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Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No.

85331 August 25, 1989 KAPALARAN BUS LINE, petitioner, vs. ANGEL CORONADO, LOPE GRAJERA, DIONISIO SHINYO, and THE COURT OF APPEALS, respondents, Leopoldo M. Consunto for petitioner. Danilo S. Cruz for intervenor-appellee. Conrado Manicad for private respondents. FELICIANO, J.: Petitioner Kapalaran Bus Line ("Kapalaran") seeks the reversal or modification of the Court of Appeals' decision in CA G.R. CV No. 12476 and the absolution of petitioner from all liability arising from the collision between one of petitioner's buses and a jeepney owned by respondent Coronado, driven by respondent Grajera and in which jeepney respondent Shinyo was a passenger. The facts of this case as found by the trial court and adopted by the Court of Appeals, are summarized in the trial court's decision and quoted in the Court of Appeals' own judgment in the following terms: The accident happened on the National Highway at 10:30 A.M. on August 2, 1982. The jeepney driven by Lope Grajera was then corning from Pila, Laguna on its way towards the direction of Sta. Cruz, traversing the old highway. As it reached the intersection where there is a traffic sign 'yield,' it stopped and cautiously treated the intersection as a "Thru Stop' street, which it is not. The KBL bus was on its way from Sta. Cruz, Laguna, driven by its regular driver Virgilio Llamoso, on its way towards Manila. The regular itinerary of the KBL bus is through the town proper of Pila, Laguna, but at times it avoids this if a bus is already fully loaded with passengers and can no longer accommodate additional passengers. As the KBL bus neared the intersection, Virgilio Llamoso inquired from his conductor if they could still accommodate passengers and learning that they were already full, he decided to bypass Pila and instead, to proceed along the national highway. Virgilio Llamoso admitted that there was another motor vehicle ahead of him. The general rule is that the vehicle on the national highway has the right-of-way as against a feeder road. Another general rule is that the vehicle coming from the right has the right-of-way over the vehicle coming from the left. The general rules on right-of-way may be invoked only if both vehicles approach the intersection at almost the same time. In the case at bar, both roads are national roads. Also, the KBL bus was still far from the intersection when the jeepney reached the same. As testified to by Atty. Conrado L. Manicad who was driving a Mustang car coming from the direction of Sta. Cruz and proceeding towards the direction of Manila, he stopped at the intersection to give way to the jeepney driven by Grajera. Behind Manicad were two vehicles, a car of his client and another car. A Laguna Transit bus had just entered the town of Pila ahead of Atty. Manicad. The sketch marked Exhibit 'E' indicates very clearly that the jeepney had already traversed the intersection when it met the KBL bus head-on. It is also obvious that the point of impact was on the right lane of the highway which is the lane properly belonging to the jeepney. As testified to by Lope Grajera, the KBL bus

ignored the stopped vehicles of Atty. Manicad and the other vehicles behind Atty. Manicad and overtook both vehicles at the intersection, therefore, causing the accident. Judging from the testimony of Atty. Conrado L. Manicad and the sketch (Exhibit 'E'), the sequence of events shows that the first vehicle to arrive at the intersection was the jeepney. Seeing that the road was clear, the jeepney which had stopped at the intersection began to move forward, and for his part, Atty. Manicad stopped his car at the intersection to give way to the jeepney. At about this time, the KBL bus was approaching the intersection and its driver was engaged in determining from his conductor if they would still pass through the town proper of Pila. Upon learning that they were already full, he turned his attention to the road and found the stopped vehicles at the intersection with the jeepney trying to cross the intersection. The KBL bus had no more room within which to stop without slamming into the rear of the vehicle behind the car of Atty. Manicad. The KBL driver chose to gamble on proceeding on its way, unfortunately, the jeepney driven by Grajera, which had the right-of-way, was about to cross the center of the highway and was directly on the path of the KBL bus. The gamble made by Llamoso did not pay off. The impact indicates that the KBL bus was travelling at a fast rate of speed because, after the collision, it did not stop; it travelled for another 50 meters and stopped only when it hit an electric post (pp. 3-4, Decision; pp. 166167, Record). 1 On 14 September 1982, Kapalaran, apparently believing that the best defense was offense, filed a complaint for damage to property and physical injuries through reckless imprudence against respondents Angel Coronado and Lope Grajera in the Regional Trial Court, Branch 27, Sta. Cruz, Laguna. Respondents answered with their own claims (counter-claims) for damages. A third-party complaint and/or a complaint for intervention was also filed in the same case against Kapalaran by jeepney passenger Dionisio Shinyo. On 15 October 1986, after trial, the trial court rendered a judgment in favor of private respondents and ordering Kapalaran (a) to pay Angel Coronado the sum of P40,000.00 as compensation for the totally wrecked jeepney, plus the sum of P5,000.00 as attorney's fees and litigation expenses, and (b) to Dionisio Shinyo the sum of P35,000.00 representing the expenses incurred by said intervenor for his treatment including his car-hire, the further sum of P30,000.00 representing the expenses said defendant will incur for his second operation to remove the intramedulary nail from his femur, the additional sum of P50,000.00 to serve as moral damages for the pain and suffering inflicted on said defendant, plus the sum of P10,000.00 in the concept of exemplary damages to serve as a deterrent to others who, like the plaintiff, may be minded to induce accident victims to perjure themselves in a sworn statement, and the sum of P15,000.00 as attorney's fees and litigation expenses. From the above judgment, Kapalaran appealed to the Court of Appeals assailing the trial court's findings on the issue of fault and the award of damages. The Court of Appeals, on 28 June 1988, affirmed the decision of the trial court but modified the award of damages by setting aside the grant of exemplary damages as well as the award of attomey's fee and litigation expenses made to Dionisio Shinyo. 2 This decision of the Court of Appeals is now before us on a Petition for Review, a motion for reconsideration by Kapalaran having been denied by that court on 13 October 1988. Kapalaran assails the findings of fact of the Regional Trial Court and of the Court of Appeals, and insists before this Court that respondent Grajera, driver of the jeepney, was at fault and not the driver of Kapalaran's bus. It must be remembered that it is not the function of this Court to

analyze and weigh evidence presented by the parties all over again and that our jurisdiction is in principle limited to reviewing errors of law that might have been committed by the Court of Appeals. Kapalaran has made no compelling showing of any misapprehension of facts on the part of the Court of Appeals that would require us to review and overturn the factual findings of that court. On the contrary, examination of the record shows that not only are the conclusions of fact of the Court of Appeals and the trial court on who — the bus driver or the jeepney driver — had acted negligently and was at fault in the collision of their vehicles, amply supported by the evidence of record, but also that Kapalaran's bus driver was grossly negligent and had acted wantonly and in obvious disregard of the applicable rules on safety on the highway. Kapalaran's driver had become aware that some vehicles ahead of the bus and travelling in the same direction had already stopped at the intersection obviously to give way either to pedestrians or to another vehicle about to enter the intersection. The bus driver, who was driving at a speed too high to be safe and proper at or near an intersection on the highway, and in any case too high to be able to slow down and stop behind the cars which had preceded it and which had stopped at the intersection, chose to swerve to the left lane and overtake such preceding vehicles, entered the intersection and directly smashed into the jeepney within the intersection. Immediately before the collision, the bus driver was actually violating the following traffic rules and regulations, among others, in the Land Transportation and Traffic Code, Republic Act No. 4136, as amended: Sec. 35. Restriction as to speed. — (a) Any person driving a motor vehicle on a highway shall drive the same at a careful and prudent speed, not greater nor less than is reasonable and proper, having due regard for the traffic, the width of the highway, and or any other condition then and there existing; and no person shall drive any motor vehicle upon a highway at such a speed as to endanger the life, limb and property of any person, nor at a speed greater than will permit him to bring the vehicle to a stop within the assured clear distance ahead. xxx xxx xxx Sec. 41. Restrictions on overtaking and passing. _1 (a) The driver of a vehicle shall not drive to the left side of the center line of a highway in overtaking or passing another vehicle, proceeding in the same direction, unless such left side is clearly visible, and is free of oncoming traffic for a sufficient distance ahead to permit such overtaking or passing to be made in safety. xxx xxx xxx (c) The driver of a vehicle shall not overtake or pass any other vehicle proceeding in the same direction, at any railway grade crossing, or at any intersection of highways, unless such intersection or crossing is controlled by traffic signal, or unless permitted to do so by a watchman or a peace officer, except on a highway having two or more lanes for movement of traffic in one direction where the driver of a vehicle may overtake or pass another vehicle on the right. Nothing in this section shall be construed to prohibit a driver overtaking or passing, upon the right, another vehicle which is making or about to make a left turn. xxx xxx xxx (Emphasis supplied) Thus, a legal presumption arose that the bus driver was negligent 3 a presumption Kapalaran was unable to overthrow. Petitioner's contention that the jeepney should have stopped before entering the "Y-intersection" because of the possibility that another vehicle behind the cars which had stopped might not similarly stop and might swerve to the left to proceed to the highway en route to Manila, is more ingenious than substantial. It also offers illustration of the familiar litigation tactic of shifting blame from one's own shoulders to those of the other party. But the jeepney driver, seeing the

a death hastened by. 5 Hence. 8 it should have appealled from that portion of the trial court's decision which had failed to hold the bus driver is not "merely subsidiary. with due regard for all circumstances. was apparently not held liable by the trial court . that the left lane of the road within the intersection and beyond was clear. the bus collided head on into the jeepney because the bus had been going at an excessively high velocity immediately before and at the time of overtaking the stopped cars. The law requires petitioner as common carrier to exercise extraordinary diligence incarrying and transporting their passanger safely "as far as human care and foresight can proved. both the trial court and the Court of Appeals overlook another and far more compelling basis for the award of exemplary damages against petitioner Kapalaran in this case. 7 Where the employer is held liable for damages. third-party defendant. the law compels them to curb the recklessness of their drivers. considering that such liability was premised upon the bus driver's negligence and that petitioner "as mere employer" was not guilty of such negligence or imprudence. It was also the responsibility of the bus driver to see to it. and so caught the jeepney within the intersection. the grievous injuries sustained by him in the violent collision. stating that it was not "such a reprehensible act to try to gather witnesses for one's cause" and that there was no evidence of use of "presure or influence" to induce the accident victims to perjure themselves While that might have been so. like the plaintiff [Kapalaran]. The award of moral damages against petitioner Kapalaran is not only entirely in order. 11 While the immediate beneficiaries of the standard of ." and is not limited to cases where the employee "cannot pay his liability" nor are private respondents compelled frist to proceed against the bus driver. petitioner Kapalaran was unable to rebut the presumption of negligence on its own part. Kapalaran argues that there was no justification for holding it. 4 Petitioner's bus was still relatively far away from the intersection when the jeepney entered the same. if not directly due to. If petitioner Kapalaran was interested in maintaining its right of recourse against or reimbursement from its own driver. The patent and gross negligence on the part of the petitioner Kapalaran's driver raised the legal presumption that Kapalaran as employer was guilty of negligence either in the selection or in the supervision of its bus driver." The Court of Appeals held that htere was no basis for this award of exemplary damages. when it overtook the two (2) cars ahead which had stopped at the intersection. using the utmost diligence of very cautious persons. upon the ground that its own bus driver. it is not conditioned upon prior recourse against the negligent employee and a prior showing of the insolvency of such employee. it has of course a right of recourse against its own negligent employee." 10 In requiring the highest possible degree of diligence from common carriers and creating a presumption of negligence against them. which was precisely the lane or side on which the jeepney had a right to be. had the right to assume that other vehicles further away and behind the stopped cars would similarly come to a stop and not seek illegally to overtake the stopped vehicles and come careening into the intersection at an unsafe speed. The Court of Appeals deleted the award of exemplary damages which the trial court had granted in order "to serve as a deterrent to others who. The liability of the employer under Article 2180 of the Civil Code is direct and immediate. The point of impact was on the left side of the intersection (the light lane so far as concerns the jeepney coming from the opposite side).cars closest to the intersection on the opposite side of the highway come to a stop to give way to him. may be minded to induce accident victims to perjure themselves in a sworn statement. 9 So far as the record shows. the employer. liable for damages. There is no question that petitioner's bus driver was grossly and very probably criminally negligent in his reckless disregard of the rights of other vehicles and their pasangers and of pedestrian as well The Court is entitled to take judicial notice of the gross negligence and the appalling disregard of the physical safety and property of others so commonly exhibited today by the drivers of passanger bussses and similar vehicles on our highways. 6 This contention in thoroughly unpersuasive. Petitioner Kapalaran also assails the award of moral damages against itself. it is also quite modest consideirng Dionisio Shinyo's death during the pendency of this petition.

being both authorized by law 14 and demanded by substantial justice in the instant case. except (1) that the award of exemplary damages to Dionisio Shinyo shall be restored and increased from P10. FERNANDO BANZON and BERFOL CAMORO. should similarly be restored.. Article 2231 of the Civil Code explicitly authorizes the imposition of exemplary damages in cases of quasi-delicts "if the defendant acted with gross negligence.R. No. Ruperto N. L-45637 May 31. CLEMENTE FONTANAR. Bidin and Cortes. Valentin A. however. J. The background facts which led to the filing of a complaint for breach of contract and damages against the respondents are summarized by the Court of First Instance of Cebu as follows: .000. which impel us to the conclusion that the trial court's award of exemplary damages was erroneously deleted and must be restored and brought more nearly to the level which public policy and substantial justice require. Jr. Zozobrado for petitioner.. the Petition for Review on certiorari is DENIED for lack of merit and the Decision of the Court of Appeals is hereby AFFIRMED.00 as attorney's fees and litigation expenses. on questions of law. 12 The law seeks to stop and prevent the slaughter and maiming of people (whether passengers or not) and the destruction of property (whether freight or not) on our highways by buses. vs.. it is not only the demands of substantial justice but also the compelling considerations of public policy noted above. petitioner. we believe that the award by the trial court of P15. respondents. C. deleted by the Court of Appeals. and (2) that the grant of attorney's fees and litigation expenses in the sum of P15. Fernan.extraordinary diligence are." Thus we believe that the award of exemplary damages by the trial court was quite proper. they are not only persons that the law seeks to benefit. JJ. Alfarara for respondents. Costs against petitioner. It is settled.. of the decision of the Court of First Instance of Cebu which reversed the decision of the City Court of Cebu and exonerated the respondents from any liability arising from a vehicular accident. In much the same vein.000. The Court is aware that respondent Shinyo did not file a separate petition for review to set aside that portion of the Court of Appeals' decision which deleted the grant by the trial court of exemplary damages. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G. concur. GUTIERREZ.00 to P25. may and should be considered and decided by this Court even if those issues had not been explicitly raised by the party affected. that issues which must be resolved if substantial justice is to be rendered to the parties. Gutierrez. WHEREFORE.: This is a petition for review. although granted for the wrong reason. 13 In the instant case. the passengers and owners of cargo carried by a common carrier. of course. JR. For if common carriers carefully observed the statutory standard of extraordinary diligence in respect of of their own passengers. the very size and power of which seem often to inflame the minds of their drivers. and should not only be restored but augmented in the present case.00 to Dionisio Shinyo shall similarly be restored. SO ORDERED.00.000. they cannot help but simultaneously benefit pedestrians and the owners and passengers of other vehicles who are equally entitled to the safe and convenient use of our roads and highways.J.000. 1985 ROBERTO JUNTILLA.

When the jeepney reached Mandaue City. The Honorable Court below committed grave abuse of discretion in failing to take cognizance of the fact that defendants and/or their employee failed to exercise "utmost and/or extraordinary diligence" required of common carriers contemplated under Art. Fernando Banzon and Berfol Camoro. Senining of the Civil Court of Cebu rendered judgment in favor of the petitioner and against the respondents. In the process. The respondents appealed to the Court of First Instance of Cebu. judgment is hereby rendered in favor of the plaintiff and against the defendants and the latter are hereby ordered. Aside from this. R-17378 for breach of contract with damages before the City Court of Cebu City. It was registered under the franchise of defendant Clemente Fontanar but was actually owned by defendant Fernando Banzon. 1755 of the Civil Code of the Philippines. PUJ-71-7 on the course of the trip from Danao City to Cebu City. Judge Leonardo B. alleging inter alia that the accident that caused losses to the petitioner was beyond the control of the respondents taking into account that the tire that exploded was newly bought and was only slightly used at the time it blew up. he immediately entered the Danao City Hospital to attend to his injuries. jointly and severally. Judge Romulo R. We find the petition impressed with merit. the plaintiff who was sitting at the front seat was thrown out of the vehicle. which he bought for P 852. "B") could no longer be found. A motion for reconsideration was denied by the Court of First Instance. he discovered that his "Omega" wrist watch was lost. to pay the plaintiff the sum of P750. When he came to his senses. Branch I against Clemente Fontanar. the wrist watch. Upon landing on the ground.The facts established after trial show that the plaintiff was a passenger of the public utility jeepney bearing plate No. Because of his shock and injuries. he went back to Danao City but on the way. Branch XIV. and also requested his father-in-law to proceed immediately to the place of the accident and look for the watch. "D"). The Honorable Court below committed grave abuse of discretion by deciding the case contrary to the doctrine laid down by the Honorable Supreme Court in the case of Necesito et al. the plaintiff momentarily lost consciousness. Upon his arrival in Danao City. the further sum of P100. the right rear tire exploded causing the vehicle to turn turtle. Paras.70 (Exh. judgment is hereby rendered exonerating the defendants from any liability to the plaintiff without pronouncement as to costs.00 as reimbursement for the lost Omega wrist watch. an additional sum of P300. The dispositive portion of the decision reads: WHEREFORE. The City Court and the Court of First Instance of Cebu found that the right rear tire of the passenger jeepney in which the petitioner was riding blew up causing the vehicle to fall on its . he found that he had a lacerated wound on his right palm. After trial.00 for the doctor's fees and medicine. v. Canares reversed the judgment of the City Court of Cebu upon a finding that the accident in question was due to a fortuitous event. xxx xxx xxx Petitioner Roberto Juntilla filed Civil Case No. The dispositive portion of the decision reads: WHEREFORE. The jeepney was driven by defendant Berfol Camoro. right thigh and on his back. The petitioner raises the following alleged errors committed by the Court of First Instance of Cebu on appeal— a. In spite of the efforts of his father-in-law.64 as unrealized salary of the plaintiff from his employer. The respondents filed their answer. he suffered injuries on his left arm.00 for attorney's fees and the costs. et al. (Exh. the sum of P246. b.

A tire blow-out.. 1958. CA-G. we held that: Petitioner maintains that a tire blow-out is a fortuitous event and gives rise to no liability for negligence. et al.R. also in relation to contracts. CA G. this would be a clear case of fortuitous event. and People v... While it may be true that the tire that blew-up was still good because the grooves of the tire were still visible. The foregoing conclusions of the Court of First Instance of Cebu are based on a misapprehension of overall facts from which a conclusion should be drawn. such as what happened in the case at bar. The Court of First Instance relied on the ruling of the Court of Appeals in Rodriguez v. No. (17 SCRA 23). 1954.. 1954. In the case at bar. consequently. CA G. No evidence was presented to show that the accident was due to adverse road conditions or that precautions were taken by the jeepney driver to compensate for any conditions liable to cause accidents. a caso fortuito presents the following essential characteristics: (1) The cause of the . December 29.R. not only are not binding on this Court but were based on considerations quite different from those that obtain in the case at bar. Indeed. The reliance of the Court of First Instance on the Rodriguez case is not in order. constitutes a clear case of caso fortuito which can be a proper basis for exonerating the defendants from liability. is an inevitable accident that exempts the carrier from liability. we laid down the following essential characteristics of caso fortuito: xxx xxx xxx .side. December 29. . De Jesus. Smith (45 Phil. No. June 27. this Court finds that the accident in question was due to a fortuitous event. despite being brand new. The Court of First Instance of Cebu ruled that: After reviewing the records of the case. therefore. this fact alone does not make the explosion of the tire a fortuitous event. The sudden blowing-up. 657). Red Line Transportation Co. The appellate court there made no findings of any specific acts of negligence on the part of the defendants and confined itself to the question of whether or not a tire blow-out. The evidence shows that the passenger jeepney was running at a very fast speed before the accident. Red Line Transportation Co. by itself alone and without a showing as to the causative factors. citing the rulings of the Court of Appeals in Rodriguez v. .. The petitioner questions the conclusion of the respondent court drawn from this finding of fact. There is also evidence to show that the passenger jeepney was overloaded at the time of the accident. 8136. v. The fact that the right rear tire exploded. We agree with the observation of the petitioner that a public utility jeep running at a regular and safe speed will not jump into a ditch when its right rear tire blows up.. there being absence of a showing that there was misconduct or negligence on the part of the operator in the operation and maintenance of the vehicle involved. The Court of First Instance of Cebu erred when it absolved the carrier from any liability upon a finding that the tire blow out is a fortuitous event. The petitioner stated that there were three (3) passengers in the front seat and fourteen (14) passengers in the rear. where the Court of Appeals ruled that: A tire blow-out does not constitute negligence unless the tire was already old and should not have been used at all. In a legal sense and. 18480. there are specific acts of negligence on the part of the respondents. 8136. could have been caused by too much air pressure injected into the tire coupled by the fact that the jeepney was overloaded and speeding at the time of the accident..R.. The records show that the passenger jeepney turned turtle and jumped into a ditch immediately after its right rear tire exploded. Palapad. however. These rulings. In La Mallorca and Pampanga Bus Co. No. In Lasam v. would generate liability.

Common carriers should teach their drivers not to overload their vehicles. and by entering into the said contract. that: . (2) It must be impossible to foresee the event which constitutes the caso fortuito. Cas. not to exceed safe and legal speed limits. The respondents also claim that the petitioner was not wearing any wrist watch during the accident. and hence not cross-examined. v. using the utmost diligence of a very cautious person. 20 L. Co. and that on his way back to Danao City. (5 Encyclopedia Juridica Espanola. see also Pennsylvania R. It should be noted that the City Court of Cebu found that the petitioner had a lacerated wound on his right palm aside from injuries on his left arm. it binds itself to carry the passengers safely as far as human care and foresight can provide. 205. v.. Hussey. These are findings of facts of the City Court of Cebu which we find no reason to disturb. (3) The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner. More so when we consider the fact that the Court of First Instance of Cebu impliedly concurred in these matters when it confined itself to the question of whether or not the tire blow out was a fortuitous event. or of the failure of the debtor to comply with his obligation. right thigh and on his back. 42 Fed. Ed. and to know the correct measures to take when a tire blows up thus insuring the safety of passengers at all times.. Having no privity whatever with the manufacturer or vendor of the defective equipment. we held in Necesito. 451. while the carrier usually has. et al. must be independent of the human will. Jur. as far as regards the work of constructing the appliance. the cause of the unforeseen and unexpected occurrence was not independent of the human will. The preponderance of authority is in favor of the doctrine that a passenger is entitled to recover damages from a carrier for an injury resulting from a defect in an appliance purchased from a manufacturer. 74 ALR 1172. that the carrier. 29 ALR 788. with a due regard for all the circumstances. . 102 U. 309. the passenger has no remedy against him. Relative to the contingency of mechanical defects.) In the case at bar. 75). with regard to inspection and application of the necessary tests. The respondents submit that if the petitioner was really injured.. the good repute of the manufacturer will not relieve the carrier from liability' (10 Am. therefore. whenever it appears that the defect would have been discovered by the carrier if it had exercised the degree of care which under the circumstances was incumbent upon it. s. The respondents argue that the doctor who issued the medical certificate was not presented during the trial. It is but logical. It is sufficient to reiterate that the source of a common carrier's legal liability is the contract of carriage. . why was he treated in Danao City and not in Mandaue City where the accident took place. or if it can be foreseen. 2d 70.unforeseen and unexpected occurrence. The records show that this obligation was not met by the respondents. and Ed Note.: Ann. it must be impossible to avoid. Co. 1916E 929). 141. Southern R. Roy. The accident was caused either through the negligence of the driver or because of mechanical defects in the tire. The rationale of the carrier's liability is the fact that the passenger has neither choice nor control over the carrier in the selection and use of the equipment and appliances in use by the carrier. while not an insurer of the safety of his passengers. And (4) the obligor (debtor) must be free from any participation in the aggravation of the injury resulting to the creditor. he discovered that his "Omega" wrist watch was lost.. et al.S. v. Paras. should nevertheless be held to answer for the flaws of his equipment if such flaws were at all discoverable. (104 Phil. the manufacturer is considered as being in law the agent or servant of the carrier. 1324. For the purposes of this doctrine. The respondents likewise argue that the petitioner cannot recover any amount for failure to prove such damages during the trial. According to this theory.

SO ORDERED.WHEREFORE. LTD. (referred to hereinafter as Petitioner Carrier) loaded at Kobe. 71478 May 29. Inc.. with the modification that the damages shall earn interest at 12% per annum and the attorney's fees are increased to SIX HUNDRED PESOS (P600. Ltd.00. petitioner.R..respondents.. both for the recovery of the value of cargo insurance. Japan for transportation to Manila. Japan.385. 69044. resulting in the total loss of ship and cargo. Enroute for Kobe.361.R. JJ. a vessel operated by petitioner Eastern Shipping Lines. the same vessel took on board 128 cartons of garment fabrics and accessories. 1987 EASTERN SHIPPING LINES. 69044 On May 11.039. 1975. Inc.. G. vs. Relova. The 128 cartons were insured for their stated value by respondent Nisshin Fire & Marine Insurance Co. Inc.00).. Both sets of goods were insured against marine risk for their stated value with respondent Development Insurance and Surety Corporation. filed . 1978.00. having been subrogated unto the rights of the two insured companies. L-69044 May 29. petitioner. INTERMEDIATE APPELLATE COURT and DEVELOPMENT INSURANCE & SURETY CORPORATION. INC. 5. the M/S ASIATICA. the decision of the Court of First Instance of Cebu.75. The basic facts are not in controversy: In G. MELENCIO-HERRERA. arose from the same incident.R.. No. NO. Melencio-Herrera. during the same period. 71478.. The respective respondent Insurers paid the corresponding marine insurance values to the consignees concerned and were thus subrogated unto the rights of the latter as the insured. De la Fuente and Alampay. for US $11. vs. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G..respondents. and two cases of surveying instruments consigned to Aman Enterprises and General Merchandise. Branch I is REINSTATED. THE NISSHIN FIRE AND MARINE INSURANCE CO. No.000 pieces of calorized lance pipes in 28 packages valued at P256.00 consigned to Philippine Blooming Mills Co. and the decision of the City Court of Cebu.. sometime in or prior to June.R. the sinking of the M/S ASIATICA when it caught fire. for short). in two (2) containers.583. 1977. Branch IV appealed from is hereby REVERSED and SET ASIDE. respondent Development Insurance & Surety Corporation (Development Insurance.. consigned to Central Textile Mills. and the 2 cases by respondent Dowa Fire & Marine Insurance Co. concur. consigned to Mariveles Apparel Corporation.: These two cases. 1987 EASTERN SHIPPING LINES. for US $46. In G. the vessel caught fire and sank. resulting in the total loss of ship and cargo. Plana. INC.. to Manila. and 7 cases of spare parts valued at P92. No.. Teehankee (Chairman). and DOWA FIRE & MARINE INSURANCE CO. No. Damages shall earn interests from January 27. J.

71478 on September 25. Hence. and Dowa Fire & Marine Insurance Co. this Petition for Review on certiorari by Petitioner Carrier. respondents Nisshin Fire & Marine Insurance Co. 2 And an admission in one pleading in one action may be received in evidence against the pleader or his successorin-interest on the trial of another action to which he is a party. Ltd. with legal interest. 3 The threshold issues in both cases are: (1) which law should govern — the Civil Code provisions on Common carriers or the Carriage of Goods by Sea Act? and (2) who has the burden of proof to show negligence of the carrier? .385.000. No. Petitioner Carrier stated in its Petition: There are about 22 cases of the "ASIATICA" pending in various courts where various plaintiffs are represented by various counsel representing various consignees or insurance companies.583.. the Trial Court rendered judgment in favor of NISSHIN and DOWA in the amounts of US $46.R. 69044 was given due course on March 25.R. Petitioner Carrier is now before us on a Petition for Review on Certiorari. hence. . the burden of proving negligence of the vessel is shifted to the cargo shipper. 1985. 1984.R. as subrogees of the insured. NISSHIN for short). 1 Petitioner Carrier should be held bound to said admission.039. We note that in G. Upon Petitioner Carrier's Motion for Reconsideration. The same was granted.. 1980. being the operator of said vessel. plus P35. No.00 and P92. Petitioner Carrier took an appeal to the then Court of Appeals which. 1985 by the First Division. At the outset. it is not liable under the law. 69044 on January 16.000. On the other hand. 1985 by the Second Division. 1985 was set aside and the Petition was given due course. On August 31. The common defendant in these cases is petitioner herein. 71478. the then Court of Appeals on September 10. (DOWA. Branch 11 (Civil Case No. As a general rule.361. G. 6087). No. R. plus attorney's fees of P5.R. 69044. Petitioner Carrier denied liability on the principal grounds that the fire which caused the sinking of the ship is an exempting circumstance under Section 4(2) (b) of the Carriage of Goods by Sea Act (COGSA). and the parties were required to submit their respective Memoranda. in favor of a party to the latter action. 1984. No. Petitioner-Carrier denied liability mainly on the ground that the loss was due to an extraordinary fortuitous event. 69044. however. G. the facts alleged in a party's pleading are deemed admissions of that party and binding upon it. No. 71478 On June 16. the Trial Court rendered judgment in favor of Development Insurance in the amounts of P256. in G. which they have done. respectively. imputing unseaworthiness of the ship and non-observance of extraordinary diligence by petitioner Carrier. we reject Petitioner Carrier's claim that it is not the operator of the M/S Asiatica but merely a charterer thereof. Petitioner Carrier sought reconsideration of the Resolution denying the Petition for Review and moved for its consolidation with G.00 because of $500 per package limitation of liability under the COGSA.suit against petitioner Carrier for the recovery of the amounts it had paid to the insured before the then Court of First instance of Manila.75. the Resolution of the Second Division of September 25. G. which was then pending resolution with the First Division. affirmed with modification the Trial Court's judgment by decreasing the amount recoverable by DOWA to US $1. affirmed.00 and US $11. 1979. No. Both Petitions were initially denied for lack of merit. with legal interest. 116151). for brevity). and that when the loss of fire is established. NO.R.00 and costs.00 as attorney's fees and costs. On appeal by petitioner. 1978.. the lower-numbered case.00. on August 14. Branch XXX (Civil Case No. respectively. and G. filed suit against Petitioner Carrier for the recovery of the insured value of the cargo lost with the then Court of First Instance of Manila.R.000. On September 15.

8 Common carriers are responsible for the loss. The evidence of the defendant did not show that extraordinary vigilance was observed by the vessel to prevent the occurrence of fire at hatches numbers 2 and 3. Article 1735 of the Civil Code provides that all cases than those mention in Article 1734. common carriers are bound to extraordinary diligence in the vigilance over the goods. The burden then is upon Petitioner Carrier to proved that it has exercised the extraordinary diligence required by law. in the care of the cargoes. lightning or other natural disaster or calamity.On the Law Applicable The law of the country to which the goods are to be transported governs the liability of the common carrier in case of their loss. 13 Article 1680 of the Civil Code. " However. earthquake. 14 As the peril of the fire is not comprehended within the exception in Article 1734. failed to satisfactorily show that extraordinary . In this regard. storm. the Trial Court. as subrogees of the cargo shippers. the liability of Petitioner Carrier is governed primarily by the Civil Code. 3. considering that the law adopts a protection policy towards agriculture. the respective Insurers. on orders. 2 and 3 cf the vessel. the crew could not have even explain what could have caused the fire. 4 As the cargoes in question were transported from Japan to the Philippines. 10 It does not fall within the category of an act of God unless caused by lightning 11 or by other natural disaster or calamity. no regular inspection was made as to their condition during the voyage. are bound to observe extraordinary diligence in the vigilance over goods. 12 It may even be caused by the actual fault or privity of the carrier. What appears is that after the cargoes were stored in the hatches. which considers fire as an extraordinary fortuitous event refers to leases of rural lands where a reduction of the rent is allowed when more than one-half of the fruits have been lost due to such event. that the fire must have started twenty-four 24) our the same was noticed. supra. the common carrier shall be presumed to have been at fault or to have acted negligently. is suppletory to the provisions of the Civil Code. the Carriage of Goods by Sea Act. according to the witnesses defendant placed in hatches No. we are of the opinion that fire may not be considered a natural disaster or calamity. in all matters not regulated by said Code. The defendant. common carriers. a special law. Pursuant to Article 1733. that carbon dioxide was ordered released and the crew was ordered to open the hatch covers of No. 5 However. or deterioration of the goods unless the same is due to any of the following causes only: (1) Flood. In this case. Boatswain Ernesto Pastrana noticed that smoke was coming out from hatch No. from the nature of their business and for reasons of public policy. Petitioner Carrier has also proved that the loss was caused by fire. Defendant's evidence did not likewise show he amount of diligence made by the crew. This must be so as it arises almost invariably from some act of man or by human means. in the Court's mind. that where the smoke was noticed. the fire was already big. unless it proves that it has observed the extraordinary deligence required by law. destruction or deterioration. 2 and hatch No. concurred in by the Appellate Court. destruction. made the following Finding of fact: The cargoes in question were. have proven that the transported goods have been lost. Consequently. 2 tor commencement of fire fighting by sea water: that all of these effort were not enough to control the fire. xxx xxx xxx 9 Petitioner Carrier claims that the loss of the vessel by fire exempts it from liability under the phrase "natural disaster or calamity. 6 Thus. 7 On the Burden of Proof Under the Civil Code. the rights and obligations of common carrier shall be governed by the Code of Commerce and by special laws. according to all the circumstances of each case.

and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided. which reads: (5) Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States. unless the nature and value of such goods have been declared by the shipper before shipment and inserted in bill of lading. xxx xxx xxx Article 1749 of the New Civil Code also allows the limitations of liability in this wise: Art." The foregoing suffices to show that the circumstances under which the fire originated and spread are such as to show that Petitioner Carrier or its servants were negligent in connection therewith. Nor may Petitioner Carrier seek refuge from liability under the Carriage of Goods by Sea Act. " and that "after the cargoes were stored in the hatches. that the fire must have started twenty-four (24) hours before the same was noticed.vigilance and care had been made by the crew to prevent the occurrence of the fire. as a fact. is binding. no regular inspection was made as to their condition during the voyage. that there was "actual fault" of the carrier shown by "lack of diligence" in that "when the smoke was noticed. is liable to the consignees for said lack of deligence required of it under Article 1733 of the Civil Code. master or agent of the carrier. in effect. 4(2). but all be conclusive on the carrier. unless the shipper or owner declares a greater value. per customary freight unit. Thus. The . should not exceed US $500 per package as provided in section 4(5) of the COGSA. the complete defense afforded by the COGSA when loss results from fire is unavailing to Petitioner Carrier. By agreement between the carrier. 15 Having failed to discharge the burden of proving that it had exercised the extraordinary diligence required by law. Petitioner Carrier cannot escape liability for the loss of the cargo. That such maximum shall not be less than the figure above named. found. On the US $500 Per Package Limitation: Petitioner Carrier avers that its liability if any. In no event shall the carrier be Liable for more than the amount of damage actually sustained. It is to be noted that the Civil Code does not of itself limit the liability of the common carrier to a fixed amount per package although the Code expressly permits a stipulation limiting such liability. A stipulation that the common carrier's liability as limited to the value of the goods appearing in the bill of lading." and that the carrier has "exercised due diligence to prevent or minimize the loss before. or the equivalent of that sum in other currency. Consequently. the fire was already big. This declaration if embodied in the bill of lading shall be prima facie evidence. both the Trial Court and the Appellate Court. 1749. It is provided therein that: Sec. The defendant. unless caused by the actual fault or privity of the carrier. it is required under Article 1739 of the same Code that the "natural disaster" must have been the "proximate and only cause of the loss. " This Petitioner Carrier has also failed to establish satisfactorily. the COGSA which is suppletory to the provisions of the Civil Code. or in case of goods not shipped in packages. during or after the occurrence of the disaster. Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from (b) Fire. And even if fire were to be considered a "natural disaster" within the meaning of Article 1734 of the Civil Code. steps in and supplements the Code by establishing a statutory provision limiting the carrier's liability in the absence of a declaration of a higher value of the goods by the shipper in the bill of lading. xxx xxx xxx In this case. as a common carrier.

No. American Export Lines. District Court for the Southern District of New York rendered judgment for the plaintiffs. 71478.000." We find no reversible error. however.039 (Exhibit "C").C.361.000 by the Appellate Court following the statutory $500 liability per package.039 should be upheld. Hence.R. that is $46. Even if language and purposes of Carriage of Goods by Sea Act left doubt as to whether carrier-furnished containers whose contents are disclosed should be treated as packages. which had been shipped in vessel — supplied containers. Carriage of Goods by Sea Act.A. the Trial Court was correct in awarding said amount only for the 128 cartons.S. 46 U. multiplying seven (7) cases by $500 per package at the present prevailing rate of P20. at the time of payment of the value of the goods lost.160. 4(5). 16 In G. 46 U. The United States Court of Appeals.. which amount is less than the maximum limitation of the carrier's liability. the Appellate Court also limited Petitioner Carrier's liability to $500 per package and affirmed the award of $46. 636 F 2d 807 (1981). In Mitsui & Co. 4(5). The goods were shipped in 28 packages (Exhibit "C-2") Multiplying 28 packages by $500 would result in a product of $14.S.A." Consequently. it multiplied 128 cartons (considered as COGSA packages) by $500 to arrive at the figure of $64. . After quoting the statement in Leather's Best. supra. which is the amount that should be paid by Petitioner Carrier for those spare parts.75 (Exhibit "I"). there is no stipulation in the respective Bills of Lading (Exhibits "C-2" and "I3") 1 7 limiting the carrier's liability for the loss or destruction of the goods. that treating a container as a package is inconsistent with the congressional purpose . 451 F 2d at 815. With respect to the seven (7) cases of spare parts (Exhibit "I-3"). at the current exchange rate of P20.000 pieces of calorized lance pipes was P256. 69044. the interest in securing international uniformity would suggest that they should not be so treated. vs. 1304(5). or its peso equivalent. In respect of the shipment of 128 cartons of garment fabrics in two (2) containers and insured with NISSHIN. Ltd.361.& 1304(5).583. each of those units and not the container constitutes the "package" referred to in liability limitation provision of Carriage of Goods by Sea Act. their actual value was P92.S." The actual total loss for the 5. In G.provisions of the Carriage of Goods by.000 which. Nor is there a declaration of a higher value of the goods. in so far as the two (2) cases of surveying instruments are concerned. but in no case "more than the amount of damage actually sustained. is in order. would be P286..C. Petitioner Carrier's liability should not exceed US $500 per package. The 128 cartons and not the two (2) containers should be considered as the shipping unit. The U.. the amount awarded to DOWA which was already reduced to $1. which is likewise the insured value of the cargo (Exhibit "H") and amount was affirmed to be paid by respondent Court. and the defendant appealed. the aforestated amount of P256. No.44 to US $1 (US $3.Sea Act on limited liability are as much a part of a bill of lading as though physically in it and as much a part thereof as though placed therein by agreement of the parties. modified and affirmed holding that: When what would ordinarily be considered packages are shipped in a container supplied by the carrier and the number of such units is disclosed in the shipping documents.583 to NISSHIN.R.44) would yield P71. which was exactly the amount of the insurance coverage by Development Insurance (Exhibit "A").75. and the amount affirmed to be paid by respondent Court. Inc.44 to US $1. and not P92. Carriage of Goods by Sea Act.540 only. or "more than the amount of damage actually sustained. Second Division. and explained that "since this amount is more than the insured value of the goods.500 x P20. the consignees of tin ingots and the shipper of floor covering brought action against the vessel owner and operator to recover for loss of ingots and floor covering.

C. They simply serve to divide the ship's overall cargo stowage space into smaller. the cartons and not the containers are the packages. Certainly. Judge Kellam held that when rolls of polyester goods are packed into cardboard cartons which are then placed in containers. Congress alone must undertake the surgery." A ruling that these large reusable metal pieces of transport equipment qualify as COGSA packages — at least where.of establishing a reasonable minimum level of liability. 414 F. much to commend it.D.. Eurygenes indicated that a carrier could limit its liability to $500 per container if the bill of lading failed to disclose the number of cartons or units within the container. 18 followed the Mitsui test: Eurygenes concerned a shipment of stereo equipment packaged by the shipper into cartons which were then placed by the shipper into a carrier. in this regard. xxx xxx xxx The case of Smithgreyhound v. an agreement to treat the container as the package. M/V Eurygenes. S. Vol. published in Fordham International Law Journal. 1982-83. Judge Beeks wrote. In Yeramex International v. Eurygenes followed the Mitsui test and treated the cartons. Flicker. The number of cartons was disclosed to the carrier in the bill of lading. as the COGSA packages. I would liken these containers to detachable stowage compartments of the ship. another district with many maritime cases followed Judge Beeks' reasoning in Matsushita and similarly rejected the functional economics test. in clear and unambiguous language. Tando. however great might be the temptation to "modernize" or reconstitute it by artful judicial gloss.) rev'd on other grounds. or if the parties indicated. 595 F 2nd 943 (4 Cir. Number 1) (Emphasis supplied) In this case. whether or not forseeable by the COGSA promulgators. obvious wisdom in the Ninth Circuit's conclusion in Hartford that technological advancements. Va. do not warrant a distortion or artificial construction of the statutory term "package. (Admiralty Litigation in Perpetuum: The Continuing Saga of Package Limitations and Third World Delivery Problems by Chester D. as here. 1979).S.M. if the individual crates or cartons prepared by the shipper and containing his goods can rightly be considered "packages" standing by themselves. 1977 A. not the container. there is. nonetheless. 1807 (E. If COGSA's package limitation scheme suffers from internal illness. at 907 (footnotes omitted): Although this approach has not completely escaped criticism. It gives needed recognition to the responsibility of the courts to construe and apply the statute as enacted. Shippers' packages are quite literally "stowed" in the containers utilizing stevedoring practices and materials analogous to those employed in traditional on board stowage. However.furnished container. 6. the Bill of Lading (Exhibit "A") disclosed the following data: 2 Containers (128) Cartons) Men's Garments Fabrics and Accessories Freight Prepaid . more serviceable loci. they do not suddenly lose that character upon being stowed in a carrier's container. There is. Supp. Hooper & Keith L. they were carrier owned and supplied — would amount to just such a distortion.

to prepare its written interrogatories. The defendant has told the Court since February 16. which is draw. On this point. "Two (2) Containers" appearing as the first entry would have sufficed. the evidence does not disclose whether the containers involved herein were carrierfurnished or not. We do not agree. 24 On the Award of Attorney's Fees: Petitioner Carrier questions the award of attorney's fees. True. for which reason it deserves no sympathy from the Court in that regard. Thus. only proves the lack of merit of the defendant's motion for postponement.full opportunity to present its evidence but it failed to do so. 69044 only) Petitioner Carrier claims that the Trial Court did not give it sufficient time to take the depositions of its witnesses in Japan by written interrogatories. 1978. and applying the ruling in the Mitsui and Eurygenes cases it is clear that the 128 cartons. the Carrier shall be at liberty to pack and carry them in any type of container(s). What due process abhors is absolute lack of opportunity to be heard.Say: Two (2) Containers Only. 1979. It cannot mean that the shipper had furnished the containers for if so. Considering. containers are provided by the carrier. up by the carrier. Its belated notice to take deposition on written interrogatories of its witnesses in Japan. when the pre-trial conference was conducted for the last time. Why did it take until August 25. Only the defendant itself is to blame for its failure to adduce evidence in support of its defenses. meaning that the goods could probably fit in two (2) containers only. the number of cartons or units.00 in favor of Development . that the Bill of Lading clearly disclosed the contents of the containers. however. therefore. 21 On Alleged Denial of Opportunity to Present Deposition of Its Witnesses: (in G.R. when its answer was prepared and filed in Court. xxx xxx xxx 22 Petitioner Carrier was afforded ample time to present its side of the case. until September 26. at the dorsal side of the Bill of Lading (Exhibit "A") appears the following stipulation in fine print: 11. respondent Court affirmed the award by the Trial Court of attorney's fees of P35. petitioner Carrier was given. not the two (2) containers should be considered as the shipping unit subject to the $500 limitation of liability. served upon the plaintiff on August 25th. the defendant had more than nine months to prepare its evidence. 1978. that it was going to take the deposition of its witnesses in Japan. Usually. 1978. and if there is any ambiguity in the Bill of Lading. just two days before the hearing set for August 27th. 1979. In both cases. like the Bill of Lading in this case. No. 23 It cannot complain now that it was denied due process when the Trial Court rendered its Decision on the basis of the evidence adduced. 20 This applies with even greater force in a contract of adhesion where a contract is already prepared and the other party merely adheres to it. it is a cardinal principle in the construction of contracts that the interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity. 1979. the Trial Court found: xxx xxx xxx Indeed. the probability is that they were so furnished for Petitioner Carrier was at liberty to pack and carry the goods in containers if they were not so packed. 19 In this case. not to mention the time from June 27. The foregoing would explain the use of the estimate "Say: Two (2) Containers Only" in the Bill of Lading. as well as the nature of the goods. since after November 6. (Use of Container) Where the goods receipt of which is acknowledged on the face of this Bill of Lading are not already packed into container(s) at the time of receipt. or more than six months.000. knowing fully well that it was its undertaking on July 11 the that the deposition of the witnesses would be dispensed with if by next time it had not yet been obtained. to August 27.

The undisputed facts. The award of P5. 153563 February 07. and the costs. Courts being vested with discretion in fixing the amount of attorney's fees. 1978. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G. concur. (CARE) signed an agreement wherein CARE would acquire from the United States government donations of non-fat dried milk and other food products from January 1.R. at times when Abdurahman had to attend to other business before a delivery was completed. he instructed his subordinates to sign the delivery receipts for him. Respondent.R. and P71. petitioner‘s branch supervisor in Zamboanga City. No. 2002. The impugned decision affirmed in toto the judgment3 dated November 14. in CA-G.the judgment is hereby affirmed.868 bags of non-fat dried milk through herein respondent Lorenzo Shipping Corporation (LSC) from September to December 1988. 1) in G. Thus. requested Abdurahman to surrender the original bills of lading.00 in G. Feliciano and Gancayco. the latter shipped 4. and P5. Rogelio Rizada and Ismael Zamora. respondent‘s agent. WHEREFORE. 71478. Before each delivery. 2) In G.Insurance in G.000. On reaching the port of Zamboanga City.00 in favor of NISSHIN and DOWA in G. CV No. 2002. JJ.No.039 for the twenty-eight (28) packages of calorized lance pipes. Upon completion of each delivery.540 for the seven (7) cases of spare parts.R. No.00 would be more reasonable in G.R. 48349. the Philippines would transport and distribute the donated commodities to the intended beneficiaries in the country. LORENZO SHIPPING CORPORATION.000. 1987.2 of May 13. 1994 of the Regional Trial Court (RTC) of Manila.000.R. in Civil Case No. Efren Ruste4 Shipping Agency. 69044. 90-52102. Rogelio and Ismael asked Abdurahman to sign the delivery receipts. In turn. . 69044. DECISION QUISUMBING. through the Department of Health (DOH). However. No. plus P5.R. Inc. both delivery checkers of Efren Ruste Shipping Agency. No. No. 1989.. but the latter merely presented certified true copies thereof. denying the motion for reconsideration of herein petitioner National Trucking and Forwarding Corporation (NTFC). with interest at the legal rate from the date of the filing of the complaint on June 13. of the Court of Appeals. Cruz. as summarized by the appellate court.R. 69044. unloaded the 4. 71478 is affirmed. Narvasa. and the Cooperative for American Relief Everywhere.868 bags of non-fat dried milk and delivered the goods to petitioner‘s warehouse.000 as attorney's fees. No. 1987 to December 31. petitioner. J.71478. the judgment is modified in that petitioner Eastern Shipping Lines shall pay the Development Insurance and Surety Corporation the amount of P256.R. The consignee named in the bills of lading issued by the respondent was Abdurahman Jama. Branch 53. 2005 NATIONAL TRUCKING AND FORWARDING CORPORATION. The government entered into a contract of carriage of goods with herein petitioner National Trucking and Forwarding Corporation (NTFC).: For review on certiorari are the Decision1 dated January 16. and its Resolution. it is believed that the amount of P5. are as follows: On June 5. the Republic of the Philippines. vs. SO ORDERED.

Notwithstanding the precautions taken, the petitioner allegedly did not receive the subject goods. Thus, in a letter dated March 11, 1989, petitioner NTFC filed a formal claim for nondelivery of the goods shipped through respondent. In its letter of April 26, 1989, the respondent explained that the cargo had already been delivered to Abdurahman Jama. The petitioner then decided to investigate the loss of the goods. But before the investigation was over, Abdurahman Jama resigned as branch supervisor of petitioner. Noting but disbelieving respondent‘s insistence that the goods were delivered, the government through the DOH, CARE, and NTFC as plaintiffs filed an action for breach of contract of carriage, against respondent as defendant, with the RTC of Manila. After trial, the RTC resolved the case as follows: WHEREFORE, judgment is hereby rendered in favor of the defendant and against the plaintiffs, dismissing the latter‘s complaint, and ordering the plaintiffs, pursuant to the defendant‘s counterclaim, to pay, jointly and solidarily, to the defendant, actual damages in the amount of P50,000.00, and attorney‘s fees in the amount ofP70,000.00, plus the costs of suit. SO ORDERED.5 Dissatisfied with the foregoing ruling, herein petitioner appealed to the Court of Appeals. It faulted the lower court for not holding that respondent failed to deliver the cargo, and that respondent failed to exercise the extraordinary diligence required of common carriers. Petitioner also assailed the lower court for denying its claims for actual, moral, and exemplary damages, and for awarding actual damages and attorney‘s fees to the respondent.6 The Court of Appeals found that the trial court did not commit any reversible error. It dismissed the appeal, and affirmed the assailed decision in toto. Undaunted, petitioner now comes to us, assigning the following errors: I THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO APPRECIATE AND APPLY THE LEGAL STANDARD OF EXTRAORDINARY DILIGENCE IN THE SHIPMENT AND DELIVERY OF GOODS TO THE RESPONDENT AS A COMMON CARRIER, AS WELL AS THE ACCOMPANYING LEGAL PRESUMPTION OF FAULT OR NEGLIGENCE ON THE PART OF THE COMMON CARRIER, IF THE GOODS ARE LOST, DESTROYED OR DETERIORATED, AS REQUIRED UNDER THE CIVIL CODE. II THE COURT OF APPEALS GRAVELY ERRED WHEN IT SUSTAINED THE BASELESS AND ARBITRARY AWARD OF ACTUAL DAMAGES AND ATTORNEY‘S FEES INASMUCH AS THE ORIGINAL COMPLAINT WAS FILED IN GOOD FAITH, WITHOUT MALICE AND WITH THE BEST INTENTION OF PROTECTING THE INTEREST AND INTEGRITY OF THE GOVERNMENT AND ITS CREDIBILITY AND RELATIONSHIP WITH INTERNATIONAL RELIEF AGENCIES AND DONOR STATES AND ORGANIZATION.7 The issues for our resolution are: (1) Is respondent presumed at fault or negligent as common carrier for the loss or deterioration of the goods? and (2) Are damages and attorney‘s fees due respondent? Anent the first issue, petitioner contends that the respondent is presumed negligent and liable for failure to abide by the terms and conditions of the bills of lading; that Abdurahman Jama‘s failure to testify should not be held against petitioner; and that the testimonies of Rogelio Rizada and Ismael Zamora, as employees of respondent‘s agent, Efren Ruste Shipping Agency, were biased and could not overturn the legal presumption of respondent‘s fault or negligence. For its part, the respondent avers that it observed extraordinary diligence in the delivery of the goods. Prior to releasing the goods to Abdurahman, Rogelio and Ismael required the surrender of the original bills of lading, and in their absence, the certified true copies showing that Abdurahman was indeed the consignee of the goods. In addition, they required Abdurahman or his designated subordinates to sign the delivery receipts upon completion of each delivery.

We rule for respondent. Article 17338 of the Civil Code demands that a common carrier observe extraordinary diligence over the goods transported by it. Extraordinary diligence is that extreme measure of care and caution which persons of unusual prudence and circumspection use for securing and preserving their own property or rights.9 This exacting standard imposed on common carriers in a contract of carriage of goods is intended to tilt the scales in favor of the shipper who is at the mercy of the common carrier once the goods have been lodged for shipment. Hence, in case of loss of goods in transit, the common carrier is presumed under the law to have been at fault or negligent.10 However, the presumption of fault or negligence, may be overturned by competent evidence showing that the common carrier has observed extraordinary diligence over the goods. In the instant case, we agree with the court a quo that the respondent adequately proved that it exercised extraordinary diligence. Although the original bills of lading remained with petitioner, respondent‘s agents demanded from Abdurahman the certified true copies of the bills of lading. They also asked the latter and in his absence, his designated subordinates, to sign the cargo delivery receipts. This practice, which respondent‘s agents testified to be their standard operating procedure, finds support in Article 353 of the Code of Commerce: ART. 353. . . . After the contract has been complied with, the bill of lading which the carrier has issued shall be returned to him, and by virtue of the exchange of this title with the thing transported, the respective obligations and actions shall be considered cancelled, …. In case the consignee, upon receiving the goods, cannot return the bill of lading subscribed by the carrier, because of its loss or of any other cause, he must give the latter a receipt for the goods delivered, this receipt producing the same effects as the return of the bill of lading. (Emphasis supplied) Conformably with the aforecited provision, the surrender of the original bill of lading is not a condition precedent for a common carrier to be discharged of its contractual obligation. If surrender of the original bill of lading is not possible, acknowledgment of the delivery by signing the delivery receipt suffices. This is what respondent did. We also note that some delivery receipts were signed by Abdurahman‘s subordinates and not by Abdurahman himself as consignee. Further, delivery checkers Rogelio and Ismael testified that Abdurahman was always present at the initial phase of each delivery, although on the few occasions when Abdurahman could not stay to witness the complete delivery of the shipment, he authorized his subordinates to sign the delivery receipts for him. This, to our mind, is sufficient and substantial compliance with the requirements. We further note that, strangely, petitioner made no effort to disapprove Abdurahman‘s resignation until after the investigation and after he was cleared of any responsibility for the loss of the goods. With Abdurahman outside of its reach, petitioner cannot now pass to respondent what could be Abdurahman‘s negligence, if indeed he were responsible. On the second issue, petitioner submits there is no basis for the award of actual damages and attorney‘s fees. It maintains that its original complaint for sum of money with damages for breach of contract of carriage was not fraudulent, in bad faith, nor malicious. Neither was the institution of the action rash nor precipitate. Petitioner avers the filing of the action was intended to protect the integrity and interest of the government and its relationship and credibility with international relief agencies and donor states. On the other hand, respondent maintains that petitioner‘s suit was baseless and malicious because instead of going after its absconding employee, petitioner wanted to recoup its losses from respondent. The trial court and the Court of Appeals were justified in granting actual damages and reasonable attorney‘s fees to respondent. On this point, we agree with petitioner.

The right to litigate should bear no premium. An adverse decision does not ipso facto justify an award of attorney‘s fees to the winning party.11 When, as in the instant case, petitioner was compelled to sue to protect the credibility of the government with international organizations, we are not inclined to grant attorney‘s fees. We find no ill motive on petitioner‘s part, only an erroneous belief in the righteousness of its claim. Moreover, an award of attorney‘s fees, in the concept of damages under Article 2208 of the Civil Code,12 requires factual and legal justifications. While the law allows some degree of discretion on the part of the courts in awarding attorney‘s fees and expenses of litigation, the discretion must be exercised with great care approximating as closely as possible, the instances exemplified by the law.13 We have searched but found nothing in petitioner‘s suit that justifies the award of attorney‘s fees. Respondent failed to show proof of actual pecuniary loss, hence, no actual damages are due in favor of respondent.14 WHEREFORE, the petition is PARTIALLY GRANTED. The assailed decision and resolution of the Court of Appeals in CA-G.R. CV No. 48349 dated January 16, 2002 and May 13, 2002 respectively, denying petitioner‘s claim for actual, moral and exemplary damages are AFFIRMED. The award of actual damages and attorney‘s fees to respondent pursuant to the latter‘s counterclaim in the trial court is DELETED. SO ORDERED. Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio and Azcuna, JJ., concur.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 164820 March 28, 2007 VICTORY LINER, INC., Petitioner, vs. PABLO M. RACE, Respondent. DECISION CHICO-NAZARIO, J.: In this Petition for Review on Certiorari under Rule 45 of the Rules of Court, 1 petitioner Victory Liner Inc. seeks to set aside the Decision of the Court of Appeals dated 26 April 2004 in CAG.R. SP No. 74010,2 affirming the Decision and Resolution of the National Labor Relations Commission (NLRC) dated 30 July 2002 and 30 August 2002, respectively, in NLRC-CA029327-01.3 In its Decision and Resolution, the NLRC vacated the Decision4 of Labor Arbiter Salimathar V. Nambi (Labor Arbiter Nambi) dated 31 July 2001 in NLRC-NCR-00-09-08922-99 and ordered the petitioner to reinstate respondent Pablo M. Race to his former position as a bus driver without loss of seniority rights and other privileges and benefits with full backwages computed from the time of his illegal dismissal in January 1998 up to his actual reinstatement. Culled from the records are the following facts: In June 1993, respondent was employed by the petitioner as a bus driver. As a requisite for his hiring, the respondent deposited a cash bond in the amount of P10,000.00 to the petitioner. Respondent was assigned to the Alaminos, Pangasinan - Cubao, Quezon City, route on the evening schedule.5 On the night of 24 August 1994, respondent drove his assigned bus from Alaminos, Pangasinan, destined to Cubao, Quezon City. While traversing Moncada, Tarlac, the bus he was driving was bumped by a Dagupan-bound bus. As a consequence thereof, respondent suffered a fractured left leg and was rushed to the Country Medical and Trauma Center in Tarlac City where he was operated on and confined from 24 August 1994 up to 10 October

000. not entitled to service incentive leave. His confinement therein lasted a month. sent a letter to the petitioner demanding employment-related money claims. He also ruled that respondent failed to present evidence showing that the latter was entitled to the abovestated money claims. that the prescriptive period for the filing of an action or claim for reinstatement and payment of labor standard benefits is four years from the time the cause of action accrued. informed by the petitioner that he was considered resigned from his job. he again conversed with Montes who reiterated to him that he was regarded as resigned but raised the consideration therein to P100. therefore. Labor Arbiter Nambi opined that respondent was not a regular employee but a mere field personnel and. He also noted that respondent committed several labor-related offenses against the petitioner which may be considered as just causes for the termination of his employment under Article 282 of the Labor Code. This was docketed as NLRC-NCR-00-09-08922-99. the petitioner gave the respondent benefits better than those received by the other bus drivers of the petitioner.10 On 31 July 2001. During their meeting. 13th month pay. more than five years had already lapsed from the accrual of his cause of action on 24 August 1994. petitioner claimed that respondent was paid strictly on commission basis. (3) underpayment of wages. (5) excessive deduction of withholding tax and SSS premium.000. however. There being no response from the petitioner. Further. service incentive leave pay. the respondent was confined again for further treatment of his fractured left leg at the Specialist Group Hospital in Dagupan City. before Christmas of 1998.6 In January 1998. He stated that the prescriptive period for filing an illegal dismissal case is four years from the dismissal of the employee concerned.9 In his Reply dated 30 June 2000. (4) nonpayment of overtime and holiday premium. Respondent rejected the explanation and offer. Respondent rebuffed the increased offer. One month after his release from the said hospital. that petitioner. He was. therefore. Respondent refused to accede and insisted on having a dialogue with the petitioner‘s officer named Yolanda Montes (Montes). Petitioner shouldered the doctor‘s professional fee and the operation. (2) illegal dismissal. the respondent. that respondent was a mere field personnel who performed his duties and functions outside the petitioner‘s premises and whose time of work cannot be determined with reasonable certainty. Since the respondent stated in his complaint that he was dismissed from work on 24 August 1994 and he filed the complaint only on 1 September 1999. holiday pay and service incentive leave. respondent explained that when he stated in his complaint that he was illegally dismissed on 24 August 1994. and (6) moral and exemplary damages and attorney‘s fees. was exempted from paying the respondent overtime compensation. respondent was charged with and found guilty of numerous offenses which were sufficient bases for his dismissal. still limping heavily. Labor Arbiter Nambi concluded that respondent‘s cause of action against petitioner had already prescribed.7 On 30 June 1999.00. that during his employment. what he meant and referred to was the date when he was no longer in a position to drive since he was hospitalized from 24 August 1994 up to 10 October 1994. night shift differential. the respondent filed before the Labor Arbiter on 1 September 1999 a complaint for (1) unfair labor practice. through his counsel. respondent. and that the respondent‘s cause of action against petitioner had already prescribed because when the former instituted the aforesaid complaint on 1 September 1999. went to the petitioner‘s office to report for work.00. holiday pay. vacation and sick leave benefits. Labor Arbiter Nambi rendered his Decision dismissing the complaint of respondent for lack of merit. Montes told him that he was deemed to have resigned from his work and to accept a consideration ofP50. The fallo of the said decision reads: . overtime pay and 13th month pay. medication and hospital expenses of the respondent in the aforestated hospitals.1994. Respondent also admitted that it was only in January 1998 that he informed the petitioner of his intent to report back for work.8 In its Position Paper dated 27 March 2000. that notwithstanding the specific exemptions provided for in the Labor Code. Thereafter.

On 26 April 2004. It ordered the reinstatement of the respondent to his former position without loss of seniority rights and other privileges and benefits with full back-wages computed from the time of his illegal dismissal in January 1998 up to his actual reinstatement. On 30 July 2002. 1994 when he figured in a vehicular accident. the NLRC categorically declared that the full backwages of the respondent was to be computed from January1998. and their contemporaneous conduct show this. the Court of Appeals dismissed the Petition. He has his pay slip covering the period of August 1-15. respondent-appellee‘s company is hereby ordered to reinstate complainant-appellant to his former position without loss of seniority rights and other privileges and benefits with full backwages computed from the time of his illegal dismissal on (sic) January 1988 up to his actual reinstatement.11 Respondent appealed to the NLRC. he was consulting the company physician who issued him receipts dated October 28.WHEREFORE. 1998 (p. 1999 after a lapse of more than five (5) years. 1996 and July 21 1997 (p. instead. It ratiocinated that respondent did not abandon his work and. record) submitted before the Labor Arbiter. Further. viz: Race did not abandon his work and continued to be an employee of Victory Liner. In addition. It also ruled that respondent was illegally dismissed by the petitioner as the latter failed to accord him due process. Record). 115. record). Vice-President for Victory Liner. when the respondent reported for work but was rejected by the petitioner. and found no grave abuse of discretion on the part of the NLRC. among other things. and he filed his complaint only on September 1. in view of all the foregoing. the appealed decision is hereby AFFIRMED. It ruled that the NLRC committed a simple typographical error when it stated in the fallo that the backwages of respondent shall be computed from January 1988 instead of January 1998 because in the paragraph prior to the dispositive portion. via a Petition for Certiorari to the Court of Appeals. that the award of backwages to the respondent computed from January 1988 up to the promulgation of the NLRC Decision on 30 July 2002 was unlawful and unjust considering that respondent was employed only in June 1993. denied the same for lack of merit in its Resolution dated 30 August 2002. continued to be an employee of petitioner after he was discharged from the hospital.12 Petitioner filed a Motion for Reconsideration of the NLRC Decision alleging. Thus. 56. considering that the causes of action in this case rooted from the purported illegal dismissal of Pablo M. and he wrote a letter dated March 18. annexed to Victory Liner‘s Consolidated Supplemental Position Paper and Formal Offer of Evidence with Erratum is Exhibit "6-A-Race" (p. where Race stated before . the respondent‘s filing of complaint on 1 September 1999 was well-within the four-year prescriptive period. It also held that the respondent‘s filing of complaint on 1 September 1999 was within the four-year prescriptive period since the cause of action accrued when the respondent reported for work in January 1998 and was informed that he was considered resigned. the NLRC stated: WHEREFORE. record). not on 24 August 1994. in addition to its specific exemptions from the letters of Article 82 of the Labor Code. dated 30 July 2002 and 30 August 2002. but in January 1998. signifying his intention to be a dispatcher or conductor due to his injured leg (p. Inc. the action has long prescribed. 1996 addressed to Gerarda Villa. 114. as amended. the NLRC promulgated its Decision reversing the decision of Labor Arbiter Nambi. however. Except for this modification. is guilty of unfair labor practice and unjust dismissal. the complaint and money claims are hereby DISMISSED by reason of prescription and for utter lack of merit and total absence of legal and factual basis in support thereof. It held that the respondent‘s cause of action accrued. 1994 when he was released from the hospital. 116. Race on August 24. The NLRC. In conclusion. It found that the petitioner did not give the respondent a written notice apprising him of acts or omissions being complained of and a written notice informing him of the termination of his employment. aside from the fact that there is absolutely no evidence that respondent Victory Liner. Petitioner assailed the NLRC Decision and Resolution. respectively. the NLRC has indicated in its Statement of Facts that respondent was hired by the petitioner sometime in June 1993. or on October 10.

that the respondent‘s letter dated 18 March 1996 to the petitioner‘s Vice-President Gerarda Villa was only an application for the position of dispatcher or conductor and that such application was not granted.00 stated therein was clearly inconsistent and disproportionate to the respondent‘s low salary of P192.18 Petitioner also argued that the cause of action of respondent had accrued on 10 November 1994. the petition is DENIED DUE COURSE and DISMISSED. After his sick leave. the respondent was no longer its employee upon the latter‘s discharge from the hospital in November 1994 because at such time.16 Moreover. 1998 was not actually a pay slip but a mere cash advance/monetary aid extended to the respondent as the large amount of P65. and that the foregoing circumstances cannot be considered as an indication of employer-employee relationship between the petitioner and respondent. based on the four-fold tests in determining the employeremployee relationship which includes the payment of wages and power to control the conduct of the employees. that from 10 November 1994 up to November 1998. that otherwise there is no more need to provide the . then the fouryear prescriptive period would be interminable as it could be extended to one or more years. he filed for disability leave. petitioner asserted that although the respondent reported for work twice a month after he was discharged from the hospital. Thus.000. and it no longer paid any wages to.13 It also found that the petitioner failed to comply with the requirements of due process in terminating the employment of respondent. RESPONDENT IS ENTITLED TO REINSTATEMENT WITH FULL BACKWAGES AND OTHER BENEFITS CONSIDERING THAT THE TERMINATION OF HIS EMPLOYMENT BY PETITIONER WAS LEGAL AND JUSTIFIED. that this is not the spirit or intent of the law. and that it granted disability leave to the respondent since the latter was a former employee and that respondent‘s application for disability leave implied an admission on the part of the respondent that he was no longer fit to work as a bus driver. and this was also approved and ran until sometime in May 1997. that it allowed the respondent to have a 120-day sick leave because the latter was a former employee.15 Anent the first issue. that if the reckoning period of the accrual of a cause of action would be the time when the written demand was made by the respondent on the petitioner. that the respondent‘s filing of a complaint against petitioner on 1 September 1999 was clearly beyond the four-year prescriptive period allowed by law. the respondent was no longer fit to work as a bus driver and respondent did not render services to the petitioner. that the petitioner merely accommodated the respondent as its former employee when the latter consulted the petitioner‘s physician on 28 October 1996 and 21 July 1997. petitioner reasoned that it had no more power to control the conduct of.17 Petitioner also asseverated that. THE CAUSE OF ACTION OF RESPONDENT FOR ILLEGAL DISMISSAL HAS NOT YET PRESCRIBED DESPITE HAVING BEEN FILED AFTER FOUR (4) YEARS AND NINE (9) MONTHS FROM THE ACCRUAL OF THE ALLEGED ACTIONABLE WRONG. that the alleged "pay slip" for the period August 1-15. it does not imply that the respondent was still considered as an employee at that time by the petitioner.14 Petitioner filed the instant petition on the following grounds: THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED CONTRARY TO LAW AND JURISPRUDENCE WHEN IT HELD IN THE ASSAILED DECISION THAT: A. He also said that he filed for a sick leave which was approved for the maximum of 120 days. the respondent did not render any services to nor filed a case or action against the petitioner.00 a day. The decretal portion of the said decision reads: WHEREFORE. B. the respondent.the investigator that after his release from the hospital he reported to Victory Liner twice a month. petitioner insisted that respondent had already abandoned his work and ceased to be its employee since November 1994.

at that time. Hence. and (2) a clear intention to sever employer-employee relationship. it should be emphasized that two factors must be present in order to constitute an abandonment: (a) the failure to report for work or absence without valid or justifiable reason.21 thus: [O]ne‘s employment.20 In illegal dismissal cases. factual findings of quasi-judicial bodies like the NLRC. But where the findings of the NLRC and the Labor Arbiter are contradictory. It should be emphasized at the outset that as a rule. when one is arbitrarily and unjustly deprived of his job or means of livelihood. Inc. for further treatment of his fractured left leg. As to the alleged abandonment of work by the respondent on 10 November 1994. the four-year prescriptive period shall be counted and computed from the date of the employee‘s dismissal up to the date of the filing of complaint for unlawful termination of employment.. the cause of action accrues from the time the employment of the worker was unjustly terminated. The right is considered to be property within the protection of a constitutional guaranty of due process of law. It is settled that in illegal dismissal cases. we shall now discuss and determine when the respondent‘s cause of action accrued in order to ascertain whether the same had already prescribed. Carnation Philippines. It is also significant to note that from 10 November 1994 up to December 1997. It is error to conclude that the employment of the respondent was unjustly terminated on 10 November 1994 because he was. this Court may delve into the records and examine for itself the questioned findings. 22 Thus. the action instituted to contest the legality of one‘s dismissal from employment constitutes." as contemplated under Art. Dagupan City. trade or calling is a "property right." and the wrongful interference therewith is an actionable wrong. He must be considered as merely on sick leave at such time. Clearly then. still confined at the Specialist Group Hospital. Indeed.23 Proceeding therefrom. the respondent cannot also be deemed as illegally dismissed from work upon his release from the said hospital in December 1994 up to December 1997 since the records show that the respondent still reported for work to the petitioner and was granted sick and disability leave by the petitioner during the same period. as in the present case. which must be brought within four years. Consequently. particularly when they coincide with those of the Labor Arbiter and if supported by substantial evidence. the petitioner never formally informed the respondent of the fact of his dismissal either through a written notice or hearing. are accorded respect and even finality by this Court. This is based on Article 1146 of the New Civil Code which states that actions based upon an injury to the rights of the plaintiff must be brought within four years.000.four-year prescriptive period as any complainant may simply allow the lapse of four years and file the action thereafter and that it would be considered as a compliance by simply making a purported demand for reinstatement after more than four years. During that same occasion.00 as a consolation for his dismissal but the latter rejected it. this Court is not a trier of facts and this applies with greater force in labor cases. The second factor is the more determinative factor . it cannot be gainfully said that respondent was unlawfully dismissed on 10 November 1994 and that the cause of action accrued on that date. the petitioner. 1146 of the New Civil Code. Likewise. an action predicated "upon an injury to the rights of the plaintiff. the respondent‘s filing of complaint for illegal dismissal on 1 September 1999 was well within the four-year prescriptive period. tried to convince the respondent to accept an amount of P50.24 The respondent must be considered as unjustly terminated from work in January 1998 since this was the first time he was informed by the petitioner that he was deemed resigned from his work. the employee concerned is given a period of four years from the time of his dismissal within which to institute a complaint.25 Thus. The four-year prescriptive period shall commence to run only upon the accrual of a cause of action of the worker. it was only at this time that the respondent‘s cause of action accrued.19 These contentions are devoid of merit. profession. in fact. in essence. We explained the rationale in the case of Callanta v.

disability leave and physician consultations were given to the respondent as mere accommodations for a former employee. In fact. it is obliged under the law to observe extra-ordinary diligence in the conduct of its business. would imperil the lives of the passengers and the property of the petitioner. petitioner contended that the order for the reinstatement of the respondent as bus driver was unconstitutional for being tantamount to involuntary servitude. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified. Except for its flimsy reason that the sick leave. Petitioner knew this very well. the petitioner did not present any evidence showing that its employeremployee relationship with the respondent was extinguished on 10 November 1994. and that the award of backwages to the respondent was unjustified. petitioner shouldered the respondent‘s medication and hospital expenses during the latter‘s confinement and operation in two hospitals. Subsequently. these circumstances clearly manifest that petitioner exercised control over the respondent and that the latter was still under the employment of the petitioner even after December 1994. The so-called "control test" is commonly regarded as the most crucial and determinative indicator of the presence or absence of an employer-employee relationship. It should be borne in mind that there are four tests in determining the existence of employer-employee relationship: (1) the manner of selection and engagement.32 Petitioner also argued that the order for the reinstatement was contrary to law. but also the manner and means to be used in reaching that end. Given the foregoing considerations. His absence from work for a long period of time was obviously due to the fact that he was still recuperating from two operations on his fractured leg.31 On the other hand. the petitioner failed to establish the fact that the respondent ceased to be its employee on 10 November 1994.27 Moreover. Evidently. and (4) the presence or absence of the power of control. the requirement of substantial and procedural due process must be complied with.26 It is apparent that respondent did not abandon his work. that the respondent‘s unwillingness to be reinstated as bus driver was also evident from his letter to the petitioner where the respondent manifested his intention to be hired as a dispatcher or conductor.and is manifested by overt acts from which it may be deduced that the employee has no more intention to work. and that to reinstate the respondent as bus driver despite the fact that it is against his will is involuntary servitude. that as a common carrier. (2) the payment of wages. although limping heavily. Apropos the second issue. that when the respondent filed his complaint for illegal dismissal. when the respondent was able to walk. that to allow the respondent to drive a bus. Mere absence from work does not imply abandonment. .30 Respondent also availed himself of the services of the petitioner‘s physician on two occasions after his release from the hospital in December 1994.28 Clearly then.33 The Labor Code mandates that before an employer may legally dismiss an employee from the service. despite the fact that the latter sustained a fractured left leg and was still limping. the employer-employee relationship between petitioner and respondent continued even after the latter‘s discharge from the hospital in December 1994 up to 1997. In the same vein. that it will violate such obligation if it will reinstate the respondent as bus driver. the employer-employee relationship between the petitioner and respondent cannot be deemed to have been extinguished on 10 November 1994. respondent was also granted a 120-day sick leave and disability leave by the petitioner. (3) the presence or absence of the power of dismissal. Under the control test. Respondent had reported for work to the petitioner after his release from the hospital in December 1994. petitioner‘s assertion that the respondent‘s cause of action accrued on 10 November 1994 must fail. respondent did not abandon his job on 10 November 1994. the latter no longer desired to be reinstated to his former position as bus driver. he still reported for work to the petitioner and was granted sick and disability leave.29 Applying the aforecited tests. an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end achieved.

nonetheless. the respondent is entitled to reinstatement without loss of seniority rights. The following are just causes for the termination of employment under Article 282 of the Labor Code: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work. the employer must (a) give the employee a written notice specifying the ground or grounds of termination. In the termination of employment. found that there was no abandonment of work on the part of the respondent. insubordination and habitual neglect of duty against him. full backwages. and other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement as provided for under Article 279 of the Labor Code. we hold that respondent was dismissed without just cause by the petitioner. is given the opportunity to respond to the charge. the latter‘s employment was deemed terminated as of such date. we rule that the latter was illegally dismissed from work by the petitioner. (d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative. (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative. (b) conduct a hearing or conference during which the employee concerned. is burdened to prove just cause for terminating the employment of respondent with clear and convincing evidence. giving to said employee reasonable opportunity within which to explain his side. with the assistance of counsel if the employee so desires. present his evidence or rebut the evidence presented against him. thus. (b) Gross and habitual neglect by the employee of his duties. and that petitioner failed to discharge this burden. Abandonment of work. as an employer.34 The records. We will now determine whether the petitioner had complied with the procedural aspect of a lawful dismissal. As earlier discussed. It has been established that petitioners failed to comply with the requirement of substantial due process in terminating the employment of respondent. grounds have been established to justify his termination. the grounds for termination of employment must be based on just or authorized causes. failed to show that the said charges were proven and that respondent was duly informed and heard with regard to the accusations. In view of the fact that the petitioner neglected to observe the substantial and procedural due process in terminating the employment of respondent. Consequently. There was nothing in the records which evinces that petitioner had sent a written notice to the respondent informing him of the ground or grounds of his termination or the reason why he was deemed resigned. may be a just cause for the termination of employment under paragraph (b) of Article 282 of the Labor Code since it is a form of neglect of duty. We. or the deliberate and unjustified refusal of an employee to resume his employment.Under the requirement of substantial due process. Petitioner also alleged that respondent was guilty of insubordination as well as gross and habitual neglect in the performance of his duties for reckless driving and for being involved in several vehicular accidents. It does not also appear that the petitioner held a hearing or conference where the respondent was given the opportunity to answer the charges of abandonment. however. and (c) give the employee a written notice of termination indicating that upon due consideration of all circumstances. .35 Petitioner miserably failed to comply with the foregoing requirements. Neither did the petitioner send a written notice to the respondent informing the latter that his service is terminated after considering all the circumstances. inclusive of allowances. and (e) Other causes analogous to the foregoing. the petitioner insisted that respondent had already abandoned his work on 10 November 1994 and. Since the petitioner.

that respondent was not seeking reinstatement.38 (3) each confinement lasted for a month.42 WHEREFORE. No. In this regard. CHICO-NAZARIO Associate Justice Republic of the Philippines SUPREME COURT Manila SPECIAL THIRD DIVISION G. MINITA V. he was also limping.41 Based on the foregoing facts and circumstances. It is clear therefore that the reinstatement of respondent not only would be deleterious to the riding public but would also put unreasonable burden on the business and interest of the petitioner. in lieu of reinstatement. in lieu of reinstatement.R.36 Respondent also sent to the petitioner a letter applying for the position of a dispatcher or conductor. No costs. SP No. respondent stated: RELIEF Complainant/s pray/s for the following: Reinstatement: No More. the respondent explained that since he cannot drive anymore due to his leg injury. separation pay of ONE (1) MONTH PAY for every year of service. he was willing to be hired as a dispatcher or conductor. RESOLUTION . SO ORDERED. 39 and (6) respondent does not have a medical certificate which guarantees that his leg injury has already healed and that he is now physically capable of driving a bus.37 In the said letter. Thus. thus. the reinstatement is still unwarranted. There is a serious doubt as to whether the respondent is physically capable of driving a bus based on the following undisputed facts: (1) respondent was operated on and confined twice in two different hospitals for a fractured left leg. is hereby AFFIRMED with the following MODIFICATIONS: Petitioner is ordered to pay the respondent.R. 74010. payment to respondent of separation pay equivalent to one month pay for every year of service is in order.It appears. (4) after his discharge from the second confinement. however. 2008 VICTORY LINER. It should be stressed that petitioner is a common carrier and. expose to danger the lives of the passengers and the property of the petitioner. This would place the petitioner in jeopardy of violating its extra-ordinary diligence obligation and. The abovestated facts obviously show that respondent was unwilling to be reinstated as a bus driver. it should be remembered that an employer may not be compelled to continue to employ such persons whose continuance in the service will patently be inimical to his interests. may be subjected to numerous complaints and court suits. and full backwages inclusive of allowances and other benefits or their monetary equivalent from 1 January 1998 up to the finality of this Decision. is obliged to exercise extra-ordinary diligence in transporting its passengers safely. as such. respondent was still limping heavily. the petition is PARTLY GRANTED insofar as it prays for the non-reinstatement of respondent. 164820 December 8. respondent. (5) when respondent had reported for work to the petitioner in January 1998. (2) steel plates were attached to his fractured leg. petitioner. undoubtedly. INC.40 To allow the respondent to drive the petitioner‘s bus under such uncertain condition would. The Decision of the Court of Appeals dated 26 April 2004 in CA-G.. vs. In his complaint for illegal dismissal against petitioner. Even assuming that respondent is willing to be reinstated as petitioner‘s bus driver. the reinstatement of the respondent is no longer feasible. PABLO RACE.

Dolores v. National Labor Relations Commission. The Decision of the Court of Appeals dated 26 April 2004 in CA-G. In another case. i. it was her first offense. What the employee can demand from the employer.6 the employee was terminated for her continuous absence without permission.3 which definitively settled that where there is valid or authorized cause for the dismissal of the employee.. Jr. employed as one of petitioner‘s bus drivers. and full backwages inclusive of allowances and other benefits or their monetary equivalent from 1 January 1998 up to the finality of this Decision. In San Miguel Corporation v.: Petitioner Victory Liner. Javate.e. inclusive of allowances. No costs. this statutory provision is not absolute. is the payment of nominal damages as indemnification for the violation of the former‘s statutory rights. according to Agabon. Foremost is the case of Agabon v. we still declared the employee‘s dismissal illegal as it was too severe a penalty considering that she had served the employer company for 21 years. and its application has been qualified and/or limited by our jurisprudence. Although we found that the employee was indeed guilty of breach of trust and violation of company rules.. as amended. We find petitioner‘s motion to be partly meritorious. and (2) full backwages. an illegally dismissed employee shall be entitled to (1) reinstatement and (2) full backwages.2 Nonetheless. Logically.CHICO-NAZARIO. but the award of backwages was limited to only one year considering the mitigating circumstance of good faith attributed to the employer. In the event that reinstatement is no longer possible. we found that respondent Pablo Race. compelling us to modify our Decision accordingly. the petition is PARTLY GRANTED insofar as it prays for the nonreinstatement of respondent. In the said Decision. filed the present Motion for Reconsideration seeking modification of our Decision dated 28 March 2007. hence. and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Inc. the dismissal is not illegal. in lieu of reinstatement.R.1 Petitioner impugns the Decision on two grounds: (1) the award of full backwages inclusive of allowances and other benefits or their monetary equivalent to respondent is not warranted. but the employer‘s liability was mitigated by its evident good faith in terminating the employee‘s services based on the terms of its Health. was illegally dismissed by petitioner since petitioner failed to comply with both substantive and procedural due process in terminating respondent‘s employment. considering the leg injury sustained by respondent in an accident which already rendered him incapable of driving a bus. J.5 Hence. we ordered payment of his separation pay instead of his reinstatement. provides that an illegally dismissed employee shall be entitled to reinstatement. National Labor Relations Commission. and (2) the dismissal of respondent is authorized under Article 284 of the Labor Code. SP No. if there is no illegal dismissal in such a case. National Labor Relations Commission (NLRC). and Court of Appeals that the employee was illegally dismissed since he was still fit to resume his work. Welfare and Retirement Plan. The dispositive portion of our Decision reads: WHEREFORE. separation pay of ONE (1) MONTH PAY for every year of service. but the employer failed to comply with statutory due process in effecting the same. 74010. reinstatement and full backwages. is hereby AFFIRMED with the following MODIFICATIONS: Petitioner is ordered to pay the respondent.4 we affirmed the consistent findings and conclusions of the Labor Arbiter. the illegally dismissed employee may claim (1) separation pay. Based on this provision. then payment of separation pay may be ordered in its stead. then we can deduce that the dismissed employee cannot avail himself of the rights under Article 279 of the Labor Code. Article 279 of the Labor Code. and her leave to study the French language would ultimately benefit the employer who no longer had to spend for translation . the employee was ordered reinstated to his former position without loss of seniority and other privileges appertaining to him prior to his dismissal. full backwages. However.

invoking good faith.7 While in the aforementioned cases of illegal dismissal. Even so. in subversion of the employer‘s efforts to give medical benefits to its workers. National Labor Relations Commission. We are unable to sustain petitioner‘s position that respondent abandoned his job as early as 1994. his services were terminated by the employer‘s company. in consideration of the employer‘s good faith in dismissing him. We. We agree. For the next four years. petitioner is asserting that it should be deemed to have acted in good faith when it considered respondent as resigned from work because the Court itself stated in the Decision that respondent‘s reinstatement is no longer feasible due to his leg injury. However. without backwages. and that to allow the respondent to drive petitioner‘s bus in his present physical condition would place petitioner in jeopardy of violating its obligation as a common carrier to always exercise extraordinary diligence. petitioner denies any liability to respondent for the payment of his backwages and allowances from 1 January 1998 to the date of finality of our Decision. We likewise found in this case that the employee‘s dismissal was too drastic a punishment in light of his voluntary confession that he committed trafficking of company-supplied medicines out of necessity. and (2) full backwages inclusive of allowances and other benefits or their monetary equivalent from 1 January 1998 up to the finality of this Decision. but awarded only limited backwages in recognition of the employer‘s good faith. given that the employer acted without malice or bad faith in terminating the employee‘s services. The employee in Itogon-Suyoc Mines. we considered the employee‘s dismissal a drastic punishment. for which he was operated on and confined at the hospital. affirmed the findings of the NLRC and the Labor Arbiter that the employee should not have been dismissed considering his 20 years of service to the employer without any previous derogatory record and his being awarded in the past two commendations for honesty. National Labor Relations Commission. We thus ruled that the employee‘s reinstatement is proper. however. we ordered the employees‘ reinstatement. Thus. We deemed that the ends of social and compassionate justice would be served by ordering the employee reinstated but without backwages in view of the employer‘s obvious good faith. Inc. bearing in mind the employer‘s good faith in terminating his services. in lieu of reinstatement.9 the employee was dismissed after he was caught buying from his co-workers medicines that were given gratis to them by the employer company. We ordered that petitioner pay respondent (1) separation pay of one month for every year of service. respondent suffered leg injury after figuring in an accident on 24 August 1994 while driving petitioner‘s bus. v. We further found that respondent was not afforded procedural due process prior to his dismissal in 1998. Similarly. in San Miguel Corporation v. again. we awarded the said employee backwages limited to a period of two years. respondent was reporting to petitioner‘s office twice a month and still receiving his salary and medical assistance from petitioner. for which reason.services. other than ordering the employee‘s reinstatement. there were also instances when we only required the employer to reinstate the dismissed employee without any award for backwages at all. We ordered the employee‘s reinstatement but without backwages. and re-selling said medicines. Reference may also be made to the case of Manila Electric Company v. In its present motion. .8was found guilty of breach of trust for stealing high-grade stones from his employer. taking into account the employee‘s 23 years of previously unblemished service to his employer and absent any showing that his continued employment would result in the employer‘s oppression or selfdestruction.10wherein the employee was found responsible for the irregularities in the installation of electrical connections to a residence. It was only in January 1998 that respondent was actually dismissed from employment when he was expressly informed that he was considered resigned from his job. Secretary of Labor. as well as his promise not to repeat the same mistake. In our Decision in the present Petition.

When petitioner informed respondent that he was deemed resigned in 1998. is the fact that respondent is unable to drive a bus since the accident in August 1994. he would have received a separation pay of P20. petitioner raised its offer toP100. Hence. In 1998. since his injury already kept him from working from 1994 onwards.00 as financial assistance. Seeing as petitioner continued to pay respondent his salaries and medical expenses for four years following the accident which caused his leg injury. and when respondent refused to receive the said amount. Even though we do not have an exact determination of respondent‘s monthly salary. gave him his salary. is obliged to exercise extra-ordinary diligence in transporting its passengers 14 safely. already established. And finally.000. In January 1998. as we discussed in our Decision.00.15 as well as the date of effectivity thereof. Respondent neither alleged nor proved that despite the injury to his leg.00. it would be the height of injustice to still require petitioner to pay respondent full backwages from the time of his termination in 1998 until the finality of this Decision. as well as the particular factual . despite the fact that respondent was unable to render actual service to petitioner. Unrebutted and. unable to identify with certitude its basis for respondent‘s termination. respondent had been in petitioner‘s employ for only five years and. Although we still cannot depart from our original ruling that respondent was illegally dismissed since petitioner was. Third.000. Understandably. Reasons of fairness and equity.17 The employer cannot be compelled to continuously pay an employee who can no longer perform the tasks for which he was hired. he was able to render actual service to petitioner as a bus driver for the mere period of a little over a year. Second. thus. we give due regard to the following circumstances: First. he rendered actual service for only a year and three months). that petitioner acted without malice and in good faith when it formally informed respondent in 1998 that he was deemed resigned from work.12 it is safe to assume that the P100. petitioner feared that it would be exposing to danger the lives of its passengers if it allowed the respondent to drive its bus despite the fact that his leg was injured. given the particular circumstances of this case. In fact. he could still drive a bus. dated 18 March 1996. respondent had been working for petitioner for only 15 months. We then proceed to determining what is the effect of petitioner‘s good faith on its liability for backwages. and paid for his medical expenses for the next four years. is very revealing of the fact that he could no longer drive a bus because of his leg injury.16 we are now convinced.000.00 for every year of service (although strictly speaking. In attributing good faith to petitioner. respondent‘s letter to petitioner‘s Vice President. we may concede that petitioner. at the beginning.000. when he went to petitioner‘s office and was informed that he was deemed resigned from work.13 petitioner is a common carrier and. despite the fact that respondent did not render actual service for the said period.00 would have been sufficient separation pay. as such. he was still limping heavily. Respondent wanted to continue working for petitioner as a dispatcher or conductor. petitioner even offered respondent the amount of P50. when the accident occurred causing injury to his leg. should he have agreed to accept the P100. respondent‘s leg injury prevented him from working as a bus driver for petitioner. despite respondent‘s inability to render actual service for four years following the accident in 1994. had sufficient basis to reasonably and in good faith deem respondent resigned by 1998.While we cannot subscribe to petitioner‘s argument that respondent had already abandoned his job in 1994. taking into account the foregoing circumstances. We have previously recognized that the constitutional policy of providing full protection to labor is not intended to oppress or destroy management. Yet.11 requesting that he be transferred to the position of dispatcher or conductor.000. from June 1993 to August 1994. petitioner still continued to pay him his salary and shoulder his medical expenses. but he failed to show that such positions were available and that he would have been qualified and capable for the said jobs. petitioner still kept him in its employ.

the Motion is PARTIALLY GRANTED. and Court of Appeals. THE COURT OF APPEALS and JESUS V. SAMSON. 19 This last ditch effort to shift to a new theory and raise a new matter in the hope of a favorable result is a pernicious practice that has been consistently rejected. The dispositive portion of the Decision dated 28 March 2007 in G.. that for purposes of computing respondent‘s separation pay.R. INC. and is only mitigated by petitioner‘s good faith. WHEREFORE. Petitioner did not raise Article 284 as an authorized cause in terminating respondent‘s employment during the proceedings before the Labor Arbiter. DECISION GUERRERO. dictate us to modify our Decision by ordering petitioner to pay respondent limited backwages (inclusive of allowances and other benefits or their monetary equivalent) for five years. No. respondent‘s continued employment under such circumstance is prohibited by law because it would place petitioner in jeopardy of violating its common carrier obligation to observe extra-ordinary diligence. Petitioner. With respect to the second ground. MINITA V.18 from 1 January 1998 to 31 December 2002. for a period of five (5) years. and arguments not adequately brought to the attention of the lower court (or in this case. NLRC.circumstances attendant in this case. 1981. in lieu of reinstatement. The rule is well-settled that points of law. and even in its Petition for Review before us. computed from 1 January 1998 to 31 December 2002. justice and due process. vs.: . theories. the dismissal of respondent on account of his physical infirmity may be deemed analogous to a termination for health reasons because respondent‘s physical disability r endered him incapable of performing his job as a bus driver. inclusive of allowances and other benefits or their monetary equivalent. SO ORDERED.] PHILIPPINE AIR LINES. petitioner alleged causes for dismissing respondent were abandonment of work.20 We are not prepared to make a conclusion of law herein that may have far-reaching consequences based on an argument that was belatedly raised and evidently a mere after-thought. SEPARATION PAY of one (1) month pay for every year of service. J. however. CHICO-NAZARIO Associate Justice FIRST DIVISION [G. To reiterate. No. the appropriate quasi-judicial administrative body) need not be considered by the reviewing court as they cannot be raised for the first time on appeal. issues. petitioner invokes Article 284 of the Labor Code which provides that "an employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees. We note that petitioner cites Article 284 of the Labor Code as an authorized cause in dismissing respondent for the first time in its Motion for Reconsideration before us. Moreover. because this would be offensive to the basic rules of fair play. much more in a motion for reconsideration as in this case. Petitioner‘s reference to Article 284 of the Labor Code at such a belated stage cannot be allowed. he must still be deemed in petitioner‘s employ until the finality of this Decision since his termination remains illegal. in addition to the separation pay of one month for every year of service awarded in lieu of reinstatement. Respondents. L-46558 : July 31. in view of the foregoing. We must clarify.R. insubordination and gross and habitual neglect of duty." According to petitioner. 164820 is MODIFIED in that petitioner is ordered to pay the respondent. andLIMITED BACKWAGES.

complaint).000.. the following sums: P1988. 1954. 10-11. and inspite of the latter‘s repeated request for expert medical assistance. Samson. discharged the latter from its employ on December 21.This is a petition for review on Certiorari of the decision of the Court of Appeals 1 dated April 18. that the headaches and dizziness experienced by plaintiff were due to emotional disturbance over his inability to pass the required up-grading or promotional course given by defendant companycranad(par. Inc.‖ The appellate court modified the above decision.00 for moral damages. he had been having periodic dizzy spells and had been suffering from general debility and nervousness cranad(par.000. the airplane crashlanded beyond the runway. complaint). to wit: ―However. now the herein petitioner. defendant PAL denied the substantial averments in the complaint. defendant Philippine Air Lines called back the plaintiff to active duty as co-pilot. defendant. 1953 on grounds of physical disability. defendant had not given him any cranad(par.00 as expenses of litigation. a general medical practitioner.000.000. complaint). plaintiff. P20. 8. he flew as co-pilot on a regular flight from Manila to Legaspi with stops at Daet. Plaintiff-Appellee. P20.00 as expenses. Samson. or a total of P273. P50. that several days after the accident. answer). 1977. the judgment appealed from is affirmed.000. 1951. Costs against the defendant.00 as attorney‘s fees and P5.:onad The complaint further alleged that instead of giving plaintiff expert and proper medical treatment called for by the nature and severity of his injuries.00. 5. that on attempting to land the plane at Daet airport. Philippine Air Lines. who has been deprived of his job since 1954.. that the jolt caused the head of the plaintiff to hit and break through the thick front windshield of the airplane causing him severe brain concussion.‖ The complaint filed on July 1. thereby causing plaintiff not only to lose his job but to become physically unfit to continue as aviator due to defendant‘s negligence in not giving him the proper medical attention cranad(pars. Camarines Sur. or a total of P255. notwithstanding the diligent efforts of the plaintiff co-pilot to avert an accident.00 as attorney‘s fees and P5. 1951. . Camarines Norte and Pili. for all the foregoing considerations. The dispositive portion of the trial court‘s decision reads: ―WHEREFORE. with Captain Delfin Bustamante as commanding pilot of a C-47 plane belonging to defendant Philippine Air Lines.‖ for damages. 1954 by plaintiff Jesus V.00 representing his unearned income. WHEREFORE.000. 1279. affirming with modification the decision of the Court of First Instance of Albay in Civil Case No. that defendant airline company instead of submitting the plaintiff to expert medical treatment. entitled ―Jesus V. Inc. In its answer filed on July 28. 9. Plaintiff prayed for damages in the amount of P180.000. Captain Delfin Bustamante due to his very slow reaction and poor judgment overshot the airfield and as a result.000. defendant simply referred him to a company physician.00 unearned income from the filing of the complaint cranad(Sec. with the modification indicated above. that as a consequence of the brain injury sustained by plaintiff from the crash. complaint). who limited the treatment to the exterior injuries without examining the severe brain concussion of plaintiff cranad(par. 6. private respondent herein. P50. 6.00.000. averred that on January 8. 7.000. that the accident was due solely and exclusively to inevitable unforeseen circumstances whereby plaintiff sustained only superficial wounds and minor injuries which were promptly treated by defendant‘s medical personnel cranad(par. Rules of Court). vs. with costs against defendant-appellant. 8.000. wounds and abrasions on the forehead with intense pain and suffering cranad(par.00 as moral damages. alleging among others. complaint). Rule 51. is entitled to the legal rate of interest on the P198. judgment is hereby rendered in favor of the plaintiff and against the defendant ordering the defendant to pay the plaintiff. that plaintiff did not sustain brain injury or cerebral concussion from the accident since he passed the annual physical and medical examination given thereafter on April 24.00 as unearned income or damages.

answer), and that, as confirmed by an expert neuro-surgeon, plaintiff was suffering-from neurosis and in view of this unfitness and disqualification from continuing as a pilot, defendant had to terminate plaintiff‘s employment cranad(pars. 7, 9, answer). Further, defendant alleged that by the very nature of its business as a common carrier, it is bound to employ only pilots who are proficient and in good mental, emotional and physical condition; that the pilot, Captain Delfin Bustamante, was a competent and proficient pilot, and although he was already afflicted with a tumor of the nasopharynx even before the accident of January 8, 1951, the Civil Aeronautics Administration, in passing upon the fitness of pilots, gave Capt. Bustamante a waiver of physical standards to enable him to retain his first class airman certificate since the affliction had not in the least affected his proficiency cranad(pars. 16-17, answer). By way of counterclaim, defendant prayed for P10,000.00 as expenses for the litigation. On March 25, 1958, defendant filed a Motion to Dismiss on the ground that the complaint is essentially a Workmen‘s Compensation claim, stating a cause of action not cognizable within the general jurisdiction of the court. The Motion to Dismiss was denied in the order of April 14, 1958. After the reception of evidence, the trial court rendered on January 15, 1973 the decision, the dispositive portion of which has been earlier cited. The defendant Philippine Air Lines, Inc. appealed the decision to the Court of Appeals as being contrary to law and unsupported by the evidence. It raised as errors of the trial court cranad(a) the holding that the damages allegedly suffered by plaintiff are attributable to the accident of January 8, 1951 which was due to the negligence of defendant in having allowed Capt. Delfin Bustamante to continue flying despite his alleged slow reaction and poor judgment; cranad(b) the finding that defendant was negligent in not having given plaintiff proper and adequate expert medical treatment and assistance for the injuries allegedly sustained in the accident of January 8, 1951; and cranad(c) in ordering defendant to pay actual or compensatory damages, moral damages and attorney‘s fees to the plaintiff. On April 18, 1977, the Court of Appeals rendered its decision affirming the judgment of the lower court but modified the award of damages by imposing legal rate of interest on the P198,000.00 unearned income from the filing of the complaint, citing Sec. 8, Rule 51 of the Rules of Court. Its motion for reconsideration of the above judgment having been denied, Philippine Air Lines, Inc. filed this instant petition for Certiorari on the ground that the decision is not in accord with law or with the applicable jurisprudence, aside from its being replete with findings in the nature of speculation, surmises and conjectures not borne out by the evidence on record thereby resulting to misapprehension of facts and amounting to a grave abuse of discretion cranad(p. 7, Petition). Petitioner raises the fundamental question in the case at bar as follows: Is there a causal connection between the injuries suffered by private respondent during the accident on 8 January 1951 and the subsequent ―periodic dizzy spells, headache and general debility‖ of which private respondent complained every now and then, on the one hand, and such ―periodic dizzy spells, headache and general debility‖ allegedly caused by the accident and private respondent‘s eventual discharge from employment, on the other? PAL submits that respondent court‘s award of damages to private respondent is anchored on findings in the nature of speculations, surmises and conjectures and not borne out by the evidence on record, thereby resulting in a misapprehension of facts and amounting to a grave abuse of discretion. Petitioner‘s submission is without merit. As found by the respondent court, the following are the essential facts of the case: ―It appears that plaintiff, a licensee aviator, was employed by defendant a few years prior to January 8, 1951 as a regular co-pilot on a guaranteed basic salary of P750.00 a month. He was assigned to and/or paired with pilot Delfin Bustamante.

Sometime in December 1950, he complained to defendant through its authorized official about the slow reaction and poor judgment of pilot Delfin Bustamante. Notwithstanding said complaint, defendant allowed the pilot to continue flying. On January 8, 1951, the two manned the regular afternoon flight of defendant‘s plane from Manila to Legaspi, with stops at Daet, Camarines Norte, and Pili, Camarines Sur. Upon making a landing at Daet, the pilot, with his slow reaction and poor judgment, overshot the airfield and, as a result of and notwithstanding diligent efforts of plaintiff to avert an accident, the airplane crash-landed beyond the runway into a mangrove. The jolt and impact caused plaintiff to hit his head upon the front windshield of the plane thereby causing his brain concussions and wounds on the forehead, with concomittant intense pain. Plaintiff was not given proper medical attention and treatment demanded by the nature and severity of his injuries. Defendant merely referred him to its clinic attended by general practitioners on his external injuries. His brain injury was never examined, much less treated. On top of that negligence, defendant recalled plaintiff to active duty as a copilot, completely ignoring his plea for expert medical assistance. Suffering periodic dizzy spells, headache and general debility, plaintiff every now and then complained to defendant. To make matters worst for plaintiff, defendant discharged him from his employment on December 21, 1953. In consequence, plaintiff has been beset with additional worries, basically financial. He is now a liability instead of a provider, of his family. On July 1, 1954, plaintiff filed a complaint for damages. Defendant vainly sought to dismiss the complaint after filing an answer. Then, the judgment and this appeal.‖ Continuing, the respondent Court of Appeals further held: ―There is no question about the employment of plaintiff by defendant, his age and salary, the overshooting by pilot Bustamante of the airfield and crashlanding in a mangrove, his hitting his head on the front windshield of the plane, his intermittent dizzy spells, headache and general debility for which he was discharged from his employment on December 21, 1953. As the lower court aptly stated: ‗From the evidence adduced by the parties, the Court finds the following facts to be uncontroverted: That the plaintiff Jesus V. Samson, on January 8, 1951 and a few years prior thereto, December 21, 1953, was a duly licensed pilot employed as a regular co-pilot of the defendant with assignment in its domestic air service in the Philippines; that on January 8, 1951, the defendant‘s airplane met an accident in crashlanding at the Daet Airport, Camarines Norte by overshooting the runway and reaching the mangroves at the edge of the landing strip; that the jolt caused plaintiff‘s head to hit the front windshield of the airplane causing him to suffer wounds and abrasion on the forehead; that the defendant, instead of giving the plaintiff expert and proper medical treatment called for by the nature and severity of the injuries of the plaintiff, simply referred him to the clinic of the defendant‘s physicians who are only general medical practitioners and not brain specialists; that the defendant‘s physicians limited their treatment to the exterior injuries on the forehead of the plaintiff and made no examination of the severe concussion of the brain of the plaintiff; that the Medical Director and Flight Surgeon of the defendant were not able to definitely determine the cause of the complaint of the plaintiff as to the periodic attack of dizziness, spells and headache; that due to this laxity of the defendant‘s physician and the continuous suffering of the ailment of the plaintiff complained of, he demanded for expert medical assistance for his brain injury and to send him to the United States, which demand was turned down and in effect denied by the defendant; that instead the defendant referred the plaintiff to a neurologist, Dr. Victor Reyes; that

from the time that said accident occurred on January 21, 1953, he was ordered grounded on several occasions because of his complaint of dizzy spells and headache; that instead of submitting the plaintiff to expert medical treatment as demanded by him and denied by the defendant, he was discharged from its employment on December 21, 1953 on the ground of physical disability, and that the plaintiff, at the time when the defendant‘s plane met the accident, up to the time he was discharged, was regularly employed as a co-pilot and receiving a basic salary of P750.00 a month plus extra pay for flying time, and bonuses amounting to P300.00 a month.‘ Even defendant-appellant itself admits as not controverted the following facts which generally admit what have been stated above as not controverted. ―In the case at bar, the following facts are not the subject of controversy: ‗(1) First, that from July 1950 to 21 December 1953, plaintiff was employed with defendant company as a first officer or co-pilot and served in that capacity in defendant‘s domestic services. (2) Second, that on January 1951, plaintiff did fly on defendant‘s PI-C 94, as first officer or co-pilot, with the late Capt. Delfin Bustamante in command as pilot; that while making a landing at the Daet airport on that date, PI-C 94 did meet an accident as stated above. (3) Third, that at or about the time of the discharge from defendant company, plaintiff had complained of ―spells of dizziness,‖ ―headaches‖ and ―nervousness‖, by reason of which he was grounded from flight duty. In short, that at that time, or approximately from November 1953 up to the date of his discharge on 21 December 1953, plaintiff was actually physically unfit to discharge his duties as pilot. (4) Fourth, that plaintiff‘s unfitness for flight duty was properly established after a thorough medical examination by competent medical experts.‘cralaw cranad(pp. 11-12, appellant‘s brief) hence, there can hardly be an issue, factual, legal or medical.‖ Taking exception from ―the rest of the essential facts of the case as found by the respondent court‖ PAL claims said facts are not fully borne out by the evidence on record and insists that the injuries suffered by private respondent during the accident on January 8, 1951 were superficial in nature; that the ―periodic spells, headache, and general debility‖ complaint of every now and then by private respondent subsequent to the Jan. 8, 1951 incident were due to emotional disturbances and that no negligence can be attributed to Capt. Delfin Bustamante much less to PAL for the occurrence on January 8, 1951, hence PAL cannot be held liable for damages. Petitioner claims absence of any causal connection between private respondent‘s superficial injuries and his alleged subsequent ―periodic spells, headache and general debility,‖ pointing out that these subsequent ailments were found by competent physician, including an expert neurosurgeon, to be due to emotional disturbances insights the conclusions of Dr. Trajano V. Bernardo that respondent‘s complaints were ―psychosomatic symptoms‖ on the basis of declarations made by respondent himself, which conclusions are supported by similar diagnosis made by Drs. Damaceno J. Ago and Villaraza stating that respondent Samson was suffering from neurosis as well as the report of Dr. Victor Reyes, a neurological specialist, indicating that the symptoms were probably, most probably due to psychogenic factors and have no organic basis. In claiming that there is no factual basis for the finding of the respondent court that the crashlanding caused respondent‘s ―brain concussion . cra ., with concomittant intense pain, for on the contrary, testimonial evidence establish the superficiality of the injuries sustained by respondent during the accident of January 8, 1951,‖ petitioner quotes portions of the testimony of Dr.

78. 79. found that blood was coming from plaintiff‘s ears and nose. Whatever it might be.:onad We agree with the respondent court in finding that the dizzy spells. to recommend that plaintiff be grounded permanently as respondent was ―psychologically unfit to resume his duties as pilot. Dr. He testified that plaintiff was suffering from cerebral concussion as a result of traumatic injury to the brain caused by his head hitting on the windshield of the plane during the crash-landing cranad(Exhibit ―G‖). 1951 and plaintiff‘s discharge from employment with PAL on December 21. cranad(Exhs. which we find outlandishly exaggerated. headache and general debility of private respondent Samson was an after-effect of the crash-landing and We find that such holding is supported by substantial evidence. considering that Dr. who declared that he removed the band-aid on the forehead of respondent and that he found out after removal that the latter had two contussed superficial wounds over the supra orbiter regions or just above the eyes measuring one centimeter long and one millimeter deep.‖ PAL concludes that respondent‘s eventual discharge from employment with PAL was effected for absolutely valid reasons. Trajano V. the wound was already healed and found nothing wrong with his ears. to wit: ―Defendant would imply that plaintiff suffered only superficial wounds which were treated and not brain injury. He examined and found his blood pressure normal. Be it brain injury or psychosomatic. headache and general debility was an after-effect of the crash-landing. it was the repeated recurrence of respondent‘s neurasthenic symptoms cranad(dizzy spells. by the opinion of its company doctors. Obviously. Reyes. nervousness) which prompted PAL‘s Flight Surgeon. Morales. 81. We are prone to believe the testimony of the plaintiff‘s doctors. It would. Dr. nose and throat so that he was declared fit for duty after the sixth day. Bernardo. which We quote from the court‘s decision. 80. We noticed. and only after he was thoroughly examined and found unfit to carry out his responsibilities and duties as a pilot. Bernardo also testified that when he examined respondent Samson three days after the accident. Dr. Dr. plaintiff has to be indemnified. neurasthenic or psychogenic. Reyes because he could not determine the cause of the dizzy spells and headache and the latter admitted that ‗it is extremely hard to be certain of the cause of his dizzy spells. attribute the dizzy spells and headache to organic or as phychosomatic. not fabricated or concocted. That plaintiff‘s condition as psychosomatic rather than organic in nature is allegedly confirmed by the fact that on six cranad(6) separate occasions after the accident he passed the required CAA physical examination for airman‘s certificate. Bernardo and Dr. Sayas. that there were other similar physical examinations conducted by the CAA on the person of plaintiff the report on which were not presented in evidence. The admitted difficulty of defendant‘s doctors in determining the cause of the dizzy spells and headache cannot be a sound basis for finding against the plaintiff and in favor of defendant. It contends that there is no causal connection between respondent‘s superficial injuries sustained during the accident on January 8. headache. According to PAL. evidently due to the injuries suffered by the plaintiff in hitting the forehead against the windshield of the plane during the accident. however. 1953. Bernardo admittedly referred to Dr. . Petitioner goes further. the fact is that such dizzy spells.‘ and suggested a possibility that it ‗was due to postraumatic syndrome.‘ Judgment are not based on possibilities. there is no gainsaying the fact that it was caused by the crash-landing. The fact is that such effect caused his discharge. neurasthenic or psychogenic. We hesitate to accept the opinion of the defendant‘s two physicians. 83 and 92). a surgeon.Manuel S. only those which suited defendants cause were hand-picked and offered in evidence. As an effect of the cause. no discharges from the nose and ears.

and We affirm the same. dizziness and headache everytime he flew as a co-pilot and everytime he went to defendant‘s clinic no less than 25 times cranad(Exhibits ―15‖ to ―36‖). Flying as a First Officer entails a very different responsibility than flying as a mere co-pilot. Sandico. The complaint against the slow reaction of the pilot at least proved the observation. The Deputy Administrator of the CAA granted the request relying on the representation and recommendation made by Dr. Reyes. Bernardo admits that due to the incident. the eyes which are very near it. They admitted that they could not determine definitely the cause of the fainting spells. Defendant requested the CAA to allow Capt. 69-A) says that ‗it is believed that his continuing to fly as a co-pilot does not involve any hazard. The fact that the complaint was not in writing does not detract anything from the seriousness thereof. which justifies the demand for expert medical assistance. . The fact First Pilot Bustamante has a long standing tumor of the Nasopharynx for which reason he was grounded since November 1947 is admitted in the letter cranad(Exh. 69). duly supported as it is by substantial evidence. Dr. ―K-1‖). Captain Carbonel of the defendant corroborated plaintiff of this matter. Bernardo cranad(See Exh. The request for waiver of physical standards is itself a positive proof that the physical condition of Capt. Bustamante to fly merely as a co-pilot and it is safe to conclude that the CAA approved the request thus allowing Bustamante to fly only as a co-pilot. Marquez. He is now in the Great Beyond. The observation could be disregarded. For having allowed Bustamante to fly as a First Officer on January 8. Yambao and Dr. Plaintiff‘s observation of the pilot was reported to the Chief Pilot who did nothing about it.‖ We also find the imputation of gross negligence by respondent court to PAL for having allowed Capt. Dr. although her testimony is crystallized by the opinions of Dr. cra . her testimony and opinion may not be discussed here. As established by the evidence. that he complained of the same to Dr. Dr. 69-A) of Dr. Jose O. dizziness and headache. Conrado Aramil. that he promised to help send plaintiff to the United States for expert medical assistance provided that whatever finding thereat should not be attributed to the crash-landing incident to which plaintiff did not agree and that plaintiff was completely ignored by the defendant in his plea for expert medical assistance. He admittedly had tumor of the nasopharynx cranad(nose). found abnormality reflected by the electroencephalogram examination in the frontal area on both sides of plaintiff‘s head cranad(Exhibits ―K‖. 1951. that the request cranad(Exh. Even the doctors presented by defendant admit vital facts about plaintiff‘s brain injury. considering that a miscalculation would not only cause the death of the crew but also of the passengers. a neurologist and psychiatrist with experience in two hospitals abroad. 1951 to be correct. Ador Dionisio. No one will certify the fitness to fly a plane of one suffering from the disease.‘cralaw cranad(Italics supplied). The opinion of these two specialist renders unnecessary that of plaintiff‘s wife who is a physician in her own right and because of her relation to the plaintiff. the breathing. Sycangco. however. ―. the plaintiff continuously complained of his fainting spells. the pilot used to get treatments from Dr. Dr. Chan. Tumor on the spot will affect the sinus. clearly established and cited in the decision of said court which states as follows: ―The pilot was sick. defendant is guilty of gross negligence and therefore should be made liable for the resulting accident. He used to complain of pain in the face more particularly in the nose which caused him to have sleepless nights.Dr. We noted. Bustamante is short of the standard set by the CAA. Bernardo to the Medical Director of the CAA requesting waiver of physical standards. The spot is very near the brain and the eyes. Delfin Bustamante to fly on that fateful day of the accident on January 8.

to wit: ―. 756-765. as defined in Art. cra . The law is clear in requiring a common carrier to exercise the highest degree of care in the discharge of its duty and business of carriage and transportation under Arts. the brakes were not as strong and I glanced at the system pressure which indicated 900 lbs. matters which are beyond Dr. Had he maintained the pressure on the brakes the plane would not have overshot the runway. notwithstanding petitioner‘s wail that the judgment of the respondent court is based entirely on speculations. 1951. 12 SCRA 308). January 20. particularly the transcript of stenographic notes cited. much less can We accept petitioner‘s invocation to calibrate once again the evidence testified to in detail and plucked from the voluminous transcript to support petitioner‘s own conclusion. and did so with great skill and proficiency. clear and substantial evidence. or air. for compensation. To bolster the claim that Capt. citing tsn. We have painstakingly perused the records. At least. Bustamante continued to fly for defendant company as a pilot. In another instance. appellant contends that for at least one or more years following the accident of January 8. the pilot would hit the Mayon Volcano had not plaintiff warned him. signed by plaintiff. pp. 8-12). 1755 and 1756 of the New Civil Code. per sq. We observed that the Report does not categorically state that Capt. Verily. Defendant would want to tie plaintiff to the report he signed about the crash-landing. it is liable cranad(Joaquin vs.‖ It was during the above precise instance that Capt. Bustamante displayed slow reaction and poor judgment. We are for the truth not logic of any argumentation. Bernardo on the physical condition of Bustamante and nothing about his skills or proficiency to fly nor on the mishaps or accidents. These more than prove what plaintiff had complained of. Bustamante has not suffered from any kind of sickness which hampered his flying ability. water. we may infer the negligence of Bustamante from the following portion of the Report. The plane hit outside the airstrip. Bustamante from any fault. Bustamante was not at fault. and without any further accident or mishap. pp.:onad Petitioner is a common carrier engaged in the business of carrying or transporting passengers or goods or both. Assuming that the pilot was not sick or that the tumor did not affect the pilot in managing the plane. plaintiff warned him that they were not in the vicinity of Daet but above the town of Ligao. We discovered that the citation covers the testimony of Dr. plaintiff‘s compassion would not upturn the truth about the crash-landing. by land. It merely relates in chronological sequence what Capt. The report was prepared by his pilot and because the latter pleaded that he had a family too and would have nowhere to go if he lost his job. Bernardo‘s competence anyway. when the pilot was preparing to land in Daet. At any rate. These Articles provide: . I felt his brakes strong but as we neared the intersection of the NE-SW runway. offering their services to the public. Aniceto. 1733. Bustamante lost his bearing and disposition. Disregard thereof by defendant is condemnable. Bustamante and plaintiff did from the take-off from Manila to the landing in Daet which resulted in an accident. but found nothing therein to substantiate appellant‘s contention. it is incorrect to say that the Accident Report cranad(Exh. exculpated Capt. 1732. the evidence shows that the overshooting of the runway and crash-landing at the mangrove was caused by the pilot for which acts the defendant must answer for damages caused thereby. 12 & 12-A). On the contrary. And for this negligence of defendant‘s employee. New Civil Code.One month prior to the crash-landing. We are convinced that respondent court‘s judgment is supported by strong. Instead. m. This Court is not impressed by. It is not the task of this Court to discharge the functions of a trier of facts much less to enter into a calibration of the evidence. Capt.cranad(CA decision. 1965. surmises and conjectures. the law presumes the employer negligent imposing upon it the burden of proving that it exercised the diligence of a good father of a family in the supervision of its employees.

00 from 1954 to 1963 or a period of ten cranad(10) years at the rate of one thousand per month cranad(P750. 8. CFI.00 for the entire period.000. La Mallorca General Partnership.000.000. stating that ―the damages awarded plaintiff by the lower court are in accordance with the facts.00 in the form of salaries and another P18. from the nature of their business and for reasons of public policy.G. This claim of the plaintiff for loss or impairment of earning capacity is based on the provision of Article 2205 of the New Civil Code of the Philippines which provides that ―damages may be recovered for loss or impairment of earning capacity in cases of temporary or permanent personal injury.‖ The court further observed that ―defendant -appellant is still fortunate. In case of death of or injuries to passengers.000.‖ As awarded by the trial court. citing Sec. the same must be compensated by such deficiency of the damages awarded to plaintiff-appellee. and considering further that in 1964 the basic pay of defendant‘s pilot was increased to P12. the plaintiff could have earned from 1964 to 1968 the sum of P60. law and jurisprudence. 6.00 unearned income from the filing of the claim. according to all the circumstances of each case. Rule 51 of the Rules of Court. The duty to exercise the utmost diligence on the part of common carriers is for the safety of passengers as well as for the members of the crew or the complement operating the carrier.000.00 extra pay for extra flying time and bonuses. 5.000.000.00 as unearned income or compensatory damages. The trial court arrived at the sum of P198. private respondent was entitled to P198.00 as bonuses and extra pay for extra flying time at the same rate of P300 a month. common carriers are presumed to have been at fault or to have acted negligently. Whatever mathematical error defendantappellant could show by abstract argumentation. 98-99. or a total of P273. the award of P300. Now to the damages. P50. while the extraordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756.000.000.000. P20. considering that the unearned income was reckoned with only up to 1968 and not up to the present as plaintiff-appellee is still living.00 a month as extra pay for extra flying time from 1954 to 1968 is likewise speculative. and 1745. nay injuries and even death to all aboard the plane.00 annually. prejudice. And this must be so for any omission. Common carriers. lapse or neglect thereof will certainly result to the damage.‖ This provision of law has been construed and interpreted in the case of Aureliano Ropato..000. with a due regard for all the circumstances.‖ chanroblesvirtualawlibrary(Decision. Nos.000. 7812. et al. A common carrier is bound to carry the passenger safely as far as human care and foresight can provide. 1733.00 for moral damages. he being only 38 years at the time the services were terminated by the defendant cranad(PAL) and he would have earned P120. using the utmost diligence of very cautious persons. vs. Art. which rules that law allows the recovery of damages for loss or impairment of earning capacity in cases of temporary or permanent personal injury. 1756. and 7.00 as expenses of litigation. the airplane in the case at bar.00 as attorney‘s fees and P5.00 as unearned income or damages by considering that respondent Samson ―could have continued to work as airline pilot for fifteen more years.000. the trial court‘s finding affirmed by the respondent court is allegedly based on pure speculation and conjecture and secondly. pp. Record on Appeal) The respondent appellate court modified the above award by ordering payment of legal interest on the P198. unless they prove that they observed extraordinary diligence as prescribed in Articles 1733 and 1755. 56 O. passengers and crew members alike. PAL likewise . Art. 1755. or a grand total of P198.00 basic salary plus P300.00.Art.00 as unearned income up to 1968 as being tenuous because firstly. Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734. The Court of Appeals affirmed the award of damages made by the trial court. are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them. Petitioner assails the award of the total sum of P198.

00 cranad(not P120. good customs or public policy .000.00 as bonuses and extra pay for extra flying time at the same rate of P300. for the reasons are obvious that it is not. If the death or injury is due to the negligence of a fellow-worker.00 a month for extra pay for extra flying time including bonus given in December every year is justified.000. as in the case under consideration. The further grant of increase in the basic pay of the pilots to P12. Delfin Bustamante to fly the plane to Daet on January 8. We have noted and considered the holding of the appellate court in the matter of bad faith on the part of PAL. When the employee‘s lack of due care contributed to his death or injury.000. the oozing of blood out . mechanics or other employees. the employer shall not be liable for compensation. 1712.000. or drunkenness. unless it should be shown that the latter did not exercise due diligence in the selection or supervision of the plaintiffs fellow-worker. 21 of the New Civil Code. Records) Having affirmed the gross negligence of PAL in allowing Capt. the latter and the employer shall be solidarily liable for compensation.rejects the award of moral damages in the amount of P50. If the mishap was due to the employee‘s own notorious negligence. the compensation shall be equitably reduced.‖ Nor can private respondent‘s action be considered ―analogous‖ to either of the foregoing. workmen.000. Art. if the death or personal injury arose out of and in the course of the employment. 1711 and Art.000 annually for 1964 to 1968 totalling P60. inasmuch as there is no evidence on record to show that PAL ―wilfully cause(d) loss or injury to cranad(private respondent) in a manner that is contrary to morals. the hitting of plaintiff‘s head to the front windshield of the plane. 1712 of the New Civil Code which provide: Art. The employer is also liable for compensation if the employee contracts any illness or disease caused by such employment or as the result of the nature of the employment. As to the grant of moral damages in the sum of P50. this wise: ―None of the essential facts material to the determination of the case have been seriously assailed: the overshooting of runway and crash-landing into the mangroves. The correct computation however should be P750 plus P300 x 12 months = P12.00 cranad(1964 to 1968 compensation) makes a grand total of P204. Adding P126. the definition of quasi-delict in Art.‖ chanroblesvirtualawlibrary(Memorandum of petitioner.00 a month totals P78.00 on the ground that private respondent‘s action before the trial court does not fall under any of the cases enumerated in the law cranad(Art.00 as originally computed).000.00 and another P18. or voluntary act. the employer shall not be answerable. even though the event may have been purely accidental or entirely due to a fortuitous cause. The grant of compensatory damages to the private respondent made by the trial court and affirmed by the appellate court by computing his basic salary per annum at P750. Owners of enterprises and other employers are obliged to pay compensation for the death or injuries to their laborers. headache and general debility produced from said injuries. 418-421.600 per annum x 10 years = P126. stated hereunder. 1711. 21.00.00 cranad(not P198.00 We also approve the same. where an employer-employee relationship existed between PAL and private respondent.000. cra . 2219 of the New Civil Code) for which moral damages are recoverable and that although private respondent‘s action gives the appearance that it is covered under quasi-delict as provided in Art. 1951 whose slow reaction and poor judgment was the cause of the crash-landing of the plane which resulted in private respondent Samson hitting his head against the windshield and causing him injuries for which reason PAL terminated his services and employment as pilot after refusing to provide him with the necessary medical treatment of respondent‘s periodic spells. pp. 2176 of the New Civil Code expressly excludes cases where there is a pre-existing contractual relation between the parties. If a fellow-worker‘s intentional or malicious act is the only cause of the death or injury.00 a month as basic salary and P300.00 as computed by the court a quo). We must necessarily affirm likewise the award of damages or compensation under the provisions of Art.000.000.000. It is further argued that private respondent‘s action cannot be deemed to be covered by Art.

―the plaintiff is entitled to attorney‘s fees because he was forced to litigate in order to enforce his valid claim cranad(Ganaban vs. Even from the standpoint of the petitioner that there is an employer-employee relationship between it and private respondent arising from the contract of employment. and plaintiff was dismissed and was forced to go to court to vindicate his right cranad(Nadura vs. 151-152. private respondent is still entitled to moral damages in view of the finding of bad faith or malice by the appellate court. New Civil Code which provides that willful injury to property may be a legal ground for awarding moral damages if the court should find that.of his ears. which does not mean that it should not be computed from the filing of the complaint.‖ xxx ―The act of defendant-appellant in unjustly refusing plaintiff-appellee‘s demand for special medical service abroad for the reason that plaintiff-appellee‘s deteriorating physical condition was not due to the accident violates the provisions of Article 19 of the Civil Code on human relations ―to act with justice. 19 of the New Civil Code on Human Relations which requires that every person must. 23 SCRA 1044). The negligence of the latter is clearly a quasi-delict and therefore Article 2219. Inc. Bustamante is undeniable.‖ chanroblesvirtualawlibrary(CA Resolution. With respect to the award of attorney‘s fees in the sum of P20. 2220. 5 SCRA 879).00 is proper and justified. such damages are justly due. give everyone his due.00 the same is likewise correct. the condition of not to attribute the cause of the ailment to the crash-landing imposed in bad faith for a demanded special medical service abroad. pp. Under the facts found by the trial court and affirmed by the appellate court and under the law and jurisprudence cited and applied. 22 SCRA 33. under the circumstances. not from the filing of the complaint. justifying the recovery of moral damages. as applied by respondent court is also well-taken and We hereby give Our affirmance thereto. The justification in the award of moral damages under Art. 30 SCRA 365. the defendant-appellant claims that the legal rate of interest on the unearned compensation should be computed from the date of the judgment in the lower court. Records) We reject the theory of petitioner that private respondent is not entitled to moral damages. and observe honesty and good faith. As pointed out in the decision of the Court of Appeals.000. and many others). in the exercise of his rights and in the performance of his duties.‖ We also agree with the modification made by the appellate court in ordering payment of legal interest from the date judicial demand was made by Pilot Samson against PAL with the filing of the complaint in the lower court. A complaint .. headaches and general debility thereafter for which he was discharged from his employment. Thereunder interest begins to accrue upon demand. Bayle. defendant acted in bad faith in refusing plaintiff‘s valid claimcranad(Filipino Pipe Foundry Corporation vs. the grant of moral damages in the amount of P50. applying the provisions of Art. extrajudicial or judicial. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith. the intermittent dizzy spells. The fact that private respondent suffered physical injuries in the head when the plane crashlanded due to the negligence of Capt. We affirm the ruling of the respondent court which reads: ―Lastly. 2209 and 2212 of the Civil Code govern when interest shall be computed. give everyone his due. De la Cruz. Central Bank. nose and mouth. cranad(2) New Civil Code is applicable.000. act with justice. Articles 1169. which finding We hereby affirm. and observe honesty and good faith. and the resultant brain injury which defendant‘s doctors could not understand nor diagnose. Benguet Consolidated. De la Cruz vs. citing a case where the issue raised in the Supreme Court was limited to when the judgment was rendered in the lower court or in the appellate court.

CV No. With costs against petitioner. petitioner averred that the deposit slips Frias used when she deposited the checks were spurious. deposited with petitioner ten checks worthP455. Vicente. received two deposit slips for the checks. 7" instead of "teller no.‖ chanroblesvirtualawlibrary(CA Resolution. SPOUSES PETER and SUSAN TAN. Teehankee and Melencio-Herrera. JJ.R. petitioner‘s teller no.. pp. Branch 31. respondents retrieved the passbook and discovered that one of the checks. WHEREFORE.000. 403954 had cleared after it was inexplicably deposited by a certain Dolores Lagsac in Premier Bank in San Pedro. 107 Phil. Manila Branch.00 as herein computed and not P198.is a judicial demand cranad(Cabarroguis vs. respondents notified petitioner of the problem.962. The deposit slip bore the stamp mark "teller no. respectively.00. it was "teller no. Still later. 153-154. * Petitioner. 8" who previously received the checks. concur. Remigia Frias. the judgment of the appellate court is hereby affirmed with slight modification in that the correct amount of compensatory damages is P204. they filed a case for collection of a sum of money in the RTC of Manila. The correct amount of compensatory damages upon which legal interest shall accrue from the filing of the complaint is P204. an original and a duplicate.000. concur in the result.000. Under Article 2212 of the Civil Code. 8 in its Juan Luna. 2004 and March 1. Metropolitan Bank and Trust Company (Metrobank) check no. Laguna. 7" who . 340). No. 167346 April 2. Makasiar and De Castro. 1991.3 affirming the decision of the Regional Trial Court (RTC) of Manila. respondent Peter Tan learned from Metrobank (where he maintained an account) that Metrobank check no.. JJ. Branch 31. in CA-G. vs.4 On December 2.000 was not posted therein. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G. contrary to the claim of respondents. SO ORDERED. the latter‘s passbook was left with petitioner for the recording of the deposits on the bank‘s ledger. 2005. Grace Neri.: Assailed in this petition for review by certiorari under Rule 45 of the Rules of Court are the decision1 and resolution2 of the Court of Appeals (CA) dated November 26. But it did not include the missing check. in view of all the foregoing. Petitioner showed respondent Peter Tan a duplicate copy of a deposit slip indicating the list of checks deposited by Frias. 403954. 2007 SOLIDBANK CORPORATION/ METROPOLITAN BANK AND TRUST COMPANY. Respondents demanded that petitioner pay the amount of the check but it refused. payable to cash in the sum of P250. Respondents. In accordance with the usual practice between petitioner and respondents. 58618.00. Neri verified the checks and their amounts in the deposit slips then returned the duplicate copy to Frias and kept the original copy for petitioner. Later. J. hence. interest due shall earn legal interest from the time it is judicially demanded. respondents‘ representative. Petitioner accused respondents of engaging in a scheme to illegally exact money from it. Records). DECISION CORONA.R. In its answer. It added that. Immediately. although the obligation may be silent upon this point.

P25. 403954 in the sum of P250.000 as exemplary damages. this appeal. and that "if the law or contract does not state the diligence which is to be observed in the performance. the said deposit slip was prepared by [petitioner] itself to cover up for the lost check.8We meticulously reviewed the records of the case and found no reason to deviate from the rule. With costs. only nine checks were actually received by said teller. of the provisions of the Civil Code on common carriers to the instant case was erroneous.000. this Court will not disturb such findings.000. (2) the award of damages in favor of respondents was unwarranted and (3) the application by the RTC. although respondents insisted that Frias deposited ten checks. At the outset. this Court believes that the loss of Metrobank Check No. petitioner faults the CA for upholding the RTC decision. Art.00 was due to the fault of [petitioner]…[It] retained the original copy of the [deposit slip marked by "Teller No. ordering [petitioner] to pay the sum of P250. and after taking into consideration all the circumstances of the case. it sought payment of P1. 1173 of the Civil Code states that "the fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the person of the time and of the place". 7" and on which the entry as to Metrobank Check No. petitioner argues that the moral and exemplary damages awarded by the lower courts had no legal basis. Hence. 403954 did not appear.00 exemplary damages plus 20% of the amount due [respondents] as and for attorney‘s fees. petitioner avers . as well as of the documentary evidence which the parties presented at the trial in support of their respective contentions. On the first issue. By way of counterclaim.received the deposit slips and. the same as expected of a good father of a family shall be required. 1756)… xxx xxx xxx WHEREFORE.1a\^/phi1." …For failure to comply with its obligation. 7"]. After trial. Even the most cursory look at the handwriting thereon reveal[ed] a very marked difference with that in the other deposit slips filled up [by Frias] on December 2.net Before us. Moreover.000. judgment is hereby rendered in favor of [respondents].6 Petitioner filed a motion for reconsideration but the CA dismissed it. Petitioner argues that: (1) the findings of the RTC and the CA were not supported by the evidence and records of the case. petitioner contends that the lower courts erred in finding it negligent for the loss of the subject check. premises considered.5 Petitioner appealed to the CA which affirmed in toto the RTC‘s assailed decision: Serious doubt [was] engendered by the fact that [petitioner] did not present the original of the deposit slip marked with "Teller No.7 The petition must fail. the fact that the check was deposited in Premier Bank affirmed its claim that it did not receive the check. Said circumstances spawn[ed] the belief thus. According to petitioner. the Court stresses that it accords respect to the factual findings of the trial court and. since the CA affirmed these findings on appeal.000. There is a presumption in law that evidence willfully suppressed would be adverse if produced. [petitioner] is presumed to have been at fault or to have acted negligently unless they prove that they observe extraordinary diligence as prescribed in Arts. with legal interest from the time the complaint [for collection of a sum of money] was filed until satisfied. the RTC found petitioner liable to respondents: Upon examination of the oral. P25. they are final and conclusive on us. SO ORDERED.00 moral damages.9 We therefore sustain the RTC‘s and CA‘s findings that petitioner was indeed negligent and responsible for respondents‘ lost check. For the award of moral damages to stand. unless it overlooked substantial matters that would alter the outcome of the case.000 as actual and moral damages and P500. On the issue of damages. 1733 and 1735 of the Civil Code (Art.000. as affirmed by the CA. 1991.

According to petitioner. simple negligence cannot be a basis for its award. In other words. 2004 and March 1.R. in CA-G. 15 the trial court merely made reference to the kind of diligence that petitioner should have performed under the circumstances.16 the Court did not hesitate to apply the doctrine of last clear chance (commonly used in transportation laws involving common carriers) to a banking transaction where it adjudged the bank responsible for the encashment of a forged check.14 In citing the different provisions of the Civil Code on common carriers.12 As to the award of exemplary damages. the law allows it by way of example for the public good. It refused to produce the original copy of the deposit slip which could have proven its claim that it did not receive respondents‘ missing check. they are required to observe the highest standards of integrity and performance. 13 For petitioner‘s failure to carry out its responsibility and to account for respondents‘ lost check. By the nature of their business. like a common carrier whose business is also imbued with public interest. petitioner should have exercised extraordinary diligence to negate its liability to respondents. we hold that the lower courts did not err in awarding exemplary damages to the latter. Thus. it nonetheless cannot insist that that was all it was guilty of. and utmost assiduousness as well. still we see no reason to strike down the RTC and CA rulings on this ground alone. SO ORDERED. 58618 are hereby AFFIRMED.that respondents should have proven the existence of bad faith by clear and convincing evidence. the petition is DENIED. we enunciated that the degree of diligence required of banks is more than that of a good father of a family in keeping with their responsibility to exercise the necessary care and prudence in handling their clients‘ money. RENATO C. fraudulent and oppressive manner. CORONA Associate Justice .17 WHEREFORE. Bad faith imports a dishonest purpose or some moral obliquity or conscious doing of a wrong that partakes of the nature of fraud. While petitioner may argue that simple negligence does not warrant the award of moral damages. Assuming arguendo that the trial court indeed used the provisions on common carriers to pin down liability on petitioner. The business of banking is impressed with public interest and great reliance is made on the bank‘s sworn profession of diligence and meticulousness in giving irreproachable service. Costs against petitioner. petitioner‘s bad faith was apparent and unmistakable. In one case. we hold that the trial court did not commit any error.11 Moreover. the assailed decision and resolution of the Court of Appeals dated November 26. respectively. the presumption now arises that it withheld the same for fraudulent purposes. It insists that the award of exemplary damages is justified only when the act complained of was done in a wanton. On the last issue. We find no compelling reason to disallow the application of the provisions on common carriers to this case if only to emphasize the fact that banking institutions (like petitioner) have the duty to exercise the highest degree of diligence when transacting with the public. in suppressing the best evidence that could have bolstered its claim and confirmed its innocence. in presenting a false deposit slip in its attempt to feign innocence. CV No. Accordingly. 2005. There. A cursory reading of its decision reveals that it anchored its conclusion that petitioner was negligent on Article 1173 of the Civil Code.10 We disagree.

were not in the passenger manifest. Inc. The MV Doña Paz carried an estimated 4. Only 24 survived the tragedy after having been rescued from the burning waters by vessels that responded to distress calls. The facts are as follows: On December 19.. EDWARD S. the two vessels collided in the open sea within the vicinity of Dumali Point between Marinduque and Oriental Mindoro. 4 The MV Doña Paz is a passenger and cargo vessel owned and operated by Sulpicio Lines. ENRIQUE S. VECTOR SHIPPING CORPORATION. making trips twice a week. VICTORIANO S. J. 1999 CALTEX (PHILIPPINES). CARLOS S. GO SIOC SO. During that particular voyage. were at fault and responsible for its collision with MV Doña Paz. 1987. and its owner and actual operator Vector Shipping Corporation. GO.493 as indicated in the Coast Guard Clearance. The petition before us seeks to reverse the Court of Appeals decision 1 holding petitioner jointly liable with the operator of MT Vector for damages when the latter collided with Sulpicio Lines. INC. GO. CAÑEZAL.R. 1987. At about 10:30 p. FRANCISCO SORIANO. No. its registered operator Francisco Soriano.m. of December 20. at about 8:00 p.000 passengers. while the two survivors from MT Vector claimed that they were sleeping at the time of the incident. TERESITA G. the MT Vector carried on board gasoline and other oil products owned by Caltex by virtue of a charter contract between them. Inc. 1987 carrying petroleum products of Caltex (Philippines). 5 Among those who perished were public school teacher Sebastian Cañezal (47 years old) and his daughter Corazon Cañezal (11 years old). motor tanker MT Vector left Limay. GO. Bataan. (hereinafter Caltex) no one could have guessed that it would collide with MV Doña Paz. On March 22. ARTURO S. GO. GO. All the crewmembers of MV Doña Paz died.m. PARDO. GO. and passengers totaling 1. killing almost all the passengers and crew members of both ships. 1988. the passenger ship MV Doña Paz left the port of Tacloban headed for Manila with a complement of 59 crew members including the master and his officers.. DOMINADOR S. 2 MT Vector is a tramping motor tanker owned and operated by Vector Shipping Corporation. 6 . GO. Inc. RICARDO S. 131166 September 30. both unmanifested passengers but proved to be on board the vessel. SULPICIO LINES.. respondents. diesel and crude oil. EDMUND S.'s passenger ship MV Doña Paz.. Bataan. 1987. petitioner. and thus resulting in one of the country's worst maritime disasters. kerosene. plying the route of Manila/ Tacloban/ Catbalogan/ Manila/ Catbalogan/ Tacloban/ Manila. on December 19. 3 On December 20. engaged in the business of transporting fuel products such as gasoline.Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G. the board of marine inquiry in BMI Case No.800 barrels of petroleum products shipped by petitioner Caltex. CAÑEZAL. loaded with 8. GO. GO. AND SOTERA E. EDGAR S. vs. many indeed.: Is the charterer of a sea vessel liable for damages resulting from a collision between the chartered vessel and a passenger ship? When MT Vector left the port of Limay. 659-87 after investigation found that the MT Vector.m. enroute to Masbate. at about 6:30 a. EUSEBIO S. GO. INC.

filed with the Regional Trial Court. Costs of the suit. Vector Shipping Corporation and Caltex (Philippines). this 15th day of September 1992. including loss of future earnings of said Sebastian. the Court of Appeal modified the trial court's ruling and included petitioner Caltex as one of the those liable for damages. PORTIA ALIÑO HERMACHUELOS . Moral damages in the amount of THREE HUNDRED THOUSAND PESOS (P300. 1989.287. Cañezal.00). The dispositive portion reads: WHEREFORE.00). the judgment rendered by the Regional Trial Court is hereby MODIFIED as follows: WHEREFORE. ARSENIO M. in the total amount of P 1. Inc. Sulpicio. the 3rd party complaint is hereby DISMISSED for want of substantiation and with costs against the 3rd party plaintiff. Cañezal. unseaworthy and a hazard to safe navigation. Teresita Cañezal and Sotera E. (being the charterer that negligently caused the shipping of combustible cargo aboard an unseaworthy vessel). Inc. 5. 1992. Inc. in view of all the foregoing. 1997. Cañezal and Corazon Cañezal: 1. in the total amount of THREE HUNDRED SIX THOUSAND FOUR HUNDRED EIGHTY (P306.44 and finally. as a result. 4. SO ORDERED. attorney's fees and costs which the latter is adjudged to pay plaintiffs. judgment is hereby rendered in favor of plaintiffs and against defendant-3rd party plaintiff Sulpicio Lines. JORGE S. on April 15. MABUTAS. 2. Inc. IT IS SO ORDERED. the same to be shared half by Vector Shipping Co. On September 15. Inc. Thus: WHEREFORE. IMPERIALAssociate Justice WE CONCUR: RAMON U. Compensatory damages representing the unearned income of Sebastian E. Likewise. Cañezal and his 11-year old daughter Corazon G. Attorney's fees in the concept of actual damages in the amount of FIFTY THOUSAND PESOS (P50. Sebastian Cañezal's wife and mother respectively. (hereafter Sulpicio). The statutory costs of the proceedings. a complaint for "Damages Arising from Breach of Contract of Carriage" against Sulpicio Lines. of the above-mentioned damages.241. JR. to wit: 1. Compensatory damages for the death of Sebastian E.. and Caltex (Phils. 2. Sulpicio alleged that Caltex chartered MT Vector with gross and evident bad faith knowing fully well that MT Vector was improperly manned. For the death of Sebastian E.00) PESOS.000). the third party complaint against petitioner. it rammed against MV Doña Paz in the open sea setting MT Vector's highly flammable cargo ablaze.. in turn. (being the vessel at fault for the collision) and the other half by Caltex (Phils. Third party defendants Vector Shipping Co. Manila. is ordered to pay the heirs of Sebastian E.). attorney's fees. Cañezal.On February 13.000. 3. DONE IN MANILA. Inc.480. defendant Sulpicio Lines. Branch 8. Inc. moral and exemplary damages. filed a third party complaint against Francisco Soriano. Cañezal and Corazon Cañezal the total amount of ONE HUNDRED THOUSAND PESOS (P100. ill-equipped. Inc. are held equally liable under the third party complaint to reimburse/indemnify defendant Sulpicio Lines..).000. GONONG On appeal to the Court of Appeals interposed by Sulpicio Lines. the trial court rendered decision dismissing.

The parties entered into a voyage charter. notwithstanding the charter of the whole portion of a vessel of one or more persons. wherein the leased vessel is leased to the charterer for a fixed period of time. . We find the petition meritorious. Court of Appeals. 8 Hence. we ruled in Coastwise Lighterage Corporation vs. as in a bareboat or demise that a common carrier becomes private. on a particular voyage. in effect. the charter party agreement did not convert the common carrier into a private carrier. 14 we said: It is therefore imperative that a public carrier shall remain as such. a contract of affreightment is one by which the owner of a ship or other vessel lets the whole or part of her to a merchant or other person for the conveyance of goods. the ship owner to supply the ship's store. in consideration of the payment of freight. which retains the character of the vessel as a common carrier. a ship-owner in a time or voyage charter retains possession and control of the ship. provided the charter is limited to the ship only. or some principal part thereof. . It is only when the charter includes both the vessel and its crew. the same however is not true in a contract of affreightment . In this case. at least insofar as the particular voyage covering the charter-party is concerned. Later. pay for the wages of the master of the crew. or voyage charter. In both cases. the charterer mans the vessel with his own people and becomes. 10 A charter party is a contract by which an entire ship. In Guzman vs. is let by the owner to another person for a specified time or use. 11 A contract of affreightment may be either time charter. 9 Petitioner and Vector entered into a contract of affreightment. Court of Appeals. subject to liability for damages caused by negligence. The charterer is free from liability to third persons in respect of the ship. the rights and the responsibilities of ownership rest on the owner. either for a determinate period of time or for a single or consecutive voyage. First: The charterer has no liability for damages under Philippine Maritime laws. (2) time charter. the charter-party provides for the hire of the vessel only. the owner for the voyage or service stipulated. Court of Appeals: 15 Although a charter party may transform a common carrier into a private one. or a charter party or similar contract on the other. Does a charter party agreement turn the common carrier into a private one? We need to answer this question in order to shed light on the responsibilities of the parties. which leaves the general owner in possession of the ship as owner for the voyage. but on whether the contract of carriage is a bill of lading or equivalent shipping documents on the one hand. Indubitably. be the property of the charterer. as in the case of a timecharter or the voyage charter. If the charter is a contract of affreightment. (3) voyage charter. 17 we ruled: . 16 MT Vector fits the definition of a common carrier under Article 1732 of the Civil Code. this petition. Inc. vs. and defray the expenses for the maintenance of the ship. 12 Under a demise or bareboat charter on the other hand. In Planters Products. 13 Second: MT Vector is a common carrier Charter parties fall into three main categories: (1) Demise or bareboat. also known as a voyage charter. for the moment.Associate Justice Associate Justice. The respective rights and duties of a shipper and the carrier depends not on whether the carrier is public or private. A common carrier is a person or corporation whose regular business is to carry passengers or property for all persons who may choose to employ and to remunerate him. although her holds may. wherein the ship is leased for a single voyage.

The Civil Code defines "common carriers" in the following terms: Art.e. The failure of a common carrier to maintain in seaworthy condition the vessel involved in its contract of carriage is a clear breach of its duty prescribed in Article 1755 of the Civil Code. Under the Carriage of Goods by Sea Act : Sec. transportation has become more rapid." i. a passenger or a shipper of goods is under no obligation to conduct an inspection of the ship and its crew. This business is impressed with a special public duty. Article 1732 also carefully avoids making any distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such services on an occasional. 1732. as "a sideline"). Third: Is Caltex liable for damages under the Civil Code? We rule that it is not.. more complicated and somehow more hazardous. the carrier being obliged by law to impliedly warrant its seaworthiness. the carriers are deemed to warrant impliedly the seaworthiness of the ship. Sulpicio argues that Caltex negligently shipped its highly combustible fuel cargo aboard an unseaworthy vessel such as the MT Vector when Caltex: 1. (1) The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to — (a) Make the ship seaworthy. 2. episodic or unscheduled basis. This aside. Carlos Tan of Bataan Refinery Corporation. by land. we now rule on whether Caltex is liable for damages under the Civil Code. equip. it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. 18 The provisions owed their conception to the nature of the business of common carriers. that the fee frequently fell below commercial freight rates is not relevant here. although such backhauling was done on a periodic. occasional rather than regular or scheduled manner. It appears to the Court that private respondent is properly characterized as a common carrier even though he merely "back-hauled" goods for other merchants from Manila to Pangasinan. and supply the ship. We think that Article 1733 deliberately refrained from making such distinctions.19 For these reasons. offering their services to the public. and even though respondent's principal occupation was not the carriage of goods for others. firms or associations engaged in the business of carrying or transporting passengers for passengers or goods or both. or air for compensation. There is no dispute that private respondent charged his customers a fee for hauling their goods. 3. corporations. . Proceeded to ship its cargo despite defects found by Mr. Common carriers are persons. Did not take steps to have M/T Vector's certificate of inspection and coastwise license renewed. For a vessel to be seaworthy. and one who does such carrying only as an ancillary activity (in local idiom. (b) Properly man. and one who offers services or solicits business only from a narrow segment of the general population. The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both. The public must of necessity rely on the care and skill of common carriers in the vigilance over the goods and safety of the passengers. xxx xxx xxx Thus. the general community or population. especially because with the modern development of science and invention. water. Neither does Article 1732 distinguish between a carrier offering its services to the "general public.

vs. is called a quasi-delict and is governed by the provisions of this Chapter. And what is negligence? The Civil Code provides: Art. Art. is obliged to pay for the damage done. is conduct which naturally or reasonably creates undue risk or harm to others. 1. of the time and of the place. or the omission to do something which ordinarily regulate the conduct of human affairs. To demand more from shippers and hold them liable in case of failure exhibits nothing but the futility of our maritime laws insofar as the protection of the public in general is concerned. the Court of Appeals relied on Articles 20 and 2176 of the Civil Code. 1173. 20 As basis for the liability of Caltex. Court of Appeals. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons. The vessel did not have a Third Mate. had the license of a Minor Patron. shall indemnify the latter for the same. Ronaldo Tarife. Considering the nature of transportation business. 20. are not expected to inquire into the vessel's seaworthiness. if there is no pre-existing contractual relation between the parties. authorized to navigate only in bays and rivers when the subject collision occurred in the open sea. — Whoever by act or omission causes damage to another. shall apply. as commonly understood. the time and the place. we cannot expect passengers to inquire every time they board a common carrier. that which is expected of a good father of a family shall be required. Hence. — Every person who contrary to law. a radio operator and lookout. the provisions of Article 1171 and 2201 paragraph 2. 23 shippers of goods. Such a practice would be an absurdity in a business where time is always of the essence. It may be the failure to observe that degree of care. precaution. When negligence shows bad faith. Filoteo Aguas. The vessel had a defective main engine. liability as found by the Court of Appeals is without basis. there being fault or negligence. If the law does not state the diligence which is to be observed in the performance. considering the nature of the obligation between Caltex and MT Vector. The duty rests upon the common carrier simply for being engaged in "public service. passengers and shippers alike customarily presume that common carriers possess all the legal requisites in its operation. which the circumstances justly demand. Because of the implied warranty of seaworthiness. and vigilance. had no license to operate the engine of the vessel. The charterer of a vessel has no obligation before transporting its cargo to ensure that the vessel it chartered complied with all legal requirements. Inc. 21 we said that negligence. whether the carrier possesses the necessary papers or that all the carrier's employees are qualified. which provide: Art. and 5. The relationship between the parties in this case is governed by special laws. The master of M/T Vector did not posses the required Chief Mate license to command and navigate the vessel. 3. Witnessed M/T Vector submitting fake documents and certificates to the Philippine Coast Guard. The Chief Engineer." 22 The Civil Code demands diligence which is required by the nature of the obligation and that which corresponds with the circumstances of the persons.3. Such fault or negligence. By the same token. when transacting with common carriers. 2176. In Southeastern College. willfully or negligently causes damage to another. genuineness of its licenses and compliance with all maritime laws. . The second mate. Sulpicio further argues that Caltex chose MT Vector transport its cargo despite these deficiencies. would do. 4. 2.

because as I said before. Q: What happened after that? A: On the first week of December. what steps did you take regarding the impending expiry of the C. the nature of the obligation of Caltex demands ordinary diligence like any other shipper in shipping his cargoes. 1290-85. we trusted Mr.Thus. . 25 On cross examination — Atty. what would that mean? Atty. 26 Finally. Abalos on the first place. That are some that make me believe that they in fact were able to secure the necessary renewal. from Mr. on Mr. or the Certificate of Inspection No. Certificate of Inspection No. be renewed and Mr. secondly. Sarenas: Objection. I called the attention of Mr. because of our long business relation. Ng's redirect examination: Atty. we trust Mr.? A: We did not insist on getting a copy of the C. the operation Manager assured us that they were able to secure a renewal of the Certificate of Inspection and that they will in time submit us a copy. and said they were going to send me a copy as soon as possible. Poblador: Mr.I. Sarenas: . . I direct your attention to this portion here containing the entries here under "VESSEL'S DOCUMENTS 1. referring to MV Vector. assured me they will renew the same. sir. . this Certificate of Inspection has expired on December 7. 1290-85 during the hiring of MT Vector? Apolinario Ng: At the time when I extended the Contract. Witness. in turn. A cursory reading of the records convinces us that Caltex had reasons to believe that MT Vector could legally transport cargo that time of the year. Abalos. those three years. . Witness. Mr. Did it occur to you not to let the vessel sail on that day because of the very approaching date of expiration? Apolinar Ng: No sir. Atty. they were allowed to sail by the Coast Guard. were you aware of the pending expiry of the Certificate of Inspection in the coastwise license on December 7. to sail.I. Sarenas: This being the case. and Expires December 7. Abalos and the fact that the vessel was able to sail indicates that the documents are in order. Court: He already answered that in the cross examination to the effect that if it was allowed.I. What was your assurance for the record that this document was renewed by the MT Vector? Atty. 1986. which will expire on December 7. Abalos. 1987 but on the last week of November. Q: If the Coast Guard clears a vessel to sail. I did nothing because the tanker has a valid C. I again made a follow-up from Mr. where it .I. Poblador: Mr. Witness. 1987. and this being an admission by you. issued December 21. Abalos to ensure that the C. . 1987". 24 xxx xxx xxx Q: What did you do with the C. Abalos as he is a long time business partner. Atty. firstly.I. Poblador: The certificate of Inspection? A: As I said.

J. No.: Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals in CAG. 1997 which denied the subsequent motion for reconsideration. 127897 November 15. Kapunan and Ynares-Santiago. 1997. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G. JR. Clearly. SO ORDERED.. it means that it has Certificate of Inspection extended as assured to this witness by Restituto Abalos. So. C. not to be extended. The Court AFFIRMS the decision of the Court of Appeals insofar as it orders Sulpicio Lines. DE LEON.. However. ordering petitioner to pay private respondent the sum of Five Million Ninety-Six Thousand Six Hundred Thirty-Five Pesos and Fifty-Seven Centavos (P5. 27 Caltex and Vector Shipping Corporation had been doing business since 1985.635.. insofar as it held Caltex liable under the third party complaint to reimburse/indemnify defendant Sulpicio Lines.is loaded and that it was scheduled for a destination by the Coast Guard. Jr. no part due to close relation with a party. CV No. Third-party defendant-appellee Vector Shipping Corporation and Francisco Soriano are held liable to reimburse/indemnify defendant Sulpicio Lines. we find no legal basis to hold petitioner liable for damages. we maintain the Court of Appeals' ruling insofar as Vector is concerned. WHEREFORE... COURT OF APPEALS and AMERICAN HOME ASSURANCE CORPORATION. No costs in this instance. to pay the heirs of Sebastian E. Cañezal and Corazon Cañezal damages as set forth therein. indeed.R. Caltex had the right to presume that the ship was seaworthy as even the Philippine Coast Guard itself was convinced of its seaworthiness. attorneys' fees and costs the latter is adjudged to pay plaintiffs-appellees in the case. Davide. That in no case MV Vector will be allowed to sail if the Certificate of inspection is. for a period of one year whereby the said common carrier agreed to transport Caltex‘s industrial fuel oil from the BatangasBataan Refinery to different parts of the country. Inc. vs. Inc. Inc. Puno. That was his repeated explanation to the cross-examination.. JJ.57) and costs and the Resolution2 dated January 21. 39626. respondents. petitioner. Under the contract. reversing the decision of the Regional Trial Court of Makati City. 39836 promulgated on June 17. the damages the latter is adjudged to pay plaintiffs-appellees.096. Delsan Transport Lines. 2001 DELSAN TRANSPORT LINES. promulgated on April 15. 1996. INC. whatever damages. petitioner took on board its . The facts show that Caltex Philippines (Caltex for brevity) entered into a contract of affreightment with the petitioner. concur. or for about two years before the tragic incident occurred in 1987. we limit our ruling to the liability of Caltex alone. Inc.R.. All things considered. THE HON. CV No. As Vector Shipping Corporation did not appeal from the Court of Appeals' decision. J. Branch 137.R. as a mere voyage charterer. J. the Court hereby GRANTS the petition and SETS ASIDE the decision of the Court of Appeals in CA-G. there is no need to clarify the same in the re-direct examination. Past services rendered showed no reason for Caltex to observe a higher degree of diligence.

Exercising its right of subrogation under Article 2207 of the New Civil Code. invokes the provision of Section 113 of the Insurance Code of the Philippines. The shipment was insured with the private respondent. Due to its failure to collect from the petitioner despite prior demand. Consequently. II THE COURT OF APPEALS ERRED AND WAS NOT JUSTIFIED IN REBUTTING THE LEGAL PRESUMPTION THAT THE VESSEL MT "MAYSUN" WAS SEAWORTHY. the vessel sank in the early morning of August 16. however.67) representing the insured value of the lost cargo. on appeal. 1986. thus exempting the common carrier (herein petitioner) from liability for the loss of its cargo.vessel. Petitioner Delsan Transport Lines.277. Geophysical and Astronomical Services Administration (PAGASA for brevity) which showed that from 2:00 o‘clock to 8:oo o‘clock in the morning on August 16. private respondent filed a complaint with the Regional Trial Court of Makati City. Inc. 1990 dismissing the complaint against herein petitioner without pronouncement as to cost. Petitioner raised the following assignments of error in support of the instant petition. the insurer will not be liable to the assured for any loss under the policy in case the vessel would later on be found as not seaworthy at the inception of the insurance.096. III THE COURT OF APPEALS ERRED IN NOT APPLYING THE DOCTRINE OF THE SUPREME COURT IN THE CASE OF HOME INSURANCE CORPORATION V. The subsequent motion for reconsideration of herein petitioner was denied by the appellate court. It theorized that when private respondent paid Caltex the value of its lost cargo.635. After the trial and upon analyzing the evidence adduced. the wind speed remained at 10 to 20 knots per hour while the waves measured from . On August 14. by the Court of Appeals. Subsequently.3 The decision of the trial court. the private respondent demanded of the petitioner the same amount it paid to Caltex.7 to two (2) meters in height only in the vicinity of the Panay Gulf where the subject vessel sank. MT Maysum set sail from Batangas for Zamboanga City. which states that in every marine insurance upon a ship or freight. the trial court rendered a decision on November 29. was reversed. for collection of a sum of money. Branch 137. The appellate court gave credence to the weather report issued by the Philippine Atmospheric.5 to wit: I THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE REGIONAL TRIAL COURT. the act of the private respondent is equivalent to a tacit recognition that the ill-fated vessel was seaworthy. or freightage. private respondent was not legally liable to Caltex due to the latter‘s breach of implied warranty under the marine insurance policy that the vessel was seaworthy. MT Maysum. MT Maysun 2.314 kiloliters of industrial fuel oil of Caltex to be delivered to the Caltex Oil Terminal in Zamboanga City. or upon any thin which is the subject of marine insurance there is an implied warranty by the shipper that the ship is seaworthy. otherwise. in contrast to herein petitioner‘s allegation that the waves were twenty (20) feet high. was seaworthy to undertake the voyage as determined by the Philippine Coast Guard per Survey Certificate Report No. In the absence of any explanation as to what may have caused the sinking of the vessel coupled with the finding that the same was improperly manned. The trial court found that the vessel. M5-016-MH upon inspection during its annual dry-docking and that the incident was caused by unexpected inclement weather condition or force majeure. 1986. American Home Assurance Corporation. Unfortunately. private respondent paid Caltex the sum of Five Million Ninety-Six Thousand Six Hundred Thirty-Five Pesos and Fifty-Seven Centavos (P5. 1986 near Panay Gulf in the Visayas taking with it the entire cargo of fuel oil. . the appellate court ruled that the petitioner is liable on its obligation as common carrier4 to herein private respondent insurance company as subrogee of Caltex. COURT OF APPEALS.

was allegedly not qualified. according to all the circumstance of each case. common carriers are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of passengers transported by them. extends to the vessel‘s complement. If the amount paid by the insurance company does not fully cover the injury or loss. he was qualified to act as the vessel‘s chief officer under Chapter IV(403).10 Consequently.9 It is not dependent upon. 11 In the event of loss. and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of.6 In any event. CA. It is designed to promote and to accomplish justice and is the mode which equity adopts to compel the ultimate payment of a debt by one who in justice and good conscience ought to pay. Besides. The right of subrogation has its roots in equity. We rule in the negative on both issues. common carriers shall be responsible . nor does it grow out of. the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. Category III(a)(3)(ii)(aa) of the Philippine Merchant Marine Rules and Regulations.8 Article 2207 of the New civil Code provides that: Art. petitioner further avers that private respondent failed. Hence. any privity of contract or upon written assignment of claim. Francisco Berina. all the crew and officers of MT Maysun were exonerated in the administrative investigation conducted by the Board of Marine Inquiry after the subject accident. the legal issues posed before the Court are: I Whether or not the payment made by the private respondent to Caltex for the insured value of the lost cargo amounted to an admission that the vessel was seaworthy. which the private respondent admitted as having been fulfilled by its payment of the insurance proceeds to Caltex of its lost cargo. the payment made by the private respondent (insurer) to Caltex (assured) operates as an equitable assignment to the former of all the remedies which the latter may have against the petitioner.The petitioner also alleges that the Court of Appeals erred in ruling that MT Maysun was not seaworthy on the ground that the marine officer who served as the chief mate of the vessel. The payment made by the private respondent for the insured value of the lost cargo operates as waiver of its (private respondent) right to enforce the term of the implied warranty against Caltex under the marine insurance policy. to present in evidence during the trial of the instant case the subject marine cargo insurance policy it entered into with Caltex. the same cannot be validly interpreted as an automatic admission of the vessel‘s seaworthiness by the private respondent as to foreclose recourse against the petitioner for any liability under its contractual obligation as a common carrier. destruction or deterioration of the insured goods. Under Section 116 of the Insurance Code of the Philippines. 2207. the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. petitioner avers that although Berina had merely a 2nd officer‘s license. It accrues simply upon payment by the insurance company of the insurance claim. From the nature of their business and for reasons of public policy. By virtue of the doctrine laid down in the case of Home Insurance Corporation vs. If the plaintiff‘s property has been insured. for unknown reason. II Whether or not the non-presentation of the marine insurance policy bars the complaint for recovery of sum of money for lack of cause of action. However. the implied warranty of seaworthiness of the vessel. The fact of payment grants the private respondent subrogatory right which enables it to exercise legal remedies that would otherwise be available to Caltex as owner of the lost cargo against the petitioner common carrier.7 the failure of the private respondent to present the insurance policy in evidence is allegedly fatal to its claim inasmuch as there is no way to determine the rights of the parties thereto. thus precluding any action for recovery against the petitioner. In fact.

petitioner attributes the sinking of MT Maysun to fortuitous even or force majeure. repeatedly buffeted MT Maysun causing it to tilt. (2-A Benedict on Admiralty. It does not in any way operate to absolve the petitioner common carrier from its civil liability arising from its failure to observe extraordinary diligence in the vigilance over the goods it was transporting and for the negligent acts or omissions of its employees.7 to two (2) meters in the vicinity of Cuyo East Pass and Panay Gulf where the subject vessel sank. captain and chief mate. the determination of which properly belongs to the courts. petitioner is liable for the insured value of the lost cargo of industrial fuel oil belonging to Caltex for its failure to rebut the presumption of fault or negligence as . And also: Authorities are clear that diligence in securing certificates of seaworthiness does not satisfy the vessel owner‘s obligation. that at around 3:15 o‘clock in the morning a squall ("unos") carrying strong winds with an approximate velocity of 30 knots per hour and big waves averaging eighteen (18) to twenty (20) feet high. The appellate court also correctly opined that the petitioner‘s witnesses. the exoneration of MT Maysun‘s officers and crew by the Board of Marine Inquiry merely concerns their respective administrative liabilities. the vessel MT Maysun. destroyed or deteriorated.12 In all other cases. storm. 1986. Thus. The certificates issued. It does not in any way operate to absolve the petitioner common carrier from its civil liabilities. as the appellate court correctly ruled. Also securing the approval of the shipper of the cargo.)17 Additionally. Neither may petitioner escape liability by presenting in evidence certificates16 that tend to show that at the time of dry-docking and inspection by the Philippine Coast Guard. (Ibid. ship captain and chief mate. do not negate the presumption of unseaworthiness triggered by an unexplained sinking. sank with its entire cargo for the reason that it was not seaworthy. was effectively rebutted and belied by the weather report15 from the Philippine Atmospheric. the wind speed remained at ten (10) to twenty (20) knots per hour while the height of the waves ranged from . showing that from 2:00 o‘clock to 8:00 o‘clock in the morning on August 16. common carriers are presumed to have been at fault or to have acted negligently. There was no squall or bad weather or extremely poor sea condition in the vicinity when the said vessel sank. 62). Sec. of the condition of the vessel or her stowage does not establish due diligence if the vessel was in fact unseaworthy. the herein petitioner common carrier. it appears that a sudden and unexpected change of weather condition occurred in the early morning of August 16. was fit for voyage. earthquake. 1986. if the goods are lost. however.unless the same is brought about. respectively of the ill-fated vessel. lightning or other natural disaster or calamity.18 In the case at bar. the ship may have appeared fit. of the said vessel. From the testimonies of Jaime Jarabe and Francisco Berina. As correctly observed by the Court of appeals: At the time of dry-docking and inspection. Jaime Jarabe and Francisco Berina. could not be expected to testify against the interest of their employer. petitioner‘s vessel. respectively. by flood. for the cargo owner has no obligation in relation to seaworthiness. 14 This tale of strong winds and big waves by the said officers of the petitioner however. or his surveyor. MT Maysun. Geophysical and Astronomical Services Administration (PAGASA). take in water and eventually sink with its cargo. among others. unless they prove that they observed extraordinary diligence. (thus): Seaworthiness relates to a vessel‘s actual condition.13 In order to escape liability for the loss of its cargo of industrial fuel oil belonging to Caltex. These pieces of evidence do not necessarily take into account the actual condition of the vessel at the time of the commencement of the voyage. Neither the granting of classification or the issuance of certificates established seaworthiness. 7-3. authorities are likewise clear as to their probative value. the independent government agency charged with monitoring weather and sea conditions. Of certificates issued in this regard.

second. in the case at bar.. In contrast. from the arrastre operator to the hauler. and Buena. and lastly. there is no doubt that the cargo of industrial fuel oil belonging to Caltex. Anent the second issue. fourth. from the M/S Oriental Statesman to the M/S Pacific Conveyor. J. since no evidence was adduced indicating at what stage in the handling process the damage to the cargo was sustained. our ruling on the presentation of the insurance policy in the said case of Home Insurance Corporation is not applicable to the case at bar. from the hauler to the consignee.. petitioner. 112350 December 12. SO ORDERED. vs. Hence. petitioner. from the port of arrival to the arrastre operator. CV No. is sufficient to establish not only the relationship of herein private respondent as insurer and Caltex. Mabuhay Brokerage Co. 1997 VLASONS SHIPPING. which sank while in transit in the vicinity of Panay Gulf and Cuyo East Pass in the early morning of August 16. from the M/S Pacific Conveyor to the port or arrival.common carrier19 occasioned by the unexplained sinking of its vessel. The right of subrogation accrues simply upon payment by the insurance company of the insurance claim. CA21 (a case cited by petitioner) because the shipment therein (hydraulic engines) passed through several stages with different parties involved in each stage. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G. from the shipper to the port of departure. No. MT Maysun. Inc. 112287 December 12. Ordinarily. the hauler can be liable only for any damage that occurred from the time it received the cargo until it finally delivered it to the consignee. We emphasized in that case that in the absence of proof of stipulations to the contrary. COURT OF APPEALS AND VLASONS SHIPPING. the instant petition is DENIED. as the assured shipper of the lost cargo of industrial fuel oil. it is our view and so hold that the presentation in evidence of the marine insurance policy is not indispensable in this case before the insurer may recover from the common carrier the insured value of the lost cargo in the exercise of its subrogatory right. concur. while in transit. WHEREFORE. Mendoza. vs. The .R. Quisumbing. (private respondent therein). The Decision dated June 17. was lost while on board petitioner‘s vessel. No.R. The insurance contract. The subrogation receipt. Bellosillo. MT Maysun. First.20 The presentation of the insurance policy was necessary in the case of Home Insurance Corporation v. JJ.. Costs against the petitioner. but also the amount paid to settle the insurance claim. G. INC. sixth. 1997 NATIONAL STEEL CORPORATION.R. from the port of departure to the M/S Oriental Statesman. 1996 of the Court of Appeals in CA-G. it cannot be held responsible for the handling of the cargo before it actually received it. 39836 is AFFIRMED.: The Court finds occasion to apply the rules on the seaworthiness of private carrier. respondents. third. COURT OF APPEALS AND NATIONAL STEEL CORPORATION. respondents. which was not presented in evidence in that case would have indicated the scope of the insurer‘s liability. INC. PANGANIBAN. its owner's responsibility for damage to the cargo and its liability for demurrage and attorney's fees. by itself. if any. 1986. fifth..

(Weather Working Day of 24 consecutive hours. It is undisputed that the ship is a private carrier. 23317. Inc. under the following terms and conditions. entered into a Contract of Voyage Charter Hire (Exhibit "B". . Payment upon presentation of Bill of Lading within fifteen (15) days.00 as unpaid freight and P88. as such. . . Other terms: (a) All terms/conditions of NONYAZAI C/P [sic] or other internationally recognized Charter Party Agreement shall form part of this Contract.000. Inc. premises considered. viz: 1. . Except as thus modified. Branch 163 in Civil Case No. the decision is AFFIRMED. xxx xxx xxx . Shipowners not responsible for losses/damages except on proven willful negligence of the officers of the vessel. 1974. Sundays and Holidays Included). Attorney's fees and expenses of litigation in the sum of P100. the Court of Appeals ruled: WHEREFORE. The RTC disposed as follows: WHEREFORE. Manila. 3.000. The Case Before us are two separate petitions for review filed by National Steel Corporation (NSC) and Vlasons Shipping. are binding on this Court. .00 and deleting the award for attorney's fees and expenses of litigation. Freight/Payment: P30. 4.. Vlasons Shipping.00/P4. the MV "VLASONS I" to make one (1) voyage to load steel products at Iligan City and discharge them at North Harbor.00 per day. 3 The Facts The MV Vlasons I is a vessel which renders tramping service and. and ordering plaintiff to pay the defendant on the counterclaim as follows: 1. Laydays/Cancelling: July 26. Cargo Insurance: Charterer's and/or Shipper's must insure the cargoes. 1976 until the same shall have been fully paid. Metro Manila. SO ORDERED. There is no pronouncement as to costs. FIOST basis. 10% more or less at Master's option. 2.500 MT. Its services are available only to specific persons who enter into a special contract of charter party with its owner. (VSI). 6. And it is in the capacity that its owner. the decision appealed from is modified by reducing the award for demurrage to P44.00 as demurrage with interest at the legal rate on both amounts from April 7. . judgment is hereby rendered in favor of defendant and against the plaintiff dismissing the complaint with cost against plaintiff.00/metric ton.000.00. when affirmed by the Court of Appeals.000. 2 On the other hand. 1974. Inc. also Exhibit "1") whereby NSC hired VSI's vessel. 8. 1 The Court of Appeals modified the decision of the Regional Trial Court of Pasig.000.000. . Demurrage/Dispatch: P8. both of which assail the August 12. SO ORDERED. Cargo: Full cargo of steel products of not less than 2. 10. 1974/Aug. . Loading/Discharging Rate: 750 tons per WWDSHINC. 5. entered into a contract of affreightment or contract of voyage charter hire with National Steel Corporation. 9. (VSI) as Owner. and 3. plaintiff National Steel Corporation (NSC) as Charterer and defendant Vlasons Shipping. Costs of suit. 1993 Decision of the Court of Appeals. 5. . does not transport cargo or shipment for the general public. 2.Court also reiterates the well-known rule that findings of facts of trial courts. The facts as found by Respondent Court of Appeals are as follows: (1) On July 17. The sum of P75. 7.

In a letter to the NSC dated March 17. nearly all the skids of tinplates and hot rolled sheets were allegedly found to be wet and rusty. NSC called for a survey of the shipment by the Manila Adjusters and Surveyors Company (MASCO). it is provided that "(o)wners shall. Chief Mate Gonzalo Sabando. Mesa. Testing Laboratories issued Report No. No. fit and safe for its reception. . any other cause arising without the actual fault or privity of Owners or without the fault of the agents or servants of owners. . both while it was still on board the vessel and later at the NDC warehouse in Pureza St. it states. 1974. when the vessel's three (3) hatches containing the shipment were opened by plaintiff's agents. Manila where the cargo was taken and stored.I. 1974. . exercise due diligence to make the vessel seaworthy and properly manned. 1974. . The following day. latent defects not discoverable by due diligence. The shipment was placed in the three (3) hatches of the ship. On August 31. acting as agent of the vessel[. which means that the handling. on August 12. 1974. dangers and accidents of the sea or other navigable waters. the M. . Under paragraph 10 thereof. wastage in bulk or weight or any other loss or damage arising from inherent defect. .P. the MV "VLASONS I" loaded at plaintiffs pier at Iligan City. that container/metal casings of the skids were rusting all over. in accordance with the Contract of Voyage Charter Hire. 0233 (Exhibit "D") on August 8." (2) On August 6. North Harbor. 1974..S. equipped and supplied and to make the holds and all other parts of the vessel in which cargo is carried. the NSC's shipment of 1. loading and unloading of the cargoes are the responsibility of the Charterer. chafing and/or any damage unless caused by the negligence or default of the master and crew. .The terms "F." which is used in the shipping business is a standard provision in the NANYOZAI Charter Party which stands for "Freight In and Out including Stevedoring and Trading".] acknowledged receipt of the cargo on board and signed the corresponding bill of lading. .T. 1974 after incurring a delay of eleven (11) days due to the heavy rain which interrupted the unloading operations. B.I. . . Owners shall not be liable for loss of or damage of the cargo arising or resulting from: unseaworthiness unless caused by want of due diligence on the part of the owners to make the vessel seaworthy. MASCO ventured the opinion that "rusting of the tinplates was caused by contact with SEA WATER sustained while still on board the vessel as a consequence of the heavy weather and rough seas encountered while en route to destination (Exhibit "F"). Testing Laboratories for analysis. Sta. and to secure that the vessel is properly manned.481. 1770 . . Unloading was completed only on August 24. (3) The vessel arrived with the cargo at Pier 12. Manila. fit and safe for its reception. equipped and supplied and to make the holds and all other parts of the vessel in which cargo is carried.677 skids of tinplates and 92 packages of hot rolled sheets or a total of 1. (Emphasis supplied). quality or vice of the cargo. MASCO reported that it found wetting and rusting of the packages of hot rolled sheets and metal covers of the tinplates. The cargo was discharged and unloaded by stevedores hired by the Charterer. 7 and 8.19 metric tons for carriage to Manila.T. insufficiency of packing. .P. "Charterers to load. that tarpaulin hatch covers were noted torn at various extents. (Exhibit "E") (4) To determine the nature and extent of the wetting and rusting. MASCO made a report of its ocular inspection conducted on the cargo.O. before and at the beginning of the voyage. Under Paragraph 5 of the NANYOZAI Charter Party.769 packages with a total weight of about 2. . 1975 (Exhibit "G"). August 13. carriage and preservation. perils. stow and discharge the cargo free of risk and expenses to owners. . It was also reported that MASCO's surveyors drew at random samples of bad order packing materials of the tinplates and delivered the same to the M. carriage and preservation." Paragraph 12 of said NANYOZAI Charter Party also provides that "(o)wners shall not be responsible for split.L. .T.I.

1974.000.00 per day for demurrage. that furthermore the Voyage Charter Party provides that loading and discharging of the cargo was on FIOST terms which means that the vessel was free of risk and expense in connection with the loading and discharging of the cargo. (6) In its complaint. shows that wetting was caused by contact with SEA WATER". that in the course of the voyage from Iligan City to Manila. (7) In its answer. causing strong winds and big waves to continuously pound against the vessel and seawater to overflow on its deck and hatch covers. 23317.145. The vessel was on demurrage for eleven (11) days in Manila waiting for plaintiff to discharge its cargo from the vessel. . on the basis of the aforesaid Report No. plaintiff formally demanded payment of said claim but defendant VSI refused and failed to pay. it alleged the following counterclaim: (a) That despite the full and proper performance by defendant of its obligations under the Voyage Charter Hire Contract. defendant shall not be responsible for losses/damages except on proven willful negligence of the officers of the vessel. 1976 which was docketed as Civil Case No. that the stevedores of plaintiff who discharged the cargo in Manila were negligent and did not exercise due care in the discharge of the cargo.145.(Exhibit "I") which in part. and that plaintiff's claim was highly speculative and grossly exaggerated and that the small stain marks or sweat marks on the edges of the tinplates were magnified and considered total loss of the cargo. Plaintiff filed its complaint against defendant on April 21. consequently. defendant denied liability for the alleged damage claiming that the MV "VLASONS I" was seaworthy in all respects for the carriage of plaintiff's cargo. plaintiff failed and refused to pay the agreed charter hire of P75. defendant is not liable. "The analysis of bad order samples of packing materials . CFI. In turn. . quality or vice of the cargo or to the insufficient packing thereof or to latent defect of the cargo not discoverable by due diligence or to any other cause arising without the actual fault or privity of defendant and without the fault of the agents or servants of defendant. Rizal. if any.000. fit and safe for its reception. plaintiff had agreed to pay defendant the sum of P8. states. that the damage. that said vessel was not a "common carrier" inasmuch as she was under voyage charter contract with the plaintiff as charterer under the charter party. strong winds and adverse weather condition. defendant claimed that it had complied with all its duties and obligations under the Voyage Charter Hire Contract and had no responsibility whatsoever to plaintiff. 1974. that under the Contract of Voyage Charter Hire. . 1770. plaintiff was liable to pay defendant demurrage in the total amount of P88. neglect and default of the master and crew in the management of the vessel as well as the want of due diligence on the part of the defendant to make the vessel seaworthy and to make the holds and all other parts of the vessel in which the cargo was carried. was due to the inherent defect.18 as a result of the act. Finally. the MV "VLASONS I" encountered very rough seas. Then on October 3.00 despite demands made by defendant.00.000. land that the cargo was exposed to rain and seawater spray while on the pier or in transit from the pier to plaintiff's warehouse after discharge from the vessel. that the officers of said MV "VLASONS I" exercised due diligence and proper seamanship and were not willfully negligent. plaintiff filed with the defendant its claim for damages suffered due to the downgrading of the damaged tinplates in the amount of P941. Thus. carriage and preservation — all in violation of defendant's undertaking under their Contract of Voyage Charter Hire. plaintiff claimed that it sustained losses in the aforesaid amount of P941. (b) That under their Voyage Charter Hire Contract. (5) On September 6.18.

00. the NIPPON KAIJI KYOKAI (Exh. "6"). As to the damage to the tinplates which was allegedly due to the wetting and rusting thereof. It was shown as claimed by plaintiff that the tinplates themselves were wrapped in kraft paper lining and corrugated cardboards could not be affected by water from outside. "12"). Coastwise License from the Board of Transportation (Exh. defendant cannot be held liable for it pursuant to Article 1734 of the Civil Case which exempts the carrier from responsibility for loss or damage arising from the "character of the goods . equipped and supplied when it undertook the voyage." All the 1. The hatch covers were water tight.769 skids of the tinplates could not have been damaged by water as claimed by plaintiff. "9"). and Certificate of Approval for Conversion issued by the Bureau of Customs (Exh.000. "4"). That being a vessel engaged in both overseas and coastwise trade. Cargo Ship Safety Equipment Certificate also from the Philippine Coast Guard (Exh. the MV "VLASONS I" has a higher degree of seaworthiness and safety. Ship Radio Station License (Exh. It has all the required certificates of seaworthiness. (d) The cargo/shipment was securely stowed in three (3) hatches of the ship. The provisions of the Civil Code on common carriers pursuant to which there exists a presumption of negligence in case of loss or damage to the cargo are not applicable. (8) From the evidence presented by both parties. The evidence shows that the MV "VLASONS I" was seaworthy and properly manned. Certificate of Inspection by the Philippine Coast Guard (Exh. plaintiff should be ordered to pay defendant attorney's fees and all expenses of litigation in the amount of not less than P100. there is unrebutted testimony of witness Vicente Angliongto that tinplates "sweat" by themselves when packed even without being in contract (sic) with water from outside especially when the weather is bad or raining. (e) The claim of the plaintiff that defendant violated the contract of carriage is not supported by evidence. International Loadline Certificate from the Philippine Coast Guard (Exh. The hatch openings were covered by hatchboards which were in turn covered by two or double tarpaulins. the MV "VLASONS I" underwent drydocking in Cebu and was thoroughly inspected by the Philippine Coast Guard. (c) Before it proceeded to Iligan City to perform the voyage called for by the Contract of Voyage Charter Hire. "7"). under the hatchboards were steel beams to give support. subject voyage was the vessel's first voyage after the drydocking. "8"). . "1"). . In fact. Furthermore. the MV VLASONS I" was covered by the required seaworthiness certificates including the Certification of Classification issued by an international classification society.(c) For filing a clearly unfounded civil action against defendant. "5"). . the trial court came out with the following findings which were set forth in its decision: (a) The MV "VLASONS I" is a vessel of Philippine registry engaged in the tramping service and is available for hire only under special contracts of charter party as in this particular case. The trust caused by sweat or moisture on the tinplates may be considered as a loss or damage but then. (b) That for purposes of the voyage covered by the Contract of Voyage Charter Hire (Exh.

Pursuant to paragraph 5 of the NANYOSAI [sic] Charter Party which was expressly made part of the Contract of Voyage Charter Hire. Plaintiff also violated the charter party contract when it loaded not only "steel products".(f) The stevedores hired by the plaintiff to discharge the cargo of tinplates were negligent in not closing the hatch openings of the MV "VLASONS I" when rains occurred during the discharging of the cargo thus allowing rainwater to enter the hatches. rainwater drifted into the cargo through the hatch openings. and that there is no proof of willful negligence of the vessel's officers. steel bars. stowing and discharging of the cargo is the sole responsibility of the plaintiff charterer and defendant carrier has no liability for whatever damage may occur or maybe [ sic] caused to the cargo in the process. "15"). the loading. II The trial court erred in finding that the rusting of NSC's tinplates was due to the inherent nature or character of the goods and not due to contact with seawater. IV . Plaintiff has not paid the total freight due of P75.000. equipped and supplied. 1974 (Exh. III The trial court erred in finding that the stevedores hired by NSC were negligent in the unloading of NSC's shipment. i. Appealing the RTC decision to the Court of Appeals. Dumlao) filed a "Marine Protest" on August 13. (h) Plaintiff did not comply with the requirement prescribed in paragraph 9 of the Voyage Charter Hire contract that it was to insure the cargo because it did not.e. It was proven that the stevedores merely set up temporary tents to cover the hatch openings in case of rain so that it would be easy for them to resume work when the rains stopped by just removing the tent or canvas. The evidence also showed that the plaintiff was required and bound under paragraph 7 of the same Voyage Charter Hire contract to pay demurrage of P8. which can be invoked by defendant as a force majeure that would exempt the defendant from liability.00 despite demands. the contract of voyage charter hire under Paragraph 4 thereof. Antonio C. properly manned.00. (i) As regards defendant's counterclaim.00 per metric ton payable to defendant carrier upon presentation of the bill of lading within fifteen (15) days. fixed the freight at P30.00 per day of delay in the unloading of the cargoes. then it could have recovered its loss or damage from the insurer. Thus plaintiff was able to ship grade cargo at a lower freight rate.000. (g) It was also established that the vessel encountered rough seas and bad weather while en route from Iligan City to Manila causing sea water to splash on the ship's deck on account of which the master of the vessel (Mr. angular bars and the like but also tinplates and hot rolled sheets which are high grade cargo commanding a higher freight. NSC alleged six errors: I The trial court erred in finding that the MV "VLASONS I" was seaworthy. Had plaintiff complied with the requirement. Because of this improper covering of the hatches by the stevedores during the discharging and unloading operations which were interrupted by rains.000. The delay amounted to eleven (11) days thereby making plaintiff liable to pay defendant for demurrage in the amount of P88.

000. NSC and VSI filed separate motions for reconsideration. 9 VSI submits for the consideration of this Court the following alleged errors of the CA: A. 8 NSC raises the following questions of law and fact: Questions of Law 1. Whether or not the terms and conditions of the Contract of Voyage Charter Hire. 3.000. the Court ordered on February 14. Undaunted. In a Resolution 5 dated October 20. 1994 the consolidation of these petitions. 2. VSI raises the following issues in its memorandum: 10 I. On motion of VSI.00 to P44. Whether or not the vessel was seaworthy and cargo-worthy.00 and deleting the award of attorneys fees and expenses of litigation. to VSI. except in respect of the demurrage. NSC and VSI filed their respective petitions for review before this Court.000 for attorney's fees and expenses of litigation. Amplifying the foregoing. Whether or not the provisions of the Civil Code of the Philippines on common carriers pursuant to which there exist[s] a presumption of negligence against the common carrier in case of loss or damage to the cargo are applicable to a private carrier.The trial court erred in exempting VSI from liability on the ground of force majeure. II. "4". Admissibility of Certificates Proving Seaworthiness 4. "6". "9". Whether or not a charterer's failure to insure its cargo exempts the shipowner from liability for cargo damage. including the Nanyozai Charter. 4 As earlier stated.000. "11" and "12") were admissible in evidence and constituted evidence of the vessel's seaworthiness at the beginning of the voyages. 6 The Issues In its petition 7 and memorandum. The foregoing issues raised by the parties will be discussed under the following headings: 1. Questions of Fact 1. V The trial court erred in finding that NSC violated the contract of voyage charter hire. The respondent Court of Appeals committed an error of law in reducing the award of demurrage from P88. Questions of Fact 2. Whether or not vessel's officers and crew were negligent in handling and caring for NSC's cargo. In its separate petition. "8". B.000. Whether or not the alleged "seaworthiness certificates" (Exhibits "3". the appellate court denied both motions. "7". Preliminary Matter: Common Carrier or Private Carrier? . the Court of Appeals modified the decision of the trial court by reducing the demurrage from P88. The respondent Court of Appeals committed an error of law in deleting the award of P100. Demurrage and Attorney's Fees. demurrage and attorney's fees. The Court's Ruling The Court affirms the assailed Decision of the Court of Appeals. 2.00. hence. and 4. rusted on their own.00 to P44. and 3. 1993. are valid and binding on both contracting parties. "5". Whether or not NSC's stevedores were negligent and caused the wetting[/]rusting of NSC's tinplates. Effect of NSC's Failure to Insure the Cargo 3. Whether or not a charterer of a vessel is liable for demurrage due to cargo unloading delays caused by weather interruption. VI The trial court erred in ordering NSC to pay freight. Whether or not NSC's cargo of tinplates did sweat during the voyage and.

1974. the stringent provisions of the Civil Code on common carriers protecting the general public cannot justifiably be applied to a ship transporting commercial goods as a private carrier. the public policy embodied therein is not contravened by stipulations in a charter party that lessen or remove the protection given by law in contracts involving common carriers. corporations." The NANYOZAI Charter Party. chafing and/or any damage unless caused by the negligence or default of the master or crew. the burden of proof was placed on NSC by the parties' agreement." It has been held that the true test of a common carrier is the carriage of passengers or goods. private carriage does not involve the general public. which was incorporated in the parties' contract of transportation further provided that the shipowner shall not be liable for loss of or a damage to the cargo arising or resulting from unseaworthiness. fit and safe for its reception. Hence. 17 Extent of VSI's Responsibility and Liability Over NSC's Cargo It is clear from the parties' Contract of Voyage Charter Hire. obtains the use and service of all or some part of a ship for a period of time or a voyage or voyages. water. a party other than the shipowner. 15Recently. are determined primarily by stipulations in their contract of private carriage or charter party. Unlike in a contract involving a common carrier. if the contrary has not been expressly stipulated. Article 1732 of the Civil Code defines a common carrier as "persons. The most typical. it is undisputed that VSI did not offer its services to the general public. it is essential to establish whether VSI contracted with NSC as a common carrier or as a private carrier." 12 In the instant case. Consequently. firms or associations engaged in the business of carrying or transporting passengers or goods or both. 16 the Court ruled: . 361." 19 Burden of Proof In view of the aforementioned contractual stipulations. provided it has space. equipped and supplied. As found by the Regional Trial Court. is the charter party." 18 The NANYOZAI Charter Party also provided that "[o]wners shall not be responsible for split. dated July 17. carrying and safekeeping the cargo. for all who opt to avail themselves of its transportation service for a fee. in a contract of private carriage. private carriage is undertaken by special agreement and the carrier does not hold himself out to carry goods for the general public." 14 Consequently. it carried passengers or goods only for those it chose under a "special contract of charter party. 11 A carrier which does not qualify under the above test is deemed a private carrier. Inc. offering their services to the public.At the outset. Court of Appeals and Seven Brothers Shipping Corporation. including their respective liability for damage to the cargo. or air. for compensation. the rights and obligations of VSI and NSC." 13 As correctly concluded by the Court of Appeals. . in Valenzuela Hardwood and Industrial Supply. vs. Merchandise shall be transported at the risk and venture of the shipper. carriage and preservation. the MV Vlasons I "was not a common but a private carrier. The resolution of this preliminary question determines the law. Ineluctably." and to "make the holds and all other parts of the vessel in which cargo [was] carried. by land. . unless the same was caused by its lack of due diligence to make the vessel seaworthy or to ensure that the same was "properly manned. NSC must prove that the damage to its shipment was caused by VSI's willful negligence or failure to exercise due diligence in making MV Vlasons I seaworthy and fit for holding.. standard of diligence and burden of proof applicable to the present case. . that VSI "shall not be responsible for losses except on proven willful negligence of the officers of the vessel. "Generally. although not the only form of private carriage. a maritime contract by which the charterer. This view finds further support in the Code of Commerce which pertinently provides: Art. the parties may freely stipulate their duties and obligations which perforce would be binding on them.

the Court of Appeals correctly found the NSC "has not taken the correct position in relation to the question of who has the burden of proof. It is a hornbook doctrine that: In an action against a private carrier for loss of. due to fortuitous event. Art. Thus. The carrier. the burden is on the plaintiff to prove that the carrier was negligent or unseaworthy. however. Since . shall be liable for damages arising from the cause mentioned in the preceding article if proofs against him show that they occurred on account of his negligence or his omission to take the precautions usually adopted by careful persons. such inferences and presumptions. and its failure to do so warrants an inference or presumption of its liability. while they may affect the burden of coming forward with evidence. and the fact that the goods were lost or damaged while in the carrier's custody does not put the burden of proof on the carrier. after citing Clause 10 and Clause 12 of the NANYOZAI Charter Party (incidentally plaintiffappellant's [NSC's] interpretation of Clause 12 is not even correct). . (2) whether the damage to the cargo should be attributed to the willful negligence of the officers and crew of the vessel or of the stevedores . cargo while in the carrier's possession does not cast on it the burden of proving proper care and diligence on its part or that the loss occurred from an excepted cause in the contract or bill of lading. plaintiff is entitled to the benefit of the presumptions and inferences by which the law aids the bailor in an action against a bailee. force majeure. where the carrier comes forward with evidence explaining the loss or damage. cargo. or the nature and inherent defect of the things." 21 First Issue: Questions of Fact Based on the foregoing. . or damage to. Where the action is based on the shipowner's warranty of seaworthiness. the law requires that it come forward with the information available to it. a private carrier is not an insurer but undertakes only to exercise due care in the protection of the goods committed to its care. . shall be for the account and risk of the shipper. the shipowner's obligations are governed by the foregoing provisions of the Code of Commerce and not by the Civil Code which. and proof that the goods were lost or damaged while in the carrier's possession does not cast on it the burden of proving seaworthiness. in its brief (pp. making him to believe that the goods were of a class or quality different from what they really were. the damage and impairment suffered by the goods during the transportation. 20 In the instant case. the burden of proving a breach thereof and that such breach was the proximate cause of the damage rests on plaintiff. However. the burden of going forward with the evidence is again on plaintiff. in discharging the burden of proof. However. do not alter the burden of proof which remains on plaintiff. Where the contract of carriage exempts the carrier from liability for unseaworthiness not discoverable by due diligence. as a general rule. the burden of proving negligence or a breach of that duty rests on plaintiff and proof of loss of. . the carrier has the preliminary burden of proving the exercise of due diligence to make the vessel seaworthy. it argues that 'a careful examination of the evidence will show that VSI miserably failed to comply with any of these obligation's as if defendant-appellee [VSI] had the burden of proof. 10-11). . the determination of the following factual questions is manifestly relevant: (1) whether VSI exercised due diligence in making MV Vlasons I seaworthy for the intended purpose under the charter party. unless the shipper committed fraud in the bill of lading.Therefore. or injury to. 362. and since the carrier is in a better position to know the cause of the loss and that it was not one involving its liability. and. The burden of proof of these accidents is on the carrier. Because the MV Vlasons I was a private carrier. places the prima faciepresumption of negligence on a common carrier.

25 The Court of Appeals itself sustained the conclusion of the trial court that MV Vlasons Iwas seaworthy. the NSC had the burden of proving that the damage to the cargo was caused by the negligence of the officers and the crew of MV Vlasons I in making their vessel seaworthy and fit for the carriage of tinplates.hired by NSC. and (3) whether the rusting of the tinplates was caused by its own "sweat" or by contact with seawater. the same are binding on this Court. as indeed NSC has not successfully proven the application of any of the aforecited exceptions. 1974. This is shown by the fact that it was drylocked and inspected by the Philippine Coast Guard before it proceeded to Iligan City for its voyage to Manila under the contract of voyage charter hire. that we re-secured the canvass covering back to position. Who Were Negligent: Seamen or Stevedores? As noted earlier. The Philippine Coast Guard Station in Cebu cleared it as seaworthy. subject to some exceptional instances. 23 only questions of law — not questions of fact — may be raised before this Court in a petition for review under Rule 45 of the Rules of Court. that in the afternoon of August 10. that while approaching Fortune Island. We find no reason to modify or reverse this finding of both the trial and the appellate courts.9 tons of steel plates and tin plates consigned to National Steel Corporation. the weather condition changed to worse and strong winds and big waves continued pounding the vessel at her port side causing sea water to overflow on deck andhatch (sic) covers and which caused the first layer of the canvass covering to give way while the new canvass covering still holding on. That the M/V "VLASONS I" departed Iligan City or about 0730 hours of August 8. Jose Pascua. that in the morning of August 10. NSC failed to discharge this burden. which had the firsthand opportunity to hear the parties' conflicting claims and to carefully weigh their respective evidence. Was MV Vlasons I Seaworthy? In any event. and the deposition of the ship's boatswain. 22 We stress that. The foregoing are clear from the marine protest of the master of the MV Vlasons I. that before departure. 1974. It faults the Court of Appeals for failing to consider such claim as an "uncontroverted fact" 26 and denies that MV Vlasons I "was equipped with new canvas covers in tandem with the old ones as indicated in the Marine Protest . After a thorough review of the case at bar. the vessel was rigged.487. . while entering Maricaban Passage. 1974. Before us. we encountered very rough seas and strong winds and Manila office was advised by telegram of the adverse weather conditions encountered. The records sufficiently support VSI's contention that the ship used the old tarpaulin. we were again exposed to moderate seas and heavy rains. . NSC relies heavily on its claim that MV Vlasons I had used an old and torn tarpaulin or canvas to cover the hatches through which the cargo was loaded into the cargo hold of the ship. that on or about August 9. Antonio C. fully equipped and cleared by the authorities. we find no reason to disturb the lower court's factual findings. the records reveal that VSI exercised due diligence to make the ship seaworthy and fit for the carriage of NSC's cargo of steel and tinplates. it met all requirements for trading as cargo vessel. fitted and equipped. Where the factual findings of both the trial court and the Court of Appeals coincide. we encountered . . That the weather condition improved when we reached Dumali Point protected by Mindoro. The findings of the trial court were subsequently affirmed by the Court of Appeals. loaded with approximately 2." 27 We disagree. The salient portions of said marine protest read: . Dumlao. only in addition to the new one used primarily to make the ship's hatches watertight. 1974. These questions of fact were threshed out and decided by the trial court. 24 The vessel's voyage from Iligan to Manila was the vessel's first voyage after drydocking. . while in the vicinity of the western part of Negros and Panay.

on top of the hatch boards. q Now. sir. q What is this beam made of? a It is made of steel. q And is there a space between the hatch boards? a There is none. . we find no reason not to sustain the conclusion of the lower court based on overwhelming evidence. sir. q And aside from the hatch board. How many canvas covers? a Two. with a little canvas flowing over the sides and we place[d] a flat bar over the canvas on the side of the hatches and then we place[d] a stopper so that the canvas could not be removed. sir. q Is the beam that was placed in the hatch opening covering the whole hatch opening? a No. the new tarpaulin did not give way and the ship's hatches and cargo holds remained waterproof. despite encountering rough weather twice. q They are tight together? a Yes. As aptly stated by the Court of Appeals. ". strong winds and big waves which caused the same canvass to give way and leaving the new canvass holding on. with a handle. ATTY DEL ROSARIO q And on top of the beams you said there is a hatch board. sir. sir. q How many hatch beams were there placed across the opening? a There are five beams in one hatch opening. 29 That due diligence was exercised by the officers and the crew of the MV Vlasons I was further demonstrated by the fact that. a Forty-five feet by thirty-five feet. according to you. q How tight? a Very tight. sir. q And will you describe how the canvas cover was secured on the hatch opening? WITNESS a It was placed flat on top of the hatch cover. sir. that the MV 'VLASONS I' was seaworthy when it undertook . xxx xxx xxx q How was the canvas supported in the middle of the hatch opening? a There is a hatch board. ATTY DEL ROSARIO q What is the hatch board made of? a It is made of wood. xxx xxx xxx 28 And the relevant portions of Jose Pascua's deposition are as follows: q What is the purpose of the canvas cover? a So that the cargo would not be soaked with water. . because there are several pieces on top of the hatch beam. is the canvass cover.again rough seas. How many pieces of wood are put on top? a Plenty. ATTY DEL ROSARIO q And will you tell us the size of the hatch opening? The length and the width of the hatch opening. sir. is there any other material there to cover the hatch? a There is a beam supporting the hatch board.

ATTY LOPEZ: Q What was used in order to protect the cargo from the weather? A A base of canvas was used as cover on top of the tin plates. upon my arrival at the vessel. . the transcript of stenographic notes shows the same was covered in the direct examination. NSC failed to discharge its burden to show negligence on the part of the officers and the crew of MV Vlasons I. COURT: All right. this is the serious part of the testimony. ATTY ZAMORA: Precisely. at the time they were discharging the cargo. . an officer of VSI. testified thus: ATTY ZAMORA: Q Now. . Port Area. is this procedure adopted by the stevedores of covering tents proper? A No. during your testimony on November 5. . 30 Indeed. will you describe [to] the Court the tents constructed. Vicente Angliongto. witness may answer. This tent-like covering. . we would like to go on detail.769 packages from NSC's pier in Iligan City arriving safely at North Harbor. did you chance to see the discharging operation? WITNESS: A Yes. 1974 carrying on board thereof plaintiff-appellant's shipment of 1. the records reveal that it was the stevedores of NSC who were negligent in unloading the cargo from the ship. where is the place. there was a typhoon passing by and the hatch tent was not good enough to hold all of it to prevent the water soaking through the canvass and enter the cargo. A The tents are just a base of canvas which look like a tent of an Indian camp raise[d] high at the middle with the whole side separated down to the hatch. Q In connection with these cargoes which were unloaded. . The stevedores employed only a tent-like material to cover the hatches when strong rains occasioned by a passing typhoon disrupted the unloading of the cargo. Manila. Q Now. you stated on August 14 you went on board the vessel upon notice from the National Steel Corporation in order to conduct the inspection of the cargo. all the hatches were opened. the size of the hatch and it is soaks [sic] at the middle because of those weather and this can be used only to temporarily protect the cargo from getting wet by rains. however.the voyage on August 8. This particular matter . I saw some of the tinplates already discharged on the pier but majority of the tinplates were inside the hall. your Honor. sir. A At the Pier. 1979. Q What was used to protect the same from weather? ATTY LOPEZ: We object. Now. this question was already asked. on August 12. On the contrary. 1974.677 skids of tinplates and 92 packages of hot rolled sheets or a total of 1. and tents were built at the opening of the hatches. sir. During the course of the investigation. Q You also stated that the hatches were already opened and that there were tents constructed at the opening of the hatches to protect the cargo from the rain. your Honor. was clearly inadequate for keeping rain and seawater away from the hatches of the ship.

Such negligence according to the trial court is evident in the stevedores hired by [NSC]. 1974. in a prudent manner. or loss of. In fact. about the negligent and defective procedure adopted in unloading the cargo. We see no reason to reverse the trial and the appellate courts' findings and conclusions on this point. Seven days lapsed because he first called the attention of the stevedores. the vessel is not liable for loss of. called the attention of the representative of the National Steel but nothing was done. "A stevedore company engaged in discharging cargo . Q As owner of the vessel. has the duty to load the cargo . [NSC] claims that the trial court erred in finding that the stevedores hired by NSC were negligent in the unloading of NSC's shipment." 34 as in the instant case. 32 The Court is not persuaded. then the NSC's representative. . . Anglingto [sic]. VSI President Vicente Angliongto wrote [NSC] calling attention to the manner the stevedores hired by [NSC] were discharging the cargo on rainy days and the improper closing of the hatches which allowed continuous heavy rain water to leak through and drip to the tinplates' covers and [Vicente Angliongto] also suggesting that due to four (4) days continuos rains with strong winds that the hatches be totally closed down and covered with canvas and the hatch tents lowered. did you not advise the National Steel Corporation [of] the procedure adopted by its stevedores in discharging the cargo particularly in this tent covering of the hatches? A Yes. the cargo caused by the negligence of the stevedores . the second time I went there. . . We do not think so. (Exh. I did the first time I saw it. It has also been shown that on August 20. . and where the officers and members and crew of the vessel do nothing and have no responsibility in the discharge of cargo by stevedores .Q In the course of your inspection. This letter was received by [NSC] on 22 August 1974 while discharging operations were still going on (Exhibit "13-A"). It was proven that the stevedores merely set up temporary tents or canvas to cover the hatch openings when it rained during the unloading operations so that it would be easier for them to resume work after the rains stopped by just removing said tents or canvass. did you see in fact the water enter and soak into the canvass and tinplates. "13"). Finally. from the stevedoring company at fault in the discharge operations. . This series of actions constitutes a reasonable response in accord with common sense and ordinary human experience. Do Tinplates "Sweat"? . Angliongto's candid answer in his aforequoted testimony satisfactorily explained the delay. I called the attention of the stevedores but the stevedores did not mind at all. sir. pointing out that he wrote his letter to petitioner only seven days later. it may be noted that the NSC may seek indemnification. In passing. A Yes. Vicente Angliongto could not be blamed for calling the stevedores' attention first and then the NSC's representative on location before formally informing NSC of the negligence he had observed. . so. he was merely expressing concern for NSC which was ultimately responsible for the stevedores it had hired and the performance of their task to unload the cargo. because he was not responsible for the stevedores or the unloading operations. . not closing the hatch of MV 'VLASONS I' when rains occurred during the discharging of the cargo thus allowing rain water and seawater spray to enter the hatches and to drift to and fall on the cargo. or damage to. . cargo caused by its negligence . subject to the laws on prescription. just the same. and it is liable for injury to. I wrote a letter to them. 33 The fact that NSC actually accepted and proceeded to remove the cargo from the ship during unfavorable weather will not make VSI liable for any damage caused thereby. . I saw it. Mr. sir. 31 NSC attempts to discredit the testimony of Angliongto by questioning his failure to complain immediately about the stevedores' negligence on the first day of unloading. viz: In the THIRD assigned error.

but they have not been proven by one who saw the writing executed. 9. or by evidence of the genuineness of the handwriting of the maker. 9. . . Flores to the effect that "the vessel 'VLASONS I' was drydocked . . while Exhibits 5. and 12 are photocopies. Certificate of Approval for Conversion issued by the Bureau of Customs 36 NSC argues that the certificates are hearsay for not having been presented in accordance with the Rules of Court. After completion of drydocking and duly inspected by PCG Inspectors. fitted and equipped for trading as a cargo vessel was cleared by the Philippine Coast Guard and sailed for Cebu Port on July 10. 11 and 12 are not "evidenced by official publications or certified true copies" as required by Sections 25 and 26. but their admission under the best evidence rule have not been demonstrated. Certificate of Inspection from the Philippine Coast Guard 3. NSC's failure to insure the cargo will not affect its right. as owner and real party in interest. . Clearly. areprima facie evidence of the facts therein stated. We do not find anything in the charter party that would make the liability of VSI for damage to the cargo contingent on or affected in any manner by NSC's obtaining an insurance over the cargo. 7. 8. Coastwise License from the Board of Transportation 5. the vessel was a private carrier and. At any rate. a cargo vessel. the vessel 'VLASONS I'. the damage to the tinplates was occasioned not by airborne moisture but by contact with rain and seawater which the stevedores negligently allowed to seep in during the unloading. it should be stressed that NSC has the burden of proving that MV Vlasons I was not seaworthy. that Exhibit 11 is admissible under a well-settled exception to the hearsay rule per Section 44 of Rule 130 of the Rules of Court. It points out that Exhibits 3. The said certificates include the following: 1. therefore. 1974. for they have not been properly offered as evidence. . as such. 6. however. Second Issue: Effect of NSC's Failure to Insure the Cargo The obligation of NSC to insure the cargo stipulated in the Contract of Voyage Charter Hire is totally separate and distinct from the contractual or statutory responsibility that may be incurred by VSI for damage to the cargo caused by the willful negligence of the officers and the crew of MV Vlasons I. Exhibits 3 and 4 are certificates issued by private parties. 6. meets all requirements. As previously discussed. 4 and 11 allegedly are "not written records or acts of public officers"." The Court of Appeals affirmed the trial court's finding. tinplates 'sweat' by themselves when packed even without being in contact with water from outside especially when the weather is bad or 35 raining . 9 and 12 are inadmissible. is in seaworthy condition. 8. 7. 5. As observed earlier. 6. Exhibits. 8. it did not have the . . We find. the Court rules that Exhibits 3. and PCG Inspectors were sent on board for inspection . of the Rules of Court. therefore. to file an action against VSI for damages caused by the latter's willful negligence. . A discussion of this issue appears inconsequential and unnecessary. is obviously misleading and erroneous. 4. 7. 5.The trial court relied on the testimony of Vicente Angliongto in finding that "." 38 Exhibit 11 is an original certificate of the Philippine Coast Guard in Cebu issued by Lieutenant Junior Grade Noli C." (sic) NSC's claim. Certificate of Inspection of the Philippines Coast Guard at Cebu 2. 37 After a careful examination of these exhibits. . which provides that "(e)ntries in official records made in the performance of a duty by a public officer of the Philippines. or by a subscribing witness. Third Issue: Admissibility of Certificates Proving Seaworthiness NSC's contention that MV Vlasons I was not seaworthy is anchored on the alleged inadmissibility of the certificates of seaworthiness offered in evidence by VSI. International Load Line Certificate from the Philippine Coast Guard 4. or by a person in the performance of a duty specially enjoined by law. Rule 132.

the contract of voyage charter hire provided for a four-day laytime. Clearly. Attorney's Fees VSI assigns as error of law the Court of Appeals' deletion of the award of attorney's fees. which was August 22. Loading/Discharging Rate: 750 tons per WWDSHINC. 1974 to August 24. . the only day of unloading unhampered by unfavorable weather or rain. . . Second. it was error for the trial court and the Court of Appeals to have found and affirmed respectively that NSC incurred eleven days of delay in unloading the cargo." 44 Moreover. . Indeed. . Assailing the genuineness of the certificate of seaworthiness is not sufficient proof that the vessel was not seaworthy. even if it reduced the amount by half. 1974. NSC may not be held liable for demurrage as the four-day laytime allowed it did not lapse. such finding is a reversible error. As mentioned. how and who caused the damage to the cargo? Ranged against NSC are two formidable truths. 41 In this case. 39 The Court defined demurrage in its strict sense as the compensation provided for in the contract of affreightment for the detention of the vessel beyond the laytime or that period of time agreed on for loading and unloading of cargo. NSC has not satisfactorily shown that this case is one of them. 10% more or less at Master's option. Cargo: Full cargo of steel products of not less than 2.00/P4. We disagree. 1974. when affirmed by the Court of Appeals. . Based on our previous discussion. ." this means days when the ship would be run continuously. the following is well-settled: Laytime runs according to the particular clause of the charter party. Demurrage/Dispatch: P8. it also qualified laytime as WWDSHINC or weather working days Sundays and holidays included. are binding on the Supreme Court. specifically August 13. 43 Consequently. and holidays are not excepted. While VSI was compelled to litigate to protect its rights. no sufficient showing of bad faith would be reflected in a party's persistence in a case other than an erroneous conviction of the righteousness of his cause . the respondent appellate court also erred in ruling that NSC was liable to VSI for demurrage. 45 Epilogue At bottom. attorney's fees may not be awarded to a party for the reason alone that the judgment rendered was favorable to the latter. 7.000. the agreement between the parties — the Contract of Voyage Charter Hire — placed the burden of proof for such loss or damage upon the shipper. NSC glaringly failed to discharge its duty of proving the willful negligence of VSI in making the ship seaworthy resulting in damage to its cargo. such fact by itself will not justify an award of attorney's fees under Article 2208 of the Civil Code when ".500 MT. as this is tantamount to imposing a premium on one's right to litigate or seek judicial redress of legitimate grievances. Fourth Issue: Demurrage and Attorney's Fees The contract of voyage charter hire provides inter alia: xxx xxx xxx 2. Basic is the rule that factual findings of the trial court. First. The trial court arrived at this erroneous finding by subtracting from the twelve days. and would cease to run in the event unfavorable weather interfered with the unloading of cargo. 42 The running of laytime was thus made subject to the weather.00 per day. On the other hand. xxx xxx xxx 6. this appeal really hinges on a factual issue: when. A qualification of "weather permitting" excepts only those days when bad weather reasonably prevents the work contemplated. . Although there are settled exceptions. 40 It is given to compensate the shipowner for the nonuse of the vessel. having been tolled by unfavorable weather condition in view of the WWDSHINC qualification agreed upon by the parties. both lower courts found that such damage was brought about during the unloading process when rain and seawater seeped through the cargo due to the fault or negligence of the stevedores employed by it.000.obligation of a common carrier to show that it was seaworthy. If laytime is expressed in "running days.

The charter party is a normal commercial contract and its stipulations are agreed upon in consideration of many factors. the instant consolidated petitions are hereby DENIED.Respondents. The facts.R. but she never left. JJ. Sanchez Street. as stated by the trial court. Narvasa. Petitioner was allowed to stay on the lot for free. Basic too is the doctrine that courts cannot relieve a parry from the effects of a private contract freely entered into. is covered by Transfer Certificate of Title (TCT) No. but on a temporary basis until such time that Concepcion and/or his family needed to develop the lot. DECISION PERALTA. 17973. THE ESTATE OF THE LATE ARSENIO E. 128924 issued by the Register of Deeds of Metro Manila. Petitioners. represented by NENITA S. Concepcion. No. Concepcion died on December 27. on the ground that it is allegedly one-sided or unfair to the plaintiff. filed a complaint for conciliation proceedings before the barangay at the instance of respondent. WHEREFORE. is valid because the parties entered into a contract of private charter. Concepcion established that she was the registered owner of the lot occupied by petitioner Angelina Soriente at No. In recognition of such factors. his family initiated steps to develop the lot. but petitioner‘s occupancy of the lot prevented them from pursuing their plan. No pronouncement as to costs. The lot. who acquired the lot in 1978. which had nothing to do with such failure or neglect. CONCEPCION. MC-03-407-A.not upon the shipowner.. Melo and Francisco. while disadvantageous to NSC. ordering petitioner to vacate the property. vs. 2003 of the Metropolitan Trial Court of Mandaluyong City. he allowed and tolerated the occupancy of the lot by petitioner. J. Metro Manila. Elizabeth Concepcion-Dela Cruz. with an area of 295 square meters. After Arsenio E. SO ORDERED. the . 637 Cavo F.3 are as follows: Respondent Nenita S. Such stipulation. C. However. That NSC failed or neglected to protect itself with such insurance should not adversely affect VSI. the parties even stipulated that the shipper should insure the cargo to protect itself from the risks it undertook under the charter party. During the lifetime of Arsenio E. premises considered.. Branch 213. In June 2000. Romero. Petitioner pleaded for time to transfer to another place. Mandaluyong City. 2009 ANGELINA SORIENTE and ALL OTHER PERSONS CLAIMING RIGHTS UNDER HER. 1989. which affirmed the Decision dated April 8. not one of common carriage. subject matter of this unlawful detainer case. Verbal demands to vacate the lot was made on petitioner. The questioned Decision of the Court of Appeals is AFFIRMED with the MODIFICATION that the demurrage awarded to VSI is deleted. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G. CONCEPCION. National Capital Judicial Region in Civil Case No. 160239 November 25. who was already staying on the property. daughter of respondent.J. and surrender the possession thereof to respondent. Branch 59 in Civil Case No. not the least of which is the transport price which is determined not only by the actual costs but also by the risks and burdens assumed by the shipper in regard to possible loss or damage to the cargo. concur. 2003 of the Regional Trial Court of Mandaluyong City.: This is a petition for review on certiorari1 of the Order2 dated October 3. District II.

On March 5. had been consolidated. which was filed by respondent against Caballero. and pay actual. the trial court set a preliminary conference on October 9. 2001. Despite receipt of the demand letter. 17974. petitioner was occupying the premises together with her family. surrender the possession thereof to respondent.10 On January 24. 2001. 17974. 2003. Rule 70 of the 1997 Revised Rules of Civil Procedure for Soriente‘s failure to file an Answer to the Complaint. Soriente intended to adopt the same as her own. through counsel.000. 17973 and 17974 are similar. 17932 against Severina Sadol. Respondent prayed that petitioner be ordered to vacate the lot. Pursuant to Section 7 of the 1991 Revised Rule on Summary Procedure. respondent. .parties did not reach a settlement. only plaintiff‘s (respondent‘s) counsel and defendants Severina Sadol and Alf redo Caballero were present. It appears from the records of the case that petitioner Soriente. 2002 as prayed for by defendants on the ground that their common counsel was absent despite proper notice. while petitioner had no title to the property and her free occupancy thereof was merely tolerated by respondent. Respondent sent petitioner a demand letter dated September 22. petitioner did not vacate the premises. Mandaluyong City. but affixed her signature to the Answer filed by defendant Alfredo Caballero in another ejectment case. The trial court denied the Motion to Render Judgment in the interest of justice and considered that the two cases. and there was no proof of service on her for the hearing. On April 27. The preliminary conference was reset to November 15. demanding that she peacefully surrender the property and extending financial assistance for her relocation. Petitioner filed an Opposition to the Motion to Render Judgment. as a defendant in the lower court. 17973. 2001 at 8:30 a. 2001. the preliminary conference was reset to January 24. pay monthly rent ofP5. 2002. moral and exemplary damages. 2002 on the ground that there was no notice sent to defendants‘ counsel. Hence. docketed as Civil Case No. The Complaint was docketed as Civil Case No. the trial court reset the preliminary conference to April 16. In the scheduled preliminary conference held on February 18. 2002 because no notice was sent to defendants‘ counsel. and plaintiff (respondent) and her counsel were both absent despite proper notice. defendants Sadol and Caballero informed the court that they informed their counsel of the hearing scheduled that day. did not file a separate Answer. 2002. as both defendants Caballero and Soriente had a common defense against plaintiff‘s (respondent‘s) separate claim against them. A representative of defendant (petitioner) Angelina Soriente appeared.00 from June 2000 until she vacates the premises. respondent filed against petitioner a Complaint6 for unlawful detainer with the Metropolitan Trial Court of Mandaluyong City. It stated that the allegations of the Complaint in Civil Case No. and she had maintained boarders for a fee.8 In an Order9 dated December 5. Plaintiff‘s (respondent‘s) counsel submitted a secretary‘s certificate attesting to the existence of a board resolution authorizing him to enter into a compromise agreement. The trial court believed that in signing the Answer filed in Civil Case No. 2000 by registered mail. On December 18. the trial court denied the Motion to Render Judgment. and then to December 18. Branch 59 (trial court). the only substantial difference being the time when defendants occupied the subject property allegedly through the tolerance of Arsenio Concepcion. but failed to submit a Special Power of Attorney authorizing her to enter into a compromise agreement. including Civil Case No. 2001 because the Motion to Render Judgment was still pending resolution. However. as well as litigation expenses. 2001. The Complaint alleged that respondent was the registered owner of the subject property. and plaintiff (respondent) did not object to the resetting. Counsel for defendants was not in court. In view of the absence of defendant Angelina Soriente or her authorized representative. 2001 by the Barangay Captain of Barangay Hagdan Bato Itaas. the scheduled preliminary conference was again reset to March 5. Moreover.m. filed a Motion to Render Judgment7 under Section 7. which resulted in the issuance of a Certificate to File Action5 dated February 17.

Such attack must be direct and not by a collateral proceeding. 12892 (Annex "A" in the complaint for Unlawful Detainer).18 The RTC held: Case records readily disclosed that the ownership of the subject lot belongs to the late Arsenio E.11 In its Order12 dated February 18. The title represented by the certificate cannot be changed. 2003. The lower court erred in holding that the plaintiff was able to establish that she is the registered owner of the lot occupied by the defendant-appellant instead of dismissing the complaint outright for lack of legal capacity to sue. raising the following issues: 1. Branch 213. Concepcion. PD 1529.13 On April 8. As should be known by Appellant Soriente through counsel. enlarged or diminished in a collateral proceeding such as this instant appeal from the decision rendered by the Metropolitan Trial Court of Mandaluyong City in an ejectment case. Branch 59. married to herein Plaintiff-Appellee Nenita S. Pay the amount of PESOS: FIVE THOUSAND (P5. the identity of the owner of the land covered thereby except as provided in the Land Registration Act. the trial court granted the motion of plaintiff‘s (respondent‘s) counsel and considered the case against defendant (petitioner) Angelina Soriente submitted for decision in accordance with Section 7 of the Rules on Summary Procedure. Pay the amount [of] PESOS: THREE THOUSAND (P3. The dispositive portion of the Decision reads: WHEREFORE. no title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession. 2003 rendered by the Metropolitan Trial Court. disposing thus: PRESCINDING FROM THE FOREGOING CONSIDERATIONS. modified.00) per month as reasonable compensation for use and occupation of the premises as of June 2000 until she finally vacates the subject premises. and 4. Mandaluyong City. the RTC affirmed the trial court‘s Decision. as evidenced by the Transfer Certificate of Title No.16 In an Order17 dated October 3. Concepcion. Vacate the subject premises and surrender the possession thereof to plaintiff. 3. altered. Concepcion but also against his hereditary successors because the latter merely steps into the shoes of the decedent by operation of law and are merely the continuation of the personalities of their predecessors-in-interest (Barcelona v. 100 Phil 251. where the Supreme Court [held] that a person who occupies the land of another at . The lower court erred in holding that the plaintiff was able to establish by preponderance of evidence that she is entitled to the relief prayed for despite lack of jurisdiction. 2. x x x xxxx Noteworthy to mention in the case at bar is the ruling laid down in Calubayan v.00) as attorney‘s fees. 21 SCRA 146. 3. the trial court rendered a Decision14 holding that respondent established by preponderance of evidence that she was entitled to the relief prayed for. 2. judgment is hereby rendered AFFIRMING IN TOTO the decision dated April 8. and that he be given 15 days within which to submit his position paper. Pascual. Pay the litigation expenses and cost of suit.plaintiff‘s (respondent‘s) counsel moved that the case be submitted for decision. This Certificate of Title shall be received as evidence in all courts of the Philippines and shall be conclusive as to all matters contained therein principally.15 Petitioner appealed the trial court‘s Decision to the RTC of Mandaluyong City. Sec. 47). 2003.000. 2003.000. judgment is hereby rendered ordering defendant Angelina Soriente and all other persons claiming rights under her to: 1. The lower court erred in holding that this instant case subject of this appeal be decided in accordance with Section 7 of the Rules on Summary Procedure. Barcelona. Said title can be attacked only for fraud within one year after the date of the issuance of the decree of registration. Prescription is unavailing not only against the registered owner Arsenio E.

Petitioner‘s contention lacks merit. Sandiganbayan22 ruled: x x x A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts. alleging absence of proof of the issuance of the requisite letters testamentary or letters of administration evidencing her legal capacity to sue in behalf of the Estate of Arsenio Concepcion in contravention of Section 4. which shall include such supporting particulars as are peculiarly within the pleader‘s knowledge. Petitioner asserts that lack of legal capacity to sue is a ground for dismissal under Section 1 (d) of Rule 16 of the Revised Rules of Court. 4. A question of fact exists when the doubt or difference arises as to the truth or falsehood of facts or when the query invites calibration of the whole evidence considering mainly the credibility of the witnesses. or when the issue does not call for an examination of the probative value of the evidence presented. III THE REGIONAL TRIAL COURT ERRED IN HOLDING THAT THIS INSTANT CASE SUBJECT OF THIS APPEAL BE DECIDED IN ACCORDANCE WITH SECTION 7 OF THE RULES ON SUMMARY PROCEDURE. There is a question of law in a given case when the doubt or difference arises as to what the law is on a certain state of facts. II THE REGIONAL TRIAL COURT ERRED IN AFFIRMING THE DECISION OF THE LOWER COURT IN HOLDING THAT THE PLAINTIFF WAS ABLE TO ESTABLISH BY PREPONDERANCE OF EVIDENCE THAT SHE IS ENTITLED TO THE RELIEF PRAYED FOR DESPITE LACK OF JURISDICTION. the trial court failed to exercise its duty to order the outright dismissal of the complaint as mandated under Section 424 of the 1991 Revised Rule on Summary Procedure. shall do so by specific denial. x x x19 Petitioner filed this petition raising the following issues: I THE REGIONAL TRIAL COURT ERRED IN AFFIRMING THE DECISION OF THE LOWER COURT IN HOLDING THAT THE PLAINTIFF WAS ABLE TO ESTABLISH THAT SHE IS THE REGISTERED OWNER OF THE LOT OCCUPIED BY THE DEFENDANT-APPELLANT INSTEAD OF DISMISSING THE COMPLAINT OUTRIGHT FOR LACK OF LEGAL CAPACITY TO SUE. is necessarily bound by an implied promise that he will vacate upon demand. without any contract between them. Republic v.21 Moreover. thus: Sec.the latter‘s tolerance or permission. Section 4. A party desiring to raise an issue as to the legal existence of any party or the capacity of any party to sue or be sued in a representative capacity. and considering that a motion to dismiss is a prohibited pleading under the summary procedure. Capacity. there is a question of fact when the doubt or difference arises as to the truth or the falsehood of alleged facts. the truth or falsehood of facts being admitted.20 Petitioner appealed from the RTC‘s decision directly to this Court on pure questions of law. must be averred. Rule 8 of the 1997 Rules of Civil Procedure. First. Rule 8 of the 1997 Rules of Civil Procedure provides: . failing which a summary action for ejectment is the proper remedy against [him].23 The Court notes that petitioner raised both questions of fact and law in her petition. the existence and relevancy of specific surrounding circumstances as well as their relation to each other and to the whole. Arsenio Concepcion. petitioner questioned respondent Nenita Concepcion‘s capacity to sue as a representative of the Estate of her husband. The Court shall resolve only the pertinent questions of law raised. and the probability of the situation. — Facts showing the capacity of a party to sue or be sued in a representative capacity or the legal existence of an organized association of persons that is made a party.

may deem her capacitated to prosecute the ejectment case as a real party-in-interest being a co-owner of the subject property considering that the trial court has jurisdiction over the subject matter and has also acquired jurisdiction over the parties. in relation to Section 4. the RTC correctly ruled: The argument is not tenable. finds it relevant to note x x x that although a Motion to Dismiss or a Motion for Bill of Particulars cannot be availed of to challenge the capacity of the party under the Rules on Summary Procedure. 2003. without any contract between them.26 Further. failing which a summary action for ejectment is the proper remedy against him. the subject property since time immemorial. including respondent Nenita S. Rule 70 of the Rules of Court. Concepcion acquired the same. but petitioner did not comply with the demand. Section 4 of the Rules of Court. assuming that respondent failed to submit the proper documents showing her capacity to sue in a representative capacity for the estate of her deceased husband." Hence. because only upon the lapse of that period . express or implied. Concepcion. To make out a case of unlawful detainer under Section 1. The presumption of the regular performance of duties applies in this case and the same shall prevail over mere allegations of the herein Defendant-Appellant. shall do so by specific denial. the Court. Article 487 of the Civil Code states. Petitioner contends that respondent admitted in her Complaint that her right to the subject property arose only in 1978. 30 Under Section 1.29 Respondent sent petitioner a demand letter dated September 22.28 The Complaint alleged that petitioner occupied the subject property by tolerance of the late Arsenio Concepcion. 4.25 Based on the provision cited above. in the interest of speedy disposition of cases. "Any one of the co-owners may bring an action in ejectment. before rendering the assailed decision dated April 8. which shall include such supporting particulars as are peculiarly within the pleader‘s knowledge. the Complaint must allege that the defendant is unlawfully withholding from the plaintiff the possession of certain real property after the expiration or termination of the former‘s right to hold possession by virtue of a contract. Capacity.27 Rule 70 of the Rules of Court. in the concept of owner. petitioner questions whether respondent has established by a preponderance of evidence that she is entitled to the relief prayed for. A person who occupies the land of another at the latter‘s tolerance or permission. and that the action is being brought within one year from the time the defendant‘s possession became unlawful. – x x x A party desiring to raise an issue as to the legal existence of any party or the capacity of any party to sue or be sued in a representative capacity.Sec. the Defendant–Appellant should have at least SPECIFICALLY DENIED such capacity of the party in the Answer. when the late Arsenio E. in relation to the Rules on Summary Procedure. but as a real party-in-interest. Concepcion and co-owner of the subject property. such possession becomes illegal upon demand to vacate by the owner and the possessor by tolerance refuses to comply with such demand. which is the ejectment of petitioner from the subject property. This court. 2000 to vacate the subject property. The case records clearly disclosed that no such specific denial was made by the appellant and this court believes that the lower court had carefully and dutifully taken into account the applicable rules particularly Section 4 of the Revised Rules on Summary Procedure. substantial evidence exists that she and her predecessors-in-interest have continuously and openly occupied and possessed. Rule 8 of the Rules of Court and pertinent jurisprudence. as the successor-in-interest of the late Arsenio E. respondent Nenita S. The Court holds that the RTC correctly affirmed the ejectment of petitioner from the property. upon cursory reading of the provisions of Rule 8. which should have included such supporting particulars as are peculiarly within the pleader‘s knowledge. Concepcion is entitled to prosecute the ejectment case not only in a representative capacity. is necessarily bound by an implied promise that he will vacate upon demand. Second. the one-year period within which a complaint for unlawful detainer can be filed should be counted from the date of demand. Petitioner alleges that to the contrary. While tolerance is lawful.

petitioner failed to present evidence to substantiate her allegation. if and when such action is brought seasonably before the proper forum. Concepcion. 6. and affirmance of the trial court‘s decision would not bar or prejudice an action between the same parties involving title to the property.35 In this case. the subject property since time immemorial. or on motion of the plaintiff.36 which was "issued in the name of Arsenio E.32 All that the trial court can do is to make an initial determination of who is the owner of the property. except in a direct proceeding for that purpose in accordance with law. the trial court found that respondent owns the property on the basis of Transfer Certificate of Title No. respondent is preferred to possess it. hence. the court. motu proprio. Whereas respondent holds a Torrens title over the subject property. modified or cancelled. in the concept of owner.43 The court's adjudication of ownership in an ejectment case is merely provisional.31 Respondent filed the ejectment case against petitioner on April 27. states: SEC.does the possession become unlawful. If a sole defendant shall fail to appear.44 Lastly.40 The issue of the validity of the title of the respondents can only be assailed in an action expressly instituted for that purpose. the plaintiff shall be entitled to judgment in accordance with Section 6hereof. appearance of parties.37 Hence. – Not later than thirty (30) days after the last answer is filed. Clearly. she is entitled to the possession of the property.42 Although petitioner alleges that substantial evidence exists that she and her predecessors-ininterest had continuously and openly occupied and possessed. This Rule shall not apply where one of two or more defendants sued under a common cause of action who had pleaded a common defense shall appear at the preliminary conference.39 It cannot be altered. as the registered owner of the subject property. the action was filed within the one-year period prescribed for filing an ejectment or unlawful detainer case. a preliminary conference shall be held. 1529. The sole issue for resolution in an unlawful detainer case is physical or material possession. 7. The failure of the plaintiff to appear in the preliminary conference shall be a cause for the dismissal of his complaint.34 The reason for this rule is to prevent the defendant from trifling with the summary nature of an ejectment suit by the simple expedient of asserting ownership over the disputed property. which is referred to by Section 7 above. Effect of failure to answer. The defendant who appears in the absence of the plaintiff shall be entitled to judgment on his counterclaim in accordance with Section 6 hereof. Preliminary conference. thus: SEC. petitioner contends that the lower court erred in deciding this case in accordance with Section 7 of the Rules on Summary Procedure. The rules on pre-trial in ordinary cases shall be applicable to the preliminary conference unless inconsistent with the provisions of this Rule. a certificate of title shall not be subject to collateral attack.38 The validity of respondent‘s certificate of title cannot be attacked by petitioner in this case for ejectment. so that it can resolve who is entitled to its possession absent other evidence to resolve ownership. 2001. All cross-claims shall be dismissed.45 Section 6 of the 1991 Revised Rules on Summary Procedure. 12892. therefore. Under Section 48 of Presidential Decree No. – Should the defendant fail to answer the complaint within the period above provided. Songco.33 Courts in ejectment cases decide questions of ownership only it is necessary to decide the question of possession.41 Whether or not the petitioner has the right to claim ownership over the property is beyond the power of the trial court to determine in an action for unlawful detainer. which was less than a year from the date of formal demand. shall render judgment as may be warranted by the facts alleged in the complaint and limited to what is . x x x married to Nenita L." It is settled rule that the person who has a Torrens title over a land is entitled to possession thereof.

Under Section 7 of the 1991 Revised Rules on Summary Procedure. Branch 213. if there are two or more defendants. hence. and she and Caballero filed the same Answer to the Complaint.46 The Court holds that the italicized provision above does not apply in the case of petitioner. 17974. the case against Alfredo Caballero was docketed as Civil Case No. the court shall render judgment as may be warranted by the facts alleged in the Complaint and limited to what is prayed for therein. These cases were consolidated by the trial court. petitioner‘s failure to appear in the preliminary conference entitled respondent to the rendition of judgment by the trial court on the ejectment case filed against petitioner. if a sole defendant shall fail to appear in the preliminary conference. defendants Caballero and Sadol were consolidated. even if the trial court consolidated the cases and. No costs. The Court notes that the ejectment case filed by respondent against petitioner was docketed in the trial court as Civil Case No. 7) shall not apply where one of two or more defendants sued under a common cause of action. that is. who had pleaded a common defense.prayed for therein: Provided. vs. the trial court should not have rendered judgment on her case based on Section 7 of the 1991 Revised Rules on Summary Procedure when she failed to appear in the preliminary conference.R. 1995 COASTWISE LIGHTERAGE CORPORATION. The ejectment case filed against petitioner was distinct from that of Caballero. the plaintiff shall be entitled to judgment in accordance with Section 6 of the Rule. That the court may in its discretion reduce the amount of damages and attorney‘s fees claimed for being excessive or otherwise unconscionable. shall appear at the preliminary conference. MC03-407-A is AFFIRMED. Rule 18 of the Rules of Court. while the case against Severina Sadol was docketed as Civil Case No. However. in the interest of justice. docketed as Civil Case No. The contention lacks merit. pleading a common defense. the petition is DENIED. WHEREFORE. since the ejectment cases were consolidated by the trial court. petitioner. 17973. The Order dated October 3. 2003 of the Regional Trial Court of Mandaluyong City. 17973. SO ORDERED. since she and Caballero were not co-defendants in the same case. 114167 July 12. Petitioner asserts that considering that the cases against her. DIOSDADO M. 17974 as the Answer also of petitioner since she affixed her signature thereto. PERALTA Associate Justice Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G. No. 17932. considered the Answer filed by Caballero in Civil Case No." Petitioner claims that the preceding provision applies to her as a defendant. thus. "[t]his Rule (Sec. in accordance with Section 7 of the 1991 Revised Rules on Summary Procedure. National Capital Judicial Region in Civil Case No. This is without prejudice to the applicability of Section 4. the trial court should not have rendered judgment against her when she failed to appear in the preliminary conference. Considering that petitioner was sued in a separate case for ejectment from that of Caballero and Sadol. however. and she and defendant Caballero signed and filed one common Answer to the Complaint. .

dated December 17. The factual background of this case is as follows: Pag-asa Sales. which is presumed to have violated the contract of carriage. Manila in holding that herein petitioner is liable to pay herein private respondent the amount of P700. while approaching Pier 18. The forward buoyancy compartment was damaged. and water gushed in through a hole "two inches wide and twenty-two inches long" 1 As a consequence. affirming Branch 35 of the Regional Trial Court.000. PhilGen then filed an action against Coastwise Lighterage before the Regional Trial Court of Manila. 1993. one of the barges. using the latter's dumb barges. As such. Pag-asa Sales. Inc. plus legal interest thereon. First. the charter party contract is one of affreightment over the whole vessel. Upon reaching Manila Bay. Pag-asa Sales. petitioner contends that the RTC and the Court of Appeals erred in finding that it was a common carrier. filed a formal claim with the insurer of its lost cargo. RESOLUTION FRANCISCO.00. representing the value of the damaged cargo of molasses. for short) and against the carrier. Pag-asa Sales. to transport the shipment of molasses from Negros Oriental to Manila and refers to this contract as a "charter agreement". the award was affirmed. It then proceeds to cite the case of Home Insurance Company vs. Inc.00 as attorney's fees and the cost of the suit. . . Corollarily. did it exercise the ordinary diligence to which a private carrier is in turn bound? Second. 3 . whether or not the insurer was subrogated into the rights of the consignee against the carrier. "Coastwise 9". Thereafter. PhilGen now claims to be subrogated to all the contractual rights and claims which the consignee may have against the carrier. entered into a contract to transport molasses from the province of Negros to Manila with Coastwise Lighterage Corporation (Coastwise for brevity). the amount of P700. Coastwise Lighterage. The barges were towed in tandem by the tugboat MT Marica. R. In turn. It stresses the fact that it contracted with Pag-asa Sales. Inc. this petition. the conclusions of the court are as follows: Accordingly. another sum of P100. herein private respondent. rather than a demise. In its entirety.00. respondents. Hence. 2 wherein this Court held: ".000. Inc. if it were in fact transformed into a private carrier." Petitioner's reliance on the aforementioned case is misplaced.. the liability of the shipowner for acts or negligence of its captain and crew. the molasses at the cargo tanks were contaminated and rendered unfit for the use it was intended. J. Inc. by virtue of the contract of affreightment which it entered into with the consignee. Inc. Pag-asa Sales. upon payment by the insurer of the value of the consignee's goods lost while on board one of the carrier's vessels.: This is a petition for review of a Decision rendered by the Court of Appeals.000. whether or not petitioner Coastwise Lighterage was transformed into a private carrier. American Steamship Agencies.COURT OF APPEALS and the PHILIPPINE GENERAL INSURANCE COMPANY.000.. There are two main issues to be resolved herein.00 which it paid to Pag-asa Sales. On the first issue. for the latter's lost cargo. On Coastwise Lighterage's appeal to the Court of Appeals. struck an unknown sunken object. to reject the shipment of molasses as a total loss. The RTC awarded the amount prayed for by PhilGen. herein petitioner. Inc. Coastwise Lighterage denied the claim and it was PhilGen which paid the consignee. which is likewise owned by Coastwise. seeking to recover the amount of P700. a common carrier undertaking to carry a special cargo or chartered to a special person only becomes a private carrier. Philippine General Insurance Company (PhilGen. This prompted the consignee. would remain in the absence of stipulation. Inc.

was not converted into a private carrier. The object turned out to be a submerged derelict vessel. Court of Appeals. Thus. and being free from fault. but the possession. which is overcome only by proof of the exercise of extraordinary diligence. It follows then that the presumption of negligence that attaches to common carriers. . . The law and jurisprudence on common carriers both hold that the mere proof of delivery of goods in good order to a carrier and the subsequent arrival of the same goods at the place of destination in bad order makes for a prima facie case against the carrier.e. . command and navigation of the ship. Inc. remains liable as carrier and must answer for any breach of duty as to the care. Petitioner admits that the contract it entered into with the consignee was one of affreightment. petitioner's assertion is belied by the evidence on record where it appeared that far from having rendered service with the greatest skill and utmost foresight. . the carrier was culpably remiss in the observance of its duties. remained unrebutted in this case. Although a charter party may transform a common carrier into a private one. . . the same however is not true in a contract of affreightment on account of the aforementioned distinctions between the two. anything short of such a complete transfer is a contract of affreightment (time or voyage charter party) or not a charter party at all. Pursuant therefore to the ruling in the aforecited Puromines case. . the owner of a vessel must completely and exclusively relinquish possession. it became impossible for the petitioner to avoid the same. However. Pag-asa Sales. the charterer will generally be regarded as the owner for the voyage or service stipulated. Nothing could have prevented the event. . Further it asserts that the fact that the Philippine Coastguard "has not exerted any effort to prepare a chart to indicate the location of sunken derelicts within Manila North Harbor to avoid navigational accidents" 6 effectively contributed to the happening of this mishap. 4 wherein we ruled: Under the demise or bareboat charter of the vessel. by the contract of affreightment. applies to the petitioner. bareboat or demise and contract of affreightment) is more clearly set out in the case of Puromines. being unaware of the hidden danger that lies in its path. the charterer or freighter merely having use of the space in the vessel in return for his payment of the charter hire. making it beyond the pale of even the exercise of extraordinary diligence. . Petitioner contends that this navigational hazard was the efficient cause of the accident. command and navigation of the vessels remained with petitioner Coastwise Lighterage. loading and unloading of the cargo. . Inc. The charterer mans the vessel with his own people and becomes the owner pro hac vice. The records show that the damage to the barge which carried the cargo of molasses was caused by its hitting an unknown sunken object as it was heading for Pier 18. destroyed or deteriorated. Coastwise Lighterage. An owner who retains possession of the ship though the hold is the property of the charterer. once the goods it transports are lost. command and navigation thereof to the charterer. subject to liability to others for damages caused by negligence. . . This presumption. To create a demise. but remained a common carrier and was still liable as such. vs. in order to carry cargo from one point to another. It is a contract for special service to be rendered by the owner of the vessel and under such contract the general owner retains the possession. only leased three of petitioner's vessels. 5 We agree. On the other hand a contract of affreightment is one in which the owner of the vessel leases part or all of its space to haul goods for others.The distinction between the two kinds of charter parties (i.

— Captains. Jamilla & Company. . the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who violated the contract. for the damage sustained by the loss of the cargo which petitioner-carrier was transporting. This legal provision containing the equitable principle of subrogation has been applied in a long line of cases including Compania Maritima v. Payment by the insurer to the assured operated as an equitable assignment to the former of all remedies which the latter may have against the third party whose negligence or wrongful act caused the loss. . . Had the patron been licensed. Inc. the patron of the vessel "Coastwise 9" admitted that he was not licensed. follow that a person without license to navigate. If the plaintiffs property has been insured. may have had against the carrier. petitioner Coastwise Lighterage's embarking on a voyage with an unlicensed patron violates this rule. 609. Article 2207 of the Civil Code is explicit on this point: Art. 7 Fireman's Fund Insurance Company v. having failed to overcome the presumption of negligence with the loss and destruction of goods it transported. Undoubtedly. upon payment to the assured will be subrogated to the rights of the assured to recover from the wrongdoer to the extent that the insurer has been obligated to pay. any privity of contract or upon written assignment of claim. upon payment by respondent insurer PhilGen of the amount of P700. . herein private respondent PhilGen. then the insurer. which petitioner contends as inapplicable in this case. On the issue of subrogation.000. by proof of its exercise of extraordinary diligence. or patrons of vessels must be Filipinos. . the former was subrogated into all the rights which Pag-asa Sales. but also the utmost familiarity with the usual and safe routes taken by seasoned and legally authorized ones. Inc. herein petitioner Coastwise Lighterage. at the helm of the vessel which eventually met the fateful accident. 2207. 9 wherein this Court explained: Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. It accrues simply upon payment of the insurance claim by the insurer. The Code of Commerce. as established by marine and navigation laws. he could be presumed to have both the skill and the knowledge that would have prevented the vessel's hitting the sunken derelict ship that lay on their way to Pier 18. we once more rule against the petitioner. We have already found petitioner liable for breach of the contract of carriage it entered into with Pag-asa Sales. Inc. by placing a person whose navigational skills are questionable.. and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of. petitioner is liable for breach of the contract of carriage. and must not be disqualified according to the same for the discharge of the duties of the position. have legal capacity to contract in accordance with this code. Clearly. the consignee of the cargo of molasses totally damaged while being transported by petitioner Coastwise Lighterage. Insurance Company of North America. The right of subrogation is not dependent upon. However. lacks not just the skill to do so. which subsidiarily governs common carriers (which are primarily governed by the provisions of the Civil Code) provides: Art. It may also logically. 8 and Pan Malayan Insurance Corporation v.Jesus R. Inc.. Constantino. Inc. If the insured property is destroyed or damaged through the fault or negligence of a party other than the assured. It cannot safely claim to have exercised extraordinary diligence. but the latter's insurer. and prove the skill capacity and qualifications necessary to command and direct the vessel.00 to Pag-asa Sales. ordinances or regulations. . . nor does it grow out of. it was not the carrier which paid the value thereof to Pag-asa Sales. Court of Appeals. As a common carrier. masters.

this petition is DENIED and the appealed decision affirming the order of Branch 35 of the Regional Trial Court of Manila for petitioner Coastwise Lighterage to pay respondent Philippine General Insurance Company the "principal amount of P700. Among her passengers were the Plaintiff Insa Abdulhaman. the Court held the owners of both vessels solidarily liable to Plaintiff for the damages caused to him by the collision. under Article 827 of . Exhibit ―A‖. Before the collision. Between 9:chanroblesvirtuallawlibrary30 to 10:chanroblesvirtuallawlibrary00 in the evening the dark clouds bloated with rain began to fall and the gushing strong wind began to blow steadily harder. and Lim Hong To. On appeal.. On that same night the M/S ―Bowline Knot‖ was navigating from Maribojoc towards Zamboanga.WHEREFORE. premises considered. Zamboanga City. all surnamed Inasa. while the body of the child Abdula Inasa of 6 years of age was never recovered. EN BANC [G.000. JJ. Among the dead passengers found were Maria. 5-6).. September 29. She was then towing a kumpit.R..‖ (Decision of C. named ―Sta. Wherefore. L. owner of the M/S ―Bowline Knot‖. the date the complaint was filed until fully paid and another sum of P100. J.. When some of the passengers of the M/L ―Consuelo V‖ were then sleeping and some were lying down awake. pp. Because the M/L ―Consuelo V‖ capsized. a few kilometers distant from San Ramon Beach. 170) by Insa Abdulhaman against the Manila Steamship Co. Amlasa. vs. Romero. concur. The weather was good and fair. his wife Carimla Mora and their five children already mentioned.Respondents. The Plaintiff and his wife paid their fare before the voyage started. found themselves swimming and floating on the crest of the waves and as a result of which nine (9) passengers were dead and missing and all the cargoes carried on said boat. Bidoaya and Bidalla.: This case was begun in the Court of First Instance of Zamboanga (Civil Case No. Such weather lasted for about an hour and then it became fair although it was showering and the visibility was good enough. that the commanding officer of the colliding vessels had both been negligent in operating their respective vessels.00 as attorney's fees and costs" 10 is likewise hereby AFFIRMED SO ORDERED. her crew and passengers.] MANILA STEAMSHIP CO. none of the passengers were warned or informed of the impending danger as the collision was so sudden and unexpected. J. the Court of Appeals found the following facts to have been established:chanroblesvirtuallawlibrary ―From 7:chanroblesvirtuallawlibrary00 to 8:chanroblesvirtuallawlibrary00 o‘clock in the evening of May 4. 1948. lashing the waves into a choppy and roaring sea.000. were also lost. to recover damages for the death of his ( Plaintiff‘s) five children and loss of personal properties on board the M/L ―Consuelo V‖ as a result of a maritime collision between said vessel and the M/S ―Bowline Knot‖ on May 4. Feliciano. Petitioner. before realizing what had happened. B. laden with cargoes and passengers left the port of Zamboanga City bound for Siokon under the command of Faustino Macrohon. All those rescued at sea were brought by the M/V ―Bowline Knot‖ to Zamboanga City. L-9534.. 1956. Maria Bay‖. all of a sudden they felt the shocking collision of the M/L ―Consuelo V‖ and a big motorship. INC. DECISION REYES. As the cause of the collision. which later on was identified as the M/V ―Bowline Knot‖. 1989. A.00 plus interest thereon at the legal rate computed from March 29. 1948. the Court of Appeals affirmed the findings of the Board of Marine Inquiry. including those of the Plaintiff as appear in the list.. INSA ABDULHAMAN (MORO) and LIM HONG TO. No. Melo and Vitug. the M/L ―Consuelo V‖. owner of the M/L ―Consuelo V‖.

owner of the M/S ―Bowline Knot‖. moderated and limited by the owner‘s right of abandonment of the vessel and earned freight (Article 587). as distinguished from the civil law and mercantile law in general. the tort in question is not a civil tort under the Civil Code but a maritime tort resulting in a collision at sea. chan roblesvirtualawlibraryso that injured parties may immediately look for reimbursement to the owner of the ship. While it is true that Plaintiff‘s action against Petitioner is based on a tort or quasidelict. 753:chanroblesvirtuallawlibrary ―The responsibility involved in the present action is that derived from the management of the vessel. It is from this judgment that Defendant Manila Steamship Co. had appealed to this Court. either of the captain or of the crew.. the M/L ―Consuelo V‖. 1908. vs. Petitioner Manila Steamship Co. chan roblesvirtualawlibraryand Article 1902. The characteristic language of the law in making the ―vessels‖ solidarily liable for the damages due to the maritime collision emphasizes the direct nature of the responsibilities on account of the collision incurred by the shipowner under maritime law. 260). 747. Urrutia & Co. 515):chanroblesvirtuallawlibrary ―In the second assignment of error. the Appellant contends that the Defendant ought not to be held liable for the negligence of his agents and employees. but also in cases of tortious negligence (Yu Biao Sontua vs. for which the captain is responsible to the agent. that shipowners and ship agents are civilly liable for the acts of the captain (Code of Commerce. It is proven that the agents and employees. its owner or agents is liable for the tortious acts of his agents (Articles 587. governed by Articles 826-939 of the Code of Commerce. This principle has been repeatedly upheld in various decisions of this court. Where the vessel is one of freight. and 618 Code of Commerce. This direct responsibility is recognized in Article 618 of the Code of Commerce under which the captain shall be civilly liable to the ship agent.. Civil Code). (Article 618. in case of collision between two vessels imputable to both of them. pleads that it is exempt from any liability to Plaintiff under Article 1903 of the Civil Code because it had exercised the diligence of a good father of a family in the selection of its employees. Shipowners would be able to escape . while the other Defendant. This defense is untenable. 511. 256. Under Article 827 of the Code of Commerce. Lopez Castelo. has been declared to exist. a public concern or public utility. each vessel shall suffer her own damage and both shall be solidarily liable for the damages occasioned to their cargoes. 613. but not to the relations between ship agent and his agents and employees.the Code of Commerce. as pointed out in the collision case of Yueng Sheng Exchange & Trading Co. 12 Phil. Code of Commerce). 1903. the M/S ―Bowline Knot‖. chan roblesvirtualawlibraryfor this reason they cannot be applied in the present case. The doctrines cited by the Appellant in support of his theory have reference to the relations between principal and agent in general. was ordered to pay all ofPlaintiff‘s damages in the amount of P20. employees and mandatories of the Defendant. the officer in command of its vessels. Article 586) and for the indemnities due the third persons (Article 587).784. 43 Phil. This direct liability. at the time of the collision. or fault.‖ In fact. well established maritime law and custom. the Manila Steamship Co. not only in case of breached contracts. particularly Third Mate Simplicio Ilagan. which was defective on account of lack of skill. would render nugatory the solidary liability established by Article 827 of the Code of Commerce for the greater protection of injured parties. vs. and the latter is the one liable to third persons. negligence. through whose negligence the explosion and fire in question occurred. it being universally recognized that the ship master or captain is primarily the representative of the owner (Standard Oil Co.‖ It is easy to see that to admit the defense of due diligence of a bonus paterfamilias (in the selection and vigilance of the officers and crew) as exempting the shipowner from any liability for their faults. 42 Phil.00 plus one-half of the costs. it is a general principle. chan roblesvirtualawlibrarybut exempted Defendant Lim Hong To from liability by reason of the sinking and total loss of his vessel. were agents. Osorio. who in his turn is responsible to the third party prejudiced or damaged.

is to erase all difference between compliance with law and the deliberate disregard thereof. stipulated — ―that in case of any accident. To compel the parties prejudiced to look to the crew for indemnity and redress would be an illusory remedy for almost always its members are. 517. chan roblesvirtualawlibrarywherefore. allegedly negligently managed by its captain in the course of its maneuvers to moor at Plaintiff‘s wharf.‖ (Exhibit 3. that sank as a result of the collision. on the other hand. Disregarding the question whether mere inability to meet the salary demands of duly licensed masters and engineers constitutes non-availability thereof that would excuse noncompliance with the law and authorize operation without licensed officers under Act 3553. Smith & Co. as conferred by Article 587 of the Code of Commerce. I shall assume full risk and responsibility for all the consequences thereof. To such proposition we cannot assent. 55 Phil. the registered owner thereof shall assume full risk and responsibility for all the consequences thereof. however. . In his desire to reap greater benefits in the maritime trade. Cadwallader Gibson Lumber Co. and that said vessel shall be held answerable for any negligence. that it is exempt from liability for the collision with the M/L ―Consuelo V‖ due to absence of negligence on its parts in the selection and supervision of the officers and crew of the M/S ―Bowline Knot‖. mere wage earners. vs. 2). the fact remains that by operating with an unlicensed master. crew.‖ (Exhibit 2). that the Court of Appeals was in error in declaring the Respondent Lim Hong To. therefore. who would normally assume that the launch officers possessed the necessary skill and experience to evade the perils of the sea. damage or loss. owner of the M/L ―Consuelo V‖. Abdulhaman. Lim Hong To willfully augmented the dangers and hazards to his vessel‘s unwarry passengers.. damage or loss. that Lim Hong To may limit his liability to the value of his vessels. considering that the qualifications and licensing of ship masters and officers are determined by the State. with Petitioner-Appellant. the provisions of Article 1903 of the Civil Code were correctly applied. and expressly declared:chanroblesvirtuallawlibrary ―That in case of any accident. Respondent Lim Hong To gave as a reason — ―that the income derived from the vessel is insufficient to pay licensed officers who demand high salaries‖. and that vigilance is practically impossible to exercise over officers and crew of vessels at sea. as already stated. His permit to operate. It is to be noted that both the master and the engineer of the motor launch ―Consuelo V‖ were not duly licensed as such (Exh. in view of the total loss of his own vessel. the liability of said Respondentcannot be the identical to that of a shipowner who bears in mind the safety of the passengers and cargo by employing duly licensed officers. In applying for permission to operate. the liability of the shipowner is. The present case. We find the ruling untenable.. To hold. governed by the provisions of the Code of Commerce and not by the Civil Code. struck the same and partially demolished it. Lim Hong To deliberately increased the risk to which the passengers and shippers of cargo aboard the ―Consuelo V‖ would be subjected. We agree. in fact.) The Court of Appeals held that neither the letter (Exhibit 2) nor the permit (Exhibit 3) contained any waiver of the right of Respondent Lim Hong To to limit his liability to the value of his motor launch and that he did not lose the statutory right to limit his liability by abandonment of the vessel. disregard or violation of any of the conditions herein imposed and for any consequence arising from such negligence. Said case treated of a civil tort. despite the lack of properly trained and experienced. find no reversible error in the refusal of the Court of Appeals to consider the defense of the Manila Steamship Co. disregard or violations. exempt from liability to the original Plaintiff. as the Court of Appeals has done. Because the tort allegedly committed was civil. The case of Walter S. invoked byPetitioner. in that the vessel of the Defendant. causing damage to Plaintiff. involves tortious conduct resulting in a maritime collision. is not the point.liability in practically every case. Hence. from captains down. We.

00 and the cost of the litigation. Fariña (Derecho Comercial Maritimo. Concepcion. C...) That Lim Hong To understood that he would incur greater liability than that normally borne by shipowners. petitioner. we hold:chanroblesvirtuallawlibrary (1) That the Manila Steamship Co. concur.. Paras.. vs. on the authority of judicial precedents from various nations. In resume.784. without prejudice to the right of the one who should pay the judgment in full to demand contribution from his co-Defendant. and imposed in his special permit. Labrador. . Derecho Maritimo. Bautista Angelo. a noted French author states:chanroblesvirtuallawlibrary ―La limitacion de la responsabilidad maritima ha sido admitida para proteger a los armadores contra los actos abusivos de sus encargados y no dejar su patrimonio entero a la discrecion del personal de sus buques. INC. the liability of Lim Hong To and Manila Steamship Co. I.‖ (Danjon. 1997 NEGROS NAVIGATION CO. is liable for the injuries caused by the collision over and beyond the value of said launch. Vol. chan roblesvirtualawlibrarya responsibility expressly assumed in his letter Exhibit 2. and that of the Court of First Instance affirmed. 122-123). (2) That Lim Hong To. through the negligence of the crews of both vessels.JJ. El Convenio de Bruselas de 25 de agosto de 1924 tambien invalida la limitacion en el caso de culpa personal en los accidentes o averías sobrevenidos (Art. as a legal limitation of a shipowner‘s liability. Padilla. sets the rule to be as follows:chanroblesvirtuallawlibrary ―Esta generalmente admitido que el propietario del buque no tiene derecho a la limitacion legal de responsibilidad si los daños o averias que dan origen a la limitacion provienen de sus propias culpas. 110398 November 7. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.The international rule is to the effect that the right of abandonment of vessels. as owner of the motor launch ―Consuelo V‖. pp. having caused the same to sail without licensed officers. does not apply to cases where the injury or the average is due to shipowner‘s own fault. owner of the M/S ―Bowline Knot‖. to the Plaintiff herein is in solidum. the decision of the Court of Appeals is modified. In view of the foregoing. is clear from his assumption of ― full‖ risk and responsibility for all the consequences‖ of the operation of the M/L ―Consuelo V‖. is directly and primarily responsible in tort for the injuries caused to the Plaintiff by the collision of said vessel with the launch ―Consuelo V‖. No. chan roblesvirtualawlibrarypero los armadores no tienen por sobre los demas derecho a ser amparados contra ellos mismos ni a ser protegidos contra sus propios actos. and it may not escape liability on the ground that it exercised due diligence in the selection and supervision of the officers and crew of the ―Bowline Knot‖.‖ To the same effect. 2.R. 2°). porque este personal cumple sus obligaciones en condiciones especiales.J. Vol. This express assumption of ―full risk and responsibility‖ would be meaningless unless intended to broaden the liability of Respondent Lim Hong To beyond the value of his vessel. (3) That both vessels being at fault.. p. Montemayor. (Emphasis supplied. in the sense of declaring both original Defendants solidarily liable to Plaintiff Insa Abdulhaman in the sum of P20. in addition to the vessel itself being held answerable. 332). Endencia and Felix. as prescribed by Article 827 of the Code of Commerce.

PNOC and PNOC/STC. and Elfreda de la Victoria. Miranda. In April of 1980. 74412. Private respondents did not join in the agreement. some of the passengers of the M/V Don Juan died. the PNOC and petitioner Negros Navigation Co. against the Negros Navigation. SPS.00 for actual damages. 1986. P152.. Miranda. denied that the four relatives of private respondents actually boarded the vessel as shown by the fact that their bodies were never recovered. but the four members of private respondents' families were never found.THE COURT OF APPEALS. At about 10:30 in the evening of April 22. four special cabin tickets (#74411. ordering all the defendants to pay jointly and severally to the plaintiffs damages as follows: To Ramon Miranda: P42. As a result. J. entered into a compromise agreement whereby petitioner assumed full responsibility for the payment and satisfaction of all claims arising out of or in connection with the collision and releasing the PNOC and the PNOC/STC from any liability to it. The tickets were for Voyage No. judgment is hereby rendered in favor of the plaintiffs. Several of her passengers perished in the sea tragedy. P90. 1980.00 as moral damages.025.: This is a petition for review on certiorari of the decision of the Court of Appeals affirming with modification the Regional Trial Court's award of damages to private respondents for the death of relatives as a result of the sinking of petitioner's vessel.00 as compensatory damages for wrongful death of three (3) victims. and that the Don Juan left Pier 2. Branch 34. MENDOZA.55 as compensatory damages for loss of earning capacity of his wife. P300. 16.m. 1980. Rosario V. In its answer. private respondent Ramon Miranda purchased from the Negros Navigation Co. Ramon V.. the dispositive portion of which leads as follows: WHEREFORE.. petitioner admitted that private respondents purchased ticket numbers 74411.654. respondents. daughter. 1980 and sank that night after being rammed by the oil tanker M/T Tacloban City. On January 20. the Don Juan collided off the Tablas Strait in Mindoro. as a result of the collision.000. 19. 74413 and 74414. with the M/T Tacloban City. Private respondents filed a complaint on July 16. The ship sailed from the port of Manila on schedule. After trial. the Philippine National Oil Company (PNOC). an oil tanker owned by the Philippine National Oil Company (PNOC) and the PNOC Shipping and Transport Corporation (PNOC/STC). that the ticket numbers were listed in the passenger manifest. Inc. Manila on April 22. 48. Inc. RAMON MIRANDA. North Harbor. on April 22. leaving Manila at 1:00 p. the court rendered judgment on February 21. seeking damages for the death of Ardita de la Victoria Miranda. however.000. the M/V Don Juan sank. 457-A of the M/V Don Juan. 74412. . 1991. 74413 and 74414) for his wife. Petitioner further averred that the Don Juan was seaworthy and manned by a full and competent crew. and that. 1980 in the Regional Trial Court of Manila. Jr. The bodies of some of the victims were found and brought to shore. son and niece who were going to Bacolod City to attend a family reunion. in view of the foregoing. and the PNOC Shipping and Transport Corporation (PNOC/STC). 26. Petitioner. RICARDO and VIRGINIA DE LA VICTORIA. The agreement was subsequently held by the trial court to be binding upon petitioner. and that the collision was entirely due to the fault of the crew of the M/T Tacloban City.

000.30 each from the Makati office of petitioner for Voyage No. Hence this petition. 1980.00 as attorney's fees.00.899. to pay plaintiffappellee Ramon Miranda the amount of P23. 74413. E) on which the numbers of the tickets and the names of Ardita Miranda and her children and Elfreda de la Victoria appear.000. There is no reason he should claim members of his family to have perished in the accident just to maintain an action. It would be more difficult for private respondents to keep the existence of their relatives if indeed they are alive than it is for petitioner to show the contrary.679.000. Ordering and sentencing defendants-appellants.P50. as compensatory damages for the death of his wife and two children.00. To Spouses Ricardo and Virginia de la Victoria: P12. Petitioner's only proof is that the bodies of the supposed victims were not among those . to pay plaintiffsappellees Dela Victoria spouses the amount of P50. The witnesses who affirmed that the victims were on the ship were biased and unreliable.000.00 as moral damages.00 as exemplary damages. all in the total amount of P634.899. This contention is without merit. instead of P30. P30. and P40.000.025. (2) whether the ruling in Mecenas v. P20.000.55. raising the following issues: (1) whether the members of private respondents' families were actually passengers of the Don Juan. jointly and severally. First. People do not normally lie about so grave a matter as the loss of dear ones. Petitioner asserts that it is common knowledge that passengers purchase tickets in advance but do not actually use them. 74412.00 as actual damages instead of P42.000. Hence. which was leaving Manila on April 22.000. private respondent should also prove the presence of the victims on the ship.075. and (4) whether the damages awarded by the appellate court are excessive.00. On appeal. jointly and severally. is binding in this case. Ordering and sentencing defendants-appellants. This was corroborated by the passenger manifest (Exh. P100.00. and P15. and 74414 at P131.00 as attorney's fees. Petitioner contends that the purchase of the tickets does not necessarily mean that the alleged victims actually took the trip. as compensatory damages for the death of their daughter Elfreda Dela Victoria. jointly and severally.000. the Court of Appeals 1 affirmed the decision of the Regional Trial Court with modification — 1. to pay plaintiffappellee Ramon Miranda the amount of P150.000.00 as compensatory damages for wrongful death.00. 2. The trial court held that the fact that the victims were passengers of the M/V Don Juan was sufficiently proven by private respondent Ramon Miranda. Private respondent Ramon Miranda testified that he personally took his family and his niece to the vessel on the day of the voyage and stayed with them on the ship until it was time for it to leave. Ordering and sentencing defendants-appellants.000. all in the total amount of P320. 47-A of the M/V Don Juan.00 as compensatory damages for loss of earning capacity. unreasonable and unwarranted. 3. who testified that he purchased tickets numbered 74411. 2 finding the crew members of petitioner to be grossly negligent in the performance of their duties.00 as exemplary damages. (3) whether the total loss of the M/V Don Juan extinguished petitioner's liability.00 for actual damages. Court of Appeals. instead of P90.00. P158.

004 on board the vessel when it sank. of whom 810 are passengers. unless Ramirez had a "storehouse" of stories. The Certificate of Inspection. admitted that he failed to call the attention of Santisteban to the imminent danger facing them. both the trial court and the appellate court relied on the findings of this Court inMecenas v. Ramirez said he and Elfreda stayed on the deck after dinner and it was there where they were jolted by the collision of the two vessels. the crew of the Don Juan was equally negligent as it found that the latter's master. Private respondent Miranda's testimony was corroborated by Edgardo Ramirez. Recounting the moments after the collision. Miranda. In addition. Petitioner casts doubt on Ramirez' testimony. Ramirez testified that Elfreda ran to fetch Mrs. Capt. Indeed. when the collision happened and that he in fact had dinner with them. He tried to return to the cabin but was not able to do so because it was dark and there was a stampede of passengers from the deck. Intermediate Appellate Court. But it is not improbable that it took Ramirez three days before calling on private respondent Miranda to tell him about the last hours of Mrs. until 10:00 p. But what is incredible about acquaintances thrown together on a long journey staying together for hours on end. issued by the Philippine Coast Guard Commander at Iloilo City stated that the total number of persons allowed on the ship was 864. in view of the confusion in the days following the collision as rescue teams and relatives searched for survivors. and the fact that the M/V Don Juan. He also knew Elfreda who was his childhood friend and townmate. In that case it was found that although the proximate cause of the mishap was the negligence of the crew of the M/TTacloban City.m. Petitioner Negros Navigation was found equally negligent in tolerating the playing of mahjong by the ship captain and other crew members while on board the ship and failing to keep the M/V Don Juan seaworthy so much so that the ship sank within 10 to 15 minutes of its impact with the M/T Tacloban City. He knew Mrs. as the faster and better-equipped vessel. This Court found that Capt. Miranda who was his teacher in the grade school. He escorted her to the room and then tried to go back to the deck when the lights went out. in idle conversation precisely to while the hours away? Petitioner also points out that it took Ramirez three (3) days before he finally contacted private respondent Ramon Miranda to tell him about the fate of his family. In finding petitioner guilty of negligence and in failing to exercise the extraordinary diligence required of it in the carriage of passengers. given the facts of this case. dated August 27. was playing mahjong at the time of collision. but there were actually 1. this Court held that even if the Tacloban City had been at fault for failing to observe an internationallyrecognized rule of navigation. 140 persons more than the maximum number that could be safely carried by it. Taking these circumstances together. Miranda and her children and niece. Ramirez said he was with Mrs. 1979. it is improper for petitioner to even suggest that private respondents' relatives did not board the ill-fated vessel and perish in the accident simply because their bodies were not recovered. the Don Juan was guilty of contributory negligence. and the officer on watch. Second. Santisteban and the crew of the M/V Don Juan failed to take steps to prevent the collision or at least delay the sinking of the ship and supervise the abandoning of the ship. Senior Third Mate Rogelio De Vera. Ramirez was a seminarian and one of the survivors of the collision. Through Justice Feliciano. this Court held: . 4 which case was brought for the death of other passengers. But so were the bodies of the other passengers reported missing not recovered. Miranda and Elfreda de la Victoria on the ship and that he talked with them. could have avoided a collision with the PNOC tanker. claiming that Ramirez could not have talked with the victims for about three hours and not run out of stories to tell. He testified that he saw Mrs.m. Miranda and her children and niece from 7:00 p. Rogelio Santisteban. the Court found that the Don Juan was overloaded.recovered from the site of the mishap. as this Court noted in the Mecenas 3 case.

the "Don Juan" having sighted the "Tacloban City" when it was still a long way off was negligent in failing to take early preventive action and in allowing the two (2) vessels to come to such close quarters as to render the collision inevitable when there was no necessity for passing so near to the "Tacloban City" as to create that hazard or inevitability. on the record of this case. The contention is without merit.3) of a mile apart.3. Petitioner contends that the decision in this case should be based on the allegations and defenses pleaded and evidence adduced in it or. . . Fourthly. Associated Realties Corporation. in short. . the "Don Juan" was more than twice as fast as the "Tacloban City. the "Don Juan" was equipped with radar which was functioning that night. 5 Petitioner criticizes the lower court's reliance on the Mecenas case. while that of the "Tacloban City" was 6. turned (for the second time) 15° to port side while the "Don Juan" veered hard to starboard. 6 In Woulfe v. Visual confirmation of radar contact was established by the "Don Juan" while the "Tacloban City" was still 2. the rule of stare decisis is a bar to any attempt to relitigate the same issue." when the two (2) vessels were only three-tenths (0.) Where." upon turning hard to port shortly before the moment of collision. the "Don Juan. . The "Tacloban City. Santisteban and Negros Navigation are properly held liable for gross negligence in connection with the collision of the "Don Juan" and "Tacloban City" and the sinking of the "Don Juan" leading to the death of hundreds of passengers. could have easily avoided the collision with the "Tacloban City." The "Don Juan's" top speed was 17 knots. as in this case. Otherwise." Indeed. falsehood on the other! Adherence to the Mecenas case is dictated by this Court's policy of maintaining stability in jurisprudence in accordance with the legal maxim "stare decisis et non quieta movere" (Follow past precedents and do not disturb what has been settled.7 miles away. arguing that. of which there can only be one truth. the same questions relating to the same event have been put forward by parties similarly situated as in a previous case litigated and decided by a competent court. In the petition at bar. In the total set of circumstances which existed in the instant case." had it taken seriously its duty of extraordinary diligence. one would be subscribing to the sophistry: truth on one side of the Pyrenees. 1980 and its liability for such accident. signalled its intention to do so by giving two (2) short blasts with its horn. the "Don Juan" carried the full complement of officers and crew members specified for a passenger vessel of her class. the court was bound by . although this case arose out of the same incident as that involved in Mecenas. We conclude that Capt. the "Don Juan's officer on-watch had sighted the "Tacloban City" on his radar screen while the latter was still four (4) nautical miles away. knots. [But] "route observance" of the International Rules of the Road will not relieve a vessel from responsibility if the collision could have been avoided by proper care and skill on her part or even by a departure from the rules. Thirdly. It is noteworthy that the "Tacloban City. for the "Don Juan" could choose its own distance. the parties are different and trial was conducted separately. What petitioner contends may be true with respect to the merits of the individual claims against petitioner but not as to the cause of the sinking of its ship on April 22. the "Don Juan" might well have avoided the collision even if it had exercised ordinary diligence merely. . Secondly. 7the Supreme Court of New Jersey held that where substantially similar cases to the pending case were presented and applicable principles declared in prior decisions. .The grossness of the negligence of the "Don Juan" is underscored when one considers the foregoing circumstances in the context of the following facts: Firstly. The "Don Juan" gave no answering horn blast to signal its own intention and proceeded to turn hard to starboard. It is true that the "Tacloban City" failed to follow Rule 18 of the International Rules of the Road which requires two (2) power-driven vessels meeting end on or nearly end on each to alter her course to starboard (right) so that each vessel may pass on the port side (left) of the other.

(2) in failing to maintain the vessel seaworthy and (3) in allowing the ship to carry more passengers than it was allowed to carry. in J. therefore.00 was awarded to the seven children of the Mecenas couple. the evidence presented in this case was the same as those presented in the Mecenas case.857." Indeed. even though the parties may be different. 10 10 Exh. Under petitioner's formula. Ramon Miranda should receive P43. Mariano. 8 it was held that under the doctrine of stare decisis a ruling is final even as to parties who are strangers to the original proceeding and not bound by the judgment under the res judicata doctrine. Petitioner contends that. The trial court made its own independent findings on the basis of the testimonies of witnesses. for the sake of certainty. 6-A 14 Exh.M. 13 12 Exh. if the facts are substantially the same.14. in State ex rel. ZZ of National Defense dated 3/12/82 Resolution on the Exh. AAA motion for reconsideration (private of the decision of the respondents) Minister of National defense dated 7/27/84 Certificate of Exh. this Court found petitioner guilty of negligence in (1) allowing or tolerating the ship captain and crew members in playing mahjong during the voyage. The issue is not one of first impression. Tollinger v." 9 Thus. private respondents should be allowed to claim only P43. The Philadelphia court expressed itself in this wise: "Stare decisis simply declares that. Fourth. The rule is well-entrenched in our jurisprudence that a shipowner may be held liable for injuries to passengers notwithstanding the exclusively real and hypothecary nature of maritime law if fault can be attributed to the shipowner. For that matter. Gill.28.the principle of stare decisis. 1-A 13 Exh. Similarly. Petitioner is.14 each as moral damages because in the Mecenas case. this Court relied on its rulings in other cases involving different parties in sustaining the validity of a land title on the principle of"stare decisis et non quieta movere. Tuason v. Coast Guard in BMI Case No.714. 19-D-NN dated 12/16/76 Nor is it true that the trial court merely based its decision on the Mecenas case. while the De la Victoria spouses should receive P97. the amount of P307. to wit: Document Mecenas case This case Decision of Commandant. 415-80 dated 3/26/81 Decision of the Minister Exh. 11-B-NN/X Phil.857. 11 11 Exh. Where the issue involved . 15 In Mecenas. 19-NN inspection dated 8/27/79 Certificate of Stability Exh. The trial court agreed with the conclusions of the then Minister of National Defense finding both vessels to be negligent. Here is where the principle of stare decisis does not apply in view of differences in the personal circumstances of the victims. Third. Exh. The next issue is whether petitioner is liable to pay damages notwithstanding the total loss of its ship. differentiation would be justified even if private respondents had joined the private respondents in the Mecenas case. supra. clearly liable for damages to the full extent. such as Senior Third Mate Rogelio de Vera. The doctrine of stare decisis works as a bar only against issues litigated in a previous case. assuming that the Mecenas case applies. a conclusion reached in one case should be applied to those which follow. who incidentally gave substantially the same testimony on petitioner's behalf before the Board of Marine Inquiry.500.

the decision in the previous case is not stare decisis of the question presently presented.33 years. 17 Heirs of Amparo delos Santos v.224. Court of Appeals. Inc. and therefore.00 annual salary of the victim.077. the trial court took into account the fact that Mrs. and Mrs.92 (given a gross annual income of P10. 16 The decision in the Mecenas case relates to damages for which petitioner was liable to the claimants in that case. We now turn to the determination of the earning capacity of the victims. in calculating the life expectancy of individuals for the purpose of determining loss of earning capacity under Art. In this case. hence her loss of earning capacity should be reckoned up to 17.00 per victim should be sustained. The gross earnings which Mrs.184. Deducting therefrom 30% as her living expenses.55. he developed a heart condition undoubtedly caused by the strain of the loss of his family. As for the amount of civil indemnity awarded to private respondents. the award of P300. Petitioner contends. In accordance with the ruling in Villa-Rey Transit. her life expectancy was computed to be 21.33 years only. Miranda would have retired from her job as a public school teacher at 65.g. v.00 per annum. considering that Mrs. Court of Appeals.33 years based on P10. however. e.. 23 the Court allowed a deduction of P1. that Mrs. It may be that in the Philippines the age of retirement generally is 65 but. Her gross earnings for 21. de la Victoria is likewise reasonable and should be affirmed. As a matter of fact. Miranda could reasonably be expected to earn were it not for her untimely death was. Petitioner contends that 30% is unrealistic. her net earnings would be P152. v. or up to age 69. Inc. three months after the collision.was not raised nor presented to the court and not passed upon by the court in the previous case. Miranda whose age at the time of the accident was 48 years. The amount of P30. it is assumed that the deceased would have earned income even after retirement from a particular job. Miranda had a master's degree and a good prospect of becoming principal of the school in which she was teaching. the appellate court's award of P50.224. Petitioner contends that from the amount of gross earnings.33 years. Intermediate Appellate Court19 as benchmark was subsequently increased to P50.00 for living expenses from the P2.00 given to Mr. With respect to Ardita Miranda. v. v. the trial court awarded damages computed as follows: 21 In the case of victim Ardita V. had she not died. 2206(1) of the Civil Code.00 in the case of Sulpicio Lines. 1988.654. 60% should be deducted as necessary living expenses. In the case at bar. Court of Appeals.000. social security deductions and inflation.077. the Court takes into account the fact that plaintiff and his wife were supporting their daughter and son who were both college students taking Medicine and Law respectively. Court of Appeals. Inc.000.000.00 and life expectancy of 21.2% thereof. would be P218.00 formerly set in De Lima v. Laguna Tayabas Co. The accepted formula for determining life expectancy is 2/3 multiplied by (80 minus the age of the deceased). Inc. correctly computed by the trial court to be P218.00 for moral damages is reasonable considering the grief petitioner Ramon Miranda suffered as a result of the loss of his entire family. she could have lived up to almost 70 years old. to which plaintiff Ramon Miranda is entitled to compensatory damages for the loss of earning capacity of his wife. In considering 30% as the living expenses of Ardita Miranda. The P100.000. by becoming a consultant. There was reason to believe that her income would have increased through the years and she could still earn more after her retirement. 20 which involved the sinking of another interisland ship on October 24.000. therefore. 18 and Philippine Rabbit Bus Lines. The deceased was 29 years old and a training assistant in the . not merely 30% as the trial court allowed.184..92. 22 we think the life expectancy of Ardita Miranda was correctly determined to be 21. Miranda's earnings would have been subject to taxes. We agree with this contention.33 years). which is roughly 54. In Villa-Rey Transit.

00 for the de la Victoria spouses is justified. earning P6.85% and it can be presumed that. a larger part going to the support of her children would be conjectural and unreasonable. she would have become a regular teacher. represented also plaintiffsappellees Dela Victoria spouses. the trial court found that. The deceased.075. Maureen Hultman. Hence. i.96.659.096. her loss of earning capacity is P111.00 On the other hand. his right to life and physical integrity. a teacher in a private school in Malolos.000. making long distance calls. Although a probationary employee. p..00] ———— 3 = 36 x 3.456. Teehankee.038. we hold that a deduction of 50% from Mrs.4% thereof from the deceased's annual salary of P46. we agree with the Court of Appeals that the amount of P40. roughly 42. p. 24the deceased was a 26-year old laborer earning a daily wage. the award of actual damages in the amount of P23.00 . spending for transportation in going to places such as Batangas City and Iloilo. damages incidental to or arising out of such death are for pecuniary losses of the beneficiaries of the deceased. February 26. spending for obituaries in the Bulletin Today and for food. she had already been working in the school for two years at the time of her death and she had a general efficiency rating of 92. masses and novenas. Indemnity for death is given to compensate for violation of the rights of the deceased. at the time of her death.e. The award would naturally vary or differ in each case. she was 26 years old. The appellate court correctly held: The Mecenas case cannot be made the basis for determining the award for attorney's fees. Miranda's gross earnings (P218. In People v. Bulacan. Quilation. In the case at bar.00 per annum.00.192.00 . Petitioner's contention that the expenses for the erection of a monument and other expenses for memorial services for the victims should be considered included in the indemnity for death awarded to private respondents is without merit.00 was determined by the Court of Appeals on the basis receipts submitted by private respondents. This amount is reasonable considering the expenses incurred by private respondent Miranda in organizing three search teams to look for his family. we note that separate testimonial evidence were adduced by plaintiff-appellee Ramon Miranda (TSN. While it is admitted that plaintiff-appellee Ramon Miranda who is himself a lawyer. The court allowed a deduction of P120.00.000.800.Bacnotan Cement Industries.00 for private respondent Ramon Miranda and P15.P3.00 which was 51. 43). we find no reason to disturb the award of P40. There is no basis for supposing that her living expenses constituted a smaller percentage of her gross income than the living expenses in the decided cases.096.21.000.077. if not for her untimely death. 1982. computed as follows: net earning = life x gross less reasonable capacity (x) expectancy annual & necessary income living expenses (50%) x = [2(80-26)] x [P6.456. was 17 years old and had just received her first paycheck as a secretary. To hold that she would have used only a small part of her income for herself.00 = P111.00.000. so that her net earning capacity should be P109. 26 On the other hand.92) would be reasonable. As for Elfreda de la Victoria. Considering the amount of work and effort put into the case as indicated by the voluminous transcripts of stenographic notes. In People v. where survivors and the bodies of other victims were found.000. erecting a monument in honor of the four victims. 6) and plaintiffs-appellees spouses Dela Victoria (TSN. 1981.3% of his annual gross earnings of P234.192. August 13. 25 the court allowed a deduction of P19. As for the award of attorney's fees.

000. One of those instruments is the institution of exemplary damages.28 WHEREFORE.00 as compensatory damages for wrongful death. P300. SO ORDERED.00 for actual damages. and P40.00 as compensatory damages for wrongful death of three (3) victims.96. the law seeks to compel them to control their employees. This Court is prepared to use the instruments given to it by the law for securing the ends of law and public policy.000.113. all in the total amount of P882. and in the event of failure of Negros Navigation Co. PNOC and/or PNOC/STC shall be entitled to a writ of execution without need of filing another action. P150.00 as exemplary damages.00 as moral damages. To private respondents Spouses Ricardo and Virginia de la Victoria: P12.000.. P100. shall reimburse either of them such amount or amounts as either may have paid. a standard which is in fact that of the highest possible degree of diligence.00 as attorney's fees.456. Regalado and Puno.00. the decision of the Court of Appeals is AFFIRMED with modification and petitioner is ORDERED to pay private respondents damages as follows: To private respondent Ramon Miranda: P23. P109. The Court will take judicial notice of the dreadful regularity with which grievous maritime disasters occur in our waters with massive loss of life. Inc.038.00 as attorney's fees. Inc. Petitioners are further ordered to pay costs of suit.000. to tame their reckless instincts and to force them to take adequate care of human beings and their property..00 as exemplary damages.000. P300. all in the total amount of P373.000.000. and P15. JJ. In requiring compliance with the standard of extraordinary diligence. ..000.000.00 for plaintiffs-appellees Dela Victoria spouses. crowds of people continue to travel by sea.96 as compensatory damages for loss of earning capacity of his wife..00 for the de la Victoria spouses in accordance with our ruling in the Mecenas case: Exemplary damages are designed by our civil law to permit the courts to reshape behaviour that is socially deleterious in its consequence by creating negative incentives or deterrents against such behaviour. P111. P50.00 for actual damages. P100.00 for Ramon Miranda and P100. So it is that notwithstanding the frequent sinking of passenger vessels in our waters.00 as moral damages. 27 The award of exemplary damages should be increased to P300. one of those ends. of special importance in an archipelagic state like the Philippines.456. The bulk of our population is too poor to afford domestic air transportation.000.for plaintiff-appellee Ramon Miranda and P15.075. concur. In the event the Philippine National Oil Company and/or the PNOC Shipping and Transport Corporation pay or are required to pay all or a portion of the amounts adjudged. petitioner Negros Navigation Co. from common carriers and in creating a presumption of negligence against them. to make the necessary reimbursement.000.000.00 as compensatory damages for loss of earning capacity. is the safe and reliable carriage of people and goods by sea.

2616. negligence. a small flame was detected on the acetylene cylinder located in the accommodation area near the engine room on the main deck level. petitioner.06 for salvage charges against the goods. KAPUNAN. (334 bags) ammonium chloride. In its answer. While the vessel was off Okinawa. No. Inc. The trial court dismissed PHAC's complaint and ruled in favor of ESLI ratiocinating thus: . freight pre-paid and in good order and condition.65. 1 and that salvage charges are properly collectible under Act No. 1996 PHILIPPINE HOME ASSURANCE CORPORATION. custody and carriage of the shipment. Fire fighting operations were again conducted at the said port.64 for additional freight and P826. (b) for the goods covered by Bill of Lading No. The incident forced the master and the crew to abandon the ship. (c) for the goods covered by Bill of Lading No. the acetylene cylinder suddenly exploded sending a flash of flame throughout the accommodation area. ESLI contended that it exercised the diligence required by law in the handling.292. consigned to Pan Oriental Match Company under Bill of Lading No.130.26 for additional freight and P4.Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G. consigned to Ding Velayo under Bills of Lading Nos. known as the Salvage Law. KMA-73 and KMA-74. Japan. viz: (a) two (2) boxes internal combustion engine parts. (b) ten (l0) metric ton. ESLI charged the consignee the sum of P2. illegal act and/or breach of contract of ESLI. (ESLI) loaded on board SS Eastern Explorer in Kobe. KCE-8. Inc. J. as follows: (a) for the goods covered by Bill of Lading No. Branch 39. KCE-12. ESLI charged the consignees several amounts corresponding to additional freight and salvage charges. Thereafter. representing salvage charges assessed against the goods. ESLI charged the consignee the sum of P8. vs. 106999 June 20. The charges were all paid by Philippine Home Assurance Corporation (PHAC) under protest for and in behalf of the consignees. 042283. arrived near the vessel and commenced to tow the vessel for the port of Naha. consigned to Orca's Company under Bill of Lading No.980. thus causing death and severe injuries to the crew and instantly setting fire to the whole superstructure of the vessel. PHAC. (c) two hundred (200) bags Glue 300. KCE-8.927. and (d) garments. KMA-73 and KMA-74. the following shipment for carriage to Manila and Cebu. Japan. Japan.14 for salvage charges against the goods. against ESLI to recover the sum paid under protest on the ground that the same were actually damages directly brought about by the fault. consigned to William Lines.337. SS Eastern Explorer was found to be a constructive total loss and its voyage was declared abandoned. After the fire was extinguished. As the crew was trying to extinguish the fire.:p Eastern Shipping Lines. COURT OF APPEALS and EASTERN SHIPPING LINES.. thereafter filed a complaint before the Regional Trial Court of Manila. ESLI charged the consignee the sum of P1. the cargoes which were saved were loaded to another vessel for delivery to their original ports of destination. that the additional freight charges are due and demandable pursuant to the Bill of Lading.68 for salvage charges against the goods. 042283. INC. as subrogee of the consignees. respondents. KCE-I2. that the fire was caused by an unforeseen event. and (d) for the goods under Bills of Lading Nos.R. under Bill of Lading No. Several hours later. ESLI charged the consignee the sum of P3. a tugboat under the control of Fukuda Salvage Co.

Macondray Co." (Atlantic Gulf and Pacific Co. When the fire was detected by the crew. 2616 states: Sec 1. 2616. the same has been tested. the salvage allowance should be charged against the ship and cargo in the proportion of their respective values.. Salvage charges may thus be assessed on the cargoes saved from the vessel." In Manila Railroad Co. therefore. 3) and before the ship loaded the Acetylene Cylinder No. or that the service rendered contributed to such success. 1980. "The expenses of salvage. the same as in a case of general average . As provided for in Section 13 of the Salvage Law. pp. 37 Phil. the vessel or its cargo shall be beyond the control of the crew. shall be entitled to like reward.The question to be resolved is whether or not the fire on the vessel which was caused by the explosion of an acetylene cylinder loaded on the same was the fault or negligence of the defendant. v. not being included in the above paragraph. the "compensation to be paid by the owner of the cargo is in proportion to the value of the vessel and the value of the cargo saved. The salvage operations conducted by Fukuda Salvage Company (Exhibits "4-A" and "6-A") was perfectly a legal operation and charges made on the goods recovered were legitimate charges. that three elements are necessary to a valid salvage claim." Thus. The above elements are all present in the instant case. 42 Phil. Act No. 2-3). 212-213). With respect to the additional freight charged by defendant from the consignees of the goods. checked and examined and was certified to have complied with the required safety measures and standards (Deposition of Senjei Hayashi. . Section 1 of Act No. otherwise known as the Salvage Law.. the Supreme Court has ruled in Erlanger & Galinger v. fire fighting operations was immediately conducted but due to the explosion of the acetylene cylinder. 178. (Memorandum for Defendant. The burning of the vessel rendering it a constructive total loss and incapable of pursuing its voyage to the Philippines was. namely (a)a marine peril (b) service voluntarily rendered when not required as an existing duty or from a special contract and (c) success in whole or in part. October 23. as well as the reward for salvage or assistance. Records.. 1980. . and picked up and conveyed to a safe place by other persons. the latter shall be entitled to a reward for the salvage. 34 Phil. not the fault or negligence of defendant but a natural disaster or calamity which nobody would like to happen. shall be a charge on the things salvaged or their value. Evidence has been presented that the SS "Eastern Explorer" was a seaworthy vessel (Deposition of Jumpei Maeda. In relation to the above provision. 321). When in case of shipwreck. . the same are also validly demandable. p. Swedish East Asiatic Co. Those who. Uchida Kisen Kaisha. October 23. the crew were unable to contain the fire and had to abandon the ship to save their lives and were saved from drowning by passing vessels in the vicinity. or shall have been abandoned by them. assist in saving a vessel or its cargo from shipwreck. 583. NCW 875. Ltd. it was also held that "when a ship and its cargo are saved together. is thus applicable to the case at bar. v. pp.

. Japan to Manila and Cebu City on board another vessel. All storage. The bill of lading is a contract and the parties are bound by its terms (Gov't of the Philippine Islands vs. Defendant therefore. transshipment. Furthermore.. At the dorsal portion of the Bills of Lading issued to the consignees is this stipulation: 12. 219). A captain who may have taken on board the goods saved from the wreck shall continue his course to the port of destination. whether payable in advance or not that may be incurred by the cargo in addition to the ordinary freight. Art 1266. the physical impossibility of the prestation extinguished defendant's obligation. 844. ." This finds support under Article 844 of the Code of Commerce which provides as follows: Art. (Memorandum for Defendant. pp. no person shall be responsible for those events which could not be foreseen. 2 On appeal to the Court of Appeals. Under Article 1266 of the Civil Code. or which though foreseen. The debtor in obligations to do shall also be released when the prestation becomes legally or physically impossible without the fault of the obligor. forwarding or other disposition of cargo at or from a port of distress or other place where there has been a forced interruption or abandonment of the voyage shall be at the expense of the owner. or when it is otherwise declared by stipulation. with judicial intervention at the disposal of their legitimate owners. or when the nature of the obligation require the assumption of risk.. respondent court affirmed the trial court's findings and conclusions. the "EASTERN MARS. whether the service be performed by the named carrying vessel or by carrier's other vessels or by strangers.As provided by the Civil Code: Art. the present petition for review before this Court on the following errors: . 215-216). shipper. and on arrival should deposit the same. The owners of the cargo shall defray all the expenses of this arrival as well as the payment of the freight which. Except in cases expressly specified by law. 3 hence. consignee of the goods or the holder of this bill of lading who shall be jointly and severally liable for all freight charges and expenses of every kind whatsoever. 1174. . can validly require payment of additional freight from the consignee. Plaintiff can not thus recover the additional freight paid by the consignee to defendant. Ynchausti and Co. Record. the terms and conditions of the Bill of Lading authorize the imposition of additional freight charges in case of forced interruption or abandonment of the voyage. may be fixed by agreement or by a judicial decision. after taking into consideration the circumstances of the case. The provision quoted is binding upon the consignee. 40 Phil. It is but legal and equitable for the defendant therefore." The burning of "EASTERN EXPLORER" while off Okinawa rendered it physically impossible for defendant to comply with its obligation of delivering the goods to their port of destination pursuant to the contract of carriage. were inevitable. to demand additional freight from the consignees for forwarding the goods from Naha. All such expenses and charges shall be due and payable day by day immediately when they are incurred.

or deterioration of the goods transported by them but who. in making its findings. II. among the carrier. PETITIONER WAS DEPRIVED OF ITS RIGHT TO CROSS. even if the transshipment took longer than necessary. WITHOUT EXPLANATION WHATSOEVER FOR HIS NON-PRESENTATION. absurd or impossible. 4 It is quite evident that the foregoing assignment of errors challenges the findings of fact and the appreciation of evidence made by the trial court and later affirmed by respondent court. THE RESPONDENT COURT ERRONEOUSLY ADOPTED THE TRIAL COURT'S RULING THAT PETITIONER WAS LIABLE TO RESPONDENT CARRIER FOR ADDITIONAL FREIGHT AND SALVAGE CHARGES. In fact. 5 Thus. III. THUS. CAPT.EXAMINE THE AUTHOR THEREOF. RENDERING ET A CONSTRUCTIVE TOTAL LOSS. DESPITE EXISTING JURISPRUDENCE TO THE CONTRARY. consignee or insurer of the goods. it is equally well-settled that the same admits of the following exceptions. is liable for the additional charges or expenses incurred by the owner of the ship in the salvage operations and in the transshipment of the goods via a different carrier. (g) when the findings of the Court of Appeals are contrary to those of the trial court. IS A NATURAL DISASTER OR CALAMITY WHICH NOBODY WOULD LIKE TO HAPPEN. VI. surmises or conjectures. (e) when the findings of fact are conflicting. (b) when the inference made is manifestly mistaken. went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee. that the findings complained of are totally devoid of support in the records.I. THE RESPONDENT COURT ERRONEOUSLY ADOPTED WITH APPROVAL THE TRIAL COURT'S FINDINGS THAT THE BURNING OF THE SS "EASTERN EXPLORER". . (d) when the judgment is based on a misapprehension of facts. the same may be properly reviewed and evaluated by this Court. (c) where there is a grave abuse of discretion. as in the instant case. (f) when the Court of Appeals. and (j) when the finding of fact of the Court of Appeals is premised on the supposed absence of evidence and is contradicted by the evidence on record. THE RESPONDENT COURT ERRONEOUSLY ADOPTED WITH APPROVAL THE TRIAL COURT'S CONCLUSION THAT THE EXPENSES OR AVERAGES INCURRED IN SAVING THE CARGO CONSTITUTE GENERAL AVERAGE. THE RESPONDENT COURT ARBITRARILY RULED THAT THE BURNING OF THE SS "EASTERN EXPLORER" WAS NOT THE FAULT AND NEGLIGENCE OF RESPONDENT EASTERN SHIPPING LINES. It is worthy to note at the outset that the goods subject of the present controversy were neither lost nor damaged in transit by the fire that razed the carrier. the said goods were all delivered to the consignees. V. What is at issue therefore is not whether or not the carrier is liable for the loss. THE RESPONDENT COURT COMMITTED GRAVE ABUSE OF DISCRETION IN RULING THAT DEFENDANT HAD EXERCISED THE EXTRAORDINARY DILIGENCE IN THE VIGILANCE OVER THE GOODS AS REQUIRED BY LAW. THE RESPONDENT COURT ARBITRARILY RULED THAT THE MARINE NOTE OF PROTEST AND STATEMENT OF FACTS ISSUED BY THE VESSEL'S MASTER ARE NOT HEARSAY DESPITE THE FACT THAT THE VESSEL'S MASTER. namely: (a) when the conclusion is a finding grounded entirely on speculation. if there is a showing. damage. or that they are so glaringly erroneous as to constitute grave abuse of discretion. IV. (h) when the findings of fact are conclusions without citation of specific evidence on which they are based. While it is a well-settled rule that only questions of law may be raised in a petition for review under Rule 45 of the Rules of Court. LICAYLICAY WAS NOT PRESENTED COURT. (i) when the facts set forth in the petition as well as in the petitioners' main and reply briefs are not disputed by the respondents.

whether oral or documentary. respondent ESLI should have known that by storing the acetylene cylinder in the accommodation area supposed to be reserved for passengers. Licaylicay. from the engine room. respondent ESLI presented Junpei Maeda. there is no merit in the finding of the trial court to which respondent court erroneously agreed that the fire was not the fault or negligence of respondent but a natural disaster or calamity. 8 It is excluded because the party against whom it is presented is deprived of his right and opportunity to cross-examine the persons to whom the statements or writings are attributed. Petitioner takes exception to this conclusion and we agree.In absolving respondent carrier of any liability. the acetylene cylinder which was fully loaded should not have been stored in the accommodation area near the engine room where the heat generated therefrom could cause the acetylene cylinder to explode by reason of spontaneous combustion. tested and examined and subsequently certified as having complied with the safety measures and standards by qualified experts 7 before it was loaded in the vessel only shows to a great extent that negligence was present in the handling of the acetylene cylinder after it was loaded and while it was on board the ship. was not presented in court to testify to the truth of the facts he stated therein. its Branch Manager in Tokyo and Yokohama. Indeed. ignorant of the danger the tank might have on humans and property. obviously fully loaded. Eastern Explorer who issued the said documents. and none was alleged by the parties. Third. who evidently had no personal knowledge of the facts stated in the documents at issue. we find the same impressed with merit because said documents are hearsay evidence. and in a safe distance. Consequently. hearsay evidence. Respondent ESLI should have easily foreseen that the acetylene cylinder. could have handled the same or could have lighted and smoked cigarettes while repairing in the accommodation area. Anent petitioner's objection to the admissibility of Exhibits "4'' and ''5". has no probative value unless the proponent can show that the evidence falls within the exceptions to the hearsay evidence rule. First. Master of S. it is not disputed that a small flame was detected on the acetylene cylinder and that by reason thereof. Rule 130 of the Rules of Court that any evidence. fire may not be considered a natural disaster or calamity since it almost always arises from some act of man or by human means. Capt. Neither is there any doubt that the acetylene cylinder. Second. Japan. It cannot be an act of God unless caused by lightning or a natural disaster or casualty not attributable to human agency. the fact that the acetylene cylinder was checked. Curious passengers. is hearsay if its probative value is not based on the personal knowledge of the witness but on the knowledge of some other person not on the witness stand. Moreover. the same exploded despite efforts to extinguish the fire. there was no showing. whether objected to or not. respondent Court of Appeals sustained the trial court's finding that the fire that gutted the ship was a natural disaster or calamity. In our jurisprudence. instead. was stored in the accommodation area near the engine room and not in a storage area considerably far. On the issue of whether or not respondent court committed an error in concluding that the expenses incurred in saving the cargo are considered general average. we rule in the . On the contrary. that the fire was caused by a natural disaster or calamity not attributable to human agency. Licaylicay. had the respondent and its agents not been negligent in storing the acetylene cylinder near the engine room. The records are simply wanting in this regard. It is clear from Section 36. the Statement of Facts and the Marine Note of Protest issued by Captain Tiburcio A. there is strong evidence indicating that the acetylene cylinder caught fire because of the fault and negligence of respondent ESLI. its captain and its crew. it unnecessarily exposed its passengers to grave danger and injury. Verily.S. 6 In the case at bar. containing highly inflammable material was in real danger of exploding because it was stored in close proximity to the engine room. then the same would not have leaked and exploded during the voyage.

COURT OF APPEALS and FELMAN SHIPPING LINES. Vitug and Hermosisima.. At around eight forty-five the following morning. 116940 June 11. JJ. Cebu. 100367-PAG. In its complaint PHILAMGEN alleged that the sinking and total loss of "MV Asilda" and its cargo were due to the vessel's unseaworthiness as she was put to sea in an unstable condition. Inc. On 6 July 1983 Coca-Cola Bottlers Philippines.00. "MV Asilda" left the port of Zamboanga in fine weather at eight o'clock in the evening of the same day. its cargo.250. concur. or both at the same time. Inc. respondent ESLI's claim for contribution from the consignees of the cargo at the time of the occurrence of the average turns to naught. On 15 July 1983 the consignee Coca-Cola Bottlers Philippines. respondent carrier must refund to herein petitioner the amount it paid under protest for additional freight and salvage charges in behalf of the consignees. if any. vs.. it indubitably follows that the cargo consignees cannot be made liable to respondent carrier for additional freight and salvage charges. Padilla. INC. 1 The shipment was insured with petitioner Philippine American General Insurance Co. Claiming its right of subrogation PHILAMGEN sought recourse against respondent FELMAN which disclaimed any liability for the loss. Inc. 7 July 1983." Respondent denied the claim thus prompting the consignee to file an insurance claim with PHILAMGEN which paid its claim of P755. 7. Inc. Respondent Eastern Shipping Lines. general or gross averages include all damages and expenses which are deliberately caused in order to save the vessel.. petitioner. the formalities prescribed under Articles 813 10 and 814 11 of the Code of Commerce in order to incur the expenses and cause the damage corresponding to gross average were not complied with. No. Inc. the vessel sank in the waters of Zamboanga del Norte bringing down her entire cargo with her including the subject 7. Jr. from a real and known risk 9 While the instant case may technically fall within the purview of the said provision. Consequently. WHEREFORE. SO ORDERED. BELLOSILLO.500 cases of 1-liter Coca-Cola softdrink bottles... Cebu plant. (PHILAMGEN for brevity). Bellosillo. on 29 November 1983 PHILAMGEN sued the shipowner for sum of money and damages. J. 1997 THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY. the judgment appealed from is hereby REVERSED and SET ASIDE. under Marine Open Policy No. It . filed a claim with respondent FELMAN for recovery of damages it sustained as a result of the loss of its softdrink bottles that sank with "MV Asilda. 1733 of the Civil Code as well as the right of the insurer to be subrogated to the rights of the insured upon payment of the insurance claim.affirmative. respondents.R. Consequently.500 cases of 1-liter Coca-Cola softdrink bottles to be transported from Zamboanga City to Cebu City for consignee Coca-Cola Bottlers Philippines. Consequently." a vessel owned and operated by respondent Felman Shipping Lines (FELMAN for brevity). As a rule.. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G. is ORDERED to return to petitioner Philippine Home Assurance Corporation the amount it paid under protest in behalf of the consignees herein.: This case deals with the liability.. Prescinding from the foregoing premises. of a shipowner for loss of cargo due to its failure to observe the extraordinary diligence required by Art. loaded on board "MV Asilda.

the payment made by PHILAMGEN to the assured was an undue. According to them. it did not give PHILAMGEN the right of subrogation so as to permit it to bring an action in court as a subrogee. 587 of the Code of Commerce. In a joint statement. After thirty minutes he observed that the vessel was listing slightly to starboard and would not correct itself despite the heavy rolling and pitching. On appeal the Court of Appeals set aside the dismissal and remanded the case to the lower court for trial on the merits. 300 sacks of seaweeds. wrong and mistaken payment. and that. 587 of the Code of Commerce should apply. The lower court further ruled that assuming "MV Asilda" was unseaworthy. while the vessel possessed the necessary Coast Guard certification indicating its seaworthiness with respect to the structure of the ship itself.500 cases of Coca-Cola softdrink bottles were improperly stowed on deck. still PHILAMGEN could not recover from FELMAN since the assured (Coca-Cola Bottlers Philippines. in which case. Thus the loss of the vessel and its entire shipment could only be attributed to either a fortuitous event. In other words. The issues for resolution in this petition are: (a) whether "MV Asilda" was seaworthy when it left the port of Zamboanga. At about seven o'clock in the morning. the appellate court denied the claim of PHILAMGEN on the ground that the assured's implied warranty of seaworthiness was not complied with. the vessel was carrying 7. On 28 February 1992 the trial court rendered judgment in favor of FELMAN. it was not seaworthy with respect to the cargo. On 29 August 1994 respondent appellate court rendered judgment finding "MV Asilda" unseaworthy for being top-heavy as 2. On 18 March 1992 PHILAMGEN appealed the decision to the Court of Appeals. He then ordered his crew to shift the cargo from starboard to portside until the vessel was balanced. Inc. They loaded the empty boxes for eggs and about 500 cases of Coca-Cola bottles on deck. in any event.) had breached its implied warranty on the vessel's seaworthiness. Perfunctorily. 2 On 17 February 1986 the trial court dismissed the complaint of PHILAMGEN. On 15 February 1985 FELMAN filed a motion to dismiss based on the affirmative defense that no right of subrogation in favor of PHILAMGEN was transmitted by the shipper. FELMAN filed a petition forcertiorari with this Court but it was subsequently denied on 13 February 1989. in which case. Furthermore. At that time he noticed that the weather had deteriorated with strong southeast winds inducing big waves. no liability should attach unless there was a stipulation to the contrary. Art. FELMAN had abandoned all its rights. interests and ownership over " MV Asilda" together with her freight and appurtenances for the purpose of limiting and extinguishing its liability under Art. (b) whether the limited liability under Art. 200 empty CO2 cylinders and an undetermined quantity of empty boxes for fresh eggs. the captain as well as the chief mate of the vessel confirmed that the weather was fine when they left the port of Zamboanga. or to the negligence of the captain and his crew. the shipowner. PHILAMGEN was not properly subrogated to the rights and interests of the shipper. Nonetheless. Since it was not legally owing. Resultantly.500 cases of 1-liter Coca-Cola softdrink bottles.further alleged that the vessel was improperly manned and that its officers were grossly negligent in failing to take appropriate measures to proceed to a nearby port or beach after the vessel started to list. (c) whether PHILAMGEN was properly subrogated to the rights and legal actions which the shipper had against FELMAN. the master of the vessel stopped the engine . 4 The ship captain stated that around four o'clock in the morning of 7 July 1983 he was awakened by the officer on duty to inform him that the vessel had hit a floating log. 587 of the Code of Commerce should apply. "MV Asilda" was unseaworthy when it left the port of Zamboanga. respondent court held that the filing of notice of abandonment had absolved the shipowner/agent from liability under the limited liability rule. 3 It ruled that "MV Asilda" was seaworthy when it left the port of Zamboanga as confirmed by certificates issued by the Philippine Coast Guard and the shipowner's surveyor attesting to its seaworthiness. and.

yet the distribution or stowage of the cargo on board was done in such a manner that the vessel was in top-heavy condition at the time of her departure and which condition rendered her unstable and unseaworthy for that particular voyage. the vessel suddenly listed to portside and before the captain could decide on his next move. an estimated 2." The report. Inc. In this connection. He ascribed the sinking to the entry of seawater through a hole in the hull caused by the vessel's collision with a partially submerged log. Contrary to the ship captain's allegations. 6 We subscribe to the findings of the Elite Adjusters. and the Court of Appeals that the proximate cause of the sinking of "MV Asilda" was its being top-heavy. which was adopted by the Court of Appeals. "MV Asilda" capsized and sank. 5 The Elite Adjusters. But from the moment that the vessel was utilized to load heavy cargo on its deck. . Considering that the ship's hatches were properly secured. evidence shows that approximately 2. therefore. At around eight forty-five. submitted a report regarding the sinking of " MV Asilda. with regard to the allegation that the vessel encountered big waves.500 empty Coca-Cola plastic cases were recovered near the vicinity of the sinking. and so hold that the proximate cause of the sinking of the M/V "Asilda" was her condition of unseaworthiness arising from her having been top-heavy when she departed from the Port of Zamboanga. was that the vessel wastop-heavy which is to say that while the vessel may not have been overloaded. the master of the vessel ordered his crew to abandon ship. .because the vessel was listing dangerously to portside. Shortly thereafter. . Finally. the sinking of ship during heavy weather is not a frequent occurrence and is not likely to occur unless they are inherently unstable and unseaworthy .. Several days after "MV Asilda" sank. and it was not designed to carry a substantial amount or quantity of cargo on deck. Inc. . He ordered his crew to shift the cargo back to starboard. It is settled that carrying a deck cargo raises the presumption of unseaworthiness unless it can be shown that the deck cargo will not interfere with the proper management of the ship. we believe strongly that had her cargo been confined to those that could have been accommodated under deck.. even given the prevailing weather conditions at that time of sinking.500 cases of softdrink bottles were stowed on deck. At that instance. the vessel was rendered unseaworthy for the purpose of carrying the type of cargo because the weight of the deck cargo so decreased the vessel's metacentric height as to cause it to become unstable. Her having capsized and eventually sunk was bound to happen and was therefore in the category of an inevitable occurrence (emphasis supplied). her stability would not have been affected and the vessel would not have been in any danger of capsizing. Therefore. in this case it was established that "MV Asilda" was not designed to carry substantial amount of cargo on deck. some of the cargo on deck were thrown overboard and seawater entered the engine room and cargo holds of the vessel. the empty Coca-Cola cases recovered could have come only from the vessel's deck cargo. The shifting of cargo took about an hour afterwhich he rang the engine room to resume full speed. reads — We found in the course of our investigation that a reasonable explanation for the series of lists experienced by the vessel that eventually led to her capsizing and sinking. However. The inordinate loading of cargo deck . we wish to call attention to the fact that this vessel was designed as a fishing vessel . . it must be pointed out that ships are precisely designed to be able to navigate safely even during heavy weather and frequently we hear of ships safely and successfully weathering encounters with typhoons and although they may sustain some amount of damage. We believe.

587 of the Code of Commerce. This liability however can be limited through abandonment of the vessel. contemplated by the parties to the policy. 114. He may have no control over the vessel but he has full control in the selection of the common carrier that will transport his goods. The strong winds and waves encountered by the vessel are but the ordinary vicissitudes of a sea voyage and as such merely contributed to its already unstable and unseaworthy condition. . a ship is "seaworthy when reasonably fit to perform the service. was not able to rebut this presumption. Nonetheless. Art. the shipowner. when PHILAMGEN paid it did so at its own risk. common carriers are presumed to have acted negligently. In relation to the question of subrogation. Hence." Under Sec. "(c)ommon carriers." In the event of loss of goods. as a legal limitation of a shipowner's liability. the question of seaworthiness cannot be raised by the assurer without showing concealment or misrepresentation by the assured. As such. In other words. 9 The international rule is to the effect that the right of abandonment of vessels. It was top-heavy as an excessive amount of cargo was loaded on deck. 11 It was already established at the outset that the sinking of "MV Asilda" was due to its unseaworthiness even at the time of its departure from the port of Zamboanga. it can only be excluded by terms in writing in the policy in the clearest language. as where the loss or injury was due to the fault of the shipowner and the captain. Where the shipowner is likewise to be blamed. In policies where the law will generally imply a warranty of seaworthiness. or freightage. respondent appellate court found " MV Asilda" unseaworthy with reference to the cargo and therefore ruled that there was breach of warranty of seaworthiness that rendered the assured not entitled to the payment of is claim under the policy. or upon anything which is the subject of marine insurance. and such situation will be covered by the provisions of the Civil Code on common carrier. are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them. its equipment and freightage as provided in Art. 587 will not apply. 13 And where the policy stipulates that the seaworthiness of the vessel as between the assured and the assurer is admitted. 587 of the Code of Commerce is not applicable to the case at bar. 10 It must be stressed at this point that Art. 12 Thus Sec. It is generally held that in every marine insurance policy the assured impliedly warrants to the assurer that the vessel is seaworthy and such warranty is as much a term of the contract as if expressly written on the face of the policy. On the second issue. Under Art 1733 of the Civil Code. when PHILAMGEN paid the claim of the bottling firm there was in effect a "voluntary payment" and no right of subrogation accrued in its favor. FELMAN was equally negligent. 14 . and to encounter the ordinary perils of the voyage. Art. according to all the circumstances of each case .resulted in the decrease of the vessel's metacentric height 7 thus making it unstable. there are exceptional circumstances wherein the ship agent could still be held answerable despite the abandonment. does not apply to cases where the injury or average was occasioned by the shipowner's own fault. from the nature of their business and for reasons of public policy. . It cannot therefore escape liability through the expedient of filing a notice of abandonment of the vessel by virtue of Art. 587." Thus it becomes the obligation of the cargo owner to look for a reliable common carrier which keeps its vessels in seaworthy condition. Closer supervision on the part of the shipowner could have prevented this fatal miscalculation. a warranty is implied that the ship is seaworthy. 587 speaks only of situations where the fault or negligence is committed solely by the captain. We need not belabor the alleged breach of warranty of seaworthiness by the assured as painstakingly pointed out by FELMAN to stress that subrogation will not work in this case. 113 of the Insurance Code provides that "(i)n every marine insurance upon a ship or freight. 8 Simply put. the ship agent is liable for the negligent acts of the captain in the care of goods loaded on the vessel. He also has full discretion in the choice of assurer that will underwrite a particular venture. FELMAN.

The marine policy issued by PHILAMGEN to the Coca-Cola bottling firm in at least two (2) instances has dispensed with the usual warranty of worthiness. Paragraph 15 of the Marine Open Policy No. 100367-PAG reads "(t)he liberties as per Contract of Affreightment the presence of the Negligence Clause and/or Latent Defect Clause in the Bill of Lading and/or Charter Party and/or Contract of Affreightment as between the Assured and the Company shall not prejudice the insurance. The seaworthiness of the vessel as between the Assured and the Assurers is hereby admitted." 15 The same clause is present in par. 8 of the Institute Cargo Clauses (F.P.A.) of the policy which states "(t)he seaworthiness of the vessel as between the Assured and Underwriters in hereby admitted . . . ." 16 The result of the admission of seaworthiness by the assurer PHILAMGEN may mean one or two things: (a) that the warranty of the seaworthiness is to be taken as fulfilled; or, (b) that the risk of unseaworthiness is assumed by the insurance company. 17 The insertion of such waiver clauses in cargo policies is in recognition of the realistic fact that cargo owners cannot control the state of the vessel. Thus it can be said that with such categorical waiver, PHILAMGEN has accepted the risk of unseaworthiness so that if the ship should sink by unseaworthiness, as what occurred in this case, PHILAMGEN is liable. Having disposed of this matter, we move on to the legal basis for subrogation. PHILAMGEN's action against FELMAN is squarely sanctioned by Art. 2207 of the Civil Code which provides: Art. 2207. If the plaintiff's property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. In Pan Malayan Insurance Corporation v. Court of Appeals, 18 we said that payment by the assurer to the assured operates as an equitable assignment to the assurer of all the remedies which the assured may have against the third party whose negligence or wrongful act caused the loss. The right of subrogation is not dependent upon, nor does it grow out of any privity of contract or upon payment by the insurance company of the insurance claim. It accrues simply upon payment by the insurance company of the insurance claim. The doctrine of subrogation has its roots in equity. It is designed to promote and to accomplish justice and is the mode which equity adopts to compel the ultimate payment of a debt by one who in justice, equity and good conscience ought to pay. 19 Therefore, the payment made by PHILAMGEN to Coca-Cola Bottlers Philippines, Inc., gave the former the right to bring an action as subrogee against FELMAN. Having failed to rebut the presumption of fault, the liability of FELMAN for the loss of the 7,500 cases of 1-liter Coca-Cola softdrink bottles is inevitable. WHEREFORE, the petition is GRANTED. Respondent FELMAN SHIPPING LINES is ordered to pay petitioner PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC., Seven Hundred Fifty-five Thousand Two Hundred and Fifty Pesos (P755,250.00) plus legal interest thereon counted from 29 November 1983, the date of judicial demand, pursuant to Arts. 2212 and 2213 of the Civil Code. 20 SO ORDERED. Vitug, Kapunan and Hermosisima, Jr., JJ., concur. Padilla, J., is on leave.

Republic of the Philippines SUPREME COURT Manila

THIRD DIVISION G.R. No. 143133 June 5, 2002 BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and JARDINE DAVIES TRANSPORT SERVICES, INC.,petitioners, vs. PHILIPPINE FIRST INSURANCE CO., INC., respondents. PANGANIBAN, J.: Proof of the delivery of goods in good order to a common carrier and of their arrival in bad order at their destination constitutes prima facie fault or negligence on the part of the carrier. If no adequate explanation is given as to how the loss, the destruction or the deterioration of the goods happened, the carrier shall be held liable therefor. Statement of the Case Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the July 15, 1998 Decision1 and the May 2, 2000 Resolution2 of the Court of Appeals3 (CA) in CA-GR CV No. 53571. The decretal portion of the Decision reads as follows: "WHEREFORE, in the light of the foregoing disquisition, the decision appealed from is hereby REVERSED and SET ASIDE. Defendants-appellees are ORDERED to jointly and severally pay plaintiffs-appellants the following: '1) FOUR Hundred Fifty One Thousand Twenty-Seven Pesos and 32/100 (P451,027.32) as actual damages, representing the value of the damaged cargo, plus interest at the legal rate from the time of filing of the complaint on July 25, 1991, until fully paid; '2) Attorney's fees amounting to 20% of the claim; and '3) Costs of suit.'"4 The assailed Resolution denied petitioner's Motion for Reconsideration. The CA reversed the Decision of the Regional Trial Court (RTC) of Makati City (Branch 134), which had disposed as follows: "WHEREFORE, in view of the foregoing, judgment is hereby rendered, dismissing the complaint, as well as defendant's counterclaim."5 The Facts The factual antecedents of the case are summarized by the Court of Appeals in this wise: "On June 13, 1990, CMC Trading A.G. shipped on board the M/V 'Anangel Sky' at Hamburg, Germany 242 coils of various Prime Cold Rolled Steel sheets for transportation to Manila consigned to the Philippine Steel Trading Corporation. On July 28, 1990, M/V Anangel Sky arrived at the port of Manila and, within the subsequent days, discharged the subject cargo. Four (4) coils were found to be in bad order B.O. Tally sheet No. 154974. Finding the four (4) coils in their damaged state to be unfit for the intended purpose, the consignee Philippine Steel Trading Corporation declared the same as total loss. "Despite receipt of a formal demand, defendants-appellees refused to submit to the consignee's claim. Consequently, plaintiff-appellant paid the consignee five hundred six thousand eighty six & 50/100 pesos (P506,086.50), and was subrogated to the latter's rights and causes of action against defendants-appellees. Subsequently, plaintiffappellant instituted this complaint for recovery of the amount paid by them, to the consignee as insured. "Impugning the propriety of the suit against them, defendants-appellees imputed that the damage and/or loss was due to pre-shipment damage, to the inherent nature, vice or defect of the goods, or to perils, danger and accidents of the sea, or to insufficiency of packing thereof, or to the act or omission of the shipper of the goods or their representatives. In addition thereto, defendants-appellees argued that their liability, if there be any, should not exceed the limitations of liability provided for in the bill of lading

and other pertinent laws. Finally, defendants-appellees averred that, in any event, they exercised due diligence and foresight required by law to prevent any damage/loss to said shipment."6 Ruling of the Trial Court The RTC dismissed the Complaint because respondent had failed to prove its claims with the quantum of proof required by law.7 It likewise debunked petitioners' counterclaim, because respondent's suit was not manifestly frivolous or primarily intended to harass them.8 Ruling of the Court of Appeals In reversing the trial court, the CA ruled that petitioners were liable for the loss or the damage of the goods shipped, because they had failed to overcome the presumption of negligence imposed on common carriers. The CA further held as inadequately proven petitioners' claim that the loss or the deterioration of the goods was due to pre-shipment damage.9 It likewise opined that the notation "metal envelopes rust stained and slightly dented" placed on the Bill of Lading had not been the proximate cause of the damage to the four (4) coils.10 As to the extent of petitioners' liability, the CA held that the package limitation under COGSA was not applicable, because the words "L/C No. 90/02447" indicated that a higher valuation of the cargo had been declared by the shipper. The CA, however, affirmed the award of attorney's fees. Hence, this Petition.11 Issues In their Memorandum, petitioners raise the following issues for the Court's consideration: I "Whether or not plaintiff by presenting only one witness who has never seen the subject shipment and whose testimony is purely hearsay is sufficient to pave the way for the applicability of Article 1735 of the Civil Code; II "Whether or not the consignee/plaintiff filed the required notice of loss within the time required by law; III "Whether or not a notation in the bill of lading at the time of loading is sufficient to show pre-shipment damage and to exempt herein defendants from liability; IV "Whether or not the "PACKAGE LIMITATION" of liability under Section 4 (5) of COGSA is applicable to the case at bar."12 In sum, the issues boil down to three: 1. Whether petitioners have overcome the presumption of negligence of a common carrier 2. Whether the notice of loss was timely filed 3. Whether the package limitation of liability is applicable This Court's Ruling The Petition is partly meritorious. First Issue: Proof of Negligence Petitioners contend that the presumption of fault imposed on common carriers should not be applied on the basis of the lone testimony offered by private respondent. The contention is untenable. Well-settled is the rule that common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence and vigilance with respect to the safety of the goods and the passengers they transport.13 Thus, common carriers are required to

Normally. BM Santos Checkers Agency. to the consignee or to the person who has a right to receive them. Pertinent portions of his testimony are reproduce hereunder: "Q. the steel sheets found in bad order were wet with fresh water. they have the burden of proving that they observed such diligence. 17 Hence. If no adequate explanation is given as to how the deterioration. petitioners received the subject shipment in good order and condition in Hamburg.25 First. 22 This is a closed list. it merely adheres to the agreement prepared by them. Owing to this high degree of diligence required of them. It is the company who contracts the checkers. Third. head checker of BM Santos Checkers Agency. Inc. (2) an act of the public enemy in war.23 Corollary to the foregoing. Will you inform the Honorable Court with what company you are connected? A." 14 The extraordinary responsibility lasts from the time the goods are unconditionally placed in the possession of and received for transportation by the carrier until they are delivered. as a general rule. unless they prove that they exercised extraordinary diligence in transporting the goods. 1990 -. or (5) an order or act of competent public authority. storm. Bad Order Tally Sheet No. sir. lightning. Fifth. (4) the character of the goods or defects in the packing or the container. mere proof of delivery of the goods in good order to a common carrier and of their arrival in bad order at their destination constitutes a prima facie case of fault or negligence against the carrier. whether international or civil.16 Even if it wants to. common carriers. actually or constructively.. 15497928 issued by Jardine Davies Transport Services.in a letter31 addressed to the Philippine Steel Coating Corporation and dated October 12. the metal envelopes ruststained and heavily buckled.19 In order to avoid responsibility for any loss or damage. including such methods as their nature requires. the loss or the destruction of the goods happened.18 That is. stated that the four coils were in bad order and condition. based on the sample submitted and tested. the riding public enters into a contract of transportation with common carriers. the presumption of fault or negligence will not arise21 if the loss is due to any of the following causes: (1) flood. (3) an act or omission of the shipper or owner of the goods. petitioners -. Q. . prior to the unloading of the cargo. the Certificate of Analysis30 stated that.15 This strict requirement is justified by the fact that. Mr.24 That petitioners failed to rebut the prima facie presumption of negligence is revealed in the case at bar by a review of the records and more so by the evidence adduced by respondent. or other natural disaster or calamity.admitted that they were aware of the condition of the four coils found in bad order and condition.20 However. loss or deterioration is other than the enumerated circumstances. you mentioned that you are a Head Checker.26 Second. How is BM Santos checkers Agency related or connected with defendant Jardine Davies Transport Services? A. If the cause of destruction. therefore. earthquake. and the contents thereof exposed and rusty. it cannot submit its own stipulations for their approval. then the carrier is liable therefor. the transporter shall be held responsible.render service with the greatest skill and foresight and "to use all reason[a]ble means to ascertain the nature and characteristics of the goods tendered for shipment. Germany. an Inspection Report27 prepared and signed by representatives of both parties showed the steel bands broken.29 Fourth. without a hand or a voice in the preparation of such contract. sir. and to exercise due care in the handling and stowage. Esmerio. a request for a bad order survey is made in case there is an apparent or a presumed loss or damage. are presumed to have been at fault or negligent if the goods they transported deteriorated or got lost or destroyed. These facts were confirmed by Ruperto Esmerio. as stated in the Bill of Lading.

on or about that date. will you inform this Honorable Court your duties and responsibilities? A. From the evidence on record. the master of the vessel and his crew should have undertaken precautionary measures to avoid possible deterioration of the cargo. or the natural propensities of animals.Q. You mentioned that you are a Head Checker. We are not convinced. The scrap of the cargoes is broken already and the rope is loosen and the cargoes are dent on the sides. sir. Your Honor that shows the condition of the steel sheets. it cannot be reasonably concluded that the damage to the four coils was due to the condition noted on the Bill of Lading. however. there is no showing that petitioners exercised due diligence to forestall or lessen the loss. the words "metal envelopes rust stained and slightly dented" were noted on the Bill of Lading.35 True. do you recall having attended the discharging and inspection of cold steel sheets in coil on board the MV/AN ANGEL SKY? A. MACAMAY: Objection. ."32 All these conclusively prove the fact of shipment in good order and condition and the consequent damage to the four coils while in the possession of petitioner.33 who notably failed to explain why. Based on your inspection since you were also present at that time. sir. were you still connected or employed with BM Santos as a Head Checker? A.40 The aforecited exception refers to cases when goods are lost or damaged while in transit as a result of the natural decay of perishable goods or the fermentation or evaporation of substances liable therefor. I think the document itself reflects the condition of the cold steel sheets and the best evidence is the document itself. defects in packages in which they are shipped. the master of the vessel should have known at the outset that metal envelopes in the said state would eventually deteriorate when not properly stored while in transit.34 Further. I am the representative of BM Santos on board the vessel. xxx xxx xxx Q. They cite the notation "metal envelopes rust stained and slightly dented" printed on the Bill of Lading as evidence that the character of the goods or defect in the packing or the containers was the proximate cause of the damage. to supervise the discharge of cargoes. petitioners further contend that they are exempted from liability under Article 1734(4) of the Civil Code.38 Having failed to discharge the burden of proving that they have exercised the extraordinary diligence required by law.41 None of these is present in the instant case. But none of these measures was taken. petitioners failed to prove that they observed the extraordinary diligence and precaution which the law requires a common carrier to know and to follow to avoid damage to or destruction of the goods entrusted to it for safe carriage and delivery. On or about August 1. COURT: Let the witness answer. the necessary and natural wear of goods in transport. I was there. Yes. Your Honor. will you inform this Honorable Court the condition or the appearance of the bad order cargoes that were unloaded from the MV/ANANGEL SKY? ATTY. 1990. petitioners cannot escape liability for the damage to the four coils.37 Equipped with the proper knowledge of the nature of steel sheets in coils and of the proper way of transporting them.39 In their attempt to escape liability. Yes. xxx xxx xxx Q.36 Having been in the service for several years. Q. And. A. sir.

the right and the obligations of common carriers shall be governed by the Code of Commerce and special . because the value of the subject shipment was declared by petitioners beforehand.59 There are. a failure to file a notice of claim within three days will not bar recovery if it is nonetheless filed within one year. has been the subject of a joint inspection or survey.Further. and (2) it has been fairly and freely agreed upon by the parties. once it accepts the goods notwithstanding such condition. an Inspection Report46 as to the condition of the goods was prepared and signed by representatives of both parties. a stipulation in the bill of lading limiting to a certain sum the common carrier's liability for loss or destruction of a cargo -.42 Thus. 1990. paragraph 6 of the Carriage of Goods by Sea Act44 (COGSA). 1991. it is not relieved of liability for loss or injury resulting therefrom. Third Issue: Package Limitation Assuming arguendo they are liable for respondent's claims.53 Second. the consignee. that the Civil Code does not limit the liability of the common carrier to a fixed amount per package. Davide Jr.is sanctioned by law. Court of Appeals. it is a contract by which three parties -.45 We are not persuaded.unless the shipper or owner declares a greater value58 -.49 In Loadstar Shipping Co. the acceptance of the bill of lading by the shipper and the consignee. however. as stated in the same provision. They assert that the cargo was discharged on July 31. petitioners have not successfully proven the application of any of the aforecited exceptions in the present case. 90/02447" in the said Bill of Lading. however. cargoes sustained during transit--may be applied suppletorily to the case at bar. petitioners contend that their liability should be limited to US$500 per package as provided in the Bill of Lading and by Section 4(5)52 of COGSA. at the time of their receipt. even if the fact of improper packing was known to the carrier or its crew or was apparent upon ordinary observation. Thus. First.43 Second Issue: Notice of Loss Petitioners claim that pursuant to Section 3. in the words of the ponente.48 This one-year prescriptive period also applies to the shipper. the Carriage of Goods by Sea Act (COGSA)--which provides for a one-year period of limitation on claims for loss of.: "Inasmuch as the neither the Civil Code nor the Code of Commerce states a specific prescriptive period on the matter. Inc.60 The rationale for this rule is to bind the shippers by their agreement to the value (maximum valuation) of their goods. As stated earlier. with full knowledge of its contents.50 we ruled that a claim is not barred by prescription as long as the one-year period has not lapsed.62 In all matters not regulated by the Civil Code. the carrier. 1990. as evidenced by the reference to and the insertion of the Letter of Credit or "L/C No. 1990.56 In a nutshell.. it is a receipt for the goods shipped. or damage to.47 Second. while the Complaint51 was filed by respondent on July 25. the insurer of the goods or any legal holder of the bill of lading. respondent should have filed its Notice of Loss within three days from delivery. but that respondent filed its Notice of Claim only on September 18. First. the cargo was discharged on July 31. the shipper. prior to unloading the cargo.57 Further. gives rise to the presumption that it constituted a perfected and binding contract. within the one-year prescriptive period. and the consignee -undertake specific responsibilities and assume stipulated obligations.54 A bill of lading serves two functions. two conditions to be satisfied: (1) the contract is reasonable and just under the circumstances.53 On the other hand.namely. the above-cited provision of COGSA provides that the notice of claim need not be given if the state of the goods. v.61 It is to be noted." In the present case. respondent argues that Section 4(5) of COGSA is inapplicable. Chief Justice Hilario G.

as stipulated in the bill of lading in the present case. First. Petitioners' liability is reduced to US$2. the Petition is partly granted and the assailed Decision MODIFIED.. concur. Puno.64 The provisions on limited liability are as much a part of the bill of lading as though physically in it and as though placed there by agreement of the parties.72 we explained the meaning of packages: "When what would ordinarily be considered packages are shipped in a container supplied by the carrier and the number of such units is disclosed in the shipping documents. a notation in the Bill of Lading which indicated the amount of the Letter of Credit obtained by the shipper for the importation of steel sheets did not effect a declaration of the value of the goods as required by the bill. JJ.69 we held that a bill of lading was separate from the Other Letter of Credit arrangements.65 In the case before us. on official leave. the four damaged coils should be considered as the shipping unit subject to the US$500 limitation.laws. Intermediate Appellate Court. No pronouncement as to costs.68 Second. there was no stipulation in the Bill of Lading 66 limiting the carrier's liability. 90/02447 cannot be the basis for petitioners' liability. which is suppletory to the provisions of the Civil Code. and the contract of issuance of a letter of credit between the amount of goods described in the commercial invoice in the contract of sale and the amount allowed in the letter of credit will not affect the validity and enforceability of the contract of carriage as embodied in the bill of lading.000 plus interest at the legal rate of six percent from the time of the filing of the Complaint on July 25. We ruled thus: "(T)he contract of carriage. Sandoval-Gutierrez. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION .67 That notation was made only for the convenience of the shipper and the bank processing the Letter of Credit. and Carpio.71 In Eastern Shipping Lines. Neither did the shipper declare a higher valuation of the goods to be shipped. must be treated independently of the contract of sale between the seller and the buyer. the COGSA.63 Thus. As the bank cannot be expected to look beyond the documents presented to it by the seller pursuant to the letter of credit.. J. the insertion of the words "L/C No. petitioners' liability should be computed based on US$500 per package and not on the per metric ton price declared in the Letter of Credit. This fact notwithstanding. the ruling in Eastern Shipping Lines and the fact that the Bill of Lading clearly disclosed the contents of the containers. each of those units and not the container constitutes the 'package' referred to in the liability limitation provision of Carriage of Goods by Sea Act."70 In the light of the foregoing. neither can the carrier be expected to go beyond the representations of the shipper in the bill of lading and to verify their accuracy vis-à-vis the commercial invoice and the letter of credit. in Keng Hua Paper Products v. 1991 until the finality of this Decision." Considering. as well as the nature of the steel sheets. abroad. Thus. therefore. and 12 percent thereafter until fully paid. supplements the latter by establishing a statutory provision limiting the carrier's liability in the absence of a shipper's declaration of a higher value in the bill of lading. the number of units. the discrepancy between the amount of goods indicated in the invoice and the amount in the bill of lading cannot negate petitioner's obligation to private respondent arising from the contract of transportation. SO ORDERED. WHEREFORE. Court of Appeals. v. Inc.

COURT OF APPEALS AND SEVEN BROTHERS SHIPPING CORPORATION. the reasonable attorney's fees in the amount equivalent to five (5) percent of the amount of the claim and the costs of the suit. vs. Victorio Chua. to pay plaintiff the sum of TWO MILLION PESOS (P2. plaintiff insured the logs against loss and/or damage with defendant South Sea Surety and Insurance Co.000. shortlanding. In the meantime.00 on said date. petitioner.) entered into an agreement with the defendant Seven Brothers (Shipping Corporation) whereby the latter undertook to load on board its vessel M/V Seven Ambassador the former's lauan round logs numbering 940 at the port of Maconacon.R.00 and the latter issued its Marine Cargo Insurance Policy No. 1984 until the amount is fully paid or in the alternative. On 24 January 1984. Judgment is hereby rendered ordering South Sea Surety and Insurance Co.000.00 (Exh. Inc. Isabela for shipment to Manila.000. cancelled the insurance policy it issued as of the date of the inception for . On 30 January 1984. 1984 until full payment thereof. CV-20156 promulgated on October 15.000. the plaintiff gave the check in payment of the premium on the insurance policy to Mr. the appealed judgment is hereby AFFIRMED except in so far (sic) as the liability of the Seven Brothers Shipping Corporation to the plaintiff is concerned which is hereby REVERSED and SET ASIDE. 84/24229 for P2. for P2. Plaintiff is hereby ordered to pay defendant Seven Brothers Shipping Corporation the sum of TWO HUNDRED THIRTY THOUSAND PESOS (P230. No... 102316 June 30. Inc. 1991.000. the South Sea Surety and Insurance Co. the dispositive portion of which reads: WHEREFORE. Instead. J.00) representing the balance of the stipulated freight charges.00) representing the value of lost logs plus legal interest from the date of demand on April 24. Inc.: Is a stipulation in a charter party that the "(o)wners shall not be responsible for loss.000. In its assailed Decision.00) representing the value of the policy of the lost logs with legal interest thereon from the date of demand on February 2. defendant Seven Brothers Shipping Corporation to pay plaintiff the amount of TWO MILLION PESOS (2. plaintiff (Valenzuela Hardwood and Industrial Supply. split.000. Defendant South Sea Surety and Insurance Company's counterclaim is hereby dismissed.G.R. 3 The Facts The factual antecedents of this case as narrated in the Court of Appeals Decision are as follows: It appears that on 16 January 1984.000. No. "E") to cover payment of the premium and documentary stamps due on the policy was tendered due to the insurer but was not accepted. PANGANIBAN.625.000. On 20 January 1984. Inc.. Respondent Court of Appeals held: WHEREFORE.. Metro Manila. breakages and any kind of damages to the cargo" 1 valid? This is the main question raised in this petition for review assailing the Decision of Respondent Court of Appeals 2 in CAG. The Court of Appeals modified the judgment of the Regional Trial Court of Valenzuela. 1997 VALENZUELA HARDWOOD AND INDUSTRIAL SUPPLY INC. respondents. Branch 171. the said vessel M/V Seven Ambassador sank on 25 January 1984 resulting in the loss of the plaintiff's insured logs. a check for P5.

F. causing the iron chains to snap and the logs to roll to the portside. Inc. to pay plaintiff-appellee P2. After due hearing and trial. . Inc.000. The lower court erred in holding that the proximate cause of the sinking of the vessel Seven Ambassadors. and likewise erred in not holding that he was the representative of the insurance broker Columbia Insurance Brokers. the court a quo rendered judgment in favor of plaintiff and against defendants. C. B. B. The trial court erred in ordering defendant-appellant South Sea Surety and Insurance Company. The trial court erred in disregarding the endorsement of cancellation of the policy due to non-payment of premium and documentary stamps. The trial court erred in disregarding the "receipt of payment clause" attached to and forming part of the Marine Cargo Insurance Policy No. 84/24229.00) pesos representing the value of the logs plus legal interest from date of demand until fully paid. Both defendants shipping corporation and the surety company appealed.. G. Inc. The lower court erred in holding defendant-appellant Seven Brothers Shipping Corporation liable in the alternative and ordering/directing it to pay plaintiffappellee the amount of two million (2. Defendant-appellant Seven Brothers Shipping Corporation impute (sic) to the court a quo the following assignment of errors. Ltd. D. The trial court erred in holding that Victorio Chua was an agent of defendantappellant South Sea Surety and Insurance Company. The lower court erred in not awarding defendant-appellant Seven Brothers Corporation its counter-claim for attorney's fees. was not due to fortuitous event but to the negligence of the captain in stowing and securing the logs on board.non-payment of the premium due in accordance with Section 77 of the Insurance Code. Inc. C. The trial court in disregarding the statement of account or bill stating the amount of premium and documentary stamps to be paid on the policy by the plaintiff-appellee..000. Inc. On 2 February 1984. The lower court erred in declaring that the non-liability clause of the Seven Brothers Shipping Corporation from logs (sic) of the cargo stipulated in the charter party is void for being contrary to public policy invoking article 1745 of the New Civil Code.00 representing value of the policy with legal interest from 2 February 1984 until the amount is fully paid. Plaintiff likewise filed a formal claim with defendant Seven Brothers Shipping Corporation for the value of the lost logs but the latter denied the claim. E. The lower court erred in ordering defendant-appellant Seven Brothers Shipping Corporation to pay appellee reasonable attorney's fees in the amount equivalent to 5% of the amount of the claim and the costs of the suit. The trial court erred in holding that Victorio Chua received compensation/commission on the premiums paid on the policies issued by the defendant-appellant South Sea Surety and Insurance Company.000. E. F. D. to wit: A. The trial court erred in not applying Section 77 of the Insurance Code. The lower court erred in not dismissing the complaint against Seven Brothers Shipping Corporation. the payment of the proceeds of the policy but the latter denied liability under the policy.000. assigns the following errors: A. Defendant-appellant South Sea Surety and Insurance Co. plaintiff demanded from defendant South Sea Surety and Insurance Co.

" 10 The validity of this stipulation is the lis mota of this case." 9 The Court's Ruling The petition is not meritorious. 1995. 23 SCRA 24). but modified it by holding that Seven Brothers Shipping Corporation ("Seven Brothers") was not liable for the lost cargo. 8 The Court is now called upon to resolve the petition for review filed by Valenzuela assailing the CA Decision which exempted Seven Brothers from any liability for the lost cargo. 5 In modifying the RTC judgment. vs. In a Resolution dated June 2.H.. short-landing. Inc. The trial court erred in not awarding to the defendant-appellant the attorney's fees alleged and proven in its counterclaim. Inc. Inc. split. the respondent appellate court ratiocinated thus: It appears that there is a stipulation in the charter party that the ship owner would be exempted from liability in case of loss. breakages and any kind of damages to the cargo. Even the latter admits this in its petition. this Court denied the petition of South Sea. 4 The Court of Appeals affirmed in part the RTC judgment by sustaining the liability of South Sea Surety and Insurance Company ("South Sea"). The Issue Petitioner Valenzuela's arguments resolve around a single issue: "whether or not respondent Court (of Appeals) committed a reversible error in upholding the validity of the stipulation in the charter party executed between the petitioner and the private respondent exempting the latter from liability for the loss of petitioner's logs arising from the negligence of its (Seven Brothers') captain. a common carrier undertaking to carry a special cargo or chartered to a special person only. As a private carrier. a stipulation exempting the owner from liability even for the negligence of its agent is valid (Home Insurance Company." 11 Likewise undisputed is the status of Private Respondent Seven Brothers as a private carrier when it contracted to transport the cargo of Petitioner Valenzuela. 6 South Sea and herein Petitioner Valenzuela Hardwood and Industrial Supply. The shipping corporation should not therefore be held liable for the loss of the logs. 7 There the Court found no reason to reverse the factual findings of the trial court and the Court of Appeals that Chua was indeed an authorized agent of South Sea when he received Valenzuela's premium payment for the marine cargo insurance policy which was thus binding on the insurer. ("Valenzuela") filed separate petitions for review before this Court. Validity of Stipulation is Lis Mota The charter party between the petitioner and private respondent stipulated that the "(o)wners shall not be responsible for loss. Under American jurisprudence. American Steamship Agencies. The primary issue to be resolved before us is whether defendants shipping corporation and the surety company are liable to the plaintiff for the latter's lost logs. 12 . The provisions on common carriers should not be applied where the carrier is not acting as such but as a private carrier. becomes a private carrier. The court a quo erred in applying the provisions of the Civil Code on common carriers to establish the liability of the shipping corporation. It should be noted at the outset that there is no dispute between the parties that the proximate cause of the sinking of M/V Seven Ambassadors resulting in the loss of its cargo was the "snapping of the iron chains and the subsequent rolling of the logs to the portside due to the negligence of the captain in stowing and securing the logs on board the vessel and not due to fortuitous event.

vehicle. 18 In that case. destruction. Pursuant to Article 1306 17 of the Civil Code. Article 1745 and other Civil Code provisions on common carriers which were cited by petitioner may not be applied unless expressly stipulated by the parties in their charter party. such stipulation is valid because it is freely entered into by the parties and the same is not contrary to law. morals.The trial court deemed the charter party stipulation void for being contrary to public policy. is dispensed with or diminished. they were resolved long ago by this Court in Home Insurance Co. Bengzon. American Steamship Agencies. 16 In a contract of private carriage. (7) That the common carrier is not responsible for the loss. Under American jurisprudence. (2) That the common carrier will not be liable for any loss. 13 citing Article 1745 of the Civil Code which provides: Art. Inc. the stringent provisions of the Civil Code on common carriers protecting the general public cannot justifiably be applied to a ship transporting commercial goods as a private carrier. the public policy embodied therein is not contravened by stipulations in a charter party that lessen or remove the protection given by law in contracts involving common carriers. Consequently. (6) That the common carrier's liability for acts committed by thieves. We stress that in a contract of private carriage. vs. through Mr. Citing Article 1306 and paragraph 1. the trial court similarly nullified a stipulation identical to that involved in the present case for being contrary to public policy based on Article 1744 of the Civil Code and Article 587 of the Code of Commerce. Any of the following or similar stipulations shall be considered unreasonable. unjust and contrary to public policy: (1) That the goods are transported at the risk of the owner or shipper. the parties may freely stipulate their duties and obligations which perforce would be binding on them. a common carrier undertaking to . the trial court held the shipowner liable for damages resulting for the partial loss of the cargo. it is undisputed that private respondent had acted as a private carrier in transporting petitioner's lauan logs. or public policy. ship. 1745. or deterioration of goods on account of the defective condition of the car. public order. Petitioner Valenzuela adds that the stipulation is void for being contrary to Articles 586 and 587 of the Code of Commerce 14 and Articles 1170 and 1173 of the Civil Code. The issue posed in this case and the arguments raised by petitioner are not novel. airplane or other equipment used in the contract of carriage. Unlike in a contract involving a common carrier." The Court is not persuaded. Indeed. As adverted to earlier. or deterioration of the goods. or of a man of ordinary prudence in the vigilance over the movables transported. Justice Jose P. 15 petitioner further contends that said stipulation "gives no duty or obligation to the private respondent to observe the diligence of a good father of a family in the custody and transportation of the cargo. (3) That the common carrier need not observe any diligence in the custody of the goods. the parties may validly stipulate that responsibility for the cargo rests solely on the charterer. their contract of private carriage is not even a contract of adhesion. the following well-settled observation and doctrine: The provisions of our Civil Code on common carriers were taken from AngloAmerican law. good customs. exempting the shipowner from liability for loss of or damage to the cargo caused even by the negligence of the ship captain. or of robbers who do not act with grave or irresistible threat. destruction. violence or force. private carriage does not involve the general public. (4) That the common carrier shall exercise a degree of diligence less than that of a good father of a family. (5) That the common carrier shall not be responsible for the acts or omissions of his or its employees. Hence. Consequently. Article 1409 of the Civil Code. Thus. This Court reversed the trial court and laid down.

carry a special cargo or chartered to a special person only, becomes a private carrier. As a private carrier, a stipulation exempting the owner from liability for the negligence of its agent is not against public policy, and is deemed valid. Such doctrine We find reasonable. The Civil Code provisions on common carriers should not be applied where the carrier is not acting as such but as a private carrier. The stipulation in the charter party absolving the owner from liability for loss due to the negligence of its agent would be void if the strict public policy governing common carriers is applied. Such policy has no force where the public at large is not involved, as in this case of a ship totally chartered for the used of a single party. 19 (Emphasis supplied.) Indeed, where the reason for the rule ceases, the rule itself does not apply. The general public enters into a contract of transportation with common carriers without a hand or a voice in the preparation thereof. The riding public merely adheres to the contract; even if the public wants to, it cannot submit its own stipulations for the approval of the common carrier. Thus, the law on common carriers extends its protective mantle against one-sided stipulations inserted in tickets, invoices or other documents over which the riding public has no understanding or, worse, no choice. Compared to the general public, a charterer in a contract of private carriage is not similarly situated. It can — and in fact it usually does — enter into a free and voluntary agreement. In practice, the parties in a contract of private carriage can stipulate the carrier's obligations and liabilities over the shipment which, in turn, determine the price or consideration of the charter. Thus, a charterer, in exchange for convenience and economy, may opt to set aside the protection of the law on common carriers. When the charterer decides to exercise this option, he takes a normal business risk. Petitioner contends that the rule in Home Insurance is not applicable to the present case because it "covers only a stipulation exempting a private carrier from liability for the negligence of his agent, but it does not apply to a stipulation exempting a private carrier like private respondent from the negligence of his employee or servant which is the situation in this case." 20 This contention of petitioner is bereft of merit, for it raises a distinction without any substantive difference. The case Home Insurance specifically dealt with "the liability of the shipowner for acts or negligence of its captain and crew" 21 and a charter party stipulation which "exempts the owner of the vessel from any loss or damage or delay arising from any other source, even from the neglect or fault of the captain or crew or some other person employed by the owner on board, for whose acts the owner would ordinarily be liable except for said paragraph." 22 Undoubtedly, Home Insurance is applicable to the case at bar. The naked assertion of petitioner that the American rule enunciated in Home Insurance is not the rule in the Philippines 23 deserves scant consideration. The Court there categorically held that said rule was "reasonable" and proceeded to apply it in the resolution of that case. Petitioner miserably failed to show such circumstances or arguments which would necessitate a departure from a well-settled rule. Consequently, our ruling in said case remains a binding judicial precedent based on the doctrine of stare decisis and Article 8 of the Civil Code which provides that "(j)udicial decisions applying or interpreting the laws or the Constitution shall form part of the legal system of the Philippines." In fine, the respondent appellate court aptly stated that "[in the case of] a private carrier, a stipulation exempting the owner from liability even for the negligence of its agents is valid." 24 Other Arguments On the basis of the foregoing alone, the present petition may already be denied; the Court, however, will discuss the other arguments of petitioner for the benefit and satisfaction of all concerned. Articles 586 and 587, Code of Commerce

Petitioner Valenzuela insists that the charter party stipulation is contrary to Articles 586 and 587 of the Code of Commerce which confer on petitioner the right to recover damages from the shipowner and ship agent for the acts or conduct of the captain. 25 We are not persuaded. Whatever rights petitioner may have under the aforementioned statutory provisions were waived when it entered into the charter party. Article 6 of the Civil Code provides that "(r)ights may be waived, unless the waiver is contrary to law, public order, public policy, morals, or good customs, or prejudicial to a person with a right recognized by law." As a general rule, patrimonial rights may be waived as opposed to rights to personality and family rights which may not be made the subject of waiver. 26 Being patently and undoubtedly patrimonial, petitioner's right conferred under said articles may be waived. This, the petitioner did by acceding to the contractual stipulation that it is solely responsible or any damage to the cargo, thereby exempting the private carrier from any responsibility for loss or damage thereto. Furthermore, as discussed above, the contract of private carriage binds petitioner and private respondent alone; it is not imbued with public policy considerations for the general public or third persons are not affected thereby. Articles 1170 and 1173, Civil Code Petitioner likewise argues that the stipulation subject of this controversy is void for being contrary to Articles 1170 and 1173 of the Civil Code 27 which read: Art. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the provisions of articles 1171 and 2201, shall apply. If the law does not state the diligence which is to be observed in the performance, that which is expected of a good father of a family shall be required. The Court notes that the foregoing articles are applicable only to the obligor or the one with an obligation to perform. In the instant case, Private Respondent Seven Brothers is not an obligor in respect of the cargo, for this obligation to bear the loss was shifted to petitioner by virtue of the charter party. This shifting of responsibility, as earlier observed, is not void. The provisions cited by petitioner are, therefore, inapplicable to the present case. Moreover, the factual milieu of this case does not justify the application of the second paragraph of Article 1173 of the Civil Code which prescribes the standard of diligence to be observed in the event the law or the contract is silent. In the instant case, Article 362 of the Code of Commerce 28 provides the standard of ordinary diligence for the carriage of goods by a carrier. The standard of diligence under this statutory provision may, however, be modified in a contract of private carriage as the petitioner and private respondent had done in their charter party. Cases Cited by Petitioner Inapplicable Petitioner cites Shewaram vs. Philippine Airlines, Inc. 29 which, in turn, quoted Juan Ysmael & Co. vs. Gabino Barreto & Co. 30 and argues that the public policy considerations stated there vis-a-vis contractual stipulations limiting the carrier's liability be applied "with equal force" to this case. 31 It also cites Manila Railroad Co. vs.Compañia Transatlantica 32 and contends that stipulations exempting a party from liability for damages due to negligence "should not be countenanced" and should be "strictly construed" against the party claiming its benefit.33 We disagree. The cases of Shewaram and Ysmael both involve a common carrier; thus, they necessarily justify the application of such policy considerations and concomitantly stricter rules. As already discussed above, the public policy considerations behind the rigorous treatment of common carriers are absent in the case of private carriers. Hence, the stringent laws applicable to

common carriers are not applied to private carries. The case of Manila Railroad is also inapplicable because the action for damages there does not involve a contract for transportation. Furthermore, the defendant therein made a "promise to use due care in the lifting operations" and, consequently, it was "bound by its undertaking"'; besides, the exemption was intended to cover accidents due to hidden defects in the apparatus or other unforseeable occurrences" not caused by its "personal negligence." This promise was thus constructed to make sense together with the stipulation against liability for damages. 34 In the present case, we stress that the private respondent made no such promise. The agreement of the parties to exempt the shipowner from responsibility for any damage to the cargo and place responsibility over the same to petitioner is the lone stipulation considered now by this Court. Finally, petitioner points to Standard Oil Co. of New York vs. Lopez Costelo, 35 Walter A. Smith & Co. vs.Cadwallader Gibson Lumber Co., 36 N. T . Hashim and Co. vs. Rocha and Co., 37 Ohta Development Co. vs.Steamship "Pompey" 38 and Limpangco Sons vs. Yangco Steamship Co. 39 in support of its contention that the shipowner be held liable for damages. 40 These however are not on all fours with the present case because they do not involve a similar factual milieu or an identical stipulation in the charter party expressly exempting the shipowner form responsibility for any damage to the cargo. Effect of the South Sea Resolution In its memorandum, Seven Brothers argues that petitioner has no cause of action against it because this Court has earlier affirmed the liability of South Sea for the loss suffered by petitioner. Private respondent submits that petitioner is not legally entitled to collect twice for a single loss. 41 In view of the above disquisition upholding the validity of the questioned charter party stipulation and holding that petitioner may not recover from private respondent, the present issue is moot and academic. It suffices to state that the Resolution of this Court dated June 2, 1995 42 affirming the liability of South Sea does not, by itself, necessarily preclude the petitioner from proceeding against private respondent. An aggrieved party may still recover the deficiency for the person causing the loss in the event the amount paid by the insurance company does not fully cover the loss. Article 2207 of the Civil Code provides: Art. 2207. If the plaintiff's property has been insured, and he has received indemnity for the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency form the person causing the loss or injury. WHEREFORE, premises considered, the petition is hereby DENIED for its utter failure to show any reversible error on the part of Respondent Court. The assailed Decision is AFFIRMED. SO ORDERED. Narvasa, C.J., Davide, Jr., Melo and Francisco, JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-23733 October 31, 1969 HERMINIO L. NOCUM, plaintiff-appellee, vs. LAGUNA TAYABAS BUS COMPANY, defendant-appellant. Fernando M. Mangubat and Felimon H. Mendoza for plaintiff-appellee. Domingo E. de Lara and Associates for defendant-appellant.

They left Azcarraga at about 11:30 in the morning and when the explosion occurred. Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734. ART. 1733. The main basis of the trial court's decision is that appellant did not observe the extraordinary or utmost diligence of a very cautious person required by the following articles of the Civil Code: ART.BARREDO. Laguna. with a due regard for all the circumstances.00 for actual damages and P500. are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them. wherein appellee Herminio L. Common carriers. according to all the circumstances of each case. he was thrown out. The bus conductor. III THE LOWER COURT ERRED IN NOT DISMISSING THE COMPLAINT. We find the appeal to be well taken. a man with a box went up the baggage compartment of the bus where he already was and said box was placed under the seat. a witness for the plaintiff. 834. In case of death of or injuries to passengers. testified that the box belonged to a passenger whose name he does not know and who told him that it contained miscellaneous items and clothes. common carriers are presumed to have been at fault or to have acted negligently. from the nature of their business and for reasons of public policy. Nos. 120 then making a trip within the barrio of Dita. Appellee. J. was injured as a consequence of the explosion of firecrackers. from a judgment of the said court (Court of First Instance of Batangas) in its Civil Case No. contained in a box. Nocum was plaintiff.00 as attorney's fees with legal interest from the filing of the complaint plus costs. 1735. who was a passenger in appellant's Bus No.351. using the utmost diligence of very cautious persons. Appellee has not filed any brief. unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755. THE CONTENTS OF WHICH WERE MISREPRESENTED BY A PASSENGER. All that We have before Us is appellant's brief with the following assignment of errors: I BASED ON THE FACTS THE LOWER COURT FOUND AS ESTABLISHED. PC investigation report states that thirty seven (37) passengers were injured (Exhibits "O" and "2"). Analyzing the evidence presented by the parties. 6. he charged him for it twenty-five centavos .: Appeal of the Laguna Tayabas Bus Co. Upon consideration of the points raised and discussed by appellant. WITH COSTS AGAINST THE APPELLEE. and 7. Municipality of Bay. 1755.. 5. loaded in said bus and declared to its conductor as containing clothes and miscellaneous items by a co-passenger. Sancho Mendoza. defendant in the Court below. AS A MATTER OF LAW. His Honor found: According to Severino Andaya. while the extraordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756. IT ERRED AS A MATTER OF LAW IN NOT ABSOLVING APPELLANT FROM LIABILITY RESULTING FROM THE EXPLOSION OF FIRECRACKERS CONTAINED IN A PACKAGE. ART 1756. The appeal is purely on legal questions. II THE LOWER COURT ERRED. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide. sentencing appellant to pay appellee the sum of P1. He helped the owner in loading the baggage which weighed about twelve (12) kilos and because of company regulation. IN AWARDING DAMAGES WITH LEGAL INTEREST IN FAVOR OF THE APPELLEE. The findings of fact of the trial court are not assailed. and 1745.

xxx xxx xxx There is no question that Bus No. To implement this particular rule for 'the safety of passengers. The injuries suffered by the plaintiff were not due to mechanical defects but to the explosion of firecrackers inside the bus which was loaded by a co-passenger. in approving the said draft. Record on Appeal. quoted Escriche's definition of caso fortuito as "an unexpected event or act of God which could neither be foreseen nor resisted. the cause of the unexpected event must be independent of the will of man or something which cannot be avoided. if not in a large measure.. The service manual. 1960. somehow. the views of His Honor do seem to be in line with the reasons that the Code Commission had for incorporating the above-quoted provisions in its draft of the Civil Code. Indeed.. insurrections. destructions of buildings by unforeseen accidents and other occurrences of a similar nature. on the highways throughout the country may. Neither was failure by employees of defendant company to detect the contents of the packages of passengers because like the rationale in the Necesito vs. "if proper and rigid inspection were observed by the defendant. This cannot be said of the instant case. however. it was therefore incumbent upon the employees of the company to make the proper inspection of all the baggages which are carried by the passengers.. the contents of the box could have been discovered and the accident avoided.) According to His Honor. But then. Paras case (supra).. 120 was road worthy when it left its Manila Terminal for Lucena that morning of December 5. exhibits "3" and "3-A. inquiry was made with the passenger carrying the same as to what was in it. If proper and rigid inspection were observed by the defendant. since its "opening . Smith. as stated by Dispatcher Cornista. lightning. that he was present when the box was loaded in the truck and the owner agreed to pay its fare." In other words. was folded and tied with abaca. such as floods. can it not be said that the breach of the contract was due to fortuitous event? The Supreme Court in the case of Lasam vs. as stated by Dispatcher .25). the recklessness of their drivers which is a common sight even in crowded areas and. From its appearance there was no indication at all that the contents were explosives or firecrackers. Neither did he open the box because he just relied on the word of the owner. We are not convinced. Dispatcher Nicolas Cornista of defendant company corroborrated the testimony of Mendoza and he said. the contents of the box could have been discovered and the accident avoided. such as dynamite and firecrackers to be transported on its buses. He added that they were not authorized to open the baggages of passengers because instruction from the management was to call the police if there were packages containing articles which were against regulations. it is quite clear that extraordinary or utmost diligence of a very cautious person was not observed by the defendant company." prohibits the employees to allow explosives. Turning to the present case. 45 Phil. Refusal by the passenger to have the package opened was no excuse because. 16. Refusal by the passenger to have the package opened was no excuse because. 657." (Decision p. We cannot agree. particularly. No doubt. shipwrecks. conflagrations. compulsions. . that the exacting criterion of said provisions has not been met by appellant in the circumstances of this particular case. be curbed. a passenger has neither choice nor control in the exercise of their discretion in determining what are inside the package of co-passengers which may eventually prove fatal. Congress must have concurred with the Commission that by requiring the highest degree of diligence from common carriers in the safe transport of their passengers and by creating a presumption of negligence against them. It is undisputed that before the box containing the firecrackers were allowed to be loaded in the bus by the conductor. among other things. torrents.(P0. employees should call the police if there were packages containing articles against company regulations.

it must be considered that while it is true the passengers of appellant's bus should not be made to suffer for something over which they had no control.R.Cornista. The principle that must control the servants of the carrier in a case like the one before us is correctly stated in the opinion in the case of Clarke v. only where the conduct of this passenger had been such before the injury as to induce a reasonably prudent and . in compelling the passenger to submit to more rigid inspection. when he protests the innocuousness of his baggage and nothing appears to indicate the contrary." In this particular case before Us. but beyond this. affirming the judgment. It is to be presumed that a passenger will not take with him anything dangerous to the lives and limbs of his co-passengers. Not to be lightly considered must be the right to privacy to which each passenger is entitled. it is said: "It may be stated briefly. Withal. evidently because of the paucity of local precedents squarely in point. Article 1755 repeats this same qualification: "A common carrier is bound to carry the passengers safely as far as human care and foresight can provide. but to conduct the needed investigation consistent with the rules of propriety and. Another passenger took a quantity of gasoline into the same coach in which Clarke was riding." That may be true. could not have justified invasion of a constitutionally protected domain. Police officers acting without judicial authority secured in the manner provided by law are not beyond the pale of constitutional inhibitions designed to protect individual human rights and liberties. Decisions in other jurisdictions cited by appellant in its brief. Louisville & N. but the constant threat any contrary ruling would pose on the right of privacy of all passengers of all common carriers. with due regard for all the circumstances. as enunciated in the decision of this Court cited by His Honor. Of course. 1120. employees should call the police if there were packages containing articles against company regulations. In the opinion. constitutional boundaries are already in danger of being transgressed. 839. Co. the constitutional rights of the passenger. Rep." In fact. Calling a policeman to his aid. what must be importantly considered here is not so much the infringement of the fundamental sacred rights of the particular passenger herein involved. above all. when there are sufficient indications that the representations of the passenger regarding the nature of his baggage may not be true. in assuming the liability of a railroad to its passengers for injury done by another passenger. It is in this sense that the mentioned service manual issued by appellant to its conductors must be understood. after the passenger had already declared that the box contained mere clothes and other miscellaneous. Article 1733 is not as unbending as His Honor has held.W. using the utmost diligence of very cautious persons. allowance must be given to the reliance that should be reposed on the sense of responsibility of all the passengers in regard to their common safety. emphasize that there is need. 20 Ky L. as We hold here. for evidence of circumstances indicating cause or causes for apprehension that the passenger's baggage is dangerous and that it is failure of the common carrier's employee to act in the face of such evidence that constitutes the cornerstone of the common carrier's liability in cases similar to the present one. The trial court peremptorily instructed the jury to find for the defendant. not to speak of his own. inquiry may be verbally made as to the nature of a passenger's baggage when such is not outwardly perceptible. for it reasonably qualifies the extraordinary diligence required of common carriers for the safety of the passengers transported by them to be "according to all the circumstances of each case.1 fairness demands that in measuring a common carrier's duty towards its passengers. by reason of which he was severely injured. as suggested by the service manual invoked by the trial judge. as in the case at bar. considering how easily the duty to inspect can be made an excuse for mischief and abuse. in the interest of the common safety of all. It ignited and exploded. In that case Clarke was a passenger on the defendant's train. He cannot be subjected to any unusual search. not necessarily to force the passenger to open his baggage. In other words. but it is Our considered opinion that the law does not require as much. the assistance of the police authorities may be solicited. 49 S.

W. 29 Ky. Dizon.] 396. through its employees. 231. 42 S. without costs. A.] 725. and injury is done. — A carrier is ordinarily not liable for injuries to passengers from fires or explosions caused by articles brought into its conveyances by other passengers." Since We hold that appellant has succeeded in rebutting the presumption of negligence by showing that it has exercised extraordinary diligence for the safety of its passengers.R. Annotation: 37 L. 142 Ky. A. from the consequence of fortuitous events. L. & S. 3 B. Clarke v. 139 S. the defendant is liable in damages. R.vigilant conductor to believe that there was reasonable ground to apprehend violence and danger to the other passengers. Castro.. R. 33 L. Co. S. We think it is equally clear that. [Eng. 9 Tex.[N. the appealed judgment of the trial court is reversed and the case is dismissed. 36 L. R. Zaldivar. therefore. 135 S. C. Reyes. 349. Civ. and that he had a right to carry it in a sack if he chose to do so. concur. in the absence of any evidence that the carrier. 649. Louisville & N. G. was aware of the nature of the article or had any reason to anticipate danger therefrom. Rep. Co. 840. It cannot be successfully denied that Harris had the right as a passenger to carry baggage on the train." Quinn v. in which case the plaintiff was injured by alcohol which had been carried upon the train by another passenger. 2001 . "according to the circumstances of the (each) case". R. Louisville & N. v. C. 703.2 (Emphasis supplied) Explosive or Dangerous Contents. C. S. 136048 Republic of the Philippines SUPREME COURT Manila THIRD DIVISION January 23. .. and it was not shown that appellant's employees knew that the jug contained alcohol..L. that otherwise the railroad is not responsible. R. Shields. Louisville & N. Concepcion. 855." The opinion quotes with approval from the case of Gulf. Renfro. A. Makalintal.B. 742.) 133. Co. of course. Illinois C. R. 652. 29 S. S. 96 S.. C. (his) fare. Co. In the opinion in that case it is said: "It was but a short period of time after the alcohol was spilt when it was set on fire and the accident occurred. Co. Co. and doubtless knew that he had the sack on the seat with him.)3 Appellant further invokes Article 1174 of the Civil Code which relieves all obligors. Co. W. common carriers like appellant. it was not the duty of appellant's conductor or any other employee to open the sack and examine its contents. it is not shown that the conductor or any other employee knew that Harris had a jug with him until it fell out of the sack. vs.. J. Sanchez and Fernando. W. W. W.] 337. The court a quo held that "the breach of contract (in this case) was not due to fortuitous event and that. R.. We deem it unnecessary to rule whether or not there was any fortuitous event in this case. Wood v. 39 S. 123 [explosion of can of gasoline]. 144 Ky. R. v. concurs in the result. R. 652. Louisville & N. Mukerjee [1901] A. No. 98 Ky. though the conductor had collected . Louisville & N. in the absence of some intimation or circumstance indicating that the sack contained something dangerous to other passengers. 36 L. App. C. A. 101 Ky. v. 32 S. F. 34. and in that case asserting it to be the duty of the conductor of the railroad train to use all reasonable means to prevent such injury. W. that then the company is responsible. including. Teehankee. reserves his vote. 420 — P. (Bogard v. 590. R. 101 Ky. In fact. and if he neglects this reasonable duty. [N.. 898. J. J.J. 1049. [explosion of fireworks]. R. 266. Vincent.. ACCORDINGLY. JJ. R Co. East Indian R. (N. W..

The Case Before us is a Petition for Review under Rule 45 of the Rules of Court. (c) Actual damages of P30. He buys his goods from Manila . NIMFA DIVINA MERCADER in her capacity and as guardian of DARWIN. vs.000. 1984 the trial court denied the aforesaid motion and admitted the amended complaint of [respondents] impleading Jose Baritua and alleged the following: '(10) The late Dominador Mercader is a [b]usinessman mainly engaged in the buy and sell of dry goods in Laoang. The decretal portion of the assailed RTC Decision reads as follows:4 "WHEREFORE. [Respondents] filed an opposition to the said motion and an amended complaint.00. 'F'.000.660. JOSEFINA MERCADER.P30. more or less.000.000. P5. 'D'. 'E' and P1. respondents. (d) 25% of whatever amount is collected by [respondents] from [petitioners] but no less than P50."3 The assailed Resolution denied petitioners' Motion for Reconsideration. JOSE DANTE MERCADER. it affirmed all the monetary damages granted by the trial court to respondents. SHIRLEY MERCADER DELA CRUZ.: The Manchester ruling requiring the payment of docket and other fees as a condition for the acquisition of jurisdiction has no retroactive effect and applies only to cases filed after its finality.000. and (g) To pay the costs. the DECISION appealed from is AFFIRMEDwith the MODIFICATION that the loss of earnings of the late Dominador Mercader is reduced to P798. PANGANIBAN.000.00 monthly out of his business.P50. upon all the foregoing premises considered.00 -.750. judgment is for [herein respondents] and against [herein petitioners].000. [P.00.JOSE BARITUA and JB LINE. petitioners. assailing the April 17. all surnamed MERCADER. The decretal portion of said Decision reads as follows: "WHEREFORE.Deed of Absolute Sale of a burial lot. Inc. J.P50. and/or for bill of particulars on the primary grounds that [respondents] failed to implead Jose Baritua as an indispensable party and that the cause of action is a suit against a wrong and non-existent party.]850. "In an Order dated December 11. 1998 Decision1 and the October 28.] filed a motion to dismiss complaint. receipt marked Exh.000. (b) For the loss of earnings of the late Dominador Mercader -.00 plus P1 .000. (e) As moral damages -.P1. Inc. de MERCADER on her behalf and on behalf of her minor child MARY JOY MERCADER. GIOVANNI. (f) As exemplary damages -.00 for the first class coffin and a 15-day wake services evidenced by a receipt marked Exh. on preponderance of evidence.00 for the 50 x 60 headstone.00. based on the average life span of 75 years from the time of his death who earned a net income of P5." The Facts The antecedents of the case are succinctly summarized by the Court of Appeals in this wise: "The original complaint was filed against JB Lines. N.00. to strike out false-impertinent matters therefrom.00 receipted purchases of goods in Manila. 1998 Resolution2 of the Court of Appeals (CA) in CA-GR CY No.00 per hearing by way of attorney's fees. [Petitioner JB Lines. Northern Samar (Branch 21). ordering the latter to pay the former: (a) As compensatory damages for the death of Dominador Mercader -.590. The Court of Appeals sustained the Decision of the Regional Trial Court (RTC) of Laoang. RODEL and DENNIS.00. MARIA THERESA MERCADER-GARCIA. marked Exh. Except for the modification of the loss of earnings. LEONIDA Vda. DANILO MERCADER. Samar. 40772.

to repair. Northern Samar for sale at his store located in the said locality. was in virtual' dilapida[ted] and dangerous condition. The alleged person of Dominador Mercader did not board bus 142 at [petitioners'] Manila station/terminal x x x as a (supposed paying passenger). (13) The late Dominador Mercader was not able to reach his destination considering that on March 17.' because what he has is a Pasay city station. Mondragon.) which he likewise loaded in [petitioners'] bus. 484 EU. 484 EU at [petitioners'] Manila Station/terminal. the Bugko Bailey Bridge (across Catarman-Laoang road) in Barangay Roxas. thus calling for the concerned government and public officials' performance of their coordinative and joint duties and responsibilities. bound for Brgy.and bring[s] them to Laoang. It is also a fact of public knowledge that [Petitioner] Baritua does not have any 'Manila station/terminal.' "[Respondents] then filed a motion to declare [petitioners] in default which motion was opposed by [petitioners]. the said bus fell into the river as a result of which the late Dominador Mercader died. issues. the familiar and known passenger and freight ticket which reads in part: 'NOTICE Baggage carried at owner's risk x x x liability on prepaid freight otherwise declared. (14) The accident happened because [petitioners'] driver negligently and recklessly operated the bus at a fast speed in wanton disregard of traffic rules and regulations and the prevailing conditions then existing that caused [the] bus to fall into the river. long pants. on or about March 17. Northern Samar. Dominador Mercader had with him as his baggage. Rawis. in a state of decay and disrepair. in compliance with existing rules and laws. It is a fact of public knowledge that. the late Dominador Mercader boarded [petitioners'] bus No. Mondragon. improve and maintain that bridge. [Petitioner] Baritua. etc. There is even no statement in the complaint that Dominador Mercader (if it were true that he was a passenger of bus 142 'at the [petitioners'] Manila station/terminal') was issued any passenger-freight ticket conformably with law and practice. Description of Freight ________________________ Signature of Owner . dusters. thru his conductors. Northern Samar. as a public utility operator. 1985. assorted goods (i. in good and reasonably safe condition. Laoang Northern Samar as a paying passenger. 1983. and/or previous thereto. xxx xxx xxx Whole Fare Paid P ___________________________ Declared value x x x. 1983 at Beily (Bugco) Bridge. (11) Sometime on March 16. 142 with Plate No.e. (12) At that time. 1983. but. in appropriate situations. Barangay Roxas. "In its answer. x x x. [Respondents] withdrew the said motion prompting the trial court to cancel the scheduled hearing of the said motion to declare [petitioners] in default in an Order dated January 23. while he was on board [petitioners'] bus no. [petitioners] denied specifically all the material allegations in the complaint and alleged the following: '2. 4. the adverted officials . short pants. [Petitioner] Baritua had no prior knowledge that. far from performing or complying with said subject duties and responsibilities.' 3. to a true passenger. 142 with Plate No.

and callous indifference to public safety. Furthermore. Moreover. as the subject allegation is a bare and pure conclusionary averment unaccompanied by the requisite statement of ultimate facts constitutive of a cause or right of action. but also failed. in such a hypothetical situation. complaint) is too vague and too broad. and bereft of factual and legal basis. i. 8. Baritua and his driver did not violate any traffic rule and regulation.00 x x x is false. contrary to the baseless imputation in paragraphs 14 and 20 of the original and amended complaints. Even assuming arguendo. For. and neglected to either close the Bugko Bridge to public use and travel. 5. 7.b.. the causative negligence.2. 6. as a result of which the bus fell into the river and sea waters. hence. and safety purposes. without however conceding.2. improvement. akin to plaintiffs' allegation. Based on the preceding averments.concerned.680. 1983.000. Baritua also exercised and complied with the requisite duty of diligence. for repair. and/or provided the proximate and direct cause of his own death. The allegation that supposedly the 'x x x [p]laintiffs are the compulsory heirs of the late DOMINADOR MERCADER x x x' (par. to the exclusion of the employer. 8. and prudence in the selection and supervision over his driver. vis-à-vis the suit against the wrong party. plaintiffs have neither a cause nor a right of action against [Petitioner] Baritua and his driver. despite the exercise and compliance by Baritua and his driver of their duties in the matter of their requisite degree of diligence. nevertheless. without just cause. bad faith. Besides. improvement and maintenance of the Bugko Bailey Bridge. [Petitioner] Baritua and his driver have no causative connection with the alleged death of Dominador Mercader who. on or prior to March 17. is personal to the wrongdoer. II. which is . 1983. to. There is no factual nor any legal basis for plaintiffs' proffered claims for damages. while Baritua's bus 142 was cautiously and prudently passing and travelling across the said bridge. care. contrary to plaintiffs' insinuation. 8. The allegation on supposed 'minimum life of 75 years' and on 'he expects to earn no less than P1. on that March 17.1. AFFIRMATIVE DEFENSES 8. that Bugko Bridge collapsed inward and caved in ruin. a pure hyperbole. So that. what jurisprudential rule refers to is only net earning. 8. even theoretically assuming. serious inefficiency. as earlier stated. Baritua also learned lately.a. plaintiffs statement of a cause of action. and so it is herein alleged that Dominador Mercader contributed considerably.2. if any there was. The law abhors a claim. maintenance. without however admitting a negligent act-omission on the part of a driver. not only failed and neglected to cause such needed repair. The allegation on exemplary damages x x x is impertinent and immaterial in the complaint against a supposed employer. he himself is to be blamed for whatever may have happened to him or for whatever may have been sustained by his supposed heirs.e. was already seriously suffering from a lingering illness even prior to his alleged demise. To mention only a glaring few: 8. did not commit any actionable breach of contract with the alleged Dominador Mercader or the latter's supposed heirs. negligence. according to a reliable source. and/or to put appropriate warning and cautionary signs. Baritua and his driver. as a proximate and direct consequence of the aggregate officials' nonfeasance. the employee-driver. caution and prudence. the complaint is nonetheless replete with false and impertinent matters which fit the rule on striking out pleadings or parts thereof.

if any.2. regarding the requisite definitive amount of claim. With this averment. this Petition. [respondents'] case may be dismissed on that ground alone. apart from being false. c) P1. which could possibly afford a rational basis for a reasonable expectation of supposed earning that could be lost. after due trial. It held that petitioners failed to rebut the presumption that in the event a passenger died or was injured. Ruling of the Court of Appeals As earlier stated. the Court of Appeals affirmed the trial court's award of monetary damages in favor of respondents.000. except the amount of Dominador Mercader's lost earnings.000. as it may not exist at all. . In violation also of the same Interim Rule 11. Petitioners. So with the averment on supposed moral damage which may not be warranted because of absence of allegation of fraud or bad faith. 8. Hence.000. the questioned allegation in the plaintiff's original and amended complaints is not preceded by the requisite statement of definitive facts. which it reduced to P798. nor of any specific fact. rendered the aforesaid assailed Decision. or impaired. the allegations that allegedly 'x x x the late Dominador Mercader boarded x x x Bus No. '(i)f any demand is for damages in a civil action the amount thereof must be specifically alleged. for which reason. petitioners submit the following issues for our consideration: "I Did the honorable Court of Appeals (CA) gravely abuse its discretion when it allowed to pass sub silenciothe trial court's failure to rule frontally on petitioners' plea for a bill of particulars. presented no sufficient proof that they had exercised extraordinary diligence. JB Line is not a juridical person. the carrier had acted negligently.c. e) An amount to be proven during the trial representing moral damages. complaint. impleaded in the amended. and ignored the nature of respondents' prayer in the complaint pleading for an award of -'a) P12. hence. correlated with that in paragraphs 4-5 hereof. are offensive to the rule on concise statement of ultimate facts.6 The Issues In their Memorandum."5 The RTC.660.representing the death compensation. The allegation in paragraph 15 of the original and amended complaint is also a pure conclusionary averment. 8. 9. b) An amount to be proven in court. Likewise. 142 x x x and that supposedly the latter had a baggage x x x containing drygoods x x x in which case [petitioners have] to pay the value thereof in such amount as may be proven by [respondents] in court during the trial x x x.4. [respondents'] amended complaint is essentially a suit against a wrong party. [respondents] have not yet paid the correct docket fee. d) An amount to be proven in court as and by way of funeral expenses. representing actual damages. nor an entity authorized by law to sue and be sued. apart from want of causative connection with the defendant. the allegation on the supposed funeral expense x x x does not also indicate any specific amount. by way of loss of earnings. Furthermore.00 -. it cannot legally be a party to any action. The assailed allegations also contravene Interim Rule 11. 8. [Petitioner] JB LINE.00 or more as may be proven during the trial. without a factual premise. As such. there was. it added.' In consequence of this averment. is merely a business name and sole proprietorship of defendant Baritua.manifestly speculative.3.

it continues until the case is finally terminated. petitions. or shall otherwise be expunged from the record. did the CA and the trial court adhere to the rule that their assailed decision must state clearly and distinctly the facts and the laws on which they are based?"7 Distilling the alleged errors cited above. It must be noted that petitioners' counsel manifested in open court his desire to file a motion for a bill of particulars. in Manchester Development Corporation v. much less the payment of the docket fee based on the amounts sought in the amended pleading. and said damages shall be considered in the assessment of the filing fees in any case. representing exemplary damages. without jurisdiction over the original and amended complaints or over the subject matter of the case. and (2) whether the CA disregarded petitioners' procedural rights.10 Once the jurisdiction of a court attaches. 11 The trial court cannot be ousted therefrom by subsequent happenings or events. has no retroactive application and cannot be invoked in the subject Complaint filed in 1984.00 per hearing as and by way of Attorney's fees.12 The Manchester ruling. First Issue: Jurisdiction Petitioners contend that since the correct amounts of docket and other lawful fees were not paid by respondents. We are not impressed. Any pleading that fails to comply with this requirement shall not be accepted nor admitted. then the trial court did not acquire jurisdiction over the subject matter of the case. although of a character that would have prevented jurisdiction from attaching in the first instance. hence. The Court's Ruling The Petition is devoid of merit.000. 1985 . The RTC gave him ten days from March 12."13 (emphasis supplied) Second Issue: Petitioners' Procedural Rights Motion for a Bill of Particulars Petitioners argue that the Court of Appeals erred when it passed sub silencio on the trial court's failure to rule frontally on their plea for a bill of particulars. henceforth all complaints. which became final in 1987.8 held that "[t]he court acquires jurisdiction over any case only upon the payment of the prescribed docket fee.f) An amount to be determined by this Honorable Court. "III Did the CA likewise arbitrarily disregard petitioners' constitutional right to procedural due process and fairness when it ignored and thrust aside their right to present evidence and to expect that their evidence will be duly considered and appreciated. CA. g) An amount equivalent to 25% of whatever amount the plaintiffs would be able to collect from the defendant but in no case less than P50. The Court." Generally. x x x. answers and other similar pleadings should specify the amount of damages being prayed for not only in the body of the pleading but also in the prayer.000.00 plus an additional amount of P1. petitioners raise two main issues for our consideration: (1) whether the CA erred in holding that the RTC had jurisdiction over the subject matter of the case. the jurisdiction of a court is determined by the statute in force at the commencement of the action. and "IV. In awarding excessive and extravagant damages.' "II Did the CA also ignore the fact that the trial court was not paid the correct amount of the docket and other lawful fees.9unless such statute provides for its retroactive application. An amendment of the complaint or similar pleading will not thereby vest jurisdiction in the court. The Court explicitly declared: "To put a stop to this irregularity.

Petitioners contend. Petitioners failed to transport him to his destination. as they did before the CA. a party may move for a more definite statement or for a bill of particulars of any matter which is not averred with sufficient definiteness or particularity to enable him properly to prepare his responsive pleading. filed the aforesaid motion only on April 2. and the details desired. In all. Although he survived the fall. 1983. Section 1. We sustain the ruling of the CA that petitioners failed to prove that they had observed extraordinary diligence. In fact."17 These arguments are not meritorious. we reject petitioners' contention that their right to adduce evidence was violated. they determine who are credible and who are not. the bus was overloaded at the time. In ascertaining the facts. several individuals were standing when the incident occurred. petitioners did not present evidence on the skill or expertise of the driver of Bus No.Before responding to a pleading. because the bus fell into a river while traversing the Bugko Bailey Bridge. it is presumed to have been at fault or to have acted negligently. the paragraphs wherein they are contained. In other words. It is supposed to do so by using the utmost diligence of very cautious persons.19 In case of death or injuries to passengers. both courts clearly laid down their bases for awarding monetary damages to respondents. Second. with due regard for all the circunistances. First. such motion was already moot and academic because. 142 or the condition of that vehicle at the time of the incident. because it did not consider their contention that the trial judges who heard the case were biased and impartial. petitioners had already filed their answer and several other pleadings to the amended Complaint. questioned some witnesses in an overzealous manner and "assum[ed] the dual role of magistrate and advocate. who initially handled the case. Such motion shall point out the defects complained of. the mere fact that Judge Noynay based his decision on the testimonies of respondents' witnesses does not necessarily mean that he did not consider those of petitioners. It must be noted that a common carrier. is bound to carry passengers safely as far as human care and foresight can provide.21 ."16 (emphasis supplied) Petitioners' Right to Adduce Evidence Petitioners also argue that their right to present evidence was violated by the CA. that both the trial and the appellate courts failed to state clearly and distinctly the facts and the law involved in the case. 142 in Pasay City on March 16. by the nature of its business and for reasons of public policy. either." They further maintain that Judge Fortunato Operario. that Judge Tomas B. unless it proves that it observed extraordinary diligence as prescribed in Articles 1733 and 175520 of the Civil Code. they consider all the evidence before them. Noynay based his Decision" on certain chosen partial testimonies of [respondents'] witnesses x x x. prior to its filing. When applied for. Both the RTC and the CA found that a contract of carriage existed between petitioners and Dominador Mercader when he boarded Bus No. In doing so. 1985 or eleven days past the deadline set by the trial court. he later died of asphyxia secondary to drowning. First. -. we find no sufficient showing that Judge Operario was overzealous in questioning the witnesses. We agree with the findings of both courts that petitioners failed to observe extraordinary diligence18 that fateful morning. Alleged Failure to State Clearly the Facts and the Law We are not convinced by petitioners' contention.15Moreover. If the pleading is a reply. provides: "Section 1. purpose. the motion must be filed within ten (10) days from service thereof. His questions merely sought to clarify their testimonies. however.14 He.within which to do so. Second. As can be gleaned from their Decisions. Rule 12 of the Rules of Court. judges cannot be expected to rely on the testimonies of every witness.

bound for Manila. on November 12. Due to the impact. along Aguinaldo Highway. Its conductor testified that it had overtaken several buses before it reached the Bugko Bailey Bridge. carrying Dr.23 We therefore believe that there is no reason to overturn the assailed CA Decision. 2004 and January 7. It is a well-settled rule that the trial court's factual findings.R. SO ORDERED. is the surviving spouse of Dr. 1991. the bus was overspeeding.R. petitioners have not presented sufficient ground to warrant a deviation from this rule..m. JR. Vitug. Mariano as its passenger. Mariano. the Petition is hereby DENIED. 24 As clearly discussed above. Respondents denied liability for the death of Dr. are conclusive and binding. doing business .J. 2005 respectively. First. Mariano and physical injuries to four other passengers. the passenger bus fell on its right side on the right shoulder of the highway and caused the death of Dr. when affirmed by the appellate court. Thus. the facts: Petitioner Herminio Mariano. since it effectively computed only net earnings in accordance with existing jurisprudence. CALLEJAS and EDGAR DE BORJA. CV No. ILDEFONSO C. dated September 13. At around 6:30 p. Melo. Mariano was 36 years old at the time of her death. concur. dated May 21. The passenger bus was bound for Tagaytay while the trailer truck came from the opposite direction. 66891. Dasmariñas. and Sandoval-Gutierrez.Third. which reversed the Decision3 of the Regional Trial Court (RTC) of Quezon City. respondent Callejas filed a third-party complaint against Liong Chio Chang. and the assailed Decision AFFIRMED. She left behind three minor children. it had accelerated and maintained its speed towards the bridge. prior to crossing the bridge. we cannot fault the appellate court in its computation of the damages and lost earnings. the Celyrosa Express bus. Cavite. DECISION PUNO.. Frelinda Mariano who was a passenger of a Celyrosa Express bus bound for Tagaytay when she met her death. Callejas is the registered owner of Celyrosa Express.: On appeal are the Decision1 and Resolution2 of the Court of Appeals in CA-G. San Agustin. Respondents. Gonzaga-Reyes. Petitioner filed a complaint for breach of contract of carriage and damages against respondents for their failure to transport his wife and mother of his three minor children safely to her destination. Respondent Ildefonso C. The trailer truck bumped the passenger bus on its left middle portion. C. 25 WHEREFORE. Costs against petitioners.22 Moreover. 166640 July 31. if they are not tainted with arbitrariness or oversight of some fact or circumstance of significance and influence. collided with an Isuzu truck with trailer bearing plate numbers PJH 906 and TRH 531. Petitioner. 1999. vs. Dr. 2009 HERMINIO MARIANO. aged four. which affirmed that of the RTC. Finally. Jr. No. JJ. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G. three and two years. They claimed that the proximate cause of the accident was the recklessness of the driver of the trailer truck which bumped their bus while allegedly at a halt on the shoulder of the road in its rightful lane. which found respondents jointly and severally liable to pay petitioner damages for the death of his wife. while respondent Edgar de Borja was the driver of the bus on which the deceased was a passenger.

against La Perla Sugar Supply and Arcadio Arcilla. 1733. insofar as it found defendants-appellants Ildefonso Callejas and Edgar de Borja liable for damages to plaintiff-appellee Herminio E. On September 24.9 The appellate court also denied the motion for reconsideration filed by petitioner. Common carriers. SPECIAL FOURTEENTH DIVISION IS NOT IN ACCORD WITH THE FACTUAL BASIS OF THE CASE.00 as exemplary damages. according to all the circumstances of each case. Mariano. Hence. the presumption of fault or negligence against the carrier is only a disputable presumption. To rule otherwise would make the common carrier the insurer of the absolute safety of its passengers which is not the intention of the lawmakers. The sum of P30.00 as moral damages. the trial court. the truck driver. relying on the following ground: THE DECISION OF THE HONORABLE COURT OF APPEALS.10 The following are the provisions of the Civil Code pertinent to the case at bar: ART. Criminal Case No. the injury sustained by the petitioner was in no way due to any defect in the means of transport or in the method of transporting or to the negligent or wilful acts of private respondent's employees. in its Decision dated September 13. 1992. for indemnity in the event that he would be held liable for damages to petitioner.000. . multiple slight physical injuries and damage to property. from the nature of their business and for reasons of public policy. The costs of suit. the said court dismissed the complaint against La Perla Sugar Supply for lack of evidence. It gives in where contrary facts are established proving either that the carrier had exercised the degree of diligence required by law or the injury suffered by the passenger was due to a fortuitous event.000. together with Liong Chio Chang. the presumption is rebutted and the carrier is not and ought not to be held liable. exemplary damages and attorney‘s fees. 2223-92. the owner of the trailer truck. Cavite. contending that the trial court erred in holding them guilty of breach of contract of carriage. found respondents Ildefonso Callejas and Edgar de Borja. however. 2. It reasoned: . .00 as foregone income. Callejas filed a complaint. Jr.000.6 In the case at bar.7 Respondents Callejas and De Borja appealed to the Court of Appeals..lavvph!l Other cases were filed. for damages he incurred due to the vehicular accident. was also filed against truck driver Arcilla in the RTC of Imus. his lost earnings. .00 as civil indemnity for the loss of life. 6. Frelinda Cargo Mariano. SO ORDERED. 3. the decision appealed from. as in the instant case. and therefore involving no issue of negligence in its duty to provide safe and suitable cars as well as competent employees.200. The sum of P1. the said court convicted truck driver Arcadio Arcilla of the crime of reckless imprudence resulting to homicide.5 A criminal case. The sum of P40. The sum of P20. Where.00 as actual and compensatory damages.under the name and style of La Perla Sugar Supply. jointly and severally liable to pay petitioner damages and costs of suit. On May 3. is REVERSED and SET ASIDE and another one entered absolving them from any liability for the death of Dr. It. 5.829. 2004. The dispositive portion of the Decision reads: ACCORDINGLY. 8 The dispositive portion of the Decision reads: WHEREFORE. The sum of P50. 4.000. 1999. found Arcilla liable to pay Callejas the cost of the repairs of his passenger bus. 1994. the defendants are ordered to pay as follows: 1. NC-397 before the RTC of Naic. On May 21. this appeal.4 docketed as Civil Case No. with the injury arising wholly from causes created by strangers over which the carrier had no control or even knowledge or could not have prevented. are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them. Cavite. the Court of Appeals reversed the decision of the trial court.

Being a mere presumption. respondent driver of the passenger bus. The totality of evidence shows that the death of petitioner‘s spouse was caused by the reckless negligence of the driver of the Isuzu trailer truck which lost its brakes and bumped the Celyrosa Express bus. using the utmost diligence of very cautious persons. The sketch13shows the passenger bus facing the direction of Tagaytay City and lying on its right side on the shoulder of the road. in creating a presumption of fault or negligence on the part of the common carrier when its passenger is injured. as follows: . or that the injury suffered by the passenger was solely due to a fortuitous event. In the case at bar. it does not. To overcome the presumption. about five meters away from the point of impact. Celyrosa Express. the same is rebuttable by proof that the common carrier had exercised extraordinary diligence as required by law in the performance of its contractual obligation. through its driver. owned and operated by respondents. Court of Appeals.12 We elucidated: While the law requires the highest degree of diligence from common carriers in the safe transport of their passengers and creates a presumption of negligence against them. a common carrier. about 500 meters away from the point of impact. petitioner cannot succeed in his contention that respondents failed to overcome the presumption of negligence against them. Article 1755 of the Civil Code qualifies the duty of extraordinary care. respondent De Borja. respondent Callejas. with a due regard for all the circumstances. the trailer truck was on the opposite direction. In accord with the above provisions. 1755. 1756. it is clear that neither the law nor the nature of the business of a transportation company makes it an insurer of the passenger's safety. In case of death of or injuries to passengers. ART. First. Article 1756 of the Civil Code. from introducing evidence to fasten the negligence on the former. He testified before the trial court. unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755. What constitutes compliance with said duty is adjudged with due regard to all the circumstances. respondents have to show that they observed extraordinary diligence in the discharge of their duty. On the other hand. its failure to exercise the degree of diligence that the law requires. make the carrier an insurer of the absolute safety of its passengers. and its registered owner. de Villa. PO3 De Villa checked out the trailer truck and found that its brakes really failed. The death of the wife of the petitioner in the course of transporting her to her destination gave rise to the presumption of negligence of the carrier.ART. because the presumption stands in the place of evidence. Thus. who investigated the accident." 11 and to observe extraordinary diligence in the discharge of its duty. with a due regard for all the circumstances. common carriers are presumed to have been at fault or to have acted negligently. however. we can only infer from the law the intention of the Code Commission and Congress to curb the recklessness of drivers and operators of common carriers in the conduct of their business. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide. merely relieves the latter. using the utmost diligence of very cautious persons. This Court interpreted the above quoted provisions in Pilapil v. PO3 De Villa stated that he interviewed De Borja. In fine. or that the accident was caused by a fortuitous event. vigilance and precaution in the carriage of passengers by common carriers to only such as human care and foresight can provide. for the time being. who said that he was about to unload some passengers when his bus was bumped by the driver of the trailer truck that lost its brakes. but that its liability for personal injuries sustained by its passenger rests upon its negligence. however. we advert to the sketch prepared by PO3 Magno S. has the express obligation "to carry the passengers safely as far as human care and foresight can provide.

The Decision dated May 21. He was not expected to know that the trailer truck had lost its brakes. about 5 meters. on full speed. 66891 are AFFIRMED. causing said vehicle 1 to fall on its side on the road shoulder. 1-c to the place where you found the same? a More or less 500 meters. xxx q When you went to the scene of accident. in the course of its travel.R. PUNO Chief Justice . Secondly. after collission (sic). the petition is DENIED. CV No. sir. The swerving of the trailer truck was abrupt and it was running on a fast speed as it was found 500 meters away from the point of collision. SO ORDERED. COURT: q Right side or left side? a Right side.15 In fine. involving the same incident. 2005 of the Court of Appeals in CA-G. IN VIEW WHEREOF. REYNATO S. COURT: q What is the distance between that circle which is marked as Exh.14 His police report bolsters his testimony and states: Said vehicle 1 [passenger bus] was running from Manila toward south direction when. what was the position of Celyrosa bus? a It was lying on its side. vehicle 2 continiously (sic) ran and stopped at approximately 500 meters away from the piont (sic) of impact. 2004 and the Resolution dated January 7. Did you investigate why did (sic) the Isuzu truck is beyond the point of impact? a Because the truck has no brakes. suddenly swerved and encroached on its lane. any doubt as to the culpability of the driver of the trailer truck ought to vanish when he pleaded guilty to the charge of reckless imprudence resulting to multiple slight physical injuries and damage to property in Criminal Case No. q Why did you say that the truck has no brakes? a I tested it. q And you found no brakes? a Yes. ESTELYDIZ: q On what part of the road was it lying? a On the shoulder of the road. Respondent driver De Borja had every right to expect that the trailer truck coming from the opposite direction would stay on its proper lane. the passenger bus was cruising on its rightful lane along the Aguinaldo Highway when the trailer truck coming from the opposite direction. it was hit and bumped by vehicle 2 [truck with trailer] then running fast from opposite direction. and its damage. ATTY. COURT: q How many meters from the point of impact? a Near.ATTY. and bumped the passenger bus on its left middle portion. 2223-92. causing the death of one and injuries of some passengers thereof. ESTELYDIZ: q You pointed to the Isuzu truck beyond the point of impact. the evidence shows that before the collision.

Inc. Taiyo Yuden Philippines.R. engaged the services of the vessel M/V Philippine Princess. and upon an alleged finding that the contents of the crate were no longer usable for their intended purpose. Delbros. Inc. The owner of the goods filed a claim with herein petitioner-carrier for the recovery of the value of the rejected cargo which was refused by the latter. Inc. The vessel arrived at the North Harbor. Inc. to transport a shipment of goods consisting of three (3) wooden crates containing one hundred thirty-six (136) cartons of inductors and LC compound on board the V Singapore V20 from Cebu City to Singapore in favor of the consignee. (carrier). Ltd. J. and petitioner-carrier. vs. Inc. CEB/SIN-008/92 issued by the latter in favor of the owner of the goods. owned and operated by petitioner Sulpicio Lines. one crate containing forty-two (42) cartons dropped from the cargo hatch to the pier apron.‘s cross-claim asserting that it observed extraordinary diligence in the handling.. Sulpicio Lines. Thereafter. Assailed as well is the Resolution3 of the Court of Appeals denying petitioner‘s Motion for Reconsideration. On 05 February 1993. 92-63337 with the trial court against Delbros. INC. Inc. respondent-insurer then filed claims for reimbursement from Delbros.: Before Us is a Petition for Review on Certiorari assailing the Decision1 of the Court of Appeals reversing the Decision2 of the Regional Trial Court (RTC) of Manila. FIRST LEPANTO-TAISHO INSURANCE CORPORATION. they were rejected as a total loss and returned to Cebu City. Inc. dismissing the complaint for damages for failure of the plaintiff to prove its case with a preponderance of evidence. 220. Inc. petitioner-carrier filed its Answer with Counterclaim. On 04 November 1992. (owner of the goods) and Delbros. the owner of the goods sought payment from respondent First Lepanto-Taisho Insurance Corporation (insurer) under a marine insurance policy issued to the former. alleging that assuming the contents of the crate in question were truly in bad order. Manila. During the unloading of the shipment. except that "2 cello bags each of 50 pieces ferri inductors No. petitioner. and petitioner-carrier Sulpicio Lines. LC FL 112270K-60 (c) were unaccounted for and missing as per packaging list. respondent. 2005 SULPICIO LINES. and herein petitioner-carrier.31. respondent-insurer filed a suit for damages docketed as Civil Case No. Petitioner-carrier filed its Answer to Delbros. which were subsequently denied. The payment of the insurance claim of the owner of the goods by the respondent-insurer subrogated the latter to whatever right or legal action the owner of the goods may have against Delbros. THE FACTS On 25 February 1992. (shipper) entered into a contract. Inc. Inc. Delbros." .Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G. Inc. 140349 June 29. evidenced by Bill of Lading No. No. The owner of the goods examined the dropped cargo. on 24 February 1992. Branch XIV. filed on 15 April 1993 its Answer with Counterclaim and Cross-claim. Taiyo Yuden Singapore Pte. DECISION CHICO-NAZARIO. fault is with herein petitioner-carrier which was responsible for the unloading of the crates. Inc. For the carriage of said shipment from Cebu City to Manila. Thus. storage and general care of the shipment and that subsequent inspection of the shipment by the Manila Adjusters and Surveyors Company showed that the contents of the third crate that had fallen were found to be in apparent sound condition. Respondent-insurer paid the claim less thirty-five percent (35%) salvage value or P194. for Delbros.

Survey Report. however. the evidence shows that one of the three crates fell during the unloading at the pier in Manila. …. the appeal is granted. WHEREFORE. Claims Statement. and the letter to Third Party carriers and shipping lines (Exhibit A-J). insist that it was only the external packaging that was damaged. he said that two cartons were torn at the sides with top portion flaps opened and the 41 cartons were properly sealed and in good order conditions. The second witness for the plaintiff. Thus. the trial court dismissed the complaint for damages as well as the counterclaim filed by therein defendant Sulpicio Lines. before the shipment reached Singapore (while it was in Manila) one crate and 2 cartons contained therein were not anymore in their original state. the goods were received by defendantappellee Delbros in Cebu properly packed in cardboard cartons and then placed in wooden crates. This testimony is hearsay. which reversed the dismissal of the complaint by the lower court.‘s crossclaim. he said that their company paid the claim less 35% salvage value based on the adjuster report. Inc. Defendant-appellees. According to the RTC: The plaintiff has failed to prove its case. The first witness for the plaintiff merely testified about the payment of the claim based on the documents accompanying the claim which were the Packing List. defendant Sulpicio Lines‘ counterclaim and defendant Delbros Inc. among others. it was found that two (2) cartons of the forty-two (42) cartons contained in this crate were externally damaged. Marine Risk Note. Defendantsappellees Delbros and Sulpicio Lines are hereby ordered to pay. Arturo Valdez. in view of the foregoing considerations.5 The appellate court disposed of the issues in the case in this wise: Furthermore. He prepared a survey report (Exhibits G and G-1) and took a picture of shipment (Exhibit G-2). that he. and that there was no actual damage to the goods such that would make them liable to the shipper. and the cross-claim filed by Delbros. the decretal portion of which reads: WHEREFORE. they are in good order and condition and are supposed to be transported and delivered to the consignee in the same state.After hearing. However.220. Upon examination. Two cartons were already opened and slightly damaged. They were torn at the sides and their top portions or flaps were open. He merely looked at them but did not conduct an inspection of the contents. The wooden crate which fell was damaged such that this particular crate was not anymore sent to Singapore and was instead shipped back to Cebu from Manila. Marine Policies. On cross-examination. it is apparent that the plaintiff had failed to prove its case with a preponderance of evidence. This theory is erroneous.31 representing actual damages.4 A Motion for Reconsideration was then filed by herein respondent-insurer and subsequently denied by the trial court in an Order dated 07 February 1995 on the ground that it did not raise any new issue. …. In the case herein. From the foregoing evidence. testified. These facts were admitted by all the parties. judgment is hereby rendered dismissing the Complaint. respondent-insurer instituted an appeal with the Court of Appeals. What he was referring to as slightly damaged were the cartons only and not the contents. Inc. jointly and severally. The check was paid and delivered to the assured as evidenced by the check voucher and the subrogation receipt. The decision appealed from is REVERSED. They were no longer fit to be sent to Singapore. When the goods are placed at a common carrier‘s possession for delivery to a specified consignee. for delivery to the consignee in Singapore. plaintiffappellant the sum of P194. . Bill of Lading. together with a co-surveyor and a representative of Sulpicio Lines had conducted a survey of the shipment at the compound of Sulpicio Lines. Commercial Invoices. On cross-examination by counsel for the Sulpicio Lines. plus legal interest counted from the filing of the complaint until fully paid.

The pivotal question to be considered in the resolution of this issue is whether or not. As a rule. which dismissal is already final. Said Resolution was properly complied with. Inc. we ruled that the subsequent submission of the missing documents with the motion for reconsideration amounts to substantial compliance. it paid in full the amount of the damages awarded by the appellate court to the respondent-insurer. Inc. therefore. filed a manifestation stating that its appeal7filed before this Court had been dismissed for being filed out of time and thus the case as against it was declared closed and terminated. prays for reimbursement. This consists in the destruction of one wooden crate and the tearing of two of the cardboard boxes therein rendering then unfit to be sent to Singapore. on the part of the Court of Appeals when it gave due course to the appeal after respondent-insurer had submitted copies of the RTC decision. this Court has allowed the filing of an appeal upon subsequent compliance with the requirements imposed by law. As enunciated by the Court in the case of Jaro v. that in a Resolution9 dated 13 August 1996. Nevertheless. 2. RULING OF THE COURT We shall first address the procedural issue raised by petitioner-carrier. Hence.11 We see no error. As a consequence. Inc. In Cusi-Hernandez vs. ISSUES Petitioner-carrier raises the following issues in its petition: 1. Inc.As We have already found. We now come to the substantial issues alleged by petitioner-carrier. or indemnity from its co-defendant. Before this Court. the Court of Appeals required herein respondent-insurer to submit seven (7) copies of the questioned decision within five (5) days from notice. Defendantappellee Sulpicio Lines cannot exculpate itself from liability because it failed to prove that it exercised due diligence in the selection and supervision of its employees to prevent the damage. and petitionercarrier Sulpicio Lines. Diaz [336 SCRA 113] and Piglas-Kamao vs. Sulpicio Lines. Defendant-appellee Sulpicio Lines admits that this crate fell while it was being unloaded at the Manila pier. for whatever it had paid to respondent-insurer in consonance with the decision of the appellate court declaring both Delbros. jointly and severally liable. herein petitioner-carrier filed its Motion for Reconsideration of the decision of the Court of Appeals which was subsequently denied in a Resolution dated 13 October 1999. where a strict application of the technical rules will impair the proper administration of justice. Delbros. Falling of the crate was negligence on the part of defendant-appellee Sulpicio Lines under the doctrine of res ipsa loquitur. however. contribution. Delbros. Inc. During the pendency of the appeal before this Court. National Labor Relations Commission [357SCRA 640]. Section 13(h) of the Rules of Civil Procedure. that the Court of Appeals should have dismissed the appeal for failure of respondent-insurer to attach a copy of the decision of the trial court to its appellant‘s brief in violation of Rule 44. The Court of Appeals erred in not holding that the trial court justly and correctly dismissed the complaint against Sulpicio Lines. there is damage suffered by the goods of the shipper. the right to appeal is a statutory right and one who seeks to avail of that right must comply with the manner required by the pertinent rules for the perfection of an appeal. based on the evidence presented .6 On 21 June 1999. The Court of Appeals erred in not dismissing the appeal for failure of appellant to comply with the technical requirement of the Rules of Court. herein petitioner-carrier Sulpicio Lines. Court of Appeals:10 There is ample jurisprudence holding that the subsequent and substantial compliance of an appellant may call for the relaxation of the rules of procedure. The reasons behind the failure of the petitioners in these two cases to comply with the required attachments were no longer scrutinized.8 A perusal of the records will show. albeit belatedly. the instant petition. Inc.

Inc.during the trial. destruction or deterioration of goods under Article 1735. common carriers are presumed to have been at fault or to have acted negligently in case the goods transported by them are lost.220. did incur damages. including such methods as their nature requires. It must be stressed that in the case at bar. if any. paid P194. resulted in damages on the part of the owner of the goods. when the shipment suffered damages as it was being unloaded. and if so. It cannot be denied that the shipment sustained damage while in the custody of petitionercarrier.. or destruction of. According to it. destroyed or had deteriorated.31 to respondent-insurer in satisfaction of the whole amount of the judgment rendered by the Court of Appeals. Coming now to the issue of the extent of petitioner-carrier‘s liability. the damage sustained by the packaging of the cargo while in petitioner-carrier‘s custody resulted in its unfitness to be transported to its consignee in Singapore. petitioner-carrier is presumed to have been negligent in the handling of the damaged cargo. with due regard to all circumstances. liable for the damages suffered by the owner of the goods? Upon respondent-insurer‘s payment of the alleged amount of loss suffered by the insured (the owner of the goods). This is erroneous. the goods entrusted to it for safe carriage and delivery.31 for the alleged damages the latter has incurred. To overcome the presumption of liability for loss.220. each of 50 pieces ferri inductors. Inc. The question then is: To what extent is Sulpicio Lines. As a common carrier. whether or not petitioner-carrier is liable for the same.13 A common carrier is bound to transport its cargo and its passengers safely "as far as human care and foresight can provide. i. it was found that two (2) cartons were torn on the side and the top flaps were open and that two (2) cello bags. Neither is it impugned that upon inspection. the owner of the goods."16 Thus. it is expected to observe extraordinary diligence in the handling of goods placed in its possession for transport. is only to the extent of the cargo damage or loss and should not include the lack of fitness of the shipment for transport to Singapore due to the damaged packing."14 The extraordinary diligence in the vigilance over the goods tendered for shipment requires the common carrier to know and to follow the required precaution for avoiding the damage to. indeed.20 Petitioner-carrier miserably failed to adduce any shred of evidence of the required extraordinary diligence to overcome the presumption that it was negligent in transporting the cargo. It is not disputed that one of the three (3) crates did fall from the cargo hatch to the pier apron while petitioner-carrier was unloading the cargo from its vessel. using the utmost diligence of a very cautious person..21 Subrogation is the substitution of one person in the place of another with . the diligence of a good paterfamiliasestablished in respect of the ordinary relations between members of society. the common carrier must prove that they observed extraordinary diligence as required in Article 173319 of the Civil Code.12 The standard of extraordinary diligence imposed upon common carriers is considerably more demanding than the standard of ordinary diligence. and to exercise due care in the handling and stowage. the insurer is entitled to be subrogated pro tanto to any right of action which the insured may have against the common carrier whose negligence or wrongful act caused the loss. The falling of the crate during the unloading is evidence of petitioner-carrier‘s negligence in handling the cargo. it is undisputed that respondent-insurer paid the owner of the goods under the insurance policy the amount of P194. Neither is there dispute as to the fact that Delbros. Petitioner-carrier contends that its liability. Such failure to ship the cargo to its final destination because of the ruined packaging. Under Articles 173517 and 175218 of the Civil Code. respondent-insurer‘s predecessor-in-interest. as common carrier. were missing from the cargo. Petitioner-carrier seems to belabor under the misapprehension that a distinction must be made between the cargo packaging and the contents of the cargo. 15It requires common carriers to render service with the greatest skill and foresight and "to use all reasonable means to ascertain the nature and characteristic of goods tendered for shipment.e. damage to the packaging is not tantamount to damage to the cargo.

MACASA. vs. GO.24 A subrogee in effect steps into the shoes of the insured and can recover only if the insured likewise could have recovered.. VICTORIANO S. EDWARD S. Inc. ENRIQUE S. a pronouncement as to the matter of reimbursement. CORNELIO B. ADELFO B.. 1987. (Chairman). with respect to the damages the latter is liable to pay. Inc. ARTURO S. (Sulpicio Lines).. 1995. concur. 2008 VECTOR SHIPPING CORPORATION and FRANCISCO SORIANO.25 As found by the Court of Appeals. INC. hence. Ritchie Macasa. Leyte bound for . there was damage suffered by the goods which consisted in the destruction of one wooden crate and the tearing of two (2) cardboard boxes therein which rendered them unfit to be sent to Singapore. owned and operated by respondent Sulpicio Lines. Inc.26 The falling of the crate was negligence on the part of Sulpicio Lines. Callejo. Inc. for which it cannot exculpate itself from liability because it failed to prove that it exercised extraordinary diligence. (Ritchie) boarded the MV Doña Paz. be included in the decision.R. JJ. that is. Sr. GO.‘s prayer contained in its manifestation that. security or remedy the subrogor did not have. DECISION NACHURA. Puno.23 In other words.reference to a lawful claim or right. Branch 17 of Davao City. has no personality before this Court. EMELIA B. GO. it will be tantamount to unjust enrichment for respondent-insurer to again recover damages from herein petitioner-carrier. and Tinga. in case the decision in the instant case be adverse to petitioner-carrier. WHEREFORE. dated May 5. may institute against petitioner-carrier Sulpicio Lines. JR. MACASA. GO. No costs. Inc. GO GUIOC SO. MACASA. the assailed Decision of the Court of Appeals dated 26 May 1999 and its Resolution dated 13 October 1999 are hereby AFFIRMED. those of the person for whom he is substituted. EDGAR S. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G. MACASA. MACASA. No. Inc. which affirmed with modification the Decision3 of the Regional Trial Court (RTC). premises considered. GO. we uphold the ruling of the appellate court that herein petitioner-carrier is liable to pay the amount paid by respondent-insurer for the damages sustained by the owner of the goods. 2003.: Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Civil Procedure seeking the reversal of the Court of Appeals (CA) Decision2 dated September 24. so that he who is substituted succeeds to the rights of the other in relation to a debt or claim. Inc. TIMOTEO B. SO ORDERED. indemnification or contribution in favor of Delbros..Respondents.. As stated in the manifestation filed by Delbros. it not being a party to the instant case. GO. RICARDO S. 160219 July 21. respondent-insurer had already been paid the full amount granted by the Court of Appeals. he cannot acquire any claim. GO and EDMUNDO S.22 The rights to which the subrogee succeeds are the same as. The Facts On December 19. Inc. however. Petitioners. spouses Cornelio (Cornelio) and Anacleta Macasa (Anacleta). including its remedies or securities. together with their eight-year-old grandson.27 Hence. and ROSARIO C. EUSEBIO S. SULPICIO LINES. Austria-Martinez. J. this shall not bar any action Delbros. With respect to Delbros. Notwithstanding. at Tacloban. GO. but not greater than. a subrogee cannot succeed to a right not possessed by the subrogor. this Court will not pass upon said issue since Delbros.

the Macasas went to the office of Sulpicio Lines to check on the veracity of the news. Soriano and Caltex Philippines Inc. the RTC awarded P200. but the latter denied that such an incident occurred. Both vessels were never retrieved. as well as for Cornelio‘s and Anacleta‘s alleged unearned income since they were both working as vocational instructors before their demise.00 in moral damages.000. The Macasas manifested that before they filed a case in court. expired certificate of inspection and it was manned by unqualified and incompetent crew members per findings of the Board of Marine Inquiry (BMI) in BMI Case No. all surnamed Macasa. and P50.000. through counsel.00 as actual and compensatory damages for the lost cash.000. and offered the amount of P250.000 gallons of gasoline and other petroleum products. as a result of this decision. and (5) the collision was MT Vector‘s fault since it was allowed to sail with an expired coastwise license. which at the time was loaded with 860. Sulpicio Lines traversed the complaint.000. MV Doña Paz collided with the MT Vector. P100.00 for the death of Cornelio.000. Some of the Macasas went to the North Harbor in Manila to await the arrival of Cornelio. Later.00 as costs and attorney‘s fees. Anacleta and Ritchie. The RTC‘s Ruling In its Decision4 dated May 5. between Marinduque and Oriental Mindoro.00 as moral damages.00 as attorney‘s fees. Sulpicio Lines. P100. The Macasas also claimed P100. The case was disposed of in this wise: Accordingly. and P100. the charterer of MT Vector. by way of actual. . and Cornelio. (2) it exercised extraordinary diligence in transporting their passengers and goods. Timoteo. Tablas Strait. Anacleta and Ritchie were among the victims whose bodies have yet to be recovered up to this day. Jr. on plaintiffs‘ complaint against third-party (sic) defendant Sulpicio Lines Inc. Inc. 1987. 1995. P600. among others that (1) MV Doña Paz was seaworthy in all aspects. (3) it acted in good faith as it gave immediate assistance to the survivors and kin of the victims. third-party defendant Caltex Philippines. only a few of the victims‘ bodies. (Caltex). Sulpicio Lines filed a Third-Party Complaint against Vector Shipping. who either drowned or were burned alive.00 by way of exemplary damages. are the children of Cornelio and Anacleta. On the other hand. Sulpicio Lines. on October 2. jewelries and other personal belongings of the latter. Thus. Anacleta and Ritchie.000. Worse.000.000. intimated its intention to settle.. Anacleta and Ritchie. Respondents Adelfo. defendant Sulpicio Lines was ordered liable against plaintiffs. The Macasas prayed for civil indemnity in the amount of P800. Cornelio. Thus. Trial on the merits ensued. alleging. On the fateful evening of December 20.000. 1991.00 as exemplary damages. Sulpicio Lines was uncooperative and was reluctant to entertain their inquiries. According to the Macasas. an oil tanker owned and operated by petitioners Vector Shipping Corporation (Vector Shipping) and Francisco Soriano (Soriano). Only twenty-six persons survived: 24 passengers of MV Doña Paz and 2 crew members of MT Vector. When they heard the news that MV Doña Paz was rammed at sea by another vessel. respondent Rosario Macasa. P500. Anacleta and Ritchie. are liable against defendant third-party plaintiff. (4) the sinking of MV Doña Paz was without contributory negligence on its part.. the Macasas filed a Complaint for Damages arising out of breach of contract of carriage against Sulpicio Lines before the RTC. are the parents of Ritchie (the Macasas). for reimbursement. checks. The complaint imputed negligence to Sulpicio Lines because it was remiss in its obligations as a common carrier.00 for the death of Cornelio. The Macasas rejected the said offer. Timoteo and his wife. and third-party defendant MT Vector Shipping Corporation and/or Francisco Soriano. bewildered.000.00 as actual damages. Emilia. in the vicinity of Dumali Point.000.00 as civil indemnity for the death of Cornelio.Manila. P100. subrogation and indemnity on all amounts. were recovered. 653-87 which had exonerated Sulpicio Lines from liability. but to no avail. they were forced to rely on their own efforts to search for the bodies of their loved ones.

.9 is not res adjudicata to this case.5 knots)? As compared to MT VECTOR of 629. Vector Shipping and Soriano appealed to the CA. third-party defendants. solid. Inc.324. by way of reimbursement.08 gross tonnage (5-deck cargo passenger vessel. exemplary damages and attorney‘s fee. MV DOÑA PAZ could ha[ve] avoid[ed] such collision had there been an official on the bridge. Sulpicio Lines. therefore. it was the MV Doña Paz which rammed MT Vector.12is res adjudicata to this case being of similar factual milieu and that the . deemed vacated as it is not yet final and executory. convincing. therefore. that this Court‘s ruling in Caltex (Philippines).moral. that due to the absence of the ship captain and other competent officers who were not at the bridge at the time of collision.. Inc. a bigger ship of 2. Caltex. to date.000. and that it was improbable for a slower vessel like MT Vector which. absence of eyewitnesses on that tragic maritime incident on 20 December 1987. and cannot make the [safety] of its passengers dependent upon the diligence of VECTOR and SORIANO? 4) Will it be in accord with existing law and/or jurisprudence that both vessels (MV DOÑA PAZ and MT VECTOR) be declared mutually at fault and. to pay in favor of plaintiff. Inc.11 On the other hand.5 knots. but not limited to.5 Aggrieved. be binding upon the court? 2) In the absence of clear. logic. at the time. and/or allied science. Inc. The P100. The CA‘s Ruling In the assailed Decision6 dated September 24. v.5 knots to ram a much faster vessel like the MV Doña Paz.000 actual damages is deleted while the indemnity for (sic) is reduced to P150. 2003. will it be in consonance with law. Sulpicio Lines. Sulpicio Lines.82 gross tonner tanker. and that MV DOÑA PAZ could had been earlier alarmed by its radar for an approaching vessel? 3) May VECTOR and SORIANO be held liable to indemnify/reimburse SULPICIO the amounts it is ordered to pay the MACASA‘s because SULPICIO‘s liability arises from breach of contract of carriage. the assailed decision is hereby modified in that thirdparty defendant-appellant Caltex Phils. to hold that MT VECTOR is the vessel solely at fault and responsible for the collision? How about MV DOÑA PAZ. with interest and cost of suit. inasmuch as in "culpa contractual" it is sufficient to prove the existence of the contract. All other aspects of the appealed judgment are perforce affirmed. since there were several other cases which did not reach this Court but. this Petition raising the following issues: 1) May the decision of the Board Marine Inquiry (BMI) which. is hereby exonerated from liability. SO ORDERED.7 The Issues Hence. subrogation and indemnity.10 that the collision was solely due to the fault of MV Doña Paz as it was guilty of navigational fault and negligence. Inc.5 knots? May it be considered that. each must [bear] its own loss? In the absence of CLEAR and CONVINCING proof[.] who is solely at fault?8 Petitioners posit that the factual findings of the BMI are not binding on the Court as such is limited to administrative liabilities and does not absolve the common carrier from its failure to observe extraordinary diligence. are ordered jointly and severally. SO ORDERED. of all the above amounts. then cruising at 16. previously holding that petitioners and Sulpicio Lines are jointly and severally liable to the victims. MT Vector Shipping Lines and/or Francisco Soriano. as between the two vessels. v. because carrier is presumed to be at fault or to have acted negligently it being its duty to exercise extraordinary diligence. the CA held: WHEREFORE. Inc. ordered against defendant Sulpicio Lines. attained finality. and concrete proof of including. Sulpicio Lines. however. is still pending with the Department of National Defense (DND) and. then cruising at 4. was running at a speed of merely 4. all premises considered. Sulpicio Lines claims that this Court‘s ruling in Caltex (Philippines). liable to pay third-party plaintiff. and running at a speed of 16. principles of physics.

as affirmed by the Philippine Coast Guard. to wit: A question of law arises when there is doubt as to what the law is on a certain state of facts. and that since it was the Christmas season. it is whether the appellate court can determine the issue raised without reviewing or evaluating the evidence. Inc.00 be reconsidered. therefore. Petitioners ought to remember that this Court is not a trier of facts. and probative value of the evidence presented. Thus. and that. this matter is essentially factual in character and.16 Likewise. For a question to be one of law.same is the law of the case on the matter. They insist that the claim for actual damages was duly established in the hearings before the RTC by ample proof that Cornelio and Anacleta were both professionals. this Court sustained the CA ruling that Vector Shipping and Soriano are liable to reimburse and indemnify . However. v. the Macasas manifest that they are basically concerned with their claims against Sulpicio Lines for breach of contract of carriage. Anacleta and Ritchie from P200. credence.00 to P150. Thus. the question posed is one of fact. we take judicial notice17 of our decision in Caltex (Philippines). in which case. This Court is being asked to evaluate the pieces of evidence which were adequately passed upon by both the RTC and the CA. Once it is clear that the issue invites a review of the evidence presented. The Macasas opine that the arguments raised by Sulpicio Lines in its attempt to avoid liability to the Macasas are without basis in fact and in law because the RTC‘s Decision is supported by applicable provisions of law and settled jurisprudence on contract of carriage. The resolution of the issue must rest solely on what the law provides on the given set of circumstances. were based on substantial evidence and by reason of its special knowledge and technical expertise. the spouses intended a vacation in Manila and buy things to bring home as gifts. the Macasas pray that the RTC Decision be affirmed in toto and/or the CA Decision be modified with respect to the deleted award of actual damages and the reduced civil indemnity for the death of the victims. Without doubt. that the BMI findings. misplaced and adds insult to injury. This Court defined a question of law. outside the ambit of a petition for review oncertiorari under Rule 45 of the Rules of Civil Procedure. the BMI‘s findings of facts are generally accorded respect by the courts. according to the Macasas.000. It is a well-established doctrine that in petitions for review on certiorari under Rule 45 of the Rules of Civil Procedure. the same must not involve an examination of the probative value of the evidence presented by the litigants or any of them. while Caltex was exonerated from any third-party liability. rather.15 Petitioners‘ insistence that MV Doña Paz was at fault at the time of the collision will entail this Court‘s review and determination of the weight. as distinguished from a question of fact. Inc.13 In their memorandum. Thus. while there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. it is a question of law. they disagree with the CA on the deletion of the RTC‘s award of P100. they could have traveled by plane instead of taking the MV Doña Paz. said BMI factual findings cannot be the subject of the instant petition for review asking this Court to look again into the pieces of evidence already presented. otherwise it is a question of fact. 14 This Court‘s Ruling The instant Petition lacks merit.000. The Macasas also appeal that the reduction of the civil indemnity for the death of Cornelio. Sulpicio Lines prays that the instant Petition be denied for lack of merit.00 actual damages. as such. It is not for this Court to weigh these pieces of evidence all over again. Sulpicio Lines. holding that MT Vector was solely at fault at the time of collision.18 In that case.000. is unjust. The CA‘s simple justification that if indeed the victims had such huge amount of money. only questions of law may be raised by the parties and passed upon by this Court. that the BMI proceedings are administrative in nature and can proceed independently of any civil action filed with the regular courts. the test of whether a question is one of law or of fact is not the appellation given to such question by the party raising the same. that they were in possession of personal effects and jewelries.

As the records would also disclose. It bears emphasis also that this Court accords respect to the factual findings of the trial court. Sulpicio Lines.1avvphi1 Moreover. The provisions owed their conception to the nature of the business of common carriers. It would not only prolong the . Inc. MT Vector was unseaworthy at the time of the mishap. We commiserate with all the victims. more complicated and somehow more hazardous. attorney‘s fees and costs the latter is adjudged to pay the victims therein. we see no cogent reason to deviate from this ruling. In short. More so. Sulpicio Lines. for its failure to sufficiently show that the CA committed any reversible error in the challenged decision as to warrant the exercise of this Court‘s discretionary appellate jurisdiction. That the said vessel was allowed to set sail when it was.27 Lastly. It may be noted that in a Resolution dated February 13. should await the review by the Department of National Defense of the BMI findings. and Sulpicio Lines. Considering that in the cases which have reached this Court. who are the same petitioners in this case. The failure of a common carrier to maintain in seaworthy condition the vessel involved in its contract of carriage is a clear breach of its duty prescribed in Article 1755 of the Civil Code. this Court will not disturb such findings. none of these exceptions finds application in this case. along with the RTC and the CA.25While this Court has recognized several exceptions26 to this rule. Inc. hear and decide cases filed before them. not fit to do so translates into rashness and imprudence. transportation has become more rapid. the CA decision21 dated November 17. This business is impressed with a special public duty.Sulpicio Lines for whatever damages. was sustained by this Court. to everyone in the group‘s knowledge. As a result.20 is unavailing. MT Vector was found to be carrying expired coastwise license and permits and was not properly manned. For these reasons. limit the courts‘ jurisdiction to expeditiously try. Sulpicio Lines.19 along with Vector Shipping Corporation and Francisco Soriano v. this Court denied the petition in Francisco Soriano v. Thus. a passenger or a shipper of goods is under no obligation to conduct an inspection of the ship and its crew. especially if affirmed by the CA on appeal. 2003 holding that Sulpicio Lines has a right to reimbursement and indemnification from the third-party defendants Soriano and Vector Shipping. v. Unless the trial court overlooked substantial matters that would alter the outcome of the case. it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. there is a defect in the ignition system of the vessel. the rule that findings of fact of the CA are generally binding and conclusive on this Court. anew. Inc. For a vessel to be seaworthy. we are disposed to agree with the findings of the CA when it aptly held: We are not swayed by the lengthy disquisition of MT Vector and Francisco Soriano urging this Court to absolve them from liability. Petitioners‘ invocation of the pendency before this Court of Francisco Soriano v. we have consistently upheld the third-party liability of petitioners. we have meticulously reviewed the records of the case and found no reason to depart from the rule. Inc. In any event. To accept petitioners‘ submission that this Court. Our ruling in that case is instructive: Thus.. 2006. the carriers are deemed to warrant impliedly the seaworthiness of the ship.22 we held that MT Vector fits the definition of a common carrier under Article 173223 of the New Civil Code. would. we cannot turn a blind eye to this gruesome maritime tragedy which is now a dark page in our nation‘s history. All evidence points to the fact that it was MT Vector‘s negligent officers and crew which caused it to ram into MV Doña Paz. Inc. the carrier being obliged by law to impliedly warrant its seaworthiness. in effect.24 We reiterate. American Home Assurance Co. and it was not convincingly shown whether the necessitated repairs were in fact undertaken before the said ship had set to sea. particularly with the Macasas who were denied justice for almost two decades in this case. especially because with the modern development of science and invention. The public must of necessity rely on the care and skill of common carriers in the vigilance over the goods and safety of the passengers. in Caltex (Philippines).

The vessel left Manila en route to Cebu City on August 2. WHEREFORE.T. R. SO ORDERED. The insurance was for a transshipment of certain wooden work tools and workbenches purchased for the consignee Science Teaching Improvement Project (STIP). 1993. As subrogee. if any. ANTONIO EDUARDO B. 1993. DECISION REYES. 1993.92 plus interest and attorney's fees in favor of respondent Insurance Company of North America (ICNA). petitioner.R. the cargo was received by petitioner Aboitiz Shipping Corporation (Aboitiz) through its duly authorized booking representative. 1993. J. 1993. payable to the Assured or order. . This. 8 On August 1. Sudlon Lahug.4 stating: This Company. 2008 ABOITIZ SHIPPING CORPORATION. the container van was loaded on board petitioner's vessel. MV Super Concarrier I.Loss. The container van was then off-loaded at Singapore and transshipped on board M/S Vigour Singapore. Aboitiz Transport System.. the ship arrived and docked at the Manila International Container Port where the container van was again off-loaded.5 The cargo. respondent. in consideration of a premium as agreed and subject to the terms and conditions printed hereon. the facts are as follows: On June 20. packed inside one container van. we cannot allow. The assailed Court of Appeals Decision dated September 24. 2003 is hereby AFFIRMED. Ecotech Center. Sudlon Lahug. The bill of lading 7 issued by Aboitiz contained the notation "grounded outside warehouse.3ICNA issued an "all-risk" open marine policy. vs. Costs against petitioners.176. 168402 August 6. Ecotech Center. MSAS Cargo International Limited and/or Associated and/or Subsidiary Companies (MSAS) procured a marine insurance policy from respondent ICNA UK Limited of London. Cebu City. On July 18. the insurer steps into the shoes of the assured and may exercise only those rights that the assured may have against the wrongdoer who caused the damage.: THE RIGHT of subrogation attaches upon payment by the insurer of the insurance claims by the assured. was shipped "freight prepaid" from Hamburg. Before Us is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) which reversed the Decision2 of the Regional Trial Court (RTC). does insure for MSAS Cargo International Limited &/or Associated &/or Subsidiary Companies on behalf of the title holder: . Cebu City. the instant Petition is DENIED. Philippines. The CA ordered petitioner Aboitiz Shipping Corporation to pay the sum of P280. NACHURA Associate Justice Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G. A clean bill of lading 6 was issued by Hapag-Lloyd which stated the consignee to be STIP. On July 26. No.Macasas‘ agony but would result in yet another tragedy at the expense of speedy justice. INSURANCE COMPANY OF NORTH AMERICA." The container van was stripped and transferred to another crate/container van without any notation on the condition of the cargo on the Stuffing/Stripping Report. Germany on board M/S Katsuragi. The Facts Culled from the records.

the cargo was withdrawn by the representative of the consignee.92. upon receiving the call. On October 4. ICNA formally advised Aboitiz of the claim and subrogation receipt executed in its favor.10 Perez found that except for the bottom of the crate which was slightly broken.15 CAC reported to ICNA that based on official weather report from the Philippine Atmospheric. The work tools and workbenches were found to have been completely soaked in water with most of the packing cartons already disintegrating. On August 11. and corrosion which were discovered upon delivery to consignee. 1993 caused water damage to the shipment. On August 21. It was then brought to the Cebu Bonded Warehousing Corporation pending clearance from the Customs authorities. 1993. Manila when it was delivered on July 26. no reply was received from Aboitiz. A subrogation receipt was duly signed by Willig. 1993.92 to consignee. the consignee filed a formal claim14 with Aboitiz in the amount of P276. 1993. 1993. ICNA paid the amount of P280. Perez. Punta Princesa.176. 4. 1993. galvanized metal bands were nailed onto all the edges. 1993. the Claimsmen Adjustment Corporation (CAC) conducted an ocular inspection and survey of the damage. He further explained that the "grounded outside warehouse" notation in the bill of lading referred only to the container van bearing the cargo. The shipment was placed outside the warehouse as can be gleaned from the bill of lading issued by Aboitiz which contained the notation "grounded outside warehouse. Mayo B. 1993. received a telephone call from Willig informing him that the cargo sustained water damage.13 On September 21.12 The letter stated that the crate was broken at its bottom part such that the contents were exposed. however. RTC Disposition ICNA filed a civil complaint against Aboitiz for collection of actual damages in the sum of P280. immediately went to the bonded warehouse and checked the condition of the container and other cargoes stuffed in the same container. molds. the damage was caused by water entering through the broken parts of the crate.16 ICNA alleged that the damage sustained by .176. The crate was properly sealed off from the inside with tarpaper sheets. the shipment arrived in Cebu City and discharged onto a receiving apron of the Cebu International Port. 1993 when the shipment was stuffed inside another container van for shipment to Cebu. it would appear that heavy rains on July 28 and 29. Willig informed Aboitiz of the damage noticed upon opening of the cargo. CAC reported to ICNA that the goods sustained water damage. CAC noted that the shipment was placed outside the warehouse of Pier No. petitioner's checker noted that the crates were slightly broken or cracked at the bottom.11 In a letter dated August 15. North Harbor. Science Teaching Improvement Project (STIP) and delivered to Don Bosco Technical High School. Despite follow-ups. He found that the container van and other cargoes stuffed there were completely dry and showed no sign of wetness. Perez.On August 3. 1993. then Claims Head of petitioner. plus interest and attorney's fees. In the Stripping Report 9 dated August 5. On August 13. The consignee contacted the Philippine office of ICNA for insurance claims. Bernhard Willig. 1993. Geophysical and Astronomical Services Administration. 1993.540. Cebu City. The letter concluded that apparently.00 for the damaged condition of the following goods: ten (10) wooden workbenches three (3) carbide-tipped saw blades one (1) set of ball-bearing guides one (1) set of overarm router bits twenty (20) rolls of sandpaper for stroke sander In a Supplemental Report dated October 20. Aboitiz refused to settle the claim. On the outside. It was received by Mr. the crate itself appeared to be completely dry and had no water marks. But he confirmed that the tools which were stored inside the crate were already corroded." It was only on July 31.

however. Francisco. Such representative. such foreign corporation doing business in the Philippines cannot sue . it lacked the capacity to sue before Philippine Courts.' claim that it had been subrogated to the rights of the consignee must fail because the subrogation receipt had no probative value for being hearsay evidence. The complaint is hereby DISMISSED. claims that it has been subrogated to the rights and interest of Science Teaching Improvement Project as shown by the Subrogation Form (Exhibit "K") allegedly signed by a representative of Science Teaching Improvement Project. the Subrogation Form is self-serving and has no probative value. dela Rosa cor. complainant ICNA Phils. ICNA Phils. The trial court noted that Marine Policy No. Aboitiz disavowed any liability and asserted that the claim had no factual and legal bases. 87GB 4475 was issued by ICNA UK Limited with address at Cigna House. to wit: Prescinding from the foregoing. premises considered. no evidence has been adduced which would show that ICNA UK is the same as or the predecessor-in-interest of plaintiff Insurance Company of North America ICNA with office address at Cigna-Monarch Bldg. the assured in the Marine Policy appears to be MSAS Cargo International Limited &/or Associated &/or Subsidiary Companies. the claim that there was an endorsement of the marine policy has no probative value as it is hearsay.. The dispositive portion of the decision17 states: WHEREFORE.. Plaintiff's witness. the RTC rendered judgment against ICNA. did not present any evidence to show that ICNA UK is its predecessor-in-interest. Plaintiff. Hence. On November 14. 87GB 4475 was issued by Insurance Company of North America (U. If it fails to obtain these licenses/authority. Under Philippine law. Second. however. Plaintiff's witness. plaintiff ICNA had no personality to institute the suit. however. The RTC reasoned: While it is clear that Marine Policy No.) Limited (ICNA UK) with address at Cigna House.18 The RTC ruled that ICNA failed to prove that it is the real party-in-interest to pursue the claim against Aboitiz. Metro Manila or that ICNA UK assigned the Marine Policy to ICNA. or that ICNA UK assigned the insurance policy to ICNA Phils. DISMISSED for lack of basis. was not presented on the witness stand. London EC3M 7NA. claims that the signature below the name MSAS Cargo International is an endorsement of the marine policy in favor of Science Teaching Improvement Project.19 (Emphasis supplied) The trial court also found that ICNA failed to produce evidence that it was a foreign corporation duly licensed to do business in the Philippines. However.the shipment was exclusively and solely brought about by the fault and negligence of Aboitiz when the shipment was left grounded outside its warehouse prior to delivery. the Board of Investments and the Insurance Commission. 8 Lime Street. Hence.K. failed to identify whose signature it was and plaintiff did not present on the witness stand or took (sic) the deposition of the person who made that signature. in the Pre-Trial Order of 12 March 1996. This allegation was. It countered that the complaint stated no cause of action. Francisco B. the cause of action was barred. 2003. Herrera Sts. plaintiff alleged in its complaint that it is a foreign insurance company duly authorized to do business in the Philippines. the court holds that plaintiff is not entitled to the relief claimed in the complaint for being baseless and without merit. and the suit was premature there being no claim made upon Aboitiz. London EC3M 7NA. Makati. denied by the defendant. likewise. one of the issues defined by the court is whether or not the plaintiff has legal capacity to sue and be sued. These licenses/authority are obtained from the Securities and Exchange Commission. the condition is that a foreign insurance company must obtain licenses/authority to do business in the Philippines. In fact. 8 Lime Street. Moreover. Legaspi Village. further. The defendant's counterclaims are. Thus.

It argued that the formal claim was not filed within the period required under Article 366 of the Code of Commerce.K. Mangaliman. Inc.20 On the other hand. who is merely the representative of the consignee. ICNA is entitled to reimbursement from Aboitiz. . Hence. disposing as follows: WHEREFORE. that ICNA had no right of subrogation because the subrogation receipt should have been signed by MSAS. The appealed decision of the Regional Trial Court of Makati City in Civil Case No.176. Aboitiz is liable for the loss or damage sustained by the subject cargo. as subrogee of the claim of the insured under the subject marine policy. THAT THE CLAIM WAS MADE BY A WRONG CLAIMANT.. 94-1590 is hereby REVERSED and SET ASIDE. the CA reversed and set aside the RTC ruling. plus the costs of suit. the trial court erred in dismissing the complaint and in not finding that based on the evidence on record and relevant provisions of law. the present appeal is hereby GRANTED. is therefore the real party in interest to bring this suit and recover the full amount of loss of the subject cargo shipped by it from Manila to the consignee in Cebu City. ICNA said it is one and the same as the ICNA UK Limited as made known in the dorsal portion of the Open Policy. whether the foreign company or its duly authorized Agent/Representative in the country.000. As subrogee. x x x22 The CA ruled that the presumption that the carrier was at fault or that it acted negligently was not overcome by any countervailing evidence.21 The CA opined that the right of subrogation accrues simply upon payment by the insurance company of the insurance claim. Mentholatum Co. Even assuming arguendo that the plaintiff-insurer in this case is an unlicensed foreign corporation. The CA ruled: At any rate. 2005. 524. We find the ground invoked for the dismissal of the complaint as legally untenable. It contended that the trial court failed to consider that its cause of action is anchored on the right of subrogation under Article 2207 of the Civil Code.before Philippine courts.) ("ICNA UK"). and attorney's fees in the sum of P50. premises considered. 72 Phil.92 with interest thereon at the legal rate from the date of the institution of this case until fully paid. A new judgment is hereby rendered ordering defendant-appellee Aboitiz Shipping Corporation to pay the plaintiff-appellant Insurance Company of North America the sum of P280. v. x x x xxxx Plaintiff insurer. Aboitiz reiterated that ICNA lacked a cause of action. On March 29. Issues The following issues are up for Our consideration: (1) THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN RULING THAT ICNA HAS A CAUSE OF ACTION AGAINST ABOITIZ BY VIRTUE OF THE RIGHT OF SUBROGATION BUT WITHOUT CONSIDERING THE ISSUE CONSISTENTLY RAISED BY ABOITIZ THAT THE FORMAL CLAIM OF STIP WAS NOT MADE WITHIN THE PERIOD PRESCRIBED BY ARTICLE 366 OF THE CODE OF COMMERCE. even assuming that it is an unlicensed foreign corporation. (2) THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN RULING THAT THE SUIT FOR REIMBURSEMENT AGAINST ABOITIZ WAS PROPERLY FILED BY ICNA AS THE LATTER WAS AN AUTHORIZED AGENT OF THE INSURANCE COMPANY OF NORTH AMERICA (U. and not Willig. the assured in the open policy. AND. (Emphasis supplied) CA Disposition ICNA appealed to the CA. MORE SO. such circumstance will not bar it from claiming reimbursement from the defendant carrier by virtue of subrogation under the contract of insurance and as recognized by Philippine courts.

payable to the Assured or Order. even if it has no license to do business in this country. Hence.27 MSAS accepted said provision when it signed and accepted the policy. which is not prohibited under Philippine law. Only when that foreign corporation is "transacting" or "doing business" in the country will a license be necessary before it can institute suits.Loss. As found by the CA. the RTC erred when it ruled that there was no proper indorsement of the insurance policy by MSAS. the company who issued the insurance. the shipper. The terms of the Open Policy authorize the filing of any claim on the insured goods. or holder.(3) THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN RULING THAT THERE WAS PROPER INDORSEMENT OF THE INSURANCE POLICY FROM THE ORIGINAL ASSURED MSAS CARGO INTERNATIONAL LIMITED ("MSAS") IN FAVOR OF THE CONSIGNEE STIP. does insure MSAS Cargo International Limited &/or Associates &/or Subsidiary Companies in behalf of the title holder: . including the consignee. The policy benefits any subsequent assignee. A foreign corporation not licensed to do business in the Philippines is not absolutely incapacitated from filing a suit in local courts. however. to be brought against ICNA UK. the consignee. or against any of its listed agents worldwide. in consideration of a premium as agreed and subject to the terms and conditions printed hereon.26 In any case. The acceptance operated as an acceptance of the authority of the agents. in favor of STIP of Don Bosco Technical High School. a formal indorsement of the policy to the agent in the Philippines was unnecessary for the latter to exercise the rights of the insurer.25 Thus. the Open Policy expressly provides that: The Company. AND THAT THE SUBROGATION RECEIPT ISSUED BY STIP IN FAVOR OF ICNA IS VALID NOTWITHSTANDING THE FACT THAT IT HAS NO PROBATIVE VALUE AND IS MERELY HEARSAY AND A SELF-SERVING DOCUMENT FOR FAILURE OF ICNA TO PRESENT A REPRESENTATIVE OF STIP TO IDENTIFY AND AUTHENTICATE THE SAME. who may file claims on behalf of the assured. the controversy rotates on three (3) central questions: (a) Is respondent ICNA the real party-in-interest that possesses the right of subrogation to claim reimbursement from petitioner Aboitiz? (b) Was there a timely filing of the notice of claim as required under Article 366 of the Code of Commerce? (c) If so. It was the domestic corporation that brought the suit and not the foreign company. which bars a foreign corporation from access to our courts. if any.23 (Underscoring supplied) Elsewise stated. It is the act of engaging in business without the prescribed license. Its authority is expressly provided for in the open policy which includes the ICNA office in the Philippines as one of the foreign company's agents. (4) THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN RULING THAT THE EXTENT AND KIND OF DAMAGE SUSTAINED BY THE SUBJECT CARGO WAS CAUSED BY THE FAULT OR NEGLIGENCE OF ABOITIZ. and not the lack of license per se.24 It may. can petitioner be held liable on the claim for damages? Our Ruling We answer the triple questions in the affirmative. this Court has held that a foreign insurance company may sue in Philippine courts upon the marine insurance policies issued by it abroad to cover internationalbound cargoes shipped by a Philippine carrier. Likewise. We uphold the CA observation that while it was the ICNA UK Limited which issued the subject marine policy. the present suit was filed by the said company's authorized agent in Manila. This is in keeping with Section 57 of the Insurance Code which states: . bring suits on isolated business transactions.

the insured releases the wrongdoer who caused the loss from liability. may be made.28 payment by the insurer to the assured operates as an equitable assignment of all remedies the assured may have against the third party who caused the damage. 1993. which states: Article 2207. the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of. Sweet Lines.29 Upon payment to the consignee of indemnity for damage to the insured goods. the insurer can be subrogated only to the rights as the insured may have against the wrongdoer. It is meant to safeguard the carrier from false and fraudulent claims. no claim shall be admitted against the carrier with regard to the condition in which the goods transported were delivered. nor does it grow out of. For damages that are visible from the outside of the package. Circumstances peculiar to this case lead Us to conclude that the notice requirement was complied with. both the insurer and the consignee are bound by the contractual stipulations under the bill of lading. Although the letter informing the carrier of the damage was dated August 15.31 Second. (Emphasis added) Respondent's cause of action is founded on it being subrogated to the rights of the consignee of the damaged shipment.. The shipment was delivered on August 11. any privity of contract or upon written assignment of claim.33 this notice requirement protects the carrier by affording it an opportunity to make an investigation of the claim while the matter is still fresh and easily investigated. the notice of claim must be made within twenty four (24) hours from receipt of the cargo if the damage is not apparent from the outside of the package.32 The giving of notice of loss or injury is a condition precedent to the action for loss or injury or the right to enforce the carrier's liability. neither of the parties in this case presented the terms for giving notices of claim under the bill of lading issued by petitioner for the goods. (Emphasis added) As this Court held in the case of Pan Malayan Insurance Corporation v. As held in the case of Philippine American General Insurance Co. Within twenty four hours following the receipt of the merchandise. together with the notice of claim. which is the contract between the parties. Subrogation is not dependent upon. has its limitations. Inc. If by its own acts after receiving payment from the insurer. Court of Appeals. the insurer loses its claim against the latter. It accrues simply upon payment of the insurance claim by the insurer. in which case the claim shall be admitted only at the time of receipt. that letter. provided that the indications of the damage or average which give rise to the claim cannot be ascertained from the outside part of such packages. as well as the manner of giving notice may be modified in the terms of the bill of lading. the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. If the amount paid by the insurance company does not fully cover the injury or loss. The law provides: Article 366. v. Under the Code of Commerce. The right of subrogation springs from Article 2207 of the Civil Code. or the transportation charges have been paid. If the plaintiff's property has been insured. 1993. Inc..A policy may be so framed that it will inure to the benefit of whosoever. was received . during the continuance of the risk. the claim against the carrier for damages or average which may be found therein upon opening the packages. First. however. Notably.30 This right of subrogation. the claim must be made immediately. After the periods mentioned have elapsed. (Emphasis supplied) The periods above. may become the owner of the interest insured. ICNA's entitlement to subrogation equipped it with a cause of action against petitioner in case of a contractual breach or negligence.

rather than a strict construction. and their application is limited to cases falling fairly within their object and purpose. Understandably. Upon opening and discovery of the damaged condition of the goods.38 Extraordinary diligence is that extreme measure of care and caution which persons of unusual prudence and circumspection use for securing and preserving their own property rights. common carriers are presumed to have been at fault or to have acted negligently. was informed by telephone sometime in August 13. a reasonable period considering that the goods could not have corroded instantly overnight such that it could only have sustained the damage during transit. already corroded. a report to this effect had to pass through the proper channels before it could be finalized and endorsed by the institution to the claims department of the shipping company. unless they prove that they observed extraordinary diligence required by law. albeit this ruling is being made pro hac vice. it was discovered that the workbenches and work tools suffered damage due to "wettage" although by then they were already physically dry. Perez. the representative of consignee who received the shipment. 1993. Mayo B. the main objective of the prescribed time period was fulfilled. This Court ruled that such a notice did not comply with the notice requirement under the law.by petitioner only on September 21. relayed the information that the delivered goods were discovered to have sustained water damage to no less than the Claims Head of petitioner. We agree with the findings of the CA that petitioner failed to overturn this presumption: x x x upon delivery of the cargo to the consignee Don Bosco Technical High School by a representative from Trabajo Arrastre. Thus. The claim for damages was denied. Perez then immediately went to the warehouse and to the delivery site to inspect the goods in behalf of petitioner. Perez was able to investigate the claims himself and he confirmed that the goods were. Mr. petitioner was able to immediately inspect the damage while the matter was still fresh. Mayo B. the necessary clearance had to be made before the package was opened. We now discuss petitioner's liability for the damages sustained by the shipment. Stipulations requiring notice of loss or claim for damage as a condition precedent to the right of recovery from a carrier must be given a reasonable and practical construction.34 In the case of Philippine Charter Insurance Corporation (PCIC) v. We have found that respondent. There was no evidence presented that the notice was timely given. Immediately. As adverted to earlier.37 We give due consideration to the fact that the final destination of the damaged cargo was a school institution where authorities are bound by rules and regulations governing their actions. In so doing. there was substantial compliance with the notice requirement in this case. is the real party in interest to institute the claim for damages against petitioner. Moreover. Mr.39 This standard is intended to grant favor to the shipper who is at the mercy of the common carrier once the goods have been entrusted to the latter for shipment. the shipment delivered to the consignee sustained water damage. indeed. as subrogee of the consignee. But petitioner admits that even before it received the written notice of claim. 40 Here.35the notice was allegedly made by the consignee through telephone. To recapitulate. when the goods were delivered. there are peculiar circumstances in the instant case that constrain Us to rule differently from the PCIC case. and the crates opened. destroyed or deteriorated. Perez. Chemoil Lighterage Corporation. Provisions specifying a time to give notice of damage to common carriers are ordinarily to be given a reasonable and practical. Claims Head of the company. and pro hac vice. Appellee carrier having failed to discharge the burden of . 1993. The call to petitioner was made two days from delivery. Neither was there evidence presented that the notice was relayed to the responsible authority of the carrier. not to be made a precedent for other cases.36 Bernhard Willig. that a valid notice of claim was made by respondent. The rule as stated in Article 1735 of the Civil Code is that in cases where the goods are lost. adapted to the circumstances of the case under adjudication.

on July 31. Mr. it was stripped from the container van. To prove the exercise of extraordinary diligence. rainfall in the Port Area of Manila from July 26 to 31. it was noted that only one (1) slab was slightly broken at the bottom allegedly hit by a forklift blade (Exhibit "F").42 Extraordinary diligence must include safeguarding the shipment from damage coming from natural elements such as rainfall. What the records showed is that the subject cargo was stripped from the container van of the shipper and transferred to the container on August 1. x x x If the subject cargo was not grounded outside prior to shipment to Cebu City.43 (Emphasis added) . And since evidence showed that rain fell over Manila during the same period. petitioner failed to mention where exactly the goods were stored during the period in question." suggesting that from July 26 to 31. x x x41 (Emphasis added) The shipment arrived in the port of Manila and was received by petitioner for carriage on July 26. 1993 and left Manila for Cebu City on August 2. 1993. the goods were kept outside the warehouse. the supplemental report submitted by the surveyor has confirmed that it was rainwater that seeped into the cargo based on official data from the PAGASA that there was. 1993. The Stuffing/Stripping Report (Exhibit "D") at the Manila port did not indicate any such defect or damage.proving that it exercised extraordinary diligence in the vigilance over such goods it contracted for carriage. It must prove that it used "all reasonable means to ascertain the nature and characteristic of the goods tendered for transport and that it exercised due care in handling them. The Surveyor specifically noted that the subject cargo was under the custody of appellee carrier from the time it was delivered by the shipper on July 26. As amply explained by the CA: On the other hand. 1993. On the same day. 1993. 1993 and finally loaded into the appellee's vessel bound for Cebu City on August 2. The bill of lading issued by petitioner on July 31. It failed to show that the crate was properly stored indoors during the time when it exercised custody before shipment to Cebu. 1993. ACCU-213798-4 on July 31. 1993). it was loaded onto another vessel bound for Cebu. Appellee's witness. petitioner must do more than merely show the possibility that some other party could be responsible for the damage. During the period between July 26 to 31. but when the container was stripped upon arrival in Cebu City port after being discharged from appellee's vessel. 1993 up to the time the goods were stripped or transferred from the container van to another container and loaded into the vessel M/V Supercon Carrier I on August 1. Aside from denying that the "grounded outside warehouse" notation referred not to the crate for shipment but only to the carrier van." actually refers to the container and not the contents thereof or the cargoes. 1993 to July 31. 1993. And yet it presented no evidence to explain where did they place or store the subject goods from the time it accepted the same for shipment on July 26. Mayo tried to disavow any responsibility for causing "wettage" to the subject goods by claiming that the notation "GROUNDED OUTSIDE WHSE. Five days later. appellee provided no explanation as to where said cargo was stored from July 26. 1993. indeed. the shipment was outside a container van and kept in storage by petitioner. The presumption that the carrier was at fault or that it acted negligently was not overcome by any countervailing evidence. 1993. the presumption of fault or negligence on its part from the time the goods were unconditionally placed in its possession (July 26. On August 1. therefore stands. 1993 until it was stuffed inside Container No. 1993 contains the notation "grounded outside warehouse. No other inevitable conclusion can be deduced from the foregoing established facts that damage from "wettage" suffered by the subject cargo was caused by the negligence of appellee carrier in grounding the shipment outside causing rainwater to seep into the cargoes. We can conclude that this was when the shipment sustained water damage. it was re-stuffed inside another container van. 1993) up to the time the same were delivered to the consignee (August 11. 1993.

RUBEN T. PAL Airway Bill No. with Pomierski F. CV No.R. vs. 1976 (Exh. Illinois. as recounted by the court a quo and adopted by respondent court after "considering the evidence on record.M. and PHILIPPINE AIRLINES. sealed the shipping case containing a hermetically sealed casket that is airtight and waterproof wherein was contained the remains of Crispina Saludo Galdo (sic) (Exb.R. Pomierski brought the remains to C. and . 6TWA). of the remains from Chicago to the Philippines. October 26.A. thru a travel agent. transfers. Pomierski and Son Funeral Home of Chicago. MARIA SALVACION SALUDO.. J.M. respondents.. Also Exh. petitioners. as the shipper and Mario (Maria) Saludo as the consignee. The funeral home had the remains embalmed (Exb. (Continental Mortuary Air Services) at the airport (Chicago) which made the necessary arrangements such as flights. In the meantime.. etc. at 3:00 p.. WHEREFORE. 1976 (See Exh. (on) October 23. Crispina Galdo Saludo. SALUDO. INC. COURT OF APPEALS. Philippine Vice Consul in Chicago. LEOPOLDO G.S..m. 107 of the same date. is a national service used by undertakers to throughout the nation (U. plaintiffs Maria Salvacion Saludo and Saturnino Saludo.M. REYES Associate Justice Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.Petitioner is thus liable for the water damage sustained by the goods due to its failure to satisfactorily prove that it exercised the extraordinary diligence required of common carriers. C). 1976 at the Pomierski & Son Funeral Home.S. The facts.). HON. made the necessary preparations and arrangements for the shipment. SALUDO and SATURNINO G. Llaneta.A. B).S. 1976 (Exh. 1992 ANICETO G. No. SALUDO. 1976 and from San Francisco to Manila on board PAL Flight No. On the same date. they furnish the air pouch which the casket is enclosed in. 1-PAL). JR. TRANS WORLD AIRLINES. 95536 March 23. 1976. Bienvenido M.A. in Chicago Illinois. 079-01180454 Ordinary was issued wherein the requested routing was from Chicago to San Francisco on board TWA Flight 131 of October 27. REGALADO. 20951 of respondent Court of Appeals 1 which affirmed the decision of the trial court 2 dismissing for lack of evidence herein petitioners' complaint in Civil Case No R-2101 of the then Court of First Instance of Southern Leyte. and from Manila to Cebu on board PAL Flight 149 of October 29. C. and they see that the remains are taken to the proper air freight terminal (Exh. C. E. on October 26. were booked with United Airlines from Chicago to California.S.: Assailed in this petition for review on certiorari is the decision in CA-G. D) and secured a permit for the disposition of dead human body on October 25.A. Branch I. INC." are as follows: After the death of plaintiffs' mother. the petition is DENIED and the appealed Decision AFFIRMED.H. A). booked the shipment with PAL thru the carrier's agent Air Care International. SO ORDERED.

What transpired at the Chicago (A)irport is explained in a memo or incident report by Pomierski (Exh. The following day October 28. that he would look into the matter and inform her about it on the plane or have it radioed to her. of the same date. that CMAS is a national service used by undertakers throughout the nation (U. she went to the TWA counter there to inquire about her mother's remains. Exh.) of the same date. 1976. and see(s) to it that the remains are taken to the proper air freight terminal.S. 3-a-PAL). Reluctantly. and she and her brother had to change reservations from UA to the TWA flight after she confirmed by phone that her mother's remains should be on that TWA flight. and Pomierski immediately called C. This upset her. 1.TWA). this shipment was withdrawn from PAL by CMAS at 1805H (or 6:05 p. October 27 (Exh. 1976.. and of the discourtesy of its employees to . 2PAL.. Ani Bantug. that the remains (of Crispina Saludo) were on a plane to Mexico City. 4 petitioners' counsel informed private respondent Trans World Airlines (TWA) of the misshipment and eventual delay in the delivery of the cargo containing the remains of the late Crispin Saludo. 1976.m. 6-TWA). She was told they did not know anything about it.). etc. she went to the TWA counter again.A. that there were two bodies at the terminal.with PAL from California to Manila. and she was told there was no body on that flight. which in a matter of 10 minutes informed him that the remains were on a plane to Mexico City. 1976.m. 079ORD-01180454 on TWA Flight 603 of October 27. 2-a-PAL). This shipment was transferred to or received by PAL at 1945H or 7:45 p. see Exh. But no confirmation from her cousin reached her that her mother was on the West Coast. They went to the airport and watched from the look-out area. This casket bearing the remains of Crispina Saludo. makes all the necessary arrangements. which was mistakenly sent to Mexico and was opened (there). transfers. The shipment was immediately loaded on PAL flight for Manila that same evening and arrived (in) Manila on October 30. So. a flight earlier than TWA Flight 131 of the same date. he relayed this information to Miss Saludo in California. and somehow they were switched. 1976 (Bee Exh. called and told him they were sending the remains back to California via Texas (see Exh. such as flights.m.M. But the director told her that the remains were booked with TWA flight to California. 3-PAL. She saw no body being brought.S. later C. and somehow they were switched. 1981 to herein plaintiff's counsel (See Exh.M. Upon arrival at San Francisco at about 5:00 p. it is stated that the remains (of Crispina Saludo) were taken to CMAS at the airport. "Due to a switch(ing) in Chicago".S. She then went to the funeral director of Pomierski Funeral Home who had her mother's remains and she told the director that they were booked with United Airlines. (Exh. TWA delivered or transferred the said shipment said to contain human remains to PAL at 1400H or 2:00 p. they took the TWA flight upon assurance of her cousin. Patagas for shipment to the Philippines (See Exh. a day after its expected arrival on October 29.m.A.A. was resealed by Crispin F. that there were two bodies at the (Chicago Airport) terminal. October 27. 3 In a letter dated December 15. In that memo or incident report (Exh. 1976. 5-TWA). It-turned out that TWA had carried a shipment under PAL Airway Bill No.. 6-TWA). 6-TWA) to Pomierski's lawyers who in turn referred to said' memo and enclosed it in their (Pomierski's lawyers) answer dated July 18. B-1). the shipment or remains of Crispina Saludo arrived (in) San Francisco from Mexico on board American Airlines. She then called Pomierski that her mother's remains were not at the West Coast terminal.

went beyond the issues of the case and the same are contrary to the admissions of both appellant and appellee. 16 Since it is precisely the soundness of the inferences or conclusions that may be drawn from the factual issues which are here being assayed. 11and (h) where the findings of fact of the Court of Appeals are contrary to those of the trial court. moral and exemplary damages. and in a subsequent resolution. surmises or conjectures. arrogant and indifferent acts of the employees of TWA and PAL. it has been held. they are of the position that. assuming that the petition raises factual questions. a question of fact. moral damages of P1.00. a question of law is one which involves a doubt or controversy on what the law is on a certain state of facts. Thus. . to wit: (a) where there is grave abuse of discretion. 14 Respondent airline companies object to the present recourse of petitioners on the ground that this petition raises only factual questions. The rule.petitioners Maria Salvacion Saludo and Saturnino Saludo. in which case it is a question of law. would justify a different conclusion. admits of established exceptions. As earlier stated. contrarily.000. is one in which there is a doubt or difference as to the truth or falsehood of the alleged facts. the same are within the recognized exceptions to the general rule as would render the petition cognizable and worthy of review by the Court. or are mere conclusions without citation of specific evidence. Likewise to be settled is whether or not the conclusions of the Court of Appeals subject of this review indeed find evidentiary and legal support. exemplary damages. 13 One test. petitioners now urge this Court to review the appealed decision and to resolve whether or not (1) the delay in the delivery of the casketed remains of petitioners' mother was due to the fault of respondent airline companies. or where the findings of fact of the Court of Appeals are premised on the absence of evidence and are contradicted by the evidence on record. absurd or impossible. In predictable disagreement and dissatisfaction with the conclusions reached by respondent appellate court. Branch III. if properly considered. and (4) private respondents should be held liable for actual. or where the facts of set forth by the petitioner are not disputed by the respondent. 5 petitioners stated that they were holding PAL liable for said delay in delivery and would commence judicial action should no favorable explanation be given. Both private respondents denied liability. 15 Petitioners maintain otherwise or. a damage suit 6 was filed by petitioners before the then Court of First Instance.00. and. alternatively. aside from attorney's fees and litigation expenses. the court below absolved the two respondent airlines companies of liability. (d) when the judgment of the Court of Appeals was based on a misapprehension of facts. 10 (g) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties and which. In a separate letter on June 10. however. Leyte. otherwise it will be a question of fact. 8 At the outset and in view of the spirited exchanges of the parties on this aspect. (f) when the Court of Appeals. in making its findings. the factual findings of the Court of Appeals are final and conclusive and cannot be reviewed by the Supreme Court. A discussion seriatim of said issues will further reveal that the sequence of the events involved is in effect disputed.(c) when the inference made is manifestly-mistaken. (b) when the finding is grounded entirely on speculations. it is to be stressed that only questions of law may be raised in a petition filed in this Court to review on certiorari the decision of the Court of Appeals. praying for the award of actual damages of P50. is whether the appellate court can determine the issue raised without reviewing or evaluating the evidence. (e) when the factual findings are conflicting. 9 This being so. 1977 addressed to co-respondent Philippine Airlines (PAL). attorney's fees and costs of suit. 7 denied herein petitioners' motion for reconsideration for lack of merit. (2) the one-day delay in the delivery of the same constitutes contractual breach as would entitle petitioners to damages. we find that the issues raised in the instant petition indeed warrant a second look if this litigation is to come to a reasonable denouement. 12 To distinguish. (3) damages are recoverable by petitioners for the humiliating.000.000. The Court of Appeals affirmed the decision of the lower court in toto.

." a further reading and a more faithful quotation of the authority cited would reveal that "(a) bill of lading may contain constituent elements of estoppel and thus become something more than a contract between the shipper and the carrier. . Ordinarily. .I. In the absence of convincing testimony establishing mistake. that "(t)he issuance of a bill of lading carries the presumption that the goods were delivered to the carrier issuing the bill. 20 The designation. 235). 1976. Under the Tariff and Customs Code. to some extent. there is nothing to prevent an inverse order of events. delivery of the goods and issuance of the bill are regarded in commercial practice as simultaneous acts. Between the consignor of goods and receiving carrier. . however. for immediate shipment. 23 However. (However). as between the shipper and the carrier. on the terms specified in such instrument. that the former should precede the latter. 24 While we agree with petitioners' statement that "an airway bill estops the carrier from denying receipt of goods of the quantity and quality described in the bill. except as may be prohibited by law. whether by sea or land. . since a bill of lading acknowledges receipt of goods to be transported. is not conclusive. both under American and Philippine law. ." 17 Petitioner allege that private respondents received the casketed remains of petitioners' mother on October 26. Such instrument may be called a shipping receipt. it is a receipt as to the quantity and description of the goods shipped and a contract to transport the goods to the consignee or other person therein designated. as evidenced by the issuance of PAL Air Waybill No. or. petitioners rely on the jurisprudential dictum. recitals in a bill of lading as to the goods shipped raise only a rebuttable presumption that such goods were delivered for . it is a general rule as to the parties to a contract of carriage of goods in connection with which a bill of lading is issued reciting that goods have been received for transportation. when no goods have been delivered for shipment no recitals in the bill can estop the carrier from showing the true facts . a receipt is not essential to a complete delivery of goods to the carrier for transportation but. varied or contradicted by parol or other evidence."19 A bill of lading is a written acknowledgment of the receipt of the goods and an agreement to transport and deliver them at a specified place to a person named or on his order. forwarder's receipt and receipt for transportation. 22 Logically. Petitioners fault respondent court for "not finding that private respondents failed to exercise extraordinary diligence required by law which resulted in the switching and/or misdelivery of the remains of Crispina Saludo to Mexico causing gross delay in its shipment to the Philippines. for that matter. and from said date. delivery of the goods to the carrier normally precedes the issuance of the bill. and consequently. 079-01180454 18 by Air Care International as carrier's agent. evidence of delivery to the carrier. but not conclusive. private respondents were charged with the responsibility to exercise extraordinary diligence so much so that for the alleged switching of the caskets on October 27. fall within the definition. .J. or one day after private respondents received the cargo. 1976. damages to petitioners. Except as modified by statute.S. There is no law which requires that the delivery of the goods for carriage and the issuance of the covering bill of lading must coincide in point of time or. . when properly executed and delivered to a shipper. when issued. that is. recitals in the bill of lading showing that the carrier received the goods for shipment on a specified date control (13 C. is competent and prima facie. the latter must necessarily be liable. It has been hold that freight tickets for bus companies as well as receipts for cargo transported by all forms of transportation. a bill of lading includes airway bills of lading. the execution of the bill of lading even prior to actual possession and control by the carrier of the cargo to be transported. To support their assertion. is immaterial. 21 The two-fold character of a bill of lading is all too familiar. but may be explained. A bill of lading. is evidence that the carrier has received the goods described therein for shipment. and it is nowhere questioned that a bill of lading is prima facie evidence of the receipt of the goods by the carrier. that the recital being in essence a receipt alone.

Philippine Vice Consul in Chicago. The findings of the trial court. or 7:45 P. sealed the shipping case containing a hermetically sealed casket that is airtight and waterproof wherein was contained the remains of Crispina Saludo Galdo (sic) (Exh.). 1976. as duly evidenced by the Interline Freight Transfer Manifest of the American Airline Freight System and signed for by Virgilio Rosales at 1945H. is a national service used by undertakers throughout the nation (U. . despite the issuance of the airway bill and the date thereof. not as evidence of receipt of delivery of the cargo on October 26. 1-PAL). .. 107 of the same date. also Exh. This responsibility remains in full force and effect even when they are temporarily unloaded or stored in transit.S. C. Bienvenido M. 1976. it was not until October 28. C. Llaneta. PAL Airway Bill No. 1976 (sic. and from San Francisco to Manila on board PAL Flight No. of the goods by the consignee or such . 29 and terminates only after the lapse of a reasonable time for the acceptance.) Moreover. the shipper requested booking of the casketed remains of Mrs. F. unless the shipper or owner exercises the right of stoppage in transitu." 25 (Emphasis supplied) For this reason.H. as the shipper and Mario (Maria) Saludo as the consignee. 1976 at the Pomierski & Son Funeral Home. E.shipment.M.m. . etc. CMAS acting upon the instruction of Pomierski.M. 1976 the cargo containing the casketed remains of Crispina Saludo was booked for PAL Flight Number PR-107 leaving San Francisco for Manila on October 27. booked the shipment with PAL thru the carrier's agent Air Care International. As between the consignor and a receiving carrier. and they see that the remains are taken to the proper air freight terminal (Exh. To signify acceptance and confirmation of said booking. we must perforce allow explanation by private respondents why.H. 2.A. at 3:00 p. G-TWA). 079-01180454 was issued. on said date.. Cristina (sic) Saludo on board PAL's San Francisco-Manila Flight No. PAL Airway Bill No. 27 In other words. on October 26.A. we are persuaded to believe private respondent PAL's account as to what transpired October 26. . 1976 as alleged by petitioners.S.1976. 07901180454 Ordinary was issued wherein the requested routing was from Chicago to San Francisco on board TWA Flight-131 of October 27.M. 1976: .H. 079-01180454 dated October 27. On the same date October 26. they deny having received the remains of Crispina Saludo on October 26. and from Manila to Cebu on board PAL Flight 149 of October 29. transfers. they furnish the air pouch which the casket is enclosed in. PAL confirmed the booking and transporting of the shipment on board of its Flight PR 107 on October 27. with Pomierski F. 1976 (See Exh. PR 107 on October 27.S. the fact must outweigh the recital. 26 (Emphasis ours. but merely as a confirmation of the booking thus made for the San Francisco-Manila flight scheduled on October 27.M. 1976. Pomierski brought the remains to C.A. Illinois.A. "10/26/76"). provide us with the explanation that sufficiently over comes the presumption relied on by petitioners in insisting that the remains of their mother were delivered to and received by private respondents on October 26. PAL issued to said Pomierski F. B). Pursuant thereto. (Continental Mortuary Air Services) at the airport (Chicago) which made the necessary arrangements such as flights. on 26 October 1976. 1976. on October 26. 1976 on the basis of the representation of the shipper and/or CMAS that the said cargo would arrive in San Francisco from Chicago on board United Airlines Flight US 121 on 27 October 1976. 1976. Actually. as favorably adopted by the Court of Appeals and which we have earner quoted. Thus — .S. 28 Explicit is the rule under Article 1736 of the Civil Code that the extraordinary responsibility of the common carrier begins from the time the goods are delivered to the carrier. PAL Airway Bill No. 1976. 1976 that PAL received physical delivery of the body at San Francisco.

S. there is delivery to the carrier when the goods are ready for and have been placed in the exclusive possession. or. 1976. This contention is without merit. This is a national service used by .other person entitled to receive them. destruction or deterioration of goods in the custody of the carrier. proceeding on the premise that there was delivery of the cargo to private respondents on October 26.A. specific routes of shipment and dates of departure and arrival were typewritten. Pomierski F.H. C. 1976 and it was from that date that private respondents became responsible for the agreed cargo under their undertakings in PAL Airway Bill No. as earlier explained. etc. Please return back (sic) first available flight to SFO. such as flights. the same does not absolve private respondents of liability because whoever brought the cargo to the airport or loaded it on the plane did so as agent of private respondents. the casket containing her remains having been shipped to Mexico City. 1976. for the switching of caskets prior thereto which was not caused by them. the specific flight numbers. the facts in the case at bar belie the averment that there was delivery of the cargo to the carrier on October 26. As already demonstrated.A. The airway bill also contains the following typewritten words." with "Maria Saludo as Consignee. as Shipper. as follows: all documents have been examined (sic).M. Thus. and said cargo was "casketed human remains of Crispina Saludo. to C.S.H. and subsequent events caused thereby. absent the excepting causes under Article 1734. transfers.M. 079-01180454. the liability of the common carrier commences eo instanti. 31 Where such a delivery has thus been accepted by the carrier. 1976 to Philippines and to Cebu via PAL Flight 149 on October 29. insist on foisting the blame on private respondents for the switching of the two caskets which occurred on October 27. Only when such fact of delivery has been unequivocally established can the liability for loss. But.1976 and that the latter's extraordinary responsibility had by then become operative.S. hired Continental Mortuary Services (hereafter referred to as C. private respondents are presumably negligent pursuant to Article 1735 of the Civil Code and. transfers. 1976. it should be noted that.M. However. attach and the presumption of fault of the carrier under Article 1735 be invoked. they must necessarily be held liable. as it turned out and was discovered later the casketed human remains which was issued PAL Airway Bill #079-1180454 was not the remains of Crispina Saludo. private respondents cannot be held liable.A. for such duty to commence there must in fact have been delivery of the cargo subject of the contract of carriage. October 27. Air Care International as carrier's agent. Pomierski F.)." On the face of the said airway bill. Rather. the body intended to be shipped as agreed upon was really placed in the possession and control of PAL on October 28. made all the necessary arrangements such as flights. Consequently. the shipper of Mrs. — for shipment of the remains of Crispina Saludo. Petitioners. It is argued that since there is no clear evidence establishing the fault Continental Mortuary Air Services (CMAS) for the mix-up. custody and control of the carrier for the purpose of their immediate transportation and the carrier has accepted them. 32 Hence. 1976. 30 And. for failure to rebut such presumption. to wit: Chicago TWA Flight 131/27 to San Francisco and from San Francisco by PAL 107 on. As pithily explained by the Court of Appeals: The airway bill expressly provides that "Carrier certifies goods described below were received for carriage". which is engaged in the business of transporting and forwarding human remains. Saludo's remains. These people made all the necessary arrangements. while we agree with petitioners that the extraordinary diligence statutorily required to be observed by the carrier instantaneously commences upon delivery of the goods thereto. The remains were taken on October 26th.. Human remains of Crispina Saludo. at the airport. etc. assuming that CMAS was at fault.

: You brought it there yourself? MICHAEL GIOSSO: Yes sir. JUAN COLLAS. and somehow they were switched. since they were not only without authority to do so.A." the authenticity of which was never challenged. under said circumstances. JR. I was very surprised when Miss Saludo called me to say that the remains were not at the west coast terminal. 603 to PAL San Francisco? MICHAEL GIOSSO: Yes.S. therefore. 1976 34 was signed by Garry Marcial of PAL at 1400H. Neither could Air Care International and/or TWA open the casket for further verification. at 1945H. 6 — "TWA". that the switching occurred or. and they see that the remains are taken to the proper air frieght terminal. 33 (Emphasis supplied. or 7:45 P. 1976. it happened while the cargo was still with CMAS. do (sic) you have occasion to handle or deal with the transfer of cargo from TWA Flight No. at the Chicago airport terminal for shipment.M. but even prohibited.M. more accurately.A.M. had no way of determining its actual contents. .. well before the same was place in the custody of private respondents. the entire fault or negligence being exclusively with C. ATTY. and based on the above findings of the Court of appeals. This shows that said misshipped cargo was in fact withdrawn by CMAS from PAL and the correct shipment containing the body of Crispina Saludo was received by PAL only on October 28. 1976.A. ATTY. JUAN COLLAS. I immediately called C. (Exb. . which is the memo or incident report enclosed in the stationery of Walter Pomierski & Sons Ltd.M. on the same date. JR. was discovered on October 27.) Consequently. AA204312.S. or 2:00 P.S. . . Thus. Michael Giosso. thereby indicating acknowledgment by PAL of the transfer to them by TWA of what was in truth the erroneous cargo.M.) It can correctly and logically be concluded.: What was your participation with the transfer of the cargo? MICHAEL GIOSSO: I manifested the freight on a transfer manifest and physically moved it to PAL and concluded the transfer by signing it off. which was supposed to contain the remains of Crispina Saludo. to the effect that Air Care International and/or TWA had to rely on the information furnished by the shipper regarding the cargo's content. no fault and/or negligence can be attributed to PAL (even if Air Care International should be considered as an agent of PAL) and/or TWA. The man said that there were two bodies at the terminal. JR. per American Airlines Interline Freight Transfer Manifest No.S.: On that date. while the Air Cargo Transfer Manifest of TWA of October 27. They called me back in a matter of ten minutes to inform me that the remains were on a plane to Mexico City..undertakers throughout the nation. Thus. said misshipped cargo was in fact withdrawn by CMAS from PAL as shown by the notation on another copy of said manifest 35 stating "Received by CMAS — Due to switch in Chicago 10/271805H. JUAN COLLAS. Air Care International and/or TWA. 36 Witness the deposition of TWA's ramp serviceman. since the casket was hermetically sealed by the Philippine Vice-Consul in Chicago and in an air pouch of C.. on this matter: ATTY.A. They furnished the air pouch which the casket is enclosed in. I did. when the cargo was received from C.M.

xxx xxx xxx ATTY. LIM: The remains of Mrs. xxx xxx xxx ATTY. what it shows? MICHAEL GIOSSO: It shows transfer of manifest on 10-27-76 to PAL at 1400 and verified with two signatures as it completed the transfer. 1976.: For purposes of clarity.ATTY. MANALAYSAY: What is the result of your investigation? ALBERTO A.: This Exhibit I-TWA. Now. CESAR P. I found that we received the body on October 28. I would like to request that the same be marked as evidence Exhibit I for PAL. did you conduct any investigation to pinpoint the possible causes of mishandling? ALBERTO A. xxx xxx xxx In what circumstances did you encounter Exhibit I-PAL? ALBERTO A. our Manila office with regard to a certain complaint that a consignee filed that this shipment did not arrive on the day that the consignee expects the shipment to arrive. Exhibit I is designated as Exhibit I-TWA. 1976? MICHAEL GIOSSO: Yes. I do. could you tell what it is. JR. makes this further clarification: ATTY. LIM: In the course of my investigation. CESAR P.. Lim. Lim. I was queried by Manila. PAL's cargo supervisor at San Francisco. JUAN COLLAS. JUAN COLLAS. Mr. ATTY. as deponentwitness for PAL. MANALAYSAY: Okay. CESAR P. LIM: If I recall correctly. MANALAYSAY: You mentioned Airway Bill. JUAN COLIAS. JR. ATTY CESAR P. JUAN COLLAS. I am showing to you a PAL Airway Bill Number 01180454 which for purposes of evidence. CESAR P. JR.: Do you have anything to show that PAL received the cargo from TWA on October 27. (Witness presenting a document) ATTY. JR. ATTY. MANALAYSAY: Is that the same body mentioned in this Airway Bill? . from American Airlines. MANALAYSAY: What body are you referring to? xxx xxx xxx ALBERTO A. ATTY. Cristina (sic) Saludo. upon receipt of that query from your Manila office.: Very good. Who was the PAL employee who received the cargo? MICHAEL GIOSSO: The name is Garry Marcial. LIM: Yes." 37 The deposition of Alberto A.

M. they did. LIM: If I recall correctly. Lim.ALBERTO A. LIM: Yes. CESAR P. approximately 7:45 of October 28. MANALAYSAY: In that case. CESAR P. We have on our records a Transfer Manifest from American Airlines Number 204312 showing that we received a human remains shipment belong to Mrs. Cristina (sic) Saludo this is the reason why we did not board it on our flight.A. ATTY.S. ATTY. I will reform my question. xxx xxx xxx Mr. 38 Petitioners consider TWA's statement that "it had to rely on the information furnished by the shipper" a lame excuse and that its failure to prove that its personnel verified and identified the contents of the casket before loading the same constituted negligence on the part of TWA. yesterday your co-defendant TWA presented as their Exhibit I evidence tending to show that on October 27. MANALAYSAY: What time did you receive said body on October 28. LIM: Yes. MANALAYSAY: I noticed that the Transfer Manifest of TWA marked as Exhibit ITWA bears the same numbers or the same entries as the Airway Bill marked as Exhibit I-A PAL tending to show that this is the human remains of Mrs Cristina (sic) Saludo. CESAR P. LIM: It is true that we received human remains shipment from TWA as indicated on this Transfer Manifest. I would rather request that counsel propound specific questions rather than asking for comments on Exhibit I-TWA. TWA would have . ATTY. Cristina (sic) Saludo or the human remains of Mrs. MENDOZA: That is a vague question. Could you tell us whether this is true? ALBERTO A. ALBERTO C. it was found out that the human remains transferred to us is not the remains of Mrs. But in the course of investigation. MAIALAYSAY: At this juncture. 1976 at about 2:00 in the. CESAR P. but to C. 39 We upbold the favorable consideration by the Court of Appeals of the following findings of the trial court: It was not (to) TWA. may I request that the Transfer Manifest referred to by the witness be marked as an evidence as Exhibit II-PAL. 1976. that the Pomierski & Son Funeral Home delivered the casket containing the remains of Crispina Saludo. LIM: Yes. ATTY. ATTY. Cristina (sic) Saludo. afternoon they delivered to you a cargo bearing human remains. MANALAYSAY: Do you have any proof with you to back the statement? ALBERTO A. Could you go over this Exhibit I and please give us your comments as to that exhibit? ATTY. Could you tell us whether TWA in fact delivered to you the human remains as indicated in that Transfer Manifest? ALBERTO A. 1976? ALBERTO A. CESAR P.

Only. the carrier ordinarily has the right to inquire as to its value. while the casket was already with PAL.S. in the absence of showing of fraud or deceit on the part of the shipper. and further noting at this juncture that a carrier has no obligation to inquire into the correctness or sufficiency of such information. Or. TWA or any airline for that matter would not have opened such a sealed casket just for the purpose of ascertaining whose body was inside and to make sure that the remains inside were those of the particular person indicated to be by C. . It is the right of the carrier to require good faith on the part of those persons who deliver goods to be carried. with the concomitant right to rely thereon. the airway bill for the shipment of the casketed remains of Crispina Saludo. too. 41 However. However.A. possibly. TWA had to accept whatever information was being furnished by the shipper or by the one presenting the casket for shipment. from PAL. 40 Verily. it turned out later. as a condition of receiving and transporting such goods. it is the duty of the carrier to make inquiry as to the general nature of the articles shipped and of their value before it consents to carry them. 42 It can safely be said then that a common carrier is entitled to fair representation of the nature and value of the goods to be carried.A.S. where a common carrier has reasonable ground to suspect that the offered goods are of a dangerous or illegal character. private respondents had no authority to unseal and open the same nor did they have any reason or justification to resort thereto. 43 The consequent duty to conduct an inspection thereof arises in the event that there should be reason to doubt the veracity of such representations. as the ONE responsible for the switching or mix-up of the two bodies at the Chicago Airport terminal. The body of Crispina Saludo had been shipped to Mexico. 079-ORD-01180454. that what was inside the casket was not the body of Crispina Saludo so much so that it had to be withdrawn by C. Ordinarily. In the absence of more definite information. granting that they could have opened the casket to inspect its contents. the carrier has the right to know the character of such goods and to insist on an inspection. if the body was that of a male person and such fact was visually apparent upon opening the casket. The foregoing points at C. It was immediately loaded by PAL on its flight for Manila. or enter into contracts with it.no knowledge therefore that the remains of Crispina Saludo were not the ones inside the casket that was being presented to it for shipment. the carrier has a the right to accept shipper's marks as to the contents of the package offered for transportation and is not bound to inquire particularly about them in order to take advantage of a false classification and where a shipper expressly represents the contents of a package to be of a designated character. to repeat. and started a chain reaction of the misshipment of the body of Crispina Saludo and a one-day delay in the delivery thereof to its destination. it is not the duty of the carrier to ask for a repetition of the statement nor disbelieve it and open the box and see for itself.A. and its failure to do so cannot defeat the shipper's right to recovery of the full value of the package if lost. private respondents had no means of ascertaining whether the body therein contained was indeed that of Crispina Saludo except. The casket containing the remains of Crispina Saludo was transshipped from Mexico and arrived in San Francisco the following day on board American Airlines.S. TWA would have to rely on there presentations of C. The casket was hermetically sealed and also sealed by the Philippine Vice Consul in Chicago.M. TWA carried to San Francisco and transferred to defendant PAL a shipment covered by or under PAL Airway Bill No. and inasmuch as the freight may depend on the value of the article to be carried.S..M.A. not defendant TWA much less defendant PAL. if reasonable and practical under the circumstances. no amount of inspection by respondent airline companies could have guarded against the switching that had already taken place. And so as a matter of fact.M.M.

This is tantamount to an admission by petitioners that they consider private respondents without fault. 47 clearly allude to CMAS as the party at fault. . or is at the very least indicative of the fact that petitioners entertained serious doubts as to whether herein private respondents were responsible for the unfortunate turn of events. is regarded as an agent of the shipper and not of the carrier." and that the cargo contained "casketed human remains of Crispina Saludo. as shipper. by accepted commercial practice." was issued on the basis of such representations.Therefore. Likewise. While we agree that the actual participation of CMAS has been sufficiently and correctly established. brought the remains of petitioners' mother for shipment. to hold that it acted as agent for private respondents would be both an inaccurate appraisal and an unwarranted categorization of the legal position it held in the entire transaction. CMAS may accordingly be classified as a forwarder which. Thereafter. the liability therefor would supposedly still be attributable to private respondents. As such. portions of which. and has no interest in the freight but receives compensation from the shipper as his agent. as would require more than routine inspection or call for the carrier to insist that the same be opened for scrutiny of its contents per declaration. . they cannot be said to have acted negligently. it can be categorically stated that. Evidence were presented to prove that allegation. . . It bears repeating that CMAS was hired to handle all the necessary shipping arrangements for the transportation of the human remains of Crispina Saludo to Manila. to be subjected to unusual search. CMAS booked the shipment with PAL through the carrier's agent. it merely contracts for the transportation of goods by carriers. with Maria Saludo as consignee. Neither can private respondents be held accountable on the basis of petitioners' preposterous proposition that whoever brought the cargo to the airport or loaded it on the airplane did so as agent of private respondents. Equally telling of the more likely possibility of CMAS' liability is petitioners' letter to and demanding an explanation from CMAS regarding the statement of private respondents laying the blame on CMAS for the incident. petitioners' grief over the death of their mother was aggravated by the unnecessary inconvenience and anxiety that attended their efforts to bring her body home for a decent burial. Undeniably. we were informed that the unfortunate a mix-up occurred due to your negligence. Air Care International. as culled from the findings of both the trial court and appellate courts. . private respondents had no reason whatsoever to doubt the truth of the shipper's representations. The reliance thereon by private respondents was reasonable and. 46 At this point. But. On the face of this overwhelming evidence we could and should have filed a case against you. Rather.44 In the case at bar. . . there must exist proof that would justify cause for apprehension that the baggage is dangerous as to warrant exhaustive inspection. This is unfortunate and calls for sincere commiseration with petitioners. The airway bill expressly providing that "carrier certifies goods received below were received for carriage. the two airlines pinpoint the responsibility upon your agents. no evidence was adduced to suggest even an iota of suspicion that the cargo presented for transportation was anything other than what it was declared to be. the facts of the case would point to CMAS as the culprit. so that even if CMAS whose services were engaged for the transit arrangements for the remains was indeed at fault. the entire chain of events which culminated in the present controversy was not due to the fault or negligence of private respondents. or even refusal to accept carriage of the same. Hence. . other than the routinary inspection procedure customarily undertaken. much as we would . it was to CMAS that the Pomierski & Son Funeral Home. and it is the failure of the carrier to act accordingly in the face of such proof that constitutes the basis of the common carrier's liability. reading as follows: . Likewise. 45 With its aforestated functions. for so doing.

Petitioners hold that respondent TWA. TWA must necessarily be presumed negligent and this presumption of negligence stands undisturbed unless rebutting evidence is presented to show that the switching or misdelivery was due to circumstances that would exempt the carrier from liability. the carrier did not undertake to carry the cargo aboard any specified aircraft. 49 The various stipulations of a contract shall be interpreted together 50and such a . We find no such ambiguity. When TWA undertook to ship the remains on its Flight 603. they contend. In addition. Neither are we prepared to delve into. we are barred by the inequity of allowing recovery of the damages prayed for by them at the expense of private respondents whose fault or negligence in the very acts imputed to them has not been convincingly and legally demonstrated. 1976. The terms are clear enough as to preclude the necessity to probe beyond the apparent intendment of the contractual provisions.like to give them consolation for their undeserved distress. Having duly delivered or transferred the cargo to its co-respondent PAL on October 27. if not directly caused. the same having the force of law between them. by agreeing to transport the remains of petitioners' mother on its Flight 131 from Chicago to San Francisco on October 27. Moreover. petitioners maintain that since there is no evidence as to who placed the body on board Flight 603. or deviate from the route or routes of shipment. We find this argument tenable. or that both caskets were received by CMAS. much less definitively rule on. as supported by the TWA Transfer Manifest. therefore. or that CMAS actually put the cargo on that flight.. when respondent TWA shipped the body on earlier flight and on a different aircraft. it supposedly violated the express agreement embodied in the airway bill. notwithstanding that the same may be stated on the face hereof. it was acting well within its rights. was bound by the terms of the issued airway bill. The hornbook rule on interpretation of contracts consecrates the primacy of the intention of the parties. the terms are to be understood literally just as they appear on the face of the contract. in view of the condition on the back of the airway bill which provides: CONDITIONS OF CONTRACT xxx xxx xxx It is agreed that no time is fixed for the completion of carriage hereunder and that Carrier may without notice substitute alternate carriers or aircraft. Petitioners further fault the Court of Appeals for ruling that there was no contractual breach on the part of private respondents as would entitle petitioners to damages. or that they came from the same funeral home. and Carrier is hereby authorized to select. Said faithful compliance was not affected by the fact that the remains were shipped on an earlier flight as there was no fixed time for completion of carriage stipulated on. It was allegedly this breach of obligation which compounded. hence petitioners' insistence on the application of the rules on interpretation of contracts and documents. ten hours earlier than scheduled. made itself a party to the contract of carriage and. the switching of the caskets. TWA faithfully complied with its obligation under the airway bill. 1976 at 2:00 P. For said error. Carrier assumes no obligation to carry the goods by any specified aircraft or over any particular route or routes or to make connection at any point according to any particular schedule. the possible liability of CMAS as the evaluation and adjudication of the same is not what is presently at issue here and is best deferred to another time and addressed to another forum. or that the two caskets at the Chicago airport were to be transported by the same airline. then the employees or agents of TWA presumably caused the mix-up by loading the wrong casket on the plane. When the terms of the agreement are clear and explicit. II. Private respondent TWA professes otherwise. The contention that there was contractual breach on the part of private respondents is founded on the postulation that there was ambiguity in the terms of the airway bill. 48 Hence.M. The shipper guarantees payment of all charges and advances. that they do not justify an attempt to read into any alleged intention of the parties.

parties agreed that no time was fixed to complete the contract of carriage and that the carrier may." While petitioners hinge private respondents' culpability on the fact that the carrier "certifies goods described below were received for carriage. did not in any way cause or add to the one-day delay complained of and/or the switching or mix-up of the bodies. 53 Indubitably. 5 — and thus if plaintiffs-appellants had recognized the former. 55 (Emphasis ours." they may have overlooked that the statement on the face of the airway bill properly and completely reads — Carrier certifies goods described below were received for carriage subject to the Conditions on the reverse hereof the goods then being in apparent good order and condition except as noted hereon. xxx xxx xxx Furthermore. the mere fact that the cargo in question was shipped in TWA Flight 603. that private respondent can use substitute aircraft even without notice and without the assumption of any obligation whatsoever to carry the goods on any specified aircraft is clearly sanctioned by the contract of carriage as specifically provided for under the conditions thereof. The carrier did not assume the obligation to carry the shipment on any specified aircraft. or any particular route or schedule) may be stated on the face hereof. Also. is tenuous. neither do particular words or phrases necessarily determine the character of a contract. 54 to bolster their assertion that the typewritten provisions regarding the routing and flight schedule prevail over the printed conditions. routes and dates of departures and arrivals on the face of the airway bill constitute a special contract which modifies the printed conditions at the back thereof. substitute alternate carriers or aircraft. the contract has provided for such a situation by explicitly stating that the above condition remains effective "notwithstanding that the same (fixed time for completion of carriage. specified aircraft. it would also be incorrect to accede to the suggestion of petitioners that the typewritten specifications of the flight. a flight earlier on the same day than TWA Flight 131. We reiterate that typewritten provisions of the contract are to be read and understood . Petitioners' invocation of the interpretative rule in the Rules of Court that written words control printed words in documents. 07901180454. 52 Turning to the terms of the contract at hand. but its clauses should be interpreted in relation to one another. the conditions of the Air Waybill are big enough to be read and noticed. then with more reason they were aware of the latter. we find no ambiguity in the contract subject of this case that would call for the application of said rule. Under the stipulation. As previously stated.) Private respondents further aptly observe that the carrier's certification regarding receipt of the goods for carriage "was of a smaller print than the condition of the Air Waybill. without notice. Said rule may be considered only when there is inconsistency between the written and printed words of the contract. 51 A contract cannot be construed by parts. contrary to the claim of plaintiffs-appellants. The whole contract must be interpreted or read together in order to arrive at its true meaning. The legal effect of the contract is not to be determined alone by any particular provision disconnected from all others. respondent court approvingly quoted the trial court's disquisition on the aforequoted condition appearing on the reverse side of the airway bill and its disposition of this particular assigned error: The foregoing stipulation fully answers plaintiffs' objections to the one-day delay and the shipping of the remains in TWA Flight 603 instead of TWA Flight 131. In any event. as presented by PAL Air Waybill No. but in the ruling intention of the parties as gathered from all the language they have used and from their contemporaneous and subsequent acts.construction is to be adopted as will give effect to all provisions thereof. 56 In the same vein. including Condition No. Certain stipulations cannot be segregated and then made to control.

When a common carrier undertakes to convey goods. The oft-repeated rule regarding a carrier's liability for delay is that in the absence of a special contract. he is bound to make it good notwithstanding any accident or delay by inevitable necessity because he might haveprovided against it by contract. and the party is disabled from performing it without any default in himself. our Supreme Court ruled that common carriers are not obligated by law to carry and to deliver merchandise. fully reconciling and giving effect to the manifest intention of the parties to the agreement. advised thereof. 90 Phil. in the absence. 5 was printed at the back of the airway bill militate against its binding effect on petitioners as parties to the contract. And this special contract for prompt delivery should call the attention of the carrier to the circumstances surrounding the case and the approximate amount of damages to be suffered in case of delay (See Mendoza vs. PAL. the law implies a contract that they shall be delivered at destination within a reasonable time. trip or voyage. Said rights and obligations are created by a specific contract entered into by the parties (Mendoza vs. and thereby imposing upon the carrier duties and/or obligations which it may not have been ready or willing to assume had it been timely. PAL. but where the party by his own contract creates a duty or charge upon himself. and persons are not vested with the right to prompt delivery. 58 This result logically follows from the well-settled rule that where the law creates a duty or charge. This rule applies with particular force where a shipper accepts a bill of lading with full knowledge of its contents. the respondent court correctly declared that — In a similar case of delayed delivery of air cargo under a very similar stipulation contained in the airway bill which reads: "The carrier does not obligate itself to carry the goods by any specified aircraft or on a specified time. Neither does the fact that the challenged condition No. terms and/or stipulations. it is bound to fulfill its contract and is liable for any delay. 60 Also.subject to and in view of the printed conditions. There is a holding in most jurisdictions that the acceptance of a bill of lading without dissent raises a presumption that all terms therein were brought to the knowledge of the shipper and agreed to by him. 836). supra). 57 But where a carrier has made an express contract to transport and deliver property within a specified time. the theory of petitioners that the specification of the flights and dates of departure and arrivals constitute a special contract that could prevail over the printed stipulations at the back of the airway bill is vacuous. and in the absence of fraud or mistake. and has no remedy over. There was no such contract entered into in the instant case. a carrier is not an insurer against delay in transportation of goods. of any agreement as to the time of delivery. unless such common carriers previously assume the obligation. Said carrier being hereby authorized to deviate from the route of the shipment without any liability therefor". Whether or not there has been such an undertaking on the part of the carrier to be determined from the circumstances surrounding the case and by application of the ordinary rules for the interpretation of contracts. no matter from what cause it may have arisen. he is estopped from thereafter denying that he assented to such terms. and acceptance under such circumstances makes it a binding contract. To countenance such a postulate would unduly burden the common carrier for that would have the effect of unilaterally transforming every single bill of lading or trip ticket into a special contract by the simple expedient of filling it up with the particulars of the flight. 59 Echoing the findings of the trial court. In order that any presumption of assent to a . Ordinary prudence on the part of any person entering or contemplating to enter into a contract would prompt even a cursory examination of any such conditions. for there were sufficient indications on the face of said bill that would alert them to the presence of such additional condition to put them on their guard. then the law will excuse him. There is no showing by plaintiffs that such a special or specific contract had been entered into between them and the defendant airline companies.

sanction violations of contractual obligations with impunity or put a premium on breaches of contract. and the shipper is held to have accepted and to be bound by the conditions there to be found. it does not mean. it must appear that the clause containing this exemption from liability plainly formed a part of the contract contained in the bill of lading. it was actually boarded on TWA Flight 603 of the same day. 5 of the airway bill is productive of mischief as it would validate delay in delivery. only when the weaker party is imposed upon in dealing with the dominant bargaining party and is reduced to the alternative of taking it or leaving it. 62However. negligence or malice of private respondents. be gives his consent. petitioners. 5 or arbitrarily vary routes. absent any particular stipulation regarding time of delivery. approximately 10 hours earlier. Thus. We are further convinced that when TWA opted to ship the remains of Crispina Saludo on an earlier flight. customs and usages. Just because we have said that condition No. mechanical failure. it is plainly incumbent upon the carrier to exercise its rights with due deference to the rights. We wish to allay petitioners' apprehension that Condition No. A stipulation printed on the back of a receipt or bill of lading or on papers attached to such receipt will be quite as effective as if printed on its face. 64 As found by the trial court. Ong Yiu vs. Court of Appeals. The one who adheres to the contract is in reality free to reject it entirely. 1977 in response to petitioners' demand letter: Investigation of TWA's handling of this matter reveals that although the shipment was scheduled on TWA Flight 131 of October 27. requirements of national security and the like. A common carrier undertaking to transport property has the implicit duty to carry and deliver it within reasonable time. completely deprived of the opportunity to bargain on equal footing. it did so in the exercise of sound discretion and with reasonable prudence. flights and schedules to the prejudice of their customers. for being subversive of public policy. the delay in the delivery of the remains of Crispina Saludo. interests and convenience of its customers. And even as it is conceded that specific routing and other navigational arrangements for a trip. 1976. or by contingencies or emergencies in aviation such as weather turbulence. Accordingly. in order to assure that the shipment would be received in San Francisco in sufficient time for . 5 partakes of the nature of a contract of adhesion and as such must be construed strictly against the party who drafted the same or gave rise to any ambiguity therein. 5 of the airway bill is binding upon the parties to and fully operative in this transaction. if he adheres. duly signified their presumed assent to all terms of the contract through their acceptance of the airway bill and are consequently bound thereby. if it is shown that the consignor knew of its terms. In case of any unreasonable delay. This condition only serves to insulate the carrier from liability in those instances when changes in routes. such receipt comes within the general rule. et al 63 instructs us that contracts of adhesion are not entirely prohibited. or variations therein. and let this serve as fair warning to respondent carriers. undeniable and regrettable as it was.stipulation in a bill of lading limiting the liability of a carrier may arise. it should be borne in mind that a contract of adhesion may be struck down as void and unenforceable. cannot be attributed to the fault. where a shipper accepts a receipt which states that its conditions are to be found on the back. as shown by the explanation of its counsel in his letter of February 19. the carrier shall be liable for damages immediately and proximately resulting from such neglect of duty. It cannot be gainsaid that petitioners' were not without several choices as to carriers in Chicago with its numerous airways and airliner servicing the same. flights and schedules are clearly justified by the peculiar circumstances of a particular case. and to guard against delay. generally lie within the discretion of the carrier in the absence of specific routing instructions or directions by the shipper. that they can at all times whimsically seek refuge from liability in the exculpatory sanctuary of said Condition No. or by general transportation practices. 61 Granting arguendo that Condition No. flight or voyage. far from being the weaker party in this situation. 65 a conclusion concurred in by respondent court and which we are not inclined to disturb.

We will be with our mother on this longer flight. customers and the public in general. III. to make sure that there would be enough time for loading said remains on the transfer flight on board PAL. indifference and extreme insensitivity to the feelings of petitioners. if any? A I immediately went to the TWA counter and I inquired about whether my mother was there or if' they knew anything about it. declares that in the performance of its obligation to the riding public. on October 27. Somewhere around that in the afternoon. Q About what time was that when you reached San Francisco from Chicago? A I think 5 o'clock. Human remains of Cristina (sic) Saludo. there was no reason for private respondents' personnel to disclaim knowledge of the arrival or whereabouts of the same other than their sheer arrogance. Q What was the answer? A They said they do not know. Q You made inquiry it was immediately thereafter? A Right after we got off the plane. honesty. PAL. 1976.transfer to PAL. They posit that since their mother's remains were transported ten hours earlier than originally scheduled. but the TWA did not tell us anything. we waited. We stayed there until about 9 o'clock. TWA claims that its employees have always dealt politely with all clients." Accordingly. Sir. So. Petitioners challenge the validity of respondent court's finding that private respondents are not liable for tort on account of the humiliating. what did you do? A I told my brother my Mom was supposed to be on the Philippine Airlines flight. TWA took it upon itself to carry the remains of Crispina Saludo on an earlier flight. This transfer was effected in San Francisco at 2:00 P. other customers and clients. respect. "Why don't" we check with PAL instead to see if she was there?" We tried to comfort each other. private respondent TWA knew of the urgency of the shipment by reason of this notation on the lower portion of the airway bill: "All documents have been certified. which we emphasize it could do under the terms of the airway bill. They have not heard anything about it. They did not say anything. Q Up to what time did you stay in the airport to wait until the TWA people could tell you the whereabouts? A Sorry. kindness and due consideration. In riposte. Q Do you want to convey to the Court that from 5 up to 9 o'clock in the evening you yourself went back to the TWA and they could not tell you where the remains of your mother were? A Yes sir. Please return bag first available flight to SFO. arrogant and indifferent acts of their officers and personnel. petitioners had the right to be treated with courtesy. on the other hand. I told him anyway that was a shortest flight from Chicago to California. 66 Precisely. what did you do. So. Moreover. it has always acted with justice. Q And after nine o'clock.M. Respondent appellate court found merit in and reproduced the trial court's refutation of this assigned error: About the only evidence of plaintiffs that may have reference to the manner with which the personnel of defendants treated the two plaintiffs at the San Francisco Airport are the following pertinent portions of Maria Saludo's testimony: Q When you arrived there. courtesy and good faith. being passengers and not merely consignors of goods. we checked with the PAL. Q What did you find? .

It was the evening flight of the Philippine Airline(s) from San Francisco to Manila.A We learned. It is something I do not want to live through again. Inc. I was very upset. and none of the above is obtaining in the instant case. it is any rude or discourteous conduct. and later. 14-18). . t. 14 SCRA 1063). Q Now. But there was nothing and we could not get any assurance from anyone about it. Q You took that flight with your mother? A We were scheduled to. It is a kind of panic. The fliqht was about 5 hours from Chicago to California. but only to the extent where it holds that the manner in which private respondent TWA's employees dealt with petitioners was not grossly humiliating. et al. Northwest Airlines. be pointed out that the lamentable actuations of respondent TWA's employees leave much to be desired. you could not locate the remains of your mother in San Francisco could you tell us what did you feel? A After we were told that my mother was not there? Q After you learned that your mother could not fly with you from Chicago to California? A Well. Aug. my Mom would be on the flight. the use of abusive or insulting language calculated to humiliate and shame passenger or had faith by or on the part of the employees of the carrier that gives the passenger an action for damages against the carrier (Zulueta vs. Cuenca. Lopez. vs. Sir. Carrascoso. Pan American World Airways. arrogant or indifferent as would assume the proportions of malice or bad faith and lay the basis for an award of the damages claimed. 67 We stand by respondent court's findings on this point. particularly so in the face of petitioners' grief over the death of their mother. et al. exacerbated by the tension and anxiety wrought by the impasse and confusion over the failure to ascertain over an appreciable period of time what happened to her remains. Q Who was that brother? A Saturnino Saludo. Q Your feeling when you reached San Francisco and you could not find out from the TWA the whereabouts of the remains. I wanted to be assured about my mother's remains. 18 SCRA 155. I wanted the confirmation that my mother was in the West Coast. We waited anxiously all that time on the plane. It must however. Pan American World Airways. At any rate. what did you feel? A Something nobody would be able to describe unless he experiences it himself. Even their alleged indifference is not clearly established. Of course.. The foregoing does not show any humiliating or arrogant manner with which the personnel of both defendants treated the two plaintiffs. I think it's a feeling you are about to go crazy.. Air France vs. cannot be said to be total or complete indifference to the said plaintiffs. their answer that they have not heard anything about the remains. 43 SCRA 397.s. Q And did you find what was your flight from San Francisco to the Philippines? A I do not know the number. and the inability of the TWA counter personnel to inform the two plaintiffs of the whereabouts of the remains. 16 SCRA 431. 9. 1983. (Inting. malfeasance or neglect. vs. pp. The initial answer of the TWA personnel at the counter that they did not know anything about the remains.n. Yes.

entitled to the understanding and humane consideration called for by and commensurate with the extraordinary diligence required of common carriers. The imperviousness displayed by the airline's personnel. After all. what exactly was your procedure adopted in your so called investigation? ALBERTO A. ALBERTO C. 68 A contract to transport passengers is quite different in kind and degree from any other contractual relation. however. is a painful experience. That the remains of the deceased were subsequently delivered. especially one's. unattended to and without any assurance from the employees of TWA that they were doing anything about the situation. Losing a loved one. even for just that fraction of time. however. in fact. they should not be treated as mere numbers or statistics for revenue. They were. agonized for nearly five hours. they have a right to be treated with kindness. albeit belatedly. Common sense would and should have dictated that they exert a little extra effort in making a more extensive inquiry. which could have easily facilitated said inquiry and which are used as a matter of course by airline companies in their daily operations. and not the cold insensitivity to their predicament. intensified by anguish due to the uncertainty of the whereabouts of their mother's remains. and eventually laid in her final resting place is of little consolation. parent. It was from PAL that they received confirmation that their mother's remains would be on the same flight to Manila with them. MENDOZA: Yes. regarding their investigation of and the action taken on learning of petitioner's problem: ATTY. rather than just shrug off the problem with a callous and uncaring remark that they had no knowledge about it. . petitioner Maria Saludo testified that it was to PAL that they repaired after failing to receive proper attention from TWA. Because the passengers in a contract of carriage do not contract merely for transportation. We find the following substantiation on this particular episode from the deposition of Alberto A. their apathetic stance while not legally reprehensible is morally deplorable. Mr.69 Passengers are human beings with human feelings and emotions. It is hard to believe that the airline's counter personnel were totally helpless about the situation. do not appear to be applicable or imputable to respondent PAL or its employees. transfer manifest and other documents concerning the shipment. Lim. particularly Maria and Saturnino Saludo. PAL's cargo supervisor earlier adverted to. The records reveal that petitioners. No attribution of discourtesy or indifference has been made against PAL by petitioners and. The operation of a common carrier is a business affected with public interest and must be directed to serve the comfort and convenience of passengers. by themselves or through their superiors. The foregoing observations. which is the primary reason for their enfranchisement and recognition in our law. With all the modern communications equipment readily available to them. passengers and the general public. This is not to say that petitioners were to be regaled with extra special attention. and generates a relation attended with public duty. Hence. over the possibility of losing their mother's mortal remains. Lim. respect. LIM: I called the lead agent on duty at that time and requested for a copy of airway bill.Airline companies are hereby sternly admonished that it is their duty not only to cursorily instruct but to strictly require their personnel to be more accommodating towards customers. Our culture accords the tenderest human feelings toward and in reverence to the dead. common carriers such as airline companies are in the business of rendering public service. it is quite apparent that private respondents' personnel were remiss in the observance of that genuine human concern and professional attentiveness required and expected of them. courtesy and consideration. was especially condemnable particularly in the hour of bereavement of the family of Crispina Saludo.

72 However. however. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G. petitioners insist. petitioners.R. Articles 2221 and 2222 of the Civil Code make it clear that nominal damages are not intended for indemnification of loss suffered but for the vindication or recognition of a right violated of invaded. respondents. They are recoverable where some injury has been done but the amount of which the evidence fails to show. YRASUEGUI. said damages cannot be awarded. LIM: They proceeded to analyze exactly where PAL failed. MENDOZA: Then. INC. The uniform decisional tenet in our jurisdiction bolds that moral damages may be awarded for wilful or fraudulent breach of contract 71 or when such breach is attended by malice or bad faith.000. 70 IV. Paras. malice or bad faith. The censurable conduct of TWA's employees cannot. Saludo to Manila. and legal interest. on their entitlement to actual.. That is so (sic) being the case. It can be said to be more of a lethargic reaction produced and engrained in some people by the mechanically routine nature of their work and a racial or societal culture which stultifies what would have been their accustomed human response to a human need under a former and different ambience. JJ. what? ALBERTO A. with the modification that an award of P40. And I found out that there was not (sic) delay in shipping the remains of Mrs. SO ORDERED. vs. moral and exemplary damages as well as attorney's fees. the facts show that petitioners' right to be treated with due courtesy in accordance with the degree of diligence required by law to be exercised by every common carrier was violated by TWA and this entitles them.ATTY ALBERTO C. be said to have approximated the dimensions of fraud. I reported to Manila these circumstances. fraud or bad faith. if any. to nominal damages from TWA alone. WHEREFORE. litigation expenses. in forwarding the human remains of Mrs. Finally. . 2008 ARMANDO G. 76 In the exercise of our discretion. Melencio-Herrera. PHILIPPINE AIRLINES. 168081 October 17. petitioners to be a reasonable amount under the circumstances of this case. the appealed decision is AFFIRMED in all other respects. Padilla and Nocon. in the absence of strong and positive evidence of fraud. as a consequence of the delay in the shipment of their mother's remains allegedly caused by wilful contractual breach. Nonetheless. concur. the assessment of damages being left to the discretion of the court according to the circumstances of the case. we find an award of P40.00 as and by way of nominal damages is hereby granted in favor of petitioners to be paid by respondent Trans World Airlines. malice or bad faith. Since we received the body from American Airlines on 28 October at 7:45 and we expedited the shipment so that it could have been loaded on our flight leaving at 9:00 in the evening or just barely one hour and 15 minutes prior to the departure of the aircraft.00 as nominal damages in favor of.000. Cristina (sic) Saludo. at least. No.. 73 Neither can there be an award of exemplary damages 74 nor of attorney's fees 75 as an item of damages in the absence of proof that defendant acted with malice.

It was discovered that he gained. I promise to personally report to your office at the designated time schedule you will set for my weight check. 1989. F/S Armando Yrasuegui4 Despite the lapse of a ninety-day period given him to reach his ideal weight. PAL advised him to go on an extended vacation leave from December 29. petitioner underwent weight check. He is now before this Court via a petition for review on certiorari claiming that he was illegally dismissed. But petitioner‘s weight problem recurred. 1985 to November 1985. 1984 to March 4. instead of losing. his off-duty status was retained. petitioner was allowed to return to work. Inc. Separation pay. On January 3. He stands five feet and eight inches (5‘8") with a large body frame. Consequently. petitioner made a commitment 3 to reduce weight in a letter addressed to Cabin Crew Group Manager Augusto Barrios. Apparently. should be awarded in favor of the employee as an act of social justice or based on equity. The letter. We uphold the legality of dismissal. 1989. and (3) he was discriminated against because other overweight employees were promoted instead of being disciplined. . R. 43 pounds over his ideal weight. petitioner remained overweight. however. gaining 2 pounds from his previous weight. 1985 to address his weight concerns. the ideal weight being 166 pounds. After meeting the required weight. in full. The Facts Petitioner Armando G. To buttress his stance. petitioner failed to meet the company‘s weight standards. 1989. Respectfully Yours. he was informed of the PAL decision for him to remain grounded until such time that he satisfactorily complies with the weight standards. Back then. weight. reads: Dear Sir: I would like to guaranty my commitment towards a weight loss from 217 pounds to 200 pounds from today until 31 Dec. 1989. he was removed from flight duty effective May 6. I promise to continue reducing at a reasonable percentage until such time that my ideal weight is achieved. PAL Line Administrator Gloria Dizon personally visited petitioner at his residence to check on the progress of his effort to lose weight. On April 26. This is so because his dismissal is not for serious misconduct. On October 17. (PAL). (2) continuing adherence to the weight standards of the company is not a bona fide occupational qualification. He was also told that he may avail of the services of the company physician should he wish to do so. 1989 to July 3. Yrasuegui was a former international flight steward of Philippine Airlines. He was overweight at 215 pounds.: THIS case portrays the peculiar story of an international flight steward who was dismissed because of his failure to adhere to the weight standards of the airline company. The weight problem of petitioner dates back to 1984.2 On February 25. he argues that (1) his dismissal does not fall under 282(e) of the Labor Code.DECISION REYES.T. He again went on leave without pay from October 17. petitioner weighed 209 pounds. 1990. prompting another leave without pay from March 5. which is 49 pounds beyond the limit. After the visit. He was formally requested to trim down to his ideal weight and report for weight checks on several dates. J. After a meticulous consideration of all arguments pro and con. 1989. Likewise. 1988 to February 1989. From thereon. 1989. He was advised that his case will be evaluated on July 3. as mandated by the Cabin and Crew Administration Manual1 of PAL. he was directed to report every two weeks for weight checks. The proper weight for a man of his height and body structure is from 147 to 166 pounds.. Petitioner weighed 217 pounds. In line with company policy. Neither is it reflective of his moral character. Again.

1990. in view of the foregoing. he weighed at 212 pounds. Despite that. 1990. As usual.00.e.8 On December 7. 1992. Palacios. Mr."11 His motion for reconsideration having been denied. Labor Arbiter Valentin C. 1992.7 When petitioner tipped the scale on July 30. 1993. Mr. Clearly. is that his violation. PAL finally served petitioner a Notice of Administrative Charge for violation of company standards on weight requirements. 1990. petitioner submitted his Answer. declaring the complainant‘s dismissal illegal.16 Assuming that it did. NLRC and CA Dispositions On November 18." He also claimed that PAL discriminated against him because "the company has not been fair in treating the cabin crew members who are similarly situated. What he claimed. were promoted instead of being disciplined. and to pay him: a.15 However. he was asked to report for weight check on different dates.. petitioner failed to report for weight checks. and Mr. had already been condoned by PAL since "no action has been taken by the company" regarding his case "since 1988. Labor Arbiter. instead.00 per month from his dismissal on June 15. 1998. other overweight employees. he was given one more month to comply with the weight requirement. SO ORDERED.Petitioner failed to report for weight checks. petitioner ignored the directive and did not report for weight checks. Backwages of Php10. He weighed at 219 pounds on August 20. 1992. although he was seen submitting his passport for processing at the PAL Staff Service Division. a clarificatory hearing was held where petitioner manifested that he was undergoing a weight reduction program to lose at least two (2) pounds per week so as to attain his ideal weight. He was reminded that his grounding would continue pending satisfactory compliance with the weight standards. if any. 1998 at P651. he did not deny being overweight. The dispositive part of the Arbiter ruling runs as follows: WHEREFORE. petitioner was formally informed by PAL that due to his inability to attain his ideal weight. petitioner was formally warned that a repeated refusal to report for weight check would be dealt with accordingly.18 Both parties appealed to the National Labor Relations Commission (NLRC).19 . On April 17. nothing was heard from petitioner until he followed up his case requesting for leniency on the latter part of 1992. 1993 up to August 15. b. On November 13." his services were considered terminated "effective immediately. the weight standards need not be complied with under pain of dismissal since his weight did not hamper the performance of his duties. From then on. Reyes ruled13 that petitioner was illegally dismissed. 1992.5 Again. petitioner could be transferred to other positions where his weight would not be a negative factor. He was given another set of weight check dates. On June 26. Cui. Attorney‘s fees of five percent (5%) of the total award." On December 8. 6 Again.10 On June 15. 1992 and 205 pounds on November 5.9 Notably. 1993 until reinstated. "and considering the utmost leniency" extended to him "which spanned a period covering a total of almost five (5) years.17 Notably. He was given ten (10) days from receipt of the charge within which to file his answer and submit controverting evidence. he was still way over his ideal weight of 166 pounds. and ordering the respondent to reinstate him to his former position or substantially equivalent one.000. Barrios. i.14 The Labor Arbiter held that the weight standards of PAL are reasonable in view of the nature of the job of petitioner. petitioner was required to explain his refusal to undergo weight checks. which for purposes of appeal is hereby set from June 15. judgment is hereby rendered.500.12 petitioner filed a complaint for illegal dismissal against PAL.

It is not willful disobedience as the NLRC seemed to suggest.41 Elaborating on its earlier ruling. 2000. Respondent is enjoined to manifests (sic) its choice of the form of the reinstatement of complainant. 27 Like the Labor Arbiter. the Labor Arbiter issued a writ of execution directing the reinstatement of petitioner without loss of seniority rights and other benefits. PAL elevated the matter to the Court of Appeals (CA) via a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure. the NLRC found the weight standards of PAL to be reasonable. 2000."37 Just like the Labor Arbiter and the NLRC."26 As a consequence.38 Thus. from date of dismissal until his actual reinstatement or finality hereof. petitioner was legally dismissed because he repeatedly failed to meet the prescribed weight standards. the CA held that the weight standards of PAL are reasonable. The assailed NLRC decision is declared NULL and VOID and is hereby SET ASIDE. According to the NLRC. the CA denied petitioner‘s motion for reconsideration. 1999. However. PAL appealed the denial of its motion to quash to the NLRC. 2004.34 The failure to adhere to the weight standards is an analogous cause for the dismissal of an employee under Article 282(e) of the Labor Code in relation to Article 282(a). inclusive of allowances and to his other benefits or their monetary equivalent instead of simply backwages. "justifies an employee‘s separation from the service. premises considered. it found as unnecessary the Labor Arbiter holding that petitioner was not remiss in the performance of his duties as flight steward despite being overweight. there can be no intentional defiance or serious misconduct by petitioner to the lawful order of PAL for him to lose weight. or the tendency to gain weight uncontrollably regardless of the amount of food intake.] the Decision of the Arbiter dated 18 November 1998 as modified by our findings herein. "the element of willfulness that the NLRC decision cites is an irrelevant consideration in arriving at a conclusion on whether the dismissal is legally proper.39 It is obvious that the issue of discrimination was only invoked by petitioner for purposes of escaping the result of his dismissal for being overweight.On October 8. 2005. On March 6.29 Thus. in case of violation. Contrary to the NLRC ruling. the following issues are posed for resolution: I."36 In other words. Both appeals of respondent thus.25 According to the NLRC. premises considered[. the Labor Arbiter denied21 the Motion to Quash Writ of Execution22 of PAL. is hereby AFFIRMED and that part of the dispositive portion of said decision concerning complainant‘s entitlement to backwages shall be deemed to refer to complainant‘s entitlement to his full backwages. No costs. the CA held that the weight standards of PAL are a bona fide occupational qualification which. the CA reversed31 the NLRC: WHEREFORE. 2000.23 On June 23. the NLRC rendered judgment24 in the following tenor: WHEREFORE.32 The CA opined that there was grave abuse of discretion on the part of the NLRC because it "looked at wrong and irrelevant considerations"33 in evaluating the evidence of the parties. the weight standards of PAL are meant to be a continuing qualification for an employee‘s position. "the relevant question to ask is not one of willfulness but one of reasonableness of the standard and whether or not the employee qualifies or continues to qualify under this standard.30 By Decision dated August 31. whether physical or through payroll within ten (10) days from notice failing which. The private respondent‘s complaint is hereby DISMISSED.40 On May 10. are DISMISSED for utter lack of merit. we hereby GRANT the petition. the same shall be deemed as complainant‘s reinstatement through payroll and execution in case of non-payment shall accordingly be issued by the Arbiter.35 Said the CA. SO ORDERED."42 Issues In this Rule 45 petition for review. "obesity.28 PAL moved for reconsideration to no avail. is a disease in itself. the Labor Arbiter should have limited himself to the issue of whether the failure of petitioner to attain his ideal weight constituted willful defiance of the weight standards of PAL.20 On February 1. .

a violation is not one of the faults for which an employee can be dismissed pursuant to pars. these "qualifying standards" are norms that apply prior to and after an employee is hired. As explained by the CA: x x x [T]he standards violated in this case were not mere "orders" of the employer." . IV."46 Relying on Nadura v. The failure to meet the employer‘s qualifying standards is in fact a ground that does not squarely fall under grounds (a) to (d) and is therefore one that falls under Article 282(e) – the "other causes analogous to the foregoing. They apply after hiring because an employee must continue to meet these standards while on the job in order to keep his job. They apply prior to employment because these are the standards a job applicant must initially meet in order to be hired. an employee may be dismissed the moment he is unable to comply with his ideal weight as prescribed by the weight standards. In other words." By its nature. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER WAS NOT UNDULY DISCRIMINATED AGAINST WHEN HE WAS DISMISSED WHILE OTHER OVERWEIGHT CABIN ATTENDANTS WERE EITHER GIVEN FLYING DUTIES OR PROMOTED. Tersely put. x x x45 Petitioner.. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED WHEN IT BRUSHED ASIDE PETITIONER‘S CLAIMS FOR REINSTATEMENT [AND] WAGES ALLEGEDLY FOR BEING MOOT AND ACADEMIC. advances a very interesting argument. (a) to (d) of Article 282. A reading of the weight standards of PAL would lead to no other conclusion than that they constitute a continuing qualification of an employee in order to keep the job. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER‘S DISMISSAL FOR OBESITY CAN BE PREDICATED ON THE "BONA FIDE OCCUPATIONAL QUALIFICATION (BFOQ) DEFENSE".WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER‘S OBESITY CAN BE A GROUND FOR DISMISSAL UNDER PARAGRAPH (e) OF ARTICLE 282 OF THE LABOR CODE OF THE PHILIPPINES. The obesity of petitioner is a ground for dismissal under Article 282(e) 44 of the Labor Code. though. The dismissal of the employee would thus fall under Article 282(e) of the Labor Code. as the trial court said. Even a cursory reading of the legal provision under consideration is sufficient to convince anyone that. He claims that obesity is a "physical abnormality and/or illness. they were standards that establish continuing qualifications for an employee‘s position. III. "illness cannot be included as an analogous cause by any stretch of imagination. In this sense. Under this perspective. Benguet invokes the provisions of subparagraph 1(f) and says that Nadura‘s illness – occasional attacks of asthma – is a cause analogous to them. the failure to maintain these standards does not fall under Article 282(a) whose express terms require the element of willfulness in order to be a ground for dismissal.47 he says his dismissal is illegal: Conscious of the fact that Nadura‘s case cannot be made to fall squarely within the specific causes enumerated in subparagraphs 1(a) to (e).43 (Underscoring supplied) Our Ruling I. Inc. they were the "prescribed weights" that a cabin crew must maintain in order to qualify for and keep his or her position in the company. II. the employee can be dismissed simply because he no longer "qualifies" for his job irrespective of whether or not the failure to qualify was willful or intentional. Benguet Consolidated.

Indeed.51He chose to ignore the suggestion. Here. and self-discipline. At that time. petitioner himself claimed that "[t]he issue is could I bring my weight down to ideal weight which is 172. Notably. i. In 1988. thus.It is clear that. Retardation and Hospitals. This was in direct violation of Section 504(a) of the Rehabilitation Act of 1973. The appellate Court disagreed and held that morbid obesity is a disability under the Rehabilitation Act and that respondent discriminated against Cook based on "perceived" disability. in Nadura. he repeatedly failed to report when required to undergo weight checks. In the case at bar. Among others. He could have easily availed the assistance of the company physician. the Court stated that "mutability is relevant only in determining the substantiality of the limitation flowing from a given impairment. Thus. petitioner was accorded utmost leniency. He was not dismissed due to illness. Respondent claimed." . Department of Mental Health. determination. In fact. The law applied in that case was Republic Act (RA) No. inNadura. Second. petitioner was dismissed for his failure to meet the weight standards of PAL. was laid off from work because of illness. per the advice of PAL. all the others expressly enumerated in the law are due to the voluntary and/or willful act of the employee. 1787. the employee was not accorded due process. asthma. Fourth.e. Petitioner cites Bonnie Cook v. the rationale there cannot apply here. then the answer is yes. She twice resigned voluntarily with an unblemished record. the evidence on record militates against petitioner‘s claims that obesity is a disease. except the just cause mentioned in sub-paragraph 1(a)." Respondent claimed that the morbid obesity of plaintiff compromised her ability to evacuate patients in case of emergency and it also put her at greater risk of serious diseases.48 The reliance on Nadura is off-tangent. there being no claim or pretense that the same was contracted through his own voluntary act.First. petitioner claims that reducing weight is costing him "a lot of expenses.52decided by the United States Court of Appeals (First Circuit). Cook contended that the action of respondent amounted to discrimination on the basis of a handicap. Even respondent admitted that her performance met the Center‘s legitimate expectations. his fluctuating weight indicates absence of willpower rather than an illness. which is capable of causing adverse effects within the musculoskeletal. The evidence included expert testimony that morbid obesity is a physiological disorder. the issue in Nadura is whether or not the dismissed employee is entitled to separation pay and damages. the issue of flight safety is absent in Nadura. 1992.Fifth. "she stood 5‘2" tall and weighed over 320 pounds. State of Rhode Island."49 True. I can do it now. That he was able to reduce his weight from 1984 to 1992 clearly shows that it is possible for him to lose weight given the proper attitude. the issue centers on the propriety of the dismissal of petitioner for his failure to meet the weight standards of PAL.. the employee who was a miner. Here. The factual milieu in Nadura is substantially different from the case at bar. during the clarificatory hearing on December 8. In that case. obesity is a mutable condition. however.53 which incorporates the remedies contained in Title VI of the Civil Rights Act of 1964. Here. Third." thus "mutability only precludes those conditions that an individual can easily and quickly reverse by behavioral alteration." 50 However. How Nadura‘s illness could be considered as "analogous" to any of them is beyond our understanding. respiratory. and cardiovascular systems. that morbid obesity could never constitute a handicap within the purview of the Rehabilitation Act. Cook re-applied for a similar position. without offering a valid explanation. thus plaintiff could simply lose weight and rid herself of concomitant disability. Cook worked from 1978 to 1980 and from 1981 to 1986 as an institutional attendant for the mentally retarded at the Ladd Center that was being operated by respondent. It involves a dysfunction of both the metabolic system and the neurological appetite – suppressing signal system. petitioner has only himself to blame. Nadura was not decided under the Labor Code. He was given more than four (4) years to comply with the weight standards of PAL.

from the nature of its business and for reasons of public policy. It does not exist if there is no statute providing for it. Verily. petitioner is not morbidly obese. It was held that the company policy is reasonable considering that its purpose is the protection of the interests of the company against possible competitor infiltration on its trade secrets and procedures.57Further. the Constitution. Glaxo Wellcome Philippines. but is nonetheless voluntary. when placed in the context of his work as flight attendant. is considered voluntary although it lacks the element of intent found in Article 282(a). and (2) that there is factual basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the duties of the job. Employment in particular jobs may not be limited to persons of a particular sex. in Star Paper Corporation v. Cook was sometime before 1978 "at least one hundred pounds more than what is considered appropriate of her height.. His obesity may not be unintended.60 and RA No. and (d). Too.58 Both arguments must fail. 727761 or the Magna Carta for Disabled Persons62contain provisions similar to BFOQ. religion. The dismissal of petitioner can be predicated on the bona fide occupational qualification defense. We hold that the obesity of petitioner. the test of reasonableness of the company policy is used because it is parallel to BFOQ. the employer must prove that (1) the employment qualification is reasonably related to the essential operation of the job involved. or national origin unless the employer can show that sex. Gross and habitual neglect. however. and (3) the employer must establish that the standard is reasonably necessary in order to accomplish the legitimate work-related purpose. (1) the employer must show that it adopted the standard for a purpose rationally connected to the performance of the job. "[v]oluntariness basically means that the just cause is solely attributable to the employee without any external force influencing or controlling his actions. a recognized just cause. petitioner was only less than 50 pounds over his ideal weight.66 this Court held that in order to justify a BFOQ. In fine.64 (2) the employer must establish that the standard is reasonably necessary65 to the accomplishment of that work-related purpose. (c). whether they be in the nature of a wrongful action or omission. Similarly. The British Columbia Government and Service Employee’s Union (BCGSEU). Cook weighed "over 320 pounds" in 1988.68 BFOQ is valid "provided it reflects an inherent quality reasonably necessary for satisfactory job performance.72 and CA73 are one in holding that the weight standards of PAL are reasonable."69 In Duncan Association of Detailman-PTGWTO v. there are a few federal and many state job discrimination laws that contain an exception allowing an employer to engage in an otherwise unlawful form of prohibited discrimination when the action is based on a BFOQ necessary to the normal operation of a business or enterprise. Clearly.Unlike Cook. First. Simbol. A common carrier. or national origin is an actual qualification for performing the job. At his heaviest. religion. there is no existing BFOQ statute that could justify his dismissal.71 NLRC. In the words of the District Court for the District of Rhode Island. The qualification is called a bona fide occupational qualification (BFOQ).56 Petitioner contends that BFOQ is a statutory defense. is bound to observe extraordinary diligence for the safety of the passengers it . that is not the case here. becomes an analogous cause under Article 282(e) of the Labor Code that justifies his dismissal from the service.55 In the United States. Inc."54 II.59 the Labor Code. there is no merit to the argument that BFOQ cannot be applied if it has no supporting statute.63 the Supreme Court of Canada adopted the so-called "Meiorin Test" in determining whether an employment policy is justified." According to the Circuit Judge. in British Columbia Public Service Employee Commission (BSPSERC) v. This element runs through all just causes under Article 282. Second. As the CA correctly puts it. the Labor Arbiter.70 the Court did not hesitate to pass upon the validity of a company policy which prohibits its employees from marrying employees of a rival company.67 In short. Under this test.

Thus. It is not farfetched to say that airline companies. expect no less than that airline companies transport their passengers to their respective destinations safely and soundly. The rationale in Western Air Lines v. most particularly the cabin flight deck crew who are on board the aircraft. The business of PAL is air transportation. Three lost seconds can translate into three lost lives. Given the cramped cabin space and narrow aisles and emergency exit doors of the airplane. These possibilities are not remote. What was involved there were two (2) airline pilots who were denied reassignment as flight engineers upon reaching the age of 60. there is no need to individually evaluate their ability to perform their task. it must necessarily rely on its employees. In other words. Indeed. The most important activity of the cabin crew is to care for the safety of passengers and the evacuation of the aircraft when an emergency occurs.75 The law leaves no room for mistake or oversight on the part of a common carrier. and narrow aisles and exit doors. Truly. and that the weight standards "has nothing to do with airworthiness of respondent‘s airlines. The weight standards of PAL should be viewed as imposing strict norms of discipline upon its employees. it has committed itself to safely transport its passengers.74 It is bound to carry its passengers safely as far as human care and foresight can provide. alleging that the age-60 retirement for flight engineers violated the Age Discrimination in Employment Act of 1967. thrive due to public confidence on their safety records. In short. That an obese cabin attendant occupies more space than a slim one is an unquestionable fact which courts can judicially recognize without introduction of evidence. the body weight and size of a cabin attendant are important factors to consider in case of emergency. not minutes. The biggest problem with an overweight cabin attendant is the possibility of impeding passengers from evacuating the aircraft. the primary objective of PAL in the imposition of the weight standards for cabin crew is flight safety. and a flight engineer who was forced to retire at age 60. Being overweight necessarily impedes mobility. in an emergency situation. Aircrafts have constricted cabin space. with due regard for all the circumstances. Age-based BFOQ and being overweight are not the same. using the utmost diligence of very cautious persons. Thus. A lesser performance is unacceptable. seconds are what cabin attendants are dealing with." must fail. airlines need cabin attendants who have the necessary strength to open emergency doors. just like all common carriers. They sued the airline company. Criswell76 relied upon by petitioner cannot apply to his case. . On board an aircraft.transports. Passenger safety goes to the core of the job of a cabin attendant. any overweight cabin attendant would certainly have difficulty navigating the cramped cabin area. People. especially the riding public. It cannot be gainsaid that cabin attendants must maintain agility at all times in order to inspire passenger confidence on their ability to care for the passengers when something goes wrong. In order to achieve this. The task of a cabin crew or flight attendant is not limited to serving meals or attending to the whims and caprices of the passengers. The job of a cabin attendant during emergencies is to speedily get the passengers out of the aircraft safely. Evacuation might slow down just because a wide-bodied cabin attendant is blocking the narrow aisles. The case of overweight cabin attendants is another matter. it is only logical to hold that the weight standards of PAL show its effort to comply with the exacting obligations imposed upon it by law by virtue of being a common carrier. the arguments of respondent that "[w]hether the airline‘s flight attendants are overweight or not has no direct relation to its mission of transporting passengers to their destination". and the stamina to withstand grueling flight schedules. As such. should the occasion call for it.77 It would also be absurd to require airline companies to reconfigure the aircraft in order to widen the aisles and exit doors just to accommodate overweight cabin attendants like petitioner. the agility to attend to passengers in cramped working conditions.

Petitioner failed to substantiate his claim that he was discriminated against by PAL. in interpreting the Fourteenth Amendment. If it can be shown that administrative bodies grossly misappreciated evidence of such nature so as to compel a conclusion to the contrary. however discriminatory or wrongful. the liberties guaranteed by the Constitution cannot be invoked. He is presumed to know the weight limit that he must maintain at all times.79We are constrained. petitioner miserably failed to indicate their respective ideal weights. We agree with the CA that "[t]he element of discrimination came into play in this case as a secondary position for the private respondent in order to escape the consequence of dismissal that being overweight entailed. Too. In the words of the CA. the Bill of Rights is not meant to be invoked against acts of private individuals. To make his claim more believable. Petitioner next claims that PAL is using passenger safety as a convenient excuse to discriminate against him.90 Private actions. no matter how egregious.89 which is the source of our equal protection guarantee.87 Put differently. except for pointing out the names of the supposed overweight cabin attendants."82 We are not unmindful that findings of facts of administrative agencies. "PAL really had no substantial case of discrimination to meet. the periods they were allowed to fly despite their being overweight. Thus. A progressive discipline is imposed to allow non-compliant cabin attendants sufficient opportunity to meet the weight standards. However. Petitioner cannot establish discrimination by simply naming the supposed cabin attendants who are allegedly similarly situated with him. petitioner has to prove his allegation with particularity."80 It is a basic rule in evidence that each party must prove his affirmative allegation.81 Since the burden of evidence lies with the party who asserts an affirmative allegation. are accorded respect. like the Labor Arbiter and the NLRC.Petitioner is also in estoppel. and other relevant data that could have adequately established a case of discriminatory treatment by PAL. Kung ang tao ay tapat kanyang tutuparin ang napagkasunduan. weights over their ideal weights. petitioner invokes the equal protection clause guaranty86 of the Constitution. It is a confession-and-avoidance position that impliedly admitted the cause of dismissal. Bona fides exigit ut quod convenit fiat. the clear-cut rules obviate any possibility for the commission of abuse or arbitrary action on the part of PAL. We thus annul their findings. is consistent in saying that the equal protection erects no shield against private conduct. the weight standards of PAL provide for separate weight limitations based on height and body frame for both male and female cabin attendants. cannot violate the equal protection guarantee.91 . their findings of facts must necessarily be reversed. including the reasonableness of the applicable standard and the private respondent‘s failure to comply. the particular flights assigned to them.83 The reason is simple: administrative agencies are experts in matters within their specific and specialized jurisdiction.78 In fact. never did he question the authority of PAL when he was repeatedly asked to trim down his weight. the United States Supreme Court. There is nothing on the records which could support the finding of discriminatory treatment. in the absence of governmental interference. even finality. Indeed. the Labor Arbiter and the NLRC inexplicably misappreciated evidence. Substantial proof must be shown as to how and why they are similarly situated and the differential treatment petitioner got from PAL despite the similarity of his situation with other employees. to hold otherwise. however. Good faith demands that what is agreed upon shall be done.88 Indeed. He does not dispute that the weight standards of PAL were made known to him prior to his employment. It only applies if the findings of facts are duly supported by substantial evidence. III.85 Here. the discriminating treatment they got from PAL.84 But the principle is not a hard and fast rule. Factual findings of administrative agencies do not have infallibility and must be set aside when they fail the test of arbitrariness.

93 the option to exercise actual reinstatement or payroll reinstatement belongs to the employer. the decision of the Labor Arbiter reinstating a dismissed or separated employee. merely reinstated in the payroll."102 In both instances. He asks PAL to comply with the impossible. The law is very clear.100 V. Contrary to the allegation of petitioner that PAL "did everything under the sun" to frustrate his "immediate return to his previous position. Although an award or order of reinstatement is self-executory and does not require a writ of execution. 103 Here. in order to insist on the payment of his full backwages.95 In fact. and (2) does not reflect on the moral character of the employee. to the labor tribunals.105 We are not blind to the fact that he was not dismissed for any serious misconduct or to any act which would reflect on his moral character. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or. As his last contention. the Court ruled that the law does not exact compliance with the impossible. It does not belong to the employee. Yrasuegui is entitled to separation pay in an amount equivalent to . at the option of the employer. In insisting that he be reinstated to his actual position despite being overweight. shall immediately be executory.92 At this point. 2001. We grant petitioner separation pay equivalent to one-half (1/2) month‘s pay for every year of service. the appealed Decision of the Court of Appeals is AFFIRMED but MODIFIED in that petitioner Armando G. He is entitled to reinstatement and his full backwages."99 He failed to prove that he complied with the return to work order of PAL. WHEREFORE. "from the time he was illegally dismissed" up to the time that the NLRC was reversed by the CA. separation pay is granted to a legally dismissed employee as an act "social justice.IV. even pending appeal. insofar as the reinstatement aspect is concerned. and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement."101 or based on "equity. Normally. petitioner in effect wants to render the issues in the present case moot. This may be deduced from the language of Article 279 of the Labor Code that "[a]n employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages. petitioner duly received the return to work notice on February 23."94 there is evidence that PAL opted to physically reinstate him to a substantially equivalent position in accordance with the order of the Labor Arbiter. Time and again. Exceptionally. The claims of petitioner for reinstatement and wages are moot.96 Petitioner cannot take refuge in the pronouncements of the Court in a case97 that "[t]he unjustified refusal of the employer to reinstate the dismissed employee entitles him to payment of his salaries effective from the time the employer failed to reinstate him despite the issuance of a writ of execution"98 and ""even if the order of reinstatement of the Labor Arbiter is reversed on appeal. Article 223 of the Labor Code finds relevance: In any event. Petitioner is entitled to separation pay. this is not an ironclad rule. it is required that the dismissal (1) was not for serious misconduct. as shown by his signature. Be that as it may. a legally dismissed employee is not entitled to separation pay. petitioner avers that his claims for reinstatement and wages have not been mooted. inclusive of allowances. Neither does it appear on record that he actually rendered services for PAL from the moment he was dismissed." Luckily for petitioner. We also recognize that his employment with PAL lasted for more or less a decade. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein.104 It should include regular allowances which he might have been receiving. all is not lost for petitioner. it is obligatory on the part of the employer to reinstate and pay the wages of the employee during the period of appeal until reversal by the higher court. or even to the courts.

which should include his regular allowances.one-half (1/2) month‘s pay for every year of service. REYES Associate Justice . RUBEN T. SO ORDERED.