunications $ommission (ET$) an 7pp&ication %or a $erti%icate o% Pu&ic $onvenience and
Eecessit! to Procure, ,nsta&&, (perate and Maintain Eationwide ,ntegrated Te&ecommunications "ervices and
to $#arge :ates T#ere%or and wit# Furt#er :e9uest %or t#e ,ssuance o% Provisiona& 7ut#orit! (ET$ $ase .3=
5/1)' 7t t#e time o% t#e %i&ing o% t#is app&ication, private respondent 1e&&Te& #ad not een granted a &egis&ative
%ranc#ise to engage in t#e usiness o% te&ecommunications service' "ince 1e&&Te& was, at t#at time, an
unen%ranc#ised app&icant, it was e3c&uded in t#e de&ierations %or service area assignments %or &oca& e3c#ange
carrier service (n&! 6M$:, ,nc', "mart $ommunications, ,nc', ,s&a $ommunications $o', ,nc' and
,nternationa& $ommunications $orporation, among ot#ers, were ene%iciaries o% %orma& awards o% service area
assignments in 7pri& and Ma! 1..5' (n 84 Marc# 1..5, :7 0>.8 was enacted granting 1e&&Te& a
congressiona& %ranc#ise w#ic# gave private respondent 1e&&Te& t#e rig#t, privi&ege and aut#orit! to carr! on
t#e usiness o% providing te&ecommunications services' (n 18 Ju&! 1..5, 1e&&Te& %i&ed wit# t#e ET$ a second
7pp&ication (ET$ $ase .5=88.) pra!ing %or t#e issuance o% a $erti%icate o% Pu&ic $onvenience and
Eecessit! %or t#e insta&&ation, operation and maintenance o% a comined nationwide &oca& to&& (domestic and
internationa&) and tandem te&ep#one e3c#anges and %aci&ities using wire, wire&ess, microwave radio, sate&&ites
and %ier optic ca&e wit# Pu&ic $a&&ing (%%ices (P$(s) and ver! sma&& aperture antennas (V"7Ts) under an
integrated s!stem' ,n t#e second app&ication, 1e&&Te& proposed to insta&& 8,>22,222 te&ep#one &ines in 12 !ears
using t#e most modern and &atest state=o%=t#e=art %aci&ities and e9uipment and to provide a 122I digita& &oca&
e3c#ange te&ep#one network' 1e&&Te& moved to wit#draw its ear&ier app&ication docketed as ET$ $ase .3=
5/1' ,n an (rder dated 11 Ju&! 1..5, t#is ear&ier app&ication was ordered wit#drawn, wit#out preAudice'
1e&&Te&?s second app&ication was opposed ! 6M$:, ,nc', "mart $ommunications, ,nc', ,s&a
$ommunications $o', ,nc' and ,nternationa& $ommunications $orporation, $apito& Fire&ess, ,nc', Bastern
Misamis (rienta& Te&ep#one $ooperative, +iert! 1roadcasting Eetwork, ,nc', Midsa!ap $ommunication,
Eort#ern Te&ep#one, P7PTB+$(, Pi&ipino Te&ep#one $orporation, P#i&ippine 6&oa& $ommunications, ,nc',
P#i&ippine +ong Distance Te&ep#one $ompan!, P#i&ippine Te&egrap# and Te&ep#one $orporation, :adio
$ommunications o% t#e P#i&ippines, ,nc' and B3te&com and Te&ecommunications (%%ice' (n 82 Decemer
1..5, 1e&&Te& comp&eted t#e presentation o% its evidence=in=c#ie%' (n 81 Decemer 1..5, 1e&&Te& %i&ed its
Forma& (%%er o% Bvidence toget#er wit# a&& t#e tec#nica&, %inancia& and &ega& documents in support o% its
app&ication' Pursuant to its ru&es, t#e app&ication was re%erred to t#e $ommon $arriers 7ut#ori*ation
Department ($$7D) %or stud! and recommendation' (n > Feruar! 1..4, t#e $$7D sumitted to Deput!
$ommissioner Fide&o N' Dum&ao, a Memorandum mani%esting t#at ;ased on tec#nica& documents sumitted,
1e&&Te&?s proposa& is tec#nica&&! %easi&e'< "use9uent&!, t#e c#ie% o% t#e :ates and :egu&ator! Division o%
$$7D, conducted a %inancia& eva&uation o% t#e proAect proposa& o% 1e&&Te&' (n 8. Marc# 1..4, it was
dec&ared t#at 1e&&Te& #as t#e %inancia& capai&it! to support its proposed proAect at &east %or t#e initia& 8 !ears'
7greeing wit# t#e %indings and recommendations o% t#e $$7D, ET$ Deput! $ommissioners Fide&o Dum&ao
and $onsue&o Pere* adopted t#e same and e3press&! signi%ied t#eir approva& t#ereto' ,n view o% t#e %avora&e
recommendations ! t#e $$7D and two memers o% t#e ET$, t#e +ega& Department t#ereo% prepared a
working dra%t 12 o% t#e order granting provisiona& aut#orit! to 1e&&Te&' T#e said working dra%t was initia&ed
! Deput! $ommissioners Fide&o N' Dum&ao and $onsue&o Pere* ut was not signed ! $ommissioner
"imeon Pintanar'
7n3ious over t#e inaction o% t#e ET$ in t#e matter o% its petition pra!ing %or t#e issuance o% a provisiona&
aut#orit!, 1e&&Te& %i&ed on 4 Ma! 1..4 an Drgent B3=Parte Motion to :eso&ve 7pp&ication and %or t#e
,ssuance o% a Provisiona& 7ut#orit!' Eo action was taken ! t#e ET$ on t#e a%orecited motion' T#us, on 18
Ma! 1..4, 1e&&Te& %i&ed a "econd Drgent B3=Parte Motion reiterating its ear&ier pra!er' ,n an (rder dated 1>
Ma! 1..4, signed so&e&! ! $ommissioner "imeon Pintanar, t#e ET$, instead o% reso&ving t#e two pending
motions o% 1e&&Te&, set t#e said motions %or a #earing on 8. Ma! 1..4' (n said date, #owever, no #earing was
conducted as t#e same was reset on 13 June 1..4' (n t#e &atter date, 1e&&Te& %i&ed a Motion to Promu&gate
(7mending t#e Motion to :eso&ve), pra!ing %or t#e promu&gation o% t#e working dra%t o% t#e order granting a
provisiona& aut#orit! to 1e&&Te&, on t#e ground t#at t#e said working dra%t #ad a&read! een signed or initia&ed
! Deput! $ommissioners Dum&ao and Pere* w#o, toget#er, constitute a maAorit! out o% t#e t#ree
commissioners composing t#e ET$' (n 5 Ju&! 1..4, t#e ET$ denied t#e said motion in an (rder so&e&!
signed ! $ommissioner "imeon Pintanar'
(n 10 Ju&! 1..4, 1e&&Te& %i&ed wit# t#e "upreme $ourt a Petition %or $ertiorari, Mandamus and Pro#iition
seeking t#e nu&&i%ication o% t#e a%orestated (rder dated 5 Ju&! 1..4 den!ing t#e Motion to Promu&gate' (n 8>
Ju&! 1..4, t#e $ourt issued a :eso&ution re%erring said petition to t#e $ourt o% 7ppea&s %or proper
determination and reso&ution pursuant to "ection ., par' 1 o% 1P 18.' (n 83 "eptemer 1..>, t#e $ourt o%
7ppea&s promu&gated decision, granting 1e&&Te&?s petition %or a writ o% $ertiorari and Pro#iition, setting
aside ET$ Memorandum $ircu&ars 1=1=.3 and 3=1=.3 %or eing contrar! to &aw' 1e&&Te&?s petition %or
mandamus was a&so granted, directing t#e ET$ to meet and anc and to consider and act on t#e dra%t order
wit#in 14 da!s' $#airman Pintanar and t#e opposing te&ecommunications companies %i&ed t#eir separate
petitions %or review'
T#e "upreme $ourt dismissed t#e instant conso&idated petitions %or &ack o% meritC wit# costs against
petitioners'
1. 7(C is a colle*ial $o+y6 Gote re9uire#ent
ET$ is a co&&egia& od! re9uiring a maAorit! vote out o% t#e t#ree memers o% t#e commission in
order to va&id&! decide a case or an! incident t#erein' $oro&&ari&!, t#e vote a&one o% t#e c#airman o% t#e
commission, asent t#e re9uired concurring vote coming %rom t#e rest o% t#e memers#ip o% t#e commission
to at &east arrive at a maAorit! decision, is not su%%icient to &ega&&! render an ET$ order, reso&ution or decision'
-. Co##issioner 0intanar is not t)e 7ational (eleco##unications Co##ission
$ommissioner Pintanar is not t#e Eationa& Te&ecommunications $ommission' @e a&one does not
speak %or and in e#a&% o% t#e ET$' T#e ET$ acts t#roug# a t#ree=man od!, and t#e t#ree memers o% t#e
commission eac# #as one vote to cast in ever! de&ieration concerning a case or an! incident t#erein t#at is
suAect to t#e Aurisdiction o% t#e ET$' @aving een organi*ed ! B( 15> as a t#ree=man commission, t#e
ET$ is a co&&egia& od! and was a co&&egia& od! even during t#e time w#en it was acting as a one=man
regime'
3. Historical #ilieu o, t)e 7(C' C5 1/ as a#en+e+ $y R5 -33
(n 10 Eovemer 1.3>, t#e Eationa& 7ssem&! passed $ommonwea&t# 7ct 15> w#ic# created t#e
Pu&ic "ervice $ommission (P"$)' F#i&e providing t#at t#e P"$ s#a&& consist o% a Pu&ic "ervice
$ommissioner and a Deput! $ommissioner, t#e &aw made it c&ear t#at t#e P"$ was not a co&&egia& od! !
stating t#at t#e Deput! $ommissioner cou&d act on&! on matters de&egated to #im ! t#e Pu&ic "ervice
$ommissioner' 7s amended ! :7 8>00, t#e Pu&ic "ervice $ommission was trans%ormed into and emerged
as a co&&egia& od!, composed o% one Pu&ic "ervice $ommissioner and %ive (4) 7ssociate $ommissioners'
T#e amendment provided t#at contested cases and a&& cases invo&ving t#e %i3ing o% rates s#a&& e decided !
t#e $ommission en anc'
/. Historical #ilieu o, t)e 7(C' :< 1 (;nte*rate+ Reor*aniJation :lan)
(n 85 "eptemer 1.08, t#en President Ferdinand B' Marcos signed, into &aw, PD 1 adopting and
approving t#e ,ntegrated :eorgani*ation P&an w#ic#, in turn, created t#e 1oard o% $ommunications (1($) in
p&ace o% t#e P"$' T#is time, t#e new regu&ator! oard was composed o% 3 o%%icers e3ercising 9uasi=Audicia&
%unctions' (n 84 Januar! 1.0/, t#e 1($ promu&gated its ;:u&es o% Procedure and Practice< in connection
wit# app&ications and proceedings e%ore it'
2. Historical #ilieu o, t)e 7(C' D8 2/! #er*er o, B8C an+ t)e (eleco##unications Control
Bureau as 7(C
(n 83 Ju&! 1.0., President Marcos issued B3ecutive (rder 45>, creating t#e Ministries o% Pu&ic
Forks, and o% Transportation and $ommunications, merged t#e de%unct 1oard o% $ommunications and t#e
Te&ecommunications $ontro& 1ureau into a sing&e entit!, t#e Eationa& Te&ecommunications $ommission
(ET$)' T#e said &aw was issued ! t#en President Marcos in t#e e3ercise o% #is &egis&ative powers' "ec' 1> o%
B( 45> provides t#at ;t#e $ommission s#a&& e composed o% a $ommissioner and two Deput!
$ommissioners, pre%era&! one o% w#om s#a&& e a &aw!er and anot#er an economist'< T#e B3ecutive (rder
took e%%ect on 85 "eptemer 1.0. ' @owever, t#e ET$ did not promu&gate an! :u&es o% Procedure and
Practice' $onse9uent&!, t#e t#en e3isting :u&es o% Procedure and Practice promu&gated ! t#e 1($ was
app&ied to proceedings in t#e ET$'
. Historical #ilieu o, t)e 7(C' 8pinion o, Bustice Secretary (:uno) entitle+ to *reat .ei*)t $ut
not conclusive upon t)e courts
T#e opinion o% t#e "ecretar! o% Justice is entit&ed to great weig#t' @owever, t#e same is not
contro&&ing or conc&usive on t#e courts' T#e Puno (pinion t#at t#e ET$ is not a co&&egia& od! is not correct'
7dmitted&!, B( 45> does not speci%ica&&! state t#at t#e ET$ was a co&&egia& od!, and neit#er does it provide
t#at t#e ET$ s#ou&d meet Bn 1anc in deciding a case or in e3ercising its adAudicator! or 9uasi=Audicia&
%unctions' 1ut t#e asence o% suc# provisions does not mi&itate against t#e co&&egia& nature o% t#e ET$ under
t#e conte3t o% "ection 1> o% B( 45> and under t#e :u&es o% Procedure and Practice app&ied ! t#e ET$ in its
proceedings' Dnder L:u&e 14M o% said :u&es, t#e 1($ (now t#e ET$), a case e%ore t#e 1($ ma! e assigned
to and #eard ! on&! a memer t#ereo% w#o is tasked to prepare and promu&gate #is Decision t#ereon, or
#eard, Bn 1anc, ! t#e %u&& memers#ip o% t#e 1($ in w#ic# case t#e concurrence o% at &east 8 o% t#e
memers#ip o% t#e 1($ is necessar! %or a va&id Decision'
3. Historical #ilieu o, t)e 7(C' B8C Rules are 7(C Rules! :)ilippine Consu#ers &oun+ation vs.
7(C
F#i&e it ma! e true t#at t#e 1($ :u&es o% Procedure was promu&gated e%ore t#e e%%ectivit! o%
B3ecutive (rder 45>, #owever, t#e :u&es o% Procedure o% 1($ governed t#e ru&es o% practice and procedure
e%ore t#e ET$ w#en it was esta&is#ed under B3ecutive (rder 45>' T#is was enunciated ! t#e "upreme
$ourt in t#e case o% GP#i&ippine $onsumers Foundation, ,nc' versus Eationa& Te&ecommunications
$ommission, 131 "$:7 822? w#en it dec&ared t#at: ;T#e :u&es o% Practice and Procedure promu&gated on 84
Januar! 1.0/ ! t#e 1oard o% $ommunications, t#e immediate predecessor o% ET$ govern t#e ru&es o%
practice and procedure e%ore t#e 1($ t#en, now ET$'<
4. Co##ission +e,ine+
7 $ommission is a od! composed o% severa& persons acting under &aw%u& aut#orit! to per%orm some
pu&ic service' ($it! o% +ouisvi&&e Municipa& @ousing $ommission versus Pu&ic @ousing 7dministration,
8>1 "out#western :eporter, 8nd, page 8/>)' 7 $ommission is a&so de%ined as a oard or committee o%
o%%icia&s appointed and empowered to per%orm certain acts or e3ercise certain Aurisdiction o% a pu&ic nature or
service ' ' ' (1&ack, +aw Dictionar!, page 85>)' T#ere is persuasive aut#orit! t#at a Gcommission? is
s!non!mous wit# Goard? ("tate B3' :e&' Jo#nson versus ,ndependent "c#oo& District Eo' /12, Faas#
$ount!, 12. Eort#western :eporter 8nd, page 4.>)'
%. Statutory Construction' @5n+A construe+
T#e conAunctive word Gand? is not wit#out an! &ega& signi%icance' ,t is not, ! an! c#ance, a
surp&usage in t#e &aw' ,t means Gin addition to? (Mc$au&& Fester B&evator $ompan! versus 7dams, 1>0
Eort#western :eporter, 332, page 338)' T#e word Gand?, w#et#er it is used to connect words, p#rases or %u&&
sentenceLsM, must e accepted as inding toget#er and as re&ating to one anot#er' From t#e conte3t o% "ection
1> o% B3ecutive (rder 45>, t#e $ommission is composed o% a $ommissioner and 8 deput! commissionersC
not t#e commissioner a&one'
1". Statutory Construction' Dvery part o, statute s)oul+ $e *iven e,,ect
,n interpreting a statute, ever! part t#ereo% s#ou&d e given e%%ect on t#e t#eor! t#at it was enacted as
an integrated &aw and not as a comination o% dissonant provisions' 7s t#e ap#orism goes, ;t#at t#e t#ing ma!
rat#er #ave e%%ect t#an e destro!ed'< @erein, i% it was t#e intention o% President Marcos to constitute mere&! a
sing&e entit!, a Gone=man? governmenta& od!, instead o% a commission or a t#ree=man co&&egia& od!, #e
wou&d not #ave constituted a commission and wou&d not #ave speci%ica&&! decreed t#at t#e $ommission is
composed o%, not t#e commissioner a&one, ut o% t#e commissioner and t#e 8 deput! commissioners'
11. Fse o, .or+ @+eputyA +oes not #ilitate a*ainst t)e colle*iality o, t)e 7(C
Bven i% B3ecutive (rder 45> used t#e word Gdeput!? to designate t#e 8 ot#er memers o% t#e
$ommission does not mi&itate against t#e co&&egia&it! o% t#e ET$' T#e co&&egia&it! o% t#e ET$ cannot e
disparaged ! t#e mere nomina& designation o% t#e memers#ip t#ereo%' "uc# nomina& designations are
wit#out %unctiona& imp&ications and are designed mere&! %or t#e purpose o% administrative structure or
#ierarc#! o% t#e personne& o% t#e ET$'
1-. 7(C Circulars 1>1>%3 an+ 3>1>%3 voi+
ET$ $ircu&ar Eo' 1=1=.3, Memorandum $ircu&ar Eo' 3=1=.3, and t#e (rder o% Pintanar dec&aring t#e
ET$ as a sing&e entit! or non=co&&egia& entit!, are contrar! to &aw and t#us nu&& and void' 7dministrative
regu&ations derive t#eir va&idit! %rom t#e statute t#at t#e! were, in t#e %irst p&ace, intended to imp&ement'
Memorandum $ircu&ars 1=1=.3 and 3=1=.3 are on t#eir %ace nu&& and void a initio %or eing unaas#ed&!
contrar! to &aw' T#e %act t#at imp&ementation o% t#ese i&&ega& regu&ations #as resu&ted in t#e institutiona&i*ation
o% t#e one=man ru&e in t#e ET$, is not and can never e a rati%ication o% suc# an i&&ega& practice' 7t t#e &east,
t#ese i&&ega& regu&ations are an erroneous interpretation o% B( 45> and in t#e conte3t o% and its predecessor
&aws' 7t t#e most, t#ese i&&ega& regu&ations are attempts to va&idate t#e one=man ru&e in t#e ET$ as e3ecuted
! persons wit# t#e se&%is# interest o% maintaining t#eir i&&usor! #o&d o% power'
13. Courts cannot re,rain ,ro# +uty to nulli,y ille*al re*ulations
"ince t#e 9uestioned memorandum circu&ars are in#erent&! and patent&! nu&& and void %or eing
tota&&! vio&ative o% t#e spirit and &etter o% B( 45> t#at constitutes t#e ET$ as a co&&egia& od!, no court ma!
s#irk %rom its dut! o% striking down suc# i&&ega& regu&ations'
1/. 8nly t)e 7(C an+ Co##issioner 0intanar are in+ispensa$le parties in t)e action ,or certiorari
,n its certiorari action e%ore t#e $ourt o% 7ppea&s, 1e&&Te& was proceeding against t#e ET$ and
$ommissioner Pintanar %or t#e %ormer?s ad#erence and de%ense o% its one=man ru&e as en%orced ! t#e &atter'
T#us, on&! t#e ET$ and $ommissioner Pintanar ma! e considered as indispensa&e parties' 7%ter a&&, it is
t#e! w#om 1e&&Te& seek to e c#astised and corrected ! t#e court %or #aving acted in grave ause o% t#eir
discretion amounting to &ack or e3cess o% Aurisdiction'
12. 8ppositors not a$solutely necessary in an action ,or certiorari! as t)e action +oes not *o into
#erits o, t)e case6 Clai# o, non>?oin+er o, in+ispensa$le parties untena$le
T#e oppositors in ET$ $ase .5=88. are not aso&ute&! necessar! %or t#e %ina& determination o% t#e
issue o% grave ause o% discretion on t#e part o% t#e ET$ and o% $ommissioner Pintanar in #is capacit! as
c#airman o% ET$ ecause t#e task o% de%ending t#em primari&! &ies in t#e (%%ice o% t#e "o&icitor 6enera&'
Furt#ermore, were t#e court to %ind t#at certiorari &ies against t#e ET$ and $ommissioner Pintanar, t#e
oppositors? cause cou&d not e signi%icant&! a%%ected ! suc# ru&ing ecause t#e issue o% grave ause o%
discretion goes not into t#e merits o% t#e case in w#ic# t#e oppositors are interested ut into t#e issue o%
co&&egia&it! t#at re9uires, regard&ess o% t#e merits o% a case, t#at t#e same e decided on t#e asis o% a maAorit!
vote o% at &east two memers o% t#e commission' 7&& t#at $ourt o% 7ppea&s passed upon was t#e 9uestion o%
w#et#er or not t#e ET$ and $ommissioner Pintanar committed grave ause o% discretion, and so t#e
"upreme $ourt must review and ascertain t#e correctness o% t#e %indings o% t#e appe&&ate court on t#is score,
and t#is score a&one'
1. =an+a#us +oes not control +iscretion
Jurisprudence is sett&ed as to t#e propriet! o% mandamus in causing a 9uasi=Audicia& agenc! to e3ercise
its discretion in a case a&read! ripe %or adAudication and &ong=awaiting t#e proper disposition' 7s to #ow t#is
discretion is to e e3ercised, #owever, is a rea&m outside t#e o%%ice o% t#e specia& civi& action o% mandamus' ,t
is e&ementar! &ega& know&edge, a%ter a&&, t#at mandamus does not &ie to contro& discretion' @erein, w#en t#e
$ourt o% 7ppea&s directed $ommissioners to meet en anc and to consider and act on t#e working dra%t o% t#e
order granting provisiona& aut#orit! to 1e&&Te&, said court was simp&! ordering t#e ET$ to sit and meet en
anc as a co&&egia& od!, and t#e suAect o% t#e de&ieration o% t#e 3=man commission wou&d e t#e said
working dra%t w#ic# emodies one course o% action t#at ma! e taken on 1e&&Te&?s app&ication %or a
provisiona& aut#orit!' T#e appe&&ate court did not order t#e ET$ to %ort#wit# grant said app&ication'
13. 7o evi+ence pro,,ere+ t)at .orkin* +ra,t .as o$taine+ $y Bell(el .as o$taine+ t)rou*) ille*al
#eans
T#e working dra%t was said to #ave een prepared ! 7tt!' 1asi&io 1o&ante o% t#e +ega& Department
o% t#e ET$C initia&ed ! t#e $$7D @ead, Bngr' Bdgardo $aarios and ! Deput! $ommissioners Dum&ao
and Pere*' Eo one among t#e a%orementioned persons #as renounced t#e working dra%t or dec&ared it to e
spurious' Petitioners #ave not pro%%ered a sing&e piece o% evidence to prove t#e c#arge t#at t#e working dra%t
o% t#e order granting provisiona& aut#orit! to 1e&&Te& was otained ! t#e &atter t#roug# i&&ega& means' ,n t#e
u&timate, t#e issue o% t#e procurement o% t#e working dra%t is more apropos %or a crimina& or administrative
investigation t#an in t#e instant proceedings &arge&! addressed to t#e reso&ution o% a pure&! &ega& 9uestion'
[-1-]
=ace+a vs. DRB (GR %2-"3>"2! 14 <ece#$er 1%%")
$o8ano vs. E+2 )*+ 95119,21-
Bn 1anc, "armiento (J): / concur, 3 took no part, 1 on &eave
&acts' (n 12 "eptemer 1..2, $a&te3 (P#i&ippines), ,nc', Pi&ipinas "#e&& Petro&eum $orporation, and Petron
$orporation pro%erred separate app&ications wit# t#e 1oard %or permission to increase t#e w#o&esa&e posted
prices o% petro&eum products, at P3'8>.0 per &iter, 8'233/ per &iter, and 8'22 per &iter, respective&!C and
meanw#i&e, %or provisiona& aut#orit! to increase temporari&! suc# w#o&esa&e posted prices pending %urt#er
proceedings' (n 81 "eptemer 1..2, t#e 1oard, in a Aoint (on t#ree app&ications) (rder granted provisiona&
re&ie%, aut#ori*ing t#e app&icants to a weig#ted average provisiona& increase o% P1'58 per &iter in t#e w#o&esa&e
posted prices o% t#eir various petro&eum products enumerated e&ow, re%ined and-or marketed ! t#em &oca&&!'
"enator Brnesto Maceda and (&iver (' +o*ano sumit t#at t#e aove (rder #ad een issued wit# grave ause
o% discretion, tantamount to &ack o% Aurisdiction, and correcti&e ! certiorari'
"enator Brnesto Maceda, sumits t#at t#e same was issued wit#out proper notice and #earing in vio&ation o%
"ection 3, paragrap# (e), o% B3ecutive (rder Eo' 108C t#at t#e 1oard, in decreeing an increase, #ad created a
new source %or t#e (i& Price "tai&i*ation Fund ((P"F), or ot#erwise t#at it #ad &evied a ta3, a power vested
in t#e &egis&ature, and-or t#at it #ad ;re=co&&ected<, ! an act o% ta3ation, ad va&orem ta3es on oi& w#ic# :7
>.>4 #ad ao&is#ed' 7tt!' (&iver +o*ano, 4 &ikewise argues t#at t#e 1oard?s (rder was issued wit#out notice
and #earing, and #ence, wit#out due process o% &aw' T#e intervenor, t#e Trade Dnion o% t#e P#i&ippines and
7&&ied "ervices (TDP7"-F"M)=F'F'T'D', argues on t#e ot#er #and, t#at t#e increase can not e a&&owed since
t#e oi& companies #ad not e3#austed t#eir e3isting oi& stock w#ic# t#e! #ad oug#t at o&d prices and t#at t#e!
can not e a&&owed to c#arge new rates %or stock purc#ased at suc# &ower rates'
T#e "upreme $ourt dismissed t#e petitionsC no costs'
1. Section 4 o, Dxecutive 8r+er 13-
"ection / (7ut#orit! to 6rant Provisiona& :e&ie%) o% B3ecutive (rder Eo' 108 provides t#at ;t#e
1oard ma!, upon t#e %i&ing o% an app&ication, petition or comp&aint or at an! stage t#erea%ter and wit#out prior
#earing, on t#e asis o% supporting papers du&! veri%ied or aut#enticated, grant provisiona& re&ie% on motion o%
a part! in t#e case or on its own initiative, wit#out preAudice to a %ina& decision a%ter #earing, s#ou&d t#e 1oard
%ind t#at t#e p&eadings, toget#er wit# suc# a%%idavits, documents and ot#er evidence w#ic# ma! e sumitted
in support o% t#e motion, sustantia&&! support t#e provisiona& order: Provided, T#at t#e 1oard s#a&&
immediate&! sc#edu&e and conduct a #earing t#ereon wit#in t#irt! (32) da!s t#erea%ter, upon pu&ication and
notice to a&& a%%ected parties'< @erein "enator Maceda and 7tt!' +o*ano, in 9uestioning t#e &ack o% a #earing,
#ave over&ooked t#e provisions o% t#e aove provision' 7s t#e (rder itse&% indicates, t#e aut#orit! %or
provisiona& increase %a&&s wit#in t#e aove provision'
-. Section 3 (e) o, Dxecutive 8r+er 13- is not t)e applica$le provision
"ection 3, paragrap# (e) o% B3ecutive (rder 108 provides t#at ;w#enever t#e 1oard #as determined
t#at t#ere is a s#ortage o% an! petro&eum product, or w#en pu&ic interest so re9uires, it ma! take suc# steps as
it ma! consider necessar!, inc&uding t#e temporar! adAustment o% t#e &eve&s o% prices o% petro&eum products
and t#e pa!ment to t#e (i& Price "tai&i*ation Fund created under Presidentia& Decree Eo' 1.4> ! persons or
entities engaged in t#e petro&eum industr! o% suc# amounts as ma! e determined ! t#e 1oard, w#ic# wi&&
ena&e t#e importer to recover its cost o% importation'<
3. Dx parte or+er ,or provisional increase allo.e+
F#i&e under B3ecutive (rder 108, a #earing is indispensa&e, it does not prec&ude t#e 1oard %rom
ordering, e3 parte, a provisiona& increase, as it did #ere, suAect to its %ina& disposition o% w#et#er or not: (1) to
make it permanentC (8) to reduce or increase it %urt#erC or (3) to den! t#e app&ication' "ection 30 paragrap# (e)
is akin to a temporar! restraining order or a writ o% pre&iminar! attac#ment issued ! t#e courts, w#ic# are
given e3 parte, and w#ic# are suAect to t#e reso&ution o% t#e main case'
/. :rovisions +o not ne*ate eac) ot)er nor operate exclusively o, t)e ot)er
"ection 3, paragrap# (e) and "ection / do not negate eac# ot#er, or ot#erwise, operate e3c&usive&! o%
t#e ot#er, in t#at t#e 1oard ma! resort to one ut not to ot# at t#e same time' "ection 3(e) out&ines t#e
Aurisdiction o% t#e 1oard and t#e grounds %or w#ic# it ma! decree a price adAustment, suAect to t#e
re9uirements o% notice and #earing' Pending t#at, #owever, it ma! order, under "ection /, an aut#orit! to
increase provisiona&&!, wit#out need o% a #earing, suAect to t#e %ina& outcome o% t#e proceeding' T#e 1oard,
o% course, is not prevented %rom conducting a #earing on t#e grant o% provisiona& aut#orit! H w#ic# is o%
course, t#e etter procedure H #owever, it can not e stigmati*ed &ater i% it %ai&ed to conduct one'
2. CitiJens1 5lliance ,or Consu#er :rotection v. Dner*y Re*ulatory Boar+
,n t#e &ig#t o% "ection /, t#e 1oard need not even #ave conducted %orma& #earings in t#ese cases prior
to t#e granting o% a provisiona& increase o% prices' T#e 1oard, upon its own discretion and on t#e asis o%
documents and evidence sumitted, cou&d #ave issued an order granting provisiona& re&ie% immediate&! upon
%i&ing o% t#e app&ications' ,n t#is respect, t#e $ourt considers t#e evidence in support o% t#e app&ications H
i'e', evidence s#owing t#at importation costs o% petro&eum products #ad gone upC t#at t#e peso #ad
depreciated in va&ueC and t#at t#e (i& Price "tai&i*ation Fund ((P"F) #ad ! t#en een dep&eted H as
sustantia& and #ence constitutive o% at &east prima %acie asis %or issuance ! t#e 1oard o% a provisiona& re&ie%
order granting an increase in t#e prices o% petro&eum products'
. 5pplications #ay $e conteste+ in t)e )earin*s proper
T#e c#a&&enged action o% t#e 1oard #as not een done in vio&ation o% t#e due process c&ause'
@owever, "enator Maceda and 7tt!' +o*ano ma! contest t#e app&ications at t#e #earings proper'
3. R5 %2 not an insurance a*ainst @oil )ikeA
:epu&ic 7ct >.>4 operated to &ower ta3es on petro&eum and petro&eum products ! imposing speci%ic
ta3es rat#er t#an ad va&orem ta3es t#ereonC it is, not, #owever, an insurance against an ;oi& #ike<, w#enever
warranted, or is it a price contro& mec#anism on petro&eum and petro&eum products' T#e statute #ad possi&!
%oresta&&ed a &arger #ike, ut it operated no more'
4. :rocee+s +eposite+ to 8:S& not an act o, taxation
T#e 1oard (rder aut#ori*ing t#e proceeds generated ! t#e increase to e deposited to t#e (P"F is
not an act o% ta3ation' ,t is aut#ori*ed ! Presidentia& Decree 1.4>, as amended ! B3ecutive (rder 130'
%. Section 4 o, :< 1%2! as a#en+e+ $y D8 133
"ection / provides t#at ;t#ere is #ere! created a Trust 7ccount in t#e ooks o% accounts o% t#e
Ministr! o% Bnerg! to e designated as (i& Price "tai&i*ation Fund ((P"F) %or t#e purpose o% minimi*ing
%re9uent price c#anges roug#t aout ! e3c#ange rate adAustments and-or c#anges in wor&d market prices o%
crude oi& and imported petro&eum products' T#e (i& Price "tai&i*ation Fund ((P"F) ma! e sourced %rom
an! o% t#e %o&&owing: (a) 7n! increase in t#e ta3 co&&ection %rom ad va&orem ta3 or customs dut! imposed on
petro&eum products suAect to ta3 under t#is Decree arising %rom e3c#ange rate adAustment, as ma! e
determined ! t#e Minister o% Finance in consu&tation wit# t#e 1oard o% Bnerg!C () 7n! increase in t#e ta3
co&&ection as a resu&t o% t#e &i%ting o% ta3 e3emptions o% government corporations, as ma! e determined !
t#e Minister o% Finance in consu&tation wit# t#e 1oard o% Bnerg!C (c) 7n! additiona& amount to e imposed on
petro&eum products to augment t#e resources o% t#e Fund t#roug# an appropriate (rder t#at ma! e issued !
t#e 1oard o% Bnerg! re9uiring pa!ment ! persons or companies engaged in t#e usiness o% importing,
manu%acturing and-or marketing petro&eum productsC (d) 7n! resu&ting peso cost di%%erentia&s in case t#e
actua& peso costs paid ! oi& companies in t#e importation o% crude oi& and petro&eum products is &ess t#an t#e
peso costs computed using t#e re%erence %oreign e3c#ange rates as %i3ed ! t#e 1oard o% Bnerg!'
1". Dvents taken ?u+icial notice o,
T#e increase was not prompted a&one ! t#e increase in wor&d oi& prices arising %rom tension in t#e
Persian 6u&%' F#at t#e $ourt gat#ers %rom t#e p&eadings as we&& as events o% w#ic# it takes Audicia& notice, is
t#at: (1) as o% 32 June 1..2, t#e (P"F #as incurred a de%icit o% P>'1 1i&&ionC (8) t#e e3c#ange rate #as %a&&en
to P8/'22 to K1'22C (3) t#e countr!?s a&ance o% pa!ments is e3pected to reac# K1 1i&&ionC (5) our trade de%icit
is at K8'/44 1i&&ion as o% t#e %irst nine mont#s o% t#e !ear' Bvident&!, aut#orities #ave een una&e to co&&ect
enoug# ta3es necessar! to rep&enis# t#e (P"F as provided ! PD 1.4>, and #ence, t#ere was no avai&a&e
a&ternative ut to #ike e3isting prices'
11. :urpose o, t)e 8:S&
T#e (P"F must not e understood to e a %unding designed to guarantee oi& %irms? pro%its a&t#oug# as
a susid!, or a trust account, t#e $ourt #as no dout t#at oi& %irms make mone! %rom it' T#e (P"F was
esta&is#ed precise&! to protect t#e consuming pu&ic %rom t#e erratic movement o% oi& prices and to prec&ude
oi& companies %rom taking advantage o% %&uctuations occurring ever! so o%ten' 7s a u%%er mec#anism, it
stai&i*es domestic prices ! ringing aout a uni%orm rate rat#er t#an &eaving pricing to t#e caprices o% t#e
market'
1-. 8il )ike per#anent6 &in+in*s ,or provisional increase )o.ever are not ,inal
,n a&& &ike&i#ood, an oi& #ike wou&d #ave proa&! een imminent, wit# or wit#out trou&e in t#e 6u&%,
a&t#oug# trou&e wou&d #ave proa&! aggravated it' T#e $ourt is not to e understood as #aving preAudged
t#e Austness o% an oi& price increase amid t#e aove premises' F#at t#e $ourt is sa!ing is t#at it t#inks t#at
ased t#ereon, t#e 6overnment #as made out a prima %acie case to Austi%! t#e provisiona& increase in 9uestion'
+et t#e $ourt t#ere%ore make c&ear t#at t#ese %indings are not %ina&C t#e urden, #owever, is on t#e petitioners?
s#ou&ders to demonstrate t#e %act t#at t#e present economic picture does not warrant a permanent increase'
13. Eis+o# on t)e increase in oil prices a political 9uestion
T#e increase in oi& prices in 9uestion (not to mention anot#er one impending, w#ic# t#e $ourt
understands #as een under consideration ! po&ic!=makers) spe&&s #ard(er) times %or t#e Fi&ipino peop&e' T#e
$ourt can not, #owever, deate t#e wisdom o% po&ic! or t#e &ogic e#ind it (un&ess it is ot#erwise aritrar!),
not ecause t#e $ourt agrees wit# po&ic!, ut ecause t#e $ourt is not t#e suita&e %orum %or deate' ,t is a
9uestion est Audged ! t#e po&itica& &eaders#ip w#ic# a%ter a&&, determines po&ic!, and u&timate&!, ! t#e
e&ectorate, t#at stands to e etter %or it or worse o%%, eit#er in t#e s#ort or &ong run' T#e $ourt s#ares t#e
indignation o% t#e peop&e over t#e conspirac! o% events and regrets its own power&essness, i% ! t#is Decision
it #as een power&ess' T#e constitutiona& sc#eme o% t#ings #as simp&! &e%t it wit# no c#oice'
[-13]
La*#an vs. =anila (GR L>-33"2! 3" Bune 1%)
Bn 1anc, :e!es J1+ (J): / concur
Facts: 1enedicto +agman (Marco Transit) was granted a certi%icate o% pu&ic convenience ! t#e Pu&ic
"ervice $ommission (! a decision, dated 82 Marc# 1.>3, in P"$ $ase >1=03/3) to operate %or pu&ic service
14 auto trucks wit# %i3ed routes and regu&ar termina& %or t#e transportation o% passengers and %reig#t, on t#e
&ine 1ocaue (1u&acan) H Para)a9ue (:i*a&) via Me!caua!an, Mari&ao, (ando, Po&o, Ma&aon, :i*a&), 6race
Park, :i*a& 7venue, :ecto 7venue, "ta' $ru* 1ridge, Ta%t 7venue, +iertad, Pasa! $it! and 1ac&aran, and
vice versa' Fit#in Mani&a, t#e &ine passes t#ru :i*a& 7venue, P&a*a 6oiti, Mc7rt#ur 1ridge, P&a*a +awton, P'
1urgos, Ta%t 7venue and Ta%t 7venue B3tension' Pursuant to said certi%icate, petitioner, w#o is doing usiness
under t#e %irm name and st!&e o% ;Marco Transit<, egan operating 18 passenger uses a&ong #is aut#ori*ed
&ine' (n 10 June 1.>5, t#e Municipa& 1oard o% t#e $it! o% Mani&a, in pursuance to "ection 1/, paragrap# ##,
o% :7 52., as amended (ot#erwise known as t#e :evised $#arter o% t#e $it! o% Mani&a) enacted (rdinance
5./>, entit&ed ;7n (rdinance :erouting Tra%%ic (n :oads and "treets Fit#in T#e $it! o% mani&a, and For
(t#er Purposes<, w#ic# t#e $it! Ma!or approved, on 13 Ju&! 1.>5, e%%ective upon approva& t#ereo%' (n 10
7ugust 1.>5, t#e Ma!or o% $it! o% Mani&a, t#roug# its po&ice agencies, egan actua& en%orcement o% said
ordinance and prevented petitioner %rom operating #is uses, e3cept 8 ;s#utt&e< uses, a&ong t#e &ine speci%ied
in #is certi%icate o% pu&ic convenience'
+agman origina&&! %i&ed, on > 7ugust 1.>5, wit# t#e "upreme $ourt a petition %or dec&arator! re&ie% seeking a
dec&aration o% #is rig#ts under t#e so=ca&&ed ;provincia& us an< ordinance o% t#e $it! o% Mani&a, wit# pra!er
%or writs o% pre&iminar! and permanent inAunctions to restrain and enAoin said cit!, its o%%icers and-or agents,
%rom en%orcing and imp&ementing said ordinance' 7t %irst, t#e "upreme $ourt, in its reso&ution dated 11
7ugust 1.>5, dismissed said petition wit#out preAudice to action, i% an!, in t#e &ower courtC ut, upon
+agman?s motion %or reconsideration and supp&ementa& petition to convert said petition wit#out preAudice to
action, i% an!, in t#e &ower courtC ut, upon +agman?s motion %or reconsideration and supp&ementa& petition to
convert said petition into one %or pro#iition, on t#e ground, among ot#ers, t#at respondents #ave een
actua&&! en%orcing said ordinance e%%ective 10 7ugust 1.>5, t#e "upreme $ourt did not, #owever, issue t#e
writ o% pre&iminar! inAunction pra!ed %or'
T#e "upreme $ourt dismissed t#e instant petition %or pro#iitionC wit# cost against +agman'
1. Section 14 ()))! R5 /"%
"ection 1/ (##) o% t#e :evised $#arter o% t#e $it! o% Mani&a provides t#at ;t#e Municipa& oard s#a&&
#ave t#e %o&&owing &egis&ative powers: (##) To esta&is# and regu&ate t#e si*e, speed, and operation o% motor
and ot#er pu&ic ve#ic&es wit#in t#e cit!C to esta&is# us stops and termina&sC and pro#iit and regu&ate t#e
entrance o% provincia& uti&it! ve#ic&es into t#e cit!, e3cept t#ose passing t#ru t#e cit!'<
-. Section 1! 8r+inance /%4
"ection 1 o% (rdinance 5./> provides t#at ;as a positive measure to re&ieve t#e critica& tra%%ic
congestion in t#e $it! o% Mani&a, w#ic# #as grown to a&arming and emergenc! proportions, and in t#e est
interest o% pu&ic we&%are and convenience, t#e %o&&owing tra%%ic ru&es and regu&ations are #ere! promu&gated:
RFLD ;. <D&;7;(;87S6
7' De%inition o% Terms' H F#en used in t#is ordinance and in suse9uent ordinance #aving re%erence
t#ereto, un&ess t#e conte3t indicated ot#erwise: (a) T#e terms Gprovincia& passenger uses? and Gprovincia&
passenger Aeepne!s? s#a&& e understood to mean t#ose w#ose route (or origin=destination) &ines come %rom or
going to points e!ond Pasa! $it!, $a&oocan $it! and Eavotas' 333
RFLD ;;. D7(RH :8;7(S 57< R8F(DS 8& :R8G;7C;5L :5SSD7GDR BFSDS 57<
BDD:7DHS.
1' Provincia& passenger uses and Aeepne!s (PD1 and PDJ) s#a&& e a&&owed to enter Mani&a, ut on&!
t#roug# t#e %o&&owing entr! points and routes, %rom >:32 7'M' to /:32 P'M' ever! da! e3cept "unda!s and
@o&ida!s: (a) T#ose coming %rom nort# s#a&& enter t#e cit! t#roug# :i*a& 7venueC turn rig#t to Mt' "amatC
rig#t to Dina&upi#anC rig#t to J' 7ad "antosC &e%t to :i*a& 7venue towards $a&oocan $it!C 333 (n) T#ose
coming %rom t#e sout# t#roug# Ta%t 7venue s#a&& turn &e%t at Vito $ru*C turn rig#t to DakoraC turn rig#t to
@arrison 1ou&evardC turn rig#t to Ta%t 7venueC t#ence proceed towards Pasa! $it!C 333
RFLD ;;;. &LDN;BLD SHF((LD BFS SDRG;CD.
1' ,n order t#at provincia& commuters s#a&& not e undu&! inconvenienced as a resu&t o% t#e
imp&ementation o% t#ese essentia& tra%%ic contro& regu&ations, operators o% provincia& passenger uses s#a&& e
a&&owed to provide uses to s#utt&e t#eir passengers %rom t#eir respective entr! contro& points, under t#e
%o&&owing conditions: (a) Bac# provincia& us compan! or %irm s#a&& e a&&owed suc# numer o% s#utt&e uses
proportionate to t#e numer o% units aut#ori*ed it, t#e ratio to e determined ! t#e $#ie%, Tra%%ic $ontro&
1ureau, ased on #is oservations as to t#e actua& needs o% commuters and tra%%ic vo&umeC in no case s#a&& t#e
a&&ocation e more t#an one s#utt&e us %or ever! 12 aut#ori*ed units, or %raction t#ereo%' () Eo s#utt&e us
s#a&& enter Mani&a un&ess t#e same s#a&& #ave een provided wit# identi%ication stickers as re9uired under
:u&e ,V #ereo%, w#ic# s#a&& e %urnis#ed and a&&ocated ! t#e $#ie%, Tra%%ic $ontro& 1ureau to eac# provincia&
us compan! or %irm' (c) 7&& suc# s#utt&e uses are not permitted to &oad or un&oad or to pick and-or drop
passengers a&ong t#e wa! ut must do so on&! in t#e %o&&owing p&aces: (1) Eort#' (a) J' 7ad "antos corner
:i*a& 7venue, or vicinities' J33 (3) "out#' (a) @arrison 1ou&evard, etween Dakota and Ta%t 7venue' 333
3. Section /! 8r+inance /%4
"ection 5 o% (rdinance 5./> provides t#at ;an! vio&ation o% t#e provisions o% t#is ordinance and o%
an! ot#er ordinance regu&ating tra%%ic in t#e cit!, s#a&& e punis#ed ! a %ine o% not &ess t#an P82'22, nor more
t#an P822'22 or ! imprisonment %or not &ess t#an %ive (4) da!s nor more t#an si3 (>) mont#s, or ot# suc#
%ine or imprisonment in t#e discretion o% t#e court'<
/. Latter le*islation prevails over ,or#er le*islation
:epu&ic 7ct 52., as amended, ot#erwise known as t#e :evised $#arter o% t#e $it! o% Mani&a, is a
specia& &aw and o% &ater enactment t#an $ommonwea&t# 7ct 45/ and t#e Pu&ic "ervice &aw ($ommonwea&t#
7ct 15>, as amended), so t#at even i% con%&ict e3ists etween t#e provisions o% t#e %ormer act and t#e &atter
acts, :7 52. s#ou&d prevai& over ot# $ommonwea&t# 7cts 45/ and 15>'
2. Special La. or provision prevails over *eneral6 Cassion vs. Banco 7acional &ilipino
,n $assion vs' 1anco Eaciona& Fi&ipino, /. P#i&' 4>2, 4>1, it was stated t#at ;%or wit# or wit#out an
e3press enactment it is a %ami&iar ru&e o% statutor! construction t#at to t#e e3tent o% an! necessar! repugnanc!
etween a genera& and a specia& &aw or provision, t#e &atter wi&& contro& t#e %ormer wit#out regard to t#e
respective dates o% passage'<
. Co##on.ealt) 5ct 2/4 +oes not con,er exclusive po.er to pro#ul*ate rules relatin* to use o,
national roa+s
$ommonwea&t# 7ct 45/ does not con%er an e3c&usive power or aut#orit! upon t#e Director o% Pu&ic
Forks, suAect to t#e approva& o% t#e "ecretar! o% Pu&ic Forks and $ommunications, to promu&gate ru&es
and regu&ations re&ating to t#e use o% and tra%%ic on nationa& roads or streets'
3. Repeal $y i#plication not ,avore+6 Section 14 ())) o, t)e =anila C)arter an exception to
provisions o, Co##on.ealt) 5ct 2/4
1ecause repea&s ! imp&ication are not %avored, a specia& &aw must e taken as intended to constitute
an e3ception to t#e genera& &aw, in t#e asence o% specia& circumstances %orcing a contrar! conc&usion'< (1aga
vs' P#i&ippine Eationa& 1ank, 48 ('6' >152) F#ere a specia& act is repugnant to or inconsistent wit# a prior
genera& act, a partia& repea& o% t#e &atter act wi&& e imp&ied or e3ception gra%ted upon t#e genera& act'< ($it! o%
6eneseo vs' ,&&inois Eort#ern Dti&it! $o', 3. EB 8d, p' 8>)' @erein, "ection 1/ (##) o% t#e Mani&a $#arter is
deemed enacted as an e3ception to t#e provisions o% $ommonwea&t# 7ct Eo' 45/
4. Situation in Co##on.ealt) 5ct 2/4 si#ilar to t)e provisions o, :u$lic Service 5ct
T#e same situation #o&d true wit# respect to t#e provisions o% t#e Pu&ic "ervice 7ct' 7&t#oug# t#e
Pu&ic "ervice $ommission is empowered, under its "ection 1> (m), to amend, modi%! or revoke certi%icates
o% pu&ic convenience a%ter notice and #earing, !et t#ere is no provision, speci%ic or ot#erwise, w#ic# can e
%ound in $ommonwea&t# 7ct 15> vesting power in t#e Pu&ic "ervice $ommission to superintend, regu&ate, or
contro& t#e streets o% respondent $it! or suspend its power to &icense or pro#iit t#e occupanc! t#ereo%' (n t#e
ot#er #and, t#is rig#t or aut#orit!, as #ereinaove conc&uded, is con%erred upon respondent $it! o% Mani&a'
T#e power vested in t#e Pu&ic "ervice $ommission under "ection 1> (m) is, t#ere%ore, suordinate to t#e
aut#orit! granted to t#e $it!, under said section 1/ (##)'
%. E)en or+inance +oes not encroac) upon t)e ?uris+iction o, t)e :u$lic Service Co##ission
7s #e&d in an 7merican case: ;(rdinances designating t#e streets wit#in a municipa&it! upon w#ic#
uses ma! operate, or pro#iiting t#eir operation in certain streets do not encroac# upon t#e Aurisdiction o% t#e
Pu&ic "ervice $ommission over motor us common carriers, so &ong as t#e ordinances do not prevent or
unreasona&! inter%ere wit# t#e uti&it!?s operation under t#e certi%icate or %ranc#ise granted ! t#at
$ommission'< ("tuck vs' Town o% 1eec# 6rove, 1>3 E'B' 5/3C 1>> E'B' 143)
1". Section 13 (?) o, t)e :u$lic Service 5ct (Co##on.ealt) 5ct 1/)
"ection 10 (Proceedings o% $ommission wit#out previous #earing) o% t#e Pu&ic "ervice 7ct provides
t#at ;t#e $ommission s#a&& #ave power, wit#out previous #earing, suAect to esta&is#ed &imitations and
e3ceptions, and saving provisions to t#e contrar!: 333 (A) To re9uire an! pu&ic service to comp&! wit# t#e
&aws o% t#e P#i&ippines, and wit# an! provincia& reso&ution or municipa& ordinance re&ating t#ereto, and to
con%orm to t#e duties imposed upon it t#ere!, or ! t#e provisions o% its own c#arter, w#et#er otained under
an! genera& or specia& &aw o% t#e P#i&ippines'< T#e provision evidences t#at t#e powers con%erred ! &aw
upon t#e Pu&ic "ervice $ommission were not designated to den! or supersede t#e regu&ator! power o% &oca&
governments over motor tra%%ic, in t#e streets suAect to t#eir contro&'
11. Su$section ( ?) re,ers to t)e la.s o, t)e :)ilippines! not ?ust or+inances
"usection (A) re%ers not on&! to ordinances ut a&so to ;t#e &aws o% t#e P#i&ippines<, and it is p&ain&!
asurd to assume t#at even &aws re&ating to pu&ic services are to remain a dead &etter wit#out t#e p&acet o% t#e
$ommissionC and t#e section makes no distinction w#atever etween en%orcement o% &aws and t#at o%
municipa& ordinances' T#e ver! %act, t#at t#e $ommission is empowered, ut no re9uired, to demand
comp&iance wit# apposite &aws and ordinances proves t#at t#e $ommission?s powers are mere&!
supp&ementar! to t#ose o% state organs, suc# as t#e po&ice, upon w#ic# t#e en%orcement o% &aws primari&!
rests'
1-. 7o evi+ence to su$stantiate c)ar*e t)at i#ple#entation is ar$itrary! oppressive an+
unreasona$le
T#e imp&ementation o% t#e ordinance in 9uestion cannot e va&id&! assai&ed as aritrar!, oppressive
and unreasona&e' 7side %rom t#e %act t#at t#ere is no evidence to sustitute t#is c#arge, +agman #as not een
tota&&! anned or pro#iited %rom operating a&& #is uses, #e #aving a&&owed to operate two (8) ;s#utt&e< uses
wit#in t#e cit! &imits'
(ransportation La.! -""/ ( /%" )
13. Savin* clause in Section 14 ())) cannot $e availe+ o,
+agmamn cannot avai& o% t#e saving c&ause o% said section 1/ (##), #e #aving admitted t#at #is uses
engaged in usiness wit#in t#e cit! &imits ! picking up passengers t#ereinC #ence, t#e! do not mere&! ;pass
t#ru t#e cit!<'
[-1/a' 1%4"]
:)ilippine Glo$al Co##unications vs. Relova (GR L>2-41%! - 8cto$er 1%4")
"econd Division, Fernando ($J): 4 concur, 1 on &eave
&acts' Petitioner P#i&ippine 6&oa& $ommunications %i&ed on 12 Ma! 1.0> wit# t#e 1oard o%
Te&ecommunications an app&ication %or aut#orit! to esta&is# a ranc# or station in $eu $it! ;%or t#e purpose
o% rendering internationa& te&ecommunications services %rom $eu $it! to an! point outside t#e P#i&ippines
w#ere it is aut#ori*ed to operated'< T#e "o&icitor 6enera&, and t#e private respondents P#i&ippine Te&egrap#
and Te&ep#one $orp', $apito& Fire&ess, and :adio $ommunications o% t#e P#i&ippines, ,nc' opposed suc#
app&ication' T#erea%ter, on . Marc# 1.0., t#e 1oard o% $ommunications rendered a decision, recogni*ing t#e
rig#t o% petitioners under its &egis&ative %ranc#ise to esta&is# ranc#es or stations an!w#ere in t#e P#i&ippines,
suAect to its prior approva&' 7 Aoint motion %or reconsideration, dated 15 June 1.0., came %rom private
respondents, %o&&owed as cou&d e e3pected ! an opposition %rom petitioner' ,n a rep&! to suc# opposition,
private respondents put in issue t#e Aurisdiction o% t#e 1oard o% $ommunications, now t#e Eationa&
Te&ecommunications $ommission, to act on suc# app&ication' "uc# motion is sti&& pending'
(n 80 7ugust 1.0., private respondents %i&ed e%ore Judge 1enAamin :e&ova an action %or dec&arator!
Audgment to ascertain t#e scope and coverage o% t#e &egis&ative %ranc#ise o% petitionerC it was rati%ied to
1ranc# J,, presided ! respondent Judge' @ence, t#e certiorari and pro#iition proceedings'
T#e "upreme $ourt dismissed t#e petition %or certiorari, and set aside t#e restraining order issued on > Marc#
1./2C no pronouncement as to costs'
1. Ri*)t to esta$lis) $ranc) or station +e$ata$le
From t#e ver! &egis&ative %ranc#ise o% P#i&ippine 6&oa& $ommunications, ,nc' t#e rig#t to esta&is# a
ranc# or station in $eu $it! ;%or t#e purpose o% rendering internationa& te&ecommunications services< %rom
suc# cit! to an! point outside t#e P#i&ippines is sa! t#e &east, deata&e' T#e matter is %ar %rom c&ear, as its
%ranc#ise does not, in e3press terms, grant it'
-. :osition o, t)e private respon+ents
"ince "ection 1 o% :epu&ic 7ct Eo' 5>10C Lt#e %ranc#ise in 9uestionM &imits ingress and egress o%
P#i&ippine 6&oa& messages or signa&s on&! t#ru a G"o&e 6atewa!? (Mani&a) or on&! t#ru GLan! pointM? or sing&e
&ocation in t#e P#i&ippines, t#ere%ore: a') P#i&ippine 6&oa& cannot esta&is# ranc#es or distriution s!stems
(direct connections to end=users) at an! ot#er point or &oca&it! wit#in t#e countr! %or t#e purpose o%
transmitting and receiving messages etween t#e gatewa! (Mani&a) and t#ese ranc#es or stations &ocated sa!,
at $eu or Davao' For t#at is to constitute domestic service wit#in t#e conte3t o% its %ranc#iseC ') P#i&ippine
6&oa& cannot even esta&is# distriution s!stems in Mani&a ot#er t#an its main o%%ice or gatewa! to transmit
and receive messages to or %rom t#e end users destined %or e3terna& transmissionC t#is p#ase o% operation
(etween t#e main o%%ice at gatewa! to t#e distriution s!stem or individua& e9uipment insta&&ed in t#e end=
users? o%%ices in Mani&a) eing Gdomestic service?C c') 7ssuming arguendo, t#at P#i&ippine 6&oa& s#a&& not
c#arge an! additiona& %ee %or t#e e3tra service mentioned does not detract %rom t#e %act t#at t#e same sti&&
constitutes Gdomestic service? since t#e! are rendered %rom one point in t#e P#i&ippines to anot#er point wit#in
t#e same countr!'<
(ransportation La.! -""/ ( /%1 )
3. Le*al 9uestion appropriate to ?u+iciary
Fide&it! to t#e asic concept o% e3#austing administrative remedies ca&&s %or t#e e9ua&&! %undamenta&
princip&e o% primar! Aurisdiction to e respected' T#e doctrine o% primar! Aurisdiction ca&&s %or app&ication
w#en t#ere is suc# competence to act on t#e part o% an administrative od!' Petitioner, #owever, cou&d not
dissipate t#e we&& %ounded dout as to w#et#er its &egis&ative %ranc#ise Austi%ies its p&ea to esta&is# t#e ranc#
or station in 9uestion' 7sent suc# c&arit! as to t#e scope and coverage o% its %ranc#ise, a &ega& 9uestion arises
w#ic# is more appropriate %or t#e Audiciar! t#an %or an administrative agenc! to reso&ve' T#ere is merit,
t#ere%ore, to t#e approac# to seek Audicia& remed! as to w#et#er or not t#e &egis&ative %ranc#ise cou&d e so
interpreted as to ena&e t#e Eationa& Te&ecommunications $ommission to act on t#e matter' 7 Aurisdictiona&
9uestion t#us arises and ca&&s %or an answer'
/. Re9uisite ,or t)e ,ilin* o, a petition ,or certiorari6 :anali*an vs. 5+ol,o
For certiorari to e avai&a&e, as set %ort# in Pana&igan v' 7do&%o, re9uires a s#owing o% ;a capricious,
aritrar! and w#imsica& e3ercise o% power, t#e ver! antit#esis o% t#e Audicia& prerogative in accordance wit#
centuries o% ot# civi& &aw and common &aw traditions'<
2. Reliance on +octrine o, ripeness ,or ?u+icial revie. not al.ays atten+e+ .it) success6 5rro.
(ransport vs. B8(
:e&iance on t#e doctrine o% ripeness %or Audicia& review is not a&wa!s attended wit# success' Precise&!,
in 7rrow Transportation $orp' v' 1oard o% Transportation, t#e mere %act t#at at t#e time t#e case was e&evated
to t#e "upreme $ourt, a motion %or reconsideration was sti&& pending wit# respondent 1oard did not su%%ice to
prec&ude a ru&ing on t#e decisive 9uestion raised'
. 0ennet) Culp <avis on 5+#inistrative La.
7 noted aut#orit! on 7dministrative +aw, Pro%essor Pennet# $u&p Davis, was re%erred to as eing ;o%
t#e view t#at t#e reso&ution o% w#at cou&d e a dei&itating uncertaint! wit# t#e conceded ai&it! o% t#e
Audiciar! to work out a so&ution o% t#e pro&em posed is a potent argument %or minimi*ing t#e emp#asis &aid
on its tec#nica& aspect'<
3. Buris+iction issue6 Ra+io Co##unications vs. Santia*o
7n e3cerpt %rom :adio $ommunications o% t#e P#i&ippines, ,nc' v' "antiago, is even more persuasive
as to w#! t#e stage #as een reac#ed %or t#e Audiciar! to act considering t#at t#e 9uestion raised is one o%
Aurisdiction' T#us: ;B3cept %or constitutiona& o%%icia&s w#o can trace t#eir competence to act to t#e
%undamenta& &aw itse&%, a pu&ic o%%icia& must &ocate in t#e statute re&ied upon a grant o% power e%ore #e can
e3ercise it' ,t need not e e3press' ,t ma! e imp&ied %rom t#e wording o% t#e &aw' 7sent suc# a re9uisite,
#owever, no warrant e3ists %or t#e assumption o% aut#orit!' T#e act per%ormed, i% proper&! c#a&&enged, cannot
meet t#e test o% va&idit!' ,t must e set aside' "o it must e in t#ese two petitions' T#at is to de%er to a princip&e
reiterated ! t#is $ourt time and time again'<
[-1/$' 1%4]
:)ilippine Glo$al vs. Relova (GR L>"2/4! 1" 7ove#$er 1%4)
Bn 1anc, Feria (J): . concur, 1 on &eave
&acts' (n 12 Ma! 1.0>, P#i&ippine 6&oa& $ommunications ,nc' (P#i&6&oa&) %i&ed wit# t#e 1oard o%
$ommunications (1($), now t#e Eationa& Te&ecommunications $ommission (ET$), an app&ication %or
aut#orit! to esta&is# a ranc# station in $eu $it! %or t#e purpose o% rendering internationa&
te&ecommunication services %rom $eu $it! to an! point outside t#e P#i&ippines w#ere it is aut#ori*ed to
operate' "aid app&ication was opposed ! t#e P#i&ippine Te&egrap# T Te&ep#one $orporation (PTTT), $apito&
Fire&ess and :adio $ommunications o% t#e P#i&ippines ,nc' (:$P,)' Meanw#i&e, on 85 Marc# 1.00, w#i&e
P#i&6&oa&?s app&ication was pending, t#e 1($ issued Memorandum $ircu&ar 00=13 designating t#e
(ransportation La.! -""/ ( /%- )
Metropo&itan Mani&a area as t#e so&e ;gatewa!< (point o% entrance into or e3it %rom) %or communications in
t#e P#i&ippines and de%ining w#at constitutes ;domestic record operations'< (n 1> Januar! 1.0., t#e 1($
granted P#i&6&oa& provisiona& aut#orit! to esta&is# a station in $eu $it! ;suAect to t#e condition t#at as
soon as domestic carriers s#a&& #ave upgraded t#eir %aci&ities, app&icant s#a&& cease its operation and inter%ace
wit# domestic carriers' ; T#en on 85 Ma! 1.0., t#e 1($ granted P#i&6&oa& %ina& aut#orit! to esta&is# a
;ranc#-station< in $eu $it! and, suAect to its prior approva& an!w#ere in t#e P#i&ippines' PTTT, et' a&'
%i&ed a Aoint motion %or reconsideration o% said decision'
(n 80 7ugust 1.0., pending reso&ution o% t#e Aoint motion %or reconsideration, PTTT, et' a&' %i&ed wit# t#e
&ower court a petition %or dec&arator! Audgment regarding t#e proper construction o% P#i&6&oa&?s %ranc#ise,
:7 5>10' P#i&6&oa& moved to dismiss t#e petition ut said motion was denied' ,t t#en assai&ed t#e a%oresaid
order on t#e ground o% &ack o% Aurisdiction, ut t#e "upreme $ourt sustained t#e &ower court and #e&d t#at t#e
suit %or dec&arator! re&ie% %e&& wit#in t#e competence o% t#e Judiciar! and did not re9uire prior action ! t#e
administrative agenc! concerned under t#e concept o% primar! Aurisdiction' (6: +=48/1., 8 (ctoer 1./2,
122 "$:7 845) 7%ter t#e issues were Aoined, t#e parties at t#e pre=tria& con%erence agreed to sumit t#e case
%or decision on t#e ases o% t#eir respective p&eadings and memoranda ecause t#e issues invo&ved are &ega&'
(n 80 7pri& 1./8, t#e &ower court rendered t#e Audgment dec&aring P#i&6&oa& wit#out aut#orit! to esta&is#,
maintain and operate, apart %rom its sing&e principa& station in Makati, an! ot#er ranc# or station wit#in t#e
P#i&ippines'' @ence, t#e petition %or review on certiorari'
T#e "upreme $ourt reversed t#e decision appea&ed %rom, and rendered anot#er dec&aring P#i&6&oa& wit#
aut#orit! to esta&is#, maintain and operate, in accordance wit# its %ranc#ise and Memorandum $ircu&ar 2/=/=
/3, an! ot#er ranc# or station wit#in t#e P#i&ippines apart %rom its sing&e principa& station in Makati, Metro
Mani&a'
1. Bu+*e ?oine+ as party in Special Civil 5ction o, certiorari (Rule 2) an+ not in 5ppeal $y
certiorari (Rule /2)
,n t#e case o% Metropo&itan Faterworks and "ewerage "!stem vs' T#e $ourt o% 7ppea&s and $it! o%
Dagupan (6: +=4548>, 84 7ugust 1./>), it was pointed out t#e common error o% Aoining t#e court or Audge
w#o rendered t#e decision appea&ed %rom as a part! respondent in an appea& ! certiorari to t#e "upreme
$ourt under :u&e 54 o% t#e :u&es o% $ourtC w#en correct&! t#e on&! parties in an appea& ! certiorari are t#e
appe&&ant as petitioner and t#e appe&&ee as respondentC and it is in t#e specia& civi& action o% certiorari under
"ection > o% :u&e >4 o% t#e :u&es o% $ourt w#ere t#e court or Audge is re9uired to e Aoined as a part!
de%endant or respondent'
-. <ecision $ase+ on a*ree#ent o, parties to su$#it case ,or +ecision $ase+ on respective
plea+in*s proper
@erein, in its "econd "upp&ementa& Memorandum %i&ed on 1> Ju&! 1./5, P#i&6&oa& e&ated&! c&aims
t#at t#e dec&arator! Audgment was improper&! made, as it was ased on t#e p&eadings a&one, a&t#oug# t#e
dec&arator! re&ie% petition presented genuine issues o% %act t#at re9uired tria&' $onsidering, #owever, t#e
agreement o% t#e parties to sumit t#e case %or decision on t#e asis o% t#eir respective p&eadings and
memoranda, t#e &ower court cou&d not e %au&ted %or rendering Audgment according&!'
3. <ecision o, lo.er court contrary to ,ranc)ise
@erein, t#e &ower court erred in rendering t#e decision appea&ed %rom, inasmuc# as t#e same is
contrar! to t#e provisions o% petitioner?s &egis&ative %ranc#ise (:'7' Eo' 5>10) as we&& as t#e contemporaneous
construction p&aced upon it ! t#e governmenta& agenc! c#arged wit# its en%orcement and t#e opinion o% t#e
%ormer "ecretar! o% Justice'
/. Section o, 1 o, :)ilippine Glo$al Co##unications! ,or#erly RC5 Co##unications
"ection 1 o% P#i&6&oa&?s %ranc#ise provides t#at ;t#ere is #ere! granted to t#e :$7
$ommunications ,nc', #ereina%ter re%erred to as t#e 6rantee, t#e rig#t and privi&ege o% constructing,
maintaining and operating communications s!stems ! radio, wire, sate&&ites, and ot#er means now known to
science or w#ic# in t#e %uture ma! e deve&oped %or t#e reception and transmission o% messages etween an!
point in t#e P#i&ippines to points e3terior t#ereto, inc&uding airp&anes, airs#ips or vesse&s, even t#oug# suc#
airp&anes, airs#ips or vesse&s ma! e &ocated wit#in t#e territoria& &imits o% t#e P#i&ippines'< :$7
$ommunications, ,nc' was suse9uent&! renamed P#i&ippine 6&oa& $ommunications, ,nc'
2. Court1s +uty to apply t)e la.6 Construction applies only .)en application i#possi$le or
ina+e9uate
T#e %irst and %undamenta& dut! o% courts, in our Audgment, is to app&! t#e &aw' $onstruction and
interpretation come on&! a%ter it #as een demonstrated t#at app&ication is impossi&e or inade9uate wit#out
t#em'
. Le*islative intent #ust $e ascertaine+ ,ro# consi+eration o, statute as a .)ole
+egis&ative intent must e ascertained %rom a consideration o% t#e statute as a w#o&e' 7s reiterated in
t#e case o% 7isporna vs' $ourt o% 7ppea&s: ;t#e particu&ar words, c&auses and p#rases s#ou&d not e studied as
detac#ed and iso&ated e3pressions, ut t#e w#o&e and ever! part o% t#e statute must e considered in %i3ing t#e
meaning o% an! o% its parts and in order to produce #armonious w#o&e' 7 statute must e so construed as to
#armoni*e and give e%%ect to a&& its provisions w#enever possi&e'
3. Lo.er court1s interpretation con,ine+ to Section 1 an+ 13 o, t)e ,ranc)ise only
T#e &ower court #e&d t#at t#e word ;an!< in t#e aove=9uoted "ection 1 o% t#e &aw means a sing&e
point wit#in t#e P#i&ippines w#ere P#i&6&oa& at its c#oice, suAect to approva& ! t#e proper governmenta&
agenc!, can esta&is# and maintain a reception and communication station or s!stem' ,t a&so #e&d t#at t#e
esta&is#ment, maintenance and operation o% %ranc#ise or stations an!w#ere in t#e P#i&ippines or even wit#in
Metropo&itan Mani&a outside or apart %rom P#i&6&oa&?s principa& or main station in Makati constitute
;domestic communication service< in vio&ation o% "ection 10 o% said &aw'
4. 8t)er sections o, t)e la. provi+es aut)ority ,or :)ilGlo$al to construct! etc. ot)er stations
.it)in :)ilippines6 Sections 3! / (a)! ! an+ %
7 reading o% ot#er sections o% t#e &aw aside %rom "ections 1 and 10 cited ! t#e &ower court wou&d
&ead to no ot#er conc&usion t#an t#at said &aw aut#ori*es petitioner to construct, maintain and operate, apart
%rom its principa& station in Makati, ot#er stations or ranc#es wit#in t#e P#i&ippines %or purposes o% its
internationa& communications operations' "ection 3 o% t#e &aw provides t#at ;%or t#e purpose o% carr!ing out
t#e privi&ege granted #erein, t#e grantee ma! esta&is# stations in suc# p&aces in t#e P#i&ippines as t#e grantee
ma! se&ect and t#e "ecretar! o% Pu&ic Forks and $ommunications ma! approve' ; "ection 5 (a) provides t#at
;t#e "ecretar! o% Pu&ic Forks and $ommunications s#a&& #ave t#e power to a&&ot to t#e grantee t#e
%re9uencies and wave &engt#s to e used t#ereunder and determine t#e stations to and %rom w#ic# eac# suc#
%re9uenc! and wave &engt#s ma! e used' and issue to t#e grantee a &icense %or suc# use'< "ection > provides
t#at ;a specia& rig#t is reserved to t#e 6overnment o% t#e :epu&ic o% t#e P#i&ippines, in time o% war,
insurrection, or domestic trou&e, to take over and operate t#e said stations upon t#e order and direction o% an!
aut#ori*ed department o% t#e 6overnment o% t#e P#i&ippines, suc# department to compensate t#e grantee %or
t#e use o% said stations during t#e period w#en t#e! s#a&& e so operated ! t#e said 6overnment'< "ection .
provides t#at ;t#e grantee s#a&& #o&d t#e nationa&, provincia&, and municipa& governments o% t#e P#i&ippines,
#arm&ess %rom a&& c&aims, accounts, demands, or actions arising out o% accidents or inAuries, w#et#er t#e
propert! or to persons, caused ! t#e construction or operation o% t#e stations o% t#e grantee'<
%. :rinciple o, conte#poraneous construction o, a statute $y t)e executive o,,icers o, t)e
*overn#ent .)ose +uty it is to execute it
(ransportation La.! -""/ ( /%/ )
T#e princip&e t#at t#e contemporaneous construction o% a statute ! t#e e3ecutive o%%icers o% t#e
government, w#ose dut! it is to e3ecute it, is entit&ed to great respect, and s#ou&d ordinari&! contro& t#e
construction o% t#e statute ! t#e courts, is so %irm&! emedded in our Aurisprudence t#at no aut#orities need
e cited to support it' $ourts wi&& and s#ou&d respect t#e contemporaneous construction p&aced upon a statute
! t#e e3ecutive o%%icers w#ose dut! it is to en%orce it, and un&ess suc# interpretation is c&ear&! erroneous wi&&
ordinari&! e contro&&ed t#ere!'
1". Construction o, B8C on :)ilGlo$al1s ,ranc)ise
,n its decision o% 85 Ma! 1.0. granting P#i&6&oa& %ina& aut#orit! to esta&is# a ranc#-station in
$eu $it!, t#e 1($ construed t#e &egis&ative %ranc#ise o% P#i&6&oa&, as %o&&ows: ;,t was t#e ear&ier
contention o% t#is 1oard w#en it issued Memorandum $ircu&ar 00=13 t#at no internationa& record carrier cou&d
esta&is# stations in an! point o% t#e countr!, %or purposes o% carr!ing out its internationa& record operations
e3cept in Metropo&itan Mani&a 7rea' @owever, a care%u& review and de&ieration on t#e stand taken ! t#e
app&icant #erein as discussed in position paper it sumitted to t#e 1oard on 81 Feruar! 1.0/ and a cursor!
review o% t#e individua& %ranc#ises o% eac# internationa& carrier as we&& as o% an ear&ier opinion e3pressed !
t#e "ecretar! o% Justice to t#e $#airman o% t#e de%unct :adio $ontro& 1oard #as convinced t#e oard t#at !
virtue o% app&icant?s %ranc#ise, Memorandum $ircu&ar 00=13 is not vio&ated ! aut#ori*ing app&icant to
esta&is# a ranc# station in $eu $it! so&e&! %or its internationa& record operations' ,n view t#ereo% and in t#e
interest o% continued e%%icient, ade9uate and satis%actor! services, t#e 1oard o% $ommunications #ere!
makes %ina& t#e provisiona& aut#orit! granted to app&icant #erein on 1> Januar! 1.0. not on&! on t#e grounds
stated in said order ut a&so %or reasons t#at suAect to t#e approva& o% t#is 1oard, app&icant ma! esta&is#
ranc# stations in an! point wit#in t#e countr! %or t#e purpose o% receiving and transmitting messages to
countries outside t#e P#i&ippines w#ere it is aut#ori*ed to render internationa& te&ecommunications services in
accordance wit# its %ranc#ise and Memorandum $ircu&ar 00=13' Metropo&itan Mani&a remains to e t#e Gso&e?
gatewa!C #ence, a&& messages received and transmitted in t#e course o% a carrier?s internationa& record carrier
operation, must e coursed t#roug# said gatewa!'<
11. 8pinion o, Secretary o, Bustice (8pinion 1/! 13 Bune 1%2/6 Bustice :e+ro (uaJon)
T#e opinion o% t#e "ecretar! o% Justice states: ;,n (pinion 0> t#e view taken was t#at a message, to
%a&& wit#in t#e purview o% t#e %ranc#ise, once sent ! a transmitter wit#in t#e P#i&ippines, cannot e received
! an! station wit#in t#e P#i&ippines even %or t#e purpose o% retransmitting suc# message to points outside t#e
P#i&ippines'< T#e interpretation given to t#e c&ause (;T#e sending o% commercia& wire&ess te&egrap#ic
messages %rom points wit#in t#e P#i&ippine ,s&ands to points e3terior t#ereto, inc&uding airp&anes, airs#ips,
and vesse&s, even t#oug# suc# airp&anes, airs#ips, or vesse&s e &ocated wit#in t#e territoria& &imits o% t#e
P#i&ippine ,s&ands, and t#e receiving o% commercia& wire&ess messages %rom suc# e3terior points<) was too
strict and does not con%orm wit# t#e spirit o% provision' ;T#e %ranc#ise #as re%erence to t#e destination o% t#e
message and not to t#e manner o% transmitta&, not as to w#et#er it s#ou&d e sent to t#e point o% destination
direct&! or t#roug# re&a!s' T#e reservation in %avor o% t#e P#i&ippine 6overnment under section 5 o% t#e
%ranc#ise o% ;a&& wire&ess communications etween points o% stations wit#in t#e P#i&ippine ,s&ands? is c&ear&!
intended to re%er on&! to domestic communications' ,t s#ou&d e understood, #owever, t#at no e3tra %ees or
to&&s cou&d e co&&ected %or t#e transmitta& o% messages %rom a re&a! station to t#e principa& station in Mani&a'
For to do so wou&d make it a domestic service and wou&d ring suc# service in competition wit# t#e domestic
radio and te&egrap# service o% t#e 1ureau o% Posts'<
1-. 8pinion o, t)e Fn+ersecretary o, Bustice (-4 7ove#$er 1%33)
T#e Justice "ecretar!?s opinion was reiterated and rea%%irmed ! t#e Dndersecretar! o% Justice on 8/
Eovemer 1.03, in answer to t#e 9uer! o% t#e 7cting $#airman o% t#e Foreign Trade Rone 7ut#orit! as to
w#et#er or not 6&oe=Macka! $a&e and :adio $orporation is ;aut#ori*ed under its %ranc#ise to set a re&a!
station inside t#e Foreign Trade Rone in Marive&es, 1ataan, w#ic# wi&& receive interstate communications %or
onward transmission ! its main station in Mani&a'<
13. Statutes in pari #ateria #ust $e construe+ to*et)er
T#e opinions o% t#e "ecretar! o% Justice and Dndersecretar! o% Justice are materia& ecause :7 5>32
and 5>10 are in pari materia' "tatutes are said to e in pari materia w#en t#e! re&ate to t#e same person or
t#ing, or to t#e same c&ass o% persons or t#ings, or #ave t#e same purpose or oAect' F#en statutes are in pari
materia, t#e ru&e o% statutor! construction dictates t#at t#e! s#ou&d e construed toget#er'
1/. Gui+elines ,or t)e *overn#ent policy o, +esi*natin* =etropolitan =anila as international
*ate.ay6 Dxistin* pu$lic o,,ices o, ;nternational Recor+ Carriers .ere +uly aut)oriJe+ $y t)eir
respective le*islative ,ranc)ises
@erein, on 84 (ctoer 1./3, t#e Eationa& Te&ecommunications $ommission, wit# t#e approva& o% t#e
Ministr! o% Transportation and $ommunications, issued Memorandum $ircu&ar 2/=/=/3 w#ic# adopted
guide&ines in t#e imp&ementation o% t#e government po&ic! o% designating Metropo&itan Mani&a as t#e
internationa& gatewa! %or purposes o% domestic and internationa& communications operations' 7mong t#e
provisions o% said Memorandum $ircu&ar w#ic# are pertinent to t#e case at ar are t#e %o&&owing: ;(1'1) T#e
,nternationa& :ecord $arriers (,:$s) s#a&& continue to own, construct and e3pand, as ma! e re9uired ! t#e
service t#eir own stations, inside p&ant, ranc#es and termina&s wit#in t#e Metro Mani&a 7rea necessar! %or
t#em to conduct t#eir usiness o% providing internationa& te&ecommunications service in t#e countr! in
accordance wit# t#eir respective %ranc#ise and as aut#ori*ed ! t#e appropriate government regu&ator!
agenc!' (8'1) T#e ,:$s s#a&& not maintain pu&ic o%%ices outside t#e gatewa!' T#e! ma!, #owever, e a&&owed
to esta&is# customer termina&s wit# t#e necessar! marketing and tec#nica& support outside Metro Mani&a'
(8'3) ,nternationa& te&ecommunications re9uirements o% non=e9uipped or wa&k=in customers s#a&& e served
t#ru t#e pu&ic o%%ices o% t#e domestic record carrier-s (D:$s)' 7&& e3isting pu&ic o%%ices o% ,:$s ma!
continue operating unti& suc# time as t#e D:$(s) can provide t#e %aci&ities re9uired ! t#e ,:$s or an
,nterconnect 7greement etween t#e ,:$(s) and D:$(s) s#a&& #ave een du&! approved ! ET$'<
[-12]
:L<( vs. 7(C [G.R. 7o. 44/"/. 8cto$er 14! 1%%".]
Bn 1anc, Me&encio=@errera (J): > concurring
&acts' (n 88 June 1.4/, :7 82.2, was enacted (7n 7ct 6ranting Fe&i3 7&erto and $ompan!, ,ncorporated,
a Franc#ise to Bsta&is# :adio "tations %or Domestic and Transoceanic Te&ecommunications)' Fe&i3 7&erto T
$o', ,nc' (F7$,) was t#e origina& corporate name, w#ic# was c#anged to BT$, wit# t#e amendment o% t#e
7rtic&es o% ,ncorporation in 1.>5' (n 13 Ma! 1./0, a&&eging urgent pu&ic need, BT$, %i&ed an app&ication
wit# ET$ (ET$ $ase /0=/.) %or t#e issuance o% a $erti%icate o% Pu&ic $onvenience and Eecessit! ($P$E)
to construct, insta&&, esta&is#, operate and maintain a $e&&u&ar Moi&e Te&ep#one "!stem and an 7&p#a
Eumeric Paging "!stem in Metro Mani&a and in t#e "out#ern +u*on regions, wit# a pra!er %or provisiona&
aut#orit! to operate P#ase 7 o% its proposa& wit#in Metro Mani&a' P+DT %i&ed an (pposition wit# a Motion to
Dismiss, ased primari&! on t#e grounds t#at (1) BT$, is not capacitated or 9ua&i%ied under its &egis&ative
%ranc#ise to operate a s!stemwide te&ep#one or network o% te&ep#one service suc# as t#e one proposed in its
app&icationC (8) BT$, &acks t#e %aci&ities needed and indispensa&e to t#e success%u& operation o% t#e proposed
ce&&u&ar moi&e te&ep#one s!stemC (3) P+DT #as itse&% a pending app&ication wit# ET$ ($ase />=/>) to insta&&
and operate a $e&&u&ar Moi&e Te&ep#one "!stem %or domestic and internationa& service not on&! in Mani&a ut
a&so in t#e provinces and t#at under t#e ;prior operator< or ;protection o% investment< doctrine, P+DT #as t#e
priorit! or pre%erence in t#e operation o% suc# serviceC and (5) t#e provisiona& aut#orit!, i% granted, wi&& resu&t
in need&ess, uneconomica& and #arm%u& dup&ication, among ot#ers' ,n an (rder, dated 18 Eovemer 1./0,
ET$ overru&ed P+DT?s (pposition and dec&ared t#at :7 82.2 s#ou&d e &iera&&! construed as to inc&ude
among t#e services under said %ranc#ise t#e operation o% a ce&&u&ar moi&e te&ep#one service' 7%ter eva&uating
t#e reconsideration soug#t ! P+DT, t#e ET$, in (ctoer 1.//, maintained its ru&ing t#at &iera&&! construed,
and t#at BT$,?s %ranc#ise carries wit# it t#e privi&ege to operate and maintain a ce&&u&ar moi&e te&ep#one
service'
(n 18 Decemer 1.//, ET$ issued an order opining t#at ;pu&ic interest, convenience and necessit! %urt#er
demand a second ce&&u&ar moi&e te&ep#one service provider and %inds prima %acie evidence s#owing BT$,?s
&ega&, %inancia& and tec#nica& capai&ities to provide a ce&&u&ar moi&e service using t#e 7MP" s!stem,< ET$
granted BT$, provisiona& aut#orit! to insta&&, operate and maintain a ce&&u&ar moi&e te&ep#one s!stem
initia&&! in Metro Mani&a, P#ase 7 on&!, suAect to t#e terms and conditions set %ort# in t#e same (rder' (ne o%
t#e conditions prescried ($ondition 4) was t#at, wit#in ninet! (.2) da!s %rom date o% t#e acceptance ! BT$,
o% t#e terms and conditions o% t#e provisiona& aut#orit!, BT$, and P+DT ;s#a&& enter into an interconnection
agreement %or t#e provision o% ade9uate interconnection %aci&ities etween app&icant?s ce&&u&ar moi&e
te&ep#one switc# and t#e pu&ic switc#ed te&ep#one network and s#a&& Aoint&! sumit suc# interconnection
agreement to t#e $ommission %or approva&'< ,n a ;Motion to "et 7side t#e (rder< granting provisiona&
aut#orit!, P+DT a&&eged essentia&&! t#at t#e interconnection ordered was in vio&ation o% due process and t#at
t#e grant o% provisiona& aut#orit! was Aurisdictiona&&! and procedura&&! in%irm' (n / Ma! 1./., ET$ issued
an order den!ing reconsideration and set t#e date %or continuation o% t#e #earings on t#e main proceedings'
P+DT c#a&&enged t#e ET$ orders o% 18 Decemer 1.// and / Ma! 1./. e%ore t#e "upreme $ourt'
(n 14 June 1./., t#e "upreme $ourt dismissed t#e petition %or its %ai&ure to comp&! %u&&! wit# t#e
re9uirements o% $ircu&ar 1//' Dpon satis%actor! s#owing, #owever, t#at t#ere was suc# comp&iance, t#e $ourt
reconsidered t#e order and reinstated t#e petition' (n 80 Feruar! 1..2, t#e $ourt issued a Temporar!
:estraining (rder, upon P+DT?s urgent mani%estation, enAoining ET$ to ;$ease and Desist %rom a&& or an! o%
its on=going proceedings and BT$, %rom continuing an! and a&& acts intended or re&ated to or w#ic# wi&&
amount to t#e imp&ementation-e3ecution o% its provisiona& aut#orit!'< P+DT was re9uired ! t#e $ourt to post
a ond o% P4 mi&&ion' P+DT comp&ied'
T#e "upreme $ourt dismissed t#e petition %or &ack o% merit and &i%ted t#e Temporar! :estraining (rder
issued' T#e ond issued as a condition %or t#e issuance o% said restraining (rder is dec&ared %or%eited in %avor
o% B3press Te&ecommunications $o', ,nc'C wit# cost against P+DT'
1. 5$use o, +iscretion or lack o, ?uris+iction only issue in a special civil action ,or Certiorari an+
:ro)i$ition
1eing a specia& civi& action %or $ertiorari and Pro#iition, t#e $ourt on&! need determine i% ET$
acted wit#out Aurisdiction or wit# grave ause o% discretion amounting to &ack or e3cess o% Aurisdiction in
granting provisiona& aut#orit! to BT$, under t#e ET$ 9uestioned (rders o% 18 Decemer 1.// and / Ma!
1./.'
-. 7(C )as ?uris+iction
ET$ is t#e regu&ator! agenc! o% t#e nationa& government wit# Aurisdiction over a&&
te&ecommunications entities' ,t is &ega&&! c&ot#ed wit# aut#orit! and given amp&e discretion to grant a
provisiona& permit or aut#orit!' ,n %act, ET$ ma!, on its own initiative, grant suc# re&ie% even in t#e asence
o% a motion %rom an app&icant'
3. Section 3 (:rovisional Re#e+y)! Rule 12! Rule o, :ractice an+ :roce+ure $e,ore t)e Boar+ o,
Co##unications (no. 7(C)
;Dpon t#e %i&ing o% an app&ication, comp&aint or petition or at an! stage t#erea%ter, t#e 1oard ma!
grant on motion o% t#e p&eaders or on its own initiative, t#e re&ie% pra!ed %or, ased on t#e p&eading, toget#er
wit# t#e a%%idavits and supporting documents attac#ed t#ereto, wit#out preAudice to a %ina& decision a%ter
comp&etion o% t#e #earing w#ic# s#a&& e ca&&ed wit#in 32 da!s %rom grant o% aut#orit! asked %or'<
/. :rovisionary aut)ority properly *rante+
T#e provisiona& aut#orit! granted ! t#e ET$ #as a de%inite e3pir! period o% 1/ mont#s un&ess sooner
renewed, and w#ic# ma! e revoked, amended or revised ! t#e ET$C and covers one o% %our p#ases' ,t is
a&so &imited to Metro Mani&a on&!' T#e insta&&ation and operation o% an a&p#a numeric paging s!stem was not
aut#ori*ed' T#e main proceedings are c&ear&! to continue as stated in t#e ET$ (rder o% / Ma! 1./.' Furt#er,
t#e provisiona& aut#orit! was issued a%ter due #earing, reception o% evidence and eva&uation t#ereo%, wit# t#e
#earings attended ! various oppositors, inc&uding P+DT' ,t was granted on&! a%ter a prima %acie s#owing t#at
BT$, #ad t#e necessar! &ega&, %inancia& and tec#nica& capai&ities and t#at pu&ic interest, convenience and
necessit! so demanded'
2. :rovisional aut)ority #eanin*less i, *rantee is not allo.e+ to operate
Provisiona& aut#orit! wou&d e meaning&ess i% t#e grantee were not a&&owed to operate' ,ts &i%etime is
&imited and ma! e revoked ! t#e ET$ at an! time in accordance wit# &aw' T#e initia& e3penditure o% P132M
more or &ess, is rendered necessar! even under a provisiona& aut#orit! to ena&e BT$, to prove its capai&it!'
. <i,,erences exist $et.een a :rovisional 5ut)ority an+ a Certi,icate o, :u$lic Convenience an+
7ecessity
1asic di%%erences e3ist etween a provisiona& aut#orit! and a $erti%icate o% Pu&ic $onvenience and
Eecessit! ($P$E)' ,% w#at #ad een granted were a $P$E, it wou&d constitute a %ina& order or award
reviewa&e on&! ! ordinar! appea& to t#e $ourt o% 7ppea&s pursuant to "ection .(3) o% 1P 18., and not !
$ertiorari e%ore t#e "upreme $ourt'
3. ()e Covera*e o, D(C;1s &ranc)ise (R5 -"%")
:7 82.2 grants BT$, (%ormer&! F7$,) ;t#e rig#t and privi&ege o% constructing, insta&&ing,
esta&is#ing and operating in t#e entire P#i&ippines radio stations %or reception and transmission o% messages
on radio stations in t#e %oreign and domestic pu&ic %i3ed point=to=point and pu&ic ase, aeronautica& and
&and moi&e stations, ' ' ' wit# t#e corresponding re&a! stations %or t#e reception and transmission o% wire&ess
messages on radiote&egrap#! and-or radiote&ep#on! ' ' ' ' ;
4. Ra+iotelep)ony +e,ine+
7s de%ined ! t#e Eew ,nternationa& Fester Dictionar! t#e term ;radiote&ep#on!< is de%ined as a
te&ep#on! carried on ! aid o% radiowaves wit#out connecting wires' T#e ,nternationa& Te&ecommunications
Dnion (,TD) de%ines a ;radiote&ep#one ca&&< as a ;te&ep#one ca&&, originating in or intended on a&& or part o% its
route over t#e radio communications c#anne&s o% t#e moi&e service or o% t#e moi&e sate&&ite service'<
%. Ra+iotelep)ony construe+ li$erally to inclu+e cellular #o$ile telep)one syste# (C=(S)
,n its (rder o% 18 Eovemer 1./0, t#e ET$ construed t#e tec#nica& term ;radiote&ep#on!< &iera&&!
as to inc&ude t#e operation o% a ce&&u&ar moi&e te&ep#one s!stem' F#i&e under :epu&ic 7ct 82.2 a s!stem=
wide te&ep#one or network o% te&ep#one service ! means o% connecting wires ma! not #ave een
contemp&ated, it can e construed &iera&&! t#at t#e operation o% a ce&&u&ar moi&e te&ep#one service w#ic#
carries messages, eit#er voice or record, wit# t#e aid o% radiowaves or a part o% its route carried over radio
communication c#anne&s, is one inc&uded among t#e services under said %ranc#ise %or w#ic# a certi%icate o%
pu&ic convenience and necessit! ma! e app&ied %or'
1". Construction *iven $y a+#inistrative a*ency *iven *reat .ei*)t an+ respect
T#e construction given ! an administrative agenc! possessed o% t#e necessar! specia& know&edge,
e3pertise and e3perience and deserves great weig#t and respect' ,t can on&! e set aside ! Audicia&
intervention on proo% o% gross ause o% discretion, %raud, or error o% &aw'
11. &actual issues not su$?ect o, a special civil action ,or certiorari
F#et#er or not BT$, (previous&! F7$,), in contravention o% its %ranc#ise, started t#e %irst o% its radio
te&ecommunication stations wit#in 8 !ears %rom t#e grant o% its %ranc#ise and comp&eted t#e construction
wit#in 12 !ears %rom said dateC and w#et#er or not its %ranc#ise #ad remained unused %rom t#e time o% its
issuance, are 9uestions o% %act e!ond t#e province o% t#is $ourt, esides t#e we&&=sett&ed procedura&
consideration t#at %actua& issues are not suAects o% a specia& civi& action %or $ertiorari' Moreover, neit#er
"ection 5, :7 82.2 nor PD 3> s#ou&d e construed as se&%=e3ecuting in working a %or%eiture' Franc#ise
#o&ders s#ou&d e given an opportunit! to e #eard, particu&ar&! so, w#ere BT$, does not admit an! reac#, in
consonance wit# t#e rudiments o% %air p&a!'
1-. Le*islative ,ranc)ise cannot $e collaterally attacke+6 cannot $e revoke+ .it)out +ue process o,
la.
P+DT?s a&&egation Q t#at t#e BT$, %ranc#ise #ad &apsed into non=e3istence %or %ai&ure o% t#e %ranc#ise
#o&der to egin and comp&ete construction o% t#e radio s!stem aut#ori*ed under t#e %ranc#ise and t#at PD 3>
(8 Eovemer 1.08) w#ic# &egis&ates t#e mandator! cance&&ation or inva&idation o% a&& %ranc#ises %or t#e
operation o% communications services, w#ic# #ave not een avai&ed o% or used ! t#e part! or parties in
w#ose name t#e! were issued Q partakes o% a co&&atera& attack on a %ranc#ise (:7 82.2), w#ic# is not a&&owed'
7 %ranc#ise is a propert! rig#t and cannot e revoked or %or%eited wit#out due process o% &aw'
13. &or,eiture $y non>user proper su$?ect o, prero*ative .rit o, 9uo .arranto6 Ri*)t to assert
$elon*s to t)e State
T#e determination o% t#e rig#t to t#e e3ercise o% a %ranc#ise, or w#et#er t#e rig#t to enAo! suc#
privi&ege #as een %or%eited ! non=user, is more proper&! t#e suAect o% t#e prerogative writ o% 9uo warranto,
t#e rig#t to assert w#ic#, as a ru&e, e&ongs to t#e "tate ;upon comp&aint or ot#erwise< t#e reason eing t#at
t#e ause o% a %ranc#ise is a pu&ic wrong and not a private inAur!' 7 %or%eiture o% a %ranc#ise wi&& #ave to e
dec&ared in a direct proceeding %or t#e purpose roug#t ! t#e "tate ecause a %ranc#ise is granted ! &aw and
its un&aw%u& e3ercise is primari&! a concern o% 6overnment'
1/. Section 1" o, R5 -"%"
;T#e grantee s#a&& not &ease, trans%er, grant t#e usu%ruct o%, se&& or assign t#is %ranc#ise nor t#e rig#ts
and privi&eges ac9uired t#ereunder to an! person, %irm, compan!, corporation or ot#er commercia& or &ega&
entit! nor merge wit# an! ot#er person, compan! or corporation organi*ed %or t#e same purpose, wit#out t#e
approva& o% t#e $ongress o% t#e P#i&ippines %irst #ad' ' ' ' ' ; T#e %oregoing provision is directed to t#e
;grantee< o% t#e %ranc#ise, w#ic# is t#e corporation itse&% and re%ers to a sa&e, &ease, or assignment o% t#at
%ranc#ise' ,t does not inc&ude t#e trans%er or sa&e o% s#ares o% stock o% a corporation ! t#e &atter?s
stock#o&ders'
12. Section -" ()) o, C5 1/! as a#en+e+ $y C5 /2/6 5cts re9uirin* t)e approval o, t)e
Co##ission
"uAect to esta&is#ed &imitations and e3ceptions and saving provisions to t#e contrar!, it s#a&& e
un&aw%u& %or an! pu&ic service or %or t#e owner, &essee or operator t#ereo%, wit#out t#e approva& and
aut#ori*ation o% t#e $ommission previous&! #ad 333 333 333 (#) To se&& or register in its ooks t#e trans%er
or sa&e o% s#ares o% its capita& stock, i% t#e resu&t o% t#at sa&e in itse&% or in connection wit# anot#er previous
sa&e, s#a&& e to vest in t#e trans%eree more t#an %ort! per centum o% t#e suscried capita& o% said pu&ic
service' 7n! trans%er made in vio&ation o% t#is provision s#a&& e void and o% no e%%ect and s#a&& not e
registered in t#e ooks o% t#e pu&ic service corporation' Eot#ing #erein contained s#a&& e construed to
prevent t#e #o&ding o% s#ares &aw%u&&! ac9uired'
1. Sales o, s)ares o, stock o, a pu$lic utility *overne+ $y Section -") o, t)e :u$lic Service 5ct (C5
1/)
T#e sa&e o% s#ares o% stock o% a pu&ic uti&it! is governed ! anot#er &aw, i'e', "ection 82(#) o% t#e
Pu&ic "ervice 7ct ($ommonwea&t# 7ct 15>)' Pursuant t#ereto, t#e Pu&ic "ervice $ommission (now t#e
ET$) is t#e government agenc! vested wit# t#e aut#orit! to approve t#e trans%er o% more t#an 52I o% t#e
suscried capita& stock o% a te&ecommunications compan! to a sing&e trans%eree' Trans%ers o% s#ares o% a
pu&ic uti&it! corporation need on&! ET$ approva&, not $ongressiona& aut#ori*ation'
(ransportation La.! -""/ ( /%% )
13. Grant o, provisional aut)ority +ee#e+ approval o, series o, trans,ers o, s)ares in D(C;
T#e approva& o% t#e ET$ ma! e deemed to #ave een met w#en it aut#ori*ed t#e issuance o% t#e
provisiona& aut#orit! to BT$,' T#ere was %u&& disc&osure e%ore t#e ET$ o% t#e trans%ers t#at transpired
starting in 1.>5 unti& 1./0' ,n %act, t#e ET$ (rder o% 18 Eovemer 1./0 re9uired BT$, to sumit its ;present
capita& and owners#ip structure'< Furt#er, BT$, even %i&ed a Motion e%ore t#e ET$, dated / Decemer 1./0,
or more t#an a !ear prior to t#e grant o% provisiona& aut#orit!, seeking approva& o% t#e increase in its capita&
stock %rom P.>2,222'22 to P52M, and t#e stock trans%ers made ! its stock#o&ders'
14. <istinction $et.een s)ares o, stock an+ sale o, ,ranc)ise itsel,6 Corporation )as separate an+
+istinct personality ,ro# its stock)ol+ers
7 distinction s#ou&d e made etween s#ares o% stock, w#ic# are owned ! stock#o&ders, t#e sa&e o%
w#ic# re9uires on&! ET$ approva&, and t#e %ranc#ise itse&% w#ic# is owned ! t#e corporation as t#e grantee
t#ereo%, t#e sa&e or trans%er o% w#ic# re9uires $ongressiona& sanction' "ince stock#o&ders own t#e s#ares o%
stock, t#e! ma! dispose o% t#e same as t#e! see %it' T#e! ma! not, #owever, trans%er or assign t#e propert! o%
a corporation, &ike its %ranc#ise' ,n ot#er words, even i% t#e origina& stock#o&ders #ad trans%erred t#eir s#ares
to anot#er group o% s#are#o&ders, t#e %ranc#ise granted to t#e corporation susists as &ong as t#e corporation,
as an entit!, continues to e3ist' T#e %ranc#ise is not t#ere! inva&idated ! t#e trans%er o% t#e s#ares' 7
corporation #as a persona&it! separate and distinct %rom t#at o% eac# stock#o&der' ,t #as t#e rig#t o% continuit!
or perpetua& succession'
1%. :L<( cannot ?usti,ia$ly re,use to interconnect! pursuant to R5 4/%
:7 >/5., or t#e Municipa& Te&ep#one 7ct o% 1./., approved on / Feruar! 1..2, mandates
interconnection providing as it does t#at ;a&& domestic te&ecommunications carriers or uti&ities ' ' ' s#a&& e
interconnected to t#e pu&ic switc# te&ep#one network'< "uc# regu&ation o% t#e use and owners#ip o%
te&ecommunications s!stems is in t#e e3ercise o% t#e p&enar! po&ice power o% t#e "tate %or t#e promotion o%
t#e genera& we&%are'
-". Constitutional #an+ate as to t)e use o, property (Section ! 5rticle N;;)
"ection >, 7rtic&e J,,, o% t#e 1./0 $onstitution provides t#at ;t#e use o% propert! ears a socia&
%unction, and a&& economic agents s#a&& contriute to t#e common good' ,ndividua&s and private groups,
inc&uding corporations, cooperatives, and simi&ar co&&ective organi*ations, s#a&& #ave t#e rig#t to own,
esta&is#, and operate economic enterprises, suAect to t#e dut! o% t#e "tate to promote distriutive Austice and
to intervene w#en t#e common good so demands'<
-1. 7(C #erely exercise+ +ele*ate+ aut)ority .)en it +ecree+ interconnection
T#e interconnection w#ic# #as een re9uired o% P+DT is a %orm o% ;intervention< wit# propert! rig#ts
dictated ! ;t#e oAective o% government to promote t#e rapid e3pansion o% te&ecommunications services in
a&& areas o% t#e P#i&ippines, ' ' ' to ma3imi*e t#e use o% te&ecommunications %aci&ities avai&a&e, ' ' ' in
recognition o% t#e vita& ro&e o% communications in nation ui&ding ' ' ' and to ensure t#at a&& users o% t#e pu&ic
te&ecommunications service #ave access to a&& ot#er users o% t#e service w#erever t#e! ma! e wit#in t#e
P#i&ippines at an accepta&e standard o% service and at reasona&e cost< (D(T$ $ircu&ar .2=85/)'
Dndouted&!, t#e encompassing oAective is t#e common good' T#e ET$, as t#e regu&ator! agenc! o% t#e
"tate, mere&! e3ercised its de&egated aut#orit! to regu&ate t#e use o% te&ecommunications networks w#en it
decreed interconnection'
--. ;nterconnection6 Sections 1 an+ 2 o, =inistry Circular 4->41 ( <ece#$er 1%4-)
"ection 1 o% Ministr! $ircu&ar /8=/1 provides ;t#at t#e government encourages t#e provision and
operation o% pu&ic moi&e te&ep#one service wit#in &oca& su=ase stations, particu&ar&!, in t#e #ig#&!
commercia&i*ed areas'< "ection 4 on t#e ot#er #and provides ;t#at, in t#e event t#e aut#orit! to operate said
service e granted to ot#er app&icants, ot#er t#an t#e %ranc#ise #o&der, t#e %ranc#ise operator s#a&& e under
o&igation to enter into an agreement wit# t#e domestic te&ep#one network, under an interconnection
agreement'<
--. ;nterconnection6 <8(C Circular 43>144 (1%43)
Department o% Transportation and $ommunication (D(T$) $ircu&ar Eo' /0=1//, issued in 1./0, a&so
decrees t#at ;a&& pu&ic communications carriers s#a&& interconnect t#eir %aci&ities pursuant to comparative&!
e%%icient interconnection ($B,) as de%ined ! t#e ET$ in t#e interest o% economic e%%icienc!'<
-3. <8(C Circular %">-/4 (1/ Bune 1%%")6 :olicy on ;nterconnection an+ Revenue S)arin* $y
:u$lic Co##unications Carriers
T#e s#aring o% revenue was an additiona& %eature considered in D(T$ $ircu&ar .2=85/' T#e circu&ar
provides t#at ;,t is t#e oAective o% government to promote t#e rapid e3pansion o% te&ecommunications
services in a&& areas o% t#e P#i&ippines' T#ere is s need to ma3imi*e t#e use o% te&ecommunications %aci&ities
avai&a&e and encourage investment in te&ecommunications in%rastructure ! suita&! 9ua&i%ied service
providers' ,n recognition o% t#e vita& ro&e o% communications in nation ui&ding, t#ere is a need to ensure t#at
a&& users o% t#e pu&ic te&ecommunications service #ave access to a&& ot#er users o% t#e service w#erever t#e!
ma! e wit#in t#e P#i&ippines at an accepta&e standard o% service and at reasona&e cost' T#us, a&& %aci&ities
o%%ering pu&ic te&ecommunication services s#a&& e interconnected into t#e nationwide te&ecommunications
network-sC t#e interconnection o% networks s#a&& e e%%ected in a %air and non=discriminator! manner and
wit#in t#e s#ortest time%rame practica&eC and t#e precise points o% inter%ace etween service operators s#a&&
e as de%ined ! t#e ET$C and t#e apportionment o% costs and division o% revenues resu&ting %rom
interconnection o% te&ecommunications networks s#a&& e as approved and-or prescried ! t#e ET$'<
-/. 8t)er interconnection>relate+ circulars' <8(C Circular 3>13>%" (1- Buly 1%%")
T#e ET$, on 18 Ju&! 1..2, issued Memorandum $ircu&ar 0=13=.2 prescriing t#e ;:u&es and
:egu&ations 6overning t#e ,nterconnection o% +oca& Te&ep#one B3c#anges and Pu&ic $a&&ing (%%ices wit#
t#e Eationwide Te&ecommunications Eetwork-s, t#e "#aring o% :evenue Derived T#ere%rom, and %or (t#er
Purposes'<
-2. ;nterconnection allo.s parties to +iscuss an+ a*ree ter#s6 7e*otiations provi+es ri*)t to $e
)ear+
T#e ET$ order to interconnect a&&ows t#e parties t#emse&ves to discuss and agree upon t#e speci%ic
terms and conditions o% t#e interconnection agreement instead o% t#e ET$ itse&% &a!ing down t#e standards o%
interconnection w#ic# it can ver! we&& impose' T#us it is t#at P+DT cannot Austi%ia&! c&aim denia& o% due
process' ,t #as een #eard' ,t wi&& continue to e #eard in t#e main proceedings' ,t wi&& sure&! e #eard in t#e
negotiations concerning t#e interconnection agreement'
-. :urpose o, interconnection
F#at interconnection seeks to accomp&is# is to ena&e t#e s!stem to reac# out to t#e greatest numer
o% peop&e possi&e in &ine wit# governmenta& po&icies &aid down' $e&&u&ar p#ones can access P+DT units and
vice versa in as wide an area as attaina&e' Fit# t#e roader reac#, pu&ic interest and convenience wi&& e
etter served' T#e interconnection soug#t ! BT$, is ! no means a ;parasitic dependence< on P+DT' T#e
BT$, s!stem can operate on its own even wit#out interconnection, ut it wi&& e &imited to its own
suscriers' To e sure, BT$, cou&d provide no mean competition, and eat into P+DT?s own to&& revenue, ut
a&& %or t#e eventua& ene%it o% a&& t#at t#e s!stem can reac#'
-3. Flti#ate Consi+erations to .)ic) pu$lic utilities #ust yiel+
T#e decisive considerations are pu&ic need, pu&ic interest, and t#e common good' T#ose were t#e
overriding %actors w#ic# motivated ET$ in granting provisiona& aut#orit! to BT$,' 7rtic&e ,,, "ection 85 o%
t#e 1./0 $onstitution, recogni*es t#e vita& ro&e o% communication and in%ormation in nation ui&ding' ,t is
&ikewise a "tate po&ic! to provide t#e environment %or t#e emergence o% communications structures suita&e to
t#e a&anced %&ow o% in%ormation into, out o%, and across t#e countr! (7rtic&e JV,, "ection 12, iid')' 7
modern and dependa&e communications network rendering e%%icient and reasona&! priced services is a&so
indispensa&e %or acce&erated economic recover! and deve&opment' To t#ese pu&ic and nationa& interests,
pu&ic uti&it! companies must ow and !ie&d'
-4. &ree co#petition in in+ustry ans.er to i#prove#ent in teleco##unication in+ustry6 7o pu$lic
utility )as a constitutional ri*)t to a #onopoly position
Free competition in t#e industr! ma! a&so provide t#e answer to a muc#=desired improvement in t#e
9ua&it! and de&iver! o% t#is t!pe o% pu&ic uti&it!, to improved tec#no&og!, %ast and #and! moi&e service, and
reduced user dissatis%action' 7%ter a&&, neit#er P+DT nor an! ot#er pu&ic uti&it! #as a constitutiona& rig#t to a
monopo&! position in view o% t#e $onstitutiona& proscription t#at no %ranc#ise certi%icate or aut#ori*ation
s#a&& e e3c&usive in c#aracter or s#a&& &ast &onger t#an 42 !ears (iid', "ection 11C 7rtic&e J,V, "ection 4,
1.03 $onstitutionC 7rtic&e J,V, "ection /, 1.34 $onstitution)' 7dditiona&&!, t#e "tate is empowered to decide
w#et#er pu&ic interest demands t#at monopo&ies e regu&ated or pro#iited (1./0 $onstitution, 7rtic&e J,,,
"ection 1.)'
[-1]
RC:; vs. Ro+ri*ueJ (GR 4334! -4 &e$ruary 1%%")
&acts' (n / "eptemer 1.0/, :u%us 1' :odrigue*, as President o% t#e For&d 7ssociation o% +aw "tudents
(F7+"), sent two ca&egrams overseas t#roug# :$P,, one addressed to Mo#amed B&sir Ta#a in P#artoum,
"udan "ocia&ist Dnion, and t#e ot#er to Diane Merger in 7t#ens, 6eorgia, Dnited "tates' T#e ca&egrams
were, in turn, re&a!ed to 6+(1B %or transmission to t#eir %oreign destinations' T#e te&egram to Ta#a advised
#im o% :odrigue*?s pending arriva& in P#artoum on 1/ "eptemer 1.0/, w#i&e t#e te&egram to Merger advised
#er o% t#e sc#edu&ed F7+" con%erence in P#artoum' :odrigue* &e%t t#e P#i&ippines on 14 "eptemer 1.0/'
(n 1/ "eptemer 1.0/, #e arrived in P#artoum, "udan at .:32 p'm' Eood! was at t#e airport to meet #im'
Due to t#e &ateness o% t#e #our, #e was %orced to s&eep at t#e airport' @e &ined up 4 c#airs toget#er and &a!
down wit# #is &uggages near #im' 1ecause o% t#e non=receipt o% t#e ca&egram, Ta#a was not a&e to meet
#im' Forse a&& preparations %or t#e internationa& con%erence #ad to e cance&&ed' Furt#ermore, Fernando
1arros, t#e Vice=President, arrived t#e ne3t da! %rom $#i&e, %o&&owed ! t#e ot#er o%%icers %rom ot#er
countries e3cept Diane Merger, t#e organi*ation?s secretar!' ,t turned out t#at t#e wire sent ! :odrigue* to
Merger was de&ivered to t#e address on t#e message ut t#e person w#o de&ivered it was to&d t#at t#e
addressee was no &onger sta!ing t#ere' T#is %act was not according&! reported to :odrigue* in Metro Mani&a'
T#e unde&ivered ca&egram was not returned ! t#e correspondent aroad to 6&oe %or disposition in t#e
P#i&ippines'
(n / Decemer 1.0/, :odrigue* %i&ed a comp&aint %or compensator! damages in t#e amount o% P54,150'22,
mora& damages in t#e amount o% P822,222'22, and e3emp&ar! damages in t#e amount o% P42,222'22 against
:$P, and 6+(1B' (n 10 Marc# 1./2, t#e t#en Presiding Judge +ino +' 7)over o% t#e $F, :i*a& rendered a
decision, #o&ding :$P, and 6+(1B so&idari&! &ia&e to pa! :odrigue* t#e tota& sim o% P813,15/ ! wa! o%
damages (roken down as LaM P122,222'22 as mora& damagesC LM P42,222'22 as e3emp&ar! damagesC LcM
P53,15/'22 as actua& damagesC and LdM P82,222'22 as attorne!?s %ees ! wa! o% damages) and to pa! t#e costs
o% t#e suit'
Dpon appea&, t#e $ourt o% 7ppea&s a%%irmed t#e &ower court?s decision' 7 motion %or reconsideration was
denied' @ence, t#e petition %or review on certiorari' T#e tit&e o% t#e case inc&udes 6&oe Macka! ut t#e
petition proper and t#e name on counse& s#ow t#at on&! :$P, comes to t#e "upreme $ourt t#roug# t#e
petition' 6&oe Macka! did not Aoin as petitioner and its counse& 7tt!' :omu&o P' 7tencia did not sign t#e
petition'
T#e "upreme $ourt partia&&! granted t#e petitionC modi%ied t#e 9uestioned decision o% t#e appe&&ate courtC
reduced t#e award directing :$P, to pa! P122,222'22 mora& damages to P12,222'22C de&eted t#e award
ordering it to pa! e3emp&ar! damages and attorne!?s %eesC and a%%irmed t#e 9uestioned decision in a&& ot#er
respectsC wit# costs against :$P,'
1. RC:; .it)out ,acilities in ,orei*n countries! course all international co##unications t)ru
Glo$e =ackay
:$P, is a domestic corporation engaged in t#e usiness o% receiving and transmitting messages' :$P,
does not #ave %aci&ities %or %oreign countries, #ence it #as a contract to course a&& internationa&
communications t#ru 6&oe Macka!' (n t#e ot#er #and, 6&oe Macka! #as an inter=connecting agreement
wit# :$P, under w#ic# t#e &atter?s internationa& messages are coursed t#ru 6&oe Macka! in t#e same wa!
t#at &oca& and domestic messages received ! 6&oe Macka! are coursed t#ru :$P,'
-. RC:; rene*e+ on its o$li*ation! lia$le ,or +a#a*es
:odrigue* and :$P, entered into a contract w#ere! %or a %ee :$P, undertook to send :odrigue*?
messages overseas' F#en, t#ere%ore, :odrigue* paid :$P, to de&iver #is messages overseas ! te&egram,
:$P, o&igated itse&% to transmit t#e messages to t#e addressee' $&ear&!, :$P, reneged on its o&igation w#en
it %ai&ed to de&iver t#e messages or to in%orm t#e sender aout t#e non=de&iver!, t#us making it &ia&e %or
damages'
3. RC:; cannot escape lia$ility $y passin* $la#e to Glo$e =ackay
:$P, cannot escape &iai&it! %or damages ! passing o%% t#e &ame %or neg&igence to 6&oe Macka!' ,t
#as an inter=connecting agreement wit# 6&oe Macka!' :$P, receives messages %or overseas destinations and
conducts its usiness to transmit %oreign messages on&! t#roug# 6&oe Macka!' To a&&ow it to escape &iai&it!
%or damages ! attriuting so&e neg&igence to 6&oe Macka! %or t#e e3pedient reason t#at it #ad a&read!
de&ivered t#e messages to t#e &atter wou&d deprive t#e genera& pu&ic avai&ing o% t#e services o% :$P, o% an
e%%ective and ade9uate remed!' ,t cannot simp&! was# its #ands o% a&& responsii&it!'
/. RC:;1s atte#pt to pass t)e $la#e on Ro+ri*ueJ not supporte+ $y recor+s
@erein, :$P, &amed :odrigue* %or t#e non=de&iver! o% t#e two te&egrams' :egarding t#e te&egram
addressed to B&sir Ta#a, :$P, avers t#at it #as an incomp&ete address as it did not inc&ude P'(' 1o3 1/42 per
instruction o% Ta#a in an ear&ier ca&e asking %or :odrigue* to rep&! via te&e3' "uc# attempt to pass t#e tota&
&ame %or t#e non=de&iver! o% t#e te&egram intended %or Ta#a to :odrigue* is not supported ! t#e records'
T#e evidence c&ear&! demonstrates t#at an ear&ier ca&egram dated 80 Ju&! 1.0/ simi&ar&! addressed to Ta#a,
7%rica, Oout# $ommittee, P#artoum, ""D and wit#out P'(' 1o3 1/42 was received ! Ta#a' T#is is
conc&usive&! s#own ! a ca&e addressed ! Ta#a to :odrigue* acknow&edging t#e receipt o% t#e Ju&! 80
ca&egram' Bvidence was a&so introduced to s#ow t#at t#e 7%rica Oout# $ommittee is a ver! important o%%ice
in P#artoum, "udan and t#e ui&ding t#at #ouses it is a ver! popu&ar ui&ding known to t#e peop&e'
2. <ue +ili*ence re9uire#ents o, t)e pu$lic utility
$onsidering t#e pu&ic uti&it! nature o% :$P,?s usiness and its contractua& o&igation to transmit
messages, it s#ou&d e3ercise due di&igence to ascertain t#at messages are de&ivered to t#e persons at t#e given
address and s#ou&d provide a s!stem w#ere! in cases o% unde&ivered messages t#e sender is given notice o%
non=de&iver!' Messages sent ! ca&e or wire&ess means are usua&&! more important and urgent t#an t#ose
w#ic# can wait %or t#e mai&' T#ere%ore, arguments aout t#e a&&eged neg&igence on t#e part o% :odrigue* in
not veri%!ing t#e address o% Diane Merger e%ore sending t#e te&egram and a&so t#e a&&eged neg&igence on t#e
part o% Merger %or not &eaving a %orwarding address do not deserve muc# consideration'
. 5rticle --13 7CC6 =oral +a#a*es
For recover! o% damages, 7rtic&e 8810 o% t#e Eew $ivi& $ode app&ies' ,t is provided t#erein t#at:
;Mora& damages inc&ude p#!sica& su%%ering, menta& anguis#, %rig#t, serious an3iet!, esmirc#ed reputation,
wounded %ee&ing, mora& s#ock, socia& #umi&iation, and simi&ar inAur!' T#oug# incapa&e o% pecuniar!
computation, mora& damages ma! e recovered i% t#e! are t#e pro3imate resu&t o% t#e de%endant?s wrong%u&
act or omission'<
3. RC:;1s ,ailure to +eliver tele*ra#s resulte+ in su,,erin*
:$P,?s %ai&ure to de&iver t#e two 9uestioned te&egrams resu&ted in t#e su%%ering t#at :odrigue* #ad to
undergo' :odrigue* su%%ered a certain degree o% menta& anguis#, %ear and an3iet! considering #is e3perience
at t#e airport o% a %oreign countr!' @is su%%ering was caused ! t#e non=appearance o% Ta#a w#o did not
receive t#e te&egram sent ! #im due to t#e gross neg&igence o% :$P,' T#ere is moreover, t#e disma! arising
%rom t#e %act, t#at a%ter so muc# preparation and trave& on t#e part o% :odrigue*, #is pains were a&& %or
not#ing' @ence, :$P, is &ia&e %or mora& damages'
4. =oral +a#a*es excessive an+ unconsciona$le! #ust $e re+uce+6 :ru+encia+o v. 5lliance
(ransport Syste#
,n t#e case o% Prudenciado v' 7&&iance Transport "!stem, ,nc' (15/ "$:7 552 L1./0M), it was #e&d t#at
tria& courts are given discretion to determine t#e amount o% mora& damages and t#at t#e $ourt o% 7ppea&s can
on&! modi%! or c#ange t#e amount awarded w#en t#e! are pa&pa&! and scanda&ous&! e3cessive Gso as to
indicate t#at it was t#e resu&t o% passion, preAudice or corruption on t#e part o% t#e tria& court?s' 1ut in more
recent cases w#ere t#e awards o% mora& and e3emp&ar! damages are %ar too e3cessive compared to t#e actua&
&osses sustained ! t#e aggrieved part!, t#is $ourt ru&ed t#at t#e! s#ou&d e reduced to more reasona&e
amounts'
%. Re+uction o, a#ount o, #oral +a#a*es6 San 5n+res vs. C5
,n t#e case o% "an 7ndres v' $ourt o% 7ppea&s (11> "$:7 /4 L1./8M), it was ru&ed t#at w#i&e t#e
amount o% mora& damages is a matter &e%t &arge&! to t#e sound discretion o% a court, t#e same w#en %ound
e3cessive s#ou&d e reduced to more reasona&e amounts, considering t#e attendant %acts and circumstances'
Mora& damages, t#oug# incapa&e o% pecuniar! estimation, are in t#e categor! o% an award designed to
compensate t#e c&aimant %or actua& inAur! su%%ered and not to impose a pena&t! on t#e wrongdoer'
1". Re+uction o, a#ount o, #oral +a#a*es6 Si*uenJa vs. C5
,n a muc# &ater case ("iguen*a v' $ourt o% 7ppea&s, 130 "$:7 40/=40. L1./4M), t#e "upreme $ourt,
reiterating t#e aove ru&ing, reduced t#e awards o% mora& and e3emp&ar! damages w#ic# were %ar too
e3cessive compared to t#e actua& &osses sustained ! t#e aggrieved parties and w#ere t#e records s#ow t#at
t#e inAur! su%%ered was not serious or gross and, t#ere%ore, out o% proportion to t#e amount o% damages
generous&! awarded ! t#e tria& court'
11. :urpose o, #oral +a#a*es6 5.ar+ o, #oral +a#a*es #ust $e proportionate to su,,erin*
in,licte+
Mora& damages are emp#atica&&! not intended to enric# a comp&ainant at t#e e3pense o% a de%endant'
T#e! are awarded on&! to ena&e t#e inAured part! to otain means, diversion or amusements t#at wi&& serve to
a&&eviate t#e mora& su%%ering #e #as undergone, ! reason o% t#e de%endants? cu&pa&e action' T#e award o%
mora& damages must e proportionate to t#e su%%ering in%&icted'
1-. (ele*ra# not an a+e9uate preparation6 7ot)in* in recor+s as to +istinction earne+ $y E5LS
7n!od! w#o #as een invo&ved in internationa& con%erences and meetings knows t#at a te&egram is
not ade9uate preparation' $onsidering t#e &ackaidaisica& attitude o% pu&ic uti&it! emp&o!ees in t#e P#i&ippines
and presuma&! in 7%rica, t#e #ead o% an internationa& student organi*ation cannot simp&! send a te&egram and
nonc#a&ant&! assume t#at ever! preparation wi&& proceed as #e anticipates it' T#e p&anning e3pertise and
degree o% t#oroug#ness incument upon con%erence organi*ers is missing %rom t#e records' T#ere is not#ing
in t#e records pointing to a certain degree o% distinction earned ! For&d 7ssociation o% +aw "tudents
(F7+") w#ic# wou&d warrant sustantia& damages ecause o% a %ai&ed meeting'
13. 5.ar+ o, #oral +a#a*es .arrante+
7ward %or damages are warranted' Peop&e depend on te&ecommunications companies in times o% deep
emotiona& stress or pressing %inancia& needs' Pnowing t#at messages aout t#e i&&nesses or deat#s o% &oved
ones, irt#s or marriages in a %ami&!, important usiness transactions, and notices o% con%erences or meetings
as in t#is case, are coursed t#roug# t#e petitioner and simi&ar corporations, it is incument upon t#em to
e3ercise a greater amount o% care and concern t#an t#at s#own in t#is case' Bver! reasona&e e%%ort to in%orm
senders o% t#e non=de&iver! o% messages s#ou&d e undertaken' @erein, :$P, does not seem to e particu&ar&!
concerned aout its responsii&it!' T#e amount o% P12,222'22 as mora& damages wou&d e reasona&e
considering t#e %acts and circumstances surrounding :$P,?s &iai&it!'
1/. Dxe#plary +a#a*es not proper
T#e award o% e3emp&ar! damages is not proper considering t#at t#ere is no s#owing t#at :$P, acted
in ;a wanton, %raudu&ent, reck&ess, oppressive, or ma&evo&ent manner'< (7rtic&e 8838, Eew $ivi& $ode)'
12. 5ctual +a#a*es6 &acts not su,,iciently controverte+ $y RC:;
:odrigue* was awarded t#e tota& amount o% P53,15/'22 as actua& or compensator! damages roken
down as %o&&ows: (a) P12,222'22 %or t#e preparation o% t#e tripC () P82,222'22 %or p&ane %areC (c) P4,222'22
%or #is sta! in transit in PakistanC (d) P5,222'22 %or #ote& i&&s in P#artoumC (e) P0/'22 %or t#e te&egrap#ic to&&,
and P02'22 %or t#e cost o% t#e ca&egram sent to Diane Merger' T#e tria& court reAected t#e e3penses a&&eged&!
incurred ! :odrigue* %or a dinner #e tendered %or t#e o%%icers, organi*ers and students at P#artoum %or
insu%%icienc! o% evidence' :$P, does not controvert t#e amounts' ,nstead, :$P, concentrates its opposition to
t#e award o% actua& damages on t#e argument t#at :odrigue*? e3penses were actua&&! paid ! t#e organi*ation
and t#e "udanese government' :$P,, #owever, %ai&s to sustantiate its a&&egations wit# c&ear proo%' (n t#e
ot#er #and, w#at is evident on record is t#at due to t#e non=receipt o% t#e te&egram w#ic# wou&d #ave
con%irmed t#e sc#edu&ed con%erence on 82 "eptemer 1.0/, Ta#a cance&&ed a&& preparations and stopped t#e
so&iciting o% %unds %or t#e con%erence w#ic# wou&d #ave inc&uded t#e e3penses o% :odrigue*' 7s a resu&t o%
t#e cance&&ation o% t#e con%erence, triggered ! t#e non=de&iver! o% t#e te&egrams, t#e o%%icers were
constrained to sc#edu&e anot#er meeting in "antiago, $#i&e in 7pri& 1.0.' T#e "upreme $ourt %ound no
reason to distur t#e %indings o% t#e tria& court a%%irmed ! t#e appe&&ate court as t#ese were not su%%icient&!
controverted ! :$P,'
1. 5.ar+ o, attorney1s ,ees i#proper6 E)en a.ar+ state+ only in +ispositive portion o, +ecision!
#ust $e +isallo.e+ on appeal
,n 7rogar v' ,ntermediate 7ppe&&ate $ourt (140 "$:7 40 L1.//M), t#e $ourt #ad occasion to state
t#at t#e reason %or t#e award o% attorne!?s %ees must e stated in t#e te3t o% t#e court?s decision, ot#erwise, i%
it is stated on&! in t#e dispositive portion o% t#e decision, t#e same must e disa&&owed on appea&' @erein, t#e
award o% attorne!?s %ees was improper ecause t#ere was no a&&egation in t#e comp&aint wit# respect to
attorne!?s %eesC :odrigue* did not present an! evidence to prove attorne!?s %ees and t#e decision %ai&ed to
e3p&ain w#! attorne!?s %ees are eing awarded' T#e tria& court %ai&ed to Austi%! t#e pa!ment o% attorne!?s %ees
! :$P,, t#ere%ore, t#e award o% attorne!?s %ees as part o% its &iai&it! s#ou&d e disa&&owed and de&eted'
[-13]
(ele,ast Co##unications vs. Castro (GR 3343! -% &e$ruary 1%44)
"econd Division, Padi&&a (J): 3 concur
&acts' (n 8 Eovemer 1.4>, $onso&acion 1ravo=$astro, wi%e o% ,gnacio $astro, "r' and mot#er o% "o%ia
$astro=$rouc#, ,gnacio $astro Jr', 7urora $astro, "a&vador $astro, Mario $astro, $onrado $astro, Bsmera&da
$astro=F&oro, 7gerico $astro, :o&ando $astro, Virgi&io $astro and 6&oria $astro, passed awa! in +inga!en,
Pangasinan' (n t#e same da!, #er daug#ter "o%ia $' $rouc#, w#o was t#en vacationing in t#e P#i&ippines,
addressed a te&egram to ,gnacio $astro, "r' at >/4 Fanda, "cottsurg, ,ndiana, D"7, 50102 announcing
$onso&acion?s deat#' T#e te&egram was accepted ! Te&e%ast in its Dagupan o%%ice, %or transmission, a%ter
pa!ment o% t#e re9uired %ees or c#arges' T#e te&egram never reac#ed its addressee' $onso&acion was interred
wit# on&! #er daug#ter "o%ia in attendance' Eeit#er t#e #usand nor an! o% t#e ot#er c#i&dren o% t#e deceased,
t#en a&& residing in t#e Dnited "tates, returned %or t#e uria&' F#en "o%ia returned to t#e Dnited "tates, s#e
discovered t#at t#e wire s#e #ad caused Te&e%ast to send, #ad not een received'
T#e $astros roug#t action %or damages arising %rom Te&e%ast?s reac# o% contract' T#e case was %i&ed in t#e
$F, Pangasinan ($ivi& $ase 1434>)' T#e tria& court, a%ter tria&, ordered Te&e%ast to pa! t#e $astros damages
wit# interest at >I per annum (L1M "o%ia $' $rouc#, P31'.8 and P1>,222'22 as compensator! damages and
P82,222'22 as mora& damagesC L8M ,gnacio $astro "r', P82,222'22 as mora& damagesC L3M ,gnacio $astro Jr',
P82,222'22 as mora& damagesC L5M 7urora $astro, P12,222'22 mora& damagesC L4M "a&vador $astro,
P12,222'22 mora& damagesC L>M Mario $astro, P12,222'22 mora& damagesC L0M $onrado $astro, P12,222 mora&
damagesC L/M Bsmera&da $' F&oro, P82,222'22 mora& damagesC L.M 7gerico $astro, P12,222'22 mora&
damagesC L12M :o&ando $astro, P12,222'22 mora& damagesC L11M Virgi&io $astro, P12,222'22 mora& damagesC
and L18M 6&oria $astro, P12,222'22 mora& damages)' T#e $ourt a&so ordered Te&e%ast to pa! P4,222'22
attorne!?s %ees, e3emp&ar! damages in t#e amount o% P1,222'22 to eac# o% t#e $astros and costs'
(n appea& ! Te&e%ast, t#e ,ntermediate 7ppe&&ate $ourt a%%irmed t#e tria& court?s decision ut e&iminated t#e
award o% P1>,222'22 as compensator! damages to "o%ia $' $rouc# and t#e award o% P&,222'22 to eac# o% t#e
$astros as e3emp&ar! damages' T#e award o% P82,222'22 as mora& damages to eac# o% "o%ia $' $rouc#,
,gnacio $astro, Jr' and Bsmera&da $' F&oro was a&so reduced to P12,222'22 %or eac#' Te&edast appea&ed %rom
t#e Audgment o% t#e appe&&ate court, contending t#at t#e award o% mora& damages s#ou&d e e&iminated as
Te&e%ast?s neg&igent act was not motivated ! ;%raud, ma&ice or reck&essness'<
T#e "upreme $ourt denied t#e petition, and modi%ied t#e decision appea&ed %rom so t#at Te&e%ast was #e&d
&ia&e to t#e $astros in t#e amounts o% (1) P12,222'22 as mora& damages, to eac# o% t#e $astrosC (8) P1,222'22
as e3emp&ar! damages, to eac# o% t#e $astrosC (3) P1>,222'22 as compensator! damages, to "o%ia $' $rouc#C
(5) P4,222'22 as attorne!?s %eesC and (4) $osts o% suit'
1. 5rticles 113" an+ -13 o, t)e Civil Co+e6 (ele,ast lia$le ,or +a#a*es
7rt' 1102 o% t#e $ivi& $ode provides t#at ;t#ose w#o in t#e per%ormance o% t#eir o&igations are gui&t!
o% %raud, neg&igence or de&a!, and t#ose w#o in an! manner contravene t#e tenor t#ereo%, are &ia&e %or
damages'< 7rt' 810> a&so provides t#at ;w#oever ! act or omission causes damage to anot#er, t#ere eing
%au&t or neg&igence, is o&iged to pa! %or t#e damage done'< @erein, "o%ia $' $rouc# entered into a contract
w#ere!, %or a %ee, Te&e%ast undertook to send #er message overseas ! te&egram' T#is, Te&e%ast did not do,
despite per%ormance ! $rouc# o% #er o&igation ! pa!ing t#e re9uired c#arges' Te&e%ast was t#ere%ore gui&t!
o% contravening its o&igation to $astro and is t#us &ia&e %or damages'
-. Lia$ility not li#ite+ to actual or 9uanti,ie+ +a#a*es
T#e &iai&it! is not &imited to actua& or 9uanti%ied damages' To sustain Te&e%ast?s contrar! position in
t#is regard wou&d resu&t in an ine9uitous situation w#ere Te&e%ast wi&& on&! e #e&d &ia&e %or t#e actua& cost o%
a te&egram %i3ed 32 !ears ago'
3. 5rticle --13 o, t)e Civil Co+e applica$le
7rt' 8810 o% t#e $ivi& $ode is app&ica&e to t#e case' ,t states: ;Mora& damages inc&ude p#!sica&
su%%ering, menta& anguis#, %rig#t, serious an3iet!, esmirc#ed reputation, wounded %ee&ings, mora& s#ock,
socia& #umi&iation, and simi&ar inAur!' T#oug# incapa&e o% pecuniar! computation, mora& damages ma! e
recovered i% t#e! are t#e pro3imate resu&ts o% t#e de%endant?s wrong%u& act or omission'< @erein, Te&e%ast?s
act or omission, w#ic# amounted to gross neg&igence, was precise&! t#e cause o% t#e su%%ering t#e $astros #ad
to undergo' Eo one can serious&! dispute t#e s#ock, t#e menta& anguis# and t#e sorrow t#at t#e overseas
c#i&dren must #ave su%%ered upon &earning o% t#e deat# o% t#eir mot#er a%ter s#e #ad a&read! een interred,
wit#out eing given t#e opportunit! to even make a c#oice on w#et#er t#e! wanted to pa! #er t#eir &ast
respects' T#ere is no dout t#at t#ese emotiona& su%%erings were pro3imate&! caused ! appe&&ant?s omission
and sustantive &aw provides %or t#e Austi%ication %or t#e award o% mora& damages'
/. 5.ar+ o, co#pensatory +a#a*es ?usti,ie+
T#e $ourt sustained t#e tria& court?s award o% P1>,222'22 as compensator! damages to $rouc#
representing t#e e3penses s#e incurred w#en s#e came to t#e P#i&ippines %rom t#e Dnited "tates to testi%!
e%ore t#e tria& court' @ad Te&e%ast not een remiss in per%orming its o&igation, t#ere wou&d #ave een no
need %or t#is suit or %or Mrs' $rouc#?s testimon!'
2. 5.ar+ o, exe#plary +a#a*es ?usti,ie+
T#e award o% e3emp&ar! damages ! t#e tria& court is &ikewise Austi%ied and, t#ere%ore, sustained in
t#e amount o% P1,222'22 %or eac# o% t#e $astros, as a warning to a&& te&egram companies to oserve due
di&igence in transmitting t#e messages o% t#eir customers'
[-14]
RC:; vs. C5 (GR 3%234! 13 =arc) 1%%1)
&acts' (n 85 Januar! 1./3, spouses Minerva Timan and F&ores Timan sent a te&egram o% condo&ence to t#eir
cousins, Mr' and Mrs' @i&ario Midoranda, at Trinidad, $a&a!og $it!, t#roug# :adio $ommunications o% t#e
P#i&ippines, ,nc' (:$P,) at $uao, Nue*on $it!, to conve! t#eir deepest s!mpat#! %or t#e recent deat# o% t#e
mot#er=in=&aw o% @i&ario Midoranda' T#e condo&ence te&egram was correct&! transmitted as %ar as t#e written
te3t was concerned' @owever, t#e condo&ence message as communicated and de&ivered to t#e addressees was
t!pewritten on a ;@app! 1irt#da!< card and p&aced inside a ;$#ristmasgram< enve&ope' 1e&ieving t#at t#e
transmitta& to t#e addressees o% t#e te&egram in t#at nonsuc# manner was done intentiona&&! and wit# gross
reac# o% contract resu&ting to ridicu&e, contempt, and #umi&iation o% t#e spouses Timan and t#e addressees,
inc&uding t#eir %riends and re&atives, t#e spouses Timan demanded an e3p&anation'
Dnsatis%ied wit# :$P,?s e3p&anations in its &etters, dated Marc# . and 7pri& 82, 1./3, t#e Timans %i&ed a
comp&aint %or damages' T#e tria& court, on 15 Feruar! 1./4 rendered Audgment in %avor o% t#e spouses
Timans, ordering :$P, to pa! t#e spouses Timans t#e amount o% P32,/5/'24 representing actua& and
compensator! damagesC P12,222'22 as mora& damages and P4,222'22 as e3emp&ar! damagesC attorne!?s %ees
in t#e sum o% P4,222'22C and costs'
T#e decision o% t#e tria& court was a%%irmed in toto ! t#e $ourt o% 7ppea&s' @ence, t#e petition %or review'
T#e "upreme $ourt a%%irmed t#e decision appea&ed %rom in totoC wit# costs against :$P,'
1. (eleco##unication co#pany en*a*e+ in $usiness a,,ectin* pu$lic interest6 <e*ree o, +ili*ence
:$P,, a corporation dea&ing in te&ecommunications and o%%ering its services to t#e pu&ic, is engaged
in a usiness a%%ected wit# pu&ic interest' 7s suc#, it is ound to e3ercise t#at degree o% di&igence e3pected o%
it in t#e per%ormance o% its o&igation'
-. Corporation can only act t)rou*) its e#ployees6 5cts o, e#ployees are also t)e corporation1s
:$P, is a domestic corporation engaged in t#e usiness o% receiving and transmitting messages'
Bver!time a person transmits a message t#roug# t#e %aci&ities o% t#e petitioner, a contract is entered into'
Dpon receipt o% t#e rate or %ee %i3ed, t#e petitioner undertakes to transmit t#e message accurate&!' 7s a
corporation, it can act on&! t#roug# its emp&o!ees' @ence t#e acts o% its emp&o!ees in receiving and
transmitting messages are t#e acts o% t#e corporation' To #o&d t#at t#e corporation is not &ia&e direct&! %or t#e
acts o% its emp&o!ees in t#e pursuit o% its usiness is to deprive t#e genera& pu&ic avai&ing o% t#e services o%
t#e corporation o% an e%%ective and ade9uate remed!'
3. (ele*ra# in or+inary or social ,or#
7n!one w#o avai&s o% t#e %aci&ities o% a te&egram compan! can c#oose to send #is message in t#e
ordinar! %orm or in a socia& %orm' ,n t#e ordinar! %orm, t#e te3t o% t#e message is t!ped on p&ain newsprint
paper' (n t#e ot#er #and, a socia& te&egram is p&aced in a specia& %orm wit# t#e proper decorations and
eme&&is#ments to suit t#e occasion and t#e message and de&ivered in an enve&ope matc#ing t#e purpose o%
t#e occasion and t#e words and intent o% t#e message' T#e sender pa!s a #ig#er amount %or t#e socia&
te&egram t#an %or one in t#e ordinar! %orm'
/. RC:; co##itte+ $reac) o, contract! *ross ne*li*ence6 RC:; callous an+ lia$le ,or +a#a*es ,or
.anton #iscon+uct
@erein, w#en :$P, t!ped t#e spouses? message o% condo&ence in a irt#da! card and de&ivered t#e
same in a co&or%u& $#ristmasgram enve&ope, it committed a reac# o% contract as we&& as gross neg&igence' ,ts
e3cuse t#at it #ad run out o% socia& condo&ence cards and enve&opes is %&ims! and unaccepta&e' ,t cou&d not
#ave een %au&ted #ad it de&ivered t#e message in t#e ordinar! %orm and reimursed t#e di%%erence in t#e cost
to t#e spouses' 1ut ! transmitting it un%itting&! H t#roug# ot#er specia& %orms c&ear&!, a&eit outward&!,
portra!ing t#e opposite %ee&ings o% Ao! and #appiness and t#anksgiving H :$P, on&! e3acerated t#e
sorrow%u& situation o% t#e addressees and t#e senders' ,t ears stress t#at t#is otc#er! e3posed not on&!
:$P,?s gross neg&igence ut a&so its ca&&ousness and disregard %or t#e sentiments o% its c&iente&e, w#ic#
tantamount to wanton misconduct, %or w#ic# it must e #e&d &ia&e %or damages'
2. RC:; lia$le ,or =r. (i#an1s con,ine#ent in )ospital
@erein, w#en t#e Timans? te&egrap#ic message reac#ed t#eir cousin, it ecame t#e Aoke o% t#e
Midorandas? %riends, re&atives, and associates w#o t#oug#t, and rig#t&! so, t#at t#e unpardona&e mi3=up was
a mocker! o% t#e deat# o% t#e mot#er=in=&aw o% t#e senders? cousin' T#us it was not une3pected t#at ecause
o% t#is unusua& incident, w#ic# caused muc# emarrassment and distress to Minerva Timan, #e su%%ered
nervousness and #!pertension resu&ting in #is con%inement %or t#ree da!s starting %rom 5 7pri& 1./3 at t#e
$apito& Medica& $enter in Nue*on $it!'
. Supre#e Court is not a trier o, ,acts
:$P, insists t#at t#ere is no causa& re&ation o% t#e i&&ness su%%ered ! Mr' Timan wit# t#e %ou&=up
caused ! t#e petitioner' 1ut t#at is a 9uestion o% %act' T#e %indings o% %act o% t#e tria& court and t#e appe&&ate
court concur in %avor o% t#e spouses Timans' T#e "upreme $ourt is ound ! suc# %indings H t#at is t#e
genera& ru&e we&&=esta&is#ed ! a &ong &ine o% cases' Eot#ing #as een s#own to convince us to Austi%! t#e
re&a3ation o% t#is ru&e in :$P,?s %avor' (n t#e contrar!, t#ese %actua& %indings are supported ! sustantia&
evidence on record'

3. =oral an+ exe#plary +a#a*es6 RC:; co##itte+ acts o, $a+ ,ait)! ,rau+ or #alice
,n contracts and 9uasi=contracts, e3emp&ar! damages ma! e awarded i% t#e de%endant acted in a
wanton, %raudu&ent, reck&ess, oppressive or ma&evo&ent manner' T#ere was gross neg&igence in transmitting t#e
wrong te&egram makes t#e te&ecommunication compan! &ia&e' 6ross care&essness or neg&igence constitutes
wanton misconduct' @erein, :$P, did not comp&! wit# its contract as intended ! t#e parties and instead o%
transmitting t#e condo&ence message in an ordinar! %orm, in accordance wit# its guide&ines, p&aced t#e
condo&ence message e3pressing sadness and sorrow in %orms conve!ing Ao! and #appiness' Dnder t#e
circumstances, :$P,?s p&ea o% good %ait# predicated on suc# e3#austion o% socia& condo&ence %orms cannot e
accepted' 6ross neg&igence or care&essness can e attriuted to :$P, in not supp&!ing its various stations wit#
suc# su%%icient and ade9uate socia& condo&ence %orms w#en it #e&d out to t#e pu&ic sometime in Januar!
1./3, t#e avai&ai&it! o% suc# socia& condo&ence %orms and accepted %or a %ee t#e transmission o% messages on
said %orms' Pnowing t#at t#ere are no suc# %orms as testi%ied to ! its Materia& $ontro& Manager Mateo
7tien*a, and entering into a contract %or t#e transmission o% messages in suc# %orms, :$P, committed acts o%
ad %ait#, %raud or ma&ice'
4. :unitive +a#a*es #ay $e recovere+
Punitive damages ma! e recovered %or wi&%u& or wanton&! neg&igent acts in respect o% messages,
even t#oug# t#ose acts are neit#er aut#ori*ed nor rati%ied' T#us, punitive damages #ave een recovered %or
mistakes in t#e transmission o% te&egrams' @erein, :$P,?s argument t#at it can not e #e&d &ia&e %or
e3emp&ar! damages, eing pena& or punitive in c#aracter, is wit#out merit'
%. Court1s .arnin* to RC:;
1! mere&! reviewing t#e numer o% cases t#at #as reac#ed t#e "upreme $ourt in w#ic# :$P, was
time and again #e&d &ia&e %or t#e same causes H reac# o% contract and gross neg&igence H t#e ine&ucta&e
conc&usion is t#at it #as not in an! wa! re%ormed nor improved its services to t#e pu&ic' ,t must do so now or
e&se ne3t time t#e $ourt ma! e constrained to adAudge stricter sanctions'
[--"]
Iulueta vs. :an 5#erican Eorl+ 5ir.ays (GR L>-424%! 4 Banuary 1%33)6 Resolution
Secon+ <ivision! Concepcion (B)' concur! 1 vote+ ,or modi%ication, 8 took no part
&acts' :a%ae& Ru&ueta, et' a&' and Pan 7merican For&d 7irwa!s ,nc' #ave moved %or t#e reconsideration o% t#e
decision o% t#e "upreme $ourt promu&gated on 8. Feruar! 1.08' Ru&ueta maintained t#at t#e decision
appea&ed %rom s#ou&d e a%%irmed in toto' T#e carrier, in turn, pra!s t#at t#e decision o% t#e "upreme $ourt e
;set aside wit# or wit#out a new tria&, and t#at t#e comp&aint e dismissed, wit# costsC or, in t#e a&ternative,
t#at t#e amount o% t#e award emodied t#erein e considera&! reduced'< "use9uent&! to t#e %i&ing o% its
motion %or reconsideration, t#e carrier %i&ed a ;petition to annu& proceedings and-or to order t#e dismissa& o%
Ru&ueta?s comp&aint,< upon t#e ground t#at Ru&ueta?s comp&aint actua&&! seeks t#e recover! o% on&! P4,428'/4
as actua& damages, ecause, %or t#e purpose o% determining t#e Aurisdiction o% t#e &ower court, t#e unspeci%ied
sums representing items o% a&&eged damages, ma! not e considered, under t#e sett&ed doctrines o% t#e
"upreme $ourt, and t#e Aurisdiction o% t#e $F, w#en t#e comp&aint in t#e present case was %i&ed on 32
"eptemer 1.>4 was &imited to cases in w#ic# t#e demand, e3c&usive o% interest, or t#e va&ue o% t#e propert!
in controvers! amounts to more t#an P12,222 and t#e mere %act t#at t#e comp&aint a&so pra!s %or unspeci%ied
mora& damages and attorne!?s %ees, does not ring t#e action wit#in t#e Aurisdiction o% t#e &ower court'
T#e "upreme $ourt denied t#e motions %or reconsideration'
1. Clai# ,or #oral +a#a*es not suscepti$le o, pecuniary esti#ation
7 c&aim %or mora& damages is one not suscepti&e o% pecuniar! estimation' ,n %act, 7rtic&e 8810 o% t#e
$ivi& $ode o% t#e P#i&ippines e3p&icit&! provides t#at ;t#oug# incapa&e o% pecuniar! computation, mora&
damages ma! e recovered i% t#e! are t#e pro3imate resu&t o% t#e de%endant?s wrong%u& act or omission'<
@ence, ;no proo% pecuniar! &oss necessar!< H pursuant to 7rtic&e 881> o% t#e same $ode H ;in order t#at
mora& damages ma! e adAudicated'< 7nd ;t#e assessment o% suc# damages is &e%t to t#e discretion o% t#e
court< H said artic&e adds H ;according to t#e circumstances o% eac# case'< @ence, t#e comp&aint is,
t#ere%ore, wit#in t#e origina& Aurisdiction o% courts o% %irst instance, w#ic# inc&udes ;a&& civi& actions in w#ic#
t#e suAect o% t#e &itigation is not capa&e o% pecuniar! estimation'<
-. Counterclai# #ay cure alle*e+ +e,ect as to a#ount necessary to +eter#ine ?uris+iction o, t)e
case
T#ere is no need to consider t#e Aurisdictiona& controvers! as to t#e amount sued to e recovered
ecause t#e counterc&aim interposed esta&is#es t#e Aurisdiction o% t#e $ourt' T#e $ourts #ave said t#at w#en
t#e Aurisdictiona& amount is in 9uestion, t#e tendering o% a counterc&aim in an amount w#ic# in itse&%, or added
to t#e amount c&aimed in t#e petition, makes up a sum e9ua& to t#e amount necessar! to t#e Aurisdiction o% t#is
court, Aurisdiction is esta&is#ed, w#atever ma! e t#e state o% t#e p&ainti%%?s comp&aint' @erein, n its answer to
Ru&ueta?s origina& and amended comp&aints, Pan 7m #ad set up a counterc&aim in t#e aggregate sum o%
P18,222, w#ic# is, a&so, wit#in t#e origina& Jurisdiction o% said courts, t#ere! curing t#e a&&eged de%ect i% an!,
in Ru&ueta?s comp&aint'
3. Si#ilar case as to ?uris+iction6 5*o v. Buslon
T#erein, petitioner?s counterc&aim %or P30,222'22 was, a&so, wit#in t#e e3c&usive origina& Aurisdiction
o% t#e &atter courts, and t#ere are amp&e precedents to t#e e%%ect t#at ;a&t#oug# t#e origina& c&aim invo&ves &ess
t#an t#e Aurisdictiona& amount, Aurisdiction can e sustained i% t#e counterc&aim (o% t#e compu&sor! t!pe)< H
suc# as t#e one set up ! petitioner #erein, ased upon t#e damages a&&eged&! su%%ered ! #im in conse9uence
o% t#e %i&ing o% said comp&aint H ;e3ceeds t#e Aurisdictiona& amount'<
/. :an 5# estoppe+ ,ro# 9uestionin* ?uris+iction
@erein, #aving not on&! %ai&ed to 9uestion t#e Aurisdiction o% t#e tria& court H eit#er in t#at court or in
t#e "upreme $ourt, e%ore t#e rendition o% t#e &atter?s decision, and even suse9uent&! t#ereto, ! %i&ing
motion %or reconsideration and seeking t#e re&ie%s t#erein pra!ed %or H ut, a&so, urged ot# courts to
e3ercise Aurisdiction over t#e merits o% t#e case, Pan 7m is now estopped %rom impugning said Aurisdiction'
2. &actual ,in+in*s o, t)e trial court
T#e Tria& Judge, w#o #ad t#e decided advantage o% oserving t#e e#aviour o% t#e witnesses in t#e
course o% t#e tria&, and %ound t#ose o% Ru&ueta wort#! o% credence, not t#e evidence %or Pan 7m'
. Res *estae6 Bo#$ scare scenario +ispute+
@erein, t#e de%ense t#eori*ed to t#e e%%ect t#at Ru&ueta was o%%=&oaded ecause o% a om=scare
a&&eged&! arising %rom #is de&a! in oarding t#e aircra%t and suse9uent re%usa& to open #is ags %or
inspection' ,n #is written report, made in transit %rom Fake to Mani&a H or immediate&! a%ter t#e occurrence
and e%ore t#e &ega& imp&ications or conse9uences t#ereo% cou&d #ave een t#e oAect o% mature de&ieration,
so t#at it cou&d, in a wa!, e considered as part o% t#e res gestae H $apt' Rentner stated t#at Ru&ueta #ad een
o%%=&oaded ;due to drinking< and ;e&&igerent attitude,< t#ere! e&!ing t#e stor! o% t#e de%ense aout said
a&&eged om=scare, and con%irming t#e view t#at said Pan 7m?s agent #ad acted out o% resentment ecause
#is ego #ad een #urt ! Mr' Ru&ueta?s adamant re%usa& to e u&&ied ! #im' ,ndeed, #ad t#ere een an iota o%
trut# in said stor! o% t#e de%ense, $apt' Rentner wou&d #ave caused ever! one o% t#e passengers to e %risked
or searc#ed and t#e &uggage o% a&& o% t#em e3amined e%ore resuming t#e %&ig#t %rom Fake ,s&and' @is %ai&ure
to do so mere&! makes t#e arti%icious nature o% Pan 7m?s version more mani%est' ,ndeed, t#e %act t#at Mrs'
Ru&ueta and Miss Ru&ueta were on oard t#e p&ane s#ows e!ond dout t#at Mr' Ru&ueta cou&d not possi&!
#ave intended to &ow it up'
3. Reason ,or Iulueta1s +elay in arrivin* ,or t)e ,li*)t6 State#ent t)at Iulueta relieve+ )i#sel, at
seclu+e+ place in t)e $eac) veri,ia$le
@erein, a&t#oug# Mr' Ru&ueta #ad to &ook %or a sec&uded p&ace in t#e eac# to re&ieve #imse&%, e!ond
t#e view o% ot#ers, Pan 7m?s airport manager, w#om Mr' Ru&ueta in%ormed aout it, soon a%ter t#e departure
o% t#e p&ane, cou&d #ave %ort#wit# c#ecked t#e veracit! o% Mr' Ru&ueta?s statement ! asking #im to indicate
t#e speci%ic p&ace w#ere #e #ad een in t#e eac# and t#en proceeding t#ereto %or purposes o% veri%ication'
4. Iulueta1s +elay in arrivin* ,or t)e ,li*)t6 :assen*er not kno.le+*ea$le on )o. #any toilets t)e
plane )as
T#e passenger o% a p&ane se&dom knows #ow man! toi&ets it #as' 7s a genera& ru&e, #is know&edge is
&imited to t#e toi&ets %or t#e c&ass H %irst c&ass or tourist c&ass H in w#ic# #e is' T#en, too, it takes severa&
minutes %or t#e passengers o% ig aircra%ts, &ike t#ose %&!ing %rom t#e D'"' to t#e P#i&ippines, to dep&ane'
1esides, t#e speed wit# w#ic# a given passenger ma! do so depends, &arge&!, upon t#e &ocation o% #is seat in
re&ation to t#e e3it door' @e cannot go over t#e #eads o% t#ose nearer t#an #e t#ere!'
%. Iulueta1s +elay in arrivin* ,or t)e ,li*)t6 Iulueta #ay )ave per,or#e+ acts .it)in t)e one> )our
perio+
@erein, Mr' Ru&ueta ma! #ave sta!ed in t#e toi&et termina& %or some time, e3pecting one o% t#e
commodes t#erein to e vacated soon enoug#, e%ore deciding to go e&sew#ere to &ook %or a p&ace suita&e to
#is purpose' 1ut #e #ad to wa&k, %irst, %rom t#e p&ane to t#e termina& ui&ding and, t#en, a%ter vain&! waiting
t#erein %or a w#i&e, cover a distance o% aout 522 !ards t#ere%rom to t#e eac#, and seek t#ere a p&ace not
visi&e ! t#e peop&e in t#e p&ane and in t#e termina&, inasmuc# as t#e terrain at Fake ,s&and is %&at' F#at is
more, #e must #ave #ad to take o%% part, at &east, o% #is c&ot#ing, ecause, wit#out t#e %aci&ities o% a toi&et, #e
#ad to was# #imse&% and, t#en, dr! #imse&% up e%ore #e cou&d e proper&! attired and wa&k ack t#e 522 !ards
t#at separated #im %rom t#e termina& ui&ding and-or t#e p&ane' $onsidering, in addition to t#e %oregoing, t#e
%act t#at #e was not %ee&ing we&&, at t#at time, t#e $ourt is not prepared to #o&d t#at it cou&d not #ave taken
#im around an #our to per%orm t#e acts narrated ! #im'
1". 5ltercations $et.een Iulueta an+ Capt. Ientner existin* at t)e ra#p lea+in* to t)e plane6 7o
opportunity ,or Iulueta to explain )is prior .)erea$outs
@erein, t#e record s#ows t#at, even e%ore Mr' Ru&ueta #ad reac#ed t#e ramp &eading to t#e p&ane,
$apt' Rentner was a&read! remonstrating at #im in an intemperate and arrogant tone and attitude (;F#at do
!ou t#ink !ou areS), t#ere! impe&&ing Mr' Ru&ueta to answer ack in t#e same vein' 7s a conse9uence, t#ere
immediate&! ensued an a&tercation in t#e course o% w#ic# eac# apparent&! tried to s#ow t#at #e cou&d not e
cowed ! t#e ot#er' T#en came t#e order o% $apt' Rentner to o%%=&oad a&& o% t#e Ru&uetas, inc&uding Mrs'
Ru&ueta and t#e minor Miss Ru&ueta, as we&& as t#eir &uggage, t#eir overcoats and ot#er e%%ects #andcarried !
t#emC ut, Mr' Ru&ueta re9uested t#at t#e &adies e a&&owed to continue t#e trip' Meanw#i&e, it #ad taken time
to &ocate #is 5 pieces o% &uggage' 7s a matter o% %act, on&! 3 o% t#em were %ound, and t#e %ourt# eventua&&!
remained in t#e p&ane' ,n s#ort, t#e issue etween $apt' Rentner and Mr' Ru&ueta #ad een &imited to
determining w#et#er t#e &atter wou&d a&&ow #imse&% to #e roweaten ! t#e %ormer' ,n t#e #eat o% t#e
a&tercation, nood! #ad in9uired aout t#e cause o% Mr' Ru&ueta?s de&a! in returning to t#e p&ane, apart %rom
t#e %act t#at it was rat#er emarrassing %or #im to e3p&ain, in t#e presence and wit#in t#e #earing o% t#e
passengers and t#e crew, t#en assem&ed around t#em, w#! #e #ad gone to t#e eac# and w#! it #ad taken
#im some time to answer t#ere a ca&& o% nature, instead o% doing so in t#e termina& ui&ding'
11. Cases! as to +a#a*es! cite+ $y :an 5# not in point
Previous cases to passengers o% air&ines, , cited ! Pan 7m, are not in point' "aid cases against air&ines
re%erred to passengers w#o were mere&! constrained to take a tourist c&ass accommodation, despite t#e %act
t#at t#e! #ad %irst c&ass tickets, and t#at a&t#oug#, in one o% suc# cases, t#ere was proo% t#at t#e air&ine
invo&ved #ad acted as it did to give pre%erence to a ;w#ite< passenger, t#is motive was not disc&osed unti& t#e
tria& in court' @erein, :a%ae& Ru&ueta was ;o%%=&oaded< at Fake ,s&and, %or #aving dared to retort to Pan 7m?s
agent in a tone and manner matc#ing, i% not e%itting #is intemperate &anguage and arrogant attitude' 7s a
conse9uence, $apt' Rentner?s attempt to #umi&iate :a%ae& Ru&ueta #ad oomeranged against #im (Rentner), in
t#e presence o% t#e ot#er passengers and t#e crew' ,t was, a&so, in t#eir presence t#at Pan 7m?s agent #ad
re%erred to t#e Ru&uetas as ;monke!s,< a racia& insu&t not made open&! and pu&ic&! in t#e previous cases
against air&ines'
1-. Iulueta not o,,loa+e+ to protect sa,ety o, aircra,t6 Dvi+ence supportin* vin+ictive #otive
@erein, Mr' Ru&ueta was o%%=&oaded, not to protect t#e sa%et! o% t#e aircra%t and its passengers, ut to
reta&iate and punis# #im %or t#e emarrassment and &oss o% %ace t#us su%%ered ! Pan 7m?s agent' T#is
vindictive motive is made more mani%est ! t#e note de&ivered to Mr' Ru&ueta ! Pan 7m?s airport manager at
Fake ,s&and, Mr' "itton, stating t#at t#e %ormer?s sta! t#erein wou&d e ;%or a minimum o% one week,< during
w#ic# #e wou&d e c#arged K13'32 per da!' T#is re%erence to a ;minimum o% one week< revea&ed t#e intention
to keep #im t#ere stranded t#at &ong, %or no ot#er p&ane, #eaded %or Mani&a, was e3pected wit#in said period
o% time, a&t#oug# Mr' Ru&ueta managed to oard, da!s &ater, a p&ane t#at roug#t #im to @awaii, w#ence #e
%&ew ack to t#e P#i&ippines, via Japan'
13. Cases! as to li$el an+ slan+er! cite+ $y :an 5# not in point6 Dxistence o, contract o, carria*e
@erein, neit#er ma! crimina& cases, nor t#e cases %or &ie& and s&ander cited ! Pan 7m, e e9uated
wit# t#e present case' ,ndeed, in ordinar! crimina& cases, t#e award %or damages is, in actua& practice, o%
pure&! academic va&ue, %or t#e convicts genera&&! e&ong to t#e poorest c&ass o% societ!' T#ere is, moreover, a
%undamenta& di%%erence etween said cases and t#e present one' T#e Ru&uetas #ad a contract o% carriage wit#
Pan 7m'
1/. Contract o, carria*e6 <uties o, t)e co##on carrier
T#e Ru&uetas #ad a contract o% carriage wit# Pan 7m, as a common carrier, pursuant to w#ic# t#e
&atter was ound, %or a sustantia& monetar! consideration paid ! t#e %ormer, not mere&! to transport t#em to
Mani&a, ut, a&so, to do so wit# ;e3traordinar! di&igence< or ;utmost di&igence'< T#e responsii&it! o% t#e
common carrier, under said contract, as regards t#e passenger?s sa%et!, is o% suc# a nature, a%%ecting as it does
pu&ic interest, t#at it ;cannot e dispensed wit#< or even ;&essened ! stipu&ation, ! t#e posting o% notices,
! statements on tickets, or ot#erwise'< Pan 7m did not on&! %ai& to comp&! wit# its o&igation to transport Mr'
Ru&ueta to Mani&a, ut, a&so, acted in a manner ca&cu&ated to #umi&iate #im, to c#astise #im, to make #im
su%%er, to cause to #im t#e greatest possi&e inconvenience, ! &eaving #im in a deso&ate is&and, in t#e
e3pectation t#at #e wou&d e stranded t#ere %or a ;minimum o% one week< and, in addition t#ereto, c#arged
t#ere%or K13'32 a da!'
12. Rationale $e)in+ exe#plary +a#a*es6 LopeJ vs. :an 5#
T#e rationa&e e#ind e3emp&ar! or corrective damages is, as t#e name imp&ies, to provide an e3amp&e
or correction %or pu&ic good' Pan 7m, #aving reac#ed its contracts in ad %ait#, t#e court, ma! award
e3emp&ar! damages in addition to mora& damages (7rtic&es 888., 8838, Eew $ivi& $odeC +ope* vs' Pan 7m)
,t is ovious, #erein, t#at in o%%=&oading Ru&ueta at Fake ,s&and, under t#e circumstances adverted to, Pan
7m?s agents #ad acted wit# ma&ice a%oret#oug#t and evident ad %ait#' ,% ;gross neg&igence< warrants t#e
award o% e3emp&ar! damages, wit# more reason is its imposition Austi%ied w#en t#e act per%ormed is
de&ierate, ma&icious and tainted wit# ad %ait#'
1. Dxe#plary +a#a*es6 7E5 vs. Cuenca
,n EF7 v' $uenca, t#e "upreme $ourt dec&ared t#at an award %or e3emp&ar! damages was Austi%ied
! t#e %act t#at t#e air&ine?s ;agent #ad acted in a wanton, reck&ess and oppressive manner< in compe&&ing
$uenca, upon arriva& at (kinawa, to trans%er, over #is oAection, %rom t#e %irst c&ass, w#ere #e was
accommodated %rom Mani&a to (kinawa, to t#e tourist c&ass, in #is trip to Japan, ;under t#reat o% ot#erwise
&eaving #im in (kinawa,< despite t#e %act t#at #e #ad paid in %u&& t#e %irst c&ass %are and was issued in Mani&a
a %irst c&ass ticket'
13. Rotea vs. Halili not in point
T#e case o% :otea vs' @a&i&i invo&ved t#e susidiar! civi& &iai&it! o% an emp&o!er arising %rom
crimina& acts o% #is emp&o!ee, and ;e3emp&ar! damages ma! e imposed w#en t#e crime was committed wit#
one or more aggravating circumstances'< 7ccording&!, t#e :otea case is not in point, %or t#e present case
invo&ves a reac# o% contract, as we&& as a 9uasi=de&ict'
14. :alisoc vs. Brilliantes not in point
Eeit#er ma! t#e case o% Pa&isoc v' 1ri&&antes, e e9uated wit# t#e present case' T#e Pa&isoc case dea&t
wit# t#e &iai&it! o% sc#oo& o%%icia&s %or damages arising %rom t#e deat# o% a student (Pa&isoc) due to %ist &ows
given ! anot#er student (Da%%on), in t#e course o% a 9uarre& etween t#em, w#i&e in a &aorator! room o% t#e
Mani&a Tec#nica& ,nstitute' ,n an action %or damages, t#e #ead t#ereo% and t#e teac#er in c#arge o% said
&aorator! were #e&d Aoint&! and severa&&! &ia&e wit# t#e student w#o caused said deat#, %or %ai&ure o% t#e
sc#oo& to provide ;ade9uate supervision over t#e activities o% t#e students in t#e sc#oo& premises,< to protect
t#em ;%rom #arm, w#et#er at t#e #ands o% %e&&ow students or ot#er parties'< T#e amount o% damages awarded
in t#e Pa&isoc case is not and cannot serve as t#e measure o% t#e damages recovera&e in t#e present case, t#e
&atter #aving een caused direct&! and intentiona&&! ! an emp&o!ee or agent o% t#e de%endant, w#ereas t#e
student w#o ki&&ed t#e !oung Pa&isoc was in no wise an agent o% t#e sc#oo&' @erein, upon #er arriva& in t#e
P#i&ippines, Mrs' Ru&ueta reported #er #usand?s predicament to Pan 7m?s &oca& manager and asked #im to
%ort#wit# #ave #im (Mr' Ru&ueta) roug#t to Mani&a, w#ic# Pan 7m?s manager re%used to do, t#ere!
imp&ied&! rati%!ing t#e o%%=&oading o% Mr' Ru&ueta at Fake ,s&and'
1%. 5rticle -14" 7CC6 :alisoc case
7rtic&e 81/2 o% t#e $ivi& $ode, reads ;T#e o&igation imposed ! artic&e 810> is demanda&e not on&!
%or one?s own acts or omissions, ut a&so %or t#ose o% persons %or w#om one is responsi&e' 333 +ast&!,
teac#ers or #eads o% esta&is#ments o% arts and trades s#a&& e &ia&e %or damages caused ! t#eir pupi&s and
students or apprentices, so &ong as t#e! remain in t#eir custod!'
-". Iulueta .oul+ )ave violate+ contract i, )e +i+ not arrive on ti#e! an+ i, t)e plane )as taken o,,
T#e argument t#at Q Mr' Ru&ueta was ound to e present at t#e time sc#edu&ed %or t#e departure o%
Pan 7m?s p&ane and t#at #e #ad, conse9uent&!, vio&ated said contract w#en #e did not s#ow up at suc# time Q
mig#t #ave #ad some weig#t #ad Pan 7m?s p&ane taken o%% e%ore Mr' Ru&ueta #ad s#own up' 1ut t#e %act is
t#at #e was read!, wi&&ing and a&e to oard t#e p&ane aout 8 #ours e%ore it actua&&! took o%%, and t#at #e was
de&ierate&! and ma&icious&! o%%=&oaded on account o% #is a&tercation wit# $apt' Rentner' 7&t#oug# Mr'
Ru&ueta was de&a!ed some 82 to 32 minutes, t#e arriva& or departure o% p&anes is o%ten de&a!ed %or muc#
&onger periods o% time' Fo&&owed to its &ogica& conc&usion, t#e argument adduced ! t#e de%ense suggests t#at
air&ines s#ou&d e #e&d &ia&e %or damages due to t#e inconvenience and an3iet!, aside %rom actua& damages,
su%%ered ! man! passengers eit#er in t#eir #aste to arrive at t#e airport on sc#edu&ed time Aust to %ind t#at
t#eir p&ane wi&& not take o%% unti& &ater, or ! reason o% t#e &ate arriva& o% t#e aircra%t at its destination'
-1. Rationale .)y ?uris+iction o, lo.er court $ein* 9uestione+ $y :an 5#
7part %rom Ru&ueta?s c&aim %or actua& damages, t#e amount o% w#ic# is not contested, t#e Ru&uetas did
not ask an! speci%ic sum ! wa! o% e3emp&ar! and mora& damages, as weM& as attorne!?s %ees, and &e%t t#e
amount t#ereo% to t#e ;sound discretion< o% t#e &ower court' T#is, precise&!, is t#e reason w#! P7E7M, now,
a&&eges H wit#out Austi%ication H t#at t#e &ower court #ad no Aurisdiction over t#e suAect matter o% t#e
present case'
--. 5rticle --"4 7CC6 5ttorney1s ,ees
7rtic&e 882/ o% our $ivi& $ode e3press&! aut#ori*es t#e award o% attorne!?s %ees ;w#en e3emp&ar!
damages are awarded,< as we&& as ;in an! ot#er case w#ere t#e court deems it Aust and e9uita&e t#at
attorne!?s %ees e recovered'< $onsidering t#e ;e3ceptiona&< circumstances otaining t#erein Q particu&ar&!
t#e ad %ait# wit# w#ic# Pan 7m?s agent #ad acted, t#e p&ace w#ere and t#e conditions under w#ic# :a%ae&
Ru&ueta was &e%t at Fake ,s&and, t#e aso&ute re%usa& o% de%endant?s manager in Mani&a to take an! step
w#atsoever to a&&eviate Mr' Ru&ueta?s predicament at Fake and #ave #im roug#t to Mani&a (w#ic#, under
t#eir contract o% carriage, was Pan 7m?s o&igation to disc#arge wit# ;e3traordinar!< or ;utmost< di&igence)
and, t#e ;racia&< %actor t#at #ad, &ikewise, tainted t#e decision o% Pan 7m?s agent, $apt' Rentner, to o%%=&oad
#im at Fake ,s&and Q t#e $ourt deem it Aust and e9uita&e in t#e present case to grant award o% attorne!?s %ees'
-3. Dvi+ence ?usti,yin* su# a.ar+e+ as attorney1s ,ees
7s regards t#e evidence necessar! to Austi%! t#e sum o% P04,222 awarded as attorne!?s %ees in t#e
present case, su%%ice it to sa! t#at t#e 9uantit! and 9ua&it! o% t#e services rendered ! Ru&ueta?s counse&
appearing on record, apart %rom t#e nature o% t#e case and t#e amount invo&ved t#erein as we&& as #is prestige
as one o% t#e most distinguis#ed memers o% t#e &ega& pro%ession in t#e P#i&ippines, o% w#ic# Audicia&
cogni*ance ma! e taken, amp&! Austi%! said award, w#ic# is a &itt&e over 12I o% t#e damages (P022,222)
co&&ecti&e ! Ru&ueta #erein' ,ndeed, t#e attorne!?s %ees in t#is case is proportiona&&! muc# &ess t#an t#at
adAudged in +ope* v' P7E7M 1> w#ic# t#e Audgment rendered %or attorne!?s %ees (P42,222) was a&most 82I
o% t#e damages (P804,222) recovered ! t#e +ope*es t#erein'
-/. :ay#ent e,,ective .)ile co#pro#ise a*ree#ent .it) =rs. Iulueta ine,,ective inso,ar as t)e
con?u*al partners)ip is concerne+
T#e pa!ment is e%%ective, inso%ar as it is deducti&e %rom t#e award, and, ecause it is due (or part o%
t#e amount due) %rom Pan 7m, wit# or wit#out its compromise agreement wit# Mrs' Ru&ueta' F#at is
ine%%ective is t#e compromise agreement, inso%ar as t#e conAuga& partners#ip is concerned'
-2. 5rticle 113 not applica$le6 Rationale o, t)e court in re9uirin* +e+uction o, :2"!""" ,ro#
a**re*ate a.ar+
7rtic&e 113 o% t#e $ivi& $ode (t#e #usand must e Aoined in a&& suits ! or against t#e wi%e e3cept:L8M
,% t#e! #ave in %act een separated %or at &east one !ear) re%ers to suits in w#ic# t#e wi%e is t#e principa& or rea&
part! in interest, not to t#e present case, ;in w#ic# t#e #usand is t#e main part! in interest, ot# as t#e person
principa&&! aggrieved and as administrator o% t#e conAuga& partners#ip, #e #aving acted in t#is capacit! in
entering into t#e contract o% carriage wit# P7E7M and paid t#e amount due to t#e &atter, under t#e contract,
wit# %unds o% t#e conAuga& partners#ip,< to w#ic# t#e amounts recovera&e %or reac# o% said contract,
according&!, e&ong' T#e damages su%%ered ! Mrs' Ru&ueta were main&! an incident o% t#e #umi&iation to
w#ic# #er #usand #ad een suAected' T#e $ourt ordered t#at said sum o% P42,222 paid ! P7E7M to Mrs'
Ru&ueta e deducted %rom t#e aggregate award in %avor o% t#e Ru&uetas %or t#e simp&e reason t#at upon
&i9uidation o% t#e conAuga& partners#ip, as provided ! &aw, said amount wou&d #ave to e reckoned wit#,
eit#er as part o% #er s#are in t#e partners#ip, or as part o% t#e support w#ic# mig#t #ave een or ma! e due to
#er as wi%e o% :a%ae& Ru&ueta' ,t wou&d sure&! e inane to sentence Pan 7m to pa! t#e P022,222 due to t#e
Ru&uetas and to direct Mrs' Ru&ueta to return said P42,222 to Pan 7m'
-. =rs. Iulueta not allo.e+ to .aive s)are in con?u*al partners)ip $e,ore +issolution t)ereo,
For ovious reasons o% pu&ic po&ic!, Mrs' Ru&ueta is not a&&owed ! &aw to waive #er s#are in t#e
conAuga& partners#ip, e%ore t#e disso&ution t#ereo%' "#e cannot even ac9uire an! propert! ! gratuitous tit&e,
wit#out t#e #usand?s consent, e3cept %rom #er ascendants, descendants, parents=in=&aw, and co&&atera&
re&atives wit#in t#e %ourt# degree'
-3. Co#pro#ise a*ree#ent6 La. +oes not ,avor settle#ent .)en spouses are contrary parties in a
co##on cause
7&t#oug# t#e &aw %avors and encourages t#e sett&ement o% &itigations ! compromise agreement
etween t#e contending parties, it certain&! does not %avor a sett&ement wit# one o% t#e spouses, ot# o% w#om
are p&ainti%%s or de%endants in a common cause, suc# as t#e de%ense o% t#e rig#ts o% t#e conAuga& partners#ip,
w#en t#e e%%ect, even i% indirect, o% t#e compromise is to Aeopardi*e ;t#e so&idarit! o% t#e %ami&!< H w#ic#
t#e &aw seeks to protect H ! creating an additiona& cause %or t#e misunderstanding t#at #ad arisen etween
suc# spouses during t#e &itigation, and t#us rendering more di%%icu&t a reconci&iation etween t#em'
-4. :resu#ption t)at purpose o, trip! an+ #oney pai+ t)ereon! are con?u*al6 5.ar+ con?u*al
@erein, t#ere was no individua& or speci%ic award in %avor o% Mrs' Ru&ueta or an! o% t#e Ru&uetasC ut
t#at t#e award was made in t#eir %avor co&&ective&!' ,n t#e asence o% proo%, t#e presumption is t#at t#e
purpose o% t#e trip was %or t#e common ene%it o% t#e Ru&uetas and t#at t#e mone! #ad come %rom t#e
conAuga& %unds, %or, un&ess t#ere is proo% to t#e contrar!, it is presumed ;t#at t#ings #ave #appened according
to t#e ordinar! course o% nature and t#e ordinar! #aits o% &i%e'< ,n %act Manresa maintains t#at t#e! are
deemed conAuga&, w#en t#e source o% t#e mone! used t#ere%or is not esta&is#ed, even i% t#e purc#ase #ad
een made ! t#e wi%e' 7nd t#is is t#e ru&e otaining in t#e P#i&ippines' Bven propert! registered, under t#e
Torrens s!stem, in t#e name o% one o% t#e spouses, or in t#at o% t#e wi%e on&!, i% ac9uired during t#e marriage,
is presumed to e&ong to t#e conAuga& partners#ip, un&ess t#ere is competent proo% to t#e contrar!'
-%. Con?u*al partners)ip property6 5rticle 123 7CC
7rtic&e 143 o% t#e $ivi& $ode provides t#at ;T#e %o&&owing are conAuga& partners#ip propert!: (1) T#at
w#ic# is ac9uired ! onerous tit&e during t#e marriage at t#e e3pense o% t#e common %und, w#et#er t#e
ac9uisition e %or t#e partners#ip, or %or on&! one o% t#e spousesC (8) T#at w#ic# is otained ! t#e industr!,
or work, or as sa&ar! o% t#e spouses, or o% eit#er o% t#emC (3) T#e %ruits, rents or interests received or due
during t#e marriage, coming %rom t#e common propert! or %rom t#e e3c&usive propert! o% eac# spouse'<
3". 5.ar+ o, +a#a*es part o, 5rticle 123 (1) 7CC
$onsidering t#at t#e damages in 9uestion #ave arisen %rom, inter a&ia, a reac# o% t#e Ru&uetas?
contract o% carriage wit# Pan 7m, %or w#ic# t#e Ru&uetas paid t#eir %are wit# %unds presuma&! e&onging to
t#e conAuga& partners#ip, t#e $ourt #o&ds t#at said damages %a&& under paragrap# (1) o% said 7rtic&e 143, t#e
rig#t t#ereto #aving een ;ac9uired ! onerous tit&e during t#e marriage'<
31. 5rticle 1/4 7CC
7rtic&e 15/ o% t#e $ivi& $ode provides t#at ;T#e %o&&owing s#a&& e t#e e3c&usive propert! o% eac#
spouse: (1) T#at w#ic# is roug#t to t#e marriage as #is or #er ownC (8) T#at w#ic# eac# ac9uires, during t#e
marriage, ! &ucrative tit&eC (3) T#at w#ic# is ac9uired ! rig#t o% redemption or ! e3c#ange wit# ot#er
propert! e&onging to on&! one o% t#e spousesC (5) T#at w#ic# is purc#ased wit# e3c&usive mone! o% t#e wi%e
or o% t#e #usand'<
3-. <a#a*es )erein not un+er provisions ,or#in* @:arap)ernal propertyA6 C)apter 3! (itle G;! o,
Book ;! 7CC
T#e damages invo&ved in t#e present case do not come under an! o% t#ese provisions or o% t#e ot#er
provisions %orming part o% $#apter 3, Tit&e V,, o% 1ook , o% t#e $ivi& $ode, w#ic# c#apter is entit&ed
;Parap#erna& Propert!'< F#at is more, i% ;t#at w#ic# is ac9uired ! rig#t o% redemption or ! e3c#ange wit#
ot#er propert! e&onging to on&! one o% t#e spouses,< and ;t#at w#ic# is purc#ased wit# e3c&usive mone! o%
t#e wi%e or o% t#e #usand,< 85 e&ong e3c&usive&! to suc# wi%e or #usand, it %o&&ows necessari&! t#at t#at
w#ic# is ac9uired wit# mone! o% t#e conAuga& partners#ip e&ongs t#ereto or %orms part t#ereo%'
33. =ara#$a vs. LoJano! :ereJ vs. Lantin not in point
T#e ru&ings in Marama v' +o*ano, and Pere* v' +antin, it was mere&! #e&d t#at t#e presumption
under 7rtic&e 1>2 o% our $ivi& $ode H to t#e e%%ect t#at a&& propert! o% t#e marriage e&ong to t#e conAuga&
partners#ip H does not app&! un&ess it is s#own t#at it was ac9uired during marriage' ,n t#e present case, t#e
contract o% carriage was conceded&! entered into, and t#e damages c&aimed ! t#e Ru&uetas were incurred,
during marriage' @ence, t#e rig#ts accruing %rom said contract, inc&uding t#ose resu&ting %rom reac# t#ereo%
! Pan 7m, are presumed to e&ong to t#e conAuga& partners#ip o% Mr' and Mrs' Ru&ueta' T#e %act t#at suc#
reac# o% contract was coup&ed, a&so, wit# a 9uasi=de&ict constitutes an aggravating circumstances and can not
possi&! #ave t#e e%%ect o% depriving t#e conAuga& partners#ip o% suc# propert! rig#ts'
3/. Lack o, proo, as t)at ri*)t o, re+e#ption pertains to .i,e alone
@erein, Pan 7m insists t#at t#e use o% conAuga& %unds to redeem propert! does not make t#e propert!
redeemed conAuga& i% t#e rig#t o% redemption pertained to t#e wi%e' ,n t#e asence, #owever, o% proo% t#at suc#
rig#t o% redemption pertains to t#e wi%e H and t#ere is no proo% t#at t#e contract o% carriage wit# P7E7M or
t#e mone! paid t#ere%or e&ongs to Mrs' Ru&ueta H t#e propert! invo&ved, or t#e rig#ts arising t#ere%rom,
must e presumed, t#ere%ore, to %orm part o% t#e conAuga& partners#ip'
32. Lilius vs. =anila Railroa+6 ;n?uries su,,ere+ $y t)e .i,e
,t is true t#at in +i&ius v' Mani&a :ai&road $o', it was #e&d t#at t#e ;patrimonia& and mora& damages<
awarded to a !oung and eauti%u& woman ! reason o% a scar H in conse9uence o% an inAur! resu&ting %rom an
automoi&e accident H w#ic# dis%igured #er %ace and %ractured #er &e%t &eg, as we&& as caused a permanent
de%ormit!, are #er parap#erna& propert!'
3. :assa*e ,ro# Colin y Capitant6 ;n?uries su,,ere+ $y t)e .i,e
;Eo esta resue&ta e3presamente en &a &egis&acion espa)o&a &a cuestin de si &as indemni*aciones deidas
por accidentes de& traaAo tienen &a consideracion de ganancia&es o son ienes particu&ares de &os con!uges'
,nc&inan a &a so&ucion de 9ue estas indemni*aciones deen ser consideradas como ganancia&es, e& #ec#o de
9ue &a sociedad pierde &a capacidad de traaAo con e& accidente, 9ue a e&&a &e pertenece, puesto 9ue de &a
sociedad son &os %rutos de ese traaAoC en camio, &a consideracion de 9ue de igua& manera 9ue &os ienes 9ue
sustitu!en a &os 9ue cada con!uge &&eva a& matrimonio como propios tienen e& caracter de propios, #ace pensar
9ue &as indemni*aciones 9ue vengan a sup&ir &a capacidad de traaAo aportada por cada con!uge a &a sociedad,
deen ser Auridicamente reputadas como ienes propios de& con!uge 9ue #a!a su%rido e& accidente' 7sX se
&&ega a &a misma so&icion aportada por &a Aurisprudencia %rancesca'< 8/
33. 8pinion in Colin y Capitant not +ecisive as it co##ents on t)e &renc) Civil Co+e! .)ic) +i,,ers
,ro# t)e Spanis) la. (.)ere t)e :)ilippine Civil Co+e is +erive+) in t)e treat#ent o, property relations
$et.een )us$an+ an+ .i,e
$o&in ! $apitant were commenting on t#e Frenc# $ivi& $odeC t#at t#eir comment re%erred to
indemnities due in conse9uence o% ;accidentes de& traaAo< resu&ting in p#!sica& inAuries sustained ! one t#e
spouses (w#ic# Mrs' Ru&ueta #as not su%%ered)C and t#at said commentators admit t#at t#e 9uestion w#et#er or
not said damages are parap#erna& propert! or e&ong to t#e conAuga& partners#ip is not sett&ed under t#e
"panis# &aw' 1esides, t#e Frenc# &aw and Aurisprudence H to w#ic# t#e comments o% P&anio& and :ipert,
&ikewise, re%er H are inapposite to t#e 9uestion under consideration, ecause t#e! di%%er asica&&! %rom t#e
"panis# &aw in t#e treatment o% t#e propert! re&ations etween #usand and wi%e' ,ndeed, our $ivi& $ode, &ie
t#e "panis# $ivi& $ode, %avors t#e s!stem o% conAuga& partners#ip o% gains' 7ccording&!, t#e %ormer provides
t#at ;in t#e asence o% marriage sett&ements, or w#en t#e same are void, t#e s!stem o% re&ative communit! or
conAuga& partners#ip o% gains s#a&& govern t#e propert! re&ations etween< t#e spouses' @ence, ;a&& propert!
o% t#e marriage is presumed to e&ong to t#e conAuga& partners#ip, un&ess it e proved t#at it pertains
e3c&usive&! to t#e #usand or to t#e wi%e'< Eo simi&ar ru&es are %ound in t#e Frenc# $ivi& $ode'
34. Capitulaciones #atrio#iales6 =anresa
T#e conAuga& partners#ip e3ists on&! w#en so stipu&ated in t#e ;capitu&aciones matrimonia&es< or !
wa! o% e3ception' ,n t#e &anguage o% Manresa: ;Prescindimos de &os preceptos de &os $odigos de Francia,
,ta&ia, @o&anda, Portuga&, 7&emania ! "ui*a, porsue so&o e3cepciona&mente, o cuando asi se pacta en &as
capitu&aciones, admiten e& sistema de ganancia&es'<
[--1]
LopeJ vs. :an 5#erican Eorl+ 5ir.ays (GR L>--/12! 3" =arc) 1%)
Bn 1anc, 1eng*on JP (J): . concur, 1 on &eave
&acts' :eservations %or %irst c&ass accommodations in F&ig#t 8 o% Pan 7merican For&d 7irwa!s %rom Tok!o
to "an Francisco on 85 Ma! 1.>2 were made wit# P7E 7M on 8. Marc# 1.>2, ! ;Oour Trave& 6uide<
agenc!, speci%ica&&!, ! De&%in Faustino, %or t#en "enator Fernando +ope*, #is wi%e Maria J' +ope*, #is son=
in=&aw 7&%redo Monte&iano, Jr', and #is daug#ter Mrs' 7&%redo Monte&iano, Jr' (Mi&agros +ope*
Monte&iano)' P7E 7M?s "an Francisco #ead o%%ice con%irmed t#e reservations on 31 Marc# 1.>2' First c&ass
tickets %or t#e aovementioned %&ig#t were suse9uent&! issued ! P7E 7M on Ma! 81 and 83, 1.>2, in %avor
o% "enator +ope* and #is part!' T#e tota& %are o% P.,555 %or a&& o% t#em was %u&&! paid e%ore t#e tickets were
issued' 7s sc#edu&ed "enator +ope* and part! &e%t Mani&a ! Eort#west 7ir&ines on 85 Ma! 1.>2, arriving in
Tok!o at 4:32 P'M' o% t#at da!' 7s soon as t#e! arrived "enator +ope* re9uested Minister 1usuego o% t#e
P#i&ippine Bmass! to contact P7E 7M?s Tok!o o%%ice regarding t#eir %irst c&ass accommodations %or t#at
evening?s %&ig#t' For t#e given reason t#at t#e %irst c&ass seats t#erein were a&& ooked up, #owever, P7E 7M?s
Tok!o o%%ice in%ormed Minister 1usuego t#at P7E 7M cou&d not accommodate "enator +ope* and part! in
t#at trip as %irst c&ass passengers' "enator +ope* t#ereupon gave t#eir %irst c&ass tickets to Minister 1usuego
%or #im to s#ow t#e same to P7E 7M?s Tok!o o%%ice, ut t#e &atter %irm&! reiterated t#at t#ere was no
accommodation %or t#em in t#e %irst c&ass, stating t#at t#e! cou&d not go in t#at %&ig#t un&ess t#e! took t#e
tourist c&ass t#erein' Due to pressing engagements awaiting "enator +ope* and #is wi%e in t#e Dnited "tates
H #e #ad to attend a usiness con%erence in "an Francisco t#e ne3t da! and s#e #ad to undergo a medica&
c#eck=up in Ma!o $&inic, :oc#ester, Minnesota, on 8/ Ma! 1.>2 and needed t#ree da!s rest e%ore t#at in
"an Francisco H "enator +ope* and part! were constrained to take P7E 7M?s %&ig#t %rom Tok!o to "an
Francisco as tourist passengers' "enator +ope* #owever made it c&ear, as indicated in #is &etter to P7E 7M?s
Tok!o o%%ice on t#at date, t#at t#e! did so ;under protest< and wit#out preAudice to %urt#er action against t#e
air&ine'
&acts pertainin* to $a+ ,ait) (<e,en+ant1s evi+ence)' T#e %irst c&ass reservations o% "enator +ope*
and part! were made on 8. Marc# 1.>2 toget#er wit# t#ose o% %our memers o% t#e :u%ino %ami&!,
%or a tota& o% / seats, as s#own in t#eir Aoint reservation card' "use9uent&!, on 32 Marc# 1.>2, two
ot#er :u%inos secured reservations and were given a separate reservation card' 7 new reservation
card consisting o% two pages was t#en made %or t#e origina& group o% eig#t passengers, name&!,
"enator +ope* and part! and %our memers o% t#e :u%ino %ami&!, t#e %irst page re%erring to 8 +ope* ,
8 Monte&ianos and 1 :u%ino and t#e second page re%erring to 3 :u%inos' (n 1/ 7pri& 1.>2 ;Oour
Trave& 6uide< agenc! cance&&ed t#e reservations o% t#e :u%inos' 7 te&e3 message was t#ereupon sent
on t#at date to P7E 7M?s #ead o%%ice at "an Francisco ! Mariano @erran*, P7E 7M?s reservations
emp&o!ee at its o%%ice in Bsco&ta, Mani&a' ,n said message, #owever, @erran* mistaken&! cance&&ed a&&
t#e seats t#at #ad een reserved, t#at is, inc&uding t#ose o% "enator +ope* and part!' T#e ne3t da! H
7pri& 1.>2 H @erran* discovered #is mistake, upon seeing t#e reservation card new&! prepared !
#is co=emp&o!ee Pedro 7sensi %or "enator +ope* and part! to t#e e3c&usion o% t#e :u%inos' ,t was
t#en t#at @erran* sent anot#er te&e3 wire to t#e "an Francisco #ead o%%ice, stating #is error and asking
%or t#e reinstatement o% t#e 5 %irst c&ass seats reserved %or "enator +ope* and part!' "an Francisco
#ead o%%ice rep&ied on 7pri& 88, 1.>2 t#at "enator +ope* and part! are wait&isted and t#at said o%%ice
is una&e to reinstate t#em' "ince t#e %&ig#t invo&ved was sti&& more t#an a mont# awa! and con%ident
t#at reinstatement wou&d e made, @erran* %orgot t#e matter and to&d no one aout it e3cept #is co=
emp&o!ee, eit#er 7rmando Davi&a or Pedro 7sensi or ot# o% t#em' "use9uent&!, on 80 7pri& 1.>2,
7rmando Davi&a, P7E 7M?s reservations emp&o!ee working in t#e same Bsco&ta o%%ice as @erran*,
p#oned P7E 7M?s ticket se&&ers at its ot#er o%%ice in t#e Mani&a @ote&, and con%irmed t#e
reservations o% "enator +ope* and part!' P7E 7M?s reservations supervisor, 7&erto Jose, discovered
@erran*?s mistake a%ter ;Oour Trave& 6uide< p#oned on 1/ Ma! 1.>2 to state t#at "enator +ope* and
part! were going to depart as sc#edu&ed' 7ccording&!, Jose sent a te&e3 wire on t#at date to P7E
7M?s #ead o%%ice at "an Francisco to report t#e error and asked said o%%ice to continue #o&ding t#e
reservations o% "enator +ope* and part!' "aid message was reiterated ! Jose in #is te&e3 wire o% 1.
Ma! 1.>2' "an Francisco #ead o%%ice rep&ied on 1. Ma! 1.>2 t#at it regrets eing una&e to con%irm
"enator +ope* and part! %or t#e reason t#at t#e %&ig#t was so&id&! ooked' Jose sent a t#ird te&e3 wire
on 82 Ma! 1.>2 addressed to P7E 7M?s o%%ices at "an Francisco, Eew Oork (,d&ewi&d 7irport),
Tok!o and @ongkong, asking a&&=out assistance towards restoring t#e cance&&ed spaces and %or report
o% cance&&ations at t#eir end' "an Francisco #ead o%%ice reiterated on 82 Ma! 1.>2 t#at it cou&d not
reinstate t#e spaces and re%erred Jose to t#e Tok!o and @ongkong o%%ices' 7&so on Ma! 82 t#e Tok!o
o%%ice o% P7E 7M wired Jose stating it wi&& do ever!t#ing possi&e' B3pecting t#at some
cance&&ations o% ookings wou&d e made e%ore t#e %&ig#t time, Jose decided to wit##o&d %rom
"enator +ope* and part!, or t#eir agent, t#e in%ormation t#at t#eir reservations #ad een cance&&ed'
7rmando Davi&a #aving previous&! con%irmed "enator +ope* and part!?s %irst c&ass reservations to
P7E 7M?s ticket se&&ers at its Mani&a @ote& o%%ice, t#e &atter so&d and issued in t#eir %avor t#e
corresponding %irst c&ass tickets on t#e 81st and 83rd o% Ma!, 1.>2'
"uit %or damages was t#erea%ter %i&ed ! "enator +ope* and part! against P7E 7M on 8 June 1.>2 in t#e $F,
o% :i*a&' 7&&eging reac# o% contracts in ad %ait# ! Pan 7m, t#e +ope*es asked %or P422,222 actua& and
mora& damages, P122,222 e3emp&ar! damages P84,222 attorne!?s %ees, p&us costs' P7E 7M %i&ed its answer
on 88 June 1.>2, asserting t#at its %ai&ure to provide %irst c&ass accommodations to p&ainti%%s was due to #onest
error o% its emp&o!ees' ,t a&so interposed a counterc&aim %or attorne!?s %ees o% P84,222' 7%ter tria&, t#e $F,
rendered its decision on 13 Eovemer 1.>3, w#ic# ordered Pan 7m to pa! t#e +ope*es t#e %o&&owing (a)
P122,222'22 as mora& damages: () P82,222'22 as e3emp&ar! damageC (c) P84,222'22 as attorne!?s %ees, and
t#e costs o% t#e action'
T#e +ope*es #owever, on 81 Eovemer 1.>3, moved %or reconsideration o% said Audgment, asking t#at mora&
damages e increased to P522,222 and t#at >I interest per annum on t#e amount o% t#e award e granted'
Pan 7m opposed t#e same' 7cting t#ereon t#e tria& court issued an order on 15 Decemer 1.>3, ordering Pan
7m to pa! t#e +ope*es (a) P142,222'22 as mora& damagesC () P84,222'22 as e3emp&ar! damagesC wit# &ega&
interest on ot# %rom t#e date o% t#e %i&ing o% t#e comp&aint unti& paidC and (c) P84,222'22 as attorne!?s %ees,
and t#e costs o% t#e action'< ,t is %rom said Audgment, as t#us reconsidered, t#at ot# parties #ave appea&ed'
Pan7m takes issue wit# t#e %inding o% t#e court a 9uo t#at it acted in ad %ait# in t#e reac# o% said contracts'
T#e +ope*es, on t#e ot#er #and, raise 9uestions on t#e amount o% damages awarded in t#eir %avor, seeking
t#at t#e same e increased to a tota& o% P>42,222'
T#e "upreme $ourt modi%ied t#e Audgments appea&ed %rom so as to award in %avor o% t#e +ope*es and against
Pan 7m: (1) P822,222'22 as mora& damages, divided among t#e +ope*es, t#us: P122,222'22 %or "enate
President Pro Tempore Fernando +ope*C P42,222'22 %or #is wi%e Maria J' +ope* P84,222'22 %or #is son=in=
&aw 7&%redo Monte&iano, Jr' and P84,222'22 %or #is daug#ter Mrs' 7&%redo Monte&iano, Jr'C (8) P04,222'22
as e3emp&ar! or corrective damagesC (3) interest at t#e &ega& rate o% >I per annum on t#e mora& and
e3emp&ar! damages a%ore=stated, %rom 15 Decemer 1.>3, t#e date o% t#e amended decision o% t#e court a
9uo, unti& said damages are %u&&! paidC (5) P42,222'22 as attorne!?s %eesC and (4) t#e costs' T#e $ourt
dismissed t#e counterc&aim'
For ad %ait# means a reac# o% a known dut! t#roug# some motive o% interest or i&& wi&&' "e&%=
enric#ment or %raterna& interest, and not persona& i&& wi&&, ma! we&& #ave een t#e motive, ut it is ma&ice
nevert#e&ess'
-. 5+#ission o, $a+ ,ait)
,t is admitted t#at Pan 7m, t#roug# its agents, ! its own evidence, %irst cance&&ed t#e +ope*es?
reservations ! mistake and t#erea%ter de&ierate&! and intentiona&&! wit##e&d %rom t#e &atter or t#eir trave&
agent t#e %act o% said cance&&ation, &etting t#em go on e&ieving t#at t#eir %irst c&ass reservations stood va&id
and con%irmed' ,n so mis&eading t#e +ope*es into purc#asing %irst c&ass tickets in t#e conviction t#at t#e! #ad
con%irmed reservations %or t#e same, w#en in %act t#e! #ad none, Pan 7m wi&%u&&! and knowing&! p&aced itse&%
into t#e position o% #aving to reac# its contracts wit# t#e +ope*es s#ou&d t#ere e no &ast=minute cance&&ation
! ot#er passengers e%ore %&ig#t time' "uc# actuation o% Pan 7m ma! indeed #ave een prompted ! not#ing
more t#an t#e promotion o% its se&%= interest in #o&ding on to "enator +ope* and part! as passengers in its
%&ig#t and %orec&osing on t#eir c#ances to seek t#e services o% ot#er air&ines t#at ma! #ave een a&e to a%%ord
t#em %irst c&ass accommodations' 7&& t#e same, in &ega& contemp&ation suc# conduct a&read! amounts to action
in ad %ait#'
3. 8t)er ,acts )i*)li*)tin* $a+ ,ait)
7t t#e time t#e +ope*es oug#t t#eir tickets, de%endant, t#ere%ore, in reac# o% its known dut!, made
t#e +ope*es e&ieve t#at t#eir reservations #ad not een cance&&ed' 7n additiona& indication o% t#is is t#e %act
t#at upon t#e %ace o% t#e two tickets o% record, name&!, t#e ticket issued to 7&%redo Monte&iano, Jr' on 81
Ma! 1.>2 and t#at issued to Mrs' 7&%redo Monte&iano, Jr', on 83 Ma! 1.>2, t#e reservation status is stated as
;(P<' "uc# wi&&%u& non=disc&osure o% t#e cance&&ation or pretense t#at t#e reservations %or t#e +ope*es stood,
and not simp&! t#e erroneous cance&&ation itse&%, is t#e %actor to w#ic# is attriuta&e t#e reac# o% t#e
resu&ting contracts' 7s i% to %urt#er emp#asi*e its ad %ait# on t#e matter, Pan 7m suse9uent&! promoted t#e
emp&o!ee w#o cance&&ed t#e +ope*es? reservations and to&d t#em not#ing aout it' T#e record s#ows t#at said
emp&o!ee, Mariano @erran*, was not suAected to investigation and suspension ! de%endant ut instead was
given a reward in t#e %orm o% an increase o% sa&ar! in June o% t#e %o&&owing !ear'
/. 5r*uen+o! #istakes6 7e*li*ence so *ross an+ reckless a#ounts to #alice or $a+ ,ait)
7t an! rate, granting a&& t#e mistakes advanced ! Pan 7m, t#ere wou&d at &east e neg&igence so
gross and reck&ess as to amount to ma&ice or ad %ait#' First&!, notwit#standing entries in t#e reservation cards
t#at t#e reservations cance&&ed are t#ose o% t#e :u%inos on&!, @erran* made t#e mistake, a%ter reading said
entries, o% sending a wire cance&&ing a&& t#e reservations, inc&uding t#ose o% "enator +ope* and part!'
"econd&!, a%ter sending a wire to "an Francisco #ead o%%ice on 1. 7pri& 1.>2 stating #is error and asking %or
reinstatement, @erran* simp&! %orgot aout t#e matter' Eotwit#standing t#e rep&! o% "an Francisco #ead o%%ice
in 88 7pri& 1.>2 t#at it cannot reinstate "enator +ope* and part!, it was assumed and taken %or granted t#at
reinstatement wou&d e made' T#ird&!, 7rmando Davi&a con%irmed t#e +ope*es? reservation in a p#one ca&& on
80 7pri& 1.>2 to Pan 7m?s ticket se&&ers, w#en at t#e time it appeared in t#e +ope*es? reservation card t#at
t#e! were on&! wait=&isted passengers' Fourt#&!, Pan 7m?s ticket se&&ers issued t#e +ope*es? tickets on Ma! 81
and 83, 1.>2, wit#out %irst c#ecking t#eir reservations Aust e%ore issuing said tickets' 7nd, %ina&&!, not one
among Pan 7m?s agents noti%ied "enator +ope* and part! t#at t#eir reservations #ad een cance&&ed, a
precaution t#at cou&d #ave averted t#eir entering wit# Pan 7m into contracts t#at t#e &atter #ad a&read! p&aced
e!ond its power to per%orm'
2. E)at is a+#itte+ in t)e course o, t)e trial +oes not nee+ to $e prove+
T#ere eing a c&ear admission in de%endant?s evidence o% %acts amounting to ad %ait# on its part in
regard to t#e reac# o% its contracts wit# t#e +ope*es, it ecomes unnecessar! to %urt#er discuss t#e evidence
adduced ! t#e +ope*es to esta&is# Pan 7m?s ad %ait#' For w#at is admitted in t#e course o% t#e tria& does
not need to e proved ("ec' 8, :u&e 18., :u&es o% $ourt)'
. Rules an+ principles as to +a#a*es an+ attorney1s ,ees
First, mora& damages are recovera&e in reac# o% contracts w#ere t#e de%endant acted %raudu&ent&! or
in ad %ait# (7rt' 8882, Eew $ivi& $ode)' "econd, in addition to mora& damages, e3emp&ar! or corrective
damages ma! e imposed ! wa! o% e3amp&e or correction %or t#e pu&ic good, in reac# o% contract w#ere
t#e de%endant acted in a wanton, %raudu&ent, reck&ess, oppressive or ma&evo&ent manner (7rtic&es 888., 8838,
Eew $ivi& $ode)' 7nd, t#ird, a written contract %or an attorne!?s services s#a&& contro& t#e amount to e paid
t#ere%or un&ess %ound ! t#e court to e unconsciona&e or unreasona&e ("ec' 85, :u&e 13/, :u&es o% $ourt)'
3. =oral +a#a*es
7s a pro3imate resu&t o% Pan 7m?s reac# in ad %ait# o% its contracts wit# t#e +ope*es? t#e &atter
su%%ered socia& #umi&iation, wounded %ee&ings, serious an3iet! and menta& anguis#' ,t ma! not e #umi&iating
to trave& as tourist passengersC it is #umi&iating to e compe&&ed to trave& as suc#, contrar! to w#at is rig#t%u&&!
to e e3pected %rom t#e contractua& undertaking'
4. =oral +a#a*es6 Hu#iliation in relation to status (Senator LopeJ)
"enator +ope* was t#en "enate President Pro Tempore' ,nternationa& carriers &ike Pan 7m know t#e
prestige o% suc# an o%%ice' For t#e "enate is not on&! t#e Dpper $#amer o% t#e P#i&ippine $ongress, ut t#e
nation?s treat!=rati%!ing od!' ,t ma! a&so e mentioned t#at in #is (%%ice "enator +ope* was in a position to
preside in impeac#ment cases s#ou&d t#e "enate sit as impeac#ment Triuna&' 7nd #e was %ormer Vice=
President o% t#e P#i&ippines' "enator +ope* was going to t#e Dnited "tates to attend a private usiness
con%erence o% t#e 1ina&angan=,sae&a "ugar $ompan!C ut #is a%oresaid rank and position were ! no means
&e%t e#ind, and in %act #e #ad a second engagement awaiting #im in t#e Dnited "tatesC a an9uet tendered !
Fi&ipino %riends in #is #onor as "enate President Pro Tempore' For t#e mora& damages sustained ! #im,
t#ere%ore, an award o% P122,222,222 is appropriate'
%. =oral +a#a*es6 :)ysical +isco#,ort (=rs. =aria LopeJ)
Mrs' Maria J' +ope*, as wi%e o% "enator +ope*, s#ared #is prestige and t#ere%ore #is #umi&iation' ,n
addition, s#e su%%ered p#!sica& discom%ort during t#e 13=#our trip (4 #ours %rom Tok!o to @ono&u&u and /
#ours %rom @ono&u&u to "an Francisco)' 7&t#oug# "enator +ope* stated t#at ;s#e was 9uite we&&,< #e
ovious&! meant re&ative&! we&&, since t#e rest o% #is statement is t#at two mont#s e%ore, s#e was attacked !
severe %&u and &ost 12 pounds o% weig#t and t#at s#e was advised ! Dr' "ison to go to t#e Dnited "tates as
soon as possi&e %or medica& c#eck=up and re&a3ation' ,n %act, "enator +ope* stated, as s#own a %ew pages
a%ter in t#e transcript o% #is testimon!, t#at Mrs' +ope* was sick w#en s#e &e%t t#e P#i&ippines' ,t is not #ard to
see t#at in #er condition t#en a p#!sica& discom%ort sustained %or t#irteen #ours ma! we&& e considered a
p#!sica& su%%ering' 7nd even wit#out regard to t#e noise and trepidation inside t#e p&ane, t#e %act t#at t#e
seating spaces in t#e tourist c&ass are 9uite narrower t#an in %irst c&ass, t#ere eing si3 seats to a row in t#e
%ormer as against %our to a row in t#e &atter, and t#at in tourist c&ass t#ere is ver! &itt&e space %or rec&ining in
view o% t#e c&oser distance etween rows, wi&& su%%ice to s#ow t#at t#e a%oresaid passenger indeed e3perienced
p#!sica& su%%ering during t#e trip' 7dded to t#is, o% course, was t#e pain%u& t#oug#t t#at s#e was deprived !
Pan7m, ater #aving paid %or and e3pected t#e same,% t#e most suita&e p&ace %or #er, t#e %irst c&ass, w#ere
evident&! t#e est o% ever!t#ing wou&d #ave een given #er, t#e est seat, service, %ood and treatment' "uc#
di%%erence in com%ort etween %irst c&ass and tourist c&ass is too ovious to e recounted, is in %act t#e reason
%or t#e %ormer?s e3istence, and is recogni*ed ! t#e air&ine in c#arging a #ig#er %are %or it and ! t#e
passengers in pa!ing said #ig#er rate' 7ccording&!, considering t#e tota&it! o% #er su%%ering and #umi&iation,
an award to Mrs' Maria J' +ope* o% P42,222'22 %or mora& damages wi&& e reasona&e'
1". =oral +a#a*es6 S)are+ presti*e (=r. M =rs. =onteli$ano)
Mr' and Mrs' 7&%redo Monte&iano, Jr', were trave&ing as immediate memers o% t#e %ami&! o% "enator
+ope*' T#e! %ormed part o% t#e "enator?s part! as s#own a&so ! t#e reservation cards o% P7E 7M' 7s suc#
t#e! &ikewise s#ared #is prestige and #umi&iation' 7&t#oug# Pan 7m contends t#at a %ew weeks e%ore t#e
%&ig#t t#e! #ad asked t#eir reservations to e c#anged %rom %irst c&ass to tourist c&ass, w#ic# did not
materia&i*e, t#e same does not mean t#e! su%%ered no s#ame in #aving to take tourist c&ass during t#e %&ig#t'
For ! t#at time t#e! #ad a&read! een made to pa! %or %irst c&ass seats and t#ere%ore to e3pect %irst c&ass
accommodations' 7s stated, it is one t#ing to take t#e tourist c&ass ! %ree c#oiceC a %ar di%%erent t#ing to e
compe&&ed to take it notwit#standing #aving paid %or %irst c&ass seats' 7s noted in t#eir motion %or
reconsideration %i&ed in t#e court a 9uo, t#e! were satis%ied wit# P84,222'22 eac# %or said persons' For t#eir
socia& #umi&iation, t#ere%ore, t#e award to t#em o% P84,222'22 is reasona&e'
11. Rationale $e)in+ exe#plary or corrective +a#a*es6 :an 5# lia$le ,or exe#plary or corrective
+a#a*es
T#e rationa&e e#ind e3emp&ar! or corrective damages is, as t#e name imp&ies, to provide an e3amp&e
or correction %or pu&ic good' Pan 7m #aving reac#ed its contracts in ad %ait#, t#e court ma! award
e3emp&ar! damages in addition to mora& damages (7rtic&es 888., 8838, Eew $ivi& $ode)' ,n view o% its
nature, it s#ou&d e imposed in suc# an amount as to su%%icient&! and e%%ective&! deter simi&ar reac# o%
contracts in t#e %uture ! Pan 7m or ot#er air&ines' ,n t#is &ig#t, we %ind it Aust to award P04,222'22 as
e3emp&ar! or corrective damages'
1-. 5ttorney1s ,ees +ue6 Eritten contract controls a#ount to $e pai+ unless unconsciona$le or
unreasona$le
7s to attorne!?s %ees, t#e record s#ows a written contract o% services e3ecuted on 1 June 1.>2
w#ereunder t#e +ope*es engaged t#e services o% t#eir counse&, 7tt!' Vicente J, Francisco, and agreed to pa!
t#e sum o% P84,222'22 as attorne!?s %ees upon t#e termination o% t#e case in t#e $F,, and an additiona& sum o%
P84,222'22 in t#e event t#e case is appea&ed to t#e "upreme $ourt' 7 written contract %or attorne!?s services
s#a&& contro& t#e amount to e paid t#ere%or un&ess %ound ! t#e court to e unconsciona&e or unreasona&e'
13. 5ttorney1s ,ees +ue6 :ro,essional stan+in* o, la.yer an+ extent o, services ren+ere+ $y )i#
7 consideration o% t#e suAect matter o% t#e present controvers!, o% t#e pro%essiona& standing o% t#e
attorne! %or t#e +ope*es, and o% t#e e3tent o% t#e services rendered ! #im, s#ows t#at said amount provided
%or in t#e written agreement is reasona&e' "aid &aw!er, w#ose prominence in t#e &ega& pro%ession is we&&
known, studied t#e case, prepared and %i&ed t#e comp&aint, con%erred wit# witnesses, ana&!*ed documentar!
evidence, persona&&! appeared at t#e tria& o% t#e case in 88 da!s, during a period o% 3 !ears, prepared 5 sets o%
cross=interrogatories %or deposition taking, prepared severa& memoranda and t#e motion %or reconsideration,
%i&ed a Aoint record on appea& wit# Pan 7m, %i&ed a rie% %or t#e +ope*es as appe&&ants consisting o% 54 printed
pages and a rie% %or t#e +ope*es as appe&&ees consisting o% 8>4 printed pages' T#e reasona&eness o% t#e
amount is c&ear ecause Pan 7m?s counse& &ikewise va&ued at P42,222'22 t#e proper compensation %or #is
services rendered to Pan 7m in t#e tria& court and on appea&'
1/. <eter#ination o, t)e a#ounts ?usti,ie+
T#e amount o% damages awarded in t#is appea& #as een determined ! ade9uate&! considering t#e
o%%icia&, po&itica&, socia&, and %inancia& standing o% t#e o%%ended parties on one #and, and t#e usiness and
%inancia& position o% t#e o%%ender on t#e ot#er' Furt#er considering t#e present rate o% e3c#ange and t#e terms
at w#ic# t#e amount o% damages awarded wou&d appro3imate&! e in D'"' do&&ars, t#e $ourt is a&& t#e more o%
t#e view t#at said award is proper and reasona&e'
[---]
:an 5#erican Eorl+ 5ir.ays vs. ;5C (GR L>3"/-! 11 5u*ust 1%44)
T#ird Division, $ortes (J): 3 concur, 1 on &eave
&acts' (n 84 7pri& 1.0/, :ene V' Pangan, president and genera& manager o% t#e "otang 1astos and 7rc#er
Productions, w#i&e in "an Francisco, $a&i%ornia and Primo Nuesada o% Prime Fi&ms, "an Francisco,
$a&i%ornia, entered into an agreement w#ere! t#e %ormer, %or and in consideration o% t#e amount o% D"
K8,422'22 per picture, ound #imse&% to supp&! t#e &atter wit# t#ree %i&ms' G7ng Maait, Masungit at ang
Pangit,? G1ig @appening wit# $#ikiting and ,king,? and GPama& Dragon? %or e3#iition in t#e Dnited "tates'
,t was a&so t#eir agreement t#at Pangan, et' a&' wou&d provide t#e necessar! promotiona& and advertising
materia&s %or said %i&ms on or e%ore 32 Ma! 1.0/' (n #is wa! #ome to t#e P#i&ippines, Pangan visited 6uam
w#ere #e contacted +eo "&utc#nick o% t#e @a%a 7dai (rgani*ation' Pangan &ikewise entered into a vera&
agreement wit# "&utc#nick %or t#e e3#iition o% two o% t#e %i&ms a at t#e @a%a 7dai T#eater in 6uam on 32
Ma! 1.0/ %or t#e consideration o% P0,222'22 per picture' Pangan undertook to provide t#e necessar!
promotiona& and advertising materia&s %or said %i&ms on or e%ore t#e e3#iition date on 32 Ma! 1.0/' 1!
virtue o% t#e agreements, Pangan caused t#e preparation o% t#e re9uisite promotiona& #andi&&s and sti&&
pictures %or w#ic# #e paid t#e tota& sum o% P18,.22'22' +ikewise in preparation %or #is trip aroad to comp&!
wit# #is contracts, Pangan purc#ased 15 c&utc# ags, 5 capi* &amps and 5 arong taga&og, wit# a tota& va&ue o%
P5,522'22' (n 1/ Ma! 1.0/, Pangan otained %rom Pan 7m?s Mani&a (%%ice, t#roug# t#e Oour Trave& 6uide,
an econom! c&ass airp&ane ticket 28>.82052>385 %or passage %rom Mani&a to 6uam on Pan 7m?s F&ig#t /58
o% 80 Ma! 1.0/, upon pa!ment ! Pangan o% t#e regu&ar %are' T#e Oour Trave& 6uide is a tour and trave&
o%%ice owned and managed ! p&ainti%%s witness Mi&a de &a :ama' (n 80 Ma! 1.0/, two #ours e%ore
departure time Pangan was at Pan 7m?s ticket counter at t#e Mani&a ,nternationa& 7irport and presented #is
ticket and c#ecked in #is two &uggages, %or w#ic# #e was given aggage c&aim tickets .>3>33 and .>3>5.'
T#e two &uggages contained t#e promotiona& and advertising materia&s, t#e c&utc# ags, arong taga&og and
#is persona& e&ongings' "use9uent&!, Pangan was in%ormed t#at #is name was not in t#e mani%est and so #e
cou&d not take F&ig#t /58 in t#e econom! c&ass' "ince t#ere was no space in t#e econom! c&ass, Pangan took
t#e %irst c&ass ecause #e wanted to e on time in 6uam to comp&! wit# #is commitment, pa!ing an additiona&
sum o% K118'22' F#en Pangan arrived in 6uam on t#e date o% 80 Ma! 1.0/, #is two &uggages did not arrive
wit# #is %&ig#t, as a conse9uence o% w#ic# #is agreements wit# "&utc#nick and Nuesada %or t#e e3#iition o%
t#e %i&ms in 6uam and in t#e Dnited "tates were cance&&ed' T#erea%ter, #e %i&ed a written c&aim %or #is missing
&uggages' Dpon arriva& in t#e P#i&ippines, Pangan contacted #is &aw!er, w#o made t#e necessar!
representations to protest as to t#e treatment w#ic# #e received %rom t#e emp&o!ees o% Pan 7m and t#e &oss o%
#is two &uggages' Pan 7m assured Pangan t#at #is grievances wou&d e investigated and given its immediate
consideration'
Due to Pan 7m?s %ai&ure to communicate wit# Pangan aout t#e action taken on #is protests, a comp&aint was
%i&ed ! Pangan' T#e $F, %ound Pan 7m &ia&e and (1) ordered Pan 7m to pa! Pangan, et' a&' t#e sum o%
P/3,222'22, %or actua& damages, wit# interest t#ereon at t#e rate o% 15I per annum %rom > Decemer 1.0/,
w#en t#e comp&aint was %i&ed, unti& t#e same is %u&&! paid, p&us t#e %urt#er sum o% P12,222'22 as attorne!?s
%eesC (8) ordered Pan 7m to pa! Pangan t#e sum o% P/,183'35, %or additiona& actua& damages, wit# interest
t#ereon at t#e rate o% 15I per annum %rom > Decemer 1.0/, unti& t#e same is %u&&! paidC (3) dismissed t#e
counterc&aim interposed ! Pan=7mC and (5) ordered Pan=7m to pa! t#e costs o% suit'
(n appea&, t#e t#en ,ntermediate 7ppe&&ate $ourt a%%irmed t#e tria& court decision' @ence, t#e petition %or
review'
T#e "upreme $ourt granted t#e Petition, set aside t#e Decision o% t#e ,ntermediate 7ppe&&ate $ourt, and
rendered a new Audgment ordering Pan 7m to pa! Pangan damages in t#e amount o% D"K>22'22 or its
e9uiva&ent in P#i&ippine currenc! at t#e time o% actua& pa!ment'
1. :ertinent Con+ition o, Carria*e printe+ at t)e $ack o, t)e ticket
T#e pertinent $ondition o% $arriage printed at t#e ack o% t#e p&ane ticket reads: ;(/) 176676B
+,71,+,TO ' ' ' T#e tota& &iai&it! o% t#e $arrier %or &ost or damage aggage o% t#e passenger is +,M,TBD T(
P122'22 %or eac# ticket un&ess a passenger dec&ares a #ig#er va&uation in e3cess o% P122'22, ut not in e3cess,
#owever, o% a tota& va&uation o% P1,222'22 and additiona& c#arges are paid pursuant to $arrier?s tari%%s'<
-. 8n* Hiu case applica$le
,n t#e case o% (ng Oiu v' $ourt o% 7ppea&s L6':' Eo' +=524.0, June 8., 1.0., .1 "$:7 883), t#e
$ourt sustained t#e va&idit! o% a printed stipu&ation at t#e ack o% an air&ine ticket &imiting t#e &iai&it! o% t#e
carrier %or &ost aggage to a speci%ied amount and ru&ed t#at t#e carrier?s &iai&it! was &imited to said amount
since t#e passenger did not dec&are a #ig#er va&ue, muc# &ess pa! additiona& c#arges' T#e ru&ing in (ng Oiu
s9uare&! app&ica&e to t#e instant case' @erein, on t#e asis o% t#e stipu&ations printed at t#e ack o% t#e ticket,
Pan 7m?s &iai&it! %or t#e &ost aggage o% Pangan is &imited to K>22'22 (K82'22 3 32 ki&os) as t#e &atter did not
dec&are a #ig#er va&ue %or #is aggage and pa! t#e corresponding additiona& c#arges' Pangan did not dec&are
an! #ig#er va&ue %or #is &uggage, muc# &ess did #e pa! an! additiona& transportation c#arge'
3. :rovisions in plane ticket a contract o, a+)esion6 Contracts o, a+)esion not entirely pro)i$ite+
F#i&e it ma! e true t#at Pangan #ad not signed t#e p&ane ticket (7rtic&e 1042), #e is nevert#e&ess
ound ! t#e provisions t#ereo%' "uc# provisions #ave een #e&d to e a part o% t#e contract o% carriage, and
va&id and inding upon t#e passenger regard&ess o% t#e &atter?s &ack o% know&edge or assent to t#e regu&ation' ,t
is w#at is known as a contract o% ;ad#esion,< in regards w#ic# it #as een said t#at contracts o% ad#esion
w#erein one part! imposes a read! made %orm o% contract on t#e ot#er, as t#e p&ane ticket, are contracts not
entire&! pro#iited' T#e one w#o ad#eres to t#e contract is in rea&it! %ree to reAect it entire&!C i% #e ad#eres, #e
gives #is consent' 7nd as #e&d in :ando&p# v' 7merican 7ir&ines (123 (#io 7pp' 108, 155 E'B' 8d /0/) and
:osenc#ein v' Trans For&d 7ir&ines, ,nc' (35. "'F' 8d 5/3), ;a contract &imiting &iai&it! upon an agreed
va&uation does not o%%end against t#e po&ic! o% t#e &aw %oridding one %rom contracting against #is own
neg&igence'<
/. S)e.ara# case not applica$le
T#e ru&ing in "#ewaram v' P#i&ippine 7ir +ines, ,nc' L6':' Eo' +=822.., Ju&! 8, 1.>>, 10 "$:7
>2>M, w#ere t#e $ourt #e&d t#at t#e stipu&ation &imiting t#e carrier?s &iai&it! to a speci%ied amount was inva&id,
%inds no app&ication in t#e instant case, as t#e ru&ing in said case was premised on t#e %inding t#at t#e
conditions printed at t#e ack o% t#e ticket were so sma&& and #ard to read t#at t#e! wou&d not warrant t#e
presumption t#at t#e passenger was aware o% t#e conditions and t#at #e #ad %ree&! and %air&! agreed t#ereto'
@erein, simi&ar %acts t#at wou&d make t#e case %a&& under t#e e3ception #ave not een a&&eged, muc# &ess
s#own to e3ist'
2. Clari,ication o, t)e 7ort).est 5irlines case .)ic) .as relie+ upon $y t)e Court o, 5ppeals
T#e $ourt o% 7ppea&?s re&iance on a 9uotation %rom Eort#west 7ir&ines, ,nc' v' $uenca L6':' Eo' +=
88584, 7ugust 31, 1.>4, 15 "$:7 12>3M to sustain t#e view t#at ;to app&! t#e Farsaw $onvention w#ic#
&imits a carrier?s &iai&it! to D"K.'20 per pound or D"K82'22 per ki&o in cases o% contractua& reac# o%
carriage is against pu&ic po&ic!< is utter&! misp&aced' T#e $ourt never intended to, and in %act never did, ru&e
against t#e va&idit! o% provisions o% t#e Farsaw $onvention' $onse9uent&!, ! no stretc# o% t#e imagination
ma! said 9uotation %rom Eort#west e considered as supportive o% t#e appe&&ate court?s statement t#at t#e
provisions o% t#e Farsaw $onvention &imited a carrier?s &iai&it! are against pu&ic po&ic!'
. :an 5# not lia$le ,or lost pro,its .)en ,il# s)o.in* contracts .ere cancelle+6 =en+oJa vs.
:5L
T#e $ourt %inds itse&% una&e to agree wit# t#e decision o% t#e tria& court, and a%%irmed ! t#e $ourt o%
7ppea&s, awarding Pangan damages as and %or &ost pro%its w#en t#eir contracts to s#ow t#e %i&ms in 6uam and
"an Francisco, $a&i%ornia were cance&&ed' T#e ru&e &aid down in Mendo*a v' P#i&ippine 7ir +ines, ,nc' L.2
P#i&' /3> (1.48)M cannot e an! c&earer: ;Dnder 7rt' 1120 o% t#e $ivi& $ode, a detor in good %ait# ma! e
#e&d &ia&e on&! %or damages t#at were %oreseen or mig#t #ave een %oreseen at t#e time t#e contract o%
transportation was entered into'< @erein, in t#e asence o% a s#owing t#at Pan 7m?s attention was ca&&ed to t#e
specia& circumstances re9uiring prompt de&iver! o% Pangan?s &uggages, Pan 7m cannot e #e&d &ia&e %or t#e
cance&&ation o% Pangan?s contracts as it cou&d not #ave %oreseen suc# an eventua&it! w#en it accepted t#e
&uggages %or transit'
3. Re9uisite ,or lia$ility ,or special +a#a*es6 C)ap#an vs. &ar*o! L.R.5. (1%14 &! p. 1"/%)
1e%ore de%endant cou&d e #e&d to specia& damages suc# as t#e present a&&eged &oss o% pro%its on
account o% de&a! or %ai&ure o% de&iver! it must #ave appeared t#at #e #ad notice at t#e time o% de&iver! to #im
o% t#e particu&ar circumstances attending t#e s#ipment and w#ic# proa&! wou&d &ead to suc# specia& &oss i%
#e de%au&ted' (r, as t#e ru&e #as een stated in anot#er %orm in order to impose on t#e de%au&ting part! %urt#er
&iai&it! t#an %or damages natura&&! and direct&! i'e', in t#e ordinar! course o% t#ings arising %rom a reac# o%
contract suc# unusua& or e3traordinar! damages must #ave een roug#t wit#in t#e contemp&ation o% t#e
parties as t#e proa&e resu&t o% reac# at t#e time o% or prior to contracting' 6enera&&! notice t#en o% an!
specia& circumstances w#ic# wi&& s#ow t#at t#e damages to e anticipated %rom a reac# wou&d e en#anced
#as een #e&d su%%icient %ar t#is e%%ect' T#e attention o% t#e common carrier must e ca&&ed to t#e nature o% t#e
artic&es s#ipped, t#e purpose o% s#ipment, and t#e desire to rus# t#e s#ipment'
4. :roxi#ate cause o, t)e cancellation o, t)e contracts
T#e evidence revea&s t#at t#e pro3imate cause o% t#e cance&&ation o% t#e contracts was Pangan?s
%ai&ure to de&iver t#e promotiona& and advertising materia&s on t#e dates agreed upon' For t#is, Pan 7m cannot
e #e&d &ia&e' Pangan #ad not dec&ared t#e va&ue o% t#e two &uggages #e #ad c#ecked in and paid additiona&
c#arges' Eeit#er was Pan 7m priv! to Pangan?s contracts nor was its attention ca&&ed to t#e condition t#erein
re9uiring de&iver! o% t#e promotiona& and advertising materia&s on or e%ore a certain date'
%. 5.ar+ o, attorney1s ,ees lost support
Fit# t#e $ourt?s #o&ding t#at Pan 7m?s &iai&it! is &imited to t#e amount stated in t#e ticket, t#e award
o% attorne!?s %ees, w#ic# is grounded on t#e a&&eged unAusti%ied re%usa& o% petitioner to satis%! Pangan?s Aust
and va&id c&aim, &oses support and must e set aside'
[--3]
Luna vs. C5 (GR 1""33/>32! -3 7ove#$er 1%%-)
First Division, 1e&&osi&&o (J): 3 concur
&acts' (n 1. Ma! 1./., at around /:22 a'm', :u%ino +una, :odo&%o 7&onso and Por%irio :odrigue* oarded
F&ig#t 282 o% Eort#west 7ir&ines ound %or "eou&, "out# Porea, to attend t#e 5=da! :otar! ,nternationa&
$onvention %rom t#e 81st to t#e 85t# o% Ma! 1..8' T#e! c#ecked in 1 piece o% &uggage eac#' 7%ter oarding,
#owever, due to engine trou&e, t#e! were asked to disemark and trans%er to a Porean 7ir&ines p&ane
sc#edu&ed to depart 5 #ours &ater' T#e! were assured t#at t#eir aggage wou&d e wit# t#em in t#e same %&ig#t'
F#en t#e! arrived in "eou&, t#e! discovered t#at t#eir persona& e&ongings were now#ere to e %oundC
instead, t#e! were a&&eged&! %&own to "eatt&e, D"7' ,t was not unti& 5 da!s &ater, and on&! a%ter repeated
representations wit# Eort#west 7ir&ines personne& at t#e airport in Porea were t#e! a&e to retrieve t#eir
&uggage' 1! t#en t#e $onvention, w#ic# t#e! were #ard&! a&e to attend, was a&most over' :u%ino O' +una and
:odo&%o J' 7&onso assert t#at on > June 1./., or 13 da!s a%ter t#e! recovered t#eir &uggage, t#e! sent a written
c&aim to t#e carrier?s o%%ice a&ong :o3as 1&vd', Brmita, Mani&a' Por%irio :odrigue*, on #is part, asseverates
t#at #e %i&ed #is c&aim on 13 June 1./.' @owever, t#e carrier, in a &etter o% 81 June 1./., disowned an!
&iai&it! %or t#e de&a! and averred t#at it e3erted ;its est e%%orts to carr! t#e passenger and aggage wit#
reasona&e dispatc#'<
(n 15 Ju&! 1./., +una and 7&onso Aoint&! %i&ed a comp&aint %or reac# o% contract wit# damages e%ore t#e
:T$ o% Pasig, Metro Mani&a ($ivi& $ase 4/3.2, 1ranc# >.), w#i&e :odrigue* %i&ed #is own comp&aint wit#
t#e :T$ o% Va&en*ue&a, Metro Mani&a ($ivi& $ase 31.5=V=/., 1ranc# 108)' @owever, upon motion o% t#e
carrier, ot# comp&aints were dismissed %or &ack o% cause o% action due to +una, et'a&'?s %ai&ure to state in t#eir
respective comp&aints t#at t#e! %i&ed a prior c&aim wit# t#e carrier wit#in t#e prescried period'
+una and 7&onso t#en %i&ed a petition %or certiorari e%ore t#e $ourt o% 7ppea&s to set aside t#e order o% Judge
$ristina M' Bstrada granting t#e carrier?s motion to dismiss, w#i&e :odrigue* proceeded direct&! to t#e
"upreme $ourt on $ertiorari %or t#e same purpose' @owever, in t#e $ourt?s reso&ution o% 8> Feruar! 1..2,
t#e "upreme $ourt re%erred :odrigue*? petition to t#e $ourt o% 7ppea&s' (n 8> Marc# 1..1, t#e T#ird
Division o% t#e $ourt o% 7ppea&s, app&!ing t#e provisions o% t#e Farsaw $onvention and ru&ing t#at certiorari
was not a sustitute %or a &ost appea&, dismissed t#e petition o% +una and 7&onso, and on 0 June 1..1 denied
t#eir motion %or reconsideration' Meanw#i&e, on 8/ Feruar! 1..1 t#e "event# Division o% t#e $ourt o%
7ppea&s, ru&ing t#at t#e 9uestioned order o% t#e tria& court #ad a&read! ecome %ina&, simi&ar&! reAected t#e
petition o% :odrigue*, and on > June 1..1 denied #is motion %or reconsideration' @ence, t#e Aoint petition %or
T#e "upreme $ourt reversed and set aside t#e assai&ed decisions and reso&utions o% t#e $ourt o% 7ppea&sC and
reinstated given due course unti& terminated t#e comp&aints %or reac# o% contract o% carriage wit# damages in
$ivi& $ase 31.5=V=/. and $ivi& $ase 4/3.2 dismissed ! Judges Teresita D' $apu&ong and $ristina M'
Bstrada, respective&!C wit#out costs'
1. (ec)nicalities s)oul+ $e +isre*ar+e+ i, only to ren+er to t)e parties t)at .)ic) is t)eir +ue
Eort#west 7ir&ines %ai&ed to de&iver t#e aggages o% +una, 7&onso, and :odrigue* at t#e designated
time and p&ace' For t#is, a&& t#at carrier cou&d sa! was t#at it e3erted a&& e%%orts to comp&! wit# t#is condition
o% t#e contract' @ence, it is evident t#at t#e %ormer su%%ered some specia& specie o% inAur! %or w#ic# t#e!
s#ou&d rig#t&! e compensated' T#e carrier cannot e a&&owed to escape &iai&it! ! seeking re%uge in t#e
argument t#at t#e tria& courts? orders #ave attained %ina&it! due to t#e %ormer?s %ai&ure to move %or
reconsideration or to %i&e a time&! appea& t#ere%rom' Tec#nica&ities s#ou&d e disregarded i% on&! to render to
t#e respective parties t#at w#ic# is t#eir due'
-. Certiorari not su$stitute to a lapse+ appeal6 Relaxation o, t)e rule
7&t#oug# certiorari cannot e a sustitute %or a &apsed appea&, w#ere a rigid app&ication o% t#at ru&e
wi&& resu&t in a mani%est %ai&ure or miscarriage o% Austice, t#e ru&e ma! e re&a3ed' $onsidering t#e roader and
primordia& interests o% Austice, particu&ar&! w#en t#ere is grave ause o% discretion, t#us impe&&ing occasiona&
departure %rom t#e genera& ru&e t#at t#e e3traordinar! writ o% certiorari cannot sustitute %or a &ost appea&, t#e
appe&&ate court ma! &ega&&! entertain t#e specia& civi& action %or certiorari'
3. Earsa. Convention )as ,orce an+ e,,ect in t)e :)ilippines6 Convention +oes not operate as an
exclusive enu#eration o, carrier1s lia$ility an+ t)e extent t)ereo,6 Convention +oes not preclu+e Civil
Co+e an+ ot)er la.s
T#e Farsaw $onvention was a treat! commitment vo&untari&! assumed ! t#e P#i&ippine
governmentC conse9uent&!, it #as t#e %orce and e%%ect o% &aw in t#is countr!' 1ut, in t#e same token, t#e
Farsaw $onvention does not operate as an e3c&usive enumeration o% t#e instances %or dec&aring an air&ine
&ia&e %or reac# o% contract o% carriage or as an aso&ute &imit o% t#e e3tent o% t#at &iai&it!' T#e $onvention
mere&! dec&ares t#e carrier &ia&e %or damages in t#e enumerated cases, i% t#e conditions t#erein speci%ied are
present' For sure, it does not regu&ate t#e &iai&it!, muc# &ess e3empt, t#e carrier %or vio&ating t#e rig#ts o%
ot#ers w#ic# must simp&! e respected in accordance wit# t#eir contracts o% carriage' T#e app&ication o% t#e
$onvention must not t#ere%ore e construed to prec&ude t#e operation o% t#e $ivi& $ode and ot#er pertinent
&aws' ,n %act, in 7&ita&ia v' ,7$, t#e $ourt awarded Dr' Fe&ipa Pa&o nomina& damages, t#e provisions o% t#e
$onvention notwit#standing'
/. Carrier still lia$le ,or $reac) o, ot)er relative la.s .)ic) provi+e a +i,,erent perio+ o, ,ilin* o,
clai#
T#e a&&eged %ai&ure o% +una, 7&on*o and :odrigue* to %i&e a c&aim wit# t#e common carrier as
mandated ! t#e provisions o% t#e Farsaw $onvention s#ou&d not e a ground %or t#e summar! dismissa& o%
t#eir comp&aints since t#e carrier ma! sti&& e #e&d &ia&e %or reac# o% ot#er re&evant &aws w#ic# ma! provide
a di%%erent period or procedure %or %i&ing a c&aim' $onsidering t#at +una, et' a&' indeed %i&ed a c&aim w#ic# t#e
carrier admitted #aving received on 81 June 1./., t#eir demand ma! #ave ver! we&& een %i&ed wit#in t#e
period prescried ! t#ose app&ica&e &aws'
2. 5rticle -2 o, t)e Convention +oes not exclu+e ot)er provisions o, t)e Convention
7rtic&e 84 o% t#e $onvention does not operate to e3c&ude t#e ot#er provisions o% t#e $onvention i%
damage is caused ! t#e common carrier?s wi&&%u& misconduct' 7rtic&e 84 re%ers on&! to t#e monetar! cei&ing
on damages %ound in 7rtic&e 88 s#ou&d damage e caused ! carrier?s wi&&%u& misconduct' @ence, on&! t#e
provisions o% 7rtic&e 88 &imiting t#e carrier?s &iai&it! and imposing a monetar! cei&ing in case o% wi&&%u&
misconduct on its part t#at t#e carrier cannot invoke'
. Eill,ul #iscon+uct! )o. s)o.n
T#e %ai&ure o% t#e carrier to de&iver t#eir &uggage at t#e designated time and p&ace does not amount
ipso %acto to wi&&%u& misconduct' For wi&&%u& misconduct to e3ist, t#ere must e a s#owing t#at t#e acts
comp&ained o% were impe&&ed ! an intention to vio&ate t#e &aw, or were in persistent disregard o% one?s rig#ts'
,t must e evidenced ! a %&agrant&! or s#ame%u&&! wrong or improper conduct'
[--/]
Santos vs. 7ort).est 8rient 5irlines (GR 1"1234! -3 Bune 1%%-)
Bn 1anc, $ru* (J): 13 concur
&acts' 7ugusto 1enedicto "antos ,,, is a minor and a resident o% t#e P#i&ippines' Eort#west (rient 7ir&ines
(E(7) is a %oreign corporation wit# principa& o%%ice in Minnesota, D'"'7', and &icensed to do usiness and
maintain a ranc# o%%ice in t#e P#i&ippines' (n 81 (ctoer 1./>, "antos purc#ased %rom E(7 a round=trip
ticket in "an Francisco, D'"'7', %or #is %&ig#t %rom "an Francisco to Mani&a via Tok!o and ack' T#e
sc#edu&ed departure date %rom Tok!o was 82 Decemer 1./>' Eo date was speci%ied %or #is return to "an
Francisco' (n 1. Decemer 1./>, "antos c#ecked in at t#e E(7 counter in t#e "an Francisco airport %or #is
sc#edu&ed departure to Mani&a' Despite a previous con%irmation and re=con%irmation, #e was in%ormed t#at #e
#ad no reservation %or #is %&ig#t %rom Tok!o to Mani&a' @e t#ere%ore #ad to e wait=&isted'
(n 18 Marc# 1./0, "antos, represented ! #is %at#er and &ega& guardian 7ugusto 1enedicto "antos, sued
E(7 %or damages in t#e :T$ Makati' (n 13 7pri& 1./0, E(7 moved to dismiss t#e comp&aint on t#e ground
o% &ack o% Aurisdiction' (n 1 Feruar! 1.//, t#e &ower court granted t#e motion and dismissed t#e case'
"antos appea&ed to t#e $ourt o% 7ppea&s, w#ic# a%%irmed t#e decision o% t#e &ower court' (n 8> June 1..1,
"antos %i&ed a motion %or reconsideration, ut t#e same was denied' "antos t#en came to t#e "upreme $ourt'
T#e "upreme $ourt denied t#e petition, wit# costs against "antos'
1. 5rticle -4 (1) o, t)e Earsa. Convention
7rtic&e 8/(1) o% t#e Farsaw $onvention, reads ;an action %or damage must e roug#t at t#e option o%
t#e p&ainti%%, in t#e territor! o% one o% t#e @ig# $ontracting Parties, eit#er e%ore t#e court o% t#e domici&e o%
t#e carrier or o% #is principa& p&ace o% usiness, or w#ere #e #as a p&ace o% usiness t#roug# w#ic# t#e contract
#as een made, or e%ore t#e court at t#e p&ace o% destination'<
-. Earsa. Convention )as ,orce an+ e,,ect in t)e :)ilippines6 History o, a+option
T#e :epu&ic o% t#e P#i&ippines is a part! to t#e $onvention %or t#e Dni%ication o% $ertain :u&es
:e&ating to ,nternationa& Transportation ! 7ir, ot#erwise known as t#e Farsaw $onvention' ,t took e%%ect on
13 Feruar! 1.33' T#e $onvention was concurred in ! t#e "enate, t#roug# its :eso&ution 1., on 1> Ma!
1.42' T#e P#i&ippine instrument o% accession was signed ! President B&pidio Nuirino on 13 (ctoer 1.42,
and was deposited wit# t#e Po&is# government on . Eovemer 1.42' T#e $onvention ecame app&ica&e to
t#e P#i&ippines on . Feruar! 1.41' (n 83 "eptemer 1.44, President :amon Magsa!sa! issued
Proc&amation 821, dec&aring our %orma& ad#erence t#ereto, to t#e end t#at t#e same and ever! artic&e and
c&ause t#ereo% ma! e oserved and %u&%i&&ed in good %ait# ! t#e :epu&ic o% t#e P#i&ippines and t#e citi*ens
t#ereo%' T#e $onvention is t#us a treat! commitment vo&untari&! assumed ! t#e P#i&ippine government and,
as suc#, #as t#e %orce and e%%ect o% &aw in t#is countr!'
3. Re9uisites o, a ?u+icial in9uiry over a constitutional 9uestion
$ourts wi&& assume Aurisdiction over a constitutiona& 9uestion on&! i% it is s#own t#at t#e essentia&
re9uisites o% a Audicia& in9uir! into suc# a 9uestion are %irst satis%ied' T#us, t#ere must e an actua& case or
controvers! invo&ving a con%&ict o% &ega& rig#ts suscepti&e o% Audicia& determinationC t#e constitutiona&
9uestion must #ave een opportune&! raised ! t#e proper part! and t#e reso&ution o% t#e 9uestion is
unavoida&! necessar! to t#e decision o% t#e case itse&%'
/. Bu+icial +esistance to +eci+e constitutional 9uestion6 Separation o, po.ers
$ourts genera&&! avoid #aving to decide constitutiona& 9uestion' T#is attitude is ased on t#e doctrine
o% separation o% powers, w#ic# enAoins upon t#e departments o% t#e government a ecoming respect %or eac#
ot#er?s acts' T#ere%ore, w#ere t#e case can e decided on ot#er grounds, t#ere wi&& e no necessit! o%
reso&ving t#e constitutiona& issue'
2. :resu#ption t)at a ?oint le*islative>executive act is care,ully stu+ie+
T#e treat! w#ic# is t#e suAect matter o% t#is petition was a Aoint &egis&ative=e3ecutive act' T#e
presumption is t#at it was %irst care%u&&! studied and determined to e constitutiona& e%ore it was adopted and
given t#e %orce o% &aw in t#is countr!'
. <octrine o, re$us sic stanti$us
7ccording to Jessup, ;t#is doctrine constitutes an attempt to %ormu&ate a &ega& princip&e w#ic# wou&d
Austi%! non=per%ormance o% a treat! o&igation i% t#e conditions wit# re&ation to w#ic# t#e parties contracted
#ave c#anged so materia&&! and so une3pected&! as to create a situation in w#ic# t#e e3action o% per%ormance
wou&d e unreasona&e'< T#e ke! e&ement o% t#is doctrine is t#e vita& c#ange in t#e condition o% t#e
contracting parties t#at t#e! cou&d not #ave %oreseen at t#e time t#e treat! was conc&uded'
3. ;ntent o, t)e Earsa. +ra,ters6 <ay v. (rans Eorl+ 5irlines! ;nc.
7s oserved in Da! vs' Trans For&d 7ir&ines, t#e Farsaw dra%ters wis#ed to create a s!stem o%
&iai&it! ru&es t#at wou&d cover a&& t#e #a*ards o% air trave&' T#e Farsaw de&egates knew t#at, in t#e !ears to
come, civi& aviation wou&d c#ange in wa!s t#at t#e! cou&d not %oresee' T#e! wis#ed to design a s!stem o% air
&aw t#at wou&d e ot# dura&e and %&e3i&e enoug# to keep pace wit# t#ese c#anges' T#e ever=c#anging needs
o% t#e s!stem o% civi& aviation can e served wit#in t#e %ramework t#e! created'
4. Circu#stance t)at airline in+ustry is in in,ancy .)en Convention .as +ra,ter +oes not .arrant
re?ection o, treaty
7&t#oug#t, it is true t#at at t#e time t#e Farsaw $onvention was dra%ted, t#e air&ine industr! was sti&&
in its in%anc!C t#at circumstance a&one is not su%%icient Austi%ication %or t#e reAection o% t#e treat! at t#is time'
$#anges were, rea&istica&&!, not entire&! un%oreseen a&t#oug# t#e! were e3pected in a genera& sense on&!'
%. 5rticle /1 o, t)e Earsa. Convention6 5nticipation o, +evelop#ents
7rtic&e 51 o% t#e $onvention provides t#at ;an! @ig# $ontracting Part! s#a&& e entit&ed not ear&ier
t#an two !ears a%ter t#e coming into %orce o% t#is convention to ca&& %or t#e assem&ing o% a new internationa&
con%erence in order to consider an! improvements w#ic# ma! e made in t#is convention' To t#is end, it wi&&
communicate wit# t#e 6overnment o% t#e Frenc# :epu&ic w#ic# wi&& take t#e necessar! measures to make
preparations %or suc# con%erence'<
1". Re?ection o, treaty necessitates ,or#al act o, re?ection
T#e treat! #as not een reAected ! t#e P#i&ippine government' T#e doctrine o% reus sic stantius
does not operate automatica&&! to render t#e treat! inoperative' T#ere is a necessit! %or a %orma& act o%
reAection, usua&&! made ! t#e #ead o% "tate, wit# a statement o% t#e reasons w#! comp&iance wit# t#e treat! is
no &onger re9uired'
11. 5rticle 3% o, t)e Earsa. Convention6 =anner in .)ic) t)e treaty is to $e +enounce+
T#e treat! ma! e denounced even wit#out an e3pressed Austi%ication %or t#is action' "uc#
denunciation is aut#ori*ed under its 7rtic&e 3., vi*: (1) 7n! one o% t#e @ig# $ontracting Parties ma!
denounce t#is convention ! a noti%ication addressed to t#e 6overnment o% t#e :epu&ic o% Po&and, w#ic#
s#a&& at once in%orm t#e 6overnment o% eac# o% t#e @ig# $ontracting Parties' (8) Denunciation s#a&& take
e%%ect si3 mont#s a%ter t#e noti%ication o% denunciation, and s#a&& operate on&! as regards t#e part! w#ic# s#a&&
#ave proceeded to denunciation'
1-. Re?ection o, a treaty not a ,unction o, t)e Court6 Scope o, po.ers o, t)e Bu+iciary
:eAection o% t#e treat!, w#et#er on t#e ground o% reus sic stantius or pursuant to 7rtic&e 3., is not a
%unction o% t#e courts ut o% t#e ot#er ranc#es o% government' T#is is a po&itica& act' T#e conc&usion and
renunciation o% treaties is t#e prerogative o% t#e po&itica& departments and ma! not e usurped ! t#e Audiciar!'
T#e courts are concerned on&! wit# t#e interpretation and app&ication o% &aws and treaties in %orce and not
wit# t#eir wisdom or e%%icac!'
13. Constitutional *uaranty o, access to courts re,er only to courts .it) appropriate ?uris+iction6
<octrine o, incorporation
T#e constitutiona& guarant! o% access to courts re%ers on&! to courts wit# appropriate Aurisdiction as
de%ined ! &aw' ,t does not mean t#at a person can go to an! court %or redress o% #is grievances regard&ess o%
t#e nature or va&ue o% #is c&aim' ,% t#e petitioner is arred %rom %i&ing #is comp&aint e%ore our courts, it is
ecause t#e! are not vested wit# t#e appropriate Aurisdiction under t#e Farsaw $onvention, w#ic# is part o%
t#e &aw o% our &and'
1/. ;nternational transportation +e,ine+6 5rticle 1 (-)
,nternationa& transportation is de%ined in paragrap# (8) o% 7rtic&e 1, w#ic# provides ;For t#e purposes
o% t#is convention, t#e e3pression ;internationa& transportation< s#a&& mean an! transportation in w#ic#,
according to t#e contract made ! t#e parties, t#e p&ace o% departure and t#e p&ace o% destination, w#et#er or
not t#ere e a reak in t#e transportation or a transs#ipment, are situated Leit#erM wit#in t#e territories o% two
@ig# $ontracting Parties'<
12. 7ature o, transportation +eter#ine+ $y contract o, parties! i.e. ticket
F#et#er t#e transportation is ;internationa&< is determined ! t#e contract o% t#e parties, w#ic# in t#e
case o% passengers is t#e ticket' F#en t#e contract o% carriage provides %or t#e transportation o% t#e passenger
etween certain designated termina&s ;wit#in t#e territories o% two @ig# $ontracting Parties,< t#e provisions
o% t#e $onvention automatica&&! app&! and e3c&usive&! govern t#e rig#ts and &iai&ities o% t#e air&ine and its
passenger' @erein, since t#e %&ig#t invo&ved is internationa&, t#e same eing %rom t#e Dnited "tates to t#e
P#i&ippines and ack to t#e Dnited "tates, it is suAect to t#e provisions o% t#e Farsaw $onvention, inc&uding
7rtic&e 8/(1), w#ic# enumerates t#e %our p&aces w#ere an action %or damages ma! e roug#t'
1. <istinction $et.een venue an+ ?uris+iction
Venue and Aurisdiction are entire&! distinct matters' Jurisdiction ma! not e con%erred ! consent or
waiver upon a court w#ic# ot#erwise wou&d #ave no Aurisdiction over t#e suAect=matter o% an actionC ut t#e
venue o% an action as %i3ed ! statute ma! e c#anged ! t#e consent o% t#e parties and an oAection t#at t#e
p&ainti%% roug#t #is suit in t#e wrong count! ma! e waived ! t#e %ai&ure o% t#e de%endant to make a time&!
oAection' ,n eit#er case, t#e court ma! render a va&id Audgment' :u&es as to Aurisdiction can never e &e%t to
t#e consent or agreement o% t#e parties, w#et#er or not a pro#iition e3ists against t#eir a&teration'
13. 5rticle 14 (1) is a ?uris+iction an+ not a venue provision
7 numer o% reasons tends to support t#e c#aracteri*ation o% 7rtic&e 8/(1) as a Aurisdiction and not a
venue provision' First, t#e wording o% 7rtic&e 38, w#ic# indicates t#e p&aces w#ere t#e action %or damage
;must< e roug#t, underscores t#e mandator! nature o% 7rtic&e 8/(1)' "econd, t#is c#aracteri*ation is
consistent wit# one o% t#e oAectives o% t#e $onvention, w#ic# is to ;regu&ate in a uni%orm manner t#e
conditions o% internationa& transportation ! air'< T#ird, t#e $onvention does not contain an! provision
prescriing ru&es o% Aurisdiction ot#er t#an 7rtic&e 8/(1), w#ic# means t#at t#e p#rase ;ru&es as to Aurisdiction<
used in 7rtic&e 38 must re%er on&! to 7rtic&e 8/(1)' ,n %act, t#e &ast sentence o% 7rtic&e 38 speci%ica&&! dea&s
wit# t#e e3c&usive enumeration in 7rtic&e 8/(1) as ;Aurisdictions,< w#ic#, as suc#, cannot e &e%t to t#e wi&& o%
t#e parties regard&ess o% t#e time w#en t#e damage occurred'
14. Buris+iction takes +ual concept .)en #atter is *overne+ $y t)e Earsa. Convention
F#ere t#e matter is governed ! t#e Farsaw $onvention, Aurisdiction takes on a dua& concept'
Jurisdiction in t#e internationa& sense must e esta&is#ed in accordance wit# 7rtic&e 8/(1) o% t#e Farsaw
$onvention, %o&&owing w#ic# t#e Aurisdiction o% a particu&ar court must e esta&is#ed pursuant to t#e
app&ica&e domestic &aw' (n&! a%ter t#e 9uestion o% w#ic# court #as Aurisdiction is determined wi&& t#e issue o%
venue e taken up' T#is second 9uestion s#a&& e governed ! t#e &aw o% t#e court to w#ic# t#e case is
sumitted'
1%. 5rticle 3- o, t)e Earsa. Convention
7rtic&e 38 provides t#at ;an! c&ause contained in t#e contract and a&& specia& agreements entered into
e%ore t#e damage occurred ! w#ic# t#e parties purport to in%ringe t#e ru&es &aid down ! t#is convention,
w#et#er ! deciding t#e &aw to e app&ied, or ! a&tering t#e ru&es as to Aurisdiction, s#a&& e nu&& and void'
Eevert#e&ess %or t#e transportation o% goods, aritration c&auses s#a&& e a&&owed, suAect to t#is convention, i%
t#e aritration is to take p&ace wit#in one o% t#e Aurisdictions re%erred to in t#e %irst paragrap# o% 7rtic&e 8/'<
-". =otion to +is#iss on t)e *roun+ o, lack o, ?uris+iction +i+ not a,,ect i#proper venue as a
*roun+ to +is#iss
B3amination o% 7rtic&e 8/(1) in re&ation to 7rtic&e 38 does not support t#e conc&usion t#at in moving
to dismiss on t#e ground o% &ack o% Aurisdiction, Eort#west #as waived improper venue as a ground to dismiss'
@erein, "antos? c&aim t#at E(7 waived venue as a ground o% its motion to dismiss is not correct' True it is
t#at E(7 averred in its M(T,(E T( D,"M,"" t#at t#e ground t#ereo% is ;t#e $ourt #as no suAect matter
Aurisdiction to entertain t#e $omp&aint< w#ic# "7ET(" considers as e9uiva&ent to ;&ack o% Aurisdiction over
t#e suAect matter ' ' '< @owever, t#e gist o% E(7?s argument in its motion is t#at t#e P#i&ippines is not t#e
proper p&ace w#ere "7ET(" cou&d %i&e t#e action H meaning t#at t#e venue o% t#e action is improper&! &aid'
Bven assuming t#en t#at t#e speci%ied ground o% t#e motion is erroneous, t#e %act is t#e proper ground o% t#e
motion H improper venue H #as een discussed t#erein'
-1. Eaiver not taken li*)tly6 <ou$t resolve to non>.aiver
Faiver cannot e &ig#t&! in%erred' ,n case o% dout, it must e reso&ved in %avor o% non=waiver i% t#ere
are specia& circumstances Austi%!ing t#is conc&usion' 7s oserved in Javier vs' ,ntermediate $ourt o% 7ppea&s,
;+ega&&!, o% course, t#e &ack o% proper venue was deemed waived ! t#e petitioners w#en t#e! %ai&ed to
invoke it in t#eir origina& motion to dismiss' Bven so, t#e motivation o% t#e private respondent s#ou&d #ave
een taken into account ! ot# t#e tria& Audge and t#e respondent court in arriving at t#eir decisions'<
--. 5anesta+ vs. 5ir Cana+a6 :lace o, <estination construe+
T#e on&! conc&usion t#at can e reac#ed in 7anestad vs' 7ir $anada is t#at ;t#e p&ace o% destination<
as used in t#e Farsaw $onvention is considered ! ot# t#e $anadian $'T'$' and t#e Dnited "tates $'7'1' to
descrie at &east two ;p&aces o% destination,< vi*', t#e ;p&ace o% destination< o% a particu&ar %&ig#t eit#er an
;outward destination< %rom t#e ;point o% origin< or %rom t#e ;outward point o% destination< to an! p&ace in
$anada' T#erein, t#e p&ace o% destination under 7rtic&e 8/ and 7rtic&e 1 o% t#e Farsaw $onvention o% t#e
%&ig#t on w#ic# Mrs' "i&vererg was ki&&ed, was +os 7nge&es according to t#e ticket, w#ic# was t#e contract
etween t#e parties and t#e suit is proper&! %i&ed in t#is $ourt w#ic# #as Aurisdiction'
-3. ButJ vs. Britis) 5ir.ays6 :lace o, <estination in a trip consistin* o, several parts is ulti#ate
+estination
,n 1ut* v' 1ritis# 7irwa!s, t#e Dnited "tates District $ourt (Bastern District o% Penns!&vania) said
t#at ;a&t#oug# t#e aut#orities w#ic# addressed t#is precise issue are not e3tensive, ot# t#e cases and t#e
commentators are a&most unanimous in conc&uding t#at t#e ;p&ace o% destination< re%erred to in t#e Farsaw
$onvention ;in a trip consisting o% severa& parts is t#e u&timate destination t#at is accorded treat!
Aurisdiction'<
-/. :lace o, +estination +eter#ine+ $y t)e contract o, carria*e
T#e p&ace o% destination, wit#in t#e meaning o% t#e Farsaw $onvention, is determined ! t#e terms
o% t#e contract o% carriage or, speci%ica&&!, t#e ticket etween t#e passenger and t#e carrier' F#et#er t#e return
portion o% t#e ticket is c#aracteri*ed as an option or a contract, t#e carrier was &ega&&! ound to transport t#e
passenger ack to t#e p&ace o% origin wit#in t#e prescried time and t#e passenger %or #er part agreed to pa!
t#e %are and, in %act, did pa! t#e %are' T#us t#ere was mutua&it! o% o&igation and a inding contract o%
carriage' T#e %act t#at t#e passenger cou&d %orego #er rig#ts under t#e contract does not make it an! &ess a
inding contract' $ertain&!, i% t#e parties did not contemp&ate t#e return &eg o% t#e Aourne!, t#e passenger
wou&d not #ave paid %or it and t#e carrier wou&d not #ave issued a round trip ticket' @erein, e3amination o%
"antos? ticket s#ows t#at #is u&timate destination is "an Francisco' 7&t#oug# t#e date o% t#e return %&ig#t was
&e%t open, t#e contract o% carriage etween t#e parties indicates t#at E(7 was ound to transport "antos to
"an Francisco %rom Mani&a' Mani&a s#ou&d t#ere%ore e considered mere&! an agreed stopping p&ace and not
t#e destination'
-2. ButJ an+ 5anesta++ case not controllin*6 Court1s +iscretion
(n t#e c&aim t#at t#e 1ut* case cou&d not #ave overru&ed t#e 7anestad case ecause t#ese decisions
are %rom di%%erent AurisdictionsC it is neit#er #ere nor t#ere' ,n %act, neit#er o% t#ese cases is contro&&ing on t#is
$ourt' ,% t#e 1ut* case was pre%erred, it is ecause t#e $ourt, in e3ercising uts own %reedom o% c#oice,
decided t#at it represents t#e etter, and correct, interpretation o% 7rtic&e 8/(1)'
-. 5rticle 1 (-)6 <istinction $et.een +estination an+ a*ree+ stoppin* place
7rtic&e 1(8) a&so draws a distinction etween a ;destination< and an ;agreed stopping p&ace'< ,t is t#e
;destination< and not an ;agreed stopping p&ace< t#at contro&s %or purposes o% ascertaining Aurisdiction under
t#e $onvention' T#e contract is a sing&e undivided operation, eginning wit# t#e p&ace o% departure and
ending wit# t#e u&timate destination' T#e use o% t#e singu&ar in t#is e3pression indicates t#e understanding o%
t#e parties to t#e $onvention t#at ever! contract o% carriage #as one p&ace o% departure and one p&ace o%
destination' 7n intermediate p&ace w#ere t#e carriage ma! e roken is not regarded #e a ;p&ace o%
destination'<
-3. <o#icile o, a corporation6 Co#pa*nie 7ationale 5ir &rance vs. Gili$erto
T#e domici&e o% a corporation is customari&! regarded as t#e p&ace w#ere it is incorporated, and t#e
courts #ave given t#e meaning to t#e term as it is used in artic&e 8/(1) o% t#e $onvention' Moreover, t#e
structure o% artic&e 8/(1), viewed as a w#o&e, is a&so incompati&e wit# t#e c&aim t#at t#e domici&e o% a
corporation inc&udes an! countr! w#ere t#e air&ine carries on its usiness on ;a regu&ar and sustantia& asis'<
T#e artic&e, in stating t#at p&aces o% usiness are among t#e ases o% t#e Aurisdiction, sets out two p&aces w#ere
an action %or damages ma! e roug#t: t#e countr! w#ere t#e carrier?s principa& p&ace o% usiness is &ocated,
and t#e countr! in w#ic# it #as a p&ace o% usiness t#roug# w#ic# t#e particu&ar contract in 9uestion was
made, t#at is, w#ere t#e ticket was oug#t'
-4. &renc) la. not inten+e+ to *overn t)e #eanin* o, Earsa. ter#s
,t cannot e said t#at ,nterna& Frenc# &aw is to e ;app&ied< in t#e c#oice o% &aw sense, to determine
t#e meaning and scope o% t#e $onvention?s terms' (% course, Frenc# &ega& usage must e considered in
arriving at an accurate Bng&is# trans&ation o% t#e Frenc#' 1ut w#en an accurate Bng&is# trans&ation is made
and agreed upon t#e in9uir! not meaning does not t#en revert to a 9uest %or a past or present Frenc# &aw to e
;app&ied< %or reve&ation o% t#e proper scope o% t#e terms' ,t does not %o&&ow %rom t#e %act t#at t#e treat! is
written in Frenc# t#at in interpreting it, t#e parties %orever c#ained to Frenc# &aw, eit#er as it e3isted w#en t#e
treat! was written or in its present state o% deve&opment' T#ere is no suggestion in t#e treat! t#at Frenc# &aw
was intended to govern t#e meaning o% Farsaw?s terms, nor an! indication #as een %ound to t#is e%%ect in its
&egis&ative #istor! or %rom t#e stud! o% its app&ication and interpretation ! ot#er courts' ,ndeed, ana&!sis o%
t#e cases indicates t#at t#e courts, in interpreting and app&!ing t#e Farsaw $onvention, #ave not considered
t#emse&ves ound to app&! Frenc# &aw simp&! ecause t#e $onvention is written in Frenc#'
-%. E)ere action #ay $e $rou*)t6 5rticle -4 (1)
T#e domici&e o% t#e carrier is on&! one o% t#e p&aces w#ere t#e comp&aint is a&&owed to e %i&ed under
7rtic&e 8/(1)' 1! speci%!ing t#e t#ree ot#er p&aces, to wit, t#e principa& p&ace o% usiness o% t#e carrier, its
p&ace o% usiness w#ere t#e contract was made, and t#e p&ace o% destination, t#e artic&e c&ear&! meant t#at
t#ese t#ree ot#er p&aces were not compre#ended in t#e term ;domici&e'<
3". Reason ,or t)e p)rase @)o.ever ,oun+e+A6 Husserl vs. S.iss 5ir (ransport Co#pany
T#e reason %or t#e use o% t#e p#rase ;#owever %ounded,< is two=%o&d: to accommodate a&& o% t#e
mu&ti%arious ases on w#ic# a c&aim mig#t e %ounded in di%%erent countries, w#et#er under code &aw or
common &aw, w#et#er under contract or tort, etc'C and to inc&ude a&& ases on w#ic# a c&aim seeking re&ie% %or
an inAur! mig#t e %ounded in an! one countr!' ,n ot#er words, an! re&ie% avai&a&e is suAect to t#e conditions
and &imitations esta&is#ed ! t#e Farsaw "!stem, regard&ess o% t#e particu&ar cause o% action w#ic# %orms
t#e asis on w#ic# a p&ainti%% cou&d seek re&ie%'
31. 5rticle -2 (1) o, t)e Earsa. Convention
7rtic&e 84 (1) provides t#at ;t#e carrier s#a&& not e entit&ed to avai& #imse&% o% t#e provisions o% t#is
$onvention w#ic# e3c&ude or &imit #is &iai&it!, i% t#e damage is caused ! #is wi&&%u& misconduct or ! suc#
de%au&t on #is part as, in accordance w#ic# t#e &aw o% t#e court to w#ic# t#e case is sumitted, is considered to
e e9uiva&ent to wi&&%u& misconduct'<
31. 5lle*ation o, .ill,ul #iscon+uct resultin* in a tort is insu,,icient to exclu+e t)e case ,ro# t)e
co#pre)ension o, t)e Earsa. Convention6 5rticles -- an+ -2 (1) in relation to 5rticle -4 (1).
T#e a&&egation o% wi&&%u& misconduct resu&ting in a tort is insu%%icient to e3c&ude t#e case %rom t#e
compre#ension o% t#e Farsaw $onvention' ,t is understood under 7rtic&e 84 (1) t#at t#e court ca&&ed upon to
determine t#e app&icai&it! o% t#e &imitation provision must %irst e vested wit# t#e appropriate Aurisdiction'
7rtic&e 8/(1) is t#e provision in t#e $onvention w#ic# de%ines t#at Aurisdiction' 7rtic&e 88 mere&! %i3es t#e
monetar! cei&ing %or t#e &iai&it! o% t#e carrier in cases covered ! t#e $onvention' ,% t#e carrier is indeed
gui&t! o% wi&&%u& misconduct, it can avai& itse&% o% t#e &imitations set %ort# in said artic&e' 1ut t#is can e done
on&! i% t#e action #as %irst een commenced proper&! under t#e ru&es on Aurisdiction set %ort# in 7rtic&e 8/ (1)'
3-. 5rticle -/ 7CC6 Buris+iction prece+es application
7rtic&e 85 o% t#e $ivi& $ode states t#at ;,n a&& contractua& propert! or ot#er re&ations, w#en one o% t#e
parties is at a disadvantage on account o% #is mora& dependence, ignorance, indigence, menta& weakness,
tender age or ot#er #andicap, t#e courts must e vigi&ant %or #is protection'< 7pp&ication o% t#e artic&e is
misp&aced, as t#e provision assumes t#at t#e court is vested wit# Aurisdiction to ru&e in %avor o% t#e
disadvantaged minor'
33. Concerns in various countries in si#ilar cases resulte+ in a+option o, an a#en+#ent to 5rticle
-4 (1) t)rou*) t)e Guate#ala :rotocol
7 numer o% countries #ave signi%ied t#eir concern over t#e pro&em o% citi*ens eing denied access
to t#eir own courts ecause o% t#e restrictive provision o% 7rtic&e 8/(1) o% t#e Farsaw $onvention' 7mong
t#ese is t#e Dnited "tates, w#ic# #as proposed an amendment t#at wou&d ena&e t#e passenger to sue in #is
own domici&e i% t#e carrier does usiness in t#at Aurisdiction' T#e reason %or t#is proposa& is e3p&ained t#us ;,n
t#e event a D" citi*en temporari&! residing aroad purc#ases a :ome to Eew Oork to :ome ticket on a
%oreign air carrier w#ic# is genera&&! suAect to t#e Aurisdiction o% t#e D", 7rtic&e 8/ wou&d prevent t#at
person %rom suing t#e carrier in t#e D" in a GFarsaw $ase? even t#oug# suc# a suit cou&d e roug#t in t#e
asence o% t#e $onvention'<
3/. Guate#ala :rotocol a#en+in* t)e Earsa. Convention ine,,ective as it )as not $een rati,ie+ $y
re9uire+ #ini#u# nu#$er o, contractin* parties
T#e proposa& was incorporated in t#e 6uatema&a Protoco& amending t#e Farsaw $onvention, w#ic#
was adopted at 6uatema&a $it! on / Marc# 1.01' 1ut it is sti&& ine%%ective ecause it #as not !et een rati%ied
! t#e re9uired minimum numer o% contracting parties' @erein, pending suc# rati%ication, "antos wi&& sti&&
#ave to %i&e #is comp&aint on&! in an! o% t#e %our p&aces designated ! 7rtic&e 8/(1) o% t#e Farsaw
$onvention' T#e proposed amendment o&sters t#e ru&ing o% t#e $ourt t#at a citi*en does not necessari&! #ave
t#e rig#t to sue in #is own courts simp&! ecause t#e air&ine #as a p&ace o% usiness in #is countr!'
32. =ere ,act o, liti*ation in 5#erican court +oes not necessarily #ean )e .ill liti*ate in vain
F#i&e t#e $ourt can on&! s!mpat#i*e wit# t#e petitioner, w#o must prosecute #is c&aims in t#e Dnited
"tates rat#er t#an in #is own countr! at &ess inconvenience, it ma! not e amiss to oserve at t#is point t#at
t#e mere %act t#at #e wi&& #ave to &itigate in t#e 7merican courts does not necessari&! mean #e wi&& &itigate in
vain' T#e Audicia& s!stem o% t#at countr! is known %or its sense o% %airness and, genera&&!, its strict ad#erence
to t#e ru&e o% &aw'
[--2]
(an vs. 7ort).estern 5irlines (GR 1324"-! 3 =arc) -""")
First Division, Pardo (J): 5 concur
&acts' (n 31 Ma! 1..5, Prisci&&a +' Tan and $onnie Tan oarded Eort#west 7ir&ines F&ig#t 8. in $#icago,
D"7 ound %or t#e P#i&ippines, wit# a stop=over at Detroit, D"7' T#e! arrived at t#e Eino! 79uino
,nternationa& 7irport (E7,7) on 1 June 1..5 at aout 12:52 p'm' Dpon t#eir arriva&, Tan and #er companion
$onnie Tan %ound t#at t#eir aggages were missing' T#e! returned to t#e airport in t#e evening o% t#e
%o&&owing da! and t#e! were in%ormed t#at t#eir aggages mig#t sti&& e in anot#er p&ane in Tok!o, Japan' (n
3 June 1..5, t#e! recovered t#eir aggages and discovered t#at some o% its contents were destro!ed and
soi&ed' $&aiming t#at t#e! ;su%%ered menta& anguis#, s&eep&ess nig#ts and great damage< ecause o%
Eort#west?s %ai&ure to in%orm t#em in advance t#at t#eir aggages wou&d not e &oaded on t#e same %&ig#t t#e!
oarded and ecause o% t#eir de&a!ed arriva&, t#e! demanded %rom Eort#west 7ir&ines compensation %or t#e
damages t#e! su%%ered' (n 14 June 1..5 and 88 June 1..5, Tan sent demand &etters to Eort#west 7ir&ines, ut
t#e &atter did not respond' @ence, t#e %i&ing o% t#e case wit# t#e :T$'
7%ter due tria&, on 12 June 1..>, t#e tria& court rendered decision %inding Eort#west 7ir&ines, ,nc' &ia&e %or
damages (P14,222 as actua& damages, P122,222 as mora& damages, P42,222 as e3emp&ar! damages, P32,222
as and %or attorne!?s %ees and $osts)'
Eort#west 7ir&ines, ,nc' appea&ed %rom t#e tria& court?s decision to t#e $ourt o% 7ppea&s contending t#at t#e
court a 9uo erred in %inding it gui&t! o% reac# o% contract o% carriage and o% wi&&%u& misconduct and awarded
damages w#ic# #ad no asis in %act or were ot#erwise e3cessive' (n 32 "eptemer 1../, t#e $ourt o%
7ppea&s promu&gated its decision partia&&! granting t#e appea& ! de&eting t#e award o% mora& and e3emp&ar!
damages and reducing t#e attorne!?s %ees to P12,222C wit#out pronouncement as to costs' @ence, t#e appea&'
T#e "upreme $ourt denied t#e petition %or &ack o% merit, and a%%irmed t#e decision o% t#e $ourt o% 7ppea&s
de&eting, #owever, t#e award o% attorne!?s %ees'
1. 7o .ill,ul #iscon+uct to allo. a.ar+ o, #oral an+ exe#plary +a#a*es
For wi&&%u& misconduct to e3ist t#ere must e a s#owing t#at t#e acts comp&ained o% were impe&&ed !
an intention to vio&ate t#e &aw, or were in persistent disregard o% one?s rig#ts' ,t must e evidenced ! a
%&agrant&! or s#ame%u&&! wrong or improper conduct' T#ere was not#ing in t#e conduct o% Eort#west 7ir&ines
w#ic# s#owed t#at t#e! were motivated ! ma&ice or ad %ait# in &oading #er aggages on anot#er p&ane' Due
to weig#t and a&ance restrictions, as a sa%et! measure, t#e air&ine #ad to transport t#e aggages on a di%%erent
%&ig#t, ut wit# t#e same e3pected date and time o% arriva& in t#e P#i&ippines' Eort#west 7ir&ines was not
gui&t! o% wi&&%u& misconduct'
-. 7o #alice6 5irline +i+ not act in $a+ ,ait)
,t is admitted t#at Eort#west 7ir&ines %ai&ed to de&iver Tan?s &uggages on time' @owever, t#ere was no
s#owing o% ma&ice in suc# %ai&ure' 1! its concern %or sa%et!, t#e air&ine #ad to s#ip t#e aggages in anot#er
%&ig#t wit# t#e same date o% arriva&' T#e 7ir&ine did not act in ad %ait#' 1ad %ait# does not simp&! connote
ad Audgment or neg&igence, it imports a dis#onest purpose or some mora& o&i9uit! and conscious doing o% a
wrong, a reac# o% known dut! t#roug# some motive or interest or i&&=wi&& t#at partakes o% t#e nature o%
%raud'<
3. Lia$ility arisin* ,ro# $reac) o, contract o, carria*e! .it)out ,rau+ or $a+ ,ait)! +oes not
inclu+e #oral an+ exe#plary +a#a*es
F#ere in reac#ing t#e contract o% carriage t#e de%endant air&ine is not s#own to #ave acted
%raudu&ent&! or in ad %ait#, &iai&it! %or damages is &imited to t#e natura& and proa&e conse9uences o% t#e
reac# o% o&igation w#ic# t#e parties #ad %oreseen or cou&d #ave reasona&! %oreseen' ,n t#at case, suc#
&iai&it! does not inc&ude mora& and e3emp&ar! damages'
[--]
5#erican 5irlines vs. C5 (GR 11"//>/2! % =arc) -""")
T#ird Division, 6on*aga=:e!es (J): 5 concur
&acts' Democrito Mendo*a purc#ased %rom "ingapore 7ir&ines in Mani&a conAunction tickets %or Mani&a=
"ingapore=7t#ens=+arnaca=:ome=Turin=Ruric#=6eneva=$open#agen=Eew Oork' 7merican 7ir&ines was not a
participating air&ine in an! o% t#e segments in t#e itinerar! under t#e said conAunction tickets' ,n 6eneva,
Mendo*a decided to %orego #is trip to $open#agen and to go straig#t to Eew Oork and in t#e asence o% a
direct %&ig#t under #is conAunction tickets %rom 6eneva to Eew Oork, Mendo*a on 0 June 1./. e3c#anged t#e
unused portion o% t#e conAunction ticket %or a one=wa! ticket %rom 6eneva to Eew Oork %rom 7merican
7ir&ines' 7merican 7ir&ines issued its own ticket to Mendo*a in 6eneva and c&aimed t#e va&ue o% t#e unused
portion o% t#e conAunction ticket %rom t#e ,7T7 c&earing #ouse in 6eneva'
,n "eptemer 1./., Mendo*a %i&ed an action %or damages e%ore t#e :T$ $eu %or t#e a&&eged emarrassment
and menta& anguis# #e su%%ered at t#e 6eneva 7irport w#en 7merican 7ir&ines Gs securit! o%%icers prevented
#im %rom oarding t#e p&ane, detained #im %or aout an #our and a&&owed #im to oard t#e p&ane on&! a%ter a&&
t#e ot#er passengers #ave oarded' 7merican 7ir&ines %i&ed a motion to dismiss %or &ack o% Aurisdiction o%
P#i&ippine courts to entertain t#e said proceedings under 7rt' 8/ (1) o% t#e Farsaw $onvention' T#e tria& court
denied t#e motion, #o&ding t#at t#e suit ma! e roug#t in t#e P#i&ippines under t#e poo& partners#ip
agreement among t#e ,7T7 memers, w#ic# inc&ude "ingapore 7ir&ines and 7merican 7ir&ines, w#erein t#e
memers act as agents o% eac# ot#er in t#e issuance o% tickets to t#ose w#o ma! need t#eir servicesC and t#at
t#e contract o% carriage per%ected in Mani&a etween Mendo*a and "ingapore 7ir&ines inds 7merican
7ir&ines as an agent o% "ingapore 7ir&ines and considering t#at 7merican 7ir&ines #as a p&ace o% usiness in
Mani&a, t#e t#ird option o% t#e p&ainti%% under t#e Farsaw $onvention'
T#e order o% denia& was e&evated to t#e $ourt o% 7ppea&s w#ic# a%%irmed t#e ru&ing o% t#e tria& court' @ence
t#e petition %or review' ,n "P 32.5>, 7merican 7ir&ines assai&ed t#e tria& court?s order den!ing its motion to
dismiss t#e action %or damages %i&ed ! Mendo*a %or &ack o% Aurisdiction under section 8/ (1) o% t#e Farsaw
$onventionC and in "P 31548 7merican 7ir&ines c#a&&enges t#e va&idit! o% t#e tria& court?s order striking o%%
t#e record t#e deposition o% its securit! o%%icer taken in 6eneva, "wit*er&and %or %ai&ure o% t#e said securit!
o%%icer to answer t#e cross interrogatories propounded ! Mendo*a'
T#e "upreme $ourt a%%irmed t#e Audgment o% t#e appe&&ate court in $7=6: "P 32.5>, and ordered t#e case
remanded to t#e court o% origin %or %urt#er proceedings' T#e "upreme $ourt set aside t#e decision o% t#e
appe&&ate court in $7=6: "P 31548 is set aside' T#e deposition o% 7merican 7ir&ines? securit! o%%icer is
reinstated as part o% t#e evidence'
1. Earsa. Convention6 :urpose an+ applica$ility
T#e Farsaw $onvention to w#ic# t#e :epu&ic o% t#e P#i&ippines is a part! and w#ic# #as t#e %orce
and e%%ect o% &aw in t#is countr! app&ies to a&& internationa& transportation o% persons, aggage or goods
per%ormed ! an aircra%t gratuitous&! or %or #ire' 7s enumerated in t#e Pream&e o% t#e $onvention, one o% t#e
oAectives is ;to regu&ate in a uni%orm manner t#e conditions o% internationa& transportation ! air<' @erein,
t#e contract o% carriage entered into ! Mendo*a wit# "ingapore 7ir&ines, and suse9uent&! wit# 7merican
7ir&ines, to transport #im to nine cities in di%%erent countries wit# Eew Oork as t#e %ina& destination is a
contract o% internationa& transportation and t#e provisions o% t#e $onvention automatica&&! app&! and
e3c&usive&! govern t#e rig#ts and &iai&ities o% t#e air&ine and its passengers' T#is inc&udes section 8/ (1)
w#ic# enumerates t#e %our p&aces w#ere an action %or damages ma! e roug#t'
-. 5rticle -4 (1) o, t)e Earsa. Convention6 E)ere action ,or +a#a*es #ay $e $rou*)t
7rtic&e 8/ (1) o% t#e Farsaw $onvention states t#at ;an action %or damages must e roug#t at t#e
option o% t#e p&ainti%%, in t#e territor! o% one o% t#e @ig# $ontracting Parties, eit#er e%ore t#e court o% t#e
domici&e o% t#e carrier or o% #is principa& p&ace o% usiness or w#ere #e #as a p&ace o% usiness t#roug# w#ic#
t#e contract #as een made, or e%ore t#e court at t#e p&ace o% destination'<
3. Geneva not t)e proper venue
@erein, 7merican 7ir&ines issued t#e ticket in 6eneva w#ic# was neit#er t#e domici&e nor t#e
principa& p&ace o% usiness o% 7merican 7ir&ines nor Mendo*a?s p&ace o% destination'
/. 5rticle 1 (3) o, t)e Earsa. Convention6 (ransportation per,or#e+ $y successive carriers
consi+ere+ un+ivi+e+
7rtic&e 1(3) o% t#e Farsaw $onvention w#ic# states t#at ;transportation to e per%ormed ! severa&
successive carriers s#a&& e deemed, %or t#e purposes o% t#is convention, to e one undivided transportation, i%
it #as een regarded ! t#e parties as a sing&e operation, w#et#er it #as een agreed upon under t#e %orm o% a
sing&e contract or a series o% contracts, and it s#a&& not &ose its internationa& c#aracter mere&! ecause one
contract or series o% contracts is to e per%ormed entire&! wit#in t#e territor! suAect o% t#e sovereignt!,
su*eraint!, mandate or aut#orit! o% t#e same @ig# $ontracting Part!'<
2. :urpose o, 5rticle 1 (3) o, t)e Earsa. Convention
T#e evident purpose under&!ing 7rtic&e 1 (3) o% t#e Farsaw $onvention is to promote internationa&
air trave& ! %aci&itating t#e procurement o% a series o% contracts %or air transportation t#roug# a sing&e
principa& and o&igating di%%erent air&ines to e ound ! one contract o% transportation'
. 8vervie. o, *eneral pool partners)ip a*ree#ent $et.een ;5(5 #e#$ers
Memers o% t#e ,7T7 are under a genera& poo& partners#ip agreement w#erein t#e! act as agent o%
eac# ot#er in t#e issuance o% tickets to contracted passengers to oost ticket sa&es wor&dwide and at t#e same
time provide passengers eas! access to air&ines w#ic# are ot#erwise inaccessi&e in some parts o% t#e wor&d'
1ooking and reservation among air&ine memers are a&&owed even ! te&ep#one and it #as ecome an
accepted practice among t#em' 18 7 memer air&ine w#ic# enters into a contract o% carriage consisting o% a
series o% trips to e per%ormed ! di%%erent carriers is aut#ori*ed to receive t#e %are %or t#e w#o&e trip and
t#roug# t#e re9uired process o% inter&ine sett&ement o% accounts ! wa! o% t#e ,7T7 c&earing #ouse an air&ine
is du&! compensated %or t#e segment o% t#e trip serviced'
3. 5#erican 5irlines tacitly reco*niJe+ its co##it#ent in ;5(5! an+ assu#e+ o$li*ation o,
ori*inal carrier
@erein, w#en 7merican 7ir&ines accepted t#e unused portion o% t#e conAunction tickets, entered it in
t#e ,7T7 c&earing #ouse and undertook to transport Mendo*a over t#e route covered ! t#e unused portion o%
t#e conAunction tickets, i'e', 6eneva to Eew Oork, 7merican 7ir&ines tacit&! recogni*ed its commitment under
t#e ,7T7 poo& arrangement to act as agent o% t#e principa& contracting air&ine, "ingapore 7ir&ines, as to t#e
segment o% t#e trip 7merican 7ir&ines agreed to undertake' 7s suc#, 7merican 7ir&ines t#ere! assumed t#e
o&igation to take t#e p&ace o% t#e carrier origina&&! designated in t#e origina& conAunction ticket'
4. ;ssuance o, ne. ticket not +ecisive o, t)e carrier1s lia$ility
7merican 7ir&ines? argument t#at it is not a designated carrier in t#e origina& conAunction tickets and
t#at it issued its own ticket is not decisive o% its &iai&it!' T#e new ticket was simp&! a rep&acement %or t#e
unused portion o% t#e conAunction ticket, ot# tickets eing %or t#e same amount o% D"K 8,0>2 and #aving t#e
same points o% departure and destination' 1! constituting itse&% as an agent o% t#e principa& carrier 7merican
7ir&ines? undertaking s#ou&d e taken as part o% a sing&e operation under t#e contract o% carriage e3ecuted !
Mendo*a and "ingapore 7ir&ines in Mani&a'
%. Court in =anila )as ?uris+iction6 ;ssue o, venue in Ce$u .aive+
T#e t#ird option o% t#e p&ainti%% under 7rt 8/ (1) o% t#e Farsaw $onvention e'g', to sue in t#e p&ace o%
usiness o% t#e carrier w#erein t#e contract was made, is t#ere%ore, Mani&a, and P#i&ippine courts are c&ot#ed
wit# Aurisdiction over t#is case' ,t must e noted, #owever, t#at w#i&e t#e case was %i&ed in $eu and not in
Mani&a t#e issue o% venue is no &onger an issue as 7merican 7ir&ines is deemed to #ave waived it w#en it
presented evidence e%ore t#e tria& court'
1". <eposition o, t)e Security 8,,icer in Geneva s)oul+ $e reinstate+ as part o, t)e evi+ence
T#e suse9uent appearance o% t#e said securit! o%%icer e%ore t#e P#i&ippine consu& in 6eneva on 1.
"eptemer 1..5 and t#e answer to t#e cross=interrogatories propounded ! Mendo*a was transmitted to t#e
tria& court ! t#e P#i&ippine consu& in 6eneva on 83 "eptemer 1..5 s#ou&d e deemed as %u&& comp&iance
wit# t#e re9uisites o% t#e rig#t o% Mendo*a to cross=e3amine 7merican 7ir&ines? witness' T#e deposition %i&ed
! 7merican 7ir&ines s#ou&d e reinstated as part o% t#e evidence and considered toget#er wit# t#e answer to
t#e cross=interrogatories'
[>]
Hu Dn* C)o vs. :an 5#erican Eorl+ 5ir.ays (GR 1-32"! -3 =arc) -""")
First Division, Puno (J): 3 concur, 1 took no part
&acts' Ou Bng $#o is t#e owner o% Ooung @ardware $o' and 7c#i&&es Marketing' ,n connection wit# t#is
usiness, #e trave&s %rom time to time to Ma&a!sia, Taipei and @ongkong' (n 12 Ju&! 1.0>, Ou Bng $#o and
Francisco Tao Ou oug#t p&ane tickets %rom $&audia Tagunicar w#o represented #erse&% to e an agent o%
Tourist For&d "ervices, ,nc' (TF",)' T#e destinations were @ongkong, Tok!o, "an Francisco, D"7, %or t#e
amount o% P84,222'22 per computation o% said Tagunicar' T#e purpose o% t#is trip is to go to Fair%ie&d, Eew
Jerse!, D'"'7' to u! 8 &ines o% in%rared #eating s!stem processing te3tured p&astic artic&e' (n said date, on&!
t#e passage %rom Mani&a to @ongkong, t#en to Tok!o, were con%irmed' LP77M F&ig#t 228 %rom Tok!o to "an
Francisco was on ;:N< status, meaning ;on re9uest<' Per instruction o% de%endant $&audia Tagunicar,
p&ainti%%s returned a%ter a %ew da!s %or t#e con%irmation o% t#e Tok!o="an Francisco segment o% t#e trip' 7%ter
ca&&ing up $ani&ao o% TF",, Tagunicar to&d t#e Ous t#at t#eir %&ig#t was now con%irmed a&& t#e wa!'
T#erea%ter, s#e attac#ed t#e con%irmation stickers on t#e p&ane tickets' 7 %ew da!s e%ore t#e sc#edu&ed %&ig#t,
t#eir son, 7drian Ou, ca&&ed t#e Pan 7m o%%ice to veri%! t#e status o% t#e %&ig#t' 7ccording to said 7drian Ou, a
personne& o% Pan 7m to&d #im over t#e p#one t#at t#e Ous? ookingLsM are con%irmed' (n 83 Ju&! 1.0/, t#e
Ous &e%t %or @ongkong and sta!ed t#ere %or 4 da!s' T#e! &e%t @ongkong %or Tok!o on 8/ Ju&! 1.0/' Dpon
t#eir arriva& in Tok!o, t#e! ca&&ed up Pan=7m o%%ice %or recon%irmation o% t#eir %&ig#t to "an Francisco' "aid
o%%ice, #owever, in%ormed t#em t#at t#eir names are not in t#e mani%est' "ince t#e! were supposed to &eave on
8. Ju&! 1.0/, and cou&d not remain in Japan %or more t#an 08 #ours, t#e! were constrained to agree to accept
air&ine tickets %or Taipei instead, per advise o% J7+ o%%icia&s' T#is is t#e on&! option &e%t to t#em ecause
Eort#west 7ir&ines was t#en on strike, #ence, t#ere was no c#ance %or t#em to otain air&ine seats to t#e
Dnited "tates wit#in 08 #ours' T#e! paid %or t#ese tickets' Dpon reac#ing Taipei, t#ere were no %&ig#ts
avai&a&e %or t#em, t#us, t#e! were %orced to return ack to Mani&a on 3 7ugust 1.0/, instead o% proceeding to
t#e Dnited "tates' Japan 7ir +ines (J7+) re%unded t#em t#e di%%erence o% t#e price %or Tok!o=Taipei LandM
Tok!o="an Francisco in t#e tota& amount o% P8,>28'22' ,n view o% t#eir %ai&ure to reac# Fair%ie&d, Eew Jerse!,
:adiant @eat Bnterprises, ,nc' cance&&ed Ou Bng $#o?s option to u! t#e 8 &ines o% in%ra=red #eating s!stem'
T#e agreement was %or #im to inspect t#e e9uipment and make %ina& arrangements wit# t#e said compan! not
&ater t#an 0 7ugust 1.0/' From t#is usiness transaction, Ou Bng $#o e3pected to rea&i*e a pro%it o%
P322,222'22 to P522,222'22'
7 comp&aint %or damages was %i&ed ! Ou Bng $#o, et' a&' against Pan 7merican For&d 7irwa!s, ,nc' (Pan
7m), Tourist For&d "ervices, ,nc' (TF",), Ju&ieta $ani&ao ($ani&ao), and $&audia Tagunicar (Tagunicar) %or
e3penses a&&eged&! incurred suc# as costs o% tickets and #ote& accommodations w#en Ou Bng $#o, et' a&' were
compe&&ed to sta! in @ongkong and t#en in Tok!o ! reason o% t#e non=con%irmation o% t#eir ooking wit#
Pan=7m' ,n a Decision dated 15 Eovemer 1..1, t#e :T$ Mani&a, 1ranc# 3, #e&d P7E 7M, TF",, and
Tagunicar, e3cept Ju&ieta $ani&ao, Aoint&! and severa&&! &ia&e to pa! Ou Bng $#o, et' a&' t#e sum o%
P822,222'22 as actua& damages, minus P8,>28'22 a&read! re%undedC P822,222'22 as mora& damagesC
P122,222'22 as e3emp&ar! damagesC an amount e9uiva&ent to 82I o% t#e award %or and as attorne!?s %ees,
p&us t#e sum o% P32,222'22 as &itigation e3penses'
(n&! Pan 7m and Tagunicar appea&ed to t#e $ourt o% 7ppea&s' (n 31 7ugust 1..4, t#e appe&&ate court
rendered Audgment modi%!ing t#e amount o% damages awarded, #o&ding Tagunicar so&e&! &ia&e t#ere%or, and
aso&ving Pan 7m and TF", %rom an! and a&& &iai&it!, t#us setting aside t#e decision o% t#e :T$ and
entering a new one dec&aring Tagunicar so&e&! &ia&e %or (1) Mora& damages in t#e amount o% P42,222'22C
(8)B3emp&ar! damages in t#e amount o% P84,222'22C and (3) 7ttorne!?s %ees in t#e amount o% P12,222'22 p&us
costs o% suitC de&eting t#e award o% actua& damages' T#e motion %or reconsideration was denied 11 Januar!
1../' @ence, t#e petition %or review'
T#e "upreme $ourt a%%irmed t#e decision appea&edC wit# costs against Ou Bng $#o, et' a&'
1. 7icos ;n+ustrial Corp. vs. C56 Dcono#y o, .or+s in ren+erin* rulin*
T#e standards o% an idea& decision set in Eicos ,ndustria& $orporation, et a&' vs' $ourt o% 7ppea&s, et
a&', as ;t#at w#ic#, wit# we&come econom! o% words, arrives at t#e %actua& %indings, reac#es t#e &ega&
conc&usions, renders its ru&ing and, #aving done so, ends'<
-. 8ne>para*rap) *eneraliJation $y trial court +i+ not su$stantiate t)e ,actual an+ le*al $asis o,
its conclusion
7 care%u& scrutin! o% t#e decision rendered ! t#e tria& court wi&& s#ow t#at a%ter narrating t#e
evidence o% t#e parties, it proceeded to dispose o% t#e case wit# a one=paragrap# genera&i*ation, to wit: ;(n
t#e asis o% t#e %oregoing %acts, t#e $ourt is constrained to conc&ude t#at de%endant Pan=7m is t#e principa&,
and de%endants TF", and Tagunicar, its aut#ori*ed agent and su=agent, respective&!' $onse9uent&!,
de%endants Pan=7m, TF", and $&audia Tagunicar s#ou&d e #e&d Aoint&! and severa&&! &ia&e to p&ainti%%s %or
damages' De%endant Ju&ieta $ani&ao, w#o acted in #er o%%icia& capacit! as (%%ice Manager o% de%endant TF",
s#ou&d not e #e&d persona&&! &ia&e'< T#e tria& court?s %inding o% %acts is ut a summar! o% t#e testimonies o%
t#e witnesses and t#e documentar! evidence presented ! t#e parties' ,t did not distinct&! and c&ear&! set %ort#,
nor sustantiate, t#e %actua& and &ega& ases %or #o&ding respondents TF",, Pan 7m and Tagunicar Aoint&! and
severa&&! &ia&e'
3. <el =un+o vs. C56 <ecisions #ust still +istinctly an+ clearly express! at least in #ini#u#
essence! its ,actual an+ le*al $ases
,n De& Mundo vs' $7, et a&' w#ere t#e tria& court, a%ter summari*ing t#e con%&icting asseverations o%
t#e parties, disposed o% t#e kerne& issue in Aust two (8) paragrap#s, it was #e&d t#at ;it is understanda&e t#at
courts, wit# t#eir #eav! dockets and time constraints, o%ten %ind t#emse&ves wit# &itt&e to spare in t#e
preparation o% decisions to t#e e3tent most desira&e' Fe #ave t#us pointed out t#at Audges mig#t &earn to
s!nt#esi*e and to simp&i%! t#eir pronouncements' Eevert#e&ess, concise&! written suc# as t#e! ma! e,
decisions must sti&& distinct&! and c&ear&! e3press, at &east in minimum essence, its %actua& and &ega& ases'<
/. Constitutional re9uire#ent t)at +ecisions #ust $e clearly $ase+ on ,acts an+ la.
Eot#ing &ess t#an "ection 15 o% 7rtic&e V,,, o% t#e $onstitution re9uires t#at ;no decision s#a&& e
rendered ! an! court wit#out e3pressing t#erein c&ear&! and distinct&! t#e %acts and t#e &aw on w#ic# it is
ased'< T#is is demanded ! t#e due process c&ause o% t#e $onstitution' @erein, t#e decision o% t#e tria& court
&eaves muc# to e desired ot# in %orm and sustance'
2. Contract o, a*ency6 Dle#ents
1! t#e contract o% agenc!, a person inds #imse&% to render some service or to do somet#ing in
representation or on e#a&% o% anot#er, wit# t#e consent or aut#orit! o% t#e &atter' T#e e&ements o% agenc! are:
(1) consent, e3press or imp&ied, o% t#e parties to esta&is# t#e re&ations#ipC (8) t#e oAect is t#e e3ecution o% a
Auridica& act in re&ation to a t#ird personC (3) t#e agent acts as a representative and not %or #imse&%C (5) t#e
agent acts wit#in t#e scope o% #is aut#orit!'
. <ealin*s .it) assu#e+ a*ent
Persons dea&ing wit# an assumed agent are ound at t#eir peri&, i% t#e! wou&d #o&d t#e principa& &ia&e,
to ascertain not on&! t#e %act o% agenc! ut a&so t#e nature and e3tent o% aut#orit!, and in case eit#er is
controverted, t#e urden o% proo% is upon t#em to esta&is# it'
3. 5,,i+avit )as .eak pro$ative value! in,erior to testi#ony *iven in Court
7%%idavits, eing taken e3 parte, are a&most a&wa!s incomp&ete and o%ten inaccurate, sometimes %rom
partia& suggestion, or %or want o% suggestion and in9uiries' T#eir in%irmit! as a species o% evidence is a matter
o% Audicia& e3perience and are t#us considered in%erior to t#e testimon! given in court' Furt#er, a%%idavits are
not comp&ete reproductions o% w#at t#e dec&arant #as in mind ecause t#e! are genera&&! prepared ! t#e
administering o%%icer and t#e a%%iant simp&! signs t#em a%ter t#e same #ave een read to #er' ,n case o%
con%&ict etween statements in t#e a%%idavit and testimonia& dec&arations, t#e &atter command greater weig#t'
4. Circu#stances puts in +ou$t .)et)er t)e a,,i+avit .as execute+ voluntarily
T#e circumstances under w#ic# said a%%idavit was prepared put in dout t#e c&aim t#at it was
e3ecuted vo&untari&! ! Tagunicar' ,t appears t#at t#e a%%idavit was prepared and was ased on t#e answers
w#ic# Tagunicar gave to t#e 9uestions propounded to #er ! 7tt!' 7ceedo, Ou Bng $#o?s &aw!er' T#e! never
to&d #er t#at t#e a%%idavit wou&d e used in a case to e %i&ed against #er' T#e! even assured #er t#at s#e wou&d
not e inc&uded as de%endant i% s#e agreed to e3ecute t#e a%%idavit' Tagunicar was prevai&ed upon ! Ou Bng
$#o?s son and t#eir &aw!er to sign t#e a%%idavit despite #er oAection to t#e statement t#erein t#at s#e was an
agent o% TF",' T#e! assured #er t#at ;it is immateria&< and t#at ;i% we %i&e a suit against !ou we cannot get
an!t#ing %rom !ou'< T#is purported admission o% Tagunicar cannot e used ! Ou Bng $#o to prove t#eir
agenc! re&ations#ip'
%. Dxistence o, a*ency relations)ip cannot $e esta$lis)e+ solely $y t)e a,,i+avit6 Bur+eno, proo,
7t an! rate, even i% suc# a%%idavit is to e given an! proative va&ue, t#e e3istence o% t#e agenc!
re&ations#ip cannot e esta&is#ed on its so&e asis' T#e dec&arations o% t#e agent a&one are genera&&!
insu%%icient to esta&is# t#e %act or e3tent o% #is aut#orit!' ,n addition, as etween t#e negative a&&egation o%
$ani&ao and Tagunicar t#at neit#er is an agent nor principa& o% t#e ot#er, and t#e a%%irmative a&&egation o% Ou
Bng $#o t#at an agenc! re&ations#ip e3ists, it is t#e &atter w#o #ave t#e urden o% evidence to prove t#eir
a&&egation, %ai&ing in w#ic#, t#eir c&aim must necessari&! %ai&'
1". (a*unicar not an aut)oriJe+ a*ent or representative o, :an 5# or (ES;
Tagunicar categorica&&! denied in open court t#at s#e is a du&! aut#ori*ed agent o% TF",, and
dec&ared t#at s#e is an independent trave& agent' T#us, Tagunicar is an independent trave& so&icitor and is not a
du&! aut#ori*ed agent or representative o% eit#er Pan 7m or TF",' T#eir usiness transactions are not
su%%icient to consider Pan 7m as t#e principa&, and Tagunicar and TF", as its agent and su=agent,
respective&!' Tagunicar was not aut#ori*ed to con%irm t#e ookings o%, nor issue va&idation stickers to Ou Bng
$#o, et' a&' and #ence, Pan 7m and TF", cannot e #e&d responsi&e %or #er actions'
11. (a*unicar1s transaction .it) (ES; si#ply a contract o, sale
T#e documents Q t#e Ticket "a&es :eport, sumitted ! TF", to Pan 7m re%&ecting t#e commissions
received ! TF", as an agent o% Pan 7m, a &isting o% t#e routes taken ! passengers w#o were audited to
TF",?s sa&es report, and a receipt issued ! ! TF", covering t#e pa!ment made ! Tagunicar %or t#e tickets
s#e oug#t %rom TF", Q cannot Austi%! t#e deduction t#at Tagunicar was paid a commission eit#er ! TF",
or Pan 7m' (n t#e contrar!, Tagunicar testi%ied t#at w#en s#e pa!s TF",, s#e a&read! deducts in advance #er
commission and mere&! gives t#e net amount to TF",' From a&& sides o% t#e &ega& prism, t#e transaction is
simp&! a contract o% sa&e w#erein Tagunicar u!s air&ine tickets %rom TF", and t#en se&&s it at a premium to
#er c&ients'
1-. =otive o, Hu Dn* C)o in suin* :an 5#
T#e rea& motive o% Ou Bng $#o in suing Pan 7m appears in its 7mended $omp&aint t#at TF",,
$ani&ao and Tagunicar ma! not e %inancia&&! capa&e o% pa!ing t#e %ormer t#e amounts soug#t to e
recovered, and in suc# event, Pan 7m, eing t#eir u&timate principa&, is primari&! and-or susidiari&! &ia&e to
pa! said amounts to t#em' T#is &ends credence to Tagunicar?s testimon! t#at s#e was persuaded to e3ecute an
a%%idavit imp&icating Pan 7M ecause t#e %ormer knew t#e! wou&d not e a&e to get an!t#ing o% va&ue %rom
#er'
13. Lack o, protest in Bapan supports conclusion t)at suit is #eritless
,n t#e past, t#e $ourt #as warned t#at it wi&& not to&erate an ause o% t#e Audicia& process !
passengers in order to pr! on internationa& air&ines %or damage awards, &ike ;trop#ies in a sa%ari'< T#e
merit&ess suit against Pan 7m ecomes more g&aring wit# Ou Bng $#o, et' a&'?s inaction a%ter t#e! were
umped o%% in Tok!o' ,% t#e! were o% t#e #onest e&ie% t#at Pan 7m was responsi&e %or t#e mis%ortune w#ic#
eset t#em, t#ere is no evidence to s#ow t#at t#e! &odged a protest wit# Pan 7m?s Tok!o o%%ice immediate&!
a%ter t#e! were re%used passage %or t#e %&ig#t to "an Francisco, or even upon t#eir arriva& in Mani&a' ,t grinds
against t#e grain o% #uman e3perience t#at Ou Bng $#o did not insist t#at t#e! e a&&owed to oard,
considering t#at it was t#en dou&! di%%icu&t to get seats ecause o% t#e ongoing Eort#west 7ir&ines strike' ,t is
a&so perp&e3ing t#at t#e! readi&! accepted w#atever t#e Tok!o o%%ice #ad to o%%er as an a&ternative'
,ne3p&ica&! too, no demand &etter was sent to TF", and $ani&ao' Eor was a demand &etter sent to Pan 7m'
To sa! t#e &east, t#e motive o% Ou Bng $#o in suing Pan 7m is suspect'
1/. La. presu#es *oo+ ,ait)6 =ere re,usal to passen*er1s .is)es +oes not translate into +a#a*es in
a$sence o, $a+ ,ait)
,t is not su%%icient to prove t#at Pan 7m did not a&&ow Ou Bng $#o to oard to Austi%! t#e &atter?s c&aim
%or damages' Mere re%usa& to accede to t#e passenger?s wis#es does not necessari&! trans&ate into damages in
t#e asence o% ad %ait#' T#e sett&ed ru&e is t#at t#e &aw presumes good %ait# suc# t#at an! person w#o seeks
to e awarded damages due to acts o% anot#er #as t#e urden o% proving t#at t#e &atter acted in ad %ait# or
wit# i&& motive' T#e evidence presented ! Ou Bng $#o was insu%%icient to overcome t#e presumption o% good
%ait#' T#e! #ave %ai&ed to s#ow an! wanton, ma&evo&ent or reck&ess misconduct imputa&e to respondent Pan
7m in its re%usa& to accommodate petitioners in its Tok!o="an Francisco %&ig#t' Pan 7m cou&d not #ave acted
in ad %ait# ecause t#e! did not #ave con%irmed tickets and more important&!, t#e! were not in t#e passenger
mani%est'
12. Cases .)ere t)e Court )el+ airline lia$le ,or +a#a*es ,or )avin* acte+ in an+ ,ait)
(1) ,n (rtigas Jr' v' +u%t#ansa 6erman 7ir&ines ,nc', t#e $ourt ru&ed t#at t#ere was a va&id and inding
contract etween t#e air&ine and its passenger a%ter %inding t#at va&idating sticker on t#e passenger?s ticket #ad
t#e &etters ;('P'< appearing in t#e G:es' "tatus? o3 w#ic# means ;space con%irmed< and t#at t#e ticket is
con%irmed or va&idated' (8) ,n Pan 7merican For&d 7irwa!s ,nc' v' ,7$, et a&' w#ere a wou&d=e=passenger
#ad t#e necessar! ticket, aggage c&aim and c&earance %rom immigration a&& c&ear&! s#owing t#at s#e was a
con%irmed passenger and inc&uded in t#e passenger mani%est and !et was denied accommodation in said %&ig#t,
t#e $ourt awarded damages' (3) ,n 7rmovit, et a&' v' $7, et a&', t#e $ourt up#e&d t#e award o% damages made
against an air&ine %or gross neg&igence committed in t#e issuance o% tickets wit# erroneous entries as to t#e
time o% %&ig#t' (5) ,n 7&ita&ia 7irwa!s v' $7, et a&', t#e $ourt #e&d t#at w#en air&ine issues a ticket to a
passenger con%irmed on a particu&ar %&ig#t, on a certain date, a contract o% carriage arises, and t#e passenger
#as ever! rig#t to e3pect t#at #e wou&d %&! on t#at %&ig#t and on t#at date' ,% #e does not, t#en t#e carrier opens
itse&% to a suit %or reac# o% contract o% carriage' (4) 7n award o% damages was #e&d proper in t#e case o%
Ra&amea, et a&' v' $7, et a&' w#ere a con%irmed passenger inc&uded in t#e mani%est was denied accommodation
in suc# %&ig#t'
1. RK #eans @Re9uestA! not con,ir#e+6 Sarreal Sr. cs. Bapan 5irlines Co.
,n "arrea&, "r' v' Japan 7ir&ines $o', +td', t#e air&ine was #e&d not &ia&e %or damages w#ere t#e
passenger was not a&&owed to oard t#e p&ane ecause #is ticket #ad not een con%irmed' T#e stu on t#e
passenger?s ticket s#owed among ot#er coded items, under t#e co&umn ;status< t#e &etters ;:N< H w#ic# was
understood to mean ;:e9uest'< $&ear&!, t#is does not mean a con%irmation ut on&! a re9uest' ,t wou&d #ave
een di%%erent i% w#at was written on t#e stu were t#e &etter ;ok< in w#ic# case t#e petitioner wou&d #ave
een assured o% a seat on said %&ig#t' T#e passenger t#us was more o% a wait=&isted passenger t#an a regu&ar&!
ooked passenger' @erein, Ou Bng $#o?s ticket were on ;:N< status' T#e! were not con%irmed passengers
and t#eir names were not &isted in t#e passenger mani%est' ,n ot#er words, t#is is not a case w#ere Pan 7m
ound itse&% to transport Ou Bng $#o and t#erea%ter reneged on its o&igation' @ence, t#e air&ine cannot e
#e&d &ia&e %or damages'
13. Dvi+ence t)at tickets .ere never con,ir#e+
Bvidence s#ow t#at t#e tickets were never con%irmed %or good reasons: (1) T#e persistent ca&&s made
! Tagunicar to $ani&ao, and t#ose made ! Ou Bng $#o at t#e Mani&a, @ongkong and Tok!o o%%ices o% Pan
7m, are e&o9uent indications t#at Ou Bng $#o knew t#at t#eir tickets #ave not een con%irmed' (8) T#e
va&idation stickers w#ic# Tagunicar attac#ed to t#e tickets were t#ose intended %or t#e e3c&usive use o% air&ine
companies' 7s s#e #ad no aut#orit! to use t#em, t#e va&idation stickers are not va&id and inding' (3) T#e
names o% Ou Bng $#o did not appear in t#e passenger mani%est' (5) Tagunicar s#owed t#at t#e status o% t#e
"an Francisco=Eew Oork segment was ;(k<, meaning it was con%irmed, ut t#at t#e status o% t#e Tok!o="an
Francisco segment was sti&& ;on re9uest<' (4) $ani&ao testi%ied t#at on t#e da! t#at Ou Bng $#o were to depart
%or @ongkong, Tagunicar ca&&ed #er %rom t#e airport asking %or con%irmation o% t#e Tok!o="an Francisco
%&ig#t, and t#at w#en s#e to&d Tagunicar t#at s#e s#ou&d not #ave a&&owed Ou Bng $#o to &eave ecause t#eir
tickets #ave not een con%irmed, Tagunicar mere&! said ;1a#a&a na'< T#is was never controverted nor re%uted
! Tagunicar' (>) To prove t#at it rea&&! did not con%irm t#e ookings, $ani&ao pointed out t#at t#e va&idation
stickers w#ic# Tagunicar attac#ed to t#e tickets #ad ,7T7 8=/8=2002 stamped on it, w#ereas t#e ,7T7 numer
o% TF", is 8/=32002'
14. =o+i,ications as to t)e a#ount o, +a#a*es +ue to e9uity
Tagunicar s#ou&d e &ia&e %or #aving acted in ad %ait# in misrepresenting to Ou Bng $#o t#at t#eir
tickets #ave een con%irmed' @er cu&pai&it!, #owever, was proper&! mitigated' Ou Bng $#o testi%ied t#at #e
repeated&! tried to %o&&ow up on t#e con%irmation o% t#eir tickets wit# Pan 7m ecause #e douted t#e
con%irmation made ! Tagunicar' T#is is c&ear proo% t#at t#e! knew t#at t#e! mig#t e umped o%% at Tok!o
w#en t#e! decided to proceed wit# t#e trip' 7ware o% t#is risk, t#e! e3erted e%%orts to con%irm t#eir tickets in
Mani&a, t#en in @ongkong, and %ina&&! in Tok!o' :esu&tant&!, t#e modi%ication as to t#e amount o% damages
awarded is Aust and e9uita&e under t#e circumstances'
[--4]
RiJal Surety M ;nsurance vs. =acon+ray M Co. (GR L>-/"/! -% &e$ruary 1%4)
Bn 1anc, $oncepcion ($J): . concur
&acts' :i*a& "uret! T ,nsurance $o' seeks to recover %rom Macondra! T $o', ,nc', as aut#ori*ed agent,
Mani&a, o% 1arer "teams#ip +ines, ,nc', w#ic# operates t#e vesse& ;"" Tai Ping,< t#e sum o% P8,282'22,
representing t#e ma3imum va&ue recovera&e H under t#e corresponding i&& o% &ading H o% some mac#iner!
parts s#ipped, on oard said vesse&, at Eew Oork, and consigned to Bdwardson Manu%acturing $orporation, in
Mani&a, ut not disc#arged ! t#e vesse& in Mani&a, in view o% w#ic# :i*a& "uret! #ad to pa!, pursuant to its
contract o% insurance wit# t#e consignee, t#e va&ue o% said e%%ects to t#e &atter' ,n its answer, Macondra! set up
t#e de%ense o% prescription, w#ic# t#e &ower court sustained' @ence, t#e dismissa& o% t#e comp&aint ! t#e $F,
Mani&a, wit# costs'
:i*a& "uret! appea&ed direct&! to t#e "upreme $ourt' T#e "upreme $ourt a%%irmed t#e decision appea&ed
%rom, wit# costs against :i*a& "uret!'
1. Section 3! (itle ;! o, t)e Carria*e o, Goo+s $y Sea 5ct
T#e penu&timate paragrap# o% suparagrap# > reads ;in an! event t#e carrier and t#e s#ip s#a&& e
disc#arged %rom a&& &iai&it! in respect to &oss or damages un&ess suit is roug#t wit#in one !ear a%ter de&iver!
o% t#e goods or t#e date w#en t#e goods s#ou&d #ave een de&ivered: Provided, T#at i% a notice o% &oss or
damage, eit#er apparent or concea&ed, is not given as provided %or in t#is section, t#at %act s#a&& not a%%ect or
preAudice t#e rig#t o% t#e s#ipper to ring suit wit#in one !ear a%ter t#e de&iver! o% t#e goods or t#e date w#en
t#e goods s#ou&d #ave een de&ivered'<
-. Section 3! (itle ;! C8GS5! conte#plates cases o, +a#a*e! an+ even loss
T#e provision contemp&ates not on&! t#e case o% damage, ut, a&so, t#at o% &oss' ,t goes wit#out sa!ing
t#at t#ere cou&d e no possi&e disc#arge o% goods &ost during t#e vo!age and e%ore reac#ing t#e destination'
T#en again, said provision, &ikewise, anticipates two (8) ot#er possii&ities, vi*': 1) t#at de&iver! #as een
made, in w#ic# case t#e action s#ou&d e roug#t ;wit#in one !ear a%ter de&iver! o% t#e goods,< or 8) t#at no
de&iver! #as taken p&ace, in w#ic# event said period s#ou&d e computed %rom ;t#e date w#en t#e goods
s#ou&d #ave een de&ivered'< ,n t#e &atter contingenc!, t#e cause o% suc# non= de&iver! H t#at is to sa!,
w#et#er t#e goods #ave een disc#arged %rom t#e vesse& or not H is immateria&' ,% t#e goods #ave not een
disc#arged %rom t#e vesse&, t#e non=de&iver! is imputa&e to t#e carrier' "o wou&d it e, i% t#e goods #ad een
un&oaded %rom t#e vesse&, ut not de&ivered to t#e consignee' ,ndeed, in suc# case o% disc#arge o% t#e goods
%rom t#e vesse&, t#e carrier wou&d sti&& e &ia&e %or non=de&iver! o% t#e goods, ecause t#e same wou&d e due
to its own omission, i% it undertook to make t#e de&iver! ! itse&%, or to t#e omission o% its agent, i% t#e carrier
entrusted t#e custod! o% t#e goods and-or its de&iver! to a t#ird part!'
3. C8GS5 rules on statute o, li#itations to $e applie+ as it is t)e one stipulate+ in $ill o, la+in*
P#i&ippine statute o% &imitations o% action cannot e app&ied to t#e present case ecause t#e
corresponding i&& o% &ading H w#ic# is t#e contract and, #ence, t#e &aw etween t#e parties H e3press&!
stipu&ates t#at it is ;suAect to t#e Provisions o% t#e $arriage ! "ea 7ct o% t#e D'"' o% 7merica, approved 1>
7pri& 1.3>, w#ic# s#a&& e deemed to e incorporated< t#erein'
/. Reckonin* perio+ ,or prescription
,nasmuc# as t#e ;"" Tai Ping< arrived at t#e Port o% Mani&a on 8 Eovemer 1.>8 and &e%t it on 5
Eovemer 1.>8, it was on t#e &atter date t#at t#e carrier #ad t#e &ast opportunit! to de&iver t#e goodsC t#at t#e
period o% one !ear wit#in w#ic# t#e carrier cou&d e sued commenced to run, t#ere%ore, %rom 4 Eovemer
1.>8 and e3pired on 5 Eovemer 1.>3C and t#at said period #as e3pired e%ore t#e action was commenced on
12 Feruar! 1.>5'
[--%]
()e 5#erican ;nsurance Co. vs. Co#pania =ariti#a (GR L>-/212! 14 7ove#$er 1%3)
Bn 1anc, Maka&inta& (J): . concur
&acts' (n 11 7ugust 1.>8, a certain cargo insured wit# t#e 7merican ,nsurance $ompan! (7,$) was s#ipped
in Eew Oork, D"7 aoard ;M-" T(:B7D(:<, o% w#ic# t#e genera& agent in t#e P#i&ippines is Macondra! T
$o' ,nc'' T#e cargo, wit# an invoice va&ue o% K3,43.'>1 $,F $eu, was consigned to t#e order o% t#e importer
7t&as $onso&idated Mining and Deve&opment $orporation' ,nasmuc# as t#e %ina& port o% ca&& o% t#e ;M-"
T(:B7D(:< was Mani&a, t#e carrier, in accepting t#e cargo at t#e point o% s#ipment, agreed to transs#ip t#e
same, a%ter its disc#arge in Mani&a, aoard an inter=is&and vesse& to its destination in $eu' (n 1/ "eptemer
1.>8 t#e ;M-" T(:B7D(:< arrived at t#e port o% Mani&a and on t#e same date disc#arged t#e cargo in
9uestion' Pursuant to t#e arrangement t#e cargo was suse9uent&! &oaded aoard t#e ;"" ",ND,J(:, an inter=
is&and vesse&' T#e s#ipment was %ina&&! disc#arged in $eu on 85 "eptemer 1.>8' F#en t#e consignee took
de&iver! o% t#e s#ipment it was %ound to e s#ort o% 8 pieces o% tractor parts wort# K8,/35'//, or P11,2>3'18 at
t#e e3c#ange rate o% P3'.284' 7,$ paid t#e insured va&ue o% t#e &ost merc#andise to t#e consignee' To recover
t#e said sum o% P11,2>3'18, 7,$, as surogee o% t#e consignee?s rig#ts, %i&ed on 85 "eptemer 1.>3 a
comp&aint against t#e $ompa)ia Maritima and t#e Visa!an $eu Termina& $o', ,nc' as a&ternative de%endants'
T#e %ormer was sued as operator and owner o% ;"" ",ND,J(:< and t#e &atter as operator o% t#e arrastre
service at t#e port o% $eu, c#arged wit# t#e care and custod! o% a&& cargo disc#arged t#ere' ,n view o%
Maritima?s a&&egation in its answer t#at t#e &ost merc#andise #ad not actua&&! een de&ivered to it, 7,$ %i&ed
on > Eovemer 1.>5 a motion to admit its amended comp&aint imp&eading Macondra! and +u*on 1rokerage
$orporation as additiona& de%endants and e&iminating t#e Visa!an $eu Termina& $o', ,nc' T#e amended
comp&aint was admitted on 15 Eovemer 1.>5' (n 83 Decemer 1.>5 Macondra! moved to dismiss t#e
amended comp&aint against it on t#e ground t#at 7,$?s action #ad a&read! prescried under t#e provisions o%
t#e $arriage o% 6oods ! "ea 7ct' T#e motion to dismiss was granted and 7,$ interposed t#e present appea&
%rom t#e order o% dismissa&'
T#e "upreme $ourt a%%irmed t#e order a%%irmed %rom, wit# costs'
1. Section 3 ()! C8GS5
T#e provision provides ;,n an! event, t#e carrier and t#e s#ip s#a&& e disc#arged %rom a&& &iai&it! in
respect o% &oss or damage un&ess suit is roug#t wit#in one !ear a%ter de&iver! o% t#e goods or t#e date w#en
t#e goods s#a&& #ave een de&ivered'<
-. 5ction $ase+ on t)e contract o, carria*e up to ,inal port o, +estination
T#e action is ased on t#e contract o% carriage up to t#e %ina& port o% destination, w#ic# was $eu
$it!, %or w#ic# t#e corresponding %reig#t #ad een prepaid (1i&& o% +ading Eo' 13)' T#e use o% t#e term
;%orwarding agent o% t#e s#ipper< ($&ause 11 o% t#e i&& o% &ading) is not decisive o% t#e issue'
3. :rovisions o, $ill o, la+in* evi+encin* nature o, contract o, carria*e
T#e %o&&owing provisions o% t#e i&& o% &ading are t#e ones direct&! in point: (1) ;T#is i&& o% &ading
s#a&& #ave e%%ect suAect to t#e provisions o% t#e $arriage o% 6oods ! "ea 7ct o% t#e Dnited "tates o%
7merica' approved 7pri& 1>, 1.3>, w#ic# s#a&& e deemed to e incorporated #erein and not#ing #erein
contained s#a&& e deemed a surrender ! t#e $arrier o% an! o% its rig#ts or immunities or an increase o% an!
o% its responsii&ities or &iai&ities under said 7ct' T#e provisions stated in said 7ct (e3cept as ma! e
ot#erwise speci%ica&&! provided #erein) s#a&& govern e%ore t#e goods are &oaded on and a%ter t#e! are
disc#arged %rom t#e s#ip and t#roug#out t#e entire time t#e goods are in t#e custod! o% t#e carrier' ' ' ; and
;(1.) ,n an! event t#e carrier and t#e s#ip s#a&& e disc#arged %rom a&& &iai&it! in respect o% &oss or damage
un&ess suit is roug#t wit#in one !ear a%ter de&iver! o% t#e goods or t#e date w#en t#e goods s#ou&d #ave een
de&ivered'<
/. (ranss)ip#ent o, car*o not a separate transaction entere+ into $y =acon+ray6 (ransaction
re#ains to covere+ $y C8GS5
T#e transs#ipment o% t#e cargo %rom Mani&a to $eu was not a separate transaction %rom t#at
origina&&! entered into ! Macondra!, as genera& agent %or t#e ;M-" T(:B7D(:<' ,t was part o%
Macondra!?s o&igation under t#e contract o% carriage and t#e %act t#at t#e transs#ipment was made via an
inter=is&and vesse& did not operate to remove t#e transaction %rom t#e operation o% t#e $arriage o% 6oods !
"ea 7ct' ("ee 6o $#ang T $o', ,nc' vs' 7oiti* T $o', ,nc', ./ P#i&' 1.0)'
[-3"]
=itsui vs. C5 (GR 11%231! 11 =arc) 1%%4)
"econd Division, Mendo*a (J): 5 concur
&acts' Mitsui ('"'P' +ines +td' is a %oreign corporation represented in t#e P#i&ippines ! its agent,
Magsa!sa! 7gencies' ,t entered into a contract o% carriage t#roug# Meister Transport, ,nc', an internationa&
%reig#t %orwarder, wit# +avine +oungewear Manu%acturing $orporation to transport goods o% t#e &atter %rom
Mani&a to +e @avre, France' Mitsui undertook to de&iver t#e goods to France 8/ da!s %rom initia& &oading' (n
85 Ju&! 1..1, Mitsui?s vesse& &oaded +avine?s container van %or carriage at t#e said port o% origin' @owever, in
Paos#iung, Taiwan t#e goods were not transs#ipped immediate&!, wit# t#e resu&t t#at t#e s#ipment arrived in
+e @avre on&! on 15 Eovemer 1..1' T#e consignee a&&eged&! paid on&! #a&% t#e va&ue o% t#e said goods on
t#e ground t#at t#e! did not arrive in France unti& t#e ;o%% season< in t#at countr!' T#e remaining #a&% was
a&&eged&! c#arged to t#e account o% +avine w#ic# in turn demanded pa!ment %rom Mitsui t#roug# its agent'
7s Mitsui denied +avine?s c&aim, t#e &atter %i&ed a case in t#e :T$ on 15 7pri& 1..8' ,n t#e origina&
comp&aint, +avine imp&eaded as de%endants Meister Transport, ,nc' and Magsa!sa! 7gencies, ,nc', t#e &atter
as agent o% Mitsui ('"'P' +ines +td' (n 82 Ma! 1..3, it amended its comp&aint ! imp&eading Mitsui as
de%endant in &ieu o% its agent' T#e parties to t#e case t#us ecame +avine as p&ainti%%, on one side, and Meister
and Mitsui as represented ! Magsa!sa! 7gencies, ,nc', as de%endants on t#e ot#er' Mitsui %i&ed a motion to
dismiss a&&eging t#at t#e c&aim against it #ad prescried under t#e $arriage o% 6oods ! "ea 7ct' T#e tria&
court denied Mitsui?s motion as we&& as its suse9uent motion %or reconsideration'
(n petition %or certiorari, and on 84 Januar! 1..4, t#e $ourt o% 7ppea&s sustained t#e tria& court?s orders'
Mistui?s motion %or reconsideration was &ikewise denied 88 Marc# 1..4' @ence, t#e petition %or review'
T#e "upreme $ourt a%%irmed t#e decision o% t#e $ourt o% 7ppea&s'
1. T3() o, t)e Carria*e o, Goo+s $y Sea 5ct (C8GS5)
"ection 3 (>) provides ;un&ess notice o% &oss or damage and t#e genera& nature o% suc# &oss or damage
e given in writing to t#e carrier or #is agent at t#e port o% disc#arge or at t#e time o% t#e remova& o% t#e goods
into t#e custod! o% t#e person entit&ed to de&iver! t#ereo% under t#e contract o% carriage, suc# remova& s#a&& e
prima %acie evidence o% t#e de&iver! ! t#e carrier o% t#e goods as descried in t#e i&& o% &ading' ,% t#e &oss or
damage is not apparent, t#e notice must e given wit#in t#ree da!s o% t#e de&iver!' "aid notice o% &oss or
damage ma! e endorsed upon t#e receipt %or t#e goods given ! t#e person taking de&iver! t#ereo%' T#e
notice in writing need not e given i% t#e state o% t#e goods #as at t#e time o% t#eir receipt een t#e suAect o%
Aoint surve! or inspection' ,n an! event t#e carrier and t#e s#ip s#a&& e disc#arged %rom a&& &iai&it! in respect
o% &oss or damage un&ess suit is roug#t wit#in one !ear a%ter de&iver! o% t#e goods or t#e date w#en t#e goods
s#ou&d #ave een de&ivered: Provided, t#at, i% a notice o% &oss or damage, eit#er apparent or concea&ed, is not
given as provided %or in t#is section, t#at %act s#a&& not a%%ect or preAudice t#e rig#t o% t#e s#ipper to ring suit
wit#in one !ear a%ter t#e de&iver! o% t#e goods or t#e date w#en t#e goods s#ou&d #ave een de&ivered' ,n t#e
case o% an! actua& or appre#ended &oss or damage, t#e carrier and t#e receiver s#a&& give a&& reasona&e
%aci&ities to eac# ot#er %or inspecting and ta&&!ing t#e goods'<
-. @LossA construe+6 7o loss .)en *oo+s si#ply #is+elivere+6 5n* vs. 5#erican Stea#s)ip
5*encies
,n 7ng v' 7merican "teams#ip 7gencies, ,nc', t#e 9uestion was w#et#er an action %or t#e va&ue o%
goods w#ic# #ad een de&ivered to a part! ot#er t#an t#e consignee is %or ;&oss or damage< wit#in t#e
meaning o% a3(>) o% t#e $(6"7' ,t was #e&d t#at t#ere was no &oss ecause t#e goods #ad simp&! een
misde&ivered' ;+oss< re%ers to t#e deterioration or disappearance o% goods' 7s de%ined in t#e $ivi& $ode and
as app&ied to "ection 3(>), paragrap# 5 o% t#e $arriage o% 6oods ! "ea 7ct, ;&oss< contemp&ates mere&! a
situation w#ere no de&iver! at a&& was made ! t#e s#ipper o% t#e goods ecause t#e same #ad peris#ed, gone
out o% commerce, or disappeared in suc# a wa! t#at t#eir e3istence is unknown or t#e! cannot e recovered'
3. <eterioration o, *oo+s +ue to +elay constitutes @lossA or @+a#a*eA6 1 year prescription un+er
T3()! C8GS5
$on%orma&! wit# t#e concept o% w#at constitutes ;&oss< or ;damage,< t#e deterioration o% goods due
to de&a! in t#eir transportation constitutes ;&oss< or ;damage< wit#in t#e meaning o% 3(>), so t#at as suit was
not roug#t wit#in one !ear t#e action was arred' F#atever damage or inAur! is su%%ered ! t#e goods w#i&e
in transit wou&d resu&t in &oss or damage to eit#er t#e s#ipper or t#e consignee' 7s &ong as it is c&aimed,
t#ere%ore, t#at t#e &osses or damages su%%ered ! t#e s#ipper or consignee were due to t#e arriva& o% t#e goods
in damaged or deteriorated condition, t#e action is sti&& asica&&! one %or damage to t#e goods, and must e
%i&ed wit#in t#e period o% one !ear %rom de&iver! or receipt, under t#e provision o% t#e $arriage o% 6oods !
"ea 7ct'
/. Rationale ,or t)e 1 year perio+ o, li#itation
T#e one=!ear period o% &imitation is designed to meet t#e e3igencies o% maritime #a*ards' ,n a case
w#ere t#e goods s#ipped were neit#er &ost nor damaged in transit ut were, on t#e contrar!, de&ivered in port
to someone w#o c&aimed to e entit&ed t#ereto, t#e situation is di%%erent, and t#e specia& need %or t#e s#ort
period o% &imitation in cases o% &oss or damage caused ! maritime peri&s does not otain'
2. <a#a*e +ue to ot)er causes not covere+ $y C8GS5
Damages su%%ered ! #im as a resu&t o% t#e de&a! in t#e s#ipment o% #is cargo are not covered ! t#e
prescriptive provision o% t#e $arriage o% 6oods ! "ea 7ct, i% suc# damages were due, not to t#e deterioration
and deca! o% t#e goods w#i&e in transit, ut to ot#er causes independent o% t#e condition o% t#e cargo upon
arriva&, &ike a drop in t#eir market va&ue' @erein, t#ere is neit#er deterioration nor disappearance nor
destruction o% goods caused ! t#e carrier?s reac# o% contract' F#atever reduction t#ere ma! #ave een in
t#e va&ue o% t#e goods is not due to t#eir deterioration or disappearance ecause t#e! #ad een damaged in
transit'
. ;ssue not a$out lia$ility ,or )an+lin* o, *oo+s $ut lia$ility un+er t)e contract o, carria*e6 1"
year prescription accor+in* to *eneral la.s
F#at is in issue in t#e petition is not t#e &iai&it! o% Mistui %or its #and&ing o% goods as provided !
3(>) o% t#e $(6"7, ut its &iai&it! under its contract o% carriage wit# +avine as covered ! &aws o% more
genera& app&ication' T#e 9uestion e%ore t#e tria& court is not t#e particu&ar sense o% ;damages< as it re%ers to
t#e p#!sica& &oss or damage o% a s#ipper?s goods as speci%ica&&! covered ! a3(>) o% $(6"7 ut Mitsui?s
potentia& &iai&it! %or t#e damages it #as caused in t#e genera& sense and, as suc#, t#e matter is governed !
t#e $ivi& $ode, t#e $ode o% $ommerce and $(6"7, %or t#e reac# o% its contract o% carriage wit# +avine'
T#e suit is not %or ;&oss or damage< to goods contemp&ated in a3(>), t#e 9uestion o% prescription o% action is
governed not ! t#e $(6"7 ut ! 7rtic&e 1155 o% t#e $ivi& $ode w#ic# provides %or a prescriptive period o%
ten !ears'
[-31]
=ayer Steel :ipe vs. C5 (GR 1-/"2"! 1% Bune 1%%3)
"econd Division, Puno (J): 5 concur
&acts' ,n 1./3, @ongkong 6overnment "upp&ies Department (@ongkong) contracted Ma!er "tee& Pipe
$orporation (Ma!er) to manu%acture and supp&! various stee& pipes and %ittings' From 7ugust to (ctoer
1./3, Ma!er s#ipped t#e pipes and %ittings to @ongkong as evidenced ! ,nvoice M"P$=1215, M"P$=1214,
M"P$=1284, M"P$=1282, M"P$=1210 and M"P$=1288' Prior to t#e s#ipping, Ma!er insured t#e pipes and
%ittings against a&& risks wit# "out# "ea "uret! and ,nsurance $o', ,nc' ("out# "ea) and $#arter ,nsurance
$orp' ($#arter)' T#e pipes and %ittings covered ! ,nvoice M"P$=1215, 1214 and 1284 wit# a tota& amount o%
D"K818,008'2. were insured wit# "out# "ea, w#i&e t#ose covered ! ,nvoice 1282, 1210 and 1288 wit# a
tota& amount o% D"K15.,502'22 were insured wit# $#arter' Ma!er and @ongkong Aoint&! appointed ,ndustria&
,nspection (,nternationa&) ,nc' as t#ird=part! inspector to e3amine w#et#er t#e pipes and %ittings are
manu%actured in accordance wit# t#e speci%ications in t#e contract' ,ndustria& ,nspection certi%ied a&& t#e pipes
and %ittings to e in good order condition e%ore t#e! were &oaded in t#e vesse&' Eonet#e&ess, w#en t#e goods
reac#ed @ongkong, it was discovered t#at a sustantia& portion t#ereo% was damaged' @ongkong and Ma!er
%i&ed a c&aim against "ourt# "ea and $#arter %or indemnit! under t#e insurance contract' $#arter paid
@ongkong t#e amount o% @PK>5,.25'04' @ongkong and Ma!er demanded pa!ment o% t#e a&ance o%
@PK8..,354'32 representing t#e cost o% repair o% t#e damaged pipes' "out# "ea and $#arter re%used to pa!
ecause t#e insurance surve!or?s report a&&eged&! s#owed t#at t#e damage is a %actor! de%ect'
(n 10 7pri& 1./>, @ongkong and Ma!er %i&ed an action against "out# "ea and $#arter to recover t#e sum o%
@PK8..,354'32' T#e tria& court ru&ed in %avor o% t#e %ormer' ,t %ound t#at t#e damage to t#e goods is not due
to manu%acturing de%ects' ,t a&so noted t#at t#e insurance contracts e3ecuted ! Ma!er wit# "out# "ea and
$#arter are ;a&& risks< po&icies w#ic# insure against a&& causes o% conceiva&e &oss or damage' T#e on&!
e3ceptions are t#ose e3c&uded in t#e po&ic!, or t#ose sustained due to %raud or intentiona& misconduct on t#e
part o% t#e insured' T#us, t#e court ordered "out# "ea and $#arter to pa! in so&idum t#e sum e9uiva&ent in
P#i&ippine currenc! o% @PK8..,354'32 wit# &ega& rate o% interest as o% t#e %i&ing o% t#e comp&aintC
P122,222'22 as and %or attorne!?s %eesC and costs o% suit'
"out# "ea and $#arter e&evated t#e case to t#e $ourt o% 7ppea&s' T#e appe&&ate court a%%irmed t#e %inding o%
t#e tria& court t#at t#e damage is not due to %actor! de%ect and t#at it was covered ! t#e ;a&& risks< insurance
po&icies issued ! "out# "ea and $#arter to Ma!er' @owever, it set aside t#e decision o% t#e tria& court and
dismissed t#e comp&aint on t#e ground o% prescription' @ence, t#e petition %or review on certiorari %i&ed !
Ma!er and @ongkong'
T#e "upreme $ourt granted t#e petition, set aside t#e 15 Decemer 1..4 decision and t#e 88 Feruar! 1..>
reso&ution o% t#e $ourt o% 7ppea&s, and reinstated t#e decision o% t#e :T$C wit#out costs'
1. Section 3 () o, C8GS5
"ection 3(>) o% t#e $arriage o% 6oods ! "ea 7ct provides t#at ;t#e carrier and t#e s#ip s#a&& e
disc#arged %rom a&& &iai&it! in respect o% &oss or damage un&ess suit is roug#t wit#in one !ear a%ter de&iver!
o% t#e goods or t#e date w#en t#e goods s#ou&d #ave een de&ivered'<
-. Section 3 () o, C8GS5 applies to carriers an+ not to insurers6 ;nsurers covere+ $y ;nsurance
Co+e
"ection 3(>) o% t#e $arriage o% 6oods ! "ea 7ct states t#at t#e carrier and t#e s#ip s#a&& e
disc#arged %rom a&& &iai&it! %or &oss or damage to t#e goods i% no suit is %i&ed wit#in one !ear a%ter de&iver! o%
t#e goods or t#e date w#en t#e! s#ou&d #ave een de&ivered' Dnder t#is provision, on&! t#e carrier?s &iai&it!
is e3tinguis#ed i% no suit is roug#t wit#in one !ear' 1ut t#e &iai&it! o% t#e insurer is not e3tinguis#ed ecause
t#e insurer?s &iai&it! is ased not on t#e contract o% carriage ut on t#e contract o% insurance' 7 c&ose reading
o% t#e &aw revea&s t#at t#e $arriage o% 6oods ! "ea 7ct governs t#e re&ations#ip etween t#e carrier on t#e
one #and and t#e s#ipper, t#e consignee and-or t#e insurer on t#e ot#er #and' ,t de%ines t#e o&igations o% t#e
carrier under t#e contract o% carriage' ,t does not, #owever, a%%ect t#e re&ations#ip etween t#e s#ipper and t#e
insurer' T#e &atter case is governed ! t#e ,nsurance $ode'
3. &ilipino =erc)ants ;nsurance Co. vs. 5le?an+ro +i,,erent ,ro# case at $ar
T#e Fi&ipino Merc#ants case is di%%erent %rom t#e case at ar' ,n Fi&ipino Merc#ants, it was t#e insurer
w#ic# %i&ed a c&aim against t#e carrier %or reimursement o% t#e amount it paid to t#e s#ipper' ,n t#e case at
ar, it was t#e s#ipper w#ic# %i&ed a c&aim against t#e insurer' T#e asis o% t#e s#ipper?s c&aim is t#e ;a&& risks<
insurance po&icies issued ! "out# "ea and $#arter to Ma!er'
/. :roper application o, rulin* in &ilipino =erc)ants
T#e ru&ing in Fi&ipino Merc#ants s#ou&d app&! on&! to suits against t#e carrier %i&ed eit#er ! t#e
s#ipper, t#e consignee or t#e insurer' F#en t#e court said in Fi&ipino Merc#ants t#at "ection 3(>) o% t#e
$arriage o% 6oods ! "ea 7ct app&ies to t#e insurer, it meant t#at t#e insurer, &ike t#e s#ipper, ma! no &onger
%i&e a c&aim against t#e carrier e!ond t#e one=!ear period provided in t#e &aw' 1ut it does not mean t#at t#e
s#ipper ma! no &onger %i&e a c&aim against t#e insurer ecause t#e asis o% t#e insurer?s &iai&it! is t#e
insurance contract' 7n insurance contract is a contract w#ere! one part!, %or a consideration known as t#e
premium, agrees to indemni%! anot#er %or &oss or damage w#ic# #e ma! su%%er %rom a speci%ied peri&'
2. 7ature o, an @all risksA insurance policy6 :rescription as per 5rticle 11// 7CC
7n ;a&& risks< insurance po&ic! covers a&& kinds o% &oss ot#er t#an t#ose due to wi&&%u& and %raudu&ent
act o% t#e insured' @erein, "out# "ea and $#arter issued t#e ;a&& risks< po&icies to Ma!er, t#e! ound
t#emse&ves to indemni%! t#e &atter in case o% &oss or damage to t#e goods insured' "uc# o&igation prescries
in ten !ears, in accordance wit# 7rtic&e 1155 o% t#e Eew $ivi& $ode'
[234] hewara% vs. PAL, see [F a2ter +7]
[-32]
Barrios vs. Go ()on* (GR L>131%-! 3" =arc) 1%3)
Bn 1anc, 1arrera (J): 12 concur
&acts' @onorio M' 1arrios was, on Ma! 1 and 8, 1.4/, captain and-or master o% t#e MV @enr! , o% t#e
Fi&&iam +ines ,ncorporated, o% $eu $it!, p&!ing etween and to and %rom $eu $it! and ot#er sout#ern
cities and ports, among w#ic# are Dumaguete $it!, Ramoanga $it!, and Davao $it!' 7t aout /:22 p'm' o% 1
Ma! 1.4/, 1arrios in #is capacit! as suc# captain and-or master o% t#e a%oresaid MV @enr! ,, received or
ot#erwise intercepted an "'('"' distress signa& ! &inkers %rom t#e MV 7&%redo, owned and-or operated !
$ar&os 7' 6o T#ong T $ompan!' 7cting on and-or answering t#e "'('"' ca&&, 1arrios, a&so in #is capacit! as
captain and-or master o% t#e MV @enr! ,, w#ic# was t#en sai&ing or navigating %rom Dumaguete $it!, a&tered
t#e course o% said vesse&, and steered and #eaded towards t#e eckoning MV Don 7&%redo, w#ic# 1arrios
%ound to e in trou&e, due to engine %ai&ure and t#e &oss o% #er prope&&er, %or w#ic# reason, it was dri%ting
s&ow&! sout#ward %rom Eegros ,s&and towards 1orneo in t#e open $#ina "ea, at t#e merc! o% a moderate
easter&! wind' 7t aout /:84 p'm' on t#e same da!, t#e MV @enr!, under t#e command o% 1arrios, succeeded
in getting near t#e MV Don 7&%redo H in %act as near as 0 seven meters %rom t#e &atter s#ip H and wit# t#e
consent and know&edge o% t#e captain and-or master o% t#e MV Don 7&%redo, 1arrios caused t#e &atter vesse&
to e tied to, or we&&=secured and connected wit# tow &ines %rom t#e MV @enr! ,C and in t#at manner, position
and situation, t#e &atter #ad t#e MV Don 7&%redo in tow and proceeded towards t#e direction o% Dumaguete
$it!, as evidenced ! a written certi%icate to t#is e%%ect e3ecuted and accomp&is#ed ! t#e Master, t#e $#ie%
Bngineer, t#e $#ie% (%%icer, and t#e "econd Bngineer o% t#e MV Don 7&%redo, w#o were t#en on oard t#e
&atter s#ip at t#e time o% t#e occurrence stated aove' 7t aout 4:12 a'm', 8 Ma! 1.4/, or a%ter a&most . #ours
during t#e nig#t, wit# t#e MV Don 7&%redo sti&& in tow ! t#e MV @enr! ,, and w#i&e ot# vesse&s were
approac#ing t#e vicinit! o% 7po ,s&and o%% Ramoanga town, Eegros (rienta&, t#e MV +u3, a sister s#ip o% t#e
MV Don 7&%redo, was sig#ted #eading towards t#e direction o% t#e a%oresaid two vesse&s, reac#ing t#en 14
minutes &ater, or at aout 4:84 a'm' T#ereupon, at t#e re9uest and instance o% t#e captain and-or master o% t#e
MV Don 7&%redo, 1arrios caused t#e tow &ines to e re&eased, t#ere! a&so re&easing t#e MV Don 7&%redo'
1arrios conc&udes t#at t#e! esta&is# an impending sea peri& %rom w#ic# sa&vage o% a s#ip wort# more t#an
P122 222'22, p&us &i%e and cargo was done, w#i&e 6o T#ong insists t#at t#e %acts made out no suc# case, ut
t#at w#at mere&! #appened was on&! mere towage %rom w#ic# 1arrios cannot c&aim an! compensation or
remuneration independent&! o% t#e s#ipping compan! t#at owned t#e vesse& commanded ! #im' 1roug#t to
t#e $F, o% Mani&a ($ivi& $ase 3081.), t#e court t#erein dismissed t#e caseC wit# cost against 1arrios' 1arrios
interposed an appea&'
T#e "upreme $ourt a%%irmed t#e decision o% t#e &ower court in a&& respects, wit# costs against 1arrios'
1. Section 1! Salva*e La.
"ection 1 o% t#e "a&vage +aw (7ct Eo' 8>1>), provides t#at ;w#en in case o% s#ipwreck, t#e vesse& or
its cargo s#a&& e e!ond t#e contro& o% t#e crew, or s#a&& #ave een aandoned ! t#em, and picked up and
conve!ed to a sa%e p&ace ! ot#er persons, t#e &atter s#a&& e entit&ed to a reward %or t#e sa&vage' T#ose w#o,
not eing inc&uded in t#e aove paragrap#, assist in saving a vesse& or its cargo %rom s#ipwreck, s#a&& e
entit&ed to a &ike reward'<
-. Salva*e +e,ine+
7ccording to "ection 1, 7ct 8>1>, t#ose w#o assist in saving a vesse& or its cargo %rom s#ipwreck,
s#a&& e entit&ed to a reward (sa&vage)' ;"a&vage< #as een de%ined as ;t#e compensation a&&owed to persons
! w#ose assistance a s#ip or #er cargo #as een saved, in w#o&e or in part, %rom impending peri& on t#e sea,
or in recovering suc# propert! %rom actua& &oss, as in case o% s#ipwreck, dere&ict, or recapture'<
3. Dle#ents ,or a vali+ salva*e clai#6 Drlan*er M Galin*er case
,n t#e Br&anger T 6a&inger case, it was #e&d t#at t#ree e&ements are necessar! to a va&id sa&vage
c&aim, name&!, (1) a marine peri&, (8) service vo&untari&! rendered w#en not re9uired as an e3isting dut! or
%rom a specia& contract, and (3) success in w#o&e or in part, or t#at t#e service rendered contriuted to suc#
success'
/. 7o #arine peril to ?usti,y vali+ salva*e clai#
T#ere was no marine peri& to Austi%! a va&id sa&vage c&aim ! 1arrios against 6o T#ong' ,t appears
t#at a&t#oug# 6o T#ong?s vesse& in 9uestion was, on t#e nig#t o% 1 Ma! 1.4/, in a #e&p&ess condition due to
engine %ai&ure, it did not dri%t too %ar %rom t#e p&ace w#ere it was' T#e weat#er was %air, c&ear, and good' T#e
waves were sma&& and too s&ig#t, so muc# so, t#at t#ere were on&! ripp&es on t#e sea, w#ic# was 9uite smoot#'
During t#e towing o% t#e vesse& on t#e same nig#t, t#ere was moon&ig#t' 7&t#oug# said vesse& was dri%ting
towards t#e open sea, t#ere was no danger o% its %oundering or eing stranded, as it was %ar %rom an! is&and or
rocks' ,n case o% danger o% stranding, its anc#or cou&d e re&eased, to prevent suc# occurrence' T#ere was no
danger t#at 6o T#ong?s vesse& wou&d sink in view o% t#e smoot#ness o% t#e sea and t#e %airness o% t#e
weat#er' T#at t#ere was asence o% danger is s#own ! t#e %act t#at said vesse& or its crew did not even %ind it
necessar! to &ower its &aunc# and two motor oats, in order to evacuate its passengers aoard' Eeit#er did t#e!
%ind occasion to Aettison t#e vesse&?s cargo as a sa%et! measure' Eeit#er t#e passengers nor t#e cargo were in
danger o% peris#ing' 7&& t#at t#e vesse&?s crew memers cou&d not do was to move t#e vesse& on its own
power' T#at did not make t#e vesse& a 9uasi=dere&ict'
2. Contract o, to.a*e per,ecte+ even .it)out .ritten a*ree#ent
Tug w#ic# put &ine aoard &iert! s#ip w#ic# was not in danger or peri& ut w#ic# #ad reduced its
engine speed ecause o% #ot grounds, and assisted s#ip over ar and, t#erea%ter, dropped tow&ine and stood !
w#i&e s#ip proceeded to dock under own power, was entit&ed, in asence o% written agreement as to amount to
e paid %or services, to pa!ment %or towage services, and not %or sa&vage services' @erein, in consenting to
1arrios? o%%er to tow t#e vesse&, 6o T#ong (t#roug# t#e captain o% its vesse& MV Don 7&%redo) t#ere!
imp&ied&! entered into a Auridica& re&ation o% ;towage< wit# t#e owner o% t#e vesse& MV @enr! ,, captained !
1arrios, t#e Fi&&iam +ines'
. 8nly o.ner entitle+ to re#uneration in to.a*e
,% t#e contract t#us created is one %or towage, t#en on&! t#e owner o% t#e towing vesse&, to t#e
e3c&usion o% t#e crew o% t#e said vesse&, ma! e entit&ed to remuneration'T#e courts #ave to draw a distinct
&ine etween sa&vage and towageC %or t#e reason t#at a reward oug#t sometimes to e given to t#e crew o% t#e
sa&vage vesse& and to ot#er participants in sa&vage services, and suc# reward s#ou&d not e given i% t#e
services were #e&d to e mere&! towage' T#e master and memers o% t#e crew o% a tug were not entit&ed to
participate in pa!ment ! &iert! s#ip %or services rendered ! tug w#ic# were towage services and not
sa&vage services' T#e distinction etween sa&vage and towage is o% importance to t#e crew o% t#e sa&vaging
s#ip, %or t#e %o&&owing reasons: ,% t#e contract %or towage is in %act towage, t#en t#e crew does not #ave an!
interest or rig#ts in t#e remuneration pursuant to t#e contract' 1ut i% t#e owners o% t#e respective vesse&s are
o% a sa&vage nature, t#e crew o% t#e sa&vaging s#ip is entit&ed to sa&vage, and can &ook to t#e sa&ved vesse& %or
its s#are'
3. 8.ner expressly .aive+ clai# ,or co#pensation! captain not entitle+ t)ere,ore
7s t#e vesse&=owner, Fi&&iam +ines, #ad e3press&! waived its c&aim %or compensation %or t#e towage
service rendered to 6o T#ong, it is c&ear t#at 1arrios, w#ose rig#t i% at a&& depends upon and not separate %rom
t#e interest o% #is emp&o!er, is not entit&ed to pa!ment %or suc# towage service'
4. D9uity cannot $e resorte+ i, t)ere is an express provision o, la.
1arrios cannot invoke e9uit! in support o% #is c&aim %or compensation against 6o T#ong' T#ere eing
an e3press provision o% &aw (7rt' 8158, $ivi& $ode) app&ica&e to t#e re&ations#ip created in t#e case, i'e' t#at
o% a 9uasi=contract o% towage w#ere t#e crew is not entit&ed to compensation separate %rom t#at o% t#e vesse&,
t#ere is no occasion to resort to e9uita&e considerations'
[23/] =anila (ailroad vs. =acondra-, see [3!+]
[-33]
Eallace vs. :u?alte Co. (GR 1""1%! -% =arc) 1%1)
"econd Division, More&and (J): 3 concur, 1 concur in resu&t
&acts' (n 5 7ugust, 1.13, t#e sc#ooner Podiak was &ost o%% t#e coast o% Mindoro, #aving een &own on #er
side ! #eav! winds' "#e was deserted ! t#e o%%icers and crew' ,n t#is condition s#e was %&oating at t#e
merc! o% t#e e&ements %or 3 or 5 da!s' (n 0 7ugust, t#e report o% #er &oss reac#ed t#e $o&&ector o% $ustoms o%
t#e P#i&ippine ,s&ands w#o steamers and vesse& p&!ing in P#i&ippine water, dec&aring t#e Podiak a dere&ict and
a danger to navigation' 7s soon as t#e circu&ar &etter was received ! Migue& PuAa&te and Migue& (ssorio t#e!
c#artered t#e coast guard cutter Mindoro and proceeded to searc# %or t#e &ost sc#ooner' (n / 7ugust t#e! &e%t
t#e port o% Mani&a carr!ing on oard $aptain Jose Mu)o* and some men, w#o were to take c#arge o%, and
direct, t#e sa&vage operations' Two da!s &ater t#e Podiak was &ocated, %&oating aandoned on #er side, wit# a&&
#er sai&s un%ur&ed and under water' ,mmediate&! a oat, wit# $aptain Jose Mu)o* and #is men, was &owered
%rom t#e coast guard cutter and, in t#e midst o% a #eav! sea and strong wind, t#e! succeeded in making %ast a
rope to t#e stern o% t#e Podiak' T#e! towed #er into t#e port o% Po&a, reac#ing t#at port a da! or two &ater,
t#e! eing o&iged to proceed ver! s&ow&! not on&! on account o% t#e #eav! sea ut a&so ! reason o% t#e %act
t#at t#e Podiak was %u&& o% water' (nce in Po&a 1a! men were &e%t in c#arge o% t#e vesse& w#i&e $aptain Jose
Mu)o* went ack to Mani&a on t#e Mindoro, and reported to #is emp&o!ers' T#e! immediate&! c#artered t#e
steamer +akandu&a to carr! workmen and to tow a &ig#ter ca&&ed t#e Pa9uita wit# sa&vage materia&s and
imp&ements to Po&a 1a!' T#e! a&so dispatc#ed t#e steamer Maria +uisa O' to assist in t#e sa&vage work' (n 18
7ugust 1.13 T#omas 7' Fa&&ace?s agent de&ivered to PuAa&te a &etter o%%ering to pa! %or t#e services rendered
in sa&ving t#e vesse&, ut not to %urt#er e3penses'
7n action o% rep&evin was egun ! t#e owner (Fa&&ace) to recover possession o% t#e Podiak w#ic# #ad een
deserted ! its captain and crew ! reason o% its #aving een capsi*ed ! a ga&e and w#ic# #ad een %ound,
taken possession o% and towed into port ! Migue& PuAa&te and Migue& (ssorio w#o, at t#e time t#e action was
egun, were engaged in comp&eting t#e sa&vage o% t#e vesse&' Migue& PuAa&te and Migue& (ssorio set up t#eir
rig#ts on t#e vesse& as sa&vors and contend t#at t#e! were entit&ed to t#e possession o% t#e vesse& unti& t#e
sa&vage operations were comp&eted and t#at, i% possession were taken %rom t#em e%ore t#at time, t#e! were
entit&ed to t#e same compensation as t#e! wou&d een i% Fa&&ace #ad a&&owed t#em to comp&ete t#e work' (n
t#e evidence t#e tria& court ordered t#e vesse& de&ivered to Fa&&ace, ut as a condition o% suc# de&iver!
Fa&&ace was re9uired to pa! t#e Migue& PuAa&te and Migue& (ssorio t#e sum o% P4,422 ;on or e%ore t#e %irst
da! o% 7pri&, 1.15, and in case pa!ment t#ereo% is not made as stated t#e de%endants s#a&& #ave Audgment %or
t#e possession o% t#e vesse& %or t#e purpose o% disposing o% it to satis%! t#eir &ien %or sa&vage upon it'< From
t#is Audgment Fa&&ace appea&ed'
T#e "upreme $ourt a%%irmed t#e Audgment appea&ed %rom, wit# costs against Fa&&ace'
1. Fncontroverte+ ,acts in t)e case
(1) Podiak capsi*ed o%% t#e coast o% Mindoro during a storm and t#at s#e was deserted ! #er o%%icers
and crew and &e%t %&oating on #er side wit# sai&s un%ur&ed and under water' (8) T#e 1ureau o% Eavigation o% t#e
P#i&ippine ,s&ands dec&ared t#e vesse& a dere&ict and dangerous to navigation and noti%ied t#e pu&ic o% t#e
coast t#at s#e was %&oating as a dere&ict somew#ere o%% t#e coast o% Mindoro' (3) B3penditures were incurred
! PuAa&te and (ssorio in t#eir attempt to sa&ve t#e vesse&'
-. :arties +e,en+ant6 Ger$al or+er in #akin* 8ssorio a party +e,en+ant assu#e+
PuAa&te T $o' %i&ed an answer sa!ing t#at it #ad not#ing to do wit# t#e sa&vage operations and #as
taken no part t#erein, and t#at it #ad no interest w#atever in t#e &itigation' Migue& PuAa&te %i&ed an answer
setting out t#e %acts and asking t#at t#e! e a&&owed proper compensation and t#e e3penses incurred in t#e
sa&vage o% t#e Podiak #e acted Aoint&! wit# one Migue& (ssorio w#o was interested e9ua&&! wit# #imse&% and
asked t#at #e e made a part! de%endant' F#i&e t#ere appears in t#e i&& o% e3ceptions no order making
Migue& (ssorio a part! and t#ere is in t#e record no answer %i&ed ! #im, it is evident t#at #e was considered a
part! de%endant, inasmuc# as t#e court a&& t#roug# t#e decision speaks o% Migue& PuAa&te and Migue& (ssorio
as t#e de%endants and renders a Audgment in t#eir %avor Aoint&!' F#i&e it does not appear in t#e record t#at a
written order was made and entered making (ssorio a part! de%endant, t#e $ourt must assume t#at at &east a
vera& order to t#at e%%ect was made and t#at t#e answer o% Migue& PuAa&te served a&so as t#e answer o%
Migue& (ssorio' T#is assumption is necessar! in view o% t#e attitude o% t#e tria& court w#ic# t#roug#out t#e
case treats (ssorio as a part! de%endant e9ua&&! wit# PuAa&te'
3. Gessel a +erilict
Vesse& in 9uestion was a dere&ict' ,t #ad capsi*ed and was &!ing on its side, its mast and sai&s
sumerged and wit# ever! indication t#at it mig#t %ounder at an! momentC it #ad een deserted ! its o%%icers
and crew wit# no intention on t#eir part to returnC it was a menage to navigation and in t#at condition
%urnis#ed a proper suAect %or sei*ure ! an! person w#o desired to sa&ve it or remove it %rom t#e routes o%
maritime tra%%ic' ,t was taken possession o% ! t#e de%endants under somew#at peri&ous circumstances and
removed to a p&ace o% sa%et! against a #eav! sea' 7%ter its arriva& at a p&ace o% sa%et! ut e%ore it #ad een
rig#ted and %&oated t#e Fa&&ace?s agent served t#e &etter upon PuAa&te and $o'
/. Letter +oes not pro+uce any le*al e,,ect
F#atever mig#t e said wit# regard to t#e e%%ect o% t#e &etter on t#e re&ations etween t#e parties i% it
stood a&one in t#e record it is unnecessar! to sa!' ,t is not a demand %or t#e possession o% t#e Podiak in t#e
sense in w#ic# t#at word is genera&&! used' ,t is mere&! an o%%er to do certain t#ings' T#e $ourt does not care
to determine t#e precise e%%ect o% t#is o%%er %rom a &ega& point o% view since it appears t#at t#e circumstances
under w#ic# it was presented prevent it %rom producing an! e%%ect in t#e case'
2. D,,ect o, notice nulli,ie+ $y attitu+e o, Eallace1s a*ent
Migue& PuAa&te testi%ied t#at Martine*, w#o presented t#e o%%er to #im, re9uired an answer t#ereto at
once or at most wit#in 12 minutes' PuAa&te in%ormed #im t#at it was impossi&e %or #im to make a statement to
#im at t#at time o% t#e e3penses w#ic# #ad een incurred as man! o% t#e i&&s #ad not een paid<, and t#at it
wou&d e impossi&e to %urnis# #im t#e in%ormation w#ic# t#e &etter re9uired wit#in t#e time speci%ied !
Martine*' PuAa&te stated to #im t#at #e wou&d acknow&edge receipt o% t#e &etter ut #e cou&d not %urnis# t#e
in%ormation w#ic# Martine* demanded wit#in t#e time speci%ied' T#is testimon! is not denied ! Martine*
a&t#oug# #e was a witness %or Fa&&ace and testi%ied in t#e case' F#atever e%%ect t#e notice in 9uestion mig#t
#ave produced was nu&&i%ied ! t#e attitude o% Fa&&ace?s agent w#o signed and served t#e notice t#e!
re9uiring t#at PuAa&te comp&! on t#e spot wit# t#e provisions t#ereo%, particu&ar&! t#ose re&ating to %urnis#ing
a statement o% t#e e3penses and t#e va&ue o% t#e services w#ic# #ad een rendered up to t#e time o% t#e
service o% t#e notice' To %u&%i&& t#is re9uirement was at t#e time c&ear&! impossi&e and PuAa&te cannot e #e&d
responsi&e %or t#eir not doing so' ,t is c&ear t#at t#e attitude o% Martine* was in e%%ect a dec&aration eit#er t#at
i% PuAa&te did not immediate&! comp&! wit# t#e terms t#ereo% t#e o%%er wou&d e wit#drawn or t#at t#e
de&iver! t#ereo% to PuAa&te was on condition t#at t#e comp&! wit# Martine*?s vera& re9uest' 7t t#e ver! &east
t#e attitude o% Martine* was suc# as to &eave us in dout as to Aust w#at #appened'
. &in+in*s o, ,act o, lo.er court! as to t)e expenses! respecte+
7s to t#e c&aim t#at t#e e3penses incurred ! PuAa&te in sa&ving t#e Podiak were e3cessive and made
intentiona&&! so ! PuAa&te is not sustained ! t#e record in a manner w#ic# re9uires or wou&d Austi%! us in
disturing t#e Audgment o% t#e tria& court in t#at respect' F#i&e t#ere is some evidence tending to s#ow t#at
some o% t#e e3penses were unnecessar! t#ere is ot#er evidence to t#e contrar! and t#e $ourt is satis%ied t#at
under a&& t#e circumstances o% t#e case t#e Audgment o% t#e tria& court is supported ! a preponderance o% t#e
evidence' ,t appears %rom a&& t#e %acts and circumstances o% t#e case t#at PuAa&te acted in good %ait#C t#at t#e!
kept t#e e3penses wit#in reasona&e oundC t#at t#e! acted wit# dispatc# and per%ormed t#eir work, genera&&!
speaking, in a workman&ike manner'
3. 5llo.ance not excessive as s)ip value+ a$ove #onetary clai#
7s to t#e amount o% compensation, it cannot e said t#at it is e3cessive' T#e s#ip was in a ad wa!
and wou&d ver! proa&! #ave een &ost ut %or t#e prompt action ! PuAa&te or t#e e9ua&&! prompt action
some ot#er sa&vor' Taking into consideration t#e e3penses w#ic# t#e sa&vors incurred w#ic# amounted to
near&! P4,222, t#e a&&owance o% t#e amount o% P4,422 is not e3cessive as t#e s#ip was wort# P12,222
according to Fa&&ace, w#i&e ot#er witnesses p&aced t#e va&ue %rom P11,222 to P18,222'
[-34]
5tlantic Gul, M :aci,ic Co. vs. Fc)i+a 0isen 0ais)a (GR 12431! 3 7ove#$er 1%-1)
"econd Division, Jo#nson (J): 5 concur
&acts' (n 81 (ctoer 1.1/, w#i&e t#e steams#ip P!odo Maru was disc#arging a cargo o% coa&, t#e propert! o%
Vicente Madriga&, in t#e #aror o% Mani&a, inside t#e reakwater, one o% t#e &ig#ters a&ongside said vesse&
sank' ,n swinging wit# t#e tide, t#e P!odo Maru came vio&ent&! in contact wit# t#is sumerged &ig#ter, t#e
resu&t eing t#at #er #u&& was per%orated' T#e said steamer egan to sink during t#e morning o% (ctoer 88
and touc#ed t#e ottom o% t#e #aror at 12 a'm' "#e continued to sink deeper into t#e mud unti&, on (ctoer
83, t#e %orward #a&% o% t#e vesse& was entire&! sumerged, w#i&e t#e stern #a&% was sti&& a%&oat' T#e dept# o%
t#e water in t#at part o% t#e #aror w#ere t#e vesse& was moored at t#e time o% t#e accident is aout 81 %eet at
&ow tide' T#e dept# o% t#e vesse& %rom deck to kee& is aout 34 %eet' T#e va&ue o% t#e vesse& at t#e time o% t#e
accident was aout P1,322,222, P#i&ippine currenc!' (n t#e a%ternoon o% (ctoer 83, t#e 7t&antic 6u&% T
Paci%ic $ompan! o% Mani&a and "immie T 6ri&k, at t#e re9uest o% t#e captain and agents o% t#e s#ip, took
possession o% t#e sinking vesse& as sa&vors and commenced sa&vage operation at once' 7t t#at time t#e! #ad
sumitted two propositions to t#e captain and agents o% t#e s#ip as to compensation %or t#e sa&vage services to
e per%ormed: one %or P142,222 in case o% success and reimursement o% e3penses in case o% %ai&ure, and
anot#er %or P322,222 ;no cure no pa!'< 7t&antic 6u&% and "immie were in%ormed t#at t#e propositions wou&d
e transmitted to t#e owners o% t#e vesse& in Japan %or acceptance or reAection, ut t#e! were re9uested to
continue work in t#e meantime, upon t#e understanding t#at i% no specia& contract s#ou&d e made t#e! wou&d
e compensated as sa&vors' T#e vesse& was %&oated on (ctoer 32 and t#e sa&vage operations ended t#e
%o&&owing da!' (n t#e a%ternoon o% (ctoer 32, 7t&antic 6u&% and "immie were in%ormed in writing t#at t#e
#ead o%%ice o% t#e steams#ip compan! in Japan #ad, ! ca&e, reAected ot# o% t#e propositions, and t#at it was
proposed to sett&e wit# t#em on t#e asis o% t#e reasona&e va&ue o% t#eir services as sa&vors' 7t&antic 6u&% and
"immie t#en made demand %or pa!ment o% P142,222' Dc#ida Pisen Pais#a and Mitsui 1ussan Pais#a (not
inc&uding Madriga&) o%%ered to pa! P04,222' 7t&antic 6u&% and "immie t#en made a counter o%%er o% P184,222'
T#is was reAected'
7t&antic 6u&d and "immie t#en roug#t t#e present action %or t#e recover! o% a sa&vage award o% P322,222C
ut, in t#eir tria& rie%, t#e! reduced t#is demand to P8.0,553'52' During t#e pendenc! o% t#e negotiations
regarding t#e va&ue o% t#e sa&vage services, it was agreed t#at t#e vesse& s#ou&d e %reed %rom an! &ien w#ic#
7t&antic 6u&% and "immie mig#t #ave upon #er as sa&vors, in consideration o% t#e agreement o% Mitsui 1ussan
Pais#a to respond in so&idum wit# t#e owner o% t#e vesse&, Dc#ida Pisen Pais#a, %or w#atever mig#t e %ound
due t#e sa&vors upon %ina& Audgment' Judgment was rendered in %avor o% 7t&antic 6u&% and "immie and against
t#e Dc#ida Pisen Pais#a and Mitsui 1ussan Pais#a in so&idum %or t#e sum o% P152,222 and %or costs' T#e
action was dismissed as regards Vicente Madriga&, t#e owner o% t#e cargo' From t#at Audgment 7&tantic 6u&%
and "immie and Dc#ida Pisen Pais#a and Mitsui 1ussan Pais#a appea&ed to t#e "upreme $ourt'
T#e "upreme $ourt modi%ied t#e Audgment appea&ed %rom, ordered decreed t#at 7t&antic 6u&% and "immie
#ave and recover t#e sum o% P./,222, P#i&ippine currenc!, %rom Dc#ida Pisen Pais#a and Mitsui 1ussan
Pais#a, Aoint&! and severa&&!, and t#e sum o% P8,222, P#i&ippine currenc!, %rom Vicente Madriga&, wit#out an!
%inding as to costs'
1. Dle#ents involve+ in co#pensation6 C)ar*es exor$itant
T#e 9uestion o% compensation invo&ves two e&ements: (a) T#e actua& e3penses incurred in t#e sa&vage
operation, and () t#e reward %or services rendered ! t#e p&ainti%%s as sa&vors' 7ttac#ed to 7t&antic 6u&%?s and
"immie?s comp&aint is a statement o% t#e e3penses a&&eged to #ave een incurred ! t#em, aggregating t#e
sum o% P>3,205'54' Dc#ida Pisen Pais#a and Mitsui 1ussan Pais#a, in t#eir rie%, vigorous&! c#a&&enge t#e
reasona&eness o% t#ese c#arges, a&&eging t#at t#e! ;are pa&pa&!, gross&! and sin%u&&! e3aggerated'< "u%%ice it
to sa! t#at a%ter a perusa& o% t#e &uminous rie%s o% t#e eminent counse& %or ot# parties, in re&ation wit# t#e
evidence adduced during t#e tria& o% t#e cause, most o% t#e c#arges %or e3penses made ! 7t&antic 6u&% and
"immie are rea&&! e3oritant' $onsidering a&& o% t#e %acts and circumstances o% t#e case, and specia&&! t#e
in%&ated war prices o% materia&s at t#e time t#e sa&vage in 9uestion was per%ormed, t#e sum o% P42,222 wou&d
e a ver! reasona&e a&&owance to 7&tantic 6u&% and "immie %or t#eir cas# out&a! and t#e renta& va&ue o% t#eir
e9uipment'
-. Section 1"! 5ct -16 <eter#ination o, t)e re.ar+ ,or salva*e
"ection 12 o% 7ct 8>1>, w#ic# prescries t#e ru&e %or determining t#e reward %or sa&vage, provides
t#at ;in a case coming under t#e &ast preceding section, as we&& as in t#e asence o% an agreement, t#e reward
%or sa&vage or assistance s#a&& e %i3ed ! t#e $ourt o% First ,nstance o% t#e province w#ere t#e t#ings
sa&vaged are %ound, taking into account principa&&! t#e e3penditures made to recover or save t#e vesse& or t#e
cargo or ot#, t#e *ea& demonstrated, t#e time emp&o!ed, t#e services rendered, t#e e3cessive e3penses
occasioned, t#e numer o% persons w#o aided, t#e danger to w#ic# t#e! and t#eir vesse&s were e3posed, as
we&& as t#at w#ic# menaced t#e t#ings recovered or sa&vaged, and t#e va&ue o% suc# t#ings a%ter deducting t#e
e3penses'<
3. Heat) vs. Stea#er San 7icolas6 @5+#iralty an+ #arit#e ?uris+ictionA
,n t#e case o% @eat# vs' T#e "teamer "an Eico&as (0 P#i&', 438), t#e court #e&d t#at ;t#e p#rase
Gadmira&t! and maritime Aurisdiction? %ound in 7ct 13>, section 4>, paragrap# 5, did not put in %orce in t#ese
,s&ands t#e &aw, practice, and procedure in %orce in admira&t! courts in t#e Dnited "tates'<
/. Frrutia vs. :asi* Stea#s)ip6 Resort to custo#s in a$sence o, *eneral principles o, la.
,n t#e case o% 6' Drrutia T $o' vs' Pasig "teamer T +ig#ter $o' (88 P#i&', 332, decided 88 Marc#
1.18, %our !ears prior to t#e passage o% 7ct 8>1>), t#e court said: ;T#ere eing no e3press &egis&ation e3act&!
app&ica&e to cases o% sa&vage, nor &ega& princip&es t#ereto re&ating esta&is#ed ! t#e courts, pursuant to t#e
second paragrap# o% artic&e > o% t#e $ivi& $ode, we must %a&& ack upon t#e customs o% t#e p&ace, and, in t#e
asence t#ereo%, genera& princip&es o% &aw'<
2. FS vs. Bull6 5ct not expressly +isapprove+ $y Con*ress vali+ unless covere+ $y Con*ressional
le*islation or ,or$i++en $y or*anic la.
,n t#e case o% t#e Dnited "tates vs' 1u&& (14 P#i&', 0), t#e court #e&d t#at ;an 7ct o% t#e &egis&ative
aut#orit! o% t#e P#i&ippine 6overnment w#ic# #as not een e3press&! disapproved ! $ongress is va&id un&ess
its suAect=matter #as een covered ! $ongressiona& &egis&ation, or its enactment %oridden ! some
provision o% t#e organic &aw'< ,t is not even suggested t#at t#e 7ct in 9uestion (Eo' 8>1>) #as een e3press&!
disapproved ! $ongress' T#e $ourt?s attention #as not een ca&&ed to an! 7ct o% $ongress, app&ica&e to t#e
P#i&ippine ,s&ands, re&ating to t#e suAect=matter o% said 7ct 8>1>, nor is t#e $ourt aware o% t#e e3istence o%
an! suc# 7ct'
. 5ct -1 +i+ not a,,ect t)e a+#iralty ?uris+iction o, t)e SC an+ t)e C&;
F#et#er t#e provision in t#e P#i&ippine 1i&& and t#e Jones +aw ;t#at t#e admira&t! Aurisdiction o% t#e
"upreme $ourt and $ourts o% First ,nstance s#a&& not e c#anged e3cept ! act o% $ongress,< s#ou&d e
construed as %oridding t#e P#i&ippine +egis&ature %rom enacting suc# a &aw as 7ct 8>1>, re&ating to sa&vage
H a matter pertaining to admira&t!, depends upon w#et#er or not 7ct 8>1> did in an! wa! c#ange t#e
admira&t! Aurisdiction o% t#e "upreme $ourt and t#e $ourts o% First ,nstance, as provided ! 7ct 13>' Bven
granting t#at t#e p#rase ;admira&t! Aurisdiction< used in P#i&ippine organic &aw app&ies not on&! to t#e power
to #ear and decide ut to t#e maritime &aw as a od!, sti&& t#e $ourt is una&e to sa! t#at 7ct 8>1> #as e%%ected
an! c#ange in t#e admira&t! Aurisdiction o% t#e "upreme $ourt and t#e $ourts o% First ,nstance' Bven granting
t#at t#e ru&es prescried ! "ection 11 o% 7ct 8>1> are di%%erent %rom t#e 7merican maritime &aw, as decided
in t#e "an Eico&as case, t#e p#rase ;admira&t! and maritime Aurisdiction< %ound in 7ct 13> did not put in %orce
in t#ese ,s&ands t#e &aw, practice, and procedure in %orce in t#e admira&t! courts in t#e Dnited "tates' T#e
7merican maritime &aw not eing necessari&! in %orce in t#ese ,s&ands, it is c&ear t#at 7ct 8>1> o% t#e
P#i&ippine +egis&ature cou&d not and did not a%%ect t#e same' Fo&&owing t#e decision in t#e 1u&& case, 7ct 8>1>
is va&id unti& e3press&! disapproved ! $ongress'
3. &acts to $e taken into account in +eter#inin* re.ar+ ,or salva*e
,n determining t#e reward %or t#e sa&vage in 9uestion, t#e %o&&owing %acts s#ou&d e taken into
account: (1) T#at t#e sa&vage operations in 9uestion were per%ormed in Mani&a 1a!, inside t#e reakwater,
w#ere t#e dept# o% t#e water was on&! aout 81 %eet at &ow tideC (8) t#at t#ose operations &asted / da!s H
%rom noon o% (ctoer 83 to (ctoer 31 H a&t#oug# t#e sa&vors appear to #ave rendered services unti& /
EovemerC (3) t#at t#e vesse& sa&ved and its cargo were never in danger o% tota& &oss, a&t#oug# it is admitted
t#at i% t#e vesse& #ad sunk and &isted, t#e e3penses o% recovering t#e same wou&d #ave een considera&eC (5)
t#at t#e sa&vage operation was comparative&! simp&e, consisting mere&! o% using pumps to prevent t#e vesse&
%rom sinking an! %urt#er, w#i&e t#e sa&vors were ui&ding a co%%erdam around t#e sumerged %ore#atc#
preparator! to pumping #er outC (4) t#at t#ere was no danger to t#e &ives and propert! o% t#e sa&vors in view o%
t#e pro3imit! to t#e s#ore o% t#e p&ace w#ere t#e work was per%ormedC (>) t#at t#e va&ue o% t#e e9uipment
used, inc&uding t#e &aunc#es emp&o!ed to maintain t#e %err! service, was aout P322,222C (0) t#at 7t&antic
6u&%?s and "immie?s out&a!, toget#er wit# t#e reasona&e renta& va&ue o% t#eir e9uipment, was, as we #ave
#ereto%ore estimated, t#e sum o% P42,222C (/) t#at t#e P!odo Maru was, at t#e time s#e was sa&ved, va&ued at
P1,322,222C (.) t#at t#e captain o% said vesse& was in a #urr! to get #er out ecause #e #ad to meet a new
c#arter in JapanC and (12) t#at 7t&antic 6u&% and "immie accomp&is#ed t#e sa&vage wit# energ! and
promptitude, to t#e entire satis%action o% t#e captain and agents o% t#e vesse&'
4. Su,,icient co#pensation6 ;n relation .it) Drlan*er! =RR! an+ Frrutia cases
$onsidering a&& o% t#e %oregoing %acts in re&ation wit# t#e award #ereto%ore made ! t#e court in t#e
sa&vage cases o% Br&anger T 6a&inger vs' "wedis# Bast 7siatic $o', +td' (35 P#i&', 10/), Mani&a :ai&road $o'
vs' Macondra! T $o' (30 P#i&', /42), and 6' Drrutia T $o' vs' Pasig "teamer T +ig#ter $o' (88 P#i&', 332),
t#e sum o% P42,222 wou&d e an e9uita&! &iera& net compensation to 7t&antic 6u&% and "immie as sa&vors o%
t#e P!odo Maru' T#is, toget#er wit# t#e sum o% P42,222 w#ic# s#ou&d e a&&owed t#em %or t#eir e3penses
and t#e reasona&e renta& va&ue o% t#eir e9uipment, makes a tota& award to t#e p&ainti%%s o% t#e sum o%
P122,222' T#is amount is a su%%icient compensation %or t#e out&a! and e%%ort o% t#e sa&vors, and t#at t#e same
is &iera& enoug# to constitute an inducement to ot#ers to render &ike services in simi&ar emergencies in t#e
%uture'
%. =a+ri*al $ene,ite+ ,ro# salva*e! s)oul+ s)are a proportionate a#ount
7&t#oug# t#e remova& o% t#e 403 tons o% coa& %rom t#e vesse& was mere&! incidenta& to, and
necessitated !, t#e raising o% said vesse&, it cannot e said t#at ;suc# remova& did not operate in an! wa! to
ene%it t#e cargo, nor save it %rom an! risk or damage'< @ad t#e vesse& comp&ete&! sunk and &isted, e3treme
di%%icu&t! wou&d no dout #ave een encountered in removing t#e coa& in 9uestion %rom #er #o&d, t#us
occasioning considera&e e3pense and &oss to Madriga&' ,t is a&so undenia&e t#at part o% 7&tantic 6u&%?s and
"immie?s e3penses were incurred in carr!ing suc# coa& to t#e s#ore' ,t is ut Aust, t#en, t#at Madriga& s#ou&d
s#are a proportionate amount o% t#e award'
1". Galuation o, =a+ri*al1s s)are
$onsidering t#at t#e remova& o% said coa& %rom t#e sinking vesse& was mere&! incidenta& to sa&ving
#erC and considering t#at on&! 403 tons o% suc# cargo were actua&&! taken %rom t#e s#ip, it eing no &onger
necessar! to touc# t#e rest %or t#e purpose o% raising #er, %u&& Austice wou&d e done to a&& t#e parties
concerned ! taking t#e va&ue o% t#e said 403 tons o% coa& in re&ation wit# t#e va&ue o% t#e s#ip, and t#us
apportion t#e sa&vage award etween t#eir respective owners' T#e said 403 tons o% coa&, at P54 a ton, are
wort# P84,0/4, w#ic# is appro3imate&! 8 per cent o% t#e va&ue o% t#e s#ip (w#ic# is estimated at P1,322,222) '
Madriga&, t#us, s#ou&d e made to pa! 8 per cent o% t#e award o% P122,222, or t#e sum o% P8,222'
[-3%]
Drlan*er M Galin*er vs. S.e+is) Dast 5siatic (GR 1""21! % =arc) 1%1)
First Division, Per $uriam (p): 4 concur
&acts' T#e steams#ip Eippon &oaded principa&&! wit# copra and wit# some ot#er genera& merc#andise sai&ed
%rom Mani&a on 0 Ma! 1.13, ound %or "ingapore' T#e steams#ip Eippon went aground on "caroroug# :ee%
aout 5:32 p'm' o% / Ma! 1.13' "caroroug# :ee% is aout 182 to 132 mi&es %rom t#e nearest point on t#e
,s&and o% +u*on' (n . Ma! 1.13, t#e c#ie% o%%icer, Feston, and . memers o% t#e crew &e%t t#e Eippon and
succeeded in reac#ing t#e coast o% +u*on at "anta $ru*, Rama&es, on t#e morning o% 18 Ma! 1.13' (n 18
Ma! 1.13, at 18:32 p'm' t#e c#ie% o%%icer sent a te&egram to @e&m, t#e Director o% t#e 1ureau o% Eavigation at
Mani&a' 7t 1'32 p' m', t#e 6overnment o% t#e P#i&ippine ,s&ands ordered t#e coast guard cutter Mindoro wit#
&i%e=saving app&iances to t#e scene o% t#e wreck o% t#e Eippon' 7t 3 p' m' t#e steams#ip Manc#uria sai&ed
%rom mani&a %or @ongkong and was re9uested to pass ! "caroroug# :ee%' T#e Manc#uria arrived at
"caroroug# :ee% some time e%ore t#e arriva& o% t#e Mindoro on 13 Ma! 1.13, and took on oard t#e
captain and t#e remainder o% t#e crew' T#e Manc#uria was sti&& near "caroroug# :ee% w#en t#e Mindoro
arrived' T#e captain o% t#e Manc#uria in%ormed t#e captain o% t#e Mindoro t#at t#e captain and crew o% t#e
Eippon were on oard t#e Manc#uria and were proceeding to @ongkong' T#e captain and crew o% Eippon,
w#ic# assistance was dec&ined' T#e Mindoro proceeded to t#e Eippon and removed t#e a&ance o% t#e
aggage o% t#e o%%icers and crew, w#ic# was %ound upon t#e deck' T#e Mindoro proceeded to "anta $ru*,
Rama&es, w#ere t#e c#ie% o%%icer, Feston, and t#e . memers o% t#e crew were taken on oard and roug#t to
Mani&a, arriving t#ere on 15 Ma! 1.13' (n 13 Ma! 1.13, Di3on, captain o% t#e Manc#uria sent t#e message
t#at ;7&& rescued %rom t#e Eippon' "tranded on e3treme nort# end o% s#oa&' Vesse& stranded Ma! .' "#e is %u&&
o% water %ore and a%t and is ad&! as#ore' "#ip aandoned' Proceed @ongkong'< T#e captain o% t#e Eippon
saw t#e aove message e%ore it was sent' (n 15 Ma! 1.13, Br&anger T 6a&inger app&ied to t#e Director o%
Eavigation %or a c#arter o% a coast guard cutter, %or t#e purpose o% proceeding to ;t#e stranded and aandoned
steamer Eippon'< T#e coast guard cutter Mindoro was c#artered to Br&anger T 6a&inger and started on its
return to t#e "'"' Eippon on 15 Ma! 1.13' Br&anger T 6a&inger took possession o% t#e Eippon on or aout 10
Ma! 1.13, and continued in possession unti& aout 1Ju&! 1.15, w#en t#e &ast o% t#e cargo was s#ipped to
Mani&a' T#e Eippon was %&oated and towed to (&ongapo, w#ere temporar! repairs were made, and t#en
roug#t to Mani&a' T#e Manc#uria arrived at @ongkong on t#e evening o% 15 Ma! 1.13' F#en t#e captain
and crew &e%t t#e Eippon and went on oard t#e Manc#uria, t#e! took wit# t#em t#e c#ronometer, t#e s#ip?s
register, t#e s#ip?s artic&es, t#e s#ip?s &og, and as muc# o% t#e crew?s aggage as a sma&& oat cou&d carr!' T#e
a&ance o% t#e aggage o% t#e crew was packed and &e%t on t#e deck o% t#e Eippon and was &ater removed to
t#e Mindoro, wit#out protest on t#e part o% t#e captain o% t#e Eippon' T#e cargo was roug#t to t#e port o%
Mani&a and t#e va&ues %or t#e (1) $opra (appro3imate&! 1310 tons) va&ued at, &ess cost o% sa&e ! $o&&ector o%
$ustoms were va&ued at P158,>40'24C (8) 6enera& cargo=so&d at custom#ouse at P4,.3.'>/C (3) 7gar=agar at
P4,>34'22C (5) 6amp#or at P 1,/42'22C (4) $urios at P142'22, respective&!C tota&ing P14>,831'03' T#e s#ip
was va&ued at P842,222' T#e Br&anger T 6a&inger?s c&aim against t#e s#ip was sett&ed %or (+)14,222 or aout
P154,/22'
(n 4 7ugust 1.13, Br&anger T 6a&inger roug#t an action against t#e insurance companies and underwriters,
w#o represented t#e cargo sa&ved %rom t#e Eippon, to #ave t#e amount o% sa&vage, to w#ic# Br&anger T
6a&inger were entit&ed, determined' T#e case came on %or tria& e%ore t#e @onora&e 7' "' $ross%ie&d' T#e
(e&werke Teutonia, a corporation, appeared as c&aimant o% t#e copra' T#e Eew Rea&and ,nsurance $ompan!
appeared as insurer and assignee o% 1,222 case o% ean oi& and two cases o% amoo &ac9uer workC and T#e
T#ames and Merse! Marine ,nsurance $ompan! appeared as a reinsurer to t#e e3tent o% P>,422 on t#e cargo
o% copra' T#e court adAudged t#e case in %avor o% Br&anger T 6a&inger %or U o% t#e net proceeds o% sa&es
amounting to P05,8./'3> and U o% t#e interest accruing t#ereon, and against $ar& Maeck&er %or t#e sum o%
P.84, and against t#e Eew Rea&and ,nsurance $ompan! (+td') %or t#e o% P8,/22, and against w#omever t#e
two cases marked : H F, $open#agen, were de&ivered to, and %or t#e sum o% P8,302'>/, out o% t#e proceeds
o% t#e sa&e o% 1,222 cases o% vegeta&e oi&, and in %avor o% t#e G(e&werke Teutonia? %or t#e sum o% P01,38/'43,
now deposited wit# t#e @ongkong T "#ang#ai 1anking $orporation, toget#er wit# U o% t#e interest t#ereon'<
Eo costs were ta3ed'
T#e (e&werke Teutonia, T#e Eew Rea&and ,nsurance $ompan! (+td')' and Br&anger T 6a&inger appea&ed
%rom t#e decision'
T#e "upreme $ourt ordered and decreed t#at t#e Audgment o% t#e &ower court e modi%ied, and t#at a
Audgment e entered against t#e ;(er&werke Teutonia and Eew Rea&and ,nsurance $o' and in %avor o%
Br&anger T 6a&inger (against (e&werke Teutonia %or t#e sum o% P51,081'44C against T#e Eew Rea&and
,nsurance $o' in t#e sum o% P1,180)' T#e $ourt %urt#er ordered and decreed t#at t#e amount o% t#e Audgment
rendered e paid out o% t#e mone! w#ic# is under t#e contro& o% t#e $F, o% Mani&aC wit#out an! %inding as to
costs'
1. General rules *overnin* salva*e services an+ salva*e a.ar+s6 La.s o, 8leron (1--)
,n t#e +aws o% (&eron, w#ic# were promu&gated sometime e%ore t#e !ear 188>, at artic&e ,V, states
;,% a vesse&, departing wit# #er &ading %rom 1ordeau3, or an! ot#er p&ace, #appens in t#e course o% #er
vo!age, to e rendered un%it to proceed t#erein, and t#e mariners save as muc# o% t#e &ading as possi&! t#e!
canC i% t#e merc#ants re9uire t#eir goods o% t#e master, #e ma! de&iver t#em i% #e p&eases, t#e! pa!ing t#e
%reig#t in proportion to t#e part o% t#e vo!age t#at is per%ormed, and t#e costs o% t#e sa&vage' 1ut i% t#e master
can readi&! repair #is vesse&, #e ma! do itC or i% #e p&eases, #e ma! %reig#t anot#er s#ip to per%orm #is vo!age'
7nd i% #e #as promised t#e peop&e w#o #e&p #im to save t#e s#ip t#e t#ird, or t#e #a&% part o% t#e goods saved
%or t#e danger t#e! ran, t#e Audicatures o% t#e countr! s#ou&d consider t#e pains and trou&e t#e! #ave een at,
and reward t#em according&!, wit#out an! regard to t#e promises made t#em ! t#e parties concerned in t#e
time o% t#eir distress'<
-. Salva*e +e,ine+
,n genera&, sa&vage ma! e de%ined as a service w#ic# one person renders to t#e owner o% a s#ip
w#ic# t#e owner or t#ose entrusted wit# t#e are una&e to protect and secure'
3. Salva*e +e,ine+6 &lan+ers on =ariti#e La.
"a&vage is %ounded on t#e e9uit! o% remunerating private and individua& services per%ormed in sa!ing,
in w#o&e or in part, a s#ip or its cargo %rom impending peri&, or recovering t#em a%ter actua& &oss' ,t is a
compensation %or actua& services rendered to t#e propert! c#arged wit# it, and is a&&owed %or meritorious
conduct o% t#e sa&vor, and in consideration o% a ene%it con%erred upon t#e person w#ose propert! #e #as
saved' 7 c&aim %or sa&vage rests on t#e princip&e t#at, un&ess t#e propert! e in %act saved ! t#ose w#o c&aim
t#e compensation, it can not e a&&owed, #owever enevo&ent t#eir intention and #owever #eroic t#eir
conduct'
/. Salva*e +e,ine+6 Eillia#son vs. t)e 5lp)onso
,n t#e case o% Fi&&iamson vs' T#e 7&p#onso, it was #e&d t#at ;t#e re&ie% o% propert! %rom an
impending peri& o% t#e sea, ! t#e vo&untar! e3ertions o% t#ose w#o are under no &ega& o&igation to render
assistance, and t#e conse9uent u&timate sa%et! o% t#e propert!, constitute a case o% sa&vage' ,t ma! e a case o%
more or &ess merit, according to t#e degree o% peri& in w#ic# t#e propert! was, and t#e danger and di%%icu&t! or
re&ieving itC ut t#ese circumstances a%%ect t#e degree o% t#e service and not its nature'<
2. Salva*e +e,ine+6 Black.all vs. Saucelito (u* Co.
,n 1&ackwa&& vs' "auce&ito Tug $ompan!, t#e court said ;"a&vage is t#e compensation a&&owed to
persons ! w#ose assistance a s#ip or #er cargo #as een saved, in w#o&e or in part, %rom impending peri& on
t#e sea, or in recovering suc# propert! %rom actua& &oss, as in case o% s#ipwreck, dere&ict, or recapture'<
. Dle#ents necessary to a vali+ salva*e clai#6 =ay,lo.er vs. t)e Sa$ine
T#ree e&ements are necessar! to a va&id sa&vage c&aim: (1) 7 marine peri&' (8) "ervice vo&untari&!
rendered w#en not re9uired as an e3isting dut! or %rom a specia& contract' (3) "uccess, in w#o&e or in part, or
t#at t#e service rendered contriuted to suc# success'

3. <erelict +e,ine+6 5$$ott1s la. o, #erc)ant s)ips an+ sea#en
7 dere&ict is de%ined as ;7 s#ip or #er cargo w#ic# is aandoned and deserted at sea ! t#ose w#o
were in c#arge o% it, wit#out an! #ope o% recovering it (sine spe recuperandi), or wit#out an! intention o%
returning to it (sine animo revertendi)' F#et#er propert! is to e adAudged dere&ict is determined !
ascertaining w#at was t#e intention and e3pectation o% t#ose in c#arge o% it w#en t#e! 9uitted it' ,% t#ose in
c#arge &e%t wit#in t#e intention o% returning, or o% procuring assistance, t#e propert! is not dere&ict, ut i% t#e!
9uitted t#e propert! wit# t#e intention o% %ina&&! &eaving it, it is dere&ict, and a c#ange o% t#eir intention and an
attempt to return wi&& not c#ange o% t#eir intention and an attempt to return wi&& not c#ange its nature'
4. S)ip .as a$an+one+! salva*e .as co##ence+
@erein, at t#e time Br&anger T 6a&inger commenced t#e attempt to sa&ve w#at was possi&e o% t#e "'
"' Eippon and cargo, it was Austi%ied, %rom a&& t#e conditions e3isting, in e&ieving t#at it #ad aandoned and
in taking possession, even t#oug# t#e master o% t#e vesse& intended w#en #e &e%t it, to return and attempt
sa&vage' "uc# intention, i% it e3isted, does not appear to #ave een ver! %irm&! %i3ed, considering t#e &eisure&!
manner in w#ic# t#e master proceeded a%ter #e reac#ed t#e Port o% @ongkong' $aptain Bggert did not make
an! determined e%%ort to arrange %or t#e sa&vage o% t#e Eippon' $apt' Bggert #ad over two da!s in w#ic# to
arrange %or sa&vage operations and #e did not#ing, w#i&e Br&anger T 6a&inger, w#o were strangers and #ad no
interest, sent out a sa&vage e3pedition in 85 #ours a%ter t#e! discovered t#at t#e s#ip was wrecked' T#e
evidence proves t#at t#e Eippon was in peri&C t#at t#e captain &e%t in order to protect #is &i%e and t#e &ives o%
t#e crewC t#at t#e animo revertendi was s&ig#t' T#e argument o% t#e de%endant=appe&&ant to t#e e%%ect t#at t#e
s#ip was in no danger is a it out o% p&ace in view o% t#e statement o% t#e captain t#at s#e wou&d sink wit# t#e
%irst ga&e, coup&ed wit# t#e %act t#at a t!p#oon was t#e cause o% #er stranding'
%. Cases .)ere clai# ,or salva*e .as allo.e+6 Bee case
,n T#e 1ee (Fed' $as' Eo' 181.C 3 Fed' $as', 51), t#e %acts were as %o&&ows: T#e 1ee sai&ed %rom
1oston to Eova "cotia' T#ree da!s a%ter &eaving port a ga&e was encountered w#ic# %orced #er to run into a
cove on t#e nort# side o% 6rand Manan ,s&and, w#ere an anc#or was &et out' T#e s#ip was somew#at inAured
%rom t#e %orce o% t#e storm' T#e master and t#e crew sta!ed on oard %or 85 #ours and t#en went as#ore to
procure assistance' T#e is&and was ver! sparse&! sett&ed' T#e! met on s#ore a numer o% men (t#e &ie&ants) to
w#om t#e! e3p&ained t#e predicament and position o% t#e s#ip' T#ese men immediate&! went to t#e s#ip,
oarded #er, and took possession' 7%ter t#e master #ad een as#ore aout %ive #ours #e returned to t#e s#ip
and %ound t#e &ie&ants in possession' T#e owners contended t#at t#e master was e3c&uded %rom t#e s#ip
wrong%u&&! and t#ere%ore t#e &ie&ants cou&d not c&aim sa&vage'
1". Busti,ication o, a.ar+ o, salva*e in t)e Bee case
F#en a vesse& is %ound at sea, deserted, and #as een aandoned ! t#e master and crew wit#out t#e
intention o% returning and resuming t#e possession, s#e is, in t#e sense o% t#e &aw, dere&ict, and t#e %inder w#o
takes t#e possession wit# t#e intention o% saving #er, gains a rig#t o% possession, w#ic# #e can maintain
against t#e true owner' T#e owner does not, indeed, renounce #is rig#t o% propert!' T#is is not presumed to e
#is intention, nor does t#e %inder ac9uire an! suc# rig#t' 1ut t#e owner does aandon temporari&! #is rig#t o%
possession, w#ic# is trans%erred to t#e %inder, w#o ecomes ound to preserve t#e propert! wit# good %ait#,
and ring it to a p&ace o% sa%et! %or t#e owner?s useC and #e ac9uires a rig#t to e paid %or #is services a
reasona&e and proper compensation, out o% t#e propert! itse&%' @e is not ound to part wit# t#e possession
unti& t#is is paid, or it is taken into t#e custod! o% t#e &aw, preparator! to t#e amount o% sa&vage eing &ega&&!
ascertained' "#ou&d t#e sa&vors meet wit# t#e owner a%ter an aandonment, and #e s#ou&d tender #is
assistance in saving and securing t#e propert!, sure&! t#is oug#t not, wit#out good reasons, to e re%used, as
t#is wou&d e no ar to t#e rig#t o% sa&vage, and s#ou&d it e unreasona&! reAected it mig#t a%%ect t#e
Audgment o% a court materia&&!, as to t#e amount proper to e a&&owed' "ti&&, t#e rig#t possession is in t#e
sa&vor' 1ut w#en t#e owner, or t#e master and crew w#o represent #im, &eave a vesse& temporari&!, wit#out
an! intention o% a %ina& aandonment, ut wit# t#e intent to return and resume t#e possession, s#e is not
considered as a &ega& dere&ict, nor is t#e rig#t o% possession &ost ! suc# temporar! asence %or t#e purpose o%
otaining assistance, a&t#oug# no individua& ma! e remaining on oard %or t#e purpose o% retaining t#e
possession' Propert! is not, in t#e sense o% t#e &aw, dere&ict and t#e possession &e%t vacant %or t#e %inder, unti&
t#e spes recuperandi is gone, and t#e animus revertendi is %ina&&! given up' (T#e 79ui&a, 1 $' :o' 7dm', 51')
1ut w#en a man %inds propert! t#us temporari&! &e%t to t#e merc! o% t#e e&ements, w#et#er %rom necessit! or
an! ot#er cause, t#oug# not %ina&&! aandoned and &ega&&! dere&ict, and #e takes possession o% it wit# t#e ona
%ide intention o% sa!ing i% %or t#e owner, #e wi&& not e treated as a trespasser' (n t#e contrar!, i% ! #is
e3ertions #e contriutes materia&&! to t#e preservation o% t#e propert!, #e wi&& entit&e #imse&% to a
remuneration according to t#e merits o% #is service as a sa&vor'<
11. Cases .)ere clai# ,or salva*e .as allo.e+6 ;n t)e Bo)n Gilpin
,n T#e Jo#n 6i&pin (Fed' $as' Eo' 0354C 13 Fed' $as', >04) t#e s#ip Jo#n 6i&pin, attempting to &eave
Eew Oork #aror in a winter storm, was driven as#ore' T#e s#ip?s crew sent %or #e&p and in t#e meantime put
%ort# ever! e%%ort to get #er o%%' @e&p arrived toward evening, ut accomp&is#ed not#ing' T#e master and crew
went as#ore' T#e same nig#t t#e &ie&ants went out to t#e s#ip wit# e9uipment and started working' ,t was
contended t#at t#e master #ad gone as#ore %or assistance' @e returned t#e ne3t morning wit# a tug and some
men and demanded possession, w#ic# was re%used' "a&vage was a&&owed'
1-. Busti,ication o, a.ar+ o, salva*e in t)e Bo)n Gilpin case
T#e &ie&ants, in t#e e3ercise o% t#eir ca&&ing as wreckers, coming to a vesse& in t#at p&ig#t, wou&d e
gui&t! o% a dere&iction o% dut! i% t#e! %ai&ed to emp&o! a&& t#eir means %or t#e instantaneous preservation o%
propert! so circumstanced' T#is ma! not e strict&! and tec#nica&&! a case o% dere&ict, i% rea&&! t#e master o%
t#e rig #ad gone to t#e cit! to otain t#e necessar! #e&p to save t#e cargo and rig, intending at t#e time, to
return wit# a&& practica&e dispatc#' ,t appears #e came to t#e wreck ! / or . a' m' t#e %o&&owing da!, in a
steam=tug, wit# men to assist in saving t#e cargo' T#e animus revertendi et recuperandi ma! t#us %ar #ave
continued wit# t#e master, ut t#is menta& #ope or purpose must e regarded inoperative and unavai&ing as an
actua& occupanc! o% t#e vesse&, or mani%estation to ot#ers o% a continuing possession' "#e was aso&ute&!
deserted %or 18 or 15 #ours in a condition w#en #er instant destruction was menaced, and t#e &ives o% t#ose
w#o s#ou&d attempt to remain ! #er wou&d e considered in #ig#est Aeopard!' "#e was 9uite dere&ictC and
eing t#us %ound ! t#e &ie&ants, t#e possession t#e! took o% #er was &aw%u&' Possession eing t#us taken
w#en t#e vesse& was, in %act, aandoned and 9uite dere&ict, under peri& o% instant destruction, t#e &ie&ants #ad
a rig#t to retain it unti& t#e sa&vage was comp&eted, and no ot#er person cou&d inter%ere against t#em %orci&!,
provided t#e! were a&e to e%%ect t#e purpose, and were conducting t#e usiness wit# %ide&it! and vigor'
13. Cases .)ere clai# ,or salva*e .as allo.e+6 ;n ()e S)a.#ut
,n T#e "#awmut (144 Fed' :ep', 50>) t#e court a&&owed sa&vage upon t#e %o&&owing %acts: T#e %our=
masted sc#ooner M!rt#&e Tunne& sai&ed %rom 1runswick ound %or Eew Oork T#e %irst da! out a #urricane
struck #er and tore t#e sai&s awa! and carried o%% t#e deck &oad' "#e was ad&! damaged and &eaking' T#e
master o% t#e M!rt#&e Tunne& re9uested towage ! t#e steams#ip Mae to t#e port o% $#ar&eston' T#e Mae, on
account o% #er own damaged condition, was una&e to tow ut s#e took t#e master and crew o% t#e M!rt#&e
Tunne& o%% and &anded t#em at $#ar&eston' T#e owners noti%ied and t#e! started an e3pedition out in searc#'
1e%ore t#is e3pedition reac#ed #er, t#e steams#ip "#awmut sig#ted t#e M!rt#&e Tunne&, and, %inding t#at s#e
was aandoned and water&ogged, took #er in tow and succeeded in taking #er to $#ar&eston' T#e owners o%
t#e M!rt#&e Tunne& contended t#at s#e was not dere&ict, ecause t#e master #ad gone as#ore to procure
assistance'
1/. Busti,ication o, a.ar+ o, salva*e in ()e S)a.#ut case
T#e %irst 9uestion t#at arises is w#et#er t#e M!rt#&e Tunne& is a dere&ict' Prima %acie a vesse& %ound at
sea in a situation o% peri&, wit# no one aoard o% #er, is a dere&ictC ut w#ere t#e master and crew &eave suc#
vesse& temporari&!, wit#out an! intention o% %ina& aandonment, %or t#e purpose o% otaining assistance, and
wit# t#e intent to return and resume possession, s#e is not tec#nica&&! a dere&ict' ,t is not o% sustantia&
importance to decide t#at 9uestion' "#e was w#at ma! e ca&&ed a 9uasi=dere&ictC aandoned, #e&p&ess, #er
sai&s gone, entire&! wit#out power in #erse&% to save #erse&% %rom a situation not o% imminent ut o%
considera&e peri&C &!ing aout midwa! etween t#e 6u&% "tream and t#e s#ore, and aout 32 mi&es %rom
eit#er' 7n east wind wou&d #ave driven #er upon one, and a west wind into t#e ot#er, w#ere s#e wou&d #ave
ecome a tota& &oss' +!ing in t#e pat#wa! o% commerce, wit# not#ing aoard to indicate an intention to return
and resume possession, it was a #ig#&! meritorious act upon t#e part o% t#e "#awmut to take possession o% #er,
and t#e award must e governed ! t#e ru&es w#ic# govern in case o% dere&ictsC t#e amount o% it to e
modi%ied in some degree in t#e interest o% t#e owners in consideration o% t#eir prompt, inte&&igent, and
praisewort#! e%%orts to resume possession o% #er, w#erein t#e! incurred considera&e e3pense'<
12. <octrine in t)e cases o, Bee! ()e Bo)n Gilpin! an+ ()e S)a.#ut
T#e %irst o% t#ese cases was decided in 1/3> and t#e &ast in 1.20' T#e! indicate t#at t#e aandonment
o% a vesse& ! a&& on oard, w#en t#e vesse& is in peri&, wi&& Austi%! t#ird parties in taking possession wit# t#e
ona %ide intention o% saving t#e vesse& and its cargo %or its owners' T#e menta& #ope o% t#e master and t#e
crew wi&& in no wa! a%%ect t#e possession nor t#e rig#t to sa&vage'
1. =anila is $ase ,or operations
7s to w#et#er Mani&a or @ongkong s#ou&d e used as a ase %or operations, $apt' :oinson, w#o was
t#e on&! one o% t#e e3perts w#o #ad #ad an! e3perience in #and&ing wet copra, un9ua&i%ied&! approved Mani&a
as a ase %or operations' Furt#er, +ereton, a stevedore, testi%ied t#at #e wou&d #ave gotten some o% #is
materia&s %rom @ongkong ut t#at #e wou&d #ave %reig#ted t#e sa&ved cargo to Mani&a' 7&& ot#er t#ings eing
e9ua&, t#e %act t#at @ongkong is 52 sai&ing #ours %rom "caroroug# :ee% w#i&e Mani&a is &ess t#an 85 sai&ing
#ours wou&d make Mani&a ! %ar t#e more &ogica& ase'
13. (esti#ony o, t)e .itnesses as to t)e proper #et)o+ use+6 8nly Capt. Ro$inson )as experience
in class o, .ork! i.e. )an+lin* o, t)e .et copra
@erein, Br&anger T 6a&inger sent men into t#e #o&d o% t#e s#ip and sacked t#e copra and roug#t it to
Mani&a w#ere it was so&d' "ome o% t#e witnesses contended t#at ot#er met#ods s#ou&d #ave een used' T#e!
testi%ied t#at ;gras< or ;c&am s#e&&s< wou&d #ave roug#t etter resu&ts, ut none o% t#ese witnesses #ad #ad
an! e3perience in un&oading wet copra' $apt' :oinson was t#e on&! witness ca&&ed w#o #ad #ad an!
e3perience in t#is c&ass o% work' @e testi%ied t#at t#e on&! wa! a&& t#e copra cou&d e gotten out was ! sacks
or ! canvas s&ingsC t#at ;gras< wou&d e o% no use ecause o% t#e inai&it! to work wit# t#em etween
decks' T#e copra was in t#ree &a!ers' T#e top &a!er was dr!, t#e midd&e &a!er was sumerged ever! time t#e
tide rose, and t#e &ower &a!er was sumerged a&& o% t#e time' ,t was mani%est&! impossi&e to keep t#ese &a!ers
separate ! using ;gras< or ;c&am s#e&&s'< T#e %act t#at wet copra is e3ceeding&! di%%icu&t to #and&e, on
account o% t#e gases w#ic# arise %rom it, is a&so o% prime importance in weig#ing t#e testimon! o% t#e
de%endant?s witnesses, ecause none o% t#em #ad ever #ad e3perience wit# wet copra'
14. <i,,iculty to in+uce la$orers to .ork .it) .et copra not attri$uta$le to lack o, care or +ili*ence
@erein, Br&anger T 6a&inger commenced t#e actua& work o% sa&ving t#e s#ip and cargo on 1/ Ma!
1.13' T#e &ast o% t#e cargo was roug#t to Mani&a t#e &atter part o% June' T#e &ast o% t#e dr! copra was roug#t
to Mani&a on June 4' T#e estimates o% t#e e3perts wit# regard to t#e time necessar! to remove t#e cargo
ranged %rom / to 82 da!s' T#e greater portion o% t#e cargo was roug#t in ! Br&anger T 6a&inger wit#in 14
da!s' T#e de&a! a%ter June 4 was due to t#e di%%icu&t! in inducing &aorers to work wit# wet copra' T#is
di%%icu&t! wou&d #ave arisen wit# an! set o% sa&vors and cannot e attriuted to a &ack o% care or di&igence on
t#e part o% Br&anger T 6a&inger'
1%. Salva*e con+ucte+ .it) skill! +ili*ence! an+ e,,iciency
F#i&e Br&anger T 6a&inger entered upon t#e sa&vage proceedings wit#out proper means and not eing
adapted ! t#eir usiness to conduct t#eir work, and w#i&e it ma! appear t#at possi&! t#e sa&vage mig#t #ave
een conducted in a etter manner and #ave accomp&is#ed somew#at etter resu&ts in t#e saving o% t#e copra
cargo, !et it appears t#at t#e! 9uick&! remedied t#eir &ack o% means and corrected t#e conduct o% t#e work so
t#at it accomp&is#ed %air&! good resu&ts' ,t does not appear %rom t#e evidence t#at an!one t#en or suse9uent&!
suggested or %ound an! ot#er course w#ic# mig#t #ave een pursued and w#ic# wou&d #ave roug#t etter
resu&ts' @erein, Br&anger T 6a&inger were di&igent in commencing t#e work and were care%u& and e%%icient in
its pursuit and conc&usion'
-". :roper vie. as to co#pensation as salva*e
$ompensation as sa&vage is not viewed ! t#e admira&t! courts mere&! as pa! on t#e princip&e o%
9uantum meruit or as a remuneration pro opere et &aore, ut as a reward given %or peri&ous services,
vo&untari&! rendered, and as an inducement to mariners to emark in suc# dangerous enterprises to save &i%e
and propert!'
-1. Dxpenses incurre+ $y Drlan*er M Galin*er #ust $e $orne $y t)e#! s)oul+ )ave $een spent not
#ore t)an t)e reasona$le s)are o, t)e procee+s .oul+ a#ount to un+er any circu#stances
T#e contention, t#at e3penses incurred s#ou&d e deducted %rom t#e entire amount o% t#e sa&ved
propert! and t#e remainder e divided as a reward %or t#e services rendered, #as no asis in &aw o% sa&vage
compensation' T#e e3penses incurred ! Br&anger T 6a&inger must e orne ! t#em' ,t is true t#at t#e award
s#ou&d e &iera& enoug# to cover t#e e3penses and give an e3tra amount as a reward %or t#e services rendered
ut t#e e3penses are used in no ot#er wa! as a asis %or t#e %ina& award' 7 part o% t#e risk t#at Br&anger T
6a&inger incurred was t#at t#e goods sa&ved wou&d not pa! t#em %or t#e amount e3pended in sa&ving t#em'
Br&anger T 6a&inger knew t#is risk and t#e! s#ou&d not #ave spent more mone! t#an t#eir reasona&e s#are o%
t#e proceeds wou&d amount to under an! circumstances'
--. Salvor consi+ere+ a ?oint o.ner6 ()e case o, Carl Sc)urJ (Case 7o. -/1/6 2 &e+. Cas.! 4/)
7 sa&vor, in t#e view o% t#e maritime &aw, #as an interest in t#e propert!C it is ca&&ed a &ien, ut it never
goes, in t#e asence o% a contract e3press&! made, upon t#e idea o% a det due ! t#e owner to t#e sa&vor %or
services rendered, as at common &aw, ut upon t#e princip&e t#at t#e service creates a propert! in t#e t#ing
saved' @e is, to a&& intents and purposes, a Aoint owner, and i% t#e propert! is &ost #e must ear #is s#are &ike
ot#er Aoint owners'
-3. Li$elant an+ o.ners #utually $ear t)eir respective s)are o, t)e loss in value $y t)e sale
T#e &ie&ant and t#e owners must mutua&&! ear t#eir respective s#are o% t#e &oss in va&ue ! t#e sa&e'
,% t#e &ie&ant #as een un%ortunate and #as spent #is time and mone! in saving a propert! not wort# t#e
e3penditure #e made, or i%, #aving saved enoug# to compensate #im, it is &ost ! t#e uncertainties o% a Audicia&
sa&e %or partition, so to speak, it is a mis%ortune not uncommon to a&& w#o seek gain ! adventurous
specu&ations in va&ues' T#e &ie&ant sa!s in #is testimon! t#at #e re&ied entire&! on #is rig#ts as a sa&vor' T#is
eing so #e knew t#e risk #e ran and it was #is own %o&&! to e3pend more mone! in t#e service t#an #is
reasona&e s#are wou&d #ave een wort# under a&& circumstances and contingencies' @e can re&! neit#er on
t#e common &aw idea o% an imp&ied contract to pa! %or work on and aout one?s propert! w#at t#e work is
reasona&! wort# wit# a &ien attac#ed ! possession %or satis%action, nor upon an! motion o% an imp&ied
maritime contract %or t#e services, wit# a maritime &ien to secure it, as in t#e case o% repairs, or supp&ies
%urnis#ed a need! vesse&, or t#e &ike' ,n suc# a case t#e owner wou&d &ose a&& i% t#e propert! did not satis%! t#e
det, w#en %air&! so&d' 1ut t#is doctrine #as no p&ace in t#e maritime &aw o% sa&vage' ,t does not proceed upon
an! t#eor! o% an imp&ied o&igation, eit#er o% t#e owner or t#e res, to pa! a 9uantum meruit, nor actua&
e3penses incurred, ut rat#er on t#at o% a reasona&e compensation or reward, as t#e case ma! e, to one w#o
#as rescued t#e res %rom danger o% tota& &oss' ,% #e gets t#e w#o&e, t#e propert! #ad as we&& een &ost entire&!,
so %ar as t#e owner is concerned' T#e pu&ic po&ic! o% encouragement %or suc# service does not, o% itse&%,
%urnis# su%%icient support %or a ru&e w#ic# wou&d e3c&ude t#e owner %rom a&& ene%it to e derived %rom t#e
service'
-/. =istakes in t)e valuation o, car*o $orne $y salvors6 ;n Eillia#s vs. ()e 5+olp)e (&e+. Cas. 7o.
1331-6 -% &e+. Cas.! 132")
T#e c&aim o% t#e &ie&ants is %or sa&vage, t#e services rendered were sa&vage services and t#e owners
are to receive t#eir propert! again, a%ter pa!ing sa&vage %or t#e services rendered t#em' F#at service wou&d it
e to t#em to take t#eir propert! under circumstances ca&&ing %or t#e w#o&e o% it ! wa! o% indemnit!S T#e
mistake o% t#e captain and t#e supercargo, and part owner o% t#e Triton as to t#e va&ue o% t#e propert! on
oard t#e 7do&p#e, s#ou&d not operate to t#e inAur! o% t#e owners t#ereo%C t#e sa&vors must ear t#e
conse9uences o% t#eir own mistake, taking suc# a proportion on&! o% t#e propert! sa&ved, as ! t#e &aw o% t#e
admira&t! s#ou&d e awarded t#em'
-2. Reservation o, reasona$le proportion ,or t)e o.ner6 ;n ()e D+.ar+s (1- &e+. Rep.! 2"4! 2"%)
,t is true t#at in rendering a sa&vage service t#e sa&vor assumes t#e risks o% %ai&ure, and #is sa&vage
depends upon #is success and t#e amount o% propert! savedC !et w#en t#ere is enoug# to %u&&! compensate
#im %or time and &aor, and &eave an reasona&e proportion %or t#e owner, #e s#ou&d certain&! e awarded t#at,
i% t#e amount wi&& a&&ow no more'<
-. ()e +octrine o, salva*e re9uires t)at t)e service O#ust $e pro+uctive o, so#e $ene,it to t)e
o.ners o, t)e property salve+
,n T#e +' F' Perr! (01 Fed' :ep', 054, 05>), wit#out regard to t#e e&ement o% reward w#ic# is
intended ! t#e sa&vage a&&owance, it is mani%est t#at remuneration pro opere et &aore wou&d e p&aced in
e3cess o% t#e %und #ere, i% suc# asis were a&&owa&e' F#i&e sa&vage is o% t#e nature o% a reward %or
meritorious service, and %or determination o% its amount t#e interests o% t#e pu&ic and t#e encouragement o%
ot#ers to undertake &ike service are taken into consideration, as we&& as t#e risk incurred, and t#e va&ue o% t#e
propert! saved, and w#ere t#e proceeds %or division are sma&&, t#e proportion o% a&&owance to t#e sa&vor ma!
e en&arged to answer t#ese purposes, nevert#e&ess, t#e doctrine o% sa&vage re9uires, as a prere9uisite to an!
a&&owance, t#at t#e service Gmust e productive o% some ene%it to t#e owners o% t#e propert! sa&vedC %or,
#owever meritorious t#e e3ertions o% a&&eged sa&vors ma! e, i% t#e! are not attended wit# ene%it to t#e
owners, t#e! can not e compensated as suc#'< T#e c&aim o% t#e &ie&ant can on&! e supported as one %or
sa&vage' ,t does not constitute a persona& demand, upon 9uantum meruit, against t#e owners, ut gives an
interest in t#e propert! saved, w#ic# entit&es t#e sa&vor to a &iera& s#are o% t#e proceeds' (ne o% t#e grounds
%or &iera&it! in sa&vage awards is t#e risk assumed ! t#e sa&vor, H t#at #e can #ave no recompense %or
service or e3pense un&ess #e is success%u& in t#e rescue o% propert!, and t#at #is reward must e wit#in t#e
measure o% #is success' @e otains an interest in t#e propert!, and in its proceeds w#en so&d, ut accompanied
! t#e same risk o% an! mis%ortune or depreciation w#ic# ma! occur to reduce its va&ue' ,n ot#er words, #e
can on&! #ave a portion, in an! eventC and t#e %act t#at #is e3ertions were meritorious and t#at t#eir actua&
va&ue, or t#e e3pense actua&&! incurred, e3ceeded t#e amount produced ! t#e service, cannot operate to
asor t#e entire proceeds against t#e esta&is#ed ru&es o% sa&vage'
-3. Courts )ave a .i+e +escretion in settlin* t)e a.ar+6 ;n ()e Bo$ H. Backson (11 &e+. Rep.!
1"12! 1"14)
$ourts #ave a wide descretion in sett&ing t#e award' T#e award is now determined ! t#e particu&ar
%acts and t#e degree o% merit' T#ere is no %i3ed ru&e %or sa&vage a&&owance' T#e o&d ru&e in cases o% a dere&ict
was 42 per cent o% t#e propert! sa&vedC ut under modern decisions and practice, it ma! e &ess, or it ma! e
more' T#e a&&owance rests in t#e sound discretion o% t#e court or Audge, w#o #ears t#e case, #ears t#e
witnesses testi%!, &ooks into t#eir e!es, and is ac9uainted wit# t#e environments o% t#e rescue' ' ' ' 7n
a&&owance %or sa&vage s#ou&d not e weig#ed in go&den sca&es, ut s#ou&d e made as a reward %or meritorious
vo&untar! services, rendered at a time w#en danger o% &oss is imminent, as a reward %or suc# services so
rendered, and %or t#e purpose o% encouraging ot#ers in &ike services'
-4. 8l+ rule o, 2"R o, t)e +erelict a$an+one+6 ;n ()e La#in*ton (4 &e+. Rep.! 32! 34)
F#i&e it appears most c&ear&! t#at, since t#e o&d #ard and %ast ru&e o% ?42 per cent o% a dere&ict? was
aandoned, t#e award is determined ! a consideration o% t#e pecu&iar %acts o% eac# case, it is none t#e &ess
true t#at t#e admira&t! courts #ave a&wa!s een care%u& not on&! to encourage sa&ving enterprises ! &iera&it!,
w#en possi&e, ut a&so to recogni*e t#at it is, a%ter a&&, a specu&ation in w#ic# desert and reward not a&wa!s
a&ance'
-%. 5.ar+ is lar*ely in t)e +iscretion o, t)e trial court an+ it is rare t)at t)e appellate court .ill
+istur$ t)e ,in+in*
7ppe&&ate courts rare&! reduce sa&vage awards, un&ess t#ere #as een some vio&ation o% Aust princip&es,
or some c&ear or pa&pa&e mistake' T#e! are re&uctant to distur suc# award, so&e&! on t#e ground t#at t#e
suordinate court gave too &arge a sum, un&ess t#e! are c&ear&! satis%ied t#at t#e court e&ow made an
e3oritant estimate o% t#e services' ,t is e9ua&&! true t#at, w#en t#e &aw gives a part! a rig#t to appea&, #e #as
t#e rig#t to demand t#e conscientious Audgment o% t#e appe&&ate court on ever! 9uestion arising in t#e case,
and t#e a&&owance o% sa&vage origina&&! decreased #as, in man! cases, een increased or diminis#ed in t#e
appe&&ate court, even w#ere it did not vio&ate an! o% t#e Aust princip&es w#ic# s#ou&d regu&ate t#e suAect, ut
was unreasona&! e3cessive or inade9uate' 7&t#oug# t#e amount to e awarded as sa&vage rests, as it is said,
in t#e discretion o% t#e court awarding it, appe&&ate courts wi&& &ook to see i% t#at discretion #as een e3ercised
! t#e court o% %irst instance in t#e spirit o% t#ose decisions w#ic# #ig#er triuna&s #ave recogni*ed and
en%orced, and wi&& readAust t#e amount i% t#e decree e&ow does not %o&&ow in t#e pat# o% aut#orit!, even
t#oug# no princip&e #as een vio&ated or mistake made'
3". <istinction in t)e proportion o, a.ar+ as to t)e property salve+6 Cases
T#e dr! copra and t#e agar=agar was sa&ved wit# muc# more ease t#an t#e wet copra' T#e courts #ave,
a&most universa&&!, made a distinction in t#e proportion o% award as to t#e propert! sa&ved' (1) ,n T#e 7merica
(1 Fed' $as', 4.>), decided in 1/3>, t#e award was as %o&&ows: 84 per cent on cargo sa&ved dr!C 42 per cent on
cargo sa&ved damagedC >2 per cent on cargo sa&ved ! diving' (8) ,n T#e 7Aa3 (1 Fed' $as', 848), decided in
1/3>, t#e award was as %o&&ows: 33 per cent on t#e dr!C 42 per cent on t#e wetC 42 per cent on s#ip?s
materia&s' (3) ,n T#e Eat#anie& Pima&& (Fed' $as' Eo' 12233), decided in 1/43, t#e award was as %o&&ows: 32
per cent on dr! cargoC 42 per cent on wet, sa&ved ! diving and working under water' (5) ,n T#e 1rewster
(Fed' $as' Eo' 1/48), decided in 1/5/, t#e award was as %o&&ows: 33 per cent, and as to some cargo w#ere
diving was necessar!, >2 per cent' (4) ,n T#e Mu&#ouse (Fed' $as' Eo' ..12), decided in 1/4., t#e award was
as %o&&ows: 84 per cent sa&ving dr! deck cottonC 54 per cent sa&ving cotton sumerged etween decksC 44 per
cent sa&ving cotton ! diving' (>) ,n T#e Jo#n Fes&e! (Fed' $as' E(' 0533), decided in 1/>>, t#e award was
as %o&&ows: 14 per centC on damaged cotton a s&ig#t&! #ig#er per cent' (0) ,n T#e Eort#wester (Fed' $as' E('
12333), decided in 1/03, t#e award was as %o&&ows: 82 per cent on cotton dr!C 33 1-3 per cent on cotton wet
and urntC 52 per cent on materia&sC 42 per cent on propert! sa&ved ! diving' (/) ,n 1aker vs' $argo etc' o%
T#e "&oodna (34 Fed' :ep', 430), decided in 1//0, t#e award was as %o&&ows: 84 per cent on dr! cottonC 33
1-3 per cent on wet cottonC 54 per cent on materia&s' (.) ,n t#e cases in w#ic# t#e %u&& award o% 42 per cent
was a&&owed t#e court usua&&! made t#e comment: ;services #ig#&! meritorious service,< ;wit# great &aor and
di%%icu&t!,< or simi&ar remarks'
31. :roperty involve+ in t)e salva*e! in t)e present case
,n t#e sa&vage operations conducted ! Br&anger T 6a&inger, t#e %o&&owing propert! was invo&ved (1)
t#e steams#ip Eippon, va&ued at P842,222'22C (8) copra, net va&ued, sa&ved at P 158,>40'24C (3) agar=agar, net
va&ue, sa&ved at P 4,>34'22C (5) genera& cargo at P 4,.3.'>/C (4) camp#or, net va&ue, sa&ved at P 1,/42'22C and
(>) curios, net va&ue, sa&ved at (P) 142'22'
3-. 5*ree#ent $et.een t)e parties! in t)e present case
Br&anger T 6a&inger and t#e owners o% t#e s#ip #ave #ereto%ore, ! mutua& agreement, sett&ed t#e
9uestion o% t#e amount o% sa&vage o% t#e s#ip' Br&anger T 6a&inger received %or t#at part o% t#eir services t#e
sum o% (+)14222, or aout P154,/22' Eo appea& was taken %rom t#e Audgment o% t#e &ower court concerning
t#e amount o% sa&vage a&&owed ! it %or t#e genera& cargo, t#e camp#or, nor t#e curios sa&ved'
33. 5#ount o, salva*e ,or t)e copra an+ t)e a*ar>a*ar
7%ter a care%u& stud! o% t#e entire record and taking into account t#e amount w#ic# Br&anger T
6a&inger #as received, t#e $ourt #as arrived at t#e conc&usion t#at in e9uit! and Austice t#at Br&anger T
6a&inger s#ou&d receive %or t#eir services t#e %o&&owing amounts: (a) 52 per cent o% t#e net va&ue o% t#e wet
copra sa&vedC () 84 per cent o% t#e net va&ue o% t#e dr! copra sa&vedC and (c) 82 per cent o% t#e net va&ue o%
t#e agar=agar sa&ved' T#e net va&ue o% t#e wet copra sa&ved amounted to P52,3/1'.5C 52 per cent o% t#at
amount wou&d e P1>,148'0/' T#ere%ore, t#e net va&ue o% t#e dr! copra sa&ved amounted to P128,804'11C 84
per cent o% t#at amount wou&d e P84,4>/'00' ,n ascertaining t#e net va&ue o% t#e copra sa&ved, t#e e3penses
incurred ! t#e $o&&ector o% $ustoms in t#e sa&e o% t#e copra, amounting to P5,2/2'21, #as een deducted
%rom t#e tota& amount o% t#e copra sa&ved in t#e proportion o% 8'4 to 1' Dividing t#e e3pense in t#at proportion
we #ave deducted %rom t#e amount o% t#e dr! copra sa&ved t#e sum o% P8,.15'3., and %rom t#e amount o% t#e
wet copra sa&ved, t#e sum o% P1,1>4'>8' T#e net va&ue o% t#e agar=agar sa&ved amounted to P4,>3>C 82 per
cent o% t#at amount wou&d e P1,180'
[-/"]
:estano vs. Su#ayan* (GR 13%432! / <ece#$er -""")
&acts' 7t around 8:22 p'm' o% . 7ugust 1./>, 7nanias "uma!ang was riding a motorc!c&e a&ong t#e nationa&
#ig#wa! in ,&i#an, Taagon, $eu' :iding wit# #im was #is %riend Manue& :omagos' 7s t#e! came upon a
Aunction w#ere t#e #ig#wa! connected wit# t#e road &eading to Taagon, t#e! were #it ! a passenger us
driven ! 6regorio Pesta)o and owned ! Metro $eu 7utous $orp', w#ic# #ad tried to overtake t#em,
sending t#e motorc!c&e and its passengers #urt&ing upon t#e pavement' 1ot# 7nanias "uma!ang and Manue&
:omagos were rus#ed to t#e #ospita& in "ogod, w#ere "uma!ang was pronounced dead on arriva&' :omagos
was trans%erred to t#e $eu Doctors? @ospita&, ut #e succumed to #is inAuries t#e da! a%ter'
7part %rom t#e institution o% crimina& c#arges against Pesta)o, Teotimo and Pa* "uma!ang, as #eirs o%
7nanias "uma!ang, %i&ed a civi& action %or damages ($ivi& $ase $B1=>12/) against Pesta)o, as driver o% t#e
passenger us t#at rammed t#e deceased?s motorc!c&e, Metro $eu, as owner and operator o% t#e said us,
and Per&a $ompania de "eguros, as insurer o% Metro $eu' (n . Eovemer 1./0, upon motion o% Pesta)o,
Judge Pedro $' "on ordered t#e conso&idation o% t#e said case wit# $rimina& $ase 12>85, pending in 1ranc#
1> o% t#e same $ourt, invo&ving t#e crimina& prosecution o% Pesta)o %or dou&e #omicide t#ru reck&ess
imprudence' Joint tria& o% t#e two cases t#erea%ter ensued' ,n Audgment, t#e &ower court %ound Pestano and
Metro $eu &ia&e to t#e "uma!angs, in t#e amounts o% P32,222'22 %or deat# indemnit!, P/8.,20. %or &oss o%
earning capacit! o% t#e deceased 7nanias "uma!ang, and P3>,222'22 %or necessar! interment e3penses' T#e
&iai&it! o% Per&a $ompania de "eguros, #owever, was &imited on&! to t#e amount stipu&ated in t#e insurance
po&ic!, w#ic# was P18,222 %or deat# indemnit! and P5,422'22 %or uria& e3penses' Pestano and Metro $eu
appea&ed'
T#e $ourt o% 7ppea&s ($7=6: $V 328/.), on 81 7pri& 1..., denied t#e appea&, and a%%irmed t#e decision o%
t#e &ower court wit# t#e modi%ication regarding t#e indemnit! %or t#e deat# o% t#e victim (i'e' raised to
P42,222)' T#e motion %or reconsideration suse9uent&! %i&ed was denied > 7ugust 1...' @ence, t#e Petition
%or review on certiorari (:u&e 54)'
T#e "upreme $ourt denied t#e petition, and a%%irmed t#e assai&ed Decision and :eso&utionC wit# cost against
Pestano and Metro $eu'
1. &actual ,in+in*s o, t)e Court o, 5ppeals! a,,ir#in* t)ose o, t)e trial court! are conclusive upon
t)e Supre#e Court
Factua& %indings o% t#e $7 a%%irming t#ose o% t#e tria& court are conc&usive and inding on t#e
"upreme $ourt' @erein, Pestano and Metro $eu were raising a 9uestion o% %act ased on Pesta)o?s testimon!
contradicting t#at o% B!ewitness ,gnacio Eeis and on t#e &ocation o% t#e dents on t#e umper and t#e gri&&'
T#e $7 agreed wit# t#e tria& court t#at t#e ve#icu&ar co&&ision was caused ! Pesta)o?s neg&igence w#en #e
attempted to overtake t#e motorc!c&e' 7s a pro%essiona& driver operating a pu&ic transport us, #e s#ou&d
#ave anticipated t#at overtaking at a Aunction was a peri&ous maneuver and s#ou&d t#us #ave e3ercised
e3treme caution' Pestano and Metro $eu %ai&ed to demonstrate t#at t#is case %a&&s under an! o% t#e
recogni*ed e3ceptions to t#is ru&e'
-. ;ssue o, ne*li*ence $asically ,actual
T#e issue o% neg&igence is asica&&! %actua& and, in 9uasi=de&icts, crucia& in t#e award o% damages'
3. 5rticles -14" an+ -13 o, t)e Civil Co+e6 Bonus pater ,a#ilias6 D#ployer presu#e+ ne*li*ent
in selection an+ supervision o, e#ployees! are responsi$le ,or +a#a*es cause+ $y t)eir e#ployees
Dnder 7rtic&es 81/2 and 810> o% t#e $ivi& $ode, owners and managers are responsi&e %or damages
caused ! t#eir emp&o!ees' F#en an inAur! is caused ! t#e neg&igence o% a servant or an emp&o!ee, t#e
master or emp&o!er is presumed to e neg&igent eit#er in t#e se&ection or in t#e supervision o% t#at emp&o!ee'
T#is presumption ma! e overcome on&! ! satis%actori&! s#owing t#at t#e emp&o!er e3ercised t#e care and
t#e di&igence o% a good %at#er o% a %ami&! in t#e se&ection and t#e supervision o% its emp&o!ee'
/. <e,ective spee+o#eter s)o.s laxity o, =etro Ce$u in t)e supervision o, e#ployees an+ con+uct
o, $usiness
7&&owing Pesta)o to p&! #is route wit# a de%ective speedometer s#owed &a3it! on t#e part o% Metro
$eu in t#e operation o% its usiness and in t#e supervision o% its emp&o!ees' T#e neg&igence a&&uded is in its
supervision over its driver, not in t#at w#ic# direct&! caused t#e accident' T#e %act t#at Pesta)o was a&e to
use a us wit# a %au&t! speedometer s#ows t#at Metro $eu was remiss in t#e supervision o% its emp&o!ees
and in t#e proper care o% its ve#ic&es' ,t #ad t#us %ai&ed to conduct its usiness wit# t#e di&igence re9uired !
&aw'
2. 5rticle --" 7CC6 ;n+e#nity ,or +eat) )as $een ,ixe+ to :2"!"""
T#e indemnit! %or deat# caused ! a 9uasi=de&ict used to e pegged at P3,222, ased on 7rtic&e 882>
o% t#e $ivi& $ode' @owever, t#e amount #as een gradua&&! increased t#roug# t#e !ears ecause o% t#e
dec&ining va&ue o% our currenc!' 7t present, prevai&ing Aurisprudence %i3es t#e amount at P42,222'
. Co#putation o, loss o, earnin* capacity $ase+ on li,e expectancy o, +ecease+! not o, )eir6
&actors
T#e $ourt #as consistent&! computed t#e &oss o% earning capacit! ased on t#e &i%e e3pectanc! o% t#e
deceased, and not on t#at o% t#e #eir' Bven Vi&&a :e! Transit case did &ikewise' T#e award %or &oss o% earning
capacit! is ased on two %actors: (1) t#e numer o% !ears on w#ic# t#e computation o% damages is ased and
(8) t#e rate at w#ic# t#e &oss sustained ! t#e #eirs is %i3ed' T#e %irst %actor re%ers to t#e &i%e e3pectanc!, w#ic#
takes into consideration t#e nature o% t#e victim?s work, &i%est!&e, age and state o% #ea&t# prior to t#e accident'
T#e second re%ers to t#e victim?s earning capacit! minus t#e necessar! &iving e3penses' "tated ot#erwise, t#e
amount recovera&e is t#at portion o% t#e earnings o% t#e deceased w#ic# t#e ene%iciar! wou&d #ave received
H t#e net earnings o% t#e deceased'

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