1. Dangwa Transportation Co., Inc. vs.

Court of Appeals

G.R. No. 95582, 202 SCRA 574 , October 07, 1991 Not satisfied therewith, private respondents appealed to the Court of Appeals
which, in a decision 3 in CA-G.R. CV No. 19504 promulgated on August 14,
REGALADO, J.: 1990, set aside the decision of the lower court, and ordered petitioners to pay
private respondents:
On May 13, 1985, private respondents filed a complaint 1 for damages
against petitioners for the death of Pedrito Cudiamat as a result of a
vehicular accident which occurred on March 25, 1985 at Marivic, Sapid,
Mankayan, Benguet. Among others, it was alleged that on said date, while 1. The sum of Thirty Thousand (P30,000.00) Pesos by way of
petitioner Theodore M. Lardizabal was driving a passenger bus belonging to indemnity for death of the victim Pedrito Cudiamat;
petitioner corporation in a reckless and imprudent manner and without due
regard to traffic rules and regulations and safety to persons and property, it
ran over its passenger, Pedrito Cudiamat. However, instead of bringing
Pedrito immediately to the nearest hospital, the said driver, in utter bad faith 2. The sum of Twenty Thousand (P20,000.00) by way of moral
and without regard to the welfare of the victim, first brought his other damages;
passengers and cargo to their respective destinations before banging said
victim to the Lepanto Hospital where he expired.
3. The sum of Two Hundred Eighty Eight Thousand (P288,000.00)
Pesos as actual and compensatory damages;
On the other hand, petitioners alleged that they had observed and continued
to observe the extraordinary diligence required in the operation of the
transportation company and the supervision of the employees, even as they
4. The costs of this suit. 4
add that they are not absolute insurers of the safety of the public at large.
Further, it was alleged that it was the victim's own carelessness and
negligence which gave rise to the subject incident, hence they prayed for the
dismissal of the complaint plus an award of damages in their favor by way of Petitioners' motion for reconsideration was denied by the Court of Appeals in
a counterclaim. its resolution dated October 4, 1990, 5 hence this petition with the central
issue herein being whether respondent court erred in reversing the decision
of the trial court and in finding petitioners negligent and liable for the
damages claimed.
On July 29, 1988, the trial court rendered a decision, effectively in favor of
petitioners, with this decretal portion:

It is an established principle that the factual findings of the Court of Appeals

as a rule are final and may not be reviewed by this Court on appeal.
IN VIEW OF ALL THE FOREGOING, judgment is hereby pronounced that
However, this is subject to settled exceptions, one of which is when the
Pedrito Cudiamat was negligent, which negligence was the proximate cause
findings of the appellate court are contrary to those of the trial court, in which
of his death. Nonetheless, defendants in equity, are hereby ordered to pay
case a reexamination of the facts and evidence may be undertaken. 6
the heirs of Pedrito Cudiamat the sum of P10,000.00 which approximates the
amount defendants initially offered said heirs for the amicable settlement of
the case. No costs.
In the case at bar, the trial court and the Court of Appeal have discordant
positions as to who between the petitioners an the victim is guilty of
negligence. Perforce, we have had to conduct an evaluation of the evidence
SO ORDERED. 2
in this case for the prope calibration of their conflicting factual findings and
legal conclusions.
The lower court, in declaring that the victim was negligent, made the
following findings:
because of a drizzle. The defendants-appellees utterly failed to observe their
duty and obligation as common carrier to the end that they should observe
extra-ordinary diligence in the vigilance over the goods and for the safety of
the passengers transported by them according to the circumstances of each
case (Article 1733, New Civil Code). 8

After a careful review of the evidence on record, we find no reason to disturb

the above holding of the Court of Appeals. Its aforesaid findings are
This Court is satisfied that Pedrito Cudiamat was negligent in trying to board supported by the testimony of petitioners' own witnesses. One of them,
a moving vehicle, especially with one of his hands holding an umbrella. And, Virginia Abalos, testified on cross-examination as follows:
without having given the driver or the conductor any indication that he wishes
to board the bus. But defendants can also be found wanting of the necessary
diligence. In this connection, it is safe to assume that when the deceased
Cudiamat attempted to board defendants' bus, the vehicle's door was open Q It is not a fact Madam witness, that at bunkhouse 54, that is before the
instead of being closed. This should be so, for it is hard to believe that one place of the incident, there is a crossing?
would even attempt to board a vehicle (i)n motion if the door of said vehicle is
closed. Here lies the defendant's lack of diligence. Under such
circumstances, equity demands that there must be something given to the
heirs of the victim to assuage their feelings. This, also considering that A The way going to the mines but it is not being pass(ed) by the bus.
initially, defendant common carrier had made overtures to amicably settle the
case. It did offer a certain monetary consideration to the victim's heirs. 7
Q And the incident happened before bunkhouse 56, is that not correct?

However, respondent court, in arriving at a different opinion, declares that:

A It happened between 54 and 53 bunkhouses. 9

From the testimony of appellees'own witness in the person of Vitaliano

Safarita, it is evident that the subject bus was at full stop when the victim
The bus conductor, Martin Anglog, also declared:
Pedrito Cudiamat boarded the same as it was precisely on this instance
where a certain Miss Abenoja alighted from the bus. Moreover, contrary to
the assertion of the appellees, the victim did indicate his intention to board
the bus as can be seen from the testimony of the said witness when he Q When you arrived at Lepanto on March 25, 1985, will you please inform
declared that Pedrito Cudiamat was no longer walking and made a sign to this Honorable Court if there was anv unusual incident that occurred?
board the bus when the latter was still at a distance from him. It was at the
instance when Pedrito Cudiamat was closing his umbrella at the platform of
the bus when the latter made a sudden jerk movement (as) the driver
commenced to accelerate the bus. A When we delivered a baggage at Marivic because a person alighted there
between Bunkhouse 53 and 54.

Evidently, the incident took place due to the gross negligence of the
appellee-driver in prematurely stepping on the accelerator and in not waiting Q What happened when you delivered this passenger at this particular place
for the passenger to first secure his seat especially so when we take into in Lepanto?
account that the platform of the bus was at the time slippery and wet

A When we reached the place, a passenger alighted and I signalled my
driver. When we stopped we went out because I saw an umbrella about a
split second and I signalled again the driver, so the driver stopped and we
went down and we saw Pedrito Cudiamat asking for help because he was
lying down.
Q How far away was this certain person, Pedrito Cudiamat, when you saw
him lying down — from the bus how far was he?
A It is about two to three meters.
Q On what direction of the bus was he found about three meters from the
bus, was it at the front or at the back?
A At the back, sir. 10 (Emphasis supplied.)
The foregoing testimonies show that the place of the accident and the place
where one of the passengers alighted were both between Bunkhouses 53
and 54, hence the finding of the Court of Appeals that the bus was at full stop
when the victim boarded the same is correct. They further confirm the
conclusion that the victim fell from the platform of the bus when it suddenly
accelerated forward and was run over by the rear right tires of the vehicle, as
shown by the physical evidence on where he was thereafter found in relation
to the bus when it stopped. Under such circumstances, it cannot be said that
the deceased was guilty of negligence.
The contention of petitioners that the driver and the conductor had no
knowledge that the victim would ride on the bus, since the latter had
supposedly not manifested his intention to board the same, does not merit
consideration. When the bus is not in motion there is no necessity for a
person who wants to ride the same to signal his intention to board. A public
utility bus, once it stops, is in effect making a continuous offer to bus riders.
Hence, it becomes the duty of the driver and the conductor, every time the
bus stops, to do no act that would have the effect of increasing the peril to a
passenger while he was attempting to board the same. The premature
acceleration of the bus in this case was a breach of such duty. 11
It is the duty of common carriers of passengers, including common carriers
by railroad train, streetcar, or motorbus, to stop their conveyances a
reasonable length of time in order to afford passengers an opportunity to
board and enter, and they are liable for injuries suffered by boarding
passengers resulting from the sudden starting up or jerking of their
conveyances while they are doing so. 12
Further, even assuming that the bus was moving, the act of the victim in
boarding the same cannot be considered negligent under the circumstances.
As clearly explained in the testimony of the aforestated witness for
petitioners, Virginia Abalos, th bus had "just started" and "was still in slow
motion" at the point where the victim had boarded and was on its platform.
13
It is not negligence per se, or as a matter of law, for one attempt to board a
train or streetcar which is moving slowly. 14 An ordinarily prudent person
would have made the attempt board the moving conveyance under the same
or similar circumstances. The fact that passengers board and alight from
slowly moving vehicle is a matter of common experience both the driver and
conductor in this case could not have been unaware of such an ordinary
practice.
The victim herein, by stepping and standing on the platform of the bus, is
already considered a passenger and is entitled all the rights and protection
pertaining to such a contractual relation. Hence, it has been held that the
duty which the carrier passengers owes to its patrons extends to persons
boarding cars as well as to those alighting therefrom. 15
Common carriers, from the nature of their business and reasons of public
policy, are bound to observe extraordina diligence for the safety of the
passengers transported by the according to all the circumstances of each
case. 16 A common carrier is bound to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence very
cautious persons, with a due regard for all the circumstances. 17
 Q Why, what happened to your refrigerator at that particular time?

It has also been repeatedly held that in an action based on a contract of

carriage, the court need not make an express finding of fault or negligence
on the part of the carrier in order to hold it responsible to pay the damages A I asked them to bring it down because that is the nearest place to our
sought by the passenger. By contract of carriage, the carrier assumes the house and when I went down and asked somebody to bring down the
express obligation to transport the passenger to his destination safely and refrigerator, I also asked somebody to call the family of Mr. Cudiamat.
observe extraordinary diligence with a due regard for all the circumstances,
and any injury that might be suffered by the passenger is right away
attributable to the fault or negligence of the carrier. This is an exception to
the general rule that negligence must be proved, and it is therefore COURT:
incumbent upon the carrier to prove that it has exercised extraordinary
diligence as prescribed in Articles 1733 and 1755 of the Civil Code. 18
Q Why did you ask somebody to call the family of Mr. Cudiamat?

Moreover, the circumstances under which the driver and the conductor failed
to bring the gravely injured victim immediately to the hospital for medical A Because Mr. Cudiamat met an accident, so I ask somebody to call
treatment is a patent and incontrovertible proof of their negligence. It defies for the family of Mr. Cudiamat.
understanding and can even be stigmatized as callous indifference. The
evidence shows that after the accident the bus could have forthwith turned at
Bunk 56 and thence to the hospital, but its driver instead opted to first
proceed to Bunk 70 to allow a passenger to alight and to deliver a Q But nobody ask(ed) you to call for the family of Mr. Cudiamat?
refrigerator, despite the serious condition of the victim. The vacuous reason
given by petitioners that it was the wife of the deceased who caused the
delay was tersely and correctly confuted by respondent court:
A No sir. 21

... The pretension of the appellees that the delay was due to the fact that they
had to wait for about twenty minutes for Inocencia Cudiamat to get dressed
deserves scant consideration. It is rather scandalous and deplorable for a
wife whose husband is at the verge of dying to have the luxury of dressing
herself up for about twenty minutes before attending to help her distressed
and helpless husband. 19
Further, it cannot be said that the main intention of petitioner Lardizabal in
going to Bunk 70 was to inform the victim's family of the mishap, since it was
not said bus driver nor the conductor but the companion of the victim who
informed his family thereof. 20 In fact, it was only after the refrigerator was
unloaded that one of the passengers thought of sending somebody to the
house of the victim, as shown by the testimony of Virginia Abalos again, to
wit:
With respect to the award of damages, an oversight was, however,
committed by respondent Court of Appeals in computing the actual damages
based on the gross income of the victim. The rule is that the amount
recoverable by the heirs of a victim of a tort is not the loss of the entire
earnings, but rather the loss of that portion of the earnings which the
beneficiary would have received. In other words, only net earnings, not gross
earnings, are to be considered, that is, the total of the earnings less
expenses necessary in the creation of such earnings or income and minus
living and other incidental expenses. 22
We are of the opinion that the deductible living and other expense of the
deceased may fairly and reasonably be fixed at P500.00 a month or
P6,000.00 a year. In adjudicating the actual or compensatory damages,
respondent court found that the deceased was 48 years old, in good health
with a remaining productive life expectancy of 12 years, and then earning
P24,000.00 a year. Using the gross annual income as the basis, and
multiplying the same by 12 years, it accordingly awarded P288,000. Applying
the aforestated rule on computation based on the net earnings, said award
must be, as it hereby is, rectified and reduced to P216,000.00. However, in
accordance with prevailing jurisprudence, the death indemnity is hereby
increased to P50,000.00. 23
WHEREFORE, subject to the above modifications, the challenged judgment
and resolution of respondent Court of Appeals are hereby AFFIRMED in all
other respects.
SO ORDERED.
2. Loadstar Shipping Co., Inc. vs. Court of Appeals
G.R. No. 131621, 315 SCRA 339 , September 28, 1999
DAVIDE, JR., C.J.:
Petitioner Loadstar Shipping Co., Inc. (hereafter LOADSTAR), in this petition
for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure,
seeks to reverse and set aside the following: (a) the 30 January 1997
decision 1 of the Court of Appeals in CA-G.R. CV No. 36401, which affirmed
the decision of 4 October 1991 2 of the Regional Trial Court of Manila,
Branch 16, in Civil Case No. 85-29110, ordering LOADSTAR to pay private
respondent Manila Insurance Co. (hereafter MIC) the amount of P6,067,178,
with legal interest from the filing of the compliant until fully paid, P8,000 as
attorney's fees, and the costs of the suit; and (b) its resolution of 19
November 1997, 3 denying LOADSTAR's motion for reconsideration of said
decision.
The facts are undisputed.1âwphi1.nêt
On 19 November 1984, LOADSTAR received on board its M/V "Cherokee"
(hereafter, the vessel) the following goods for shipment:
a) 705 bales of lawanit hardwood;
b) 27 boxes and crates of tilewood assemblies and the others ;and
c) 49 bundles of mouldings R & W (3) Apitong Bolidenized.
The goods, amounting to P6,067,178, were insured for the same amount
with MIC against various risks including "TOTAL LOSS BY TOTAL OF THE
LOSS THE VESSEL." The vessel, in turn, was insured by Prudential
Guarantee & Assurance, Inc. (hereafter PGAI) for P4 million. On 20
November 1984, on its way to Manila from the port of Nasipit, Agusan del
Norte, the vessel, along with its cargo, sank off Limasawa Island. As a result
of the total loss of its shipment, the consignee made a claim with LOADSTAR
which, however, ignored the same. As the insurer, MIC paid P6,075,000 to
the insured in full settlement of its claim, and the latter executed a
subrogation receipt therefor.
On 4 February 1985, MIC filed a complaint against LOADSTAR and PGAI,
alleging that the sinking of the vessel was due to the fault and negligence of
LOADSTAR and its employees. It also prayed that PGAI be ordered to pay
the insurance proceeds from the loss the vessel directly to MIC, said amount
to be deducted from MIC's claim from LOADSTAR.
In its answer, LOADSTAR denied any liability for the loss of the shipper's
goods and claimed that sinking of its vessel was due to force majeure. PGAI,
on the other hand, averred that MIC had no cause of action against it,
LOADSTAR being the party insured. In any event, PGAI was later dropped
as a party defendant after it paid the insurance proceeds to LOADSTAR.
As stated at the outset, the court a quo rendered judgment in favor of MIC,
prompting LOADSTAR to elevate the matter to the court of Appeals, which,
however, agreed with the trial court and affirmed its decision in toto.
In dismissing LOADSTAR's appeal, the appellate court made the following
observations:
1) LOADSTAR cannot be considered a private carrier on the sole
ground that there was a single shipper on that fateful voyage. The court
noted that the charter of the vessel was limited to the ship, but LOADSTAR
retained control over its crew. 4

2) As a common carrier, it is the Code of Commerce, not the Civil
Code, which should be applied in determining the rights and liabilities of the
parties.
3) The vessel was not seaworthy because it was undermanned on the
day of the voyage. If it had been seaworthy, it could have withstood the
"natural and inevitable action of the sea" on 20 November 1984, when the
condition of the sea was moderate. The vessel sank, not because of force
majeure, but because it was not seaworthy. LOADSTAR'S allegation that the
sinking was probably due to the "convergence of the winds," as stated by a
PAGASA expert, was not duly proven at the trial. The "limited liability" rule,
therefore, is not applicable considering that, in this case, there was an actual
finding of negligence on the part of the carrier.5
4) Between MIC and LOADSTAR, the provisions of the Bill of Lading do
not apply because said provisions bind only the shipper/consignee and the
carrier. When MIC paid the shipper for the goods insured, it was subrogated
to the latter's rights as against the carrier, LOADSTAR. 6
5) There was a clear breach of the contract of carriage when the
shipper's goods never reached their destination. LOADSTAR's defense of
"diligence of a good father of a family" in the training and selection of its crew
is unavailing because this is not a proper or complete defense in culpa
contractual.
6) "Art. 361 (of the Code of Commerce) has been judicially construed to
mean that when goods are delivered on board a ship in good order and
condition, and the shipowner delivers them to the shipper in bad order and
condition, it then devolves upon the shipowner to both allege and prove that
the goods were damaged by reason of some fact which legally exempts him
from liability." Transportation of the merchandise at the risk and venture of
the shipper means that the latter bears the risk of loss or deterioration of his
goods arising from fortuitous events, force majeure, or the inherent nature
and defects of the goods, but not those caused by the presumed negligence
or fault of the carrier, unless otherwise proved. 7
The errors assigned by LOADSTAR boil down to a determination of the
following issues:
(1) Is the M/V "Cherokee" a private or a common carrier?
(2) Did LOADSTAR observe due and/or ordinary diligence in these
premises.
Regarding the first issue, LOADSTAR submits that the vessel was a private
carrier because it was not issued certificate of public convenience, it did not
have a regular trip or schedule nor a fixed route, and there was only "one
shipper, one consignee for a special cargo."
In refutation, MIC argues that the issue as to the classification of the M/V
"Cherokee" was not timely raised below; hence, it is barred by estoppel.
While it is true that the vessel had on board only the cargo of wood products
for delivery to one consignee, it was also carrying passengers as part of its
regular business. Moreover, the bills of lading in this case made no mention
of any charter party but only a statement that the vessel was a "general
cargo carrier." Neither was there any "special arrangement" between
LOADSTAR and the shipper regarding the shipment of the cargo. The
singular fact that the vessel was carrying a particular type of cargo for one
shipper is not sufficient to convert the vessel into a private carrier.
As regards the second error, LOADSTAR argues that as a private carrier, it
cannot be presumed to have been negligent, and the burden of proving
otherwise devolved upon MIC. 8
LOADSTAR also maintains that the vessel was seaworthy. Before the fateful
voyage on 19 November 1984, the vessel was allegedly dry docked at
Keppel Philippines Shipyard and was duly inspected by the maritime safety
engineers of the Philippine Coast Guard, who certified that the ship was fit to
undertake a voyage. Its crew at the time was experienced, licensed and
unquestionably competent. With all these precautions, there could be no
other conclusion except that LOADSTAR exercised the diligence of a good
father of a family in ensuring the vessel's seaworthiness.
LOADSTAR further claims that it was not responsible for the loss of the
cargo, such loss being due to force majeure. It points out that when the
vessel left Nasipit, Agusan del Norte, on 19 November 1984, the weather
was fine until the next day when the vessel sank due to strong waves. MCI's
witness, Gracelia Tapel, fully established the existence of two typhoons,
"WELFRING" and "YOLING," inside the Philippine area of responsibility. In
fact, on 20 November 1984, signal no. 1 was declared over Eastern Visayas,
which includes Limasawa Island. Tapel also testified that the convergence of
winds brought about by these two typhoons strengthened wind velocity in the
area, naturally producing strong waves and winds, in turn, causing the vessel
to list and eventually sink.
LOADSTAR goes on to argue that, being a private carrier, any agreement
limiting its liability, such as what transpired in this case, is valid. Since the
cargo was being shipped at "owner's risk," LOADSTAR was not liable for any
loss or damage to the same. Therefore, the Court of Appeals erred in holding
that the provisions of the bills of lading apply only to the shipper and the
carrier, and not to the insurer of the goods, which conclusion runs counter to
the Supreme Court's ruling in the case of St. Paul Fire & Marine Co. v.
Macondray & Co., Inc., 9 and National Union Fire Insurance Company of
Pittsburgh v. Stolt-Nielsen Phils., Inc. 10
Finally, LOADSTAR avers that MIC's claim had already prescribed, the case
having been instituted beyond the period stated in the bills of lading for
instituting the same — suits based upon claims arising from shortage,
damage, or non-delivery of shipment shall be instituted within sixty days from
the accrual of the right of action. The vessel sank on 20 November 1984; yet,
the case for recovery was filed only on 4 February 1985.
MIC, on the other hand, claims that LOADSTAR was liable, notwithstanding
that the loss of the cargo was due to force majeure, because the same
concurred with LOADSTAR's fault or negligence.
Secondly, LOADSTAR did not raise the issue of prescription in the court
below; hence, the same must be deemed waived.
Thirdly, the " limited liability " theory is not applicable in the case at bar
because LOADSTAR was at fault or negligent, and because it failed to
maintain a seaworthy vessel. Authorizing the voyage notwithstanding its
knowledge of a typhoon is tantamount to negligence.
We find no merit in this petition.
Anent the first assigned error, we hold that LOADSTAR is a common carrier.
It is not necessary that the carrier be issued a certificate of public
convenience, and this public character is not altered by the fact that the
carriage of the goods in question was periodic, occasional, episodic or
unscheduled.
In support of its position, LOADSTAR relied on the 1968 case of Home
Insurance Co. v. American Steamship Agencies, Inc., 11 where this Court
held that a common carrier transporting special cargo or chartering the
vessel to a special person becomes a private carrier that is not subject to the
provisions of the Civil Code. Any stipulation in the charter party absolving the
owner from liability for loss due to the negligence of its agent is void only if
the strict policy governing common carriers is upheld. Such policy has no
force where the public at is not involved, as in the case of a ship totally
chartered for the use of a single party. LOADSTAR also cited Valenzuela
Hardwood and Industrial Supply, Inc. v. Court of Appeals 12 and National
Steel Corp. v. Court of Appeals, 13 both of which upheld the Home Insurance
doctrine.
These cases invoked by LOADSTAR are not applicable in the case at bar for
the simple reason that the factual settings are different. The records do not
disclose that the M/V "Cherokee," on the date in question, undertook to carry
a special cargo or was chartered to a special person only. There was no
charter party. The bills of lading failed to show any special arrangement, but
only a general provision to the effect that the M/V"Cherokee" was a "general
cargo carrier." 14 Further, the bare fact that the vessel was carrying a
particular type of cargo for one shipper, which appears to be purely
coincidental, is not reason enough to convert the vessel from a common to a
private carrier, especially where, as in this case, it was shown that the vessel
was also carrying passengers.
Under the facts and circumstances obtaining in this case, LOADSTAR fits the
definition of a common carrier under Article 1732 of the Civil Code. In the
case of De Guzman v. Court of Appeals,15 the Court juxtaposed the
statutory definition of "common carriers" with the peculiar circumstances of
that case, viz.:
The Civil Code defines "common carriers" in the following terms:
Art. 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting passengers
or goods or both, by land, water, or air for compensation, offering their
services to the public.
The above article makes no distinction between one whose principal
business activity is the carrying of persons or goods or both, and one who
does such carrying only as ancillary activity (in local idiom, as "a sideline".
Article 1732 also carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled basis and
one offering such service on an occasional, episodic or unscheduled basis.
Neither does Article 1732 distinguish between a carrier offering its services to
the "general public," i.e., the general community or population, and one who
offers services or solicits business only from a narrow segment of the general
population. We think that Article 1733 deliberately refrained from making
such distinctions.
xxx xxx xxx
It appears to the Court that private respondent is properly characterized as a
common carrier even though he merely "back-hauled" goods for other
merchants from Manila to Pangasinan, although such backhauling was done
on a periodic or occasional rather than regular or scheduled manner, and
eventhough private respondent's principal occupation was not the carriage of
goods for others. There is no dispute that private respondent charged his
customers a fee for hauling their goods; that fee frequently fell below
commercial freight rates is not relevant here.
The Court of Appeals referred to the fact that private respondent held no
certificate of public convenience, and concluded he was not a common
carrier. This is palpable error. A certificate of public convenience is not a
requisite for the incurring of liability under the Civil Code provisions governing
common carriers. That liability arises the moment a person or firm acts as a
common carrier, without regard to whether or not such carrier has also
complied with the requirements of the applicable regulatory statute and
implementing regulations and has been granted a certificate of public
convenience or other franchise. To exempt private respondent from the
liabilities of a common carrier because he has not secured the necessary
certificate of public convenience, would be offensive to sound public policy;
that would be to reward private respondent precisely for failing to comply with
applicable statutory requirements The business of a common carrier
impinges directly and intimately upon the safety and well being and property
of those members of the general community who happen to deal with such
carrier. The law imposes duties and liabilities upon common carriers for the
safety and protection of those who utilize their services and the law cannot
allow a common carrier to render such duties and liabilities merely facultative
by simply failing to obtain the necessary permits and authorizations.
Moving on to the second assigned error, we find that the M/V "Cherokee"
was not seaworthy when it embarked on its voyage on 19 November 1984.
The vessel was not even sufficiently manned at the time. "For a vessel to be
seaworthy, it must be adequately equipped for the voyage and manned with
a sufficient number of competent officers and crew. The failure of a common
carrier to maintain in seaworthy condition its vessel involved in a contract of
carriage is a clear breach of its duty prescribed in Article 1755 of the Civil
Code." 16
Neither do we agree with LOADSTAR's argument that the "limited liability"
theory should be applied in this case. The doctrine of limited liability does not
apply where there was negligence on the part of the vessel owner or agent.
17 LOADSTAR was at fault or negligent in not maintaining a seaworthy
vessel and in having allowed its vessel to sail despite knowledge of an
approaching typhoon. In any event, it did not sink because of any storm that
may be deemed as force majeure, inasmuch as the wind condition in the
performance of its duties, LOADSTAR cannot hide behind the "limited
liability" doctrine to escape responsibility for the loss of the vessel and its
cargo.
LOADSTAR also claims that the Court of Appeals erred in holding it liable for
the loss of the goods, in utter disregard of this Court's pronouncements in St.
Paul Fire & Marine Ins. Co. v. Macondray & Co., Inc., 18 and National Union
Fire Insurance v. Stolt-Nielsen Phils., Inc. 19 It was ruled in these two cases
that after paying the claim of the insured for damages under the insurance
policy, the insurer is subrogated merely to the rights of the assured, that is, it
can recover only the amount that may, in turn, be recovered by the latter.
Since the right of the assured in case of loss or damage to the goods is
limited or restricted by the provisions in the bills of lading, a suit by the
insurer as subrogee is necessarily subject to the same limitations and
restrictions. We do not agree. In the first place, the cases relied on by
LOADSTAR involved a limitation on the carrier's liability to an amount fixed in
the bill of lading which the parties may enter into, provided that the same was
freely and fairly agreed upon (Articles 1749-1750). On the other hand, the
stipulation in the case at bar effectively reduces the common carrier's liability
for the loss or destruction of the goods to a degree less than extraordinary
(Articles 1744 and 1745), that is, the carrier is not liable for any loss or
damage to shipments made at "owner's risk." Such stipulation is obviously
null and void for being contrary to public policy." 20 It has been said:
Three kinds of stipulations have often been made in a bill of lading. The first
one exempting the carrier from any and all liability for loss or damage
occasioned by its own negligence. The second is one providing for an
unqualified limitation of such liability to an agreed valuation. And the third is
one limiting the liability of the carrier to an agreed valuation unless the
shipper declares a higher value and pays a higher rate of. freight. According
to an almost uniform weight of authority, the first and second kinds of
stipulations are invalid as being contrary to public policy, but the third is valid
and enforceable. 21
Since the stipulation in question is null and void, it follows that when MIC
paid the shipper, it was subrogated to all the rights which the latter has
against the common carrier, LOADSTAR.
Neither is there merit to the contention that the claim in this case was barred
by prescription. MIC's cause of action had not yet prescribed at the time it
was concerned. Inasmuch as neither the Civil Code nor the Code of
Commerce states a specific prescriptive period on the matter, the Carriage of
Goods by Sea Act (COGSA) — which provides for a one-year period of
limitation on claims for loss of, or damage to, cargoes sustained during
transit — may be applied suppletorily to the case at bar. This one-year
prescriptive period also applies to the insurer of the goods. 22 In this case,
the period for filing the action for recovery has not yet elapsed. Moreover, a
stipulation reducing the one-year period is null and void; 23 it must,
accordingly, be struck down.
WHEREFORE, the instant petition is DENIED and the challenged decision of
30 January 1997 of the Court of Appeals in CA-G.R. CV No. 36401 is
AFFIRMED. Costs against petitioner.1âwphi1.nêt
SO ORDERED.
3. La Mallorca vs. Court of Appeals, et al.
G.R. No. L-20761, 17 SCRA 739 , July 27, 1966
BARRERA, J.:
La Mallorca seeks the review of the decision of the Court of Appeals in CA-
G.R. No. 23267-R, holding it liable for quasi-delict and ordering it to pay to
respondents Mariano Beltran, et al., P6,000.00 for the death of his minor
daughter Raquel Beltran, plus P400.00 as actual damages.
The facts of the case as found by the Court of Appeals, briefly are:
On December 20, 1953, at about noontime, plaintiffs, husband and wife,
together with their minor daughters, namely, Milagros, 13 years old, Raquel,
about 4½ years old, and Fe, over 2 years old, boarded the Pambusco Bus
No. 352, bearing plate TPU No. 757 (1953 Pampanga), owned and operated
by the defendant, at San Fernando, Pampanga, bound for Anao, Mexico,
Pampanga. At the time, they were carrying with them four pieces of
baggages containing their personal belonging. The conductor of the bus, who
happened to be a half-brother of plaintiff Mariano Beltran, issued three tickets
(Exhs. A, B, & C) covering the full fares of the plaintiff and their eldest child,
Milagros. No fare was charged on Raquel and Fe, since both were below the
height at which fare is charged in accordance with the appellant's rules and
regulations.
After about an hour's trip, the bus reached Anao whereat it stopped to allow
the passengers bound therefor, among whom were the plaintiffs and their
children to get off. With respect to the group of the plaintiffs, Mariano Beltran,
then carrying some of their baggages, was the first to get down the bus,
followed by his wife and his children. Mariano led his companions to a
shaded spot on the left pedestrians side of the road about four or five meters
away from the vehicle. Afterwards, he returned to the bus in controversy to
get his other bayong, which he had left behind, but in so doing, his daughter
Raquel followed him, unnoticed by her father. While said Mariano Beltran
was on the running board of the bus waiting for the conductor to hand him his
bayong which he left under one of its seats near the door, the bus, whose
motor was not shut off while unloading, suddenly started moving forward,
evidently to resume its trip, notwithstanding the fact that the conductor has
not given the driver the customary signal to start, since said conductor was
still attending to the baggage left behind by Mariano Beltran. Incidentally,
when the bus was again placed into a complete stop, it had travelled about
ten meters from the point where the plaintiffs had gotten off.
Sensing that the bus was again in motion, Mariano Beltran immediately
jumped from the running board without getting his bayong from the
conductor. He landed on the side of the road almost in front of the shaded
place where he left his wife and children. At that precise time, he saw people
beginning to gather around the body of a child lying prostrate on the ground,
her skull crushed, and without life. The child was none other than his
daughter Raquel, who was run over by the bus in which she rode earlier
together with her parents.
For the death of their said child, the plaintiffs commenced the present suit
against the defendant seeking to recover from the latter an aggregate
amount of P16,000 to cover moral damages and actual damages sustained
as a result thereof and attorney's fees. After trial on the merits, the court
below rendered the judgment in question.
On the basis of these facts, the trial court found defendant liable for breach of
contract of carriage and sentenced it to pay P3,000.00 for the death of the
child and P400.00 as compensatory damages representing burial expenses
and costs.
On appeal to the Court of Appeals, La Mallorca claimed that there could not
be a breach of contract in the case, for the reason that when the child met
her death, she was no longer a passenger of the bus involved in the incident
and, therefore, the contract of carriage had already terminated. Although the
Court of Appeals sustained this theory, it nevertheless found the defendant-
appellant guilty of quasi-delict and held the latter liable for damages, for the
negligence of its driver, in accordance with Article 2180 of the Civil Code.
And, the Court of Appeals did not only find the petitioner liable, but increased
the damages awarded the plaintiffs-appellees to P6,000.00, instead of
P3,000.00 granted by the trial court.
In its brief before us, La Mallorca contends that the Court of Appeals erred
(1) in holding it liable for quasi-delict, considering that respondents complaint
was one for breach of contract, and (2) in raising the award of damages from
P3,000.00 to P6,000.00 although respondents did not appeal from the
decision of the lower court.
Under the facts as found by the Court of Appeals, we have to sustain the
judgement holding petitioner liable for damages for the death of the child,
Raquel Beltran. It may be pointed out that although it is true that respondent
Mariano Beltran, his wife, and their children (including the deceased child)
had alighted from the bus at a place designated for disembarking or
unloading of passengers, it was also established that the father had to return
to the vehicle (which was still at a stop) to get one of his bags or bayong that
was left under one of the seats of the bus. There can be no controversy that
as far as the father is concerned, when he returned to the bus for his bayong
which was not unloaded, the relation of passenger and carrier between him
and the petitioner remained subsisting. For, the relation of carrier and
passenger does not necessarily cease where the latter, after alighting from
the car, aids the carrier's servant or employee in removing his baggage from
the car.1 The issue to be determined here is whether as to the child, who
was already led by the father to a place about 5 meters away from the bus,
the liability of the carrier for her safety under the contract of carriage also
persisted.
It has been recognized as a rule that the relation of carrier and passenger
does not cease at the moment the passenger alights from the carrier's
vehicle at a place selected by the carrier at the point of destination, but
continues until the passenger has had a reasonable time or a reasonable
opportunity to leave the carrier's premises. And, what is a reasonable time or
a reasonable delay within this rule is to be determined from all the
circumstances. Thus, a person who, after alighting from a train, walks along
the station platform is considered still a passenger.2 So also, where a
passenger has alighted at his destination and is proceeding by the usual way
to leave the company's premises, but before actually doing so is halted by
the report that his brother, a fellow passenger, has been shot, and he in good
faith and without intent of engaging in the difficulty, returns to relieve his
brother, he is deemed reasonably and necessarily delayed and thus
continues to be a passenger entitled as such to the protection of the railroad
and company and its agents.3
In the present case, the father returned to the bus to get one of his baggages
which was not unloaded when they alighted from the bus. Raquel, the child
that she was, must have followed the father. However, although the father
was still on the running board of the bus awaiting for the conductor to hand
him the bag or bayong, the bus started to run, so that even he (the father)
had to jump down from the moving vehicle. It was at this instance that the
child, who must be near the bus, was run over and killed. In the
circumstances, it cannot be claimed that the carrier's agent had exercised
the "utmost diligence" of a "very cautions person" required by Article 1755 of
the Civil Code to be observed by a common carrier in the discharge of its
obligation to transport safely its passengers. In the first place, the driver,
although stopping the bus, nevertheless did not put off the engine. Secondly,
he started to run the bus even before the bus conductor gave him the signal
to go and while the latter was still unloading part of the baggages of the
passengers Mariano Beltran and family. The presence of said passengers
near the bus was not unreasonable and they are, therefore, to be considered
still as passengers of the carrier, entitled to the protection under their
contract of carriage.
But even assuming arguendo that the contract of carriage has already
terminated, herein petitioner can be held liable for the negligence of its driver,
as ruled by the Court of Appeals, pursuant to Article 2180 of the Civil Code.
Paragraph 7 of the complaint, which reads —
That aside from the aforesaid breach of contract, the death of Raquel
Beltran, plaintiffs' daughter, was caused by the negligence and want of
exercise of the utmost diligence of a very cautious person on the part of the
defendants and their agent, necessary to transport plaintiffs and their
daughter safely as far as human care and foresight can provide in the
operation of their vehicle.
is clearly an allegation for quasi-delict. The inclusion of this averment for
quasi-delict, while incompatible with the other claim under the contract of
carriage, is permissible under Section 2 of Rule 8 of the New Rules of Court,
which allows a plaintiff to allege causes of action in the alternative, be they
compatible with each other or not, to the end that the real matter in
controversy may be resolved and determined.4
The plaintiffs sufficiently pleaded the culpa or negligence upon which the
claim was predicated when it was alleged in the complaint that "the death of
Raquel Beltran, plaintiffs' daughter, was caused by the negligence and want
of exercise of the utmost diligence of a very cautious person on the part of
the defendants and their agent." This allegation was also proved when it was
established during the trial that the driver, even before receiving the proper
signal from the conductor, and while there were still persons on the running
board of the bus and near it, started to run off the vehicle. The presentation
of proof of the negligence of its employee gave rise to the presumption that
the defendant employer did not exercise the diligence of a good father of the
family in the selection and supervision of its employees. And this
presumption, as the Court of Appeals found, petitioner had failed to
overcome. Consequently, petitioner must be adjudged peculiarily liable for
the death of the child Raquel Beltran.
The increase of the award of damages from P3,000.00 to P6,000.00 by the
Court of Appeals, however, cannot be sustained. Generally, the appellate
court can only pass upon and consider questions or issues raised and
argued in appellant's brief. Plaintiffs did not appeal from that portion of the
judgment of the trial court awarding them on P3,000.00 damages for the
death of their daughter. Neither does it appear that, as appellees in the Court
of Appeals, plaintiffs have pointed out in their brief the inadequacy of the
award, or that the inclusion of the figure P3,000.00 was merely a clerical
error, in order that the matter may be treated as an exception to the general
rule.5 Herein petitioner's contention, therefore, that the Court of Appeals
committed error in raising the amount of the award for damages is, evidently,
meritorious.1äwphï1.ñët
Wherefore, the decision of the Court of Appeals is hereby modified by
sentencing, the petitioner to pay to the respondents Mariano Beltran, et al.,
the sum of P3,000.00 for the death of the child, Raquel Beltran, and the
amount of P400.00 as actual damages. No costs in this instance. So
ordered.

4. Villanueva vs. Domingo
G.R. No. 144274, 438 SCRA 485 , September 20, 2004
CORONA, J.:
This is a petition to review the decision1 of the Court of Appeals in CA-G.R.
CV No. 52203 affirming in turn the decision of the trial court finding petitioner
liable to respondent for damages. The dispositive portion read:
WHEREFORE, the appealed decision is hereby AFFIRMED except
the award of attorney’s fees including appearance fees which is
DELETED.
SO ORDERED.2
The facts of the case, as summarized by the Court of Appeals, are as
follows:
[Respondent] Priscilla R. Domingo is the registered owner of a silver
Mitsubishi Lancer Car model 1980 bearing plate No. NDW 781 ’91
with [co-respondent] Leandro Luis R. Domingo as authorized driver.
[Petitioner] Nostradamus Villanueva was then the registered "owner"
of a green Mitsubishi Lancer bearing Plate No. PHK 201 ’91.
On 22 October 1991 at about 9:45 in the evening, following a green
traffic light, [respondent] Priscilla Domingo’s silver Lancer car with
Plate No. NDW 781 ’91 then driven by [co-respondent] Leandro Luis
R. Domingo was cruising along the middle lane of South
Superhighway at moderate speed from north to south. Suddenly, a
green Mitsubishi Lancer with plate No. PHK 201 ’91 driven by
Renato Dela Cruz Ocfemia darted from Vito Cruz Street towards the
South Superhighway directly into the path of NDW 781 ’91 thereby
hitting and bumping its left front portion. As a result of the impact,
NDW 781 ’91 hit two (2) parked vehicles at the roadside, the second
hitting another parked car in front of it.
Per Traffic Accident Report prepared by Traffic Investigator Pfc.
Patrocinio N. Acido, Renato dela Cruz Ocfemia was driving with
expired license and positive for alcoholic breath. Hence, Manila
Assistant City Prosecutor Oscar A. Pascua recommended the filing
of information for reckless imprudence resulting to (sic) damage to
property and physical injuries.
The original complaint was amended twice: first, impleading Auto
Palace Car Exchange as commercial agent and/or buyer-seller and
second, impleading Albert Jaucian as principal defendant doing
business under the name and style of Auto Palace Car Exchange.
Except for Ocfemia, all the defendants filed separate answers to the
complaint. [Petitioner] Nostradamus Villanueva claimed that he was
no longer the owner of the car at the time of the mishap because it
was swapped with a Pajero owned by Albert Jaucian/Auto Palace
Car Exchange. For her part, Linda Gonzales declared that her
presence at the scene of the accident was upon the request of the
actual owner of the Mitsubishi Lancer (PHK 201 ’91) [Albert Jaucian]
for whom she had been working as agent/seller. On the other hand,
Auto Palace Car Exchange represented by Albert Jaucian claimed
that he was not the registered owner of the car. Moreover, it could
not be held subsidiary liable as employer of Ocfemia because the
latter was off-duty as utility employee at the time of the incident.
Neither was Ocfemia performing a duty related to his employment.3
After trial, the trial court found petitioner liable and ordered him to pay
respondent actual, moral and exemplary damages plus appearance and
attorney’s fees:
WHEREFORE, judgment is hereby rendered for the plaintiffs,
ordering Nostradamus Villanueva to pay the amount of ₱99,580 as
actual damages, ₱25,000.00 as moral damages, ₱25,000.00 as
exemplary damages and attorney’s fees in the amount of ₱10,000.00
plus appearance fees of ₱500.00 per hearing with legal interest
counted from the date of judgment. In conformity with the law on
equity and in accordance with the ruling in First Malayan Lending
and Finance Corporation vs. Court of Appeals (supra), Albert
Jaucian is hereby ordered to indemnify Nostradamus Villanueva for
whatever amount the latter is hereby ordered to pay under the
judgment.
SO ORDERED.4
The CA upheld the trial court’s decision but deleted the award for
appearance and attorney’s fees because the justification for the grant was
not stated in the body of the decision. Thus, this petition for review which
raises a singular issue:
 MAY THE REGISTERED OWNER OF A MOTOR VEHICLE BE
HELD LIABLE FOR DAMAGES ARISING FROM A VEHICULAR
ACCIDENT INVOLVING HIS MOTOR VEHICLE WHILE BEING
OPERATED BY THE EMPLOYEE OF ITS BUYER WITHOUT THE
LATTER’S CONSENT AND KNOWLEDGE?5
Yes.
We have consistently ruled that the registered owner of any vehicle is directly
and primarily responsible to the public and third persons while it is being
operated.6 The rationale behind such doctrine was explained way back in
1957 in Erezo vs. Jepte7:
The principle upon which this doctrine is based is that in dealing with vehicles
registered under the Public Service Law, the public has the right to assume
or presume that the registered owner is the actual owner thereof, for it would
be difficult for the public to enforce the actions that they may have for injuries
caused to them by the vehicles being negligently operated if the public
should be required to prove who the actual owner is. How would the public or
third persons know against whom to enforce their rights in case of
subsequent transfers of the vehicles? We do not imply by his doctrine,
however, that the registered owner may not recover whatever amount he had
paid by virtue of his liability to third persons from the person to whom he had
actually sold, assigned or conveyed the vehicle.
Under the same principle the registered owner of any vehicle, even if
not used for a public service, should primarily be responsible to the
public or to third persons for injuries caused the latter while the
vehicle is being driven on the highways or streets. The members of
the Court are in agreement that the defendant-appellant should be
held liable to plaintiff-appellee for the injuries occasioned to the latter
because of the negligence of the driver, even if the defendant-
appellant was no longer the owner of the vehicle at the time of the
damage because he had previously sold it to another. What is the
legal basis for his (defendant-appellant’s) liability?
There is a presumption that the owner of the guilty vehicle is the defendant-
appellant as he is the registered owner in the Motor Vehicles Office. Should
he not be allowed to prove the truth, that he had sold it to another and thus
shift the responsibility for the injury to the real and actual owner? The
defendant holds the affirmative of this proposition; the trial court held the
negative.
The Revised Motor Vehicle Law (Act No. 3992, as amended) provides that
no vehicle may be used or operated upon any public highway unless the
same is property registered. It has been stated that the system of licensing
and the requirement that each machine must carry a registration number,
conspicuously displayed, is one of the precautions taken to reduce the
danger of injury to pedestrians and other travelers from the careless
management of automobiles. And to furnish a means of ascertaining the
identity of persons violating the laws and ordinances, regulating the speed
and operation of machines upon the highways (2 R.C.L. 1176). Not only are
vehicles to be registered and that no motor vehicles are to be used or
operated without being properly registered for the current year, but that
dealers in motor vehicles shall furnish thee Motor Vehicles Office a report
showing the name and address of each purchaser of motor vehicle during
the previous month and the manufacturer’s serial number and motor number.
(Section 5(c), Act No. 3992, as amended.)
Registration is required not to make said registration the operative act by
which ownership in vehicles is transferred, as in land registration cases,
because the administrative proceeding of registration does not bear any
essential relation to the contract of sale between the parties (Chinchilla vs.
Rafael and Verdaguer, 39 Phil. 888), but to permit the use and operation of
the vehicle upon any public highway (section 5 [a], Act No. 3992, as
amended). The main aim of motor vehicle registration is to identify the owner
so that if any accident happens, or that any damage or injury is caused by
the vehicle on the public highways, responsibility therefore can be fixed on a
definite individual, the registered owner. Instances are numerous where
vehicles running on public highways caused accidents or injuries to
pedestrians or other vehicles without positive identification of the owner or
drivers, or with very scant means of identification. It is to forestall these
circumstances, so inconvenient or prejudicial to the public, that the motor
vehicle registration is primarily ordained, in the interest of the determination
of persons responsible for damages or injuries caused on public highways:
One of the principal purposes of motor vehicles legislation is identification of
the vehicle and of the operator, in case of accident; and another is that the
knowledge that means of detection are always available may act as a
deterrent from lax observance of the law and of the rules of conservative and
safe operation. Whatever purpose there may be in these statutes, it is
subordinate at the last to the primary purpose of rendering it certain that the
violator of the law or of the rules of safety shall not escape because of lack of
means to discover him. The purpose of the statute is thwarted, and the
displayed number becomes a "share and delusion," if courts would entertain
such defenses as that put forward by appellee in this case. No responsible
person or corporation could be held liable for the most outrageous acts of
negligence, if they should be allowed to pace a "middleman" between them
and the public, and escape liability by the manner in which they recompense
servants. (King vs. Brenham Automobile Co., Inc. 145 S.W. 278, 279.)
With the above policy in mind, the question that defendant-appellant poses
is: should not the registered owner be allowed at the trial to prove who the
actual and real owner is, and in accordance with such proof escape or evade
responsibility by and lay the same on the person actually owning the vehicle?
We hold with the trial court that the law does not allow him to do so; the law,
with its aim and policy in mind, does not relieve him directly of the
responsibility that the law fixes and places upon him as an incident or
consequence of registration. Were a registered owner allowed to evade
responsibility by proving who the supposed transferee or owner is, it would
be easy for him, by collusion with others or otherwise, to escape said
responsibility and transfer the same to an indefinite person, or to one who
possesses no property with which to respond financially for the damage or
injury done. A victim of recklessness on the public highways is usually
without means to discover or identify the person actually causing the injury or
damage. He has no means other than by a recourse to the registration in the
Motor Vehicles Office to determine who is the owner. The protection that the
law aims to extend to him would
become illusory were the registered owner given the opportunity to escape
liability by disproving his ownership. If the policy of the law is to be enforced
and carried out, the registered owner should not be allowed to prove the
contrary to the prejudice of the person injured, that is, to prove that a third
person or another has become the owner, so that he may thereby be relieved
of the responsibility to the injured person.
The above policy and application of the law may appear quite harsh and
would seem to conflict with truth and justice. We do not think it is so. A
registered owner who has already sold or transferred a vehicle has the
recourse to a third-party complaint, in the same action brought against him to
recover for the damage or injury done, against the vendee or transferee of
the vehicle. The inconvenience of the suit is no justification for relieving him
of liability; said inconvenience is the price he pays for failure to comply with
the registration that the law demands and requires.
In synthesis, we hold that the registered owner, the defendant-appellant
herein, is primarily responsible for the damage caused to the vehicle of the
plaintiff-appellee, but he (defendant-appellant) has a right to be indemnified
by the real or actual owner of the amount that he may be required to pay as
damage for the injury caused to the plaintiff-appellant.8
Petitioner insists that he is not liable for damages since the driver of the
vehicle at the time of the accident was not an authorized driver of the new
(actual) owner of the vehicle. He claims that the ruling in First Malayan
Leasing and Finance Corporation vs. CA9 implies that to hold the registered
owner liable for damages, the driver of the vehicle must have been
authorized, allowed and permitted by its actual owner to operate and drive it.
Thus, if the vehicle is driven without the knowledge and consent of the actual
owner, then the registered owner cannot be held liable for damages.
He further argues that this was the underlying theory behind Duavit vs.
CA10 wherein the court absolved the registered owner from liability after
finding that the vehicle was virtually stolen from the owner’s garage by a
person who was neither authorized nor employed by the owner. Petitioner
concludes that the ruling in Duavit and not the one in First Malayan should be
applicable to him.
Petitioner’s argument lacks merit. Whether the driver is authorized or not by
the actual owner is irrelevant to determining the liability of the registered
owner who the law holds primarily and directly responsible for any accident,
injury or death caused by the operation of the vehicle in the streets and
highways. To require the driver of the vehicle to be authorized by
the actual owner before the registered owner can be held accountable is to
defeat the very purpose why motor vehicle legislations are enacted in the first
place.
Furthermore, there is nothing in First Malayan which even remotely suggests
that the driver must be authorized before the registered owner can be held
accountable. In First Malayan, the registered owner, First Malayan
Corporation, was held liable for damages arising from the accident even if
the vehicle involved was already owned by another party:
This Court has consistently ruled that regardless of who
the actual owner is of a motor vehicle might be, the registered owner
is the operator of the same with respect to the public and third
persons, and as such, directly and primarily responsible for the
consequences of its operation. In contemplation of law, the
owner/operator of record is the employer of the driver, the actual
operator and employer being considered merely as his agent (MYC-
Agro-Industrial Corporation vs. Vda. de Caldo, 132 SCRA 10,
citing Vargas vs. Langcay, 6 SCRA 174; Tamayo vs. Aquino, 105
Phil. 949).
‘We believe that it is immaterial whether or not the driver was
actually employed by the operator of record. It is even not
necessary to prove who the actual owner of the vehicle and
the employer of the driver is. Granting that, in this case, the
father of the driver is the actual owner and that he is the
actual employer, following the well-settled principle that the
operator of record continues to be the operator of the vehicle
in contemplation of law, as regards the public and third
person, and as such is responsible for the consequences
 incident to its operation, we must hold and consider such
owner-operator of record as the employer, in contemplation
of law, of the driver. And, to give effect to this policy of law
as enunciated in the above cited decisions of this Court, we
must now extend the same and consider the actual operator
and employer as the agent of the operator of record.’11
Contrary to petitioner’s position, the First Malayan ruling is applicable to him
since the case involves the same set of facts ― the registered owner had
previously sold the vehicle to someone else and was being driven by an
employee of the new (actual) owner. Duavit is inapplicable since the vehicle
there was not transferred to another; the registered and the actual owner was
one and the same person. Besides, in Duavit, the defense of the registered
owner, Gilberto Duavit, was that the vehicle was practically stolen from his
garage by Oscar Sabiano, as affirmed by the latter:
Defendant Sabiano, in his testimony, categorically admitted that he
took the jeep from the garage of defendant Duavit without the
consent and authority of the latter. He testified further that Duavit
even filed charges against him for the theft of the jeep but which
Duavit did not push through as his (Sabiano’s) parents apologized to
Duavit on his behalf.12
As correctly pointed out by the CA, the Duavit ruling is not applicable to
petitioner’s case since the circumstance of unauthorized use was not
present. He in fact voluntarily delivered his car to Albert Jaucian as part of
the downpayment for a vehicle he purchased from Jaucian. Thus, he could
not claim that the vehicle was stolen from him since he voluntarily ceded
possession thereof to Jaucian. It was the latter, as the new (actual) owner,
who could have raised the defense of theft to prove that he was not liable for
the acts of his employee Ocfemia. Thus, there is no reason to apply
the Duavit ruling to this case.
The ruling in First Malayan has been reiterated in BA Finance Corporation
vs. CA13 and more recently in Aguilar, Sr. vs. Commercial Savings
Bank.14 In BA Finance, we held the registered owner liable even if, at the
time of the accident, the vehicle was leased by another party and was driven
by the lessee’s employee. In Aguilar, the registered owner-bank answered
for damages for the accident even if the vehicle was being driven by the
Vice-President of the Bank in his private capacity and not as an officer of the
Bank, as claimed by the Bank. We find no reason to deviate from these
decisions.
The main purpose of vehicle registration is the easy identification of the
owner who can be held responsible for any accident, damage or injury
caused by the vehicle. Easy identification prevents inconvenience and
prejudice to a third party injured by one who is unknown or unidentified. To
allow a registered owner to escape liability by claiming that the driver was not
authorized by the new (actual) owner results in the public detriment the law
seeks to avoid.
Finally, the issue of whether or not the driver of the vehicle during the
accident was authorized is not at all relevant to determining the liability of the
registered owner. This must be so if we are to comply with the rationale and
principle behind the registration requirement under the motor vehicle law.
WHEREFORE, the petition is hereby DENIED. The January 26, 2000
decision of the Court of Appeals is AFFIRMED.
SO ORDERED.
5. Equitable Leasing Corporation vs. Suyom
G.R. No. 143360, 388 SCRA 445 , September 05, 2002
PANGANIBAN, J.:
In an action based on quasi delict, the registered owner of a motor
vehicle is solidarily liable for the injuries and damages caused by the
negligence of the driver, in spite of the fact that the vehicle may have already
been the subject of an unregistered Deed of Sale in favor of another
person. Unless registered with the Land Transportation Office, the sale --
while valid and binding between the parties -- does not affect third parties,
especially the victims of accidents involving the said transport
equipment. Thus, in the present case, petitioner, which is the registered
owner, is liable for the acts of the driver employed by its former lessee who
has become the owner of that vehicle by virtue of an unregistered Deed of
Sale.
Statement of the Case
Before us is a Petition for Review under Rule 45 of the Rules of Court,
assailing the May 12, 2000 Decision[1] of the Court of Appeals[2] (CA) in CA-
GR CV No. 55474. The decretal portion of the Decision reads as follows:
WHEREFORE, premises considered, the instant appeal is On July 17, 1994, a Fuso Road Tractor driven by Raul Tutor rammed
hereby DISMISSED for lack of merit. The assailed decision, dated May 5, into the house cum store of Myrna Tamayo located at Pier 18, Vitas, Tondo,
1997, of the Regional Trial Court of Manila, Branch 14, in Civil Case No. 95- Manila. A portion of the house was destroyed. Pinned to death under the
73522, is hereby AFFIRMED with MODIFICATION that the award of engine of the tractor were Respondent Myrna Tamayos son, Reniel Tamayo,
attorneys fees is DELETED.[3] and Respondent Felix Oledans daughter, Felmarie Oledan. Injured were
Respondent Oledan himself, Respondent Marissa Enano, and two sons of
On the other hand, in Civil Case No. 95-73522, the Regional Trial Court Respondent Lucita Suyom.
(RTC) of Manila (Branch 14) had earlier disposed in this wise: Tutor was charged with and later convicted of reckless imprudence
resulting in multiple homicide and multiple physical injuries in Criminal Case
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and No. 296094-SA, Metropolitan Trial Court of Manila, Branch 12.[5]
against the defendant Equitable Leasing Corporation ordering said defendant
to pay to the plaintiffs the following: Upon verification with the Land Transportation Office, respondents were
furnished a copy of Official Receipt No. 62204139[6] and Certificate of
A. TO MYRNA TAMAYO Registration No. 08262797,[7] showing that the registered owner of the tractor
was Equitable Leasing Corporation/leased to Edwin Lim. On April 15, 1995,
respondents filed against Raul Tutor, Ecatine Corporation (Ecatine) and
1. the sum of P50,000.00 for the death of Reniel Tamayo; Equitable Leasing Corporation (Equitable) a Complaint[8] for damages
docketed as Civil Case No. 95-73522 in the RTC of Manila, Branch 14.
2. P50,000.00 as moral damages; and
The trial court, upon motion of plaintiffs counsel, issued an Order
3. P56,000.00 for the damage to the store and its contents, and funeral dropping Raul Tutor, Ecatine and Edwin Lim from the Complaint, because
expenses. they could not be located and served with summonses.[9] On the other hand,
in its Answer with Counterclaim,[10] petitioner alleged that the vehicle had
already been sold to Ecatine and that the former was no longer in possession
B. TO FELIX OLEDAN and control thereof at the time of the incident. It also claimed that Tutor was
an employee, not of Equitable, but of Ecatine.
1. the sum of P50,000.00 for the death of Felmarie Oledan;
After trial on the merits, the RTC rendered its Decision ordering
petitioner to pay actual and moral damages and attorneys fees to
2. P50,000.00 as moral damages; and
respondents. It held that since the Deed of Sale between petitioner and
Ecatine had not been registered with the Land Transportation Office (LTO),
3. P30,000.00 for medical expenses, and funeral expenses. the legal owner was still Equitable.[11] Thus, petitioner was liable to
respondents.[12]
C. TO MARISSA ENANO

1. P7,000.00 as actual damages Ruling of the Court of Appeals

D. TO LUCITA SUYOM
Sustaining the RTC, the CA held that petitioner was still to be legally
1. The sum of P5,000.00 for the medical treatment of her two sons. deemed the owner/operator of the tractor, even if that vehicle had been the
subject of a Deed of Sale in favor of Ecatine on December 9, 1992. The
The sum of P120,000.00 as and for attorneys fees.[4] reason cited by the CA was that the Certificate of Registration on file with the
LTO still remained in petitioners name.[13] In order that a transfer of
ownership of a motor vehicle can bind third persons, it must be duly recorded
in the LTO.[14]
The Facts
 The CA likewise upheld respondents claim for moral damages against
petitioner because the appellate court considered Tutor, the driver of the
tractor, to be an agent of the registered owner/operator.[15]
Hence, this Petition.[16]
Issues
In its Memorandum, petitioner raises the following issues for the Courts
consideration:
I conduct of the subordinate is direct and primary, but is subject to the defense
Whether or not the Court of Appeals and the trial court gravely erred when
they decided and held that petitioner [was] liable for damages suffered by
private respondents in an action based on quasi delict for the negligent acts
of a driver who [was] not the employee of the petitioner.
II
Whether or not the Court of Appeals and the trial court gravely erred when
they awarded moral damages to private respondents despite their failure to
prove that the injuries they suffered were brought by petitioners wrongful
act.[17]
This Courts Ruling
The Petition has no merit.
First Issue:
Liability for Wrongful Acts
Petitioner contends that it should not be held liable for the damages
sustained by respondents and that arose from the negligence of the driver of
the Fuso Road Tractor, which it had already sold to Ecatine at the time of the
accident. Not having employed Raul Tutor, the driver of the vehicle, it could
not have controlled or supervised him.[18]
We are not persuaded. In negligence cases, the aggrieved party may
sue the negligent party under (1) Article 100[19] of the Revised Penal Code,
for civil liability ex delicto; or (2) under Article 2176[20] of the Civil Code, for
civil liability ex quasi delicto.[21]
Furthermore, under Article 103 of the Revised Penal Code, employers
may be held subsidiarily liable for felonies committed by their employees in
the discharge of the latters duties.[22]This liability attaches when the
employees who are convicted of crimes committed in the performance of
their work are found to be insolvent and are thus unable to satisfy the civil
liability adjudged.[23]
On the other hand, under Article 2176 in relation to Article 2180 [24] of the
Civil Code, an action predicated on quasi delict may be instituted against the
employer for an employees act or omission. The liability for the negligent
of due diligence in the selection and supervision of the employee.[25]The
enforcement of the judgment against the employer for an action based on
Article 2176 does not require the employee to be insolvent, since the liability
of the former is solidary -- the latter being statutorily considered a joint
tortfeasor.[26] To sustain a claim based on quasi delict, the following
requisites must be proven: (a) damage suffered by the plaintiff, (b) fault or
negligence of the defendant, and (c) connection of cause and effect between
the fault or negligence of the defendant and the damage incurred by the
plaintiff.[27]
These two causes of action (ex delicto or ex quasi delicto) may be
availed of, subject to the caveat[28] that the offended party cannot recover
damages twice for the same act or omission or under both causes. [29] Since
these two civil liabilities are distinct and independent of each other, the failure
to recover in one will not necessarily preclude recovery in the other. [30]
In the instant case, respondents -- having failed to recover anything in
the criminal case -- elected to file a separate civil action for damages, based
on quasi delict under Article 2176 of the Civil Code. [31] The evidence is clear
that the deaths and the injuries suffered by respondents and their kins were
due to the fault of the driver of the Fuso tractor.
Dated June 4, 1991, the Lease Agreement[32] between petitioner and
Edwin Lim stipulated that it is the intention of the parties to enter into a
FINANCE LEASE AGREEMENT.[33] Under such scheme, ownership of the
subject tractor was to be registered in the name of petitioner, until the value
of the vehicle has been fully paid by Edwin Lim.[34] Further, in the Lease
Schedule,[35] the monthly rental for the tractor was stipulated, and the term of
the Lease was scheduled to expire on December 4, 1992. After a few
months, Lim completed the payments to cover the full price of the
tractor.[36] Thus, on December 9, 1992, a Deed of Sale[37] over the tractor was
executed by petitioner in favor of Ecatine represented by Edwin
Lim. However, the Deed was not registered with the LTO.
 We hold petitioner liable for the deaths and the injuries complained of,
because it was the registered owner of the tractor at the time of the accident
on July 17, 1994.[38] The Court has consistently ruled that, regardless of
sales made of a motor vehicle, the registered owner is the lawful operator
insofar as the public and third persons are concerned; consequently, it is
directly and primarily responsible for the consequences of its operation. [39] In
contemplation of law, the owner/operator of record is the employer of the
driver, the actual operator and employer being considered as merely
its agent.[40] The same principle applies even if the registered owner of any
vehicle does not use it for public service.[41]
Since Equitable remained the registered owner of the tractor, it could
not escape primary liability for the deaths and the injuries arising from the
negligence of the driver.[42]
The finance-lease agreement between Equitable on the one hand and
Lim or Ecatine on the other has already been superseded by the sale. In any
event, it does not bind third persons.The rationale for this rule has been aptly
explained in Erezo v. Jepte,[43] which we quote hereunder:
x x x. The main aim of motor vehicle registration is to identify the owner so
that if any accident happens, or that any damage or injury is caused by the
vehicle on the public highways, responsibility therefor can be fixed on a
definite individual, the registered owner. Instances are numerous where
vehicles running on public highways caused accidents or injuries to
pedestrians or other vehicles without positive identification of the owner or
drivers, or with very scant means of identification. It is to forestall these
circumstances, so inconvenient or prejudicial to the public, that the motor
vehicle registration is primarily ordained, in the interest of the determination
of persons responsible for damages or injuries caused on public highways.[44]
Further, petitioners insistence on FGU Insurance Corp. v. Court of
Appeals is misplaced.[45] First, in FGU Insurance, the registered vehicle
owner, which was engaged in a rent-a-car business, rented out the car. In
this case, the registered owner of the truck, which is engaged in the business
of financing motor vehicle acquisitions, has actually sold the truck to Ecatine,
which in turn employed Tutor. Second, in FGU Insurance, the registered
owner of the vehicle was not held responsible for the negligent acts of the
person who rented one of its cars, because Article 2180 of the Civil Code
was not applicable. We held that no vinculum juris as employer and
employee existed between the owner and the driver. [46] In this case, the
registered owner of the tractor is considered under the law to be the
employer of the driver, while the actual operator is deemed to be
its agent.[47] Thus, Equitable, the registered owner of the tractor, is -- for
purposes of the law on quasi delict -- the employer of Raul Tutor, the driver
of the tractor. Ecatine, Tutors actual employer, is deemed as merely an agent
of Equitable.[48]
True, the LTO Certificate of Registration, dated 5/31/91, qualifies the
name of the registered owner as EQUITABLE LEASING
CORPORATION/Leased to Edwin Lim. But the lease agreement between
Equitable and Lim has been overtaken by the Deed of Sale on December 9,
1992, between petitioner and Ecatine. While this Deed does not affect
respondents in this quasi delict suit, it definitely binds petitioner because,
unlike them, it is a party to it.
We must stress that the failure of Equitable and/or Ecatine to register
the sale with the LTO should not prejudice respondents, who have the legal
right to rely on the legal principle that the registered vehicle owner is liable for
the damages caused by the negligence of the driver. Petitioner cannot hide
behind its allegation that Tutor was the employee of Ecatine. This will
effectively prevent respondents from recovering their losses on the basis of
the inaction or fault of petitioner in failing to register the sale. The non-
registration is the fault of petitioner, which should thus face the legal
consequences thereof.
Second Issue:
Moral Damages
Petitioner further claims that it is not liable for moral damages, because
respondents failed to establish or show the causal connection or relation
between the factual basis of their claim and their wrongful act or omission, if
any. [49]
Moral damages are not punitive in nature, but are designed to
compensate[50] and alleviate in some way the physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation, and similar injury unjustly caused a
person.[51] Although incapable of pecuniary computation, moral damages
must nevertheless be somehow proportional to and in approximation of the
suffering inflicted.[52] This is so because moral damages are in the category
of an award designed to compensate the claimant for actual injury suffered,
not to impose a penalty on the wrongdoer.[53]
Viewed as an action for quasi delict, the present case falls squarely
within the purview of Article 2219 (2),[54] which provides for the payment of
moral damages in cases of quasi delict.[55] Having established the liability of
petitioner as the registered owner of the vehicle, [56] respondents have
satisfactorily shown the existence of the factual basis for the award [57] and its
causal connection to the acts of Raul Tutor, who is deemed as petitioners
employee.[58] Indeed, the damages and injuries suffered by respondents
were the proximate result of petitioners tortious act or omission.[59]
 Further, no proof of pecuniary loss is necessary in order that moral
damages may be awarded, the amount of indemnity being left to the
discretion of the court.[60] The evidence gives no ground for doubt that such
discretion was properly and judiciously exercised by the trial court. [61] The
award is in fact consistent with the rule that moral damages are not intended
to enrich the injured party, but to alleviate the moral suffering undergone by
that party by reason of the defendants culpable action. [62]
WHEREFORE, the Petition is DENIED and the assailed
Decision AFFIRMED. Costs against petitioner.
SO ORDERED.
6. FEB Leasing and Finance Corporation vs. Baylon
G.R. No. 181398, 653 SCRA 22 , June 29, 2011
CARPIO, J.:
The Case
This is a petition for review on certiorari1 of the 9 October 2007
Decision2 and the 18 January 2008 Resolution3 of the Court of Appeals in
CA-G.R. CV No. 81446. The 9 October 2007 Decision affirmed the 30
October 2003 Decision4 of the Regional Trial Court (Branch 35)
of Gapan City in Civil Case No. 2334 ordering petitioner to pay respondents
damages. The 18 January 2008 Resolution denied petitioners motion for
reconsideration.
The Facts
On 2 September 2000, an Isuzu oil tanker running along Del Monte Avenue
in Quezon City and bearing plate number TDY 712 hit Loretta
V. Baylon (Loretta), daughter of respondent spouses Sergio
P. Baylon and Maritess Villena-Baylon (spouses Baylon). At the time of the
accident, the oil tanker was registered5 in the name of petitioner FEB Leasing
and Finance Corporation6 (petitioner). The oil tanker was leased7 to BG
Hauler, Inc. (BG Hauler) and was being driven by the latters driver, Manuel
Y. Estilloso. The oil tanker was insured8 by FGU Insurance Corp. (FGU
Insurance).
The accident took place at around 2:00 p.m. as the oil tanker was coming
from Balintawak and heading towards Manila. Upon reaching the intersection
of Bonifacio Street and Del Monte Avenue, the oil tanker turned left. While
the driver of the oil tanker was executing a left turn side by side with another
vehicle towards Del Monte Avenue, the oil tanker hit Loretta who was then
crossing Del Monte Avenue coming from Mayon Street. Due to the strong
impact, Loretta was violently thrown away about three to five meters from the
point of impact. She fell to the ground unconscious. She was brought for
treatment to the Chinese General Hospital where she remained in a coma
until her death two days after.9
The spouses Baylon filed with the RTC (Branch 35) of Gapan City a
Complaint10 for damages against petitioner, BG Hauler, the driver, and FGU
Insurance. Petitioner filed its answer with compulsory counterclaim while
FGU Insurance filed its answer with counterclaim. On the other hand, BG
Hauler filed its answer with compulsory counterclaim and cross-claim against
FGU Insurance.
Petitioner claimed that the spouses Baylon had no cause of action against it
because under its lease contract with BG Hauler, petitioner was not liable for
any loss, damage, or injury that the leased oil tanker might cause. Petitioner
claimed that no employer-employee relationship existed between petitioner
and the driver.
BG Hauler alleged that neither do the spouses Baylon have a cause of action
against it since the oil tanker was not registered in its name. BG Hauler
contended that the victim was guilty of contributory negligence in crossing
the street. BG Hauler claimed that even if its driver was at fault, BG Hauler
exercised the diligence of a good father of a family in the selection and
supervision of its driver. BG Hauler also contended that FGU Insurance is
obliged to assume all liabilities arising from the use of the insured oil tanker.
For its part, FGU Insurance averred that the victim was guilty of contributory
negligence. FGU Insurance concluded that the spouses Baylon could not
expect to be paid the full amount of their claims. FGU Insurance pointed out
that the insurance policy covering the oil tanker limited any claim to a
maximum of P400,000.00.
During trial, FGU Insurance moved that (1) it be allowed to deposit in court
the amount of P450,000.00 in the joint names of the spouses Baylon,
petitioner, and BG Hauler and (2) it be released from further participating in
the proceedings. After the RTC granted the motion, FGU Insurance
deposited in the Branch Clerk of Court a check in the names of the
spouses Baylon, petitioner, and BG Hauler. The RTC then released FGU
Insurance from its contractual obligations under the insurance policy.
The Ruling of the RTC
After weighing the evidence submitted by the parties, the RTC found that the
death of Loretta was due to the negligent act of the driver. The RTC held that
BG Hauler, as the employer, was solidarily liable with the driver. The RTC
further held that petitioner, as the registered owner of the oil tanker, was
also solidarily liable.
The RTC found that since FGU Insurance already paid the amount
of P450,000.00 to the spouses Baylon, BG Hauler, and petitioner, the
insurers obligation has been satisfactorily fulfilled. The RTC thus dismissed
the cross-claim of BG Hauler against FGU Insurance. The decretal part of
the RTCs decision reads:
Wherefore, premises considered, judgment is hereby rendered in
favor of the plaintiffs and against defendants FEB Leasing (now BPI
Leasing), BG Hauler, and Manuel Estilloso, to wit:
1. Ordering the defendants, jointly and severally, to pay plaintiffs the
following:
a. the amount of P62,000.00 representing actual expenses incurred
by the plaintiffs;
b. the amount of P50,000.00 as moral damages;
c. the amount of P2,400,000.00 for loss of earning capacity of the
deceased victim, Loretta V. Baylon;
d. the sum of P50,000.00 for death indemnity;
e. the sum of P50,000.00 for and as attorneys fees; and
f. with costs against the defendants.
2. Ordering the dismissal of defendants counter-claim for lack of
merit and the cross claim of defendant BG Hauler against defendant
FGU Insurance.
SO ORDERED.11
Petitioner, BG Hauler, and the driver appealed the RTC Decision to the Court
of Appeals. Petitioner claimed that as financial lessor, it is exempt from
liability resulting from any loss, damage, or injury the oil tanker may cause
while being operated by BG Hauler as financial lessee.
On the other hand, BG Hauler and the driver alleged that no sufficient
evidence existed proving the driver to be at fault. They claimed that the RTC
erred in finding BG Hauler negligent despite the fact that it had exercised the
diligence of a good father of a family in the selection and supervision of its
driver and in the maintenance of its vehicles. They contended that petitioner,
as the registered owner of the oil tanker, should be solely liable for Lorettas
death.
The Ruling of the Court of Appeals
The Court of Appeals held that petitioner, BG Hauler, and the driver
are solidarily liable for damages arising from Lorettas death. Petitioners
liability arose from the fact that it was the registered owner of the oil tanker
while BG Haulers liability emanated from a provision in the lease contract
providing that the lessee shall be liable in case of any loss, damage, or injury
the leased oil tanker may cause.
Thus, the Court of Appeals affirmed the RTC Decision but with the
modification that the award of attorneys fees be deleted for being
speculative. The dispositive part of the appellate courts Decision reads:
WHEREFORE, in the light of the foregoing, the instant appeal is
DENIED. Consequently, the assailed Decision of the lower court is
AFFIRMED with the MODIFICATION that the award of attorneys
fees is DELETED.
IT IS SO ORDERED.12
Dissatisfied, petitioner and BG Hauler, joined by the driver, filed two separate
motions for reconsideration. In its 18 January 2008 Resolution, the Court of
Appeals denied both motions for lack of merit.
Unconvinced, petitioner alone filed with this Court the present petition for
review on certiorari impleading the spouses Baylon, BG Hauler, and the
driver as respondents.13
The Issue
The sole issue submitted for resolution is whether the registered owner of a
financially leased vehicle remains liable for loss, damage, or injury caused by
the vehicle notwithstanding an exemption provision in the financial lease
contract.
The Courts Ruling
Petitioner contends that the lease contract between BG Hauler and petitioner
specifically provides that BG Hauler shall be liable for any loss, damage, or
injury the leased oil tanker may cause even if petitioner is the registered
owner of the said oil tanker. Petitioner claims that the Court of Appeals erred
in holding petitioner solidarily liable with BG Hauler despite having found the
latter liable under the lease contract.
For their part, the spouses Baylon counter that the lease contract between
petitioner and BG Hauler cannot bind third parties like them. The
spouses Baylon maintain that the existence of the lease contract does not
relieve petitioner of direct responsibility as the registered owner of the oil
tanker that caused the death of their daughter.
On the other hand, BG Hauler and the driver argue that at the time petitioner
and BG Hauler entered into the lease contract, Republic Act No. 5980 14 was
still in effect. They point out that the amendatory law, Republic Act No.
8556,15 which exempts from liability in case of any loss, damage, or injury to
third persons the registered owners of vehicles financially leased to another,
was not yet enacted at that time.
In point is the 2008 case of PCI Leasing and Finance, Inc. v. UCPB General
Insurance Co., Inc.16 There, we held liable PCI Leasing and Finance, Inc.,
the registered owner of an 18-wheeler Fuso Tanker Truck leased to Superior
Gas & Equitable Co., Inc. (SUGECO) and being driven by the latters driver,
for damages arising from a collision. This despite an express provision in the
lease contract to the effect that the lessee, SUGECO, shall indemnify and
hold the registered owner free from any liabilities, damages, suits, claims, or
judgments arising from SUGECOs use of the leased motor vehicle.
In the instant case, Section 5.1 of the lease contract between petitioner and
BG Hauler provides:
Sec. 5.1. It is the principle of this Lease that while the title or
ownership of the EQUIPMENT, with all the rights consequent
thereof, are retained by the LESSOR, the risk of loss or damage of
the EQUIPMENT from whatever source arising, as well as any
liability resulting from the ownership, operation and/or
possession thereof, over and above those actually
compensated by insurance, are hereby transferred to and
assumed by the LESSEE hereunder which shall continue in full
force and effect.17 (Emphasis supplied)
If it so wishes, petitioner may proceed against BG Hauler to seek
enforcement of the latters contractual obligation under Section 5.1 of the
lease contract. In the present case, petitioner did not file a cross-claim
against BG Hauler. Hence, this Court cannot require BG Hauler to reimburse
petitioner for the latters liability to the spouses Baylon. However, as the
registered owner of the oil tanker, petitioner may not escape its liability to
third persons.
Under Section 5 of Republic Act No. 4136,18 as amended, all motor vehicles
used or operated on or upon any highway of the Philippines must be
registered with the Bureau of Land Transportation (now Land Transportation
Office) for the current year.19 Furthermore, any encumbrances of motor
vehicles must be recorded with the Land Transportation Office in order to be
valid against third parties.20
In accordance with the law on compulsory motor vehicle registration, this
Court has consistently ruled that, with respect to the public and third persons,
the registered owner of a motor vehicle is directly and primarily responsible
for the consequences of its operation regardless of who the actual vehicle
owner might be.21 Well-settled is the rule that the registered owner of the
vehicle is liable for quasi-delicts resulting from its use. Thus, even if the
vehicle has already been sold, leased, or transferred to another person at the
time the vehicle figured in an accident, the registered vehicle owner would
still be liable for damages caused by the accident. The sale, transfer or lease
of the vehicle, which is not registered with the Land Transportation Office, will
not bind third persons aggrieved in an accident involving the vehicle. The
compulsory motor vehicle registration underscores the importance of
registering the vehicle in the name of the actual owner.
The policy behind the rule is to enable the victim to find redress by the
expedient recourse of identifying the registered vehicle owner in the records
of the Land Transportation Office. The registered owner can be reimbursed
by the actual owner, lessee or transferee who is known to him. Unlike the
registered owner, the innocent victim is not privy to the lease, sale, transfer
or encumbrance of the vehicle. Hence, the victim should not be prejudiced by
the failure to register such transaction or encumbrance. As the Court held
in PCI Leasing:
The burden of registration of the lease contract is minuscule
compared to the chaos that may result if registered owners or
operators of vehicles are freed from such responsibility. Petitioner
pays the price for its failure to obey the law on compulsory
registration of motor vehicles for registration is a pre-requisite for any
person to even enjoy the privilege of putting a vehicle on public
roads.22
In the landmark case of Erezo v. Jepte,23 the Court succinctly laid down the
public policy behind the rule, thus:
The main aim of motor vehicle registration is to identify the owner so
that if any accident happens, or that any damage or injury is caused
by the vehicle on the public highways, responsibility thereforcan be
fixed on a definite individual, the registered owner. Instances are
numerous where vehicles running on public highways caused
accidents or injuries to pedestrians or other vehicles without positive
identification of the owner or drivers, or with very scant means of
 identification. It is to forestall these circumstances, so inconvenient
or prejudicial to the public, that the motor vehicle registration is
primarily ordained, in the interest of the determination of persons
responsible for damages or injuries caused on public highways.
xxx
to justify the award of P50,000attorneys fees to respondent spouses Baylon.
The award of attorneys fees must have some factual, legal and equitable
bases and cannot be left to speculations and conjectures. 25Consistent with
prevailing jurisprudence,26 attorneys fees as part of damages are awarded
only in the instances enumerated in Article 2208 of the Civil Code.27 Thus,
the award of attorneys fees is the exception rather than the rule. Attorneys
fees are not awarded every time a party prevails in a suit because of the
policy that no premium should be placed on the right to litigate.28

WHEREFORE, we DENY the petition. We AFFIRM the 9 October 2007

Were a registered owner allowed to evade responsibility by proving
who the supposed transferee or owner is, it would be easy for him, Decision and the 18 January 2008 Resolution of the Court of Appeals in CA-
G.R. CV No. 81446 affirming with modification the 30 October 2003 Decision
by collusion with others or, or otherwise, to escape said responsibility
of the Regional Trial Court (Branch 35) of Gapan City in Civil Case No. 2334
and transfer the same to an indefinite person, or to one who
ordering petitioner FEB Leasing and Finance Corporation, BG Hauler, Inc.,
possesses no property with which to respond financially for the
and driver Manuel Y. Estilloso to solidarily pay respondent spouses Sergio
damage or injury done. A victim of recklessness on the public
highways is usually without means to discover or identify the person P. Baylon and Maritess Villena-Baylon the following amounts:
actually causing the injury or damage. He has no means other than
by a recourse to the registration in the Motor Vehicles Office to
determine who is the owner. The protection that the law aims to
extend to him would become illusory were the registered owner a. P62,000.00 representing actual expenses incurred by the
given the opportunity to escape liability by disproving his ownership. plaintiffs;
If the policy of the law is to be enforced and carried out, the
registered owner should not be allowed to prove the contrary to the b. P50,000.00 as moral damages;
prejudice of the person injured, that is to prove that a third person or
another has become the owner, so that he may be thereby be
c. P2,400,000.00 for loss of earning capacity of the deceased victim,
relieved of the responsibility to the injured person.24 Loretta V. Baylon; and

d. P50,000.00 for death indemnity.

In this case, petitioner admits that it is the registered owner of the oil tanker
that figured in an accident causing the death of Loretta. As the registered
owner, it cannot escape liability for the loss arising out of negligence in the
operation of the oil tanker. Its liability remains even if at the time of the Costs against petitioner.
accident, the oil tanker was leased to BG Hauler and was being driven by the
latters driver, and despite a provision in the lease contract exonerating the SO ORDERED.
registered owner from liability.

As a final point, we agree with the Court of Appeals that the award of
attorneys fees by the RTC must be deleted for lack of basis. The RTC failed

7. Erezo, et al. vs. Jepte
G.R. No. L-9605, 102 Phil. 103 , September 30, 1957
LABRADOR, J.:
Appeal from a judgment of the Court of First Instance of Manila ordering
defendant to pay plaintiff Gaudioso Erezo P3,000 on the death of Ernesto
Erezo, son of plaintiff Gaudioso Erezo.
Defendant-appellant is the registered owner of a six by six truck bearing plate
No. TC-1253. On August, 9, 1949, while the same was being driven by
Rodolfo Espino y Garcia, it collided with a taxicab at the intersection of San
Andres and Dakota Streets, Manila. As the truck went off the street, it hit
Ernesto Erezo and another, and the former suffered injuries, as a result of
which he died. The driver was prosecuted for homicide through reckless
negligence in criminal case No. 10663 of the Court of First Instance of
Manila. The accused pleaded guilty and was sentenced to suffer
imprisonment and to pay the heirs of Ernesto Erezo the sum of P3,000. As
the amount of the judgment could not be enforced against him, plaintiff
brought this action against the registered owner of the truck, the defendant-
appellant. The circumstances material to the case are stated by the court in
its decision.
The defendant does not deny at the time of the fatal accident the
cargo truck driven by Rodolfo Espino y Garcia was registered in his
name. He, however, claims that the vehicle belonged to the Port
Brokerage, of which he was the broker at the time of the accident.
He explained, and his explanation was corroborated by Policarpio
Franco, the manager of the corporation, that the trucks of the
corporation were registered in his name as a convenient
arrangement so as to enable the corporation to pay the registration
fee with his backpay as a pre-war government employee. Franco,
however, admitted that the arrangement was not known to the Motor
Vehicle Office.
The trial court held that as the defendant-appellant represented himself to be
the owner of the truck and the Motor Vehicle Office, relying on his
representation, registered the vehicles in his name, the Government and all
persons affected by the representation had the right to rely on his declaration
of ownership and registration. It, therefore, held that the defendant-appellant
is liable because he cannot be permitted to repudiate his own declaration.
(Section 68 [a], Rule 123, and Art. 1431, New Civil Code.).
Against the judgment, the defendant has prosecuted this appeal claiming that
at the time of the accident the relation of employer and employee between
the driver and defendant-appellant was not established, it having been
proved at the trial that the owner of the truck was the Port Brokerage, of
which defendant-appellant was merely a broker. We find no merit or justice in
the above contention. In previous decisions, We already have held that the
registered owner of a certificate of public convenience is liable to the public
for the injuries or damages suffered by passengers or third persons caused
by the operation of said vehicle, even though the same had been transferred
to a third person. (Montoya vs. Ignacio, 94 Phil., 182, 50 Off. Gaz., 108;
Roque vs. Malibay Transit Inc.,1 G. R. No. L- 8561, November 18,1955; Vda.
de Medina vs. Cresencia, 99 Phil., 506, 52 Off. Gaz., [10], 4606.)The
principle upon which this doctrine is based is that in dealing with vehicles
registered under the Public Service Law, the public has the right to assume
or presume that the registered owner is the actual owner thereof, for it would
be difficult for the public to enforce the actions that they may have for injuries
caused to them by the vehicles being negligently operated if the public
should be required to prove who the actual owner is. How would the public or
third persons know against whom to enforce their rights in case of
subsequent transfers of the vehicles? We do not imply by this doctrine,
however, that the registered owner may not recover whatever amount he had
paid by virtue of his liability to third persons from the person to whom he had
actually sold, assigned or conveyed the vehicle.
Under the same principle the registered owner of any vehicle, even if not
used for a public service, should primarily be responsible to the public or to
third persons for injuries caused the latter while the vehicle is being driven on
the highways or streets. The members of the Court are in agreement that the
defendant-appellant should be held liable to plaintiff-appellee for the injuries
occasioned to the latter because of the negligence of the driver even if the
defendant-appellant was no longer the owner of the vehicle at the time of the
damage because he had previously sold it to another. What is the legal basis
for his (defendant-appellant's) liability?.
There is a presumption that the owner of the guilty vehicle is the defendant-
appellant as he is the registered owner in the Motor Vehicle Office. Should
he not be allowed to prove the truth, that he had sold it to another and thus
shift the responsibility for the injury to the real and actual owner? The
defendant holds the affirmative of this proposition; the trial court held the
negative.
The Revised Motor Vehicle Law (Act No. 3992, as amended) provides that
no vehicle may be used or operated upon any public highway unless the
same is properly registered. It has been stated that the system of licensing
and the requirement that each machine must carry a registration number,
conspicuously displayed, is one of the precautions taken to reduce the
danger of injury to pedestrians and other travelers from the careless
management of automobiles, and to furnish a means of ascertaining the
identity of persons violating the laws and ordinances, regulating the speed
and operation of machines upon the highways (2 R. C. L. 1176). Not only are
vehicles to be registered and that no motor vehicles are to be used or
operated without being properly registered for the current year, but that
dealers in motor vehicles shall furnish the Motor Vehicles Office a report
showing the name and address of each purchaser of motor vehicle during
the previous month and the manufacturer's serial number and motor number.
(Section 5 [c], Act. No. 3992, as amended.).
Registration is required not to make said registration the operative act by
which ownership in vehicles is transferred, as in land registration cases,
because the administrative proceeding of registration does not bear any
essential relation to the contract of sale between the parties (Chinchilla vs.
Rafael and Verdaguer, 39 Phil. 888), but to permit the use and operation of
the vehicle upon any public highway (section 5 [a], Act No. 3992, as
amended).The main aim of motor vehicle registration is to identify the owner
so that if any accident happens, or that any damage or injury is caused by
the vehicles on the public highways, responsibility therefore can be fixed on a
definite individual, the registered owner. Instances are numerous where
vehicles running on public highways caused accidents or injuries to
pedestrians or other vehicles without positive identification of the owner or
drivers, or with very scant means of identification. It is to forestall those
circumstances, so inconvenient or prejudicial to the public, that the motor
vehicle registration is primarily ordained, in the interest of the determination
of persons responsible for damages or injuries caused on public highways.
One of the principal purposes of motor vehicles legislation is
identification of the vehicle and of the operator, in case of accident;
and another is that the knowledge that means of detection are
always available may act as a deterrent from lax observance of the
law and of the rules of conservative and safe operation. Whatever
purpose there may be in these statutes, it is subordinate at the last to
the primary purpose of rendering it certain that the violator of the law
or of the rules of safety shall not escape because of lack of means to
discover him." The purpose of the statute is thwarted, and the
displayed number becomes a "snare and delusion," if courts will
entertain such defenses as that put forward by appellee in this case.
No responsible person or corporation could be held liable for the
most outrageous acts of negligence, if they should be allowed to
place a "middleman" between them and the public, and escape
liability by the manner in which they recompense their servants.
(King vs. Brenham Automobile Co., 145 S. W. 278,279.)
With the above policy in mind, the question that defendant-appellant poses
is: should not be registered owner be allowed at the trial to prove who the
actual and real owner is, and in accordance with such proof escape or evade
responsibility and lay the same on the person actually owning the vehicle?
We hold with the trial court that the laws does not allow him to do so; the law,
with its aim and policy in mind, does not relieve him directly of the
responsibility that the law fixes and places upon him as an incident or
consequence of registration. Were a registered owner allowed to evade
responsibility by proving who the supposed transferee or owner is, it would
be easy for him, by collusion with others or otherwise, to escape said
responsibility and transfer the same to an indefinite person, or to one who
possesses no property with which to respond financially for the damage or
injury done. A victim of recklessness on the public highways is usually
without means to discover or identify the person actually causing the injury or
damage. He has no means other than by a recourse to the registration in the
Motor Vehicles Office to determine who is the owner. The protection that the
law aims to extend to him would become illusory were the registered owner
given the opportunity to escape liability by disproving his ownership. If the
policy of the law is to be enforced and carried out, the registered owner
should be allowed to prove the contrary to the prejudice of the person injured
that is, to prove that a third person or another has become the owner, so that
he may thereby be relieved of the responsibility to the injured
person.1âwphïl.nêt
The above policy and application of the law may appear quite harsh and
would seem to conflict with truth and justice. We do not think it is so. A
registered owner who has already sold or transferred a vehicle has the
recourse to a third-party complaint, in the same action brought against him to
recover for the damage or injury done, against the vendee or transferee of
the vehicle. The inconvenience of the suit is no justification for relieving him
of liability; said inconvenience is the price he pays for failure to comply with
the registration that the law demands and requires.
In synthesis, we hold that the registered owner, the defendant-appellant
herein, is primarily responsible for the damage caused to the vehicle of the
plaintiff-appellee, but he (defendant-appellant) has a right to be indemnified
by the real or actual owner of the amount that he may be required to pay as
damage for the injury caused to the plaintiff-appellant.1âwphïl.nêt
Bengzon, Paras, C.J., Bautista Angelo, Concepcion, Reyes, J. B. L., and
Felix, JJ., concur.
Montemayor, J., concurs in the result.
8. Equitable Leasing Corporation vs. Suyom
G.R. No. 143360, 388 SCRA 445 , September 05, 2002
9. Caltex (Philippines), Inc. vs. Sulpicio Lines, Inc.
G.R. No. 131166, 315 SCRA 709 , September 30, 1999
PARDO, J.:
Is the charterer of a sea vessel liable for damages resulting from a
collision between the chartered vessel and a passenger ship?
When MT Vector left the port of Limay, Bataan, on December 19, 1987
carrying petroleum products of Caltex (Philippines), Inc. (hereinafter Caltex)
no one could have guessed that it would collide with MV Doa Paz, killing
almost all the passengers and crew members of both ships, and thus
resulting in one of the countrys worst maritime disasters.
The petition before us seeks to reverse the Court of Appeals
decision[1]holding petitioner jointly liable with the operator of MT Vector for
damages when the latter collided with Sulpicio Lines, Inc.s passenger ship
MV Doa Paz.
The facts are as follows:
On December 19, 1987, motor tanker MT Vector left Limay, Bataan, at
about 8:00 p.m., enroute to Masbate, loaded with 8,800 barrels of petroleum
products shipped by petitioner Caltex.[2] MT Vector is a tramping motor
tanker owned and operated by Vector Shipping Corporation, engaged in the
business of transporting fuel products such as gasoline, kerosene, diesel and
crude oil. During that particular voyage, the MT Vector carried on board
gasoline and other oil products owned by Caltex by virtue of a charter
contract between them.[3]
On December 20, 1987, at about 6:30 a.m., the passenger ship MV Doa
Paz left the port of Tacloban headed for Manila with a complement of 59
crew members including the master and his officers, and passengers totaling
1,493 as indicated in the Coast Guard Clearance.[4] The MV Doa Paz is a
passenger and cargo vessel owned and operated by Sulpicio Lines, Inc.
plying the route of Manila/ Tacloban/ Catbalogan/ Manila/ Catbalogan/
Tacloban/ Manila, making trips twice a week.
At about 10:30 p.m. of December 20, 1987, the two vessels collided in
the open sea within the vicinity of Dumali Point between Marinduque and
Oriental Mindoro. All the crewmembers of MV Doa Paz died, while the two
survivors from MT Vector claimed that they were sleeping at the time of the
incident.
The MV Doa Paz carried an estimated 4,000 passengers; many indeed,
were not in the passenger manifest. Only 24 survived the tragedy after
having been rescued from the burning waters by vessels that responded to
distress calls.[5] Among those who perished were public school teacher
Sebastian Caezal (47 years old) and his daughter Corazon Caezal (11 years
old), both unmanifested passengers but proved to be on board the vessel.
On March 22, 1988, the board of marine inquiry in BMI Case No. 653-87
after investigation found that the MT Vector, its registered operator Francisco
Soriano, and its owner and actual operator Vector Shipping Corporation,
were at fault and responsible for its collision with MV Doa Paz.[6]
On February 13, 1989, Teresita Caezal and Sotera E. Caezal,
Sebastian Caezals wife and mother respectively, filed with the Regional Trial
Court, Branch 8, Manila, a complaint for Damages Arising from Breach of
Contract of Carriage against Sulpicio Lines, Inc. (hereafter Sulpicio). Sulpicio,
in turn, filed a third party complaint against Francisco Soriano, Vector
Shipping Corporation and Caltex (Philippines), Inc. Sulpicio alleged that
Caltex chartered MT Vector with gross and evident bad faith knowing fully
well that MT Vector was improperly manned, ill-equipped, unseaworthy and a
hazard to safe navigation; as a result, it rammed against MV Doa Paz in the
open sea setting MT Vectors highly flammable cargo ablaze.
On September 15, 1992, the trial court rendered decision dismissing the
third party complaint against petitioner. The dispositive portion reads:
WHEREFORE, judgement is hereby rendered in favor of plaintiffs and
against defendant-3rd party plaintiff Sulpicio Lines, Inc., to wit:
1. For the death of Sebastian E. Caezal and his 11-year old daughter
Corazon G. Caezal, including loss of future earnings of said Sebastian, moral
and exemplary damages, attorneys fees, in the total amount of P
1,241,287.44 and finally;
2. The statutory costs of the proceedings.
Likewise, the 3rd party complaint is hereby DISMISSED for want of
substantiation and with costs against the 3rd party plaintiff.
IT IS SO ORDERED.
DONE IN MANILA, this 15th day of September 1992.
ARSENIO M. GONONG
Judge[7]
On appeal to the Court of Appeals interposed by Sulpicio Lines, Inc., on
April 15, 1997, the Court of Appeal modified the trial courts ruling and
included petitioner Caltex as one of the those liable for damages. Thus:
WHEREFORE, in view of all the foregoing, the judgment rendered by the
Regional Trial Court is hereby MODIFIED as follows:
WHEREFORE, defendant Sulpicio Lines, Inc., is ordered to pay the heirs of
Sebastian E. Caezal and Corazon Caezal:
1. Compensatory damages for the death of Sebastian E.Caezal and Corazon
Caezal the total amount of ONE HUNDRED THOUSAND PESOS
(P100,000);
2. Compensatory damages representing the unearned income of Sebastian
E. Caezal, in the total amount of THREE HUNDRED SIX THOUSAND FOUR
HUNDRED EIGHTY (P306,480.00) PESOS;
3. Moral damages in the amount of THREE HUNDRED THOUSAND PESOS
(P 300,000.00);
4. Attorneys fees in the concept of actual damages in the amount of FIFTY
THOUSAND PESOS (P 50,000.00);
5. Costs of the suit.
Third party defendants Vector Shipping Co. and Caltex (Phils.), Inc. are held
equally liable under the third party complaint to reimburse/indemnify
defendant Sulpicio Lines, Inc. of the above-mentioned damages, attorneys
fees and costs which the latter is adjudged to pay plaintiffs, the same to be
shared half by Vector Shipping Co. (being the vessel at fault for the collision)
and the other half by Caltex (Phils.), Inc. (being the charterer that negligently
caused the shipping of combustible cargo aboard an unseaworthy vessel).
SO ORDERED.
JORGE S. IMPERIAL
Associate Justice
WE CONCUR:
RAMON U. MABUTAS. JR. PORTIA ALIO HERMACHUELOS
Associate Justice Associate Justice[8]
Hence, this petition.
We find the petition meritorious.
First: The charterer has no liability for damages under Philippine
Maritime laws.
The respective rights and duties of a shipper and the carrier depends
not on whether the carrier is public or private, but on whether the contract of
carriage is a bill of lading or equivalent shipping documents on the one hand,
or a charter party or similar contract on the other.[9]
Petitioner and Vector entered into a contract of affreightment, also
known as a voyage charter.[10]
A charter party is a contract by which an entire ship, or some principal
part thereof, is let by the owner to another person for a specified time or use;
a contract of affreightment is one by which the owner of a ship or other
vessel lets the whole or part of her to a merchant or other person for the
conveyance of goods, on a particular voyage, in consideration of the
payment of freight.[11]
A contract of affreightment may be either time charter, wherein the
leased vessel is leased to the charterer for a fixed period of time, or voyage
charter, wherein the ship is leased for a single voyage. In both cases, the
charter-party provides for the hire of the vessel only, either for a determinate
period of time or for a single or consecutive voyage, the ship owner to supply
the ships store, pay for the wages of the master of the crew, and defray the
expenses for the maintenance of the ship.[12]
Under a demise or bareboat charter on the other hand, the charterer
mans the vessel with his own people and becomes, in effect, the owner for
the voyage or service stipulated, subject to liability for damages caused by
negligence.
If the charter is a contract of affreightment, which leaves the general
owner in possession of the ship as owner for the voyage, the rights and the
responsibilities of ownership rest on the owner. The charterer is free from
liability to third persons in respect of the ship.[13]
Second : MT Vector is a common carrier
Charter parties fall into three main categories: (1) Demise or bareboat,
(2) time charter, (3) voyage charter. Does a charter party agreement turn the
common carrier into a private one? We need to answer this question in order
to shed light on the responsibilities of the parties.
In this case, the charter party agreement did not convert the common
carrier into a private carrier. The parties entered into a voyage charter, which
retains the character of the vessel as a common carrier.
In Planters Products, Inc. vs. Court of Appeals,[14] we said:
It is therefore imperative that a public carrier shall remain as such,
notwithstanding the charter of the whole or portion of a vessel by one or
more persons, provided the charter is limited to the ship only, as in the case
of a time-charter or voyage charter. It is only when the charter includes both
the vessel and its crew, as in a bareboat or demise that a common carrier
becomes private, at least insofar as the particular voyage covering the
charter-party is concerned. Indubitably, a ship-owner in a time or voyage
charter retains possession and control of the ship, although her holds may,
for the moment, be the property of the charterer.
Later, we ruled in Coastwise Lighterage Corporation vs. Court of
Appeals:[15]
Although a charter party may transform a common carrier into a private one,
the same however is not true in a contract of affreightment xxx
A common carrier is a person or corporation whose regular business is
to carry passengers or property for all persons who may choose to employ
and to remunerate him.[16] MT Vector fits the definition of a common carrier
under Article 1732 of the Civil Code. In Guzman vs. Court of Appeals,[17] we
ruled:
The Civil Code defines common carriers in the following terms:
Article 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting passengers
for passengers or goods or both, by land, water, or air for compensation,
offering their services to the public.
The above article makes no distinction between one
whose principal business activity is the carrying of persons or goods or both,
and one who does such carrying only as an ancillary activity (in local idiom,
as a sideline). Article 1732 also carefully avoids making any distinction
between a person or enterprise offering transportation service on a regular or
scheduled basis and one offering such services on a an occasional, episodic
or unscheduled basis. Neither does Article 1732 distinguish between a
carrier offering its services to the general public, i.e., the general community
or population, and one who offers services or solicits business only from a
narrow segment of the general population. We think that Article 1733
deliberately refrained from making such distinctions.
It appears to the Court that private respondent is properly characterized as a
common carrier even though he merely back-hauled goods for other
merchants from Manila to Pangasinan, although such backhauling was done
on a periodic, occasional rather than regular or scheduled manner, and even
though respondents principal occupation was not the carriage of goods for
others. There is no dispute that private respondent charged his customers a
fee for hauling their goods; that the fee frequently fell below commercial
freight rates is not relevant here.
Under the Carriage of Goods by Sea Act :
Sec. 3. (1) The carrier shall be bound before and at the beginning of the
voyage to exercise due diligence to -
(a) Make the ship seaworthy;
(b) Properly man, equip, and supply the ship;
xxx xxx xxx
Thus, the carriers are deemed to warrant impliedly the seaworthiness of
the ship. For a vessel to be seaworthy, it must be adequately equipped
for the voyage and manned with a sufficient number of competent
officers and crew. The failure of a common carrier to maintain in seaworthy
condition the vessel involved in its contract of carriage is a clear breach of its
duty prescribed in Article 1755 of the Civil Code.[18]
The provisions owed their conception to the nature of the business of
common carriers. This business is impressed with a special public duty. The
public must of necessity rely on the care and skill of common carriers in the
vigilance over the goods and safety of the passengers, especially because
with the modern development of science and invention, transportation has
become more rapid, more complicated and somehow more
hazardous.[19] For these reasons, a passenger or a shipper of goods is under
no obligation to conduct an inspection of the ship and its crew, the carrier
being obliged by law to impliedly warrant its seaworthiness.
This aside, we now rule on whether Caltex is liable for damages under
the Civil Code.
Third: Is Caltex liable for damages under the Civil Code?
We rule that it is not.
 Sulpicio argues that Caltex negligently shipped its highly combustible
fuel cargo aboard an unseaworthy vessel such as the MT Vector when
Caltex:
1. Did not take steps to have M/T Vectors certificate of inspection
and coastwise license renewed;
2. Proceeded to ship its cargo despite defects found by Mr. Carlos
Tan of Bataan Refinery Corporation;
3. Witnessed M/T Vector submitting fake documents and
certificates to the Philippine Coast Guard.
Sulpicio further argues that Caltex chose MT Vector to transport its
cargo despite these deficiencies:
1. The master of M/T Vector did not posses the required Chief
Mate license to command and navigate the vessel;
2. The second mate, Ronaldo Tarife, had the license of a Minor
Patron, authorized to navigate only in bays and rivers when the
subject collision occurred in the open sea;
3. The Chief Engineer, Filoteo Aguas, had no license to operate the
engine of the vessel;
4. The vessel did not have a Third Mate, a radio operator and a
lookout; and
5. The vessel had a defective main engine.[20]
As basis for the liability of Caltex, the Court of Appeals relied on Articles
20 and 2176 of the Civil Code, which provide:
Article 20. - Every person who contrary to law, willfully or negligently causes
damage to another, shall indemnify the latter for the same.
Article 2176. - Whoever by act or omission causes damage to another, there
being fault or negligence, is obliged to pay for the damage done. Such fault
or negligence, if there is no pre-existing contractual relation between the
parties, is called a quasi-delict and is governed by the provisions of this
Chapter.
And what is negligence?
The Civil Code provides:
Article 1173. The fault or negligence of the obligor consists in the omission
of that diligence which is required by the nature of the obligation and
corresponds with the circumstances of the persons, of the time and of the
place. When negligence shows bad faith, the provisions of Article 1171 and
2201 paragraph 2, shall apply.
If the law does not state the diligence which is to be observed in the
performance, that which is expected of a good father of a family shall be
required.
In Southeastern College, Inc. vs. Court of Appeals,[21] we said that
negligence, as commonly understood, is conduct which naturally or
reasonably creates undue risk or harm to others. It may be the failure to
observe that degree of care, precaution, and vigilance, which the
circumstances justly demand, or the omission to do something which
ordinarily regulate the conduct of human affairs, would do.
The charterer of a vessel has no obligation before transporting its cargo
to ensure that the vessel it chartered complied with all legal
requirements. The duty rests upon the common carrier simply for being
engaged in public service.[22] The Civil Code demands diligence which is
required by the nature of the obligation and that which corresponds with the
circumstances of the persons, the time and the place.Hence, considering the
nature of the obligation between Caltex and MT Vector, the liability as found
by the Court of Appeals is without basis.
The relationship between the parties in this case is governed by special
laws. Because of the implied warranty of seaworthiness,[23] shippers of
goods, when transacting with common carriers, are not expected to inquire
into the vessels seaworthiness, genuineness of its licenses and compliance
with all maritime laws. To demand more from shippers and hold them liable
in case of failure exhibits nothing but the futility of our maritime laws insofar
as the protection of the public in general is concerned. By the same token,
we cannot expect passengers to inquire every time they board a common
carrier, whether the carrier possesses the necessary papers or that all the
carriers employees are qualified. Such a practice would be an absurdity in a
business where time is always of the essence. Considering the nature of
transportation business, passengers and shippers alike customarily presume
that common carriers possess all the legal requisites in its operation.
Thus, the nature of the obligation of Caltex demands ordinary diligence
like any other shipper in shipping his cargoes.
A cursory reading of the records convinces us that Caltex had reasons
to believe that MT Vector could legally transport cargo that time of the year.
Atty. Poblador: Mr. Witness, I direct your attention to this portion here
containing the entries here under VESSELS DOCUMENTS
1. Certificate of Inspection No. 1290-85, issued December 21,
1986, and Expires December 7, 1987, Mr. Witness, what steps
 did you take regarding the impending expiry of the C.I. or the
Certificate of Inspection No. 1290-85 during the hiring of MT
Vector?
Apolinar Ng: At the time when I extended the Contract, I did nothing
because the tanker has a valid C.I. which will expire on December 7,
1987 but on the last week of November, I called the attention of Mr.
Abalos to ensure that the C.I. be renewed and Mr. Abalos, in turn,
assured me they will renew the same.
Q: What happened after that?
A: On the first week of December, I again made a follow-up from Mr.
Abalos, and said they were going to send me a copy as soon as
possible, sir.[24]
xxx xxx xxx
Q: What did you do with the C.I.?
A: We did not insist on getting a copy of the C.I. from Mr. Abalos on the
first place, because of our long business relation, we trust Mr. Abalos
and the fact that the vessel was able to sail indicates that the
documents are in order. xxx[25]
On cross examination -
Atty. Sarenas: This being the case, and this being an admission by you,
this Certificate of Inspection has expired on December 7. Did it occur
to you not to let the vessel sail on that day because of the very
approaching date of expiration?
Apolinar Ng: No sir, because as I said before, the operation Manager
assured us that they were able to secure a renewal of the Certificate
of Inspection and that they will in time submit us a copy. [26]
Finally, on Mr. Ngs redirect examination:
Atty. Poblador: Mr. Witness, were you aware of the pending expiry of the
Certificate of Inspection in the coastwise license on December 7,
1987. What was your assurance for the record that this document
was renewed by the MT Vector?
Atty. Sarenas: xxx
Atty. Poblador: The certificate of Inspection?
A: As I said, firstly, we trusted Mr. Abalos as he is a long time business
partner; secondly, those three years, they were allowed to sail by the
Coast Guard. That are some that make me believe that they in fact
were able to secure the necessary renewal.
Q: If the Coast Guard clears a vessel to sail, what would that mean?
Atty. Sarenas: Objection.
Court: He already answered that in the cross examination to the effect
that if it was allowed, referring to MV Vector, to sail, where it is
loaded and that it was scheduled for a destination by the Coast
Guard, it means that it has Certificate of Inspection extended as
assured to this witness by Restituto Abalos. That in no case MV
Vector will be allowed to sail if the Certificate of Inspection is, indeed,
not to be extended. That was his repeated explanation to the cross-
examination. So, there is no need to clarify the same in the re-direct
examination.[27]
Caltex and Vector Shipping Corporation had been doing business since
1985, or for about two years before the tragic incident occurred in 1987. Past
services rendered showed no reason for Caltex to observe a higher degree
of diligence.
Clearly, as a mere voyage charterer, Caltex had the right to presume
that the ship was seaworthy as even the Philippine Coast Guard itself was
convinced of its seaworthiness. All things considered, we find no legal basis
to hold petitioner liable for damages.
As Vector Shipping Corporation did not appeal from the Court of
Appeals decision, we limit our ruling to the liability of Caltex alone. However,
we maintain the Court of Appeals ruling insofar as Vector is concerned .
WHEREFORE, the Court hereby GRANTS the petition and SETS
ASIDE the decision of the Court of Appeals in CA-G. R. CV No. 39626,
promulgated on April 15, 1997, insofar as it held Caltex liable under the third
party complaint to reimburse/indemnify defendant Sulpicio Lines, Inc. the
damages the latter is adjudged to pay plaintiffs-appellees. The Court
AFFIRMS the decision of the Court of Appeals insofar as it orders Sulpicio
Lines, Inc. to pay the heirs of Sebastian E. Caezal and Corazon Caezal
damages as set forth therein. Third-party defendant-appellee Vector
Shipping Corporation and Francisco Soriano are held liable to
reimburse/indemnify defendant Sulpicio Lines, Inc. whatever damages,
attorneys fees and costs the latter is adjudged to pay plaintiffs-appellees in
the case.
No costs in this instance.
SO ORDERED.
10. Duavit vs. Court of Appeals
G.R. No. 82318, 173 SCRA 490, May 18, 1989
GUTIERREZ, JR., J.:
This petition raises the sole issue of whether or not the owner of a private
vehicle which figured in an accident can be held liable under Article 2180 of
the Civil Code when the said vehicle was neither driven by an employee of
the owner nor taken with the consent of the latter.
The facts are summarized in the contested decision, as follows:
From the evidence adduced by the plaintiffs, consisting of
the testimonies of witnesses Virgilio Catuar, Antonio
Sarmiento, Jr., Ruperto Catuar, Jr. and Norberto Bernarte it
appears that on July 28, 1971 plaintiffs Antonio Sarmiento,
Sr. and Virgilio Catuar were aboard a jeep with plate number
77-99-F-I Manila, 1971, owned by plaintiff, Ruperto Catuar
was driving the said jeep on Ortigas Avenue, San Juan,
Rizal; that plaintiff's jeep, at the time, was running
moderately at 20 to 35 kilometers per hour and while
approaching Roosevelt Avenue, Virgilio Catuar slowed
down; that suddenly, another jeep with plate number 99-97-
F-J Manila 1971 driven by defendant Oscar Sabiniano hit
and bumped plaintiff's jeep on the portion near the left rear
wheel, and as a result of the impact plaintiff's jeep fell on its
right and skidded by about 30 yards; that as a result plaintiffs
jeep was damaged, particularly the windshield, the
differential, the part near the left rear wheel and the top
cover of the jeep; that plaintiff Virgilio Catuar was thrown to
the middle of the road; his wrist was broken and he
sustained contusions on the head; that likewise plaintiff
Antonio Sarmiento, Sr. was trapped inside the fallen jeep,
and one of his legs was fractured.
Evidence also shows that the plaintiff Virgilio Catuar spent a
total of P2,464.00 for repairs of the jeep, as shown by the
receipts of payment of labor and spare parts (Exhs. H to H-7
Plaintiffs likewise tried to prove that plaintiff Virgilio Catuar,
immediately after the accident was taken to Immaculate
Concepcion Hospital, and then was transferred to the
National Orthopedic Hospital; that while plaintiff Catuar was
not confined in the hospital, his wrist was in a plaster cast for
a period of one month, and the contusions on his head were
under treatment for about two (2) weeks; that for
hospitalization, medicine and allied expenses, plaintiff
Catuar spent P5,000.00.
Evidence also shows that as a result of the incident, plaintiff
Antonio Sarmiento, Sr. sustained injuries on his leg; that at
first, he was taken to the National Orthopedic Hospital (Exh.
K but later he was confined at the Makati Medical Center
from July 29, to August 29, 1971 and then from September
15 to 25, 1971; that his leg was in a plaster cast for a period
of eight (8) months; and that for hospitalization and medical
attendance, plaintiff Antonio Sarmiento, Sr. spent no less
than P13,785.25 as evidenced by receipts in his possession.
(Exhs. N to N-1).
Proofs were adduced also to show that plaintiff Antonio
sarmiento Sr. is employed as Assistant Accountant of the
Canlubang Sugar Estate with a salary of P1,200.00 a month;
that as sideline he also works as accountant of United
Haulers Inc. with a salary of P500.00 a month; and that as a
result of this incident, plaintiff Sarmiento was unable to
perform his normal work for a period of at least 8 months. On
the other hand, evidence shows that the other plaintiff
Virgilio Catuar is a Chief Clerk in Canlubang Sugar Estate
with a salary of P500.00 a month, and as a result of the
incident, he was incapacitated to work for a period of one (1)
month.
The plaintiffs have filed this case both against Oscar
Sabiniano as driver, and against Gualberto Duavit as owner
of the jeep.
Defendant Gualberto Duavit, while admitting ownership of
the other jeep (Plate No. 99-07-F-J Manila, 1971), denied
that the other defendant (Oscar Sabiniano) was his
employee. Duavit claimed that he has not been an employer
of defendant Oscar Sabiniano at any time up to the present.
On the other hand documentary and testimonial evidence
show that defendant Oscar Sabiniano was an employee of
the Board of Liquidators from November 14, 1966 up to
January 4, 1973 (Annex A of Answer).
Defendant Sabiniano, in his testimony, categorically
admitted that he took the jeep from the garage of defendant
Duavit without the consent or authority of the latter (TSN,
 September 7, 1978, p. 8). He testified further, that Duavit
even filed charges against him for theft of the jeep, but which
Duavit did not push through as his (Sabiniano's) parents
apologized to Duavit on his behalf.
Defendant Oscar Sabiniano, on the other hand in an attempt
to exculpate himself from liability, makes it appear that he
was taking all necessary precaution while driving and the
accident occurred due to the negligence of Virgilio Catuar.
Sabiniano claims that it was plaintiffs vehicle which hit and
bumped their jeep. (Reno, pp. 21-23)
The trial court found Oscar Sabiniano negligent in driving the vehicle but
found no employer-employee relationship between him and the petitioner
because the latter was then a government employee and he took the vehicle
without the authority and consent of the owner. The petitioner was, thus,
absolved from liability under Article 2180 of the Civil Code.
The private respondents appealed the case.
On January 7, 1988, the Court of Appeals rendered the questioned decision
holding the petitioner jointly and severally liable with Sabiniano. The
appellate court in part ruled:
We cannot go along with appellee's argument. It will be seen
that in Vargas v. Langcay, supra, it was held that it is
immaterial whether or not the driver was actually employed
by the operator of record or registered owner, and it is even
not necessary to prove who the actual owner of the vehicle
and who the employer of the driver is. When the Supreme
Court ruled, thus: 'We must hold and consider such owner-
operator of record (registered owner) as the employer in
contemplation of law, of the driver,' it cannot be construed
other than that the registered owner is the employer of the
driver in contemplation of law. It is a conclusive presumption
of fact and law, and is not subject to rebuttal of proof to the
contrary. Otherwise, as stated in the decision, we quote:
The purpose of the principles evolved by the decisions in
these matters will be defeated and thwarted if we entertain
the argument of petitioner that she is not liable because the
actual owner and employer was established by the evidence.
...
Along the same vein, the defendant-appellee Gualberto Duavit cannot be
allowed to prove that the driver Sabiniano was not his employee at the time
of the vehicular accident.
The ruling laid down in Amar V. Soberano (1966), 63 O.G.
6850, by this Court to the effect that the burden of proving
the non-existence of an employer-employee relationship is
upon the defendant and this he must do by a satisfactory
preponderance of evidence, has to defer to the doctrines
evolved by the Supreme Court in cases of damages arising
from vehicular mishaps involving registered motor vehicle.
(See Tugade v. Court of Appeals, 85 SCRA 226, 230).
(Rollo, pp. 26-27)
The appellate court also denied the petitioner's motion for reconsideration.
Hence, this petition.
The petitioner contends that the respondent appellate court committed grave
abuse of discretion in holding him jointly and severally liable with Sabiniano
in spite of the absence of an employer-employee relationship between them
and despite the fact that the petitioner's jeep was taken out of his garage and
was driven by Sabiniano without his consent.
As early as in 1939, we have ruled that an owner of a vehicle cannot be held
liable for an accident involving the said vehicle if the same was driven without
his consent or knowledge and by a person not employed by him. Thus,
in Duquillo v. Bayot (67 Phil. 131-133-134) [1939] we said:
Under the facts established, the defendant cannot be held
liable for anything. At the time of the accident, James
McGurk was driving the truck, and he was not an employee
of the defendant, nor did he have anything to do with the
latter's business; neither the defendant nor Father Ayson,
who was in charge of her business, consented to have any
of her trucks driven on the day of the accident, as it was a
holy day, and much less by a chauffeur who was not in
charge of driving it; the use of the defendant's truck in the
circumstances indicated was done without her consent or
knowledge; it may, therefore, be said, that there was not the
remotest contractual relation between the deceased Pio
Duquillo and the defendant. It necessarily follows from all
this that articles 1101 and following of the Civil Code, cited
by the appellant, have no application in this case, and,
therefore, the errors attributed to the inferior court are
without basis.
The Court upholds the above ruling as still relevant and better applicable to
present day circumstances.
The respondent court's misplaced reliance on the cases of Erezo v.
Jepte (102 Phil. 103 [1957] and Vargas v. Langcay (6 SCRA 174 [1962])
cannot be sustained. In the Erezo case, Jepte, the registered owner of the
truck which collided with a taxicab, and which resulted in the killing of Erezo,
claimed that at the time of the accident, the truck belonged to the Port
Brokerage in an arrangement with the corporation but the same was not
known to the Motor Vehicles Office. This Court sustained the trial court's
ruling that since Jepte represented himself to be the owner of the truck and
the Motor Vehicles Office, relying on his representation, registered the
vehicle in his name, the Government and all persons affected by the
representation had the right to rely on his declaration of ownership and
registration. Thus, even if Jepte were not the owner of the truck at the time of
the accident, he was still held liable for the death of Erezo significantly, the
driver of the truck was fully authorized to drive it.
Likewise, in the Vargas case, just before the accident occurred Vargas had
sold her jeepney to a third person, so that at the time of the accident she was
no longer the owner of the jeepney. This court, nevertheless, affirmed
Vargas' liability since she failed to surrender to the Motor Vehicles Office the
corresponding AC plates in violation of the Revised Motor Vehicle Law and
Commonwealth Act No. 146. We further ruled that the operator of record
continues to be the operator of the vehicle in contemplation of law, as
regards the public and third persons, and as such is responsible for the
consequences incident to its operator. The vehicle involved was a public
utility jeepney for hire. In such cases, the law does not only require the
surrender of the AC plates but orders the vendor operator to stop the
operation of the jeepney as a form of public transportation until the matter is
reported to the authorities.
As can be seen, the circumstances of the above cases are entirely different
from those in the present case. Herein petitioner does not deny ownership of
the vehicle involved in tire mishap but completely denies having employed
the driver Sabiniano or even having authorized the latter to drive his jeep.
The jeep was virtually stolen from the petitioner's garage. To hold, therefore,
the petitioner liable for the accident caused by the negligence of Sabiniano
who was neither his driver nor employee would be absurd as it would be like
holding liable the owner of a stolen vehicle for an accident caused by the
person who stole such vehicle. In this regard, we cannot ignore the many
cases of vehicles forcibly taken from their owners at gunpoint or stolen from
garages and parking areas and the instances of service station attendants or
mechanics of auto repair shops using, without the owner's consent, vehicles
entrusted to them for servicing or repair.
We cannot blindly apply absolute rules based on precedents whose facts do
not jibe four square with pending cases. Every case must be determined on
its own peculiar factual circumstances. Where, as in this case, the records of
the petition fail to indicate the slightest indicia of an employer-employee
relationship between the owner and the erring driver or any consent given by
the owner for the vehicle's use, we cannot hold the owner liable.
We, therefore, find that the respondent appellate court committed reversible
error in holding the petitioner jointly and severally liable with Sabiniano to the
private respondent.
WHEREFORE, the petition is GRANTED and the decision and resolution
appealed from are hereby ANNULLED and SET ASIDE. The decision of the
then Court of First Instance (now Regional Trial Court) of Laguna, 8th
Judicial District, Branch 6, dated July 30, 1981 is REINSTATED.
SO ORDERED.
11. Edgar Cokaliong Shipping Lines, Inc. vs. UCPB General Insurance
Company, Inc.
G.R. No. 146018, 404 SCRA 706 , June 25, 2003
PANGANIBAN, J.:
The liability of a common carrier for the loss of goods may, by stipulation
in the bill of lading, be limited to the value declared by the shipper. On the
other hand, the liability of the insurer is determined by the actual value
covered by the insurance policy and the insurance premiums paid therefor,
and not necessarily by the value declared in the bill of lading.
The Case
Before the Court is a Petition for Review[1] under Rule 45 of the Rules of
Court, seeking to set aside the August 31, 2000 Decision [2] and the
November 17, 2000 Resolution[3] of the Court of Appeals[4] (CA) in CA-GR
SP No. 62751. The dispositive part of the Decision reads:
IN THE LIGHT OF THE FOREGOING, the appeal is GRANTED. The
Decision appealed from is REVERSED. [Petitioner] is hereby condemned to
pay to [respondent] the total amount of P148,500.00, with interest thereon, at
the rate of 6% per annum, from date of this Decision of the
Court. [Respondents] claim for attorneys fees [is] DISMISSED. [Petitioners]
counterclaims are DISMISSED.[5]
The assailed Resolution denied petitioners Motion for Reconsideration.
On the other hand, the disposition of the Regional Trial
Courts[6] Decision,[7] which was later reversed by the CA, states:
WHEREFORE, premises considered, the case is hereby DISMISSED for
lack of merit.
No cost.[8]
The Facts
The facts of the case are summarized by the appellate court in this wise:
Sometime on December 11, 1991, Nestor Angelia delivered to the Edgar
Cokaliong Shipping Lines, Inc. (now Cokaliong Shipping Lines), [petitioner]
for brevity, cargo consisting of one (1) carton of Christmas dcor and two (2)
sacks of plastic toys, to be transported on board the M/V Tandag on
its Voyage No. T-189 scheduled to depart from Cebu City, on December 12,
1991, for Tandag, Surigao del Sur. [Petitioner] issued Bill of Lading No. 58,
freight prepaid, covering the cargo. Nestor Angelia was both the shipper and
consignee of the cargo valued, on the face thereof, in the amount
of P6,500.00.Zosimo Mercado likewise delivered cargo to [petitioner],
consisting of two (2) cartons of plastic toys and Christmas decor, one (1) roll
of floor mat and one (1) bundle of various or assorted goods for
transportation thereof from Cebu City to Tandag, Surigao del Sur, on board
the said vessel, and said voyage. [Petitioner] issued Bill of Lading No.
59 covering the cargo which, on the face thereof, was valued in the amount
of P14,000.00. Under the Bill of Lading, Zosimo Mercado was both the
shipper and consignee of the cargo.
On December 12, 1991, Feliciana Legaspi insured the cargo, covered by Bill
of Lading No. 59, with the UCPB General Insurance Co., Inc., [respondent]
for brevity, for the amount of P100,000.00 against all risks under Open
Policy No. 002/91/254 for which she was issued, by [respondent], Marine
Risk Note No. 18409 on said date. She also insured the cargo covered
by Bill of Lading No. 58, with [respondent], for the amount of P50,000.00,
under Open Policy No. 002/91/254 on the basis of which [respondent]
issued Marine Risk Note No. 18410 on said date.
When the vessel left port, it had thirty-four (34) passengers and assorted
cargo on board, including the goods of Legaspi. After the vessel had passed
by the Mandaue-Mactan Bridge, fire ensued in the engine room, and, despite
earnest efforts of the officers and crew of the vessel, the fire engulfed and
destroyed the entire vessel resulting in the loss of the vessel and the cargoes
therein. The Captain filed the required Marine Protest.
Shortly thereafter, Feliciana Legaspi filed a claim, with [respondent], for the
value of the cargo insured under Marine Risk Note No. 18409 and covered
by Bill of Lading No. 59. She submitted, in support of her claim, a Receipt,
dated December 11, 1991, purportedly signed by Zosimo Mercado,
and Order Slips purportedly signed by him for the goods he received from
Feliciana Legaspi valued in the amount of P110,056.00. [Respondent]
approved the claim of Feliciana Legaspi and drew and issued UCPB Check
No. 612939, dated March 9, 1992, in the net amount of P99,000.00, in
settlement of her claim after which she executed a Subrogation
Receipt/Deed, for said amount, in favor of [respondent]. She also filed a
claim for the value of the cargo covered by Bill of Lading No. 58. She
submitted to [respondent] a Receipt, dated December 11, 1991 and Order
Slips, purportedly signed by Nestor Angelia for the goods he received from
Feliciana Legaspi valued at P60,338.00. [Respondent] approved her claim
and remitted to Feliciana Legaspi the net amount of P49,500.00, after which
she signed a Subrogation Receipt/Deed, dated March 9, 1992, in favor of
[respondent].
On July 14, 1992, [respondent], as subrogee of Feliciana Legaspi, filed a
complaint anchored on torts against [petitioner], with the Regional Trial Court
of Makati City, for the collection of the total principal amount of P148,500.00,
which it paid to Feliciana Legaspi for the loss of the cargo, praying that
judgment be rendered in its favor and against the [petitioner] as follows:
WHEREFORE, it is respectfully prayed of this Honorable Court that after due
hearing, judgment be rendered ordering [petitioner] to pay [respondent] the
following.
1. Actual damages in the amount of P148,500.00 plus interest thereon at the
legal rate from the time of filing of this complaint until fully paid;
2. Attorneys fees in the amount of P10,000.00; and
3. Cost of suit.
[Respondent] further prays for such other reliefs and remedies as this
Honorable Court may deem just and equitable under the premises.
[Respondent] alleged, inter alia, in its complaint, that the cargo subject of its
complaint was delivered to, and received by, [petitioner] for transportation to
Tandag, Surigao del Sur under Bill of Ladings, Annexes A and B of the
complaint; that the loss of the cargo was due to the negligence of the
[petitioner]; and that Feliciana Legaspi had executed Subrogation
Receipts/Deeds in favor of [respondent] after paying to her the value of the
cargo on account of the Marine Risk Notes it issued in her favor covering
the cargo.
In its Answer to the complaint, [petitioner] alleged that: (a) [petitioner] was
cleared by the Board of Marine Inquiry of any negligence in the burning of the
vessel; (b) the complaint stated no cause of action against [petitioner]; and
(c) the shippers/consignee had already been paid the value of the goods as
stated in the Bill of Lading and, hence, [petitioner] cannot be held liable for
the loss of the cargo beyond the value thereof declared in the Bill of Lading.
After [respondent] rested its case, [petitioner] prayed for and was allowed, by
the Court a quo, to take the depositions of Chester Cokaliong, the Vice-
President and Chief Operating Officer of [petitioner], and a resident of Cebu
City, and of Noel Tanyu, an officer of the Equitable Banking Corporation, in
Cebu City, and a resident of Cebu City, to be given before the Presiding
Judge of Branch 106 of the Regional Trial Court of Cebu City. Chester
Cokaliong and Noel Tanyu did testify, by way of deposition, before the Court
and declared inter alia, that: [petitioner] is a family corporation like
the Chester Marketing, Inc.; Nestor Angelia had been doing business with
[petitioner] and Chester Marketing, Inc., for years, and incurred an account
with Chester Marketing, Inc. for his purchases from said corporation;
[petitioner] did issue Bills of Lading Nos. 58 and 59 for the cargo described
therein with Zosimo Mercado and Nestor Angelia as shippers/consignees,
respectively; the engine room of the M/V Tandag caught fire after it passed
the Mandaue/Mactan Bridge resulting in the total loss of the vessel and its
cargo; an investigation was conducted by the Board of Marine Inquiry of the
Philippine Coast Guard which rendered a Report, dated February 13, 1992
absolving [petitioner] of any responsibility on account of the fire, which
Report of the Board was approved by the District Commander of the
Philippine Coast Guard; a few days after the sinking of the vessel, a
representative of the Legaspi Marketing filed claims for the values of the
goods under Bills of Lading Nos. 58 and 59 in behalf of the
shippers/consignees, Nestor Angelia and Zosimo Mercado; [petitioner] was
able to ascertain, from the shippers/consignees and the representative of the
Legaspi Marketing that the cargo covered by Bill of Lading No. 59 was
owned by Legaspi Marketing and consigned to Zosimo Mercado while that
covered by Bill of Lading No. 58 was purchased by Nestor Angelia from the
Legaspi Marketing; that [petitioner] approved the claim of Legaspi Marketing
for the value of the cargo under Bill of Lading No. 59 and remitted to
Legaspi Marketing the said amount under Equitable Banking Corporation
Check No. 20230486 dated August 12, 1992, in the amount of P14,000.00
for which the representative of the Legaspi Marketing signed Voucher No.
4379, dated August 12, 1992, for the said amount of P14,000.00 in full
payment of claims under Bill of Lading No. 59; that [petitioner] approved the
claim of Nestor Angelia in the amount of P6,500.00 but that since the latter
owed Chester Marketing, Inc., for some purchases, [petitioner] merely set off
the amount due to Nestor Angelia under Bill of Lading No. 58 against his
account with Chester Marketing, Inc.; [petitioner] lost/[misplaced] the original
of the check after it was received by Legaspi Marketing, hence, the
production of the microfilm copy by Noel Tanyu of the Equitable Banking
Corporation; [petitioner] never knew, before settling with Legaspi Marketing
and Nestor Angelia that the cargo under both Bills of Lading were insured
with [respondent], or that Feliciana Legaspi filed claims for the value of the
cargo with [respondent] and that the latter approved the claims of Feliciana
Legaspi and paid the total amount of P148,500.00 to her; [petitioner] came to
know, for the first time, of the payments by [respondent] of the claims of
Feliciana Legaspi when it was served with the summons and complaint, on
October 8, 1992; after settling his claim, Nestor Angelia x x x executed
the Release and Quitclaim, dated July 2, 1993, and Affidavit, dated July 2,
1993 in favor of [respondent]; hence, [petitioner] was absolved of any liability
for the loss of the cargo covered by Bills of Lading Nos. 58 and 59; and
even if it was, its liability should not exceed the value of the cargo as stated
in the Bills of Lading.
[Petitioner] did not anymore present any other witnesses on its evidence-in-
chief. x x x[9] (Citations omitted)
Ruling of the Court of Appeals
The CA held that petitioner had failed to prove that the fire which
consumed the vessel and its cargo was caused by something other than its
negligence in the upkeep, maintenance and operation of the vessel.[10]
Petitioner had paid P14,000 to Legaspi Marketing for the cargo covered
by Bill of Lading No. 59. The CA, however, held that the payment did not
extinguish petitioners obligation to respondent, because there was no
evidence that Feliciana Legaspi (the insured) was the owner/proprietor of
Legaspi Marketing. The CA also pointed out the impropriety of treating the
claim under Bill of Lading No. 58 -- covering cargo valued therein at P6,500 -
- as a setoff against Nestor Angelias account with Chester Enterprises, Inc.
 Finally, it ruled that respondent is not bound by the valuation of the
cargo under the Bills of Lading, x x x nor is the value of the cargo under said
Bills of Lading conclusive on the [respondent]. This is so because, in the first
place, the goods were insured with the [respondent] for the total amount
of P150,000.00, which amount may be considered as the face value of the
goods.[11]
Hence this Petition.[12]
Issues
Petitioner raises for our consideration the following alleged errors of the
CA:
I
The Honorable Court of Appeals erred, granting arguendo that petitioner is
liable, in holding that petitioners liability should be based on the actual
insured value of the goods and not from actual valuation declared by the
shipper/consignee in the bill of lading.
II
The Court of Appeals erred in not affirming the findings of the Philippine
Coast Guard, as sustained by the trial court a quo, holding that the cause of
loss of the aforesaid cargoes under Bill of Lading Nos. 58 and 59 was due to
force majeure and due diligence was [exercised] by petitioner prior to, during
and immediately after the fire on [petitioners] vessel.
III
The Court of Appeals erred in not holding that respondent UCPB General
Insurance has no cause of action against the petitioner.[13]
In sum, the issues are: (1) Is petitioner liable for the loss of the
goods? (2) If it is liable, what is the extent of its liability?
This Courts Ruling
The Petition is partly meritorious.
First Issue:
Liability for Loss
Petitioner argues that the cause of the loss of the goods, subject of this
case, was force majeure. It adds that its exercise of due diligence was
adequately proven by the findings of the Philippine Coast Guard.
We are not convinced. The uncontroverted findings of the Philippine
Coast Guard show that the M/V Tandag sank due to a fire, which resulted
from a crack in the auxiliary engine fuel oil service tank. Fuel spurted out of
the crack and dripped to the heating exhaust manifold, causing the ship to
burst into flames. The crack was located on the side of the fuel oil tank,
which had a mere two-inch gap from the engine room walling, thus
precluding constant inspection and care by the crew.
Having originated from an unchecked crack in the fuel oil service tank,
the fire could not have been caused by force majeure. Broadly speaking,
force majeure generally applies to a natural accident, such as that caused by
a lightning, an earthquake, a tempest or a public enemy.[14] Hence, fire is not
considered a natural disaster or calamity. In Eastern Shipping Lines, Inc. v.
Intermediate Appellate Court,[15] we explained:
x x x. This must be so as it arises almost invariably from some act of man or
by human means. It does not fall within the category of an act of God unless
caused by lighting or by other natural disaster or calamity. It may even be
caused by the actual fault or privity of the carrier.
Article 1680 of the Civil Code, which considers fire as an extraordinary
fortuitous event refers to leases or rural lands where a reduction of the rent is
allowed when more than one-half of the fruits have been lost due to such
event, considering that the law adopts a protective policy towards agriculture.
As the peril of fire is not comprehended within the exceptions in Article
1734, supra, Article 1735 of the Civil Code provides that in all cases other
than those mentioned in Article 1734, the common carrier shall be presumed
to have been at fault or to have acted negligently, unless it proves that it has
observed the extraordinary diligence required by law.
Where loss of cargo results from the failure of the officers of a vessel to
inspect their ship frequently so as to discover the existence of cracked parts,
that loss cannot be attributed to force majeure, but to the negligence of those
officials.[16]
The law provides that a common carrier is presumed to have been
negligent if it fails to prove that it exercised extraordinary vigilance over the
goods it transported. Ensuring the seaworthiness of the vessel is the first
step in exercising the required vigilance. Petitioner did not present sufficient
evidence showing what measures or acts it had undertaken to ensure the
seaworthiness of the vessel. It failed to show when the last inspection and
care of the auxiliary engine fuel oil service tank was made, what the normal
practice was for its maintenance, or some other evidence to establish that it
had exercised extraordinary diligence. It merely stated that constant
inspection and care were not possible, and that the last time the vessel was
dry-docked was in November 1990. Necessarily, in accordance with Article
1735[17] of the Civil Code, we hold petitioner responsible for the loss of the
goods covered by Bills of Lading Nos. 58 and 59.
Second Issue:
Extent of Liability
Respondent contends that petitioners liability should be based on the
actual insured value of the goods, subject of this case. On the other hand,
petitioner claims that its liability should be limited to the value declared by the
shipper/consignee in the Bill of Lading.
The records[18] show that the Bills of Lading covering the lost goods
contain the stipulation that in case of claim for loss or for damage to the
shipped merchandise or property, [t]he liability of the common carrier x x x
shall not exceed the value of the goods as appearing in the bill of
lading.[19] The attempt by respondent to make light of this stipulation is
unconvincing.As it had the consignees copies of the Bills of Lading, [20] it
could have easily produced those copies, instead of relying on mere
allegations and suppositions. However, it presented mere photocopies
thereof to disprove petitioners evidence showing the existence of the above
stipulation.
A stipulation that limits liability is valid[21] as long as it is not against
public policy. In Everett Steamship Corporation v. Court of Appeals,[22] the
Court stated:
A stipulation in the bill of lading limiting the common carriers liability for loss
or destruction of a cargo to a certain sum, unless the shipper or owner
declares a greater value, is sanctioned by law, particularly Articles 1749 and
1750 of the Civil Code which provides:
Art. 1749. A stipulation that the common carriers liability is limited to the
value of the goods appearing in the bill of lading, unless the shipper or owner
declares a greater value, is binding.
Art. 1750. A contract fixing the sum that may be recovered by the owner or
shipper for the loss, destruction, or deterioration of the goods is valid, if it is
reasonable and just under the circumstances, and has been freely and fairly
agreed upon.
Such limited-liability clause has also been consistently upheld by this Court in
a number of cases. Thus, in Sea-Land Service, Inc. vs. Intermediate
Appellate Court, we ruled:
It seems clear that even if said section 4 (5) of the Carriage of Goods by Sea
Act did not exist, the validity and binding effect of the liability limitation clause
in the bill of lading here are nevertheless fully sustainable on the basis alone
of the cited Civil Code Provisions. That said stipulation is just and reasonable
is arguable from the fact that it echoes Art. 1750 itself in providing a limit to
liability only if a greater value is not declared for the shipment in the bill of
lading. To hold otherwise would amount to questioning the justness and
fairness of the law itself, and this the private respondent does not pretend to
do. But over and above that consideration, the just and reasonable character
of such stipulation is implicit in it giving the shipper or owner the option of
avoiding accrual of liability limitation by the simple and surely far from
onerous expedient of declaring the nature and value of the shipment in the
bill of lading.
Pursuant to the afore-quoted provisions of law, it is required that the
stipulation limiting the common carriers liability for loss must be reasonable
and just under the circumstances, and has been freely and fairly agreed
upon.
The bill of lading subject of the present controversy specifically provides,
among others:
18. All claims for which the carrier may be liable shall be adjusted and settled
on the basis of the shippers net invoice cost plus freight and insurance
premiums, if paid, and in no event shall the carrier be liable for any loss of
possible profits or any consequential loss.
The carrier shall not be liable for any loss of or any damage to or in any
connection with, goods in an amount exceeding One Hundred Thousand Yen
in Japanese Currency (100,000.00) or its equivalent in any other currency
per package or customary freight unit (whichever is least) unless the value of
the goods higher than this amount is declared in writing by the shipper before
receipt of the goods by the carrier and inserted in the Bill of Lading and extra
freight is paid as required.
The above stipulations are, to our mind, reasonable and just. In the bill of
lading, the carrier made it clear that its liability would only be up to One
Hundred Thousand (Y100,000.00) Yen. However, the shipper, Maruman
Trading, had the option to declare a higher valuation if the value of its cargo
was higher than the limited liability of the carrier. Considering that the shipper
did not declare a higher valuation, it had itself to blame for not complying with
the stipulations. (Italics supplied)
In the present case, the stipulation limiting petitioners liability is not
contrary to public policy. In fact, its just and reasonable character is
evident. The shippers/consignees may recover the full value of the goods by
the simple expedient of declaring the true value of the shipment in the Bill of
Lading. Other than the payment of a higher freight, there was nothing to stop
them from placing the actual value of the goods therein. In fact, they
committed fraud against the common carrier by deliberately undervaluing the
goods in their Bill of Lading, thus depriving the carrier of its proper and just
transport fare.
Concededly, the purpose of the limiting stipulation in the Bill of Lading is
to protect the common carrier. Such stipulation obliges the shipper/consignee
to notify the common carrier of the amount that the latter may be liable for in
case of loss of the goods. The common carrier can then take appropriate
measures -- getting insurance, if needed, to cover or protect itself.This
precaution on the part of the carrier is reasonable and prudent. Hence, a
shipper/consignee that undervalues the real worth of the goods it seeks to
transport does not only violate a valid contractual stipulation, but commits a
fraudulent act when it seeks to make the common carrier liable for more than
the amount it declared in the bill of lading.
Indeed, Zosimo Mercado and Nestor Angelia misled petitioner by
undervaluing the goods in their respective Bills of Lading. Hence, petitioner
was exposed to a risk that was deliberately hidden from it, and from which it
could not protect itself.
It is well to point out that, for assuming a higher risk (the alleged actual
value of the goods) the insurance company was paid the correct higher
premium by Feliciana Legaspi; while petitioner was paid a fee lower than
what it was entitled to for transporting the goods that had been deliberately
undervalued by the shippers in the Bill of Lading. Between the two of them,
the insurer should bear the loss in excess of the value declared in the Bills of
Lading. This is the just and equitable solution.
In Aboitiz Shipping Corporation v. Court of Appeals,[23] the description of
the nature and the value of the goods shipped were declared and reflected in
the bill of lading, like in the present case. The Court therein considered this
declaration as the basis of the carriers liability and ordered payment based
on such amount. Following this ruling, petitioner should not be held liable for
more than what was declared by the shippers/consignees as the value of the
goods in the bills of lading.
We find no cogent reason to disturb the CAs finding that Feliciana
Legaspi was the owner of the goods covered by Bills of Lading Nos. 58 and
59. Undoubtedly, the goods were merely consigned to Nestor Angelia and
Zosimo Mercado, respectively; thus, Feliciana Legaspi or her subrogee
(respondent) was entitled to the goods or, in case of loss, to compensation
therefor.There is no evidence showing that petitioner paid her for the loss of
those goods. It does not even claim to have paid her.
On the other hand, Legaspi Marketing filed with petitioner a claim for the
lost goods under Bill of Lading No. 59, for which the latter subsequently
paid P14,000. But nothing in the records convincingly shows that the former
was the owner of the goods. Respondent was, however, able to prove that it
was Feliciana Legaspi who owned those goods, and who was thus entitled to
payment for their loss. Hence, the claim for the goods under Bill of Lading
No. 59 cannot be deemed to have been extinguished, because payment was
made to a person who was not entitled thereto.
With regard to the claim for the goods that were covered by Bill of
Lading No. 58 and valued at P6,500, the parties have not convinced us to
disturb the findings of the CA that compensation could not validly take
place. Thus, we uphold the appellate courts ruling on this point.
WHEREFORE, the Petition is hereby PARTIALLY GRANTED. The
assailed Decision is MODIFIED in the sense that petitioner
is ORDERED to pay respondent the sums of P14,000 and P6,500, which
represent the value of the goods stated in Bills of Lading Nos. 59 and 58,
respectively. No costs.
SO ORDERED.
12. Ang vs. American Steamship Agencies, Inc.
G.r. No. L-22491, 19 SCRA 123 , January 27, 1967
BENGZON, J. P., J.:
These are two cases separately appealed to the Court of Appeals and
certified to Us by said Court. Since both appeals involve the same parties
and issue, they are decided together herein.
Yau Yue Commercial Bank, Ltd. of Hongkong, also referred to hereafter as
Yau Yue, agreed to sell one boat (50 feet, 30 tons) containing used U.S.
Military Surplus to one Davao Merchandising Corp. for the sum of $8,820.27
(US), and 42 cases (62 sets and 494 pieces) of Hiranos Automatic Cop
Change for Cotton Loom for Calieo to one Herminio Teves for the sum of
$18,246.,65 (US), respectively.
Said agreements were both subject to the following terms and arrangements:
(a) the purchase price should be covered by a bank draft for the
corresponding amount which should be paid by the purchaser in exchange
for the delivery of the corresponding bill of lading to be deposited with a local
bank, the Hongkong & Shanghai Bank of Manila; (b) upon arrival of the
articles in Manila the purchaser would be notified and would have to pay the
amount called for in the corresponding demand draft, after which the bill of
lading would be delivered to said purchaser; and (c) the purchaser would
present said bill of lading to the carrier's agent; American Steamship
Agencies, Inc., which would then issue the correspoding "Permit To Deliver
Imported Articles" to be presented to the Bureau of Custom to obtain the
release of the articles.
Pursuant thereto, on February 17, 1961, Hirahira & Co., Ltd. shipped the 42
cases (62 sets and 494 pieces ) of Hiranos Automatic Cop Change for
Cotton Loom for Calico at Nagoya, aboard the "S.S. CELEBES MARU", for
Manila, with the Kansai Steamship Co., Ltd. of Osaka, Japan, as carrier, of
which the American Steamship Agencies, Inc. is the agent in the Philippines,
under a shipping agreement, Bill of Lading No. NM 1, dated February 17,
1961, consigned "to order of the shipper", with Herminio G. Teves as the
party to be notified of the arrival of said articles.1äwphï1.ñët
Similarly, on June 3, 1961, the United States Contracting Officer, on behalf of
Nippon Trading Shokai for Nishiman Kaihatsu Co., Ltd. shipped the boat
containing U.S. Military Surplus at Yokohama, Japan, the "KYOJU MARU",
with Sankyo Kiun Kabushiki Kaisha of Japan as carrier, of which the
American Steamship Agencies, Inc. is the agent in the Philippines, under a
shipping agreement, Bill of Lading No. YM-3, dated June 3, 1961, consigned
"to the order of Yau Yue Commercial Bank, Ltd. of Hongkong", with Davao
Merchandising Corporation as the party to be notified of the arrival of said
boat.
The bills of lading were indorsed to the order of Yau Yue and delivered to it
by the respective shippers. Upon receipt thereof, Yan Yue drew demand
drafts together with the bills of lading against Teves and Davao
Merchandising Corp., through the Hongkong & Shanghai Bank.
The shipment for Teves arrived in Manila on March 2, 1961; that of Davao
Merchandising Corp., arrived on June 10, 1961. Accordingly, Hongkong &
Shanghai Bank notified Teves and the Davao Merchandising Corporation,
the "notify parties" under the bills of lading, of the arrival of the goods and
requested payment of the demand drafts representing the purchase prices of
the articles. The Davao Merchandising Corp. and Teves, however, did not
pay the respective drafts, prompting the bank in both cases to make the
corresponding protests. The bank likewise returned the bills of lading and
demand drafts to Yau Yue which indorsed both bills of lading to Domingo
Ang.
Teves and Davao Merchandising Corporation, however, were able to obtain
bank guaranties in favor of the American Steamship Agencies., Inc., as
carriers' agent, to the effect that they would surrender the original and
negotiable bills of lading duly indorsed by Yau Yue. And on the strength of
said guaranties, Davao Merchandising Corp. and Teves each succeeded in
securing a "Permit To Deliver Imported Articles" from the carriers' agent,
which they presented to the Bureau of Customs. In turn the latter released to
them the articles covered by the bills of lading.
After being informed by the American Steamship Agencies that the articles
covered by the respective bills of lading were already delivered by them to
the Davao Merchandising Corp. and to Teves, Domingo Ang filed claims with
the carriers' agent for the cost of said articles, interests and damages. The
American Steamship Agencies, Inc., however, refused payment.
Domingo Ang thereafter filed separate complaints in the Court of First
Instance of Manila against the American Steamship Agencies, Inc., for
having allegedly wrongfully delivered and/or converted the goods covered by
the bills of lading belonging to plaintiff Ang, to the damage and prejudice of
the latter. The suit as to the Teves shipment was filed on October 30, 1963;
that referring to the Davao Merchandising Corp.'s shipment was filed on
November 14, 1963.
Subsequently, defendant filed motions to dismiss upon the ground that
plaintiff's causes of action have prescribed under the Carriage of Goods by
Sea Act (Commonwealth Act No. 65), more particularly section 3(6),
paragraph 4, which provides:
In any event, the carrier and the ship shall be discharged from all
liability in respect to loss or damage unless suit is brought within one
year after delivery of the goods or the date when the goods should
have been delivered.
It argued that the cargoes should have been delivered to the person
entitled to the delivery thereof, i.e., plaintiff, on March 2, 1961 (Teves
shipment) and June 10, 1961 (Davao Merchandising Corp.
shipment), the respective dates of the vessels' arrival in Manila, and
that even allowing a reasonable time (even one month) after such
 arrivals within which to make delivery, still, the actions commenced
on October 30, 1963 and November 14, 1963. respectively, were
filed beyond the prescribed period of one year.
By order dated February 21, 1964, copy of which was received by plaintiff on
February 28, 1964, the lower court presided over by the Hon. Judge
Guillermo S. Santos, dismissed the action (in re the 42 cases [62 sets and
494 pieces] of Hiranos Automatic Cop Change for Cotton Loom for Calico)
on the ground of prescription. His motion for reconsideration dated March 20,
1964 having been denied by the lower court in its order dated June 5, 1964,
plaintiff appealed to the Court of Appeals. This is now L-25050 and refers to
the Teves shipment.
Upon the other hand, by order dated January 6, 1964, the lower court
presided over by the Hon. Jesus P. Morfe (in re the boat [50 feet, 30 tons]
containing used U.S. Military Surplus) denied the motion to dismiss on the
ground that there being no allegation in the complaint as to the date of arrival
of the cargo or the date of which it should have been delivered, the
defendant was relying on facts which are not yet in evidence such as
presuming that the cargo had arrived on the specific date and that the same
had been delivered on another specific date.
Upon a motion for reconsideration filed by the defendant on January 13,
1964 and after the parties submitted their memoranda of authorities and
counter-authorities, respectively, the lower court by an order dated February
20, 1964, reconsidered its prior order of January 6, 1964 and dismissed
plaintiff's action also on the ground of prescription. From this order,
defendant appealed to the Court of Appeals. This is now L-25047 and refers
to the Davao Merchandising Corp. shipment.
At issue is a question purely of law, namely: Did plaintiff-appellant's causes
of action prescribe under Section 3(6), paragraph 4 of the Carriage of Goods
by Sea Act? .
The point has already been resolved by this Court in a case involving the
same parties and parallel facts to those herein involved. In Domingo Ang vs.
American Steamship Agencies, Inc., L-22491, January 27, 1967, We held
that the one-year prescriptive period under Section 3(6), paragraph 4 of the
Carriage of Goods by Sea Act does not apply to cases of misdelivery or
conversion. For convenience, We quote the ruling therein:
The provision of law involved in this case speaks of "loss or
damage". That there was no damage caused to the goods which
were delivered intact to Herminio G. Teves who did not file any
notice of damage, is admitted by both parties in this case. What is to
be resolved — in order to determine the applicability of the
prescriptive period of one year to the case at bar — is whether or not
there was 'loss' of the goods subject matter of the complaint.
Nowhere is "loss" defined in the Carriage of Goods by Sea Act.
Therefore, recourse must be had to the Civil Code which provides in
Article 18 thereof that, "In matters which are governed by the Code
of Commerce and special law, their deficiency shall be supplied by
the provision of this Code."
Article 1189 of the Civil Code defines the word 'loss' in cases where
condition have been imposed with the intention of suspending the
efficacy of an obligation to give. The contract of carriage under
consideration entered into by and between American Steamship
Agencies, Inc. and the Yau Yue (which later on endorsed the bill of
lading covering the shipment to plaintiff herein Domingo Ang), is one
involving an obligation to give or to deliver the goods "to the order of
shipper" that is, upon the presentation and surrender of the bill of
lading. This being so, said article can be applied to the present
controversy, more specifically paragraph 2 thereof which provides
that, "... it is understood that a thing is lost when it perishes, or goes
out of commerce, or disappears in such a way that its existence is
unknown or it cannot be recovered."
As defined in the Civil Code and as applied to Section 3(6),
paragraph 4 of the Carriage of Goods by Sea Act, 'loss'
contemplates merely a situation where no delivery at all was made
by the shipper of the goods because the same had perished, gone
out of commerce, or disappeared in much a way that their existence
is unknown or they cannot be recovered. It does not include a
situation where there was indeed delivery — but delivery to the
wrong person, or a misdelivery, as alleged fir the complaint in this
case.
xxx xxx xxx
The point that matters here is that the situation is either delivery or
misdelivery, but not non-delivery. Thus, the goods were either rightly
delivered or misdelivered, but they were not lost. There being no loss
or damage to the goods, the aforequoted provision of the Carriage of
Goods by Sea Act stating that "In any event, the carrier and the ship
shall be discharged from all liability in respect of loss or damage
unless it is brought within one year after delivery of the goods or the
date of when the goods should have been delivered," does not apply.
The reason is not difficult to see. Said one-year period of limitation is
 designed to meet the exigencies of maritime hazards. In a case
where the goods shipped were neither lost nor damaged in transit
but were, on the contrary, delivered in port to someone who claimed
to be entitled thereto, the situation is different, and the special need
for the short period of limitation in case of loss or damage caused by
maritime perils does not obtain.

It follows that for suits predicated not upon loss or damage but on
alleged misdelivery (or conversion) of the goods, the applicable rule
on prescription is that found in the Civil Code, namely, either ten
years for breach of a written contract or four years for quasi-delict
(Arts. 1144[1], 1146, Civil Code). ...

The goods covered by the two shipments subject matter of these appealed
cases were also delivered to the notify parties, Davao Merchandising
Corporation and Herminio Teves, despite the latter's inability to present the
proper bills of lading and without the knowledge and consent of plaintiff-
appellant Domingo Ang to whom were endorsed said bills of lading. There is
therefore likewise misdelivery not nondelivery. Finally, the recipients of said
goods did not file any complaint with defendant regarding any damage to the
same. No loss nor damage is therefore involved in these cases. And thus the
prescriptive period under Section 3(6), paragraph 4 of the Carriage of Goods
by Sea Act does not apply. The applicable prescriptive period is that found in
the Civil Code, namely, either ten years for breach of a written contract or
four years for quasi-delict (Arts. 1144[1] and 1146). Since the complaints in
these appealed cases were filed two years and five months (as to Davao
Merchandising Corp. shipment) and 2 years and 8 months (as to Teves
shipment), from the arrival of the two shipments, it is clear that the causes of
action have not yet prescribed.

Wherefore, the orders appealed from dismissing plaintiff's complaints in

these two cases on the ground of prescription are hereby reversed and set
aside; let said cases be remanded to the respective court a quo for further
proceedings. So ordered.