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8/23/2016 G.R.No.

168433

TodayisTuesday,August23,2016

RepublicofthePhilippines
SUPREMECOURT
Manila

SECONDDIVISION

G.R.No.168433February10,2009

UCPBGENERALINSURANCECO.,INC.,Petitioner,
vs.
ABOITIZSHIPPINGCORP.EAGLEEXPRESSLINES,DAMCOINTERMODALSERVICES,INC.,andPIMENTEL
CUSTOMSBROKERAGECO.,Respondents.

DECISION

TINGA,J.:

UCPBGeneralInsuranceCo.,Inc.(UCPB)assailstheDecision1oftheCourtofAppealsdatedOctober29,2004,
whichreversedtheDecision2datedNovember29,1999oftheRegionalTrialCourtofMakatiCity,Branch146,
anditsResolution3datedJune14,2005,whichdeniedUCPBsmotionforreconsideration.

Theundisputedfacts,culledfromtheassailedDecision,areasfollows:

OnJune18,1991,three(3)unitsofwastewatertreatmentplantwithaccessorieswerepurchasedbySanMiguel
Corporation (SMC for brevity) from Super Max Engineering Enterprises, Co., Ltd. of Taipei, Taiwan. The goods
came from Charleston, U.S.A. and arrived at the port of Manila on board MV "SCANDUTCH STAR". The same
were then transported to Cebu on board MV "ABOITIZ SUPERCON II". After its arrival at the port of Cebu and
clearance from the Bureau of Customs, the goods were delivered to and received by SMC at its plant site on
August2,1991.ItwasthendiscoveredthatoneelectricalmotorofDBSDriveUnitModelDE307wasdamaged.

Pursuanttoaninsuranceagreement,plaintiffappelleepaidSMCtheamountofP1,703,381.40representingthe
valueofthedamagedunit.Inturn,SMCexecutedaSubrogationFormdatedMarch31,1992infavorofplaintiff
appellee.

Consequently,plaintiffappelleefiledaComplaintonJuly21,1992assubrogeeofSMCseekingtorecoverfrom
defendantstheamountithadpaidSMC.

On September 20, 1994, plaintiffappellee moved to admit its Amended Complaint whereby it impleaded East
AsiaticCo.Ltd.(EASTforbrevity)asamongthedefendantsforbeingthe"generalagent"ofDAMCO.InitsOrder
datedSeptember23,1994,thelowercourtadmittedthesaidamendedcomplaint.

Uponplaintiffappelleesmotion,defendantDAMCOwasdeclaredindefaultbythelowercourtinitsOrderdated
January6,1995.

Inthemeantime,onJanuary25,1995,defendantEASTfiledaMotionforPreliminaryHearingonitsaffirmative
defenses seeking the dismissal of the complaint against it on the ground of prescription, which motion was
howeverdeniedbythecourtaquoinitsOrderdatedSeptember1,1995.Suchdenialwaselevatedbydefendant
EASTtothisCourtthroughaPetitionforCertiorarionOctober30,1995inCAG.R.SPNo.38840.Eventually,this
Court issued its Decision dated February 14, 1996 setting aside the lower courts assailed order of denial and
further ordering the dismissal of the complaint against defendant EAST. Plaintiffappellee moved for
reconsiderationthereofbutthesamewasdeniedbythisCourtinitsResolutiondatedNovember8,1996.Asper
EntryofJudgment,thisCourtsdecisionorderingthedismissalofthecomplaintagainstdefendantEASTbecame
finalandexecutoryonDecember5,1996.

Accordingly, the court a quo noted the dismissal of the complaint against defendant EAST in its Order dated
December5,1997.Thus,trialensuedwithrespecttotheremainingdefendants.

OnNovember29,1999,thelowercourtrendereditsassailedDecision,thedispositiveportionofwhichreads:

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WHEREFORE,alltheforegoingpremisesconsidered,judgmentisherebyrendereddeclaringDAMCOIntermodal
Systems, Inc., Eagle Express Lines, Inc. and defendant Aboitiz Shipping solidarily liable to plaintiffsubrogee for
thedamagedshipmentandordersthemtopayplaintiffjointlyandseverallythesumofP1,703,381.40.

Nocosts.

SOORDERED.

Not convinced, defendantsappellants EAGLE and ABOITIZ now come to this Court through their respective
appealsxxx4

Theappellatecourt,aspreviouslymentioned,reversedthedecisionofthetrialcourtandruledthatUCPBsright
ofactionagainstrespondentsdidnotaccruebecauseUCPBfailedtofileaformalnoticeofclaimwithin24hours
from (SMCs) receipt of the damaged merchandise as required under Art. 366 of the Code of Commerce.
AccordingtotheCourtofAppeals,thefilingofaclaimwithinthetimelimitationinArt.366isaconditionprecedent
totheaccrualofarightofactionagainstthecarrierforthedamagescausedtothemerchandise.

In its Memorandum5 dated February 8, 2007, UCPB asserts that the claim requirement under Art. 366 of the
Code of Commerce does not apply to this case because the damage to the merchandise had already been
known to the carrier. Interestingly, UCPB makes this revelation: "x x x damage to the cargo was found upon
dischargefromtheforeigncarrierontotheInternationalContainerTerminalServices,Inc.(ICTSI)inthepresence
ofthecarriersrepresentativewhosignedtheRequestforBadOrderSurvey6 and the Turn Over of Bad Order
Cargoes.7 On transshipment, the cargo was already damaged when loaded on board the interisland carrier."8
Thisknowledge,UCPBargues,dispenseswiththeneedtogivethecarrieraformalnoticeofclaim.Incidentally,
thecarriersrepresentativementionedbyUCPBaspresentatthetimethemerchandisewasunloadedwasinfact
arepresentativeofrespondentEagleExpressLines(EagleExpress).

UCPB claims that under the Carriage of Goods by Sea Act (COGSA), notice of loss need not be given if the
conditionofthecargohasbeenthesubjectofjointinspectionsuchas,inthiscase,theinspectioninthepresence
oftheEagleExpressrepresentativeatthetimethecargowasopenedattheICTSI.

UCPB further claims that the issue of the applicability of Art. 366 of the Code of Commerce was never raised
beforethetrialcourtandshould,therefore,nothavebeenconsideredbytheCourtofAppeals.

EagleExpress,initsMemorandum9datedFebruary7,2007,assertsthatitcannotbeheldliableforthedamage
tothemerchandiseasitactedmerelyasafreightforwardersagentinthetransaction.Itallegedlyfacilitatedthe
transshipment of the cargo from Manila to Cebu but represented the interest of the cargo owner, and not the
carriers.TheonlyreasonwhythenameoftheEagleExpressrepresentativeappearedonthePermittoDeliver
ImportedGoodswasthattheformdidnothaveaspaceforthefreightforwardersagent,butonlyfortheagentof
the shipping line. Moreover, UCPB had previously judicially admitted that upon verification from the Bureau of
Customs,itwasEastAsiaticCo.,Ltd.(EastAsiatic),regardingwhomtheoriginalcomplaintwasdismissedonthe
groundofprescription,whichwastherealagentofDAMCOIntermodalServices,Inc.(DAMCO),theshipowner.

EagleExpressarguesthattheapplicabilityofArt.366oftheCodeofCommercewasproperlyraisedasanissue
beforethetrialcourtasitmentionedthisissueasadefenseinitsAnswertoUCPBsAmendedComplaint.Hence,
UCPBscontentionthatthequestionwasraisedforthefirsttimeonappealisincorrect.

AboitizShippingCorporation(Aboitiz),ontheotherhand,pointsout,initsMemorandum10datedMarch29,2007,
thatitobviouslycannotbeheldliableforthedamagetothecargowhich,byUCPBsadmission,wasincurrednot
duringtransshipmenttoCebuon

boardoneofAboitizsvessels,butwasalreadyexistentatthetimeofunloadinginManila.Aboitizalsoarguesthat
Art. 366 of the Code of Commerce is applicable and serves as a condition precedent to the accrual of UCPBs
causeofactionagainstit. la w p h il.n e t

TheMemorandum11datedJune3,2008,filedbyPimentelCustomsBrokerageCo.(PimentelCustoms),isalsoa
reiterationoftheapplicabilityofArt.366oftheCodeofCommerce.

ItshouldbestatedattheoutsetthattheissueofwhetheraclaimshouldhavebeenmadebySMC,orUCPBas
SMCssubrogee,withinthe24hourperiodprescribedbyArt.366oftheCodeofCommercewassquarelyraised
beforethetrialcourt.

InitsAnswertoAmendedComplaint12datedMay10,1993,EagleExpressaverred,thus:

TheamendedcomplaintstatesnocauseofactionundertheprovisionsoftheCodeofCommerceandtheterms
ofthebillofladingconsigneemadenoclaimagainsthereindefendantwithintwentyfour(24)hoursfollowingthe

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receipt of the alleged cargo regarding the condition in which said cargo was delivered however, assuming
arguendo that the damage or loss, if any, could not be ascertained from the outside part of the shipment,
consigneenevermadeanyclaimagainsthereindefendantatthetimeofreceiptofsaidcargohereindefendant
learnedoftheallegedclaimonlyuponreceiptofthecomplaint.13

Likewise,initsAnswer14datedSeptember21,1992,AboitizraisedthedefensethatUCPBdidnotfileaclaimwith
itandthatthecomplaintstatesnocauseofaction.

UCPB obviously made a gross misrepresentation to the Court when it claimed that the issue regarding the
applicability of the Code of Commerce, particularly the 24hour formal claim rule, was not raised as an issue
beforethetrialcourt.Theappellatecourt,therefore,correctlylookedintothevalidityoftheargumentsraisedby
Eagle Express, Aboitiz and Pimentel Customs on this point after the trial court had so illadvisedly centered its
decisionmerelyonthematterofextraordinarydiligence.

Interestinglyenough,UCPBitselfhasrevealedthatwhentheshipmentwasdischargedandopenedattheICTSI
in Manila in the presence of an Eagle Express representative, the cargo had already been found damaged. In
fact, a request for bad order survey was then made and a turnover survey of bad order cargoes was issued,
pursuant to the procedure in the discharge of bad order cargo. The shipment was then repacked and
transshippedfromManilatoCebuonboardMVAboitizSuperconII.WhenthecargowasfinallyreceivedbySMC
atitsMandaueCitywarehouse,itwasfoundinbadorder,therebyconfirmingthedamagealreadyuncoveredin
Manila.15

In charging Aboitiz with liability for the damaged cargo, the trial court condoned UCPBs wrongful suit against
Aboitiz to whom the damage could not have been attributable since there was no evidence presented that the
cargo was further damaged during its transshipment to Cebu. Even by the exercise of extraordinary diligence,
Aboitizcouldnothaveundonethedamagetothecargothathadalreadybeentherewhenthesamewasshipped
onboarditsvessel.

Thatsaid,itisnonethelessnecessarytoascertainwhetheranyoftheremainingpartiesmaystillbeheldliableby
UCPB. The provisions of the Code of Commerce, which apply to overland, river and maritime transportation,
comeintoplay.

Art.366oftheCodeofCommercestates:

Art. 366. Within twentyfour hours following the receipt of the merchandise, the claim against the carrier for
damage or average which may be found therein upon opening the packages, may be made, provided that the
indicationsofthedamageoraveragewhichgivesrisetotheclaimcannotbeascertainedfromtheoutsidepartof
suchpackages,inwhichcasetheclaimshallbeadmittedonlyatthetimeofreceipt.

After the periods mentioned have elapsed, or the transportation charges have been paid, no claim shall be
admittedagainstthecarrierwithregardtotheconditioninwhichthegoodstransportedweredelivered. 1 a v v p h i1

Thelawclearlyrequiresthattheclaimfordamageoraveragemustbemadewithin24hoursfromreceiptofthe
merchandiseif,asinthiscase,damagecannotbeascertainedmerelyfromtheoutsidepackagingofthecargo.

In Philippine Charter Insurance Corporation v. Chemoil Lighterage Corporation,16 petitioner, as subrogee of


Plastic Group Phil., Inc. (PGP), filed suit against respondent therein for the damage found on a shipment of
chemicalsloadedonboardrespondentsbarge.RespondentclaimedthatnotimelynoticeinaccordancewithArt.
366oftheCodeofCommercewasmadebypetitionerbecauseanemployeeofPGPmerelymadeaphonecallto
respondentsVicePresident,informingthelatterofthecontaminationofthecargo.TheCourtruledthatthenotice
ofclaimwasnottimelymadeorrelayedtorespondentinaccordancewithArt.366oftheCodeofCommerce.

The requirement to give notice of loss or damage to the goods is not an empty formalism. The fundamental
reason or purpose of such a stipulation is not to relieve the carrier from just liability, but reasonably to inform it
thattheshipmenthasbeendamagedandthatitischargedwithliabilitytherefor,andtogiveitanopportunityto
examine the nature and extent of the injury. This protects the carrier by affording it an opportunity to make an
investigation of a claim while the matter is still fresh and easily investigated so as to safeguard itself from false
andfraudulentclaims.17

We have construed the 24hour claim requirement as a condition precedent to the accrual of a right of action
against a carrier for loss of, or damage to, the goods. The shipper or consignee must allege and prove the
fulfillmentofthecondition.Otherwise,norightofactionagainstthecarriercanaccrueinfavoroftheformer.18

TheshipmentinthiscasewasreceivedbySMConAugust2,1991.However,asfoundbytheCourtofAppeals,
theclaimsweredatedOctober30,1991,morethanthree(3)monthsfromreceiptoftheshipmentand,atthat,

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even after the extent of the loss had already been determined by SMCs surveyor. The claim was, therefore,
clearlyfiledbeyondthe24hourtimeframeprescribedbyArt.366oftheCodeofCommerce.

But what of the damage already discovered in the presence of Eagle Expresss representative at the time the
shipment was discharged in Manila? The Request for Bad Order Survey and Turn Over Survey of Bad Order
Cargoes,respectivelydatedJune17,1999andJune28,1991,evincethefactthatthedamagetothecargowas
alreadymadeknowntoEagleExpressand,possibly,SMC,asofthosedates.

Sec.3(6)oftheCOGSAprovidesasimilarclaimmechanismastheCodeofCommercebutprescribesaperiodof
three(3)dayswithinwhichnoticeofclaimmustbegivenifthelossordamageisnotapparent.Itstates:

Sec.3(6).Unlessnoticeoflossordamageandthegeneralnatureofsuchlossordamagebegiveninwritingto
thecarrierorhisagentattheportofdischargeoratthetimeoftheremovalofthegoodsintothecustodyofthe
personentitledtodeliverythereofunderthecontractofcarriage,suchremovalshallbeprimafacieevidenceof
thedeliverybythecarrierofthegoodsasdescibedinthebilloflading.Ifthelossordamageisnotapparent,the
noticemustbegivenwithinthreedaysofthedelivery.

Saidnoticeoflossordamagemaybeendorseduponthereceiptofthegoodsgivenbythepersontakingdelivery
thereof.

Thenoticeinwritingneednotbegivenifthestateofthegoodshasatthetimeoftheirreceiptbeenthesubjectof
jointsurveyorinspection.

UCPBseizesuponthelastparagraphwhichdispenseswiththewrittennoticeifthestateofthegoodshasbeen
the subject of a joint survey which, in this case, was the opening of the shipment in the presence of an Eagle
Expressrepresentative.Itshouldbenotedatthispointthattheapplicabilityoftheabovequotedprovisionofthe
COGSA was not raised as an issue by UCPB before the trial court and was only cited by UCPB in its
Memoranduminthiscase.

UCPB, however, is ambivalent as to which party Eagle Express represented in the transaction. By its own
manifestation,EastAsiatic,andnotEagleExpress,actedastheagentthroughwhichsummons

and court notices may be served on DAMCO. It would be unjust to hold that Eagle Expresss knowledge of the
damagetothecargoissuchthatitservedtoprecludeordispensewiththe24hournoticetothecarrierrequired
by Art. 366 of the Code of Commerce. Neither did the inspection of the cargo in which Eagle Expresss
representativehadparticipatedleadtothewaiverofthewrittennoticeundertheSec.3(6)oftheCOGSA.Eagle
Express, after all, had acted as the agent of the freight consolidator, not that of the carrier to whom the notice
shouldhavebeenmade.

Atanyrate,thenotionthattherequestforbadordersurveyandturnoversurveyofbadcargoessignedbyEagle
Expresss representative is construable as compliant with the notice requirement under Art. 366 of the Code of
CommercewasforeclosedbythedismissalofthecomplaintagainstDAMCOsrepresentative,EastAsiatic.

AsregardsrespondentPimentelCustoms,itissufficienttoacknowledgethatithadnoparticipationinthephysical
handling,loadinganddeliveryofthedamagedcargoandshould,therefore,beabsolvedofliability.

Finally, UCPBs misrepresentation that the applicability of the Code of Commerce was not raised as an issue
beforethetrialcourtwarrantstheassessmentofdoublecostsofsuitagainstit.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CAG.R. CV No. 68168, dated
October29,2004anditsResolutiondatedJune14,2005areAFFIRMED.Doublecostsagainstpetitioner.

SOORDERED.

DANTEO.TINGAM
AssociateJustice

WECONCUR:

LEONARDOA.QUISUMBING
AssociateJustice
Chairperson

CONCHITACARPIOMORALES PRESBITEROJ.VELASCO,JR.
AssociateJustice AssociateJustice

ARTUROD.BRION
AssociateJustice
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ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was
assignedtothewriteroftheopinionoftheCourtsDivision.

LEONARDOA.QUISUMBING
AssociateJustice
Chairperson,SecondDivision

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby
certified that the conclusions in the above Decision had been reached in consultation before the case was
assignedtothewriteroftheopinionoftheCourtsDivision.

REYNATOS.PUNO
ChiefJustice

Footnotes
1 Rollo, pp. 3442 penned by Associate Justice Aurora SantiagoLagman with the concurrence of
AssociateJusticesPortiaAlioHormachuelosandRebeccaDeGuiaSalvador.
2Id.at4548.

3Id.at5051.

4Id.at3537.

5Id.at259279.

6Id.at89.

7Id.at90.

8Id.at259.

9Id.at233258.

10Id.at297327.

11Id.at371387.

12Id.at150157.

13Id.at153.

14Id.at9498.

15Id.at1415PetitionforReviewonCertioraridatedAugust1,2005.

16 G.R. No. 136888, June 29, 2005, 462 SCRA 77 See also Federal Express Corporation v. American
HomeAssuranceCompany,G.R.No.150094,August18,2004,437SCRA50.

17PhilippineAmericanGeneralInsuranceCo.,Inc.v.SweetLines,Inc.,G.R.No.87434,August5,1992,
212SCRA194,208.

18PhilippineCharterInsuranceCorporationv.ChemoilLitherageCorporation,supranote13at87.

TheLawphilProjectArellanoLawFoundation

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TodayisTuesday,August23,2016

RepublicofthePhilippines
SUPREMECOURT
Manila

SECONDDIVISION

G.R.No.87434August5,1992

PHILIPPINEAMERICANGENERALINSURANCECO.,INC.andTAGUMPLASTICS,INC.,petitioners,
vs.
SWEETLINES,INC.,DAVAOVETERANSARRASTREANDPORTSERVICES,INC.andHON.COURTOF
APPEALS,respondents.

DeLara,DeLunas&Rosalesforpetitioners.

CarloL.AquinoforSweetLines,Inc.

REGALADO,J.:

Amaritimesuit 1wascommencedonMay12,1978byhereinPetitionerPhilippineAmericanGeneralInsuranceCo.,Inc.
(Philamgen) and Tagum Plastics, Inc. (TPI) against private respondents Sweet Lines, Inc. (SLI) and Davao Veterans
Arrastre and Port Services, Inc. (DVAPSI), along with S.C.I. Line (The Shipping Corporation of India Limited) and F.E.
Zuellig,Inc.,ascodefendantsinthecourtaquo,seekingrecoveryofthecostoflostordamagedshipmentplusexemplary
damages,attorney'sfeesandcostsallegedlyduetodefendants'negligence,withthefollowingfactualbackdropyieldedby
thefindingsofthecourtbelowandadoptedbyrespondentcourt:

ItwouldappearthatinoraboutMarch1977,thevesselSS"VISHVAYASH"belongingtooroperated
bytheforeigncommoncarrier,tookonboardatBatonRouge,LA,two(2)consignmentsofcargoes
forshipmenttoManilaandlaterfortranshipmenttoDavaoCity,consistingof600bagsLowDensity
Polyethylene 631 and another 6,400 bags Low Density Polyethylene 647, both consigned to the
order of Far East Bank and Trust Company of Manila, with arrival notice to Tagum Plastics, Inc.,
Madaum,Tagum,DavaoCity.Saidcargoeswerecovered,respectively,byBillsofLadingNos.6and
7 issued by the foreign common carrier (Exhs. E and F). The necessary packing or Weight List
(Exhs. A and B), as well as the Commercial Invoices (Exhs. C and D) accompanied the shipment.
The cargoes were likewise insured by the Tagum Plastics Inc. with plaintiff Philippine American
GeneralInsuranceCo.,Inc.,(Exh.G).

In the course of time, the said vessel arrived at Manila and discharged its cargoes in the Port of
ManilafortranshipmenttoDavaoCity.Forthispurpose,theforeigncarrierawaitedandmadeuseof
the services of the vessel called M/V "Sweet Love" owned and operated by defendant interisland
carrier.

Subject cargoes were loaded in Holds Nos. 2 and 3 of the interisland carrier. These were
commingledwithsimilarcargoesbelongingtoEvergreenPlantationandalsoStandfilco.

On May 15, 1977, the shipment(s) were discharged from the interisland carrier into the custody of
theconsignee.AlatersurveyconductedonJuly8,1977,upontheinstanceoftheplaintiff,showsthe
following:

OfthecargocoveredbyBillofLadingNo.25or(2)6,supposedtocontain6,400bagsofLowDensity
Polyethylene 647 originally inside 160 pallets, there were delivered to the consignee 5,413 bags in
goodordercondition.Thesurveyshowsshortages,damagesandlossestobeasfollows:

Undelivered/Damaged bags as tallied during discharge from vessel173 bags


undelivered and damaged as noted and observed whilst stored at the pier699 bags
andshortlanded110bags(Exhs.PandP1).
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Ofthe600bagsofLowDensityPolyethylene631,thesurveyconductedonthesamedayshowsan
actualdeliverytotheconsigneeofonly507bagsingoodordercondition.Likewisenotedwerethe
followinglosses,damagesandshortages,towit:

Undelivered/damagedbagsandtallysheetsduringdischargefromvessel17bags.

Undelivered and damaged as noted and observed whilst stored at the pier66 bags
Shortlanded10bags.

Therefore, of said shipment totalling 7,000 bags, originally contained in 175 pallets, only a total of
5,820 bags were delivered to the consignee in good order condition, leaving a balance of 1,080
bags. Such loss from this particular shipment is what any or all defendants may be answerable to
(sic).

Asalreadystated,somebagswereeithershortlandedorweremissing,andsomeofthe1,080bags
weretorn,thecontentsthereofpartlyspilledorwerefully/partiallyemptied,but,worse,thecontents
thereof contaminated with foreign matters and therefore could no longer serve their intended
purpose. The position taken by the consignee was that even those bags which still had some
contentswereconsideredastotallossesastheremainingcontentswerecontaminatedwithforeign
mattersandthereforedidnot(sic)longerservetheintendedpurposeofthematerial.Eachbagwas
valued, taking into account the customs duties and other taxes paid as well as charges and the
conversionvaluethenofadollartothepeso,atP110.28perbag(seeExhs.LandL1MandO).2

Beforetrial,acompromiseagreementwasenteredintobetweenpetitioners,asplaintiffs,anddefendantsS.C.I.
LineandF.E.Zuellig,uponthelatter'spaymentofP532.65insettlementoftheclaimagainstthem.Whereupon,
the trial court in its order of August 12, 1981 3 granted plaintiffs' motion to dismiss grounded on said amicable
settlement and the case as to S.C.I. Line and F.E. Zuellig was consequently "dismissed with prejudice and without
pronouncementastocosts."

Thetrialcourtthereafterrenderedjudgmentinfavorofhereinpetitionersonthisdispositiveportion:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff Philippine General American
Insurance Company Inc. and against the remaining defendants, Sweet Lines Inc. and Davao
VeteransArrastreInc.asfollows:

DefendantSweetLines,Inc.isorderedtopaysaidplaintiffthesumofP34,902.00,withlegalinterest
thereonfromdateofextrajudicialdemandonApril28,1978(Exh.M)untilfullypaid

DefendantSweetLinesInc.andDavaoVeteransArrastreand(Port)ServicesInc.aredirectedtopay
jointly and severally, the plaintiff the sum of P49,747.55, with legal interest thereon from April 28,
1978untilfullypaid

Each of said defendants are ordered to pay the plaintiffs the additional sum of P5,000 is
reimbursableattorney'sfeesandotherlitigationexpenses

Eachofsaiddefendantsshallpayonefourth(1/4)costs.4

Duetothereversalonappealbyrespondentcourtofthetrialcourt'sdecisiononthegroundofprescription, 5 in
effectdismissingthecomplaintofhereinpetitioners,andthedenialoftheirmotionforreconsideration, 6petitionersfiledthe
instantpetitionforreviewoncertiorari,faultingrespondentappellatecourtwiththefollowingerrors:(1)inupholding,without
proof,theexistenceofthesocalledprescriptiveperiod(2)grantingarguendothatthesaidprescriptiveperioddoesexist,in
not finding the same to be null and void and (3) assuming arguendo that the said prescriptive period is valid and legal, in
failingtoconcludethatpetitionerssubstantiallycompliedtherewith.7

Parenthetically, we observe that herein petitioners are jointly pursuing this case, considering their common
interest in the shipment subject of the present controversy, to obviate any question as to who the real party in
interestisandtoprotecttheirrespectiverightsasinsurerandinsured.Inanycase,thereisnoimpedimenttothe
legalstandingofPetitionerPhilamgen,evenifitaloneweretosuehereinprivaterespondentsinitsowncapacity
asinsurer,ithavingbeensubrogatedtoallrightsofrecoveryforlossofordamagetotheshipmentinsuredunder
itsMarineRiskNoteNo.438734datedMarch31,1977 8 in view of the full settlement of the claim thereunder as evidenced by the
subrogationreceipt
9issuedinitsfavorbyFarEastBankandTrustCo.,DavaoBranch,fortheaccountofpetitionerTPI.

Uponpaymentofthelosscoveredbythepolicy,theinsurer'sentitlementtosubrogationprotanto, being of the


highestequity,equipsitwithacauseofactionagainstathirdpartyincaseofcontractualbreach. 10 Further, the
insurer's subrogatory right to sue for recovery under the bill of lading in case of loss of or damage to the cargo is
jurisprudentially upheld. 11 However, if an insurer, in the exercise of its subrogatory right, may proceed against the erring

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carrier and for all intents and purposes stands in the place and in substitution of the consignee, a fortiori such insurer is
presumedtoknowandisjustasboundbythecontractualtermsunderthebillofladingastheinsured.

Onthefirstissue,petitionerscontendthatitwaserrorfortheCourtofAppealstoreversetheappealeddecision
onthesupposedgroundofprescriptionwhenSLIfailedtoadduceanyevidenceinsupportthereofandthatthe
billsofladingsaidtocontaintheshortenedperiodsforfilingaclaimandforinstitutingacourtactionagainstthe
carrier were never offered in evidence. Considering that the existence and tenor of this stipulation on the
aforesaidperiodshaveallegedlynotbeenestablished,petitionersmaintainthatitisinconceivablehowtheycan
possiblycomplytherewith. 12 In refutation, SLI avers that it is standard practice in its operations to issue bills of lading
forshipmentsentrustedtoitforcarriageandthatitinfactissuedbillsofladingnumberedMD25andMD26thereforwith
proofoftheirexistencemanifestintherecordsofthecase. 13Foritspart,DVAPSIinsistsontheproprietyofthedismissal
ofthecomplaintastoitduetopetitioners'failuretoproveitsdirectresponsibilityforthelossofand/ordamagetothecargo.
14

Onthispoint,indenyingpetitioner'smotionforreconsideration,theCourtofAppealsresolvedthatalthoughthe
bills of lading were not offered in evidence, the litigation obviously revolves on such bills of lading which are
practicallythedocumentsorcontractssuedupon,hence,theyareinevitablyinvolvedandtheirprovisionscannot
bedisregardedinthedeterminationoftherelativerightsofthepartiesthereto.15

Respondent court correctly passed upon the matter of prescription, since that defense was so considered and
controvertedbytheparties.Thisissuemayaccordinglybetakencognizanceofbythecourtevenifnotinceptively
raisedasadefensesolongasitsexistenceisplainlyapparentonthefaceofrelevantpleadings. 16Inthecaseat
bar, prescription as an affirmative defense was seasonably raised by SLI in its answer, 17 except that the bills of lading
embodying the same were not formally offered in evidence, thus reducing the bone of contention to whether or not
prescription can be maintained as such defense and, as in this case, consequently upheld on the strength of mere
referencesthereto.

AspetitionersaresuinguponSLI'scontractualobligationunderthecontractofcarriageascontainedinthebillsof
lading,suchbillsofladingcanbecategorizedasactionabledocumentswhichundertheRulesmustbeproperly
pleaded either as causes of action or defenses, 18 and the genuineness and due execution of which are deemed
admittedunlessspecificallydeniedunderoathbytheadverseparty. 19Therulesonactionabledocumentscoverandapply
tobothacauseofactionordefensebasedonsaiddocuments.20

In the present case and under the aforestated assumption that the time limit involved is a prescriptive period,
respondentcarrierdulyraisedprescriptionasanaffirmativedefenseinitsanswersettingforthparagraph5ofthe
pertinentbillsofladingwhichcomprisedthestipulationthereonbyparties,towit:

5. Claims for shortage, damage, must be made at the time of delivery to consignee or agent, if
container shows exterior signs of damage or shortage. Claims for nondelivery, misdelivery, loss or
damagemustbefiledwithin30daysfromaccrual.Suitsarisingfromshortage,damageorloss,non
deliveryormisdeliveryshallbeinstitutedwithin60daysfromdateofaccrualofrightofaction.Failure
tofileclaimsorinstitutejudicialproceedingsashereinprovidedconstituteswaiverofclaimorrightof
action. In no case shall carrier be liable for any delay, nondelivery, misdelivery, loss of damage to
cargowhilecargoisnotinactualcustodyofcarrier.21

Intheirreplythereto,hereinpetitioners,bytheirownassertionsthat

2. In connection with Pars. 14 and 15 of defendant Sweet Lines, Inc.'s Answer, plaintiffs state that
suchagreementsarewhattheSupremeCourtconsidersascontractsofadhesion(seeSweetLines,
Inc. vs. Hon. Bernardo Teves, et al., G.R. No. L37750, May 19, 1978) and, consequently, the
provisions therein which are contrary to law and public policy cannot be availed of by answering
defendantasvaliddefenses.22

therebyfailedtocontroverttheexistenceofthebillsofladingandtheaforequotedprovisionstherein,hencethey
impliedlyadmittedthesamewhentheymerelyassailedthevalidityofsubjectstipulations.

Petitioners' failure to specifically deny the existence, much less the genuineness and due execution, of the
instruments in question amounts to an admission. Judicial admissions, verbal or written, made by the parties in
the pleadings or in the course of the trial or other proceedings in the same case are conclusive, no evidence
beingrequiredtoprovethesame,andcannotbecontradictedunlessshowntohavebeenmadethroughpalpable
mistakeorthatnosuchadmissionwasmade. 23Moreover,whenthedueexecutionandgenuinenessofaninstrument
aredeemedadmittedbecauseoftheadverseparty'sfailuretomakeaspecificverifieddenialthereof,theinstrumentneed
notbepresentedformallyinevidenceforitmaybeconsideredanadmittedfact.24

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Evengrantingthatpetitioners'avermentintheirreplyamountstoadenial,ithastheproceduralearmarksofwhat
in the law on pleadings is called a negative pregnant, that is, a denial pregnant with the admission of the
substantial facts in the pleading responded to which are not squarely denied. It is in effect an admission of the
avermentitisdirectedto.25Thus,whilepetitionersobjectedtothevalidityofsuchagreementforbeingcontrarytopublic
policy,theexistenceofthebillsofladingandsaidstipulationswereneverthelessimpliedlyadmittedbythem.

We find merit in respondent court's comments that petitioners failed to touch on the matter of the non
presentationofthebillsofladingintheirbriefandearlieronintheappellateproceedingsinthiscase,henceitis
too late in the day to now allow the litigation to be overturned on that score, for to do so would mean an over
indulgenceintechnicalities.Hence,forthereasonsalreadyadvanced,thenoninclusionofthecontrovertedbills
of lading in the formal offer of evidence cannot, under the facts of this particular case, be considered a fatal
procedural lapse as would bar respondent carrier from raising the defense of prescription. Petitioners' feigned
ignorance of the provisions of the bills of lading, particularly on the time limitations for filing a claim and for
commencingasuitincourt,astheirexcusefornoncompliancetherewithdoesnotdeserveseriousattention.

It is to be noted that the carriage of the cargo involved was effected pursuant to an "Application for Delivery of
CargoeswithoutOriginalBillofLading"issuedonMay20,1977inDavaoCity 26withthenotationthereinthatsaid
applicationcorrespondstoandissubjecttothetermsofbillsofladingMD25andMD26.Itwouldbeasafeassessmentto
interpretthistomeanthat,sightunseen,petitionersacknowledgedtheexistenceofsaidbillsoflading.Byhavingthecargo
shippedonrespondentcarrier'svesselandlatermakingaclaimforlossonthebasisofthebillsoflading,petitionersforall
intentsandpurposesacceptedsaidbills.Havingdonesotheyareboundbyallstipulationscontainedtherein. 27Verily,as
petitionersaresuingforrecoveryonthecontract,andinfactevenwentasfarasassailingitsvaliditybycategorizingitasa
contract of adhesion, then they necessarily admit that there is such a contract, their knowledge of the existence of which
withitsattendantstipulationstheycannotnowbeallowedtodeny.

Ontheissueofthevalidityofthecontrovertedparagraph5ofthebillsofladingabovequotedwhichunequivocally
prescribes a time frame of thirty (30) days for filing a claim with the carrier in case of loss of or damage to the
cargoandsixty(60)daysfromaccrualoftherightofactionforinstitutinganactionincourt,whichperiodsmust
concur, petitioners posit that the alleged shorter prescriptive period which is in the nature of a limitation on
petitioners'rightofrecoveryisunreasonableandthatSLIhastheburdenofprovingotherwise,citingtheearlier
caseofSouthern Lines, Inc. vs. Court of Appeals, et al. 28 They postulate this on the theory that the bills of lading
containingthesameconstitutecontractsofadhesionandare,therefore,voidforbeingcontrarytopublicpolicy,supposedly
pursuanttothedictuminSweetLines,Inc.vs.Teves,etal.29

Furthermore, they contend, since the liability of private respondents has been clearly established, to bar
petitioners' right of recovery on a mere technicality will pave the way for unjust enrichment. 30 Contrarily, SLI
asserts and defends the reasonableness of the time limitation within which claims should be filed with the carrier the
necessity for the same, as this condition for the carrier's liability is uniformly adopted by nearly all shipping companies if
they are to survive the concomitant rigors and risks of the shipping industry and the countervailing balance afforded by
such stipulation to the legal presumption of negligence under which the carrier labors in the event of loss of or damage to
thecargo.31

It has long been held that Article 366 of the Code of Commerce applies not only to overland and river
transportationbutalsotomaritime
transportation. 32 Moreover, we agree that in this jurisdiction, as viewed from another angle, it is more accurate to state
thatthefilingofaclaimwiththecarrierwithinthetimelimitationthereforunderArticle366actuallyconstitutesacondition
precedent to the accrual of a right of action against a carrier for damages caused to the merchandise. The shipper or the
consigneemustallegeandprovethefulfillmentoftheconditionandifheomitssuchallegationsandproof,norightofaction
against the carrier can accrue in his favor. As the requirements in Article 366, restated with a slight modification in the
assailedparagraph5ofthebillsoflading,arereasonableconditionsprecedent,theyarenotlimitationsofaction. 33 Being
conditionsprecedent,theirperformancemustprecedeasuitforenforcement 34andthevestingoftherighttofilespitdoes
nottakeplaceuntilthehappeningoftheseconditions.35

Now,beforeanactioncanproperlybecommencedalltheessentialelementsofthecauseofactionmustbein
existence, that is, the cause of action must be complete. All valid conditions precedent to the institution of the
particular action, whether prescribed by statute, fixed by agreement of the parties or implied by law must be
performed or complied with before commencing the action, unless the conduct of the adverse party has been
suchastopreventorwaiveperformanceorexcusenonperformanceofthecondition.36

Itbearsrestatingthatarightofactionistherighttopresentlyenforceacauseofaction,whileacauseofaction
consistsoftheoperativefactswhichgiverisetosuchrightofaction.Therightofactiondoesnotariseuntilthe
performance of all conditions precedent to the action and may be taken away by the running of the statute of
limitations,throughestoppel,orbyothercircumstanceswhichdonotaffectthecauseofaction. 37Performanceor
fulfillmentofallconditionsprecedentuponwhicharightofactiondependsmustbesufficientlyalleged, 38consideringthat
theburdenofprooftoshowthatapartyhasarightofactionisuponthepersoninitiatingthesuit.39
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Moreparticularly,wherethecontractofshipmentcontainsareasonablerequirementofgivingnoticeoflossofor
injurytothegoods,thegivingofsuchnoticeisaconditionprecedenttotheactionforlossorinjuryortherightto
enforcethecarrier'sliability.Suchrequirementisnotanemptyformalism.Thefundamentalreasonorpurposeof
suchastipulationisnottorelievethecarrierfromjustliability,butreasonablytoinformitthattheshipmenthas
beendamagedandthatitischargedwithliabilitytherefor,andtogiveitanopportunitytoexaminethenatureand
extentoftheinjury.Thisprotectsthecarrierbyaffordingitanopportunitytomakeaninvestigationofaclaimwhile
thematterisfreshandeasilyinvestigatedsoastosafeguarditselffromfalseandfraudulentclaims.40

Stipulationsinbillsofladingorothercontractsofshipmentwhichrequirenoticeofclaimforlossofordamageto
goodsshippedinordertoimposeliabilityonthecarrieroperatetopreventtheenforcementofthecontractwhen
not complied with, that is, notice is a condition precedent and the carrier is not liable if notice is not given in
accordancewiththestipulation,41asthefailuretocomplywithsuchastipulationinacontractofcarriagewithrespectto
noticeoflossorclaimfordamagebarsrecoveryforthelossordamagesuffered.42

On the other hand, the validity of a contractual limitation of time for filing the suit itself against a carrier shorter
than the statutory period therefor has generally been upheld as such stipulation merely affects the shipper's
remedyanddoesnotaffecttheliabilityofthecarrier.Intheabsenceofanystatutorylimitationandsubjectonlyto
therequirementonthereasonablenessofthestipulatedlimitationperiod,thepartiestoacontractofcarriagemay
fixbyagreementashortertimeforthebringingofsuitonaclaimforthelossofordamagetotheshipmentthan
thatprovidedbythestatuteoflimitations.Suchlimitationisnotcontrarytopublicpolicyforitdoesnotinanyway
defeatthecompletevestitureoftherighttorecover,butmerelyrequirestheassertionofthatrightbyactionatan
earlierperiodthanwouldbenecessarytodefeatitthroughtheoperationoftheordinarystatuteoflimitations.43

Inthecaseatbar,thereisneitheranyshowingofcompliancebypetitionerswiththerequirementforthefilingofa
notice of claim within the prescribed period nor any allegation to that effect. It may then be said that while
petitionersmaypossiblyhaveacauseofaction,forfailuretocomplywiththeaboveconditionprecedenttheylost
whatever right of action they may have in their favor or, token in another sense, that remedial right or right to
reliefhadprescribed.44

TheshipmentinquestionwasdischargedintothecustodyoftheconsigneeonMay15,1977,anditwasfromthis
datethatpetitioners'causeofactionaccrued,withthirty(30)daystherefromwithinwhichtofileaclaimwiththe
carrier for any loss or damage which may have been suffered by the cargo and thereby perfect their right of
action.Thefindingsofrespondentcourtassupportedbypetitioners'formalofferofevidenceinthecourtbelow
showthattheclaimwasfiledwithSLIonlyonApril28,1978,waybeyondtheperiodprovidedinthebillsoflading
45andviolativeofthecontractualprovision,theinevitableconsequenceofwhichisthelossofpetitioners'remedyorright
tosue.EventhefilingofthecomplaintonMay12,1978isofnoremedialorpracticalconsequence,sincethetimelimitsfor
the filing thereof, whether viewed as a condition precedent or as a prescriptive period, would in this case be productive of
thesameresult,thatis,thatpetitionershadnorightofactiontobeginwithor,atanyrate,theirclaimwastimebarred.

WhatthecourtfindsratheroddisthefactthatpetitionerTPIfiledaprovisionalclaimwithDVAPSIasearlyasJune
14, 1977 46 and, as found by the trial court, a survey fixing the extent of loss of and/or damage to the cargo was
conducted on July 8, 1977 at the instance of petitioners. 47 If petitioners had the opportunity and awareness to file such
provisionalclaimandtocauseasurveytobeconductedsoonafterthedischargeofthecargo,thentheycouldveryeasily
havefiledthenecessaryformal,orevenaprovisional,claimwithSLIitself 48withinthestipulatedperiodtherefor,instead
of doing so only on April 28, 1978 despite the vessel's arrival at the port of destination on May 15, 1977. Their failure to
timely act brings us to no inference other than the fact that petitioners slept on their rights and they must now face the
consequencesofsuchinaction.

TheratiocinationoftheCourtofAppealsonthisaspectisworthreproducing:

xxxxxxxxx

Itmustbenoted,atthisjuncture,thattheaforestatedtimelimitationinthepresentationofclaimfor
lossordamage,isbutarestatementoftheruleprescribedunderArt.366oftheCodeofCommerce
whichreadsasfollows:

Art.366.Withinthetwentyfourhoursfollowingthereceiptofthemerchandise,theclaim
againstthecarrierfordamageoraveragewhichmaybefoundthereinuponopeningthe
packages,maybemade,providedthattheindicationsofthedamageoraveragewhich
givesrisetotheclaimcannotbeascertainedfromtheoutsidepartofthepackages,in
whichcasetheclaimsshallbeadmittedonlyatthetimeofthereceipt.

After the periods mentioned have elapsed, or the transportation charges have been
paid,noclaimshallbeadmittedagainstthecarrierwithregardtotheconditioninwhich
thegoodstransportedweredelivered.

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Gleanabletherefromisthefactthatsubjectstipulationevenlengthenedtheperiodforpresentationof
claimsthereunder.SuchmodificationhasbeensanctionedbytheSupremeCourt.InthecaseofOng
Yet(M)uaHardwareCo.,Inc.vs.MitsuiSteamshipCo.,Ltd.,etal.,59O.G.No.17,p.2764,itruled
thatArt.366oftheCodeofCommercecanbemodifiedbyabillofladingprescribingtheperiodof90
daysafterarrivaloftheship,forfilingofwrittenclaimwiththecarrieroragent,insteadofthe24hour
timelimitafterdeliveryprovidedintheaforecitedlegalprovision.

Tested,too,underparagraph5ofsaidBillofLading,itiscrystalclearthatthecommencementofthe
instant suit on May 12, 1978 was indeed fatally late. In view of the express provision that "suits
arisingfrom
. . . damage or loss shall be instituted within 60 days from date of accrual of right of action," the
presentactionnecessarilyfailsongroundofprescription.

In the absence of constitutional or statutory prohibition, it is usually held or recognized


that it is competent for the parties to a contract of shipment to agree on a limitation of
timeshorterthanthestatutoryperiod,withinwhichactionforbreachofthecontractshall
bebrought,andsuchlimitationwillbeenforcedifreasonable...(13C.J.S.496497)

Aperusalofthepertinentprovisionsoflawonthematterwoulddisclosethatthereisnoconstitutional
or statutory prohibition infirming paragraph 5 of subject Bill of Lading. The stipulated period of 60
daysisreasonableenoughforappelleestoascertainthefactsandthereaftertosue,ifneedbe,and
the 60day period agreed upon by the parties which shortened the statutory period within which to
bringactionforbreachofcontractisvalidandbinding....(Emphasisintheoriginaltext.)49

As explained above, the shortened period for filing suit is not unreasonable and has in fact been generally
recognizedtobeavalidbusinesspracticeintheshippingindustry.Petitioners'advertencetotheCourt'sholding
intheSouthernLinescase,supra,isfutileaswhatwasinvolvedwasaclaimforrefundofexcesspayment.We
ruledthereinthatnoncompliancewiththerequirementoffilinganoticeofclaimunderArticle366oftheCodeof
Commerce does not affect the consignee's right of action against the carrier because said requirement applies
onlytocasesforrecoveryofdamagesonaccountoflossofordamagetocargo,nottoanactionforrefundof
overpayment,andonthefurtherconsiderationthatneithertheCodeofCommercenorthebillsofladingtherein
provided any time limitation for suing for refund of money paid in excess, except only that it be filed within a
reasonabletime.

The ruling in SweetLines categorizing the stipulated limitation on venue of action provided in the subject bill of
ladingasacontractofadhesionand,underthecircumstancestherein,voidforbeingcontrarytopublicpolicyis
evidently likewise unavailing in view of the discrete environmental facts involved and the fact that the restriction
therein was unreasonable. In any case, Ong Yiu vs. Court of Appeals, et al., 50 instructs us that "contracts of
adhesion wherein one party imposes a readymade form of contract on the other . . . are contracts not entirely prohibited.
Theonewhoadherestothecontractisinrealityfreetorejectitentirelyifheadhereshegiveshisconsent."Inthepresent
case, not even an allegation of ignorance of a party excuses noncompliance with the contractual stipulations since the
responsibility for ensuring full comprehension of the provisions of a contract of carriage devolves not on the carrier but on
theowner,shipper,orconsigneeasthecasemaybe.

While it is true that substantial compliance with provisions on filing of claim for loss of or damage to cargo may
sometimes suffice, the invocation of such an assumption must be viewed visavis the object or purpose which
suchaprovisionseekstoattainandthatistoaffordthecarrierareasonableopportunitytodeterminethemerits
andvalidityoftheclaimandtoprotectitselfagainstunfoundedimpositions. 51Petitioners'wouldneverthelessadopt
an adamant posture hinged on the issuance by SLI of a "Report on Losses and Damages," dated May 15, 1977, 52 from
which petitioners theorize that this charges private respondents with actual knowledge of the loss and damage involved in
thepresentcaseaswouldobviatetheneedfororrendersuperfluousthefilingofaclaimwithinthestipulatedperiod.

Withal,ithasmerelytobepointedoutthattheaforementionedreportbearsthisnotationatthelowerpartthereof:
"DamagedbyMla.laboruponunloadingB/Lnotedatportoforigin,"asanexplanationforthecauseoflossof
and/ordamagetothecargo,togetherwithaniterativenotestatingthat"(t)hisCopyshouldbesubmittedtogether
withyourclaiminvoiceorreceiptwithin30daysfromdateofissueotherwiseyourclaimwillnotbehonored."

Moreover,knowledgeonthepartofthecarrierofthelossofordamagetothegoodsdeduciblefromtheissuance
ofsaidreportisnotequivalenttonordoesitapproximatethelegalpurposeservedbythefilingoftherequisite
claim, that is, to promptly apprise the carrier about a consignee's intention to file a claim and thus cause the
promptinvestigationoftheveracityandmeritthereofforitsprotection.Itwouldbeanunfairimpositiontorequire
thecarrier,upondiscoveryintheprocessofpreparingthereportonlossesordamagesofanyandallsuchloss
ordamage,topresumetheexistenceofaclaimagainstitwhenatthattimethecarrierisexpectedlyconcerned
merelywithaccountingforeachandeveryshipmentandassessingitscondition.Unlessanduntilanoticeofclaim
is therewith timely filed, the carrier cannot be expected to presume that for every loss or damage tallied, a
corresponding claim therefor has been filed or is already in existence as would alert it to the urgency for an

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immediate investigation of the soundness of the claim. The report on losses and damages is not the claim
referredtoandrequiredbythebillsofladingforitdoesnotfixresponsibilityforthelossordamage,butmerely
statestheconditionofthegoodsshipped.Theclaimcontemplatedherein,inwhateverform,mustbesomething
more than a notice that the goods have been lost or damaged it must contain a claim for compensation or
indicateanintenttoclaim.53

Thus, to put the legal effect of respondent carrier's report on losses or damages, the preparation of which is
standard procedure upon unloading of cargo at the port of destination, on the same level as that of a notice of
claimbyimploringsubstantialcomplianceisdefinitelyfarfetched.Besides,thecitednotationonthecarrier'sreport
itselfmakesitclearthatthefilingofanoticeofclaiminanycaseisimperativeifcarrieristobeheldliableatallfor
thelossofordamagetocargo.

Turning now to respondent DVAPSI and considering that whatever right of action petitioners may have against
respondentcarrierwaslostduetotheirfailuretoseasonablyfiletherequisiteclaim,itwouldbeawkward,tosay
theleast,thatbysomeconvenientprocessofeliminationDVAPSIshouldproverbiallybeleftholdingthebag,and
itwouldbepurespeculationtoassumethatDVAPSIisprobablyresponsibleforthelossofordamagetocargo.
Unlikeacommoncarrier,anarrastreoperatordoesnotlaborunderapresumptionofnegligenceincaseofloss,
destructionordeteriorationofgoodsdischargedintoitscustody.Inotherwords,toholdanarrastreoperatorliable
forlossofand/ordamagetogoodsentrustedtoittheremustbepreponderantevidencethatitdidnotexercise
duediligenceinthehandlingandcareofthegoods.

Petitionersfailedtopinpointliabilityonanyoftheoriginaldefendantsandinthisseeminglywildgoosechase,they
cannot quite put their finger down on when, where, how and under whose responsibility the loss or damage
probablyoccurred,orasstatedinparagraph8oftheirbasiccomplaintfiledinthecourtbelow,whether"(u)pon
dischargeofthecargoesfromtheoriginalcarryingvessel,theSSVISHVAYASH,"and/orupondischargeofthe
cargoes from the interisland vessel the MV "SWEET LOVE," in Davao City and later while in the custody of
defendantarrastreoperator.54

Thetestimonyofpetitioners'ownwitness,RobertoCabato,Jr.,MarineandAviationClaimsManagerofpetitioner
Philamgen,wasdefinitelyinconclusiveandtheresponsibilityforthelossordamagecouldstillnotbeascertained
therefrom:

Q In other words, Mr. Cabato, you only computed the loss on the basis of the figures
submitted to you and based on the documents like the survey certificate and the
certificateofthearrastre?

AYes,sir.

QTherefore,Mr.Cabato,youhavenoideahoworwheretheselosseswereincurred?

ANo,sir.

xxxxxxxxx

Q Mr. Witness, you said that you processed and investigated the claim involving the
shipment in question. Is it not a fact that in your processing and investigation you
consideredhowtheshipmentwastransported?Wherethelossescouldhaveoccurred
and what is the extent of the respective responsibilities of the bailees and/or carriers
involved?

xxxxxxxxx

A With respect to the shipment being transported, we have of course to get into it in
order to check whether the shipment coming in to this port is in accordance with the
policycondition,likeinthisparticularcase,theshipmentwastransportedtoManilaand
transhippedthroughaninterislandvesselinaccordancewiththepolicy.Withrespectto
thelosses,wehaveageneralviewwherelossescouldhaveoccurred.Ofcoursewewill
havetoconsiderthedifferentbaileeswhereintheshipmentmusthavepassedthrough,
liketheoceanvessel,theinterislandvesselandthearrastre,butdefinitelyatthatpoint
andtimewecannotdeterminetheextentofeachliability.Weareonlyinterestedatthat
point and time in the liability as regards the underwriter in accordance with the policy
thatweissued.

xxxxxxxxx

Q Mr. Witness, from the documents, namely, the survey of Manila Adjusters and
Surveyors Company, the survey of Davao Arrastre contractor and the bills of lading

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issuedbythedefendantSweetLines,willyoubeabletotelltherespectiveliabilitiesof
thebaileesand/orcarriersconcerned?

ANo,sir.(Emphasisours.)55

Neitherdidnorcouldthetrialcourt,muchlesstheCourtofAppeals,preciselyestablishthestageinthecourseof
the shipment when the goods were lost, destroyed or damaged. What can only be inferred from the factual
findings of the trial court is that by the time the cargo was discharged to DVAPSI, loss or damage had already
occurredandthatthesamecouldnothavepossiblyoccurredwhilethesamewasinthecustodyofDVAPSI,as
demonstratedbytheobservationsofthetrialcourtquotedatthestartofthisopinion.

ACCORDINGLY,ontheforegoingpremises,theinstantpetitionisDENIEDandthedismissalofthecomplaintin
thecourtaquoasdecreedbyrespondentCourtofAppealsinitschallengedjudgmentisherebyAFFIRMED.

SOORDERED.

Narvasa,C.J.,PadillaandNocon,JJ.,concur.

Footnotes

1CivilCaseNo.115376,RegionalTrialCourtofManila,BranchII.

2AnnexF,PetitionRollo,4749.

3OriginalRecord,88.

4AnnexE,PetitionRollo,40JudgeRosalioA.DeLeon,presiding.

5C.A.G.R.CVNo.04620PerJusticeFidelP.Purisima,withJusticesSegundinoChuaandNicolas
P.Lapea,Jr.,concurringAnnexF,PetitionRollo,4155.

6AnnexI,PetitionRollo,6670.

7Rollo,10.

8ExhibitGOriginalRecord,176.

9ExhibitRibid.,197.

10Fireman'sFundInsuranceCompany,Inc.,etal.,vs.Jamila&Company,Inc.,etal.,70SCRA323
(1976).

11NationalDevelopmentCompanyvs.CourtofAppeals.etal.,164SCRA593(1988).

12Rollo,11.

13CommentofSLIRollo,45.

14CommentofDVAPSIibid.,148149.

15AnnexI,PetitionRollo,68.

16Vda.dePortugal,etal.vs.IntermediateAppellateCourt,etal.,159SCRA178(1988).

17OriginalRecord,31AnnexB,PetitionRollo,23.

18Sec.7,Rule8,RulesofCourt.

19Sec.8,id.,ibid.

20Toribio,etal.vs.Bidin,etal.,134SCRA162(1985).

21OriginalRecord,31AnnexB,PetitionRollo,26.

22Ibid.,44AnnexC,id.ibid.,29.

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23SeeSec.4,Rule129,RulesofCourtSta.Anavs.Maliwat,etal.,24SCRA1018(1968)Solivio
vs.CourtofAppeals,etal.,182SCRA119(1990).

24AsiaBankingCorporationvs.Olsen,48Phil.529(1925).

2561AAm.Jur.2d,Pleadings172173Galofavs.NeeBonSing,22SCRA48(1968)Tamayovs.
Callejo,etal.,46SCRA27(1972).

26ExhibitsHandIOriginalRecord,177178.

27SeaLandService,Inc.vs.IntermediateAppellateCourt,etal.,153SCRA552(1987).

284SCRA258(1962).

2983SCRA361(1978).

30Rollo,1113.

31CommentofSLIRollo,102103.

32GovernmentofthePhilippineIslandsvs.Inchausti&Co.,24Phil.315(1913),citingCordobavs.
Warner,Barnes&Co.,1Phil.7(1901).

33Id.TritonInsuranceCompany,Ltd.vs.Jose,33Phil.194(1916).

34Dikowskivs.MetropolitanLifeIns.,Co.,24A.2d173,175,128N.J.L.124.

35NewarkGas&FuelCo.vs.CityofNewark,8OhioDec.418,421,7OhioN.P.76.

361Am.Jur.2d,Actions608.

37Ibid.,id.,541.

3861AAm.Jur.2d,Pleading89.

3913C.J.S.,Carriers537.

40Ibid.,463,50814Am.Jur.2d,Carriers97Cf.Roldanvs.LimPonzo&Co.,37Phil.285(1917)
Consunjivs.ManilaPortService,etal.,110Phil.231(1960).

41Ibid.,462.

4214Am.Jur.2d,Carriers104105.

43Ibid.,id.,98,117Ang,etal.vs.FultonFireInsuranceCo.,etal.,2SCRA945(1961).

44Therecanbenorightofactionwithoutacauseofactionbeingfirstestablished(seeEspaolvs.
TheChairmanetc.ofthePhilippineVeteransAdministration,(137SCRA314[1985]).Ontheother
hand,thecauseofactionisdistinctfromtheremedy(Tonnvs.InnerShoeTireCo.,Tex.Civ.App.,
260S.W.1078,1080)andthecauseofactionmayexistthoughtheremedydoesnot(Chandlervs.
Horne,23OhioApp.1,154N.E.748,750.)

45AnnexF,PetitionRollo,52ExhibitM,OriginalRecord,184.

46ExhibitNOriginalRecord,186.

47AnnexF,PetitionRollo,48.

48SeeEssoStandardEastern,Inc.vs.ManilaRailroadCo.,93SCRA307(1979).

49Rollo,5254.

5091SCRA223(1979).

5114Am.Jur.2d,Carriers104105.

52ExhibitJOriginalRecord,180.

5314Am.Jur.2d,Carriers106.

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54AnnexA,PetitionRollo,1819.

55TSN,June26,1981,1619,22.

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8/23/2016 G.R.No.L6517

TodayisTuesday,August23,2016

RepublicofthePhilippines
SUPREMECOURT
Manila

ENBANC

G.R.No.L6517November29,1954

E.E.ELSER,INC.,andATLANTICMUTUALINSURANCECOMPANY,petitioners,
vs.
COURTOFAPPEALS,INTERNATIONALHARVESTERCOMPANYOFTHEPHILIPPINESandISTHMIAN
STEAMSHIPCOMPANY,respondents.

GibbsandChuidianforpetitioners.
J.A.Wolfsonforrespondents.

BAUTISTAANGELO,J.:

ThisisapetitionforreviewofadecisionoftheCourtofAppealswhichaffirmsthatofcourtasorigindismissing
thecomplaintwithoutpronouncementastocosts..

Thefacts,asfoundbytheCourtofAppeals,are:.

ItappearsthatinthemonthofDecember,1945thegoodsspecifiedintheBillofLadingmarkedasAnnex
A,wereshippedonthe'S.S.SeaHydra,'ofIsthmianSteamshipCompany,fromNewYorktoManila,and
werereceivedbytheconsignee'UdharamBazarandCo.',exceptonecaseofvanishingcreamvaluedat
P159.78.Thegoodswereinsuredagainstdamageorlossbythe'AtlanticMutualInsuranceCo.'`Udharam
BazarandCo.'Inc.,whodeniedhavingreceivedthegoodsforcustody,andthe'InternationalHarvesterCo.
of the Philippines,' as agent for the shipping company, who answer that the goods were landed and
delivered to the Customs authorities. Finally, 'Udaharam Bazar and Co.' claimed for indemnity of the loss
from the insurer, 'Atlantic Mutual Insurance Co.', and was paid by the latter's agent 'E. E. Elser Inc.' the
amountinvolved,thatis,P159.78..

As may be noted, the Court of Appeals held that petitioners have already lost their right to press their claim
againstrespondentbecauseoftheirfailuretoservenoticethereofuponthecarrierwithin30daysafterreceiptof
the notice of loss or damage as required by clause 18 of the bill of lading which was issued concerning the
shipment of the merchandise which had allegedly disappeared. In this respect, the court said that, "appellant
unwittinglyadmittedthattheywerelateinclaimingtheindemnityforthelossofthecaseofthevanishingcream
astheirwrittenclaimwasmadeonApril25,1946,ormorethan30daysaftertheyhadbeenfullyawareofsaid
loss,"andbecauseofthisfailure,theCourtsaidtheactionofpetitionersshould,andmust,fall.Petitionersnow
contendthatthisfindingiserroneousinthelightoftheprovisionsoftheCarriageofGoodsbySeaActof1936,
whichapplytothiscase,thesamehavingbeenmadeanintegralpartofthecovenantsagreeduponinthebillof
lading.

Thereismeritinthiscontention.Ifthiscaseweretobegovernedbyclause18ofthebillofladingregardlessof
the provisions of the Carriage of Goods by Sea Act of 1936, the conclusion reached by the Court of Appeals
wouldindeedthecorrect,butinouropinionthisActcannotbeignoredordisregardindeterminingtheequitiesof
the parties it appearing that the same was made an integral part of the bill of lading by express stipulation. It
shouldbenoted,inthisconnection,thattheCarriageofGoodsbySeaActof1936wasacceptedandadoptedby
our government by the enactment of Commonwealth Act No. 65 making said Act "applicable to all contracts for
thecarriageinforeigntrade."AndthepertinentprovisionsoftheCarriageoftheGoodsbySeaActof1936are:

6.Unlessnoticeoflossordamageandthegeneralnatureofsuchlossordamagebegiveninwritingtothe
carrierofhisagentattheportofdischargeoratthetimeoftheremovalofthegoodsintothecustodyofthe
person entitled to delivery thereof under the contract of carriage, such removal shall be prima facie
evidenceofthedeliverybythecarrierofthegoodsasdescribedinthebilloflading.Ifthelossordamageis
notapparent,thenoticemustbegivenwithinthreedaysofthedelivery.

xxxxxxxxx

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In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage
unlesssuitisbroughtwithinoneyearafterdeliveryofthegoodsorthedatewhenthegoodsshouldhave
beendelivered:PROVIDED,Thatifanoticeoflossordamage,eitherapparentorconcealed,isnotgiven
as provided for in this section, that fact shall not affect or prejudice the right of the shipper to bring suit
within one year after the delivery of the goods or the date when the goods should have been delivered.
(Section3Emphasissupplied.).

Itwouldthereforeappearfromtheabovethatacarriercanonlybedischargedfromliabilityinrespectoflossor
damage if the suit is not brought within one year after the delivery of the goods or the date when the goods
shouldhavebeendelivered,andthat,evenifanoticeoflossordamageisnotgivenasrequired,"thatfactshall
notaffectorprejudicetherightoftheshippertobringsuitwithinoneyearafterthedeliveryofthegoods."Inother
words,regardlessofwhetherthenoticeoflossordamagehasbeengiven,theshippercanstillbringanactionto
recoversaidlossordamagewithinoneyearafterthedeliveryofthegoods,and,aswehavestatedabove,thisis
contrary to the provisions of clause 18 of the bill of lading. The question that now rises is: Which of these two
provisionsshouldprevail?Isitthatcontainedinclause18ofthebilloflading,orthatappearingintheCarriageof
GoodsbySeaAct?.

Theanswerisnotdifficulttosurmise.Thatclause18mustofnecessityyieldstotheprovisionsoftheCarriageof
Goods by Sea Act in view of the proviso contained in the same Act which says: "any clause, covenant, or
agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in
connectionwiththegoods...orlesseningsuchliabilityotherwisethanasprovidedinthisAct,shallbenulland
voidandofnoeffect."(section3.)Thismeansthatacarriercannotlimititsliabilityinamannercontrarytowhatis
providedforinsaidact.andsoclause18ofthebillofladingmustofnecessitybenullandvoid.Thisinterpretation
findsnosupportinanumberofcasesrecentlydecidedbytheAmericancourts.Thus,inBalfour,GuthrieandCo.,
Ltd.,etal.,vs.AmericanWestAfricanLine,Inc.andAmericanWestAfricanLine,Inc.vs.Balfour,Guthrie&Co.,
Ltd.,etal.,136F.2d.320,whereinthebillofladingprovidedthattheownershouldnotbeliableforlossofcargo
unless written notice thereof was given within 30 days after the goods should have been delivered and unless
writtenclaimthereforwasgivenwithinsixmonthsaftergivingsuchwrittennotice,theUnitedStatesCircuitCourt
ofAppeals,SecondCircuit,inadecisionpromulgatedonAugust2,1943,madethefollowingruling:.

ButtheAct,section3(6),45U.S.A.section1303(6)providesthatfailuretogive'noticeoflossordamages'
shallnotprejudicetherightoftheshippertobringsuitwithinoneyearafterthedatewhenthegoodsshould
havebeendelivered.toenforceabillofladingprovisionconditioningashipowner'sliabilityuponthefiling
ofwrittenclaimofloss,whichinturnrequiresanddependsuponthefilingofapriornoticeofloss,certainly
woulddoviolencetosection3(6)isthatfailuretofilewrittenclaimoflossinnoeventmayprejudicerightof
suitwithinayearofthescheduleddateforcargodelivery.Thisisalsotobeconcludedfromsection3(8)46
U.S.C.A.Section1303(8),thatanyclauseinabillofladinglesseningtheliabilityofthecarrierotherwise
thanasprovidedintheActshallbenullandvoid.AsimilarprovisionintheBritishCarriageofGoodsbySea
Act,14and15Geo.V.c.22,hasbeeninterpretedtonullifyanyrequirementofwrittenclaimasacondition
to suit at any time. CF. Australian United Steam Navigation Co., Ltd., vs. Hunt (1921) 2 A. C. 351
ConventrySheppardandCo.,vs.LarrinagaS.S.Co.,73ll.L.Rep.256.1

ButrespondentscontendthatwhiletheUnitedStatesCarriageofGoodsbySeaActof1936wasacceptedand
adopted by our government by virtue of Commonwealth Act No. 65, however, said Act does not have any
applicationtothepresentcasebecausetheshipmentinquestionwasmadeinDecember,1945,andarrivedin
ManilainFebruary,1946andatthattimethePhilippineswasstillaterritoryorpossessionoftheUnitedStates
and,thereforeitmaybesaidthatthetradethenbetweenthePhilippinesandtheUnitedStateswasnota"foreign
trade".Inotherwords,itiscontendedthattheCarriageofGoodsbySeaActasadoptedbyourgovernmentis
onlyapplicable"toallcontractsforthecarriageofgoodsbyseatoandfromPhilippineportsinforeigntrade,"and,
therefore,itdoesnotapplytotheshipmentinquestion..

GrantingarguendothatthePhilippineswasaterritoryorpossessionoftheUnitedStatesforthepurposesofsaid
ActandthatthetradebetweenthePhilippinesandtheUnitedStatesbeforetheadventofindependencewasnot
foreigntradeorcanonlybeconsideredinadomesticsense,stillweareoftheopinionthattheCarriageofGoods
bySeaActof1936mayhaveapplicationtothepresentcaseitappearingthatthepartieshaveexpresslyagreed
to make and incorporate the provisions of said Act as integral part of their contract of carriage. This is an
exceptiontotheruleregardingtheapplicabilityofsaidAct.Thisisexpresslyrecognizedbysection13ofsaidAct
whichcontainsthefollowingproviso:

NothinginthisActshallbeheldtoapplytocontractsforcarriageofgodsbyseabetweenanyportofthe
United States or its possessions, and any other port of the United States or its possessions: Provided,
however,Thatanybillofladingorsimilardocumentoftitlewhichevidenceofacontractforthecarriageof
goodsbyseabetweensuchports,containinganexpressstatementthatitshallbesubjecttotheprovisions
of this Act, shall be subjected hereto as fully as if subject hereto by the express provisions of this Act.
(Emphasissupplied.).

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Thisisalsorecognizedbytheveryauthoritycitedbycounselforrespondents,who,onthismatter,hasmadethe
followingcomment:

ThePhilippineActof1936liketheU.S.Actof1936,appliespropiovigoreonlytoforeigncommercetoall
contractsforthecarriageofgoodsbyseaandfromPhilippineportsinforeigntrade.

PriortoPhilippineIndependenceonJuly4,1946,tradebetweenthePhilippinesandotherportsandplaces
under the American Flag, was not, by an ordinary definition, foreign commerce. Hence, the U. S. and
Philippine Acts did not apply to such trades, even though conducted under foreign bottoms and under
foreignflag,unlessthecarrierexpresslyexercisedtheoptiongivenbysection13oftheU.S.Acttocarry
under the provisions of that Act. The fact that the U.S. coastwise flag monopoly did not extend to the
PhilippinetradedidnotalterthefactthattheU.S.TradewiththeIslandsisdomestic.(knaught,OceanBills
ofLading,1947ed.p.250(Emphasissupplied.).

Having reached the foregoing conclusion, it would appear clear that action of petitioners has not yet lapsed or
prescribed,aserroneouslyheldbytheCourtofAppeals,itappearingthatthepresentactionwasbroughtwithin
oneyearafterthedeliveryoftheshipmentinquestion..

Asregardsthecontentionofrespondentsthatpetitionershavetheburdenofshowingthatthelosscomplainedof
didnottakeplaceunderafterthegoodsleftthepossessionorcustodyofthecarrierbecausetheyfailedtogive
noticeoftheirlossordamageasrequiredbylaw,whichfailuresgivesrisetothepresumptionthatthegoodswere
delivered in the bill of lading, suffice it to state that, according to the Court of Appeals, the required notice was
given by the petitioners to the carrier or its agent on April 25, 1946. That notice is sufficient to overcome the
abovepresumptionwithinthemeaningofthelaw..

Wherefore the decision appealed from is reversed. Respondents, other than the Court of Appeals, are hereby
sentencedtopaytothepetitionersthesumofP159.78,withlegalinterestthereonfromthedateofthefilingofthe
complaint,plusthecostsofaction..

Paras,C.J.,Pablo,Bengzon,Padilla,Montemayor,Reyes,A.,ConcepcionandReyes,J.B.L.,JJ.,concur.

Footnotes

1ThisrulingwasreiteratedinMackay,etal.vs.UnitedStates,etal.,83F.Supp.14,October29,1948and
GivaudanDolawannavs.TheBlijdendijk,91F.Supp.663,June8,1950.

TheLawphilProjectArellanoLawFoundation

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8/23/2016 G.R.No.L12191

TodayisTuesday,August23,2016

RepublicofthePhilippines
SUPREMECOURT
Manila

ENBANC

G.R.No.L12191October14,1918

JOSECANGCO,plaintiffappellant,
vs.
MANILARAILROADCO.,defendantappellee.

RamonSoteloforappellant.
Kincaid&Hartiganforappellee.

FISHER,J.:

Atthetimeoftheoccurrencewhichgaverisetothislitigationtheplaintiff,JoseCangco,wasintheemploymentof
Manila Railroad Company in the capacity of clerk, with a monthly wage of P25. He lived in the pueblo of San
Mateo,intheprovinceofRizal,whichislocateduponthelineofthedefendantrailroadcompanyandincoming
daily by train to the company's office in the city of Manila where he worked, he used a pass, supplied by the
company, which entitled him to ride upon the company's trains free of charge. Upon the occasion in question,
January20,1915,theplaintiffarosefromhisseatinthesecondclasscarwherehewasridingand,making,his
exit through the door, took his position upon the steps of the coach, seizing the upright guardrail with his right
handforsupport.

OnthesideofthetrainwherepassengersalightattheSanMateostationthereisacementplatformwhichbegins
torisewithamoderategradientsomedistanceawayfromthecompany'sofficeandextendsalonginfrontofsaid
office for a distance sufficient to cover the length of several coaches. As the train slowed down another
passenger,namedEmilioZuiga,alsoanemployeeoftherailroadcompany,gotoffthesamecar,alightingsafely
atthepointwheretheplatformbeginstorisefromtheleveloftheground.Whenthetrainhadproceededalittle
farther the plaintiff Jose Cangco stepped off also, but one or both of his feet came in contact with a sack of
watermelonswiththeresultthathisfeetslippedfromunderhimandhefellviolentlyontheplatform.Hisbodyat
oncerolledfromtheplatformandwasdrawnunderthemovingcar,wherehisrightarmwasbadlycrushedand
lacerated. It appears that after the plaintiff alighted from the train the car moved forward possibly six meters
beforeitcametoafullstop.

Theaccidentoccurredbetween7and8o'clockonadarknight,andastherailroadstationwaslighteddimlybya
single light located some distance away, objects on the platform where the accident occurred were difficult to
discernespeciallytoapersonemergingfromalightedcar.

Theexplanationofthepresenceofasackofmelonsontheplatformwheretheplaintiffalightedisfoundinthe
factthatitwasthecustomaryseasonforharvestingthesemelonsandalargelothadbeenbroughttothestation
fortheshipmenttothemarket.Theywerecontainedinnumeroussackswhichhasbeenpiledontheplatformina
row one upon another. The testimony shows that this row of sacks was so placed of melons and the edge of
platform and it is clear that the fall of the plaintiff was due to the fact that his foot alighted upon one of these
melons at the moment he stepped upon the platform. His statement that he failed to see these objects in the
darknessisreadilytobecredited.

Theplaintiffwasdrawnfromunderthecarinanunconsciouscondition,anditappearedthattheinjurieswhichhe
hadreceivedwereveryserious.HewasthereforebroughtatoncetoacertainhospitalinthecityofManilawhere
anexaminationwasmadeandhisarmwasamputated.Theresultofthisoperationwasunsatisfactory,andthe
plaintiff was then carried to another hospital where a second operation was performed and the member was
again amputated higher up near the shoulder. It appears in evidence that the plaintiff expended the sum of
P790.25 in the form of medical and surgical fees and for other expenses in connection with the process of his
curation.

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UponAugust31,1915,heinstitutedthisproceedingintheCourtofFirstInstanceofthecityofManilatorecover
damagesofthedefendantcompany,foundinghisactionuponthenegligenceoftheservantsandemployeesof
thedefendantinplacingthesacksofmelonsupontheplatformandleavingthemsoplacedastobeamenaceto
the security of passenger alighting from the company's trains. At the hearing in the Court of First Instance, his
Honor, the trial judge, found the facts substantially as above stated, and drew therefrom his conclusion to the
effectthat,althoughnegligencewasattributabletothedefendantbyreasonofthefactthatthesacksofmelons
were so placed as to obstruct passengers passing to and from the cars, nevertheless, the plaintiff himself had
failedtouseduecautioninalightingfromthecoachandwasthereforeprecludedformrecovering.Judgmentwas
accordinglyenteredinfavorofthedefendantcompany,andtheplaintiffappealed.

Itcannotbedoubtedthattheemployeesoftherailroadcompanywereguiltyofnegligenceinpilingthesesacks
ontheplatforminthemannerabovestatedthattheirpresencecausedtheplaintifftofallashealightedfromthe
train and that they therefore constituted an effective legal cause of the injuries sustained by the plaintiff. It
necessarily follows that the defendant company is liable for the damage thereby occasioned unless recovery is
barredbytheplaintiff'sowncontributorynegligence.Inresolvingthisproblemitisnecessarythateachofthese
conceptionsofliability,towit,theprimaryresponsibilityofthedefendantcompanyandthecontributorynegligence
oftheplaintiffshouldbeseparatelyexamined.

Itisimportanttonotethatthefoundationofthelegalliabilityofthedefendantisthecontractofcarriage,andthat
the obligation to respond for the damage which plaintiff has suffered arises, if at all, from the breach of that
contractbyreasonofthefailureofdefendanttoexerciseduecareinitsperformance.Thatistosay,itsliabilityis
direct and immediate, differing essentially, in legal viewpoint from that presumptive responsibility for the
negligence of its servants, imposed by article 1903 of the Civil Code, which can be rebutted by proof of the
exercise of due care in their selection and supervision. Article 1903 of the Civil Code is not applicable to
obligations arising ex contractu, but only to extracontractual obligations or to use the technical form of
expression,thatarticlerelatesonlytoculpaaquilianaandnottoculpacontractual.

Manresa(vol.8,p.67)inhiscommentariesuponarticles1103and1104oftheCivilCode,clearlypointsoutthis
distinction, which was also recognized by this Court in its decision in the case of Rakes vs. Atlantic, Gulf and
PacificCo.(7Phil.rep.,359).Incommentinguponarticle1093Manresaclearlypointsoutthedifferencebetween
"culpa,substantiveandindependent,whichofitselfconstitutesthesourceofanobligationbetweenpersonsnot
formerly connected by any legal tie" and culpa considered as an accident in the performance of an obligation
alreadyexisting...."

IntheRakescase(supra)thedecisionofthiscourtwasmadetorestsquarelyuponthepropositionthatarticle
1903oftheCivilCodeisnotapplicabletoactsofnegligencewhichconstitutethebreachofacontract.

UponthispointtheCourtsaid:

The acts to which these articles [1902 and 1903 of the Civil Code] are applicable are understood to be
those not growing out of preexisting duties of the parties to one another. But where relations already
formedgiverisetoduties,whetherspringingfromcontractorquasicontract,thenbreachesofthoseduties
aresubjecttoarticle1101,1103,and1104ofthesamecode.(Rakesvs. Atlantic, Gulf and Pacific Co., 7
Phil.Rep.,359at365.)

This distinction is of the utmost importance. The liability, which, under the Spanish law, is, in certain cases
imposeduponemployerswithrespecttodamagesoccasionedbythenegligenceoftheiremployeestopersonsto
whom they are not bound by contract, is not based, as in the English Common Law, upon the principle of
respondeat superior if it were, the master would be liable in every case and unconditionally but upon the
principle announced in article 1902 of the Civil Code, which imposes upon all persons who by their fault or
negligence,doinjurytoanother,theobligationofmakinggoodthedamagecaused.Onewhoplacesapowerful
automobileinthehandsofaservantwhomheknowstobeignorantofthemethodofmanagingsuchavehicle,is
himself guilty of an act of negligence which makes him liable for all the consequences of his imprudence. The
obligationtomakegoodthedamagearisesattheveryinstantthattheunskillfulservant,whileactingwithinthe
scopeofhisemploymentcausestheinjury.Theliabilityofthemasterispersonalanddirect.But,ifthemasterhas
not been guilty of any negligence whatever in the selection and direction of the servant, he is not liable for the
actsofthelatter,whateverdonewithinthescopeofhisemploymentornot,ifthedamagedonebytheservant
doesnotamounttoabreachofthecontractbetweenthemasterandthepersoninjured.

It is not accurate to say that proof of diligence and care in the selection and control of the servant relieves the
master from liability for the latter's acts on the contrary, that proof shows that the responsibility has never
existed.AsManresasays(vol.8,p.68)theliabilityarisingfromextracontractualculpaisalwaysbasedupona
voluntaryactoromissionwhich,withoutwillfulintent,butbymerenegligenceorinattention,hascauseddamage
toanother.Amasterwhoexercisesallpossiblecareintheselectionofhisservant,takingintoconsiderationthe
qualificationstheyshouldpossessforthedischargeofthedutieswhichitishispurposetoconfidetothem,and
directs them with equal diligence, thereby performs his duty to third persons to whom he is bound by no
contractualties,andheincursnoliabilitywhateverif,byreasonofthenegligenceofhisservants,evenwithinthe
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scopeoftheiremployment,suchthirdpersonsufferdamage.Trueitisthatunderarticle1903oftheCivilCode
the law creates a presumption that he has been negligent in the selection or direction of his servant, but the
presumptionisrebuttableandyieldtoproofofduecareanddiligenceinthisrespect.

ThesupremecourtofPortoRico,ininterpretingidenticalprovisions,asfoundinthePortoRicoCode,hasheld
thatthesearticlesareapplicabletocasesofextracontractualculpaexclusively.(Carmonavs. Cuesta, 20 Porto
RicoReports,215.)

ThisdistinctionwasagainmadepatentbythisCourtinitsdecisioninthecaseofBahiavs.LitonjuaandLeynes,
(30Phil.rep.,624),whichwasanactionbroughtuponthetheoryoftheextracontractualliabilityofthedefendant
to respond for the damage caused by the carelessness of his employee while acting within the scope of his
employment.TheCourt,aftercitingthelastparagraphofarticle1903oftheCivilCode,said:

Fromthisarticletwothingsareapparent:(1)Thatwhenaninjuryiscausedbythenegligenceofaservant
oremployeethereinstantlyarisesapresumptionoflawthattherewasnegligenceonthepartofthemaster
oremployereitherinselectionoftheservantoremployee,orinsupervisionoverhimaftertheselection,or
both and (2) that that presumption is juris tantum and not juris et de jure, and consequently, may be
rebutted. It follows necessarily that if the employer shows to the satisfaction of the court that in selection
and supervision he has exercised the care and diligence of a good father of a family, the presumption is
overcomeandheisrelievedfromliability.

Thistheorybasestheresponsibilityofthemasterultimatelyonhisownnegligence and not on that of his


servant.ThisisthenotablepeculiarityoftheSpanishlawofnegligence.Itis,ofcourse,instrikingcontrast
totheAmericandoctrinethat,inrelationswithstrangers,thenegligenceoftheservantinconclusivelythe
negligenceofthemaster.

The opinion there expressed by this Court, to the effect that in case of extracontractual culpa based upon
negligence,itisnecessarythatthereshallhavebeensomefaultattributabletothedefendantpersonally,andthat
the last paragraph of article 1903 merely establishes a rebuttable presumption, is in complete accord with the
authoritativeopinionofManresa,whosays(vol.12,p.611)thattheliabilitycreatedbyarticle1903isimposedby
reasonofthebreachofthedutiesinherentinthespecialrelationsofauthorityorsuperiorityexistingbetweenthe
personcalledupontorepairthedamageandtheonewho,byhisactoromission,wasthecauseofit.

Ontheotherhand,theliabilityofmastersandemployersforthenegligentactsoromissionsoftheirservantsor
agents,whensuchactsoromissionscausedamageswhichamounttothebreachofacontact,isnotbasedupon
amerepresumptionofthemaster'snegligenceintheirselectionorcontrol,andproofofexerciseoftheutmost
diligenceandcareinthisregarddoesnotrelievethemasterofhisliabilityforthebreachofhiscontract.

Every legal obligation must of necessity be extracontractual or contractual. Extracontractual obligation has its
source in the breach or omission of those mutual duties which civilized society imposes upon it members, or
which arise from these relations, other than contractual, of certain members of society to others, generally
embraced in the concept of status. The legal rights of each member of society constitute the measure of the
corresponding legal duties, mainly negative in character, which the existence of those rights imposes upon all
othermembersofsociety.Thebreachofthesegeneraldutieswhetherduetowillfulintentortomereinattention,
ifproductiveofinjury,giverisetoanobligationtoindemnifytheinjuredparty.Thefundamentaldistinctionbetween
obligations of this character and those which arise from contract, rests upon the fact that in cases of non
contractual obligation it is the wrongful or negligent act or omission itself which creates the vinculum juris,
whereasincontractualrelationsthevinculumexistsindependentlyofthebreachofthevoluntarydutyassumedby
thepartieswhenenteringintothecontractualrelation.

Withrespecttoextracontractualobligationarisingfromnegligence,whetherofactoromission,itiscompetentfor
the legislature to elect and our Legislature has so elected whom such an obligation is imposed is morally
culpable,or,onthecontrary,forreasonsofpublicpolicy,toextendthatliability,withoutregardtothelackofmoral
culpability,soastoincluderesponsibilityforthenegligenceofthosepersonwhoactsormissionareimputable,by
alegalfiction,tootherswhoareinapositiontoexerciseanabsoluteorlimitedcontroloverthem.Thelegislature
whichadoptedourCivilCodehaselectedtolimitextracontractualliabilitywithcertainwelldefinedexceptions
to cases in which moral culpability can be directly imputed to the persons to be charged. This moral
responsibility may consist in having failed to exercise due care in the selection and control of one's agents or
servants,orinthecontrolofpersonswho,byreasonoftheirstatus,occupyapositionofdependencywithrespect
tothepersonmadeliablefortheirconduct.

Thepositionofanaturalorjuridicalpersonwhohasundertakenbycontracttorenderservicetoanother,iswholly
differentfromthattowhicharticle1903relates.Whenthesourcesoftheobligationuponwhichplaintiff'scauseof
actiondependsisanegligentactoromission,theburdenofproofrestsuponplaintifftoprovethenegligenceif
he does not his action fails. But when the facts averred show a contractual undertaking by defendant for the
benefitofplaintiff,anditisallegedthatplaintiffhasfailedorrefusedtoperformthecontract,itisnotnecessaryfor
plaintifftospecifyinhispleadingswhetherthebreachofthecontractisduetowillfulfaultortonegligenceonthe
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partofthedefendant,orofhisservantsoragents.Proofofthecontractandofitsnonperformanceissufficient
primafacietowarrantarecovery.

Asageneralrule...itislogicalthatincaseofextracontractualculpa,asuingcreditorshouldassumethe
burdenofproofofitsexistence,astheonlyfactuponwhichhisactionisbasedwhileonthecontrary,ina
caseofnegligencewhichpresupposestheexistenceofacontractualobligation,ifthecreditorshowsthatit
existsandthatithasbeenbroken,itisnotnecessaryforhimtoprovenegligence.(Manresa,vol.8,p.71
[1907ed.,p.76]).

Asitisnotnecessaryfortheplaintiffinanactionforthebreachofacontracttoshowthatthebreachwasdueto
thenegligentconductofdefendantorofhisservants,eventhoughsuchbeinfacttheactualcauseofthebreach,
itisobviousthatproofonthepartofdefendantthatthenegligenceoromissionofhisservantsoragentscaused
the breach of the contract would not constitute a defense to the action. If the negligence of servants or agents
couldbeinvokedasameansofdischargingtheliabilityarisingfromcontract,theanomalousresultwouldbethat
person acting through the medium of agents or servants in the performance of their contracts, would be in a
betterpositionthanthoseactinginperson.Ifonedeliversavaluablewatchtowatchmakerwhocontracttorepair
it, and the bailee, by a personal negligent act causes its destruction, he is unquestionably liable. Would it be
logicaltofreehimfromhisliabilityforthebreachofhiscontract,whichinvolvesthedutytoexerciseduecarein
thepreservationofthewatch,ifheshowsthatitwashisservantwhosenegligencecausedtheinjury?Ifsucha
theorycouldbeaccepted,juridicalpersonswouldenjoypracticallycompleteimmunityfromdamagesarisingfrom
the breach of their contracts if caused by negligent acts as such juridical persons can of necessity only act
throughagentsorservants,anditwouldnodoubtbetrueinmostinstancesthatreasonablecarehadbeentaken
in selection and direction of such servants. If one delivers securities to a banking corporation as collateral, and
theyarelostbyreasonofthenegligenceofsomeclerkemployedbythebank,woulditbejustandreasonableto
permitthebanktorelieveitselfofliabilityforthebreachofitscontracttoreturnthecollateraluponthepaymentof
thedebtbyprovingthatduecarehadbeenexercisedintheselectionanddirectionoftheclerk?

Thisdistinctionbetweenculpaaquiliana,asthesourceofanobligation,andculpacontractualasamereincident
totheperformanceofacontracthasfrequentlybeenrecognizedbythesupremecourtofSpain.(Sentencias of
June 27, 1894 November 20, 1896 and December 13, 1896.) In the decisions of November 20, 1896, it
appearedthatplaintiff'sactionaroseexcontractu,butthatdefendantsoughttoavailhimselfoftheprovisionsof
article1902oftheCivilCodeasadefense.TheSpanishSupremeCourtrejecteddefendant'scontention,saying:

Thesearenotcasesofinjurycaused,without any preexisting obligation, by fault or negligence, such as


thosetowhicharticle1902oftheCivilCoderelates,butofdamagescausedbythedefendant'sfailureto
carryouttheundertakingsimposedbythecontracts....

A brief review of the earlier decision of this court involving the liability of employers for damage done by the
negligent acts of their servants will show that in no case has the court ever decided that the negligence of the
defendant'sservantshasbeenheldtoconstituteadefensetoanactionfordamagesforbreachofcontract.

InthecaseofJohnsonvs.David(5Phil.Rep.,663),thecourtheldthattheownerofacarriagewasnotliablefor
the damages caused by the negligence of his driver. In that case the court commented on the fact that no
evidence had been adduced in the trial court that the defendant had been negligent in the employment of the
driver,orthathehadanyknowledgeofhislackofskillorcarefulness.

In the case of Baer Senior & Co's Successors vs. Compania Maritima (6 Phil. Rep., 215), the plaintiff sued the
defendantfordamagescausedbythelossofabargebelongingtoplaintiffwhichwasallowedtogetadriftbythe
negligence of defendant's servants in the course of the performance of a contract of towage. The court held,
citingManresa(vol.8,pp.29,69)thatifthe"obligationofthedefendantgrewoutofacontractmadebetweenit
andtheplaintiff...wedonotthinkthattheprovisionsofarticles1902and1903areapplicabletothecase."

InthecaseofChapmanvs.Underwood(27Phil.Rep.,374),plaintiffsuedthedefendanttorecoverdamagesfor
the personal injuries caused by the negligence of defendant's chauffeur while driving defendant's automobile in
whichdefendantwasridingatthetime.Thecourtfoundthatthedamageswerecausedbythenegligenceofthe
driveroftheautomobile,butheldthatthemasterwasnotliable,althoughhewaspresentatthetime,saying:

. . . unless the negligent acts of the driver are continued for a length of time as to give the owner a
reasonableopportunitytoobservethemandtodirectthedrivertodesisttherefrom....Theactcomplained
of must be continued in the presence of the owner for such length of time that the owner by his
acquiescence,makesthedriver'sactshisown.

InthecaseofYamadavs.ManilaRailroadCo.andBachrachGarage&TaxicabCo.(33Phil.Rep.,8),itistrue
that the court rested its conclusion as to the liability of the defendant upon article 1903, although the facts
disclosedthattheinjurycomplaintofbyplaintiffconstitutedabreachofthedutytohimarisingoutofthecontract
oftransportation.Theexpressgroundofthedecisioninthiscasewasthatarticle1903,indealingwiththeliability
of a master for the negligent acts of his servants "makes the distinction between private individuals and public
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enterprise" that as to the latter the law creates a rebuttable presumption of negligence in the selection or
directionofservantsandthatintheparticularcasethepresumptionofnegligencehadnotbeenovercome.

Itisevident,thereforethatinitsdecisionYamadacase,thecourttreatedplaintiff'sactionasthoughfoundedin
tortratherthanasbaseduponthebreachofthecontractofcarriage,andanexaminationofthepleadingsandof
thebriefsshowsthatthequestionsoflawwereinfactdiscusseduponthistheory.Viewedfromthestandpointof
thedefendantthepracticalresultmusthavebeenthesameinanyevent.Theproofdisclosedbeyonddoubtthat
thedefendant'sservantwasgrosslynegligentandthathisnegligencewastheproximatecauseofplaintiff'sinjury.
It also affirmatively appeared that defendant had been guilty of negligence in its failure to exercise proper
discretion in the direction of the servant. Defendant was, therefore, liable for the injury suffered by plaintiff,
whether the breach of the duty were to be regarded as constituting culpa aquiliana or culpa contractual. As
Manresa points out (vol. 8, pp. 29 and 69) whether negligence occurs an incident in the course of the
performanceofacontractualundertakingoritsitselfthesourceofanextracontractualundertakingobligation,its
essential characteristics are identical. There is always an act or omission productive of damage due to
carelessnessorinattentiononthepartofthedefendant.Consequently,whenthecourtholdsthatadefendantis
liableindamagesforhavingfailedtoexerciseduecare,eitherdirectly,orinfailingtoexercisepropercareinthe
selectionanddirectionofhisservants,thepracticalresultisidenticalineithercase.Therefore,itfollowsthatitis
not to be inferred, because the court held in the Yamada case that defendant was liable for the damages
negligentlycausedbyitsservantstoapersontowhomitwasboundbycontract,andmadereferencetothefact
thatthedefendantwasnegligentintheselectionandcontrolofitsservants,thatinsuchacasethecourtwould
have held that it would have been a good defense to the action, if presented squarely upon the theory of the
breachofthecontract,fordefendanttohaveprovedthatitdidinfactexercisecareintheselectionandcontrolof
theservant.

Thetrueexplanationofsuchcasesistobefoundbydirectingtheattentiontotherelativespheresofcontractual
and extracontractual obligations. The field of non contractual obligation is much more broader than that of
contractual obligations, comprising, as it does, the whole extent of juridical human relations. These two fields,
figurativelyspeaking,concentricthatistosay,themerefactthatapersonisboundtoanotherbycontractdoes
notrelievehimfromextracontractualliabilitytosuchperson.Whensuchacontractualrelationexiststheobligor
may break the contract under such conditions that the same act which constitutes the source of an extra
contractualobligationhadnocontractexistedbetweentheparties.

Thecontractofdefendanttotransportplaintiffcarriedwithit,byimplication,thedutytocarryhiminsafetyandto
providesafemeansofenteringandleavingitstrains(civilcode,article1258).Thatduty,beingcontractual,was
directandimmediate,anditsnonperformancecouldnotbeexcusedbyproofthatthefaultwasmorallyimputable
todefendant'sservants.

The railroad company's defense involves the assumption that even granting that the negligent conduct of its
servants in placing an obstruction upon the platform was a breach of its contractual obligation to maintain safe
meansofapproachingandleavingitstrains,thedirectandproximatecauseoftheinjurysufferedbyplaintiffwas
his own contributory negligence in failing to wait until the train had come to a complete stop before alighting.
UnderthedoctrineofcomparativenegligenceannouncedintheRakescase(supra),iftheaccidentwascaused
byplaintiff'sownnegligence,noliabilityisimposedupondefendant'snegligenceandplaintiff'snegligencemerely
contributedtohisinjury,thedamagesshouldbeapportioned.Itis,therefore,importanttoascertainifdefendant
wasinfactguiltyofnegligence.

Itmaybeadmittedthathadplaintiffwaiteduntilthetrainhadcometoafullstopbeforealighting,theparticular
injurysufferedbyhimcouldnothaveoccurred.Defendantcontends,andcitesmanyauthoritiesinsupportofthe
contention, that it is negligence per se for a passenger to alight from a moving train. We are not disposed to
subscribetothisdoctrineinitsabsoluteform.Weareoftheopinionthatthispropositionistoobadlystatedandis
atvariancewiththeexperienceofeverydaylife.Inthisparticularinstance,thatthetrainwasbarelymovingwhen
plaintiffalightedisshownconclusivelybythefactthatitcametostopwithinsixmetersfromtheplacewherehe
steppedfromit.Thousandsofpersonalightfromtrainsundertheseconditionseverydayoftheyear,andsustain
no injury where the company has kept its platform free from dangerous obstructions. There is no reason to
believethatplaintiffwouldhavesufferedanyinjurywhateverinalightingashedidhaditnotbeenfordefendant's
negligentfailuretoperformitsdutytoprovideasafealightingplace.

WeareoftheopinionthatthecorrectdoctrinerelatingtothissubjectisthatexpressedinThompson'sworkon
Negligence(vol.3,sec.3010)asfollows:

Thetestbywhichtodeterminewhetherthepassengerhasbeenguiltyofnegligenceinattemptingtoalight
from a moving railway train, is that of ordinary or reasonable care. It is to be considered whether an
ordinarily prudent person, of the age, sex and condition of the passenger, would have acted as the
passengeractedunderthecircumstancesdisclosedbytheevidence.Thiscarehasbeendefinedtobe,not
thecarewhichmayorshouldbeusedbytheprudentmangenerally,butthecarewhichamanofordinary
prudence would use under similar circumstances, to avoid injury." (Thompson, Commentaries on
Negligence,vol.3,sec.3010.)
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Or,itweprefertoadoptthemodeofexpositionusedbythiscourtinPicartvs.Smith(37Phil.rep.,809),wemay
saythatthetestisthisWasthereanythinginthecircumstancessurroundingtheplaintiffatthetimehealighted
from the train which would have admonished a person of average prudence that to get off the train under the
conditionsthenexistingwasdangerous?Ifso,theplaintiffshouldhavedesistedfromalightingandhisfailureso
todesistwascontributorynegligence. 1 a w p h !l.n e t

Asthecasenowbeforeuspresentsitself,theonlyfactfromwhichaconclusioncanbedrawntotheeffectthat
plaintiffwasguiltyofcontributorynegligenceisthathesteppedoffthecarwithoutbeingabletodiscernclearlythe
conditionoftheplatformandwhilethetrainwasyetslowlymoving.Inconsideringthesituationthuspresented,it
should not be overlooked that the plaintiff was, as we find, ignorant of the fact that the obstruction which was
causedbythesacksofmelonspiledontheplatformexistedandasthedefendantwasboundbyreasonofits
dutyasapubliccarriertoaffordtoitspassengersfacilitiesforsafeegressfromitstrains,theplaintiffhadaright
to assume, in the absence of some circumstance to warn him to the contrary, that the platform was clear. The
place,aswehavealreadystated,wasdark,ordimlylighted,andthisalsoisproofofafailureuponthepartofthe
defendantintheperformanceofadutyowingbyittotheplaintiffforifitwerebyanypossibilityconcedethatit
had right to pile these sacks in the path of alighting passengers, the placing of them adequately so that their
presencewouldberevealed.

As pertinent to the question of contributory negligence on the part of the plaintiff in this case the following
circumstances are to be noted: The company's platform was constructed upon a level higher than that of the
roadbed and the surrounding ground. The distance from the steps of the car to the spot where the alighting
passengerwouldplacehisfeetontheplatformwasthusreduced,therebydecreasingtheriskincidenttostepping
off.Thenatureoftheplatform,constructedasitwasofcementmaterial,alsoassuredtothepassengerastable
and even surface on which to alight. Furthermore, the plaintiff was possessed of the vigor and agility of young
manhood,anditwasbynomeanssoriskyforhimtogetoffwhilethetrainwasyetmovingasthesameactwould
havebeeninanagedorfeebleperson.Indeterminingthequestionofcontributorynegligenceinperformingsuch
actthatistosay,whetherthepassengeractedprudentlyorrecklesslytheage,sex,andphysicalcondition
ofthepassengerarecircumstancesnecessarilyaffectingthesafetyofthepassenger,andshouldbeconsidered.
Women,ithasbeenobserved,asageneralrulearelesscapablethanmenofalightingwithsafetyundersuch
conditions, as the nature of their wearing apparel obstructs the free movement of the limbs. Again, it may be
notedthattheplacewasperfectlyfamiliartotheplaintiffasitwashisdailycustomtogetonandofthetrainatthis
station.Therecould,therefore,benouncertaintyinhismindwithregardeithertothelengthofthestepwhichhe
wasrequiredtotakeorthecharacteroftheplatformwherehewasalighting.Ourconclusionisthattheconductof
theplaintiffinundertakingtoalightwhilethetrainwasyetslightlyunderwaywasnotcharacterizedbyimprudence
andthatthereforehewasnotguiltyofcontributorynegligence.

Theevidenceshowsthattheplaintiff,atthetimeoftheaccident,wasearningP25amonthasacopyistclerk,and
thattheinjurieshehassufferedhavepermanentlydisabledhimfromcontinuingthatemployment.Defendanthas
notshownthatanyothergainfuloccupationisopentoplaintiff.Hisexpectancyoflife,accordingtothestandard
mortality tables, is approximately thirtythree years. We are of the opinion that a fair compensation for the
damagesufferedbyhimforhispermanentdisabilityisthesumofP2,500,andthatheisalsoentitledtorecoverof
defendant the additional sum of P790.25 for medical attention, hospital services, and other incidental
expendituresconnectedwiththetreatmentofhisinjuries.

Thedecisionoflowercourtisreversed,andjudgmentisherebyrenderedplaintiffforthesumofP3,290.25,and
forthecostsofbothinstances.Soordered.

Arellano,C.J.,Torres,StreetandAvancea,JJ.,concur.

SeparateOpinions

MALCOLM,J.,dissenting:

With one sentence in the majority decision, we are of full accord, namely, "It may be admitted that had plaintiff
waiteduntilthetrainhadcometoafullstopbeforealighting,theparticularinjurysufferedbyhimcouldnothave
occurred."Withthegeneralrulerelativetoapassenger'scontributorynegligence,wearelikewiseinfullaccord,
namely,"Anattempttoalightfromamovingtrainisnegligenceperse."Addingthesetwopointstogether,should
beabsolvedfromthecomplaint,andjudgmentaffirmed.

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Johnson,J.,concur.

TheLawphilProjectArellanoLawFoundation

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8/23/2016 G.R.No.L21438

TodayisTuesday,August23,2016

RepublicofthePhilippines
SUPREMECOURT
Manila

ENBANC

G.R.No.L21438September28,1966

AIRFRANCE,petitioner,
vs.
RAFAELCARRASCOSOandtheHONORABLECOURTOFAPPEALS,respondents.

Lichauco,PicazoandAgcaoiliforpetitioner.
BengzonVillegasandZarragaforrespondentR.Carrascoso.

SANCHEZ,J.:

TheCourtofFirstInstanceofManila1sentencedpetitionertopayrespondentRafaelCarrascosoP25,000.00by
wayofmoraldamagesP10,000.00asexemplarydamagesP393.20representingthedifferenceinfarebetween
firstclassandtouristclassfortheportionofthetripBangkokRome,thesevariousamountswithinterestatthe
legalrate,fromthedateofthefilingofthecomplaintuntilpaidplusP3,000.00forattorneys'feesandthecosts
ofsuit.

On appeal,2 the Court of Appeals slightly reduced the amount of refund on Carrascoso's plane ticket from
P393.20toP383.10,andvotedtoaffirmtheappealeddecision"inallotherrespects",withcostsagainstpetitioner.

Thecaseisnowbeforeusforreviewoncertiorari.

ThefactsdeclaredbytheCourtofAppealsas"fullysupportedbytheevidenceofrecord",are:

Plaintiff, a civil engineer, was a member of a group of 48 Filipino pilgrims that left Manila for Lourdes on
March30,1958.

On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine Air Lines, Inc.,
issued to plaintiff a "first class" round trip airplane ticket from Manila to Rome. From Manila to Bangkok,
plaintiff travelled in "first class", but at Bangkok, the Manager of the defendant airline forced plaintiff to
vacatethe"firstclass"seatthathewasoccupyingbecause,inthewordsofthewitnessErnestoG.Cuento,
therewasa"whiteman",who,theManageralleged,hada"betterright"totheseat.Whenaskedtovacate
his "first class" seat, the plaintiff, as was to be expected, refused, and told defendant's Manager that his
seatwouldbetakenoverhisdeadbodyacommotionensued,and,accordingtosaidErnestoG.Cuento,
"manyoftheFilipinopassengersgotnervousinthetouristclasswhentheyfoundoutthatMr.Carrascoso
was having a hot discussion with the white man [manager], they came all across to Mr. Carrascoso and
pacifiedMr.Carrascosotogivehisseattothewhiteman"(Transcript,p.12,HearingofMay26,1959)and
plaintiffreluctantlygavehis"firstclass"seatintheplane.3

1.Thetrustofthereliefpetitionernowseeksisthatwereview"allthefindings"4ofrespondentCourtofAppeals.
Petitioner charges that respondent court failed to make complete findings of fact on all the issues properly laid
before it. We are asked to consider facts favorable to petitioner, and then, to overturn the appellate court's
decision.

Comingintofocusistheconstitutionalmandatethat"Nodecisionshallberenderedbyanycourtofrecordwithout
expressing therein clearly and distinctly the facts and the law on which it is based". 5 This is echoed in the
statutory demand that a judgment determining the merits of the case shall state "clearly and distinctly the facts
and the law on which it is based" 6 and that "Every decision of the Court of Appeals shall contain complete
findingsoffactonallissuesproperlyraisedbeforeit".7

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A decision with absolutely nothing to support it is a nullity. It is open to direct attack.8Thelaw,however,solely


insiststhatadecisionstatethe"essentialultimatefacts"uponwhichthecourt'sconclusionisdrawn.9Acourtof
justiceisnothideboundtowriteinitsdecisioneverybitandpieceofevidence 10presentedbyonepartyandthe
otherupontheissuesraised.Neitherisittobeburdenedwiththeobligation"tospecifyinthesentencethefacts"
whichaparty"consideredasproved".11ThisisbutapartofthementalprocessfromwhichtheCourtdrawsthe
essential ultimate facts. A decision is not to be so clogged with details such that prolixity, if not confusion, may
result.SolongasthedecisionoftheCourtofAppealscontainsthenecessaryfactstowarrantitsconclusions,itis
no error for said court to withhold therefrom "any specific finding of facts with respect to the evidence for the
defense".BecauseasthisCourtwellobserved,"Thereisnolawthatsorequires". 12Indeed,"themerefailureto
specify (in the decision) the contentions of the appellant and the reasons for refusing to believe them is not
sufficienttoholdthesamecontrarytotherequirementsoftheprovisionsoflawandtheConstitution".Itisinthis
settingthatinManigque,itwasheldthatthemerefactthatthefindings"werebasedentirelyontheevidencefor
the prosecution without taking into consideration or even mentioning the appellant's side in the controversy as
shown by his own testimony", would not vitiate the judgment. 13 If the court did not recite in the decision the
testimonyofeachwitnessfor,oreachitemofevidencepresentedby,thedefeatedparty,itdoesnotmeanthat
thecourthasoverlookedsuchtestimonyorsuchitemofevidence.14Atanyrate,thelegalpresumptionsarethat
officialdutyhasbeenregularlyperformed,andthatallthematterswithinanissueinacasewerelaidbeforethe
courtandpasseduponbyit.15

Findingsoffact,whichtheCourtofAppealsisrequiredtomake,maybedefinedas"thewrittenstatementofthe
ultimatefactsasfoundbythecourt...andessentialtosupportthedecisionandjudgmentrenderedthereon". 16
They consist of the court's "conclusions" with respect to the determinative facts in issue". 17 A question of law,
upontheotherhand,hasbeendeclaredas"onewhichdoesnotcallforanexaminationoftheprobativevalueof
theevidencepresentedbytheparties."18

2. By statute, "only questions of law may be raised" in an appeal by certiorari from a judgment of the Court of
Appeals. 19Thatjudgmentisconclusiveastothefacts.ItisnotappropriatelythebusinessofthisCourttoalter
thefactsortoreviewthequestionsoffact.20

Withtheseguideposts,wenowfacetheproblemofwhetherthefindingsoffactoftheCourtofAppealssupportits
judgment.

3.WasCarrascosoentitledtothefirstclassseatheclaims?

ItisconcededinallquartersthatonMarch28,1958hepaidtoandreceivedfrompetitionerafirstclassticket.But
petitionerassertsthatsaidticketdidnotrepresentthetrueandcompleteintentandagreementofthepartiesthat
saidrespondentknewthathedidnothaveconfirmedreservationsforfirstclassonanyspecificflight,althoughhe
hadtouristclassprotectionthat,accordingly,theissuanceofafirstclassticketwasnoguaranteethathewould
haveafirstclassride,butthatsuchwoulddependupontheavailabilityoffirstclassseats.

These are matters which petitioner has thoroughly presented and discussed in its brief before the Court of
Appeals under its third assignment of error, which reads: "The trial court erred in finding that plaintiff had
confirmed reservations for, and a right to, first class seats on the "definite" segments of his journey, particularly
thatfromSaigontoBeirut".21

And,theCourtofAppealsdisposedofthiscontentionthus:

Defendant seems to capitalize on the argument that the issuance of a firstclass ticket was no guarantee
that the passenger to whom the same had been issued, would be accommodated in the firstclass
compartment,forasinthecaseofplaintiffhehadyettomakearrangementsuponarrivalateverystation
for the necessary firstclass reservation. We are not impressed by such a reasoning. We cannot
understand how a reputable firm like defendant airplane company could have the indiscretion to give out
ticketsitnevermeanttohonoratall.Itreceivedthecorrespondingamountinpaymentoffirstclasstickets
andyetitallowedthepassengertobeatthemercyofitsemployees.Itismoreinkeepingwiththeordinary
courseofbusinessthatthecompanyshouldknowwhetherorriottheticketsitissuesaretobehonoredor
not.22

NotthattheCourtofAppealsisalone.Thetrialcourtsimilarlydisposedofpetitioner'scontention,thus:

Onthefactthatplaintiffpaidfor,andwasissueda"Firstclass"ticket,therecanbenoquestion.Apartfromhis
testimony,seeplaintiff'sExhibits"A","A1","B","B1,""B2","C"and"C1",anddefendant'sownwitness,Rafael
Altonaga,confirmedplaintiff'stestimonyandtestifiedasfollows:

Q.Intheseticketstherearemarks"O.K."Fromwhatyouknow,whatdoesthisOKmean?

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A.Thatthespaceisconfirmed.

Q.Confirmedforfirstclass?

A.Yes,"firstclass".(Transcript,p.169)

xxxxxxxxx

Defendant tried to prove by the testimony of its witnesses Luis Zaldariaga and Rafael Altonaga that although
plaintiffpaidfor,andwasissueda"firstclass"airplaneticket,theticketwassubjecttoconfirmationinHongkong.
The court cannot give credit to the testimony of said witnesses. Oral evidence cannot prevail over written
evidence, and plaintiff's Exhibits "A", "Al", "B", "Bl", "C" and "C1" belie the testimony of said witnesses, and
clearlyshowthattheplaintiffwasissued,andpaidfor,afirstclassticketwithoutanyreservationwhatever.

Furthermore,ashereinaboveshown,defendant'sownwitnessRafaelAltonagatestifiedthatthereservationfora
"firstclass"accommodationfortheplaintiffwasconfirmed.Thecourtcannotbelievethataftersuchconfirmation
defendanthadaverbalunderstandingwithplaintiffthatthe"firstclass"ticketissuedtohimbydefendantwouldbe
subjecttoconfirmationinHongkong.23

Wehaveheretoforeadvertedtothefactthatexceptforaslightdifferenceofafewpesosintheamountrefunded
onCarrascoso'sticket,thedecisionoftheCourtofFirstInstancewasaffirmedbytheCourtofAppealsinallother
respects.Weholdtheviewthatsuchajudgmentofaffirmancehasmergedthejudgmentofthelowercourt. 24
Implicit in that affirmance is a determination by the Court of Appeals that the proceeding in the Court of First
Instance was free from prejudicial error and "all questions raised by the assignments of error and all questions
that might have been raised are to be regarded as finally adjudicated against the appellant". So also, the
judgment affirmed "must be regarded as free from all error". 25 We reached this policy construction because
nothinginthedecisionoftheCourtofAppealsonthispointwouldsuggestthatitsfindingsoffactareinanyway
atwarwiththoseofthetrialcourt.NorwassaidaffirmancebytheCourtofAppealsuponagroundorgrounds
differentfromthosewhichweremadethebasisoftheconclusionsofthetrialcourt.26

If,aspetitionerunderscores,afirstclassticketholderisnotentitledtoafirstclassseat,notwithstandingthefact
that seat availability in specific flights is therein confirmed, then an air passenger is placed in the hollow of the
handsofanairline.Whatsecuritythencanapassengerhave?Itwillalwaysbeaneasymatterforanairlineaided
byitsemployees,tostrikeouttheverystipulationsintheticket,andsaythattherewasaverbalagreementtothe
contrary.Whatifthepassengerhadascheduletofulfill?Wehavelonglearnedthat,asarule,awrittendocument
speaks a uniform language that spoken word could be notoriously unreliable. If only to achieve stability in the
relationsbetweenpassengerandaircarrier,adherencetotheticketsoissuedisdesirable.Suchisthecasehere.
Thelowercourtsrefusedtobelievetheoralevidenceintendedtodefeatthecovenantsintheticket.

TheforegoingaretheconsiderationswhichpointtotheconclusionthattherearefactsuponwhichtheCourtof
AppealspredicatedthefindingthatrespondentCarrascosohadafirstclassticketandwasentitledtoafirstclass
seat at Bangkok, which is a stopover in the Saigon to Beirut leg of the flight. 27 We perceive no "welter of
distortionsbytheCourtofAppealsofpetitioner'sstatementofitsposition",aschargedbypetitioner.28Nordowe
subscribetopetitioner'saccusationthatrespondentCarrascoso"surreptitiouslytookafirstclassseattoprovoke
anissue".29Andthisbecause,aspetitionerstates,CarrascosowenttoseetheManagerathisofficeinBangkok
"toconfirmmyseatandbecausefromSaigonIwastoldagaintoseetheManager".30Why,then,washeallowed
totakeafirstclassseatintheplaneatBangkok,ifhehadnoseat?Or,ifanotherhadabetterrighttotheseat?

4.Petitionerassailsrespondentcourt'sawardofmoraldamages.Petitioner'strenchantclaimisthatCarrascoso's
action is planted upon breach of contract that to authorize an award for moral damages there must be an
avermentoffraudorbadfaith31andthatthedecisionoftheCourtofAppealsfailstomakeafindingofbadfaith.
Thepivotalallegationsinthecomplaintbearingonthisissueare:

3. That ... plaintiff entered into a contract of air carriage with the Philippine Air Lines for a valuable
consideration, the latter acting as general agents for and in behalf of the defendant, under which said
contract, plaintiff was entitled to, as defendant agreed to furnish plaintiff, First Class passage on
defendant'splaneduringtheentiredurationofplaintiff'stourofEuropewithHongkongasstartingpointup
toanduntilplaintiff'sreturntriptoManila,....

4. That, during the first two legs of the trip from Hongkong to Saigon and from Saigon to Bangkok,
defendant furnished to the plaintiff First Class accommodation but only after protestations, arguments
and/orinsistenceweremadebytheplaintiffwithdefendant'semployees.

5. That finally, defendant failed to provide First Class passage, but instead furnished plaintiff only Tourist
ClassaccommodationsfromBangkoktoTeheranand/orCasablanca,...theplaintiffhasbeencompelledby

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defendant's employees to leave the First Class accommodation berths at Bangkok after he was already
seated.

6.Thatconsequently,theplaintiff,desiringnorepetitionoftheinconvenienceandembarrassmentsbrought
bydefendant'sbreachofcontractwasforcedtotakeaPanAmericanWorldAirwaysplaneonhisreturntrip
fromMadridtoManila.32

xxxxxxxxx

2. That likewise, as a result of defendant's failure to furnish First Class accommodations aforesaid, plaintiff
suffered inconveniences, embarrassments, and humiliations, thereby causing plaintiff mental anguish, serious
anxiety, wounded feelings, social humiliation, and the like injury, resulting in moral damages in the amount of
P30,000.00.33

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The foregoing, in our opinion, substantially aver: First, That there was a contract to furnish plaintiff a first class
passage covering, amongst others, the BangkokTeheran leg Second, That said contract was breached when
petitioner failed to furnish first class transportation at Bangkok and Third, that there was bad faith when
petitioner'semployeecompelledCarrascosotoleavehisfirstclassaccommodationberth"after he was already,
seated" and to take a seat in the tourist class, by reason of which he suffered inconvenience, embarrassments
andhumiliations,therebycausinghimmentalanguish,seriousanxiety,woundedfeelingsandsocialhumiliation,
resultinginmoraldamages.Itistruethatthereisnospecificmentionofthetermbadfaithinthecomplaint.But,
the inference of bad faith is there, it may be drawn from the facts and circumstances set forth therein. 34 The
contractwasaverredtoestablishtherelationbetweentheparties.Butthestressoftheactionisputonwrongful
expulsion.

Quite apart from the foregoing is that (a) right the start of the trial, respondent's counsel placed petitioner on
guardonwhatCarrascosointendedtoprove:ThatwhilesittingintheplaneinBangkok,Carrascosowasousted
bypetitioner'smanagerwhogavehisseattoawhiteman35and(b)evidenceofbadfaithinthefulfillmentofthe
contractwaspresentedwithoutobjectiononthepartofthepetitioner.Itis,therefore,unnecessarytoinquireasto
whetherornotthereissufficientavermentinthecomplainttojustifyanawardformoraldamages.Deficiencyin
thecomplaint,ifany,wascuredbytheevidence.Anamendmentthereoftoconformtotheevidenceisnoteven
required.36Onthequestionofbadfaith,theCourtofAppealsdeclared:

That the plaintiff was forced out of his seat in the first class compartment of the plane belonging to the
defendantAirFrancewhileatBangkok,andwastransferredtothetouristclassnotonlywithouthisconsent
but against his will, has been sufficiently established by plaintiff in his testimony before the court,
corroborated by the corresponding entry made by the purser of the plane in his notebook which notation
readsasfollows:

"Firstclass passenger was forced to go to the tourist class against his will, and that the captain
refusedtointervene",

andbythetestimonyofaneyewitness,ErnestoG.Cuento,whowasacopassenger.Thecaptainofthe
planewhowasaskedbythemanagerofdefendantcompanyatBangkoktointerveneevenrefusedtodo
so. It is noteworthy that no one on behalf of defendant ever contradicted or denied this evidence for the
plaintiff.ItcouldhavebeeneasyfordefendanttopresentitsmanageratBangkoktotestifyatthetrialofthe
case,oryettosecurehisdispositionbutdefendantdidneither.37

TheCourtofappealsfurtherstated

Neitheristhereevidenceastowhetherornotapriorreservationwasmadebythewhiteman.Hence,ifthe
employeesofthedefendantatBangkoksoldafirstclasstickettohimwhenalltheseatshadalreadybeen
taken,surelytheplaintiffshouldnothavebeenpickedoutastheonetosuffertheconsequencesandtobe
subjectedtothehumiliationandindignityofbeingejectedfromhisseatinthepresenceofothers.Instead
of explaining to the white man the improvidence committed by defendant's employees, the manager
adoptedthemoredrasticstepofoustingtheplaintiffwhowasthensafelyensconscedinhisrightfulseat.
We are strengthened in our belief that this probably was what happened there, by the testimony of
defendant's witness Rafael Altonaga who, when asked to explain the meaning of the letters "O.K."
appearing on the tickets of plaintiff, said "that the space is confirmed for first class. Likewise, Zenaida
Faustino,anotherwitnessfordefendant,whowasthechiefoftheReservationOfficeofdefendant,testified
asfollows:

"Q How does the person in the ticketissuing office know what reservation the passenger has
arrangedwithyou?

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ATheycallusupbyphoneandaskfortheconfirmation."(t.s.n.,p.247,June19,1959)

Inthisconnection,wequotewithapprovalwhatthetrialJudgehassaidonthispoint:

Whydidthe,usingthewordsofwitnessErnestoG.Cuento,"whiteman"havea"betterright"tothe
seat occupied by Mr. Carrascoso? The record is silent. The defendant airline did not prove "any
better", nay, any right on the part of the "white man" to the "First class" seat that the plaintiff was
occupyingandforwhichhepaidandwasissuedacorresponding"firstclass"ticket.

Iftherewasajustifiedreasonfortheactionofthedefendant'sManagerinBangkok,thedefendant
could have easily proven it by having taken the testimony of the said Manager by deposition, but
defendant did not do so the presumption is that evidence willfully suppressed would be adverse if
produced[Sec.69,par(e),RulesofCourt]and,underthecircumstances,theCourtisconstrained
to find, as it does find, that the Manager of the defendant airline in Bangkok not merely asked but
threatenedtheplaintifftothrowhimoutoftheplaneifhedidnotgiveuphis"firstclass"seatbecause
the said Manager wanted to accommodate, using the words of the witness Ernesto G. Cuento, the
"whiteman".38

ItisreallycorrecttosaythattheCourtofAppealsinthequotedportionfirsttranscribeddidnotusetheterm
"badfaith".Butcanitbedoubtedthattherecitaloffactsthereinpointstobadfaith?Themanagernotonly
preventedCarrascosofromenjoyinghisrighttoafirstclassseatworse,heimposedhisarbitrarywillhe
forcibly ejected him from his seat, made him suffer the humiliation of having to go to the tourist class
compartment just to give way to another passenger whose right thereto has not been established.
Certainly, this is bad faith. Unless, of course, bad faith has assumed a meaning different from what is
understoodinlaw.For,"badfaith"contemplatesa"stateofmindaffirmativelyoperatingwithfurtivedesign
orwithsomemotiveofselfinterestorwillorforulteriorpurpose."39

Andiftheforegoingwerenotyetsufficient,thereistheexpressfindingofbadfaithinthejudgmentofthe
CourtofFirstInstance,thus:

Theevidenceshowsthatthedefendantviolateditscontractoftransportationwithplaintiffinbadfaith,
with the aggravating circumstances that defendant's Manager in Bangkok went to the extent of
threateningtheplaintiffinthepresenceofmanypassengerstohavehimthrownoutoftheairplaneto
givethe"firstclass"seatthathewasoccupyingto,againusingthewordsofthewitnessErnestoG.
Cuento,a"whiteman"whomhe(defendant'sManager)wishedtoaccommodate,andthedefendant
has not proven that this "white man" had any "better right" to occupy the "first class" seat that the
plaintiffwasoccupying,dulypaidfor,andforwhichthecorresponding"firstclass"ticketwasissued
bythedefendanttohim.40

5.Theresponsibilityofanemployerforthetortiousactofitsemployeesneednotbeessayed.Itiswellsettledin
law. 41 Forthewillfulmalevolentactofpetitioner'smanager,petitioner,hisemployer,mustanswer.Article21of
theCivilCodesays:

ART.21.Anypersonwhowillfullycauseslossorinjurytoanotherinamannerthatiscontrarytomorals,
goodcustomsorpublicpolicyshallcompensatethelatterforthedamage.

Inparallelcircumstances,weappliedtheforegoinglegalpreceptand,weheldthatupontheprovisionsofArticle
2219(10),CivilCode,moraldamagesarerecoverable.42

6.Acontracttotransportpassengersisquitedifferentinkindanddegreefromanyothercontractualrelation. 43
And this, because of the relation which an aircarrier sustains with the public. Its business is mainly with the
travelling public. It invites people to avail of the comforts and advantages it offers. The contract of air carriage,
therefore, generates a relation attended with a public duty. Neglect or malfeasance of the carrier's employees,
naturally,couldgivegroundforanactionfordamages.

Passengersdonotcontractmerelyfortransportation.Theyhavearighttobetreatedbythecarrier'semployees
with kindness, respect, courtesy and due consideration. They are entitled to be protected against personal
misconduct, injurious language, indignities and abuses from such employees. So it is, that any rule or
discourteous conduct on the part of employees towards a passenger gives the latter an action for damages
againstthecarrier.44

Thus,"Whereasteamshipcompany45hadacceptedapassenger'scheck,itwasabreachofcontractandatort,
giving a right of action for its agent in the presence of third persons to falsely notify her that the check was
worthless and demand payment under threat of ejection, though the language used was not insulting and she
wasnotejected."46Andthis,because,althoughtherelationofpassengerandcarrieris"contractualbothinorigin

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andnature"nevertheless"theactthatbreaksthecontractmaybealsoatort". 47Andinanothercase,"Wherea
passengeronarailroadtrain,whentheconductorcametocollecthisfaretenderedhimthecashfaretoapoint
wherethetrainwasschedulednottostop,andtoldhimthatassoonasthetrainreachedsuchpointhewouldpay
thecashfarefromthatpointtodestination,therewasnothingintheconductofthepassengerwhichjustifiedthe
conductor in using insulting language to him, as by calling him a lunatic," 48 and the Supreme Court of South
Carolinathereheldthecarrierliableforthementalsufferingofsaidpassenger. 1 a w p h l.n t

Petitioner's contract with Carrascoso is one attended with public duty. The stress of Carrascoso's action as we
havesaid,isplaceduponhiswrongfulexpulsion.Thisisaviolationofpublicdutybythepetitioneraircarriera
caseofquasidelict.Damagesareproper.

7.PetitionerdrawsourattentiontorespondentCarrascoso'stestimony,thus

QYoumentionedaboutanattendant.Whoisthatattendantandpurser?

AWhenweleftalreadythatwasalreadyinthetripIcouldnothelpit.Sooneoftheflightattendants
approachedmeandrequestedfrommemyticketandIsaid,Whatfor?andshesaid,"Wewillnotethatyou
transferredtothetouristclass".Isaid,"Nothingofthatkind.Thatistantamounttoacceptingmytransfer."
AndIalsosaid,"YouarenotgoingtonoteanythingtherebecauseIamprotestingtothistransfer".

QWassheabletonoteit?

ANo,becauseIdidnotgivemyticket.

QAboutthatpurser?

A Well, the seats there are so close that you feel uncomfortable and you don't have enough leg room, I
stood up and I went to the pantry that was next to me and the purser was there. He told me, "I have
recorded the incident in my notebook." He read it and translated it to me because it was recorded in
French"Firstclasspassengerwasforcedtogotothetouristclassagainsthiswill,andthatthecaptain
refusedtointervene."

Mr.VALTE

Imovetostrikeoutthelastpartofthetestimonyofthewitnessbecausethebestevidencewouldbethe
notes.YourHonor.

COURT

Iwillallowthataspartofhistestimony.49

PetitionerchargesthatthefindingoftheCourtofAppealsthatthepursermadeanentryinhisnotebookreading
"First class passenger was forced to go to the tourist class against his will, and that the captain refused to
intervene"ispredicateduponevidence[Carrascoso'stestimonyabove]whichisincompetent.Wedonotthinkso.
Thesubjectofinquiryisnottheentry,buttheousterincident.Testimonyontheentrydoesnotcomewithinthe
proscriptionofthebestevidencerule.Suchtestimonyisadmissible.49a

Besides, from a reading of the transcript just quoted, when the dialogue happened, the impact of the startling
occurrencewasstillfreshandcontinuedtobefelt.Theexcitementhadnotasyetdieddown.Statementsthen,in
thisenvironment,areadmissibleaspartoftheresgestae.50For,theygrow"outofthenervousexcitementand
mentalandphysicalconditionofthedeclarant".51Theutteranceofthepurserregardinghisentryinthenotebook
was spontaneous, and related to the circumstances of the ouster incident. Its trustworthiness has been
guaranteed.52Itthusescapestheoperationofthehearsayrule.Itformspartoftheresgestae.

Atallevents,theentrywasmadeoutsidethePhilippines.And,byanemployeeofpetitioner.Itwouldhavebeen
aneasymatterforpetitionertohavecontradictedCarrascoso'stestimony.Ifitwerereallytruethatnosuchentry
wasmade,thedepositionofthepursercouldhaveclearedupthematter.

We,therefore,holdthatthetranscribedtestimonyofCarrascosoisadmissibleinevidence.

8. Exemplary damages are well awarded. The Civil Code gives the court ample power to grant exemplary
damages in contracts and quasi contracts. The only condition is that defendant should have "acted in a
wanton, fraudulent, reckless, oppressive, or malevolent manner." 53 The manner of ejectment of respondent
Carrascosofromhisfirstclassseatfitsintothislegalprecept.Andthis,inadditiontomoraldamages.54

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9.Therighttoattorney'sfeesisfullyestablished.Thegrantofexemplarydamagesjustifiesasimilarjudgmentfor
attorneys' fees. The least that can be said is that the courts below felt that it is but just and equitable that
attorneys'feesbegiven.55Wedonotintendtobreakfaithwiththetraditionthatdiscretionwellexercisedasit
washereshouldnotbedisturbed.

10. Questioned as excessive are the amounts decreed by both the trial court and the Court of Appeals, thus:
P25,000.00 as moral damages P10,000.00, by way of exemplary damages, and P3,000.00 as attorneys' fees.
Thetaskoffixingtheseamountsisprimarilywiththetrialcourt.56TheCourtofAppealsdidnotinterferewiththe
same. The dictates of good sense suggest that we give our imprimatur thereto. Because, the facts and
circumstancespointtothereasonablenessthereof.57

On balance, we say that the judgment of the Court of Appeals does not suffer from reversible error. We
accordinglyvotetoaffirmthesame.Costsagainstpetitioner.Soordered.

Concepcion,C.J.,Reyes,J.B.L.,Barrera,Dizon,Regala,Makalintal,ZaldivarandCastro,JJ.,concur.
Bengzon,J.P.,J.,tooknopart.

Footnotes

1CivilCaseNo.38810,"RafaelCarrascoso,plaintiff,vs.AirFrance,defendant,"R.A.,pp.7980.

2C.A.G.R.No.26522R,"RafaelCarrascoso,plaintiffappellee,vs.AirFrance,defendantappellant."

3AppendixA,petitioner'sbrief,pp146147.SeealsoR.A.,pp.6667.

4Petitioner'sbrief,p.142.

5Section12,ArticleVIII,Constitution.

6Section 1, Rule 36, Rules of Court. See also Section 2, Rule 120, in reference to judgments in criminal
cases.
7Sec.4.Rule51Sec.33(2),JudiciaryActof1948,asamended.

8Edwardsvs.McCoy,22Phil.598,601Yangcovs.CourtofFirstInstanceofManila,etal.,29Phil.183,
191.
9Bragavs.Millora,3Phil.458,465.

10Id.

11Aringovs.Arena14Phil.263,266emphasissupplied.

12Reyesvs.People.71Phil.598,600.

13Peoplevs.Manigque35O.G.,No.94,pp.1682,1683,citingSection133oftheCodeofCivilProcedure
andSection12,Art.VIII,Constitution,supra.
14Badgeretal.vs.Boyd,65S.W.(2d),pp.601,610.

15Section5,(m)and(o),Rule131,RulesofCourt.

16InreGood'sEstate,266P.(2d),pp.719,729.

17Badgeretal.vs.Boyd,supra.

18Goducovs.CourtofAppeals,etal.,L17647,February28,1964.

19Section2,Rule45,RulesofCourt,formerlySection2,Rule46oftheRulesofCourt.

20Medel,etal.vs.Calasanz,etal.L14835,August31,1960Astraquillo,etal.vs.Javier,etal.,L20034,
January30,1965.
21Petitioner'sbriefintheCourtofAppeals,pp.8298.

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22DecisionoftheCourtofAppeals,AppendixA,petitioner'sbrief,pp.148149.

23R.A.,pp.67,73.

245BC.J.S.,p.2953Am.Jur.p.678.

253Am.Jur.,pp.677678.

26SeeGarciaValdezvs.SeteranaTuason,40Phil,943,951.

27Carrascoso'sticket,accordingtopetitioner(brief,pp.78),shows:

Flight Dateof
Segmentorleg Carrier
No. Departure
1.Manilato
PAL 300A March30
Hongkong
2.Hongkongto VN(Air
693 March31
Saigon Vietnam)
AF(Air
3.SaigontoBeirut 245 March31
France)

28Petitioner'sbrief,p.50seealsoid.,pp.37and46.

29Id.,p.103.

30Ibid.,p.102.

31Article 2220, Civil Code reads: "Willful injury to property may be a legal ground for awarding moral
damages if the court should find that, under the circumstances, such damages are justly due. The same
ruleappliestobreachesofcontractwherethedefendantactedfraudulentlyorinbadfaith."

32R.A.,p.24emphasissupplied.

33R.A.,P.5secondcauseofaction.

34Copelandvs.Dunehooetal.,138S.E.,267,270.Seealso25C.J.S.,pp.75875915Am.Jur.,pp.766
767.
35StatementofAttorneyVillegasforrespondentCarrascosoinopencourt.Respondent'sbrief,p.33.

36Section 5, Rule 10, Rules of Court, in part reads: "SEC. 5. Amendment to conform to or authorize
presentationofevidence.Whenissuesnotraisedbythepleadingsaretriedbyexpressorimpliedconsent
of the parties, they shall be treated in all respects, as if they had been raised in the pleadings. Such
amendmentofthepleadingsasmaybenecessarytocausethemtoconformtotheevidenceandtoraise
these issues may be made upon motion of any party at any time, even after judgment but failure so to
amenddoesnotaffecttheresultofthetrialoftheseissues..."CoTiamcovs.Diaz,etc.,etal.,75Phil.672,
679J.M.Tuason&Co.,Inc.,etc.vs.Bolanos,95Phil.106,110.
37Decision,CourtofAppeals,AppendixAofpetitioner'sbrief,pp.147148.

38DecisionoftheCourtofAppeals,AppendixAofpetitioner'sbrief,pp.147151.

39Words&Phrases,Perm.Ed.,Vol.5,p.13,citingWarfieldNaturalGasCo.vs.Allen,59S.W.(2d)534,
538.

40R.A.,p.74emphasissupplied.

41Article2180,CivilCode.

42PhilippineRefiningCo.vs.Garcia,etal.,L21871andL21962,September27,1966.

43SeeSection4,Chapter3,TitleVIII,CivilCode.

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444R.C.L.,pp.11741175.

45An air carrier is a common carrier and air transportation is similar or analogous to land and water
transportation.Mendozavs.PhilippineAirLines,Inc.,90Phil.836,841842.
46AustroAmericanS.S.Co.vs.Thomas,248F.231.

47Id.,p.233.

48Lipmanvs.AtlanticCoastLineR.Co.,93S.E.714,716.

49Petitioner'sbrief,pp,104105.

49aVMoran,CommentsontheRulesofCourt,1963ed.,p.76.

50Section36,Rule130,RulesofCourt.

51IVMartin,RulesofCourtinthePhilippines,1963ed.,p.324.

52Ibid.

53Article2232,CivilCode.

54Article2229,CivilCode.

55Article2208,(1)and(11),CivilCode.

56Coleongco vs. Claparols, L18616, March 31, 1964 Corpus vs. Cuaderno, et al., L23721, March 31,
1965.

57Cf. Yutuk vs. Manila Electric Company, L13016, May 31, 1961 Lopez et al. vs. Pan American World
Airways,L22415,March30,1966.

TheLawphilProjectArellanoLawFoundation

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