SECOND DIVISION

[G.R. No. L-57493. January 7, 1987.]

BALIWAG TRANSIT, INC., Petitioner, v. THE HON. COURT OF APPEALS

AND ROMAN MARTINEZ, Respondents.

Sta. Maria & Associates for Petitioner.

Felimon Almazan for respondent Roman Martinez.

SYLLABUS

1. CIVIL LAW; TRANSPORTATION; "KABIT SYSTEM," DETERMINING

FACTOR. — The "Kabit System" has been defined by the Supreme Court as
an arrangement "whereby a person who has been granted a certificate of
convenience allows another person who owns motor vehicles to operate
under such franchise for a fee." (Lita Enterprises, Inc. v. Second Civil Cases
Division, IAC, Et Al., G.R. No. 64693, April 27, 1984). The determining
factor, therefore, is the possession of a franchise to operate which negates
the existence of the "Kabit System" and not the issuance of one SSS ID
Number for both bus lines from which the existence of said system was
inferred. 

2. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACTS OF THE COURT OF

APPEALS ARE CONCLUSIVE ON THE PARTIES AND ON THIS COURT;
EXCEPTIONS. — "It is well settled that the findings of facts of the Court of
Appeals . . . are conclusive on the parties and on this Court, unless: . . . (2)
the inference made is manifestly mistaken; . . . (4) the judgment is based on
misapprehension of facts; . . . (6) the Court of Appeals went beyond the
issues of the case and its findings are contrary to the admissions of both
appellant and appellees; (7) the findings of facts of the Court of Appeals are
contrary to those of the trial court; . . ." (Sacay v. Sandiganbayan, G.R. No.
66497-98, July 10, 1986).

3. ADMINISTRATIVE LAW; ADMINISTRATIVE DECISIONS; FINDINGS OF

FACTS SUPPORTED BY SUBSTANTIAL EVIDENCE MUST BE RESPECTED.
— It has been uniformly held by this Court that it is sufficient that
administrative findings of fact are supported by evidence on the record, or
stated negatively, it is sufficient that findings of fact are not shown to be
unsupported by evidence. The Court has also held further that "in reviewing
administrative decisions, the reviewing court cannot re-examine the
sufficiency of the evidence as if originally instituted therein, and receive
additional evidence that was not submitted to the administrative agency
concerned. The findings of fact must be respected, so long as they are
supported by substantial evidence, even if not overwhelming or
preponderant."cralaw virtua1aw library
4. LABOR AND SOCIAL LEGISLATION; SOCIAL SECURITY COMMISSION;
CLAIM FILED AFTER SEVENTEEN (17) YEARS IN INSTANT CASE HAS
PRESCRIBED. — The employer-employee relationship between the late
Pascual Tuazon and herein private respondent, having been established, the
remittance of SSS contributions of the latter, is the responsibility of his
employer Tuazon, regardless of the existence or non-existence of the "Kabit
System." Moreover, private respondent having allowed seventeen (17) years
to elapse before filing his petition with the Social Security System, has
undoubtedly slept on his rights and his cause of action has already
prescribed under Article 1144(2) of the Civil Code (Central Azucarrera del
Davao v. Court of Appeals, 137 SCRA 296 [1985]; applied by analogy).

DECISION

PARAS, J.:

This is a petition for review on certiorari, seeking the reversal of the decision
of the Court of Appeals dated June 4, 1981, the dispositive portion of which
reads:jgc:chanrobles.com.ph

"WHEREFORE, the resolution (decision) of the Social Security Commission

in SSC Case No. 3272 is hereby set aside and another one entered: ordering
respondent Baliwag Transit, Inc. to remit to the Social Security Commission
the premium contributions for the petitioner for the years 1958 to May 1963
and from 1967 to March 1971, inclusive, plus penalties thereon at the rate
of 3% per month of delinquency."cralaw virtua1aw library

Two passenger bus lines with similar buses and similar routes were being
operated by firm names "Baliwag Transit" and "Baliwag Transit, Inc." (BTI)
the herein petitioner. The former was owned by the late Pascual Tuazon who
continued to operate it until his death on January 26, 1972, while the latter
was owned by petitioner corporation, incorporated in the year 1968 and
existing until the present time. Both bus lines operate under different grants
of franchises by the Public Service Commission (Brief for Petitioner, p. 11),
but were issued only one ID Number 03-22151 by the Social Security
System (Rollo, p. 66).

Private respondent claiming to be an employee of both bus lines with one ID

Number, filed a petition with the Social Security Commission on August 14,
1975 which was docketed as SSC Case No. 3272 to compel BTI to remit to
the Social Security System private respondent’s SSS Premium contributions
for the years 1958 to March, 1963 and from 1967 to March, 1971. He
alleged that he was employed by petitioner from 1947 to 1971 as conductor
and later as inspector with corresponding salary increases and that
petitioner deducted from his salaries, premium contributions, but what was
remitted to the SSS was only for a period covering June, 1963 to 1966, at a
much lesser amount.

In its answer, BTI denied having employed private respondent Ramon

Martinez, the truth being that he was employed by Pascual Tuazon who
since 1948 owned and operated buses under the trade name Baliwag
Transit which were separate and distinct from the buses operated by
petitioner company owned by Mrs. Victoria Vda. de Tengco. Both bus lines
had different offices, different maintenance and repair shops, garages, books
of account, and managers. The employment of private respondent lasted
until 1971 when his employer Pascual Tuazon became bankrupt. It was the
latter which deducted from private respondent the amount corresponding to
his SSS contributions for the years in question but allegedly did not remit
the same. Finally, herein petitioner BTI claims that private respondent
allowed 17 years to elapse and at a time when Pascual Tuazon was already
dead before filing the subject petition with the Social Security Commission.
(Rollo, p. 18).

After trial on the merits, the Social Security Commission on September 12,
1979, entered a resolution in SSC Case No. 3272, the dispositive portion of
which reads:jgc:chanrobles.com.ph

"PREMISES CONSIDERED, this Commission finds and so holds that there

existed no employer-employee relationship between the petitioner and
respondent as would warrant further remittance of SSS contributions for
and in behalf of petitioner Roman Martinez.

"Consequently, this petition is hereby dismissed for lack of merit.

"SO ORDERED."cralaw virtua1aw library

On appeal, the Court of Appeals finding- that the late Pascual Tuazon
operated his buses under the "Kabit" System, reversed and set aside the
foregoing resolution as follows:jgc:chanrobles.com.ph

"WHEREFORE, the resolution (decision) of the Social Security Commission

in SSC Case No. 3272 is hereby set aside and another one entered ordering
respondent Baliwag Transit, Inc. to remit to the Social Security Commission
the premium contributions for the petitioner for the years 1958 to May 1963
and from 1967 to March 1971, inclusive, plus penalties thereon at the rate
of 3% per month of delinquency;

"SO ORDERED."cralaw virtua1aw library

Herein petitioner filed a Motion for Reconsideration with respondent Court

of Appeals, which Motion was later denied.

Hence, this petition.

In the resolution of August 26, 1981 of the Second Division of this Court,
respondents were required to comment (Rollo, p. 64) which was complied
with on September 21, 1981 (Rollo, pp. 65-71). On October 5, 1981,
petitioner filed its Reply (Rollo, pp. 73-75) in compliance with the resolution
of September 30, 1981 (Rollo, p. 71). In the resolution of December 7, 1981,
the petition was given due course (Rollo, p. 81). The brief for petitioner-
appellant was filed on March 27, 1982 (Rollo, p. 89) while private
respondent filed a manifestation and motion to be excused for not filing
private respondent’s brief and to be allowed to adopt as his arguments the
comments he filed on September 19, 1981 and his brief with the Court of
Appeals (Rollo, p. 92). Said manifestation and motion was noted in the
resolution of June 23, 1982 (Rollo, p. 93) and this case was submitted for
deliberation in the resolution of February 3, 1984 (Rollo, p. 94).

Petitioners raised the following assignment of errors:chanrob1es virtual 1aw

library

I. THAT THE FINDINGS OF THE RESPONDENT HONORABLE COURT OF

APPEALS TO THE EFFECT THAT THE VEHICLES OF THE LATE PASCUAL
TUAZON WERE "ATTACHED" OR "KABIT" WITH PETITIONER, BALIWAG
TRANSIT, INC. MAY NOT HAVE BEEN SUPPORTED BY SUBSTANTIAL
EVIDENCE.

II. GRANTING THAT THE VEHICLES OF THE LATE PASCUAL TUAZON

WERE INDEED "ATTACHED" OR "KABIT" WITH PETITIONER BALIWAG
TRANSIT, INC. EMPLOYER-EMPLOYEE RELATIONS MAY NOT EXTENT TO
COVER OR INCLUDE THE EMPLOYEES OF THE ACTUAL OWNER OF THE
VEHICLES AS EMPLOYEES ALSO OF THE HOLDER OF THE CERTIFICATE
OF PUBLIC CONVENIENCE WHICH IS IN THIS CASE, PETITIONER
BALIWAG TRANSIT, INC.

However, the main issue in this case is whether or not the issuance by the
Social Security System of one SSS-ID-Number to two bus lines necessarily
indicates that one of them, operates his buses under the "Kabit
System."cralaw virtua1aw library

The answer is in the negative.

The "Kabit System" has been defined by the Supreme Court as an

arrangement "whereby a person who has been granted a certificate of
convenience allows another person who owns motor vehicles to operate
under such franchise for a fee." (Lita Enterprises, Inc. v. Second Civil Cases
Division, IAC, Et Al., G.R. No. 64693, April 27, 1984).

The determining factor, therefore, is the possession of a franchise to operate

which negates the existence of the "Kabit System" and not the issuance of
one SSS ID Number for both bus lines from which the existence of said
system was inferred.chanrobles.com : virtual law library
In the instant case, the findings of the Court of Appeals are as
follows:jgc:chanrobles.com.ph

". . . It is very obvious from the foregoing narration of facts that the late
Pascual Tuazon, during the time material to this case, operated his houses
under the "kabit" system; that is, while actually he was the owner and
operator of public utility buses, maintaining his own drivers, conductors,
inspectors and other employees, his buses were not registered with the
Public Service Commission (now the Bureau of Land Transportation) in his
own name. Instead, his buses were absorbed and registered as owned and
operated by the "Baliwag Transit," which was the firm name owned and used
by his niece," Victoria Vda. de Tengco."cralaw virtua1aw library

"It is well settled that the findings of facts of the Court of Appeals . . . are
conclusive on the parties and on this Court, unless: . . . (2) the inference
made is manifestly mistaken; . . . (4) the judgment is based on
misapprehension of facts; . . . (6) the Court of Appeals went beyond the
issues of the case and its findings are contrary to the admissions of both
appellant and appellees; (7) the findings of facts of the Court of Appeals are
contrary to those of the trial court; . . ." (Sacay v. Sandiganbayan, G.R. No.
66497-98, July 10, 1986).

In the case at bar, it is undisputed that as testified to, not only by seven (7)
witnesses presented by the petitioner but also by the Social Security System
witness Mangowan Macalaba, Clerk I, of the R & A Division of the Board of
Transportation, who had access to the records of said office with respect to
applications and grant of franchises of public utility vehicles, that Victoria
Vda. de Tengco and Pascual Tuazon were granted separate franchises to
operate public utility buses, under Cases Nos. 15904, 114913, 11564,
103366, 64157 and 65894 for the former and Case No. 69-4592 and Case
No. 697775 for the latter, both operating between Manila and Baliuag
routes. However, the franchises of Pascual Tuazon were cancelled on
December 16, 1971 and May 14, 1972 respectively (Rollo, p. 22), when the
latter terminated his operation.

It is thus evident that both bus lines operated under their own franchises
but opted to retain the firm name "Baliwag Transit" with slight modification,
by the inclusion of the word "Inc." in the case of herein petitioner, obviously
to take advantage of the goodwill such firm name enjoys with the riding
public. Conversely, the conclusion of the Court of Appeals that the late
Pascual Tuazon, during the time material to this case operated his buses
under the "Kabit System" on the ground that while he was actually the
owner and operator, his buses were not registered with the Public Service
Commission (now the Bureau of Land Transportation) in his own name, is
not supported by the records. Much less can it be said that there is an
analogy between the case at bar and the cited case of Doligosa, Et. Al. v.
Decolongon, Et. Al. (3 CA Nos. 1135,1142-43) to the extent that Baliwag
Transit, Inc. being the ostensible operator of the buses actually owned by
Pascual Tuazon, should be held liable for the contributions collected or
ought to be collected from private respondent (Rollo, pp. 53-54), presumably
to discourage the proliferating "Kabit System" in public utility vehicles.

While it is admitted that petitioner was the one who remitted the SSS
premiums of private respondent, it has also been established by testimonies
of witnesses that such arrangement was done purposely to accommodate
the request of the late Pascual Tuazon, the uncle of Victoria Vda. de Tengco
and the money came from him. On the other hand, there is no reason why
such testimonies should not be given credence as the records fail to show
that said witnesses have any motive or reason to falsify or perjure their
testimonies (Rollo, pp. 23-24).

Moreover, the Social Security Commission after several hearings had been
conducted, arrived at the following conclusion:chanrobles.com.ph : virtual
law library

"It was established during the hearings that petitioner Roman Martinez was
employed by, worked for and took orders from Pascual Tuazon and was
authorized to get ‘vales’ from the conductors of the trucks of Mr. Tuazon.
This was admitted got ‘vales’ from the buses of Pascual Tuazon (TSN pp. 24-
25, May 7, 1976 and Exhibits "3" to "49").

"On the other hand, there is no evidence introducted to show that petitioner
ever received salaries from respondent or from Mrs. Victoria Vda. de Tengco
and neither had he been under the orders of the latter. The only basis upon
which petitioner anchors his claim despite his actual employment by
Pascual Tuazon was the use by the latter of the trade name, Baliwag
Transit, in the operation of his (Mr. Tuazon’s) own buses which the latter
had every reason to do since he laboriously helped and organized said firm
until it gained cognizance by the public.

"It is, therefore, clear that even long before the incorporation of the Baliwag
Transit in 1968 petitioner was already an employee of the late Pascual
Tuazon who despite having separate office, employees and buses which were
operated under the line of the Baliwag Transit did not report him for
coverage to the SSS. Sadly enough, petitioner who claims to be an employee
of the respondent did not refute, by way of submitting rebuttal evidence, the
testimonies given by respondent’s witnesses that he was an employee of the
late Pascual Tuazon and not of said respondent or of Mrs. Victoria Tuazon
and not of said respondent or of Mr. Victoria Vda. de Tengco. Indeed, there
is a reasonable basis to believe that he would not attempt to do so if only to
be consistent with his stand when he filed a case before the National Labor
Relations Commission, a claim against both the late Pascual Tuazon and
the Respondent. He is now concentrating his action against the respondent
in view of the death of Pascual Tuazon who during his lifetime sold his
trucks and became bankrupt Exhibit "2") —Resolution, September 14, 1979,
pp. 29-31)." (Rollo, pp. 28-30)

It has been uniformly held by this Court that it is sufficient that

administrative findings of fact are supported by evidence on the record, or
stated negatively, it is sufficient that findings of fact are not shown to be
unsupported by evidence.cralawnad

The Court has also held further that "in reviewing administrative decisions,
the reviewing court cannot re-examine the sufficiency of the evidence as if
originally instituted therein, and receive additional evidence that was not
submitted to the administrative agency concerned. The findings of fact must
be respected, so long as they are supported by substantial evidence, even if
not overwhelming or preponderant." (Police Commission v. Lood, 127 SCRA
758 [1984].

Thus, the employer-employee relationship between the late Pascual Tuazon

and herein private respondent, having been established, the remittance of
SSS contributions of the latter, is the responsibility of his employer Tuazon,
regardless of the existence or non-existence of the "Kabit System."cralaw
virtua1aw library

Moreover, private respondent having allowed seventeen (17) years to elapse

before filing his petition with the Social Security System, has undoubtedly
slept on his rights and his cause of action has already prescribed under
Article 1144(2) of the Civil Code (Central Azucarrera del Davao v. Court of
Appeals, 137 SCRA 296 [1985]; applied by analogy).

PREMISES CONSIDERED, the decision of respondent Court of Appeals

dated June 4, 1981 is hereby REVERSED and SET ASIDE, and the
Resolution of the Social Security Commission dated September 12, 1979 is
hereby REINSTATED.

SO ORDERED.

Feria, Fernan, Alampay and Gutierrez, Jr., JJ., concur.

G.R. No. 92288 February 9, 1993

BRITISH AIRWAYS, INC., Petitioner, vs. THE HON. COURT OF APPEALS,

Twelfth Division, and FIRST INTERNATIONAL TRADING AND GENERAL
SERVICES, Respondents.

Quasha, Asperilla, Ancheta, Peña & Nolasco for petitioner.chanrobles virtual

law library

Monina P. Lee for private respondent.

NOCON, J.:
This is a petition for review on certiorari to annul and set aside the decision
dated November 15, 1989 of the Court of Appeals 1affirming the decision of
the trial court 2in ordering petitioner British Airways, Inc. to pay private
respondent First International Trading and General Services actual
damages, moral damages, corrective or exemplary damages, attorney's fees
and the costs as well as the Resolution dated February 15, 1990  3denying
petitioner's Motion for Reconsideration in the appealed
decision.chanroblesvirtualawlibrarychanrobles virtual law library

It appears on record that on February 15, 1981, private respondent First

International Trading and General Services Co., a duly licensed domestic
recruitment and placement agency, received a telex message from its
principal ROLACO Engineering and Contracting Services in Jeddah, Saudi
Arabia to recruit Filipino contract workers in behalf of said
principal. 4chanrobles virtual law library

During the early part of March 1981, said principal paid to the Jeddah
branch of petitioner British Airways, Inc. airfare tickets for 93 contract
workers with specific instruction to transport said workers to Jeddah on or
before March 30, 1981.chanroblesvirtualawlibrarychanrobles virtual law
library

As soon as petitioner received a prepaid ticket advice from its Jeddah

branch to transport the 93 workers, private respondent was immediately
informed by petitioner that its principal had forwarded 93 prepaid tickets.
Thereafter, private respondent instructed its travel agent, ADB Travel and
Tours. Inc., to book the 93 workers with petitioner but the latter failed to fly
said workers, thereby compelling private respondent to borrow money in the
amount of P304,416.00 in order to purchase airline tickets from the other
airlines as evidenced by the cash vouchers (Exhibits "B", "C" and "C-1 to C-
7") for the 93 workers it had recruited who must leave immediately since the
visas of said workers are valid only for 45 days and the Bureau of
Employment Services mandates that contract workers must be sent to the
job site within a period of 30 days.chanroblesvirtualawlibrarychanrobles
virtual law library

Sometime in the first week of June, 1981, private respondent was again
informed by the petitioner that it had received a prepaid ticket advice from
its Jeddah branch for the transportation of 27 contract workers.
Immediatety, private respondent instructed its travel agent to book the 27
contract workers with the petitioner but the latter was only able to book and
confirm 16 seats on its June 9, 1981 flight. However, on the date of the
scheduled flight only 9 workers were able to board said flight while the
remaining 7 workers were rebooked to June 30, 1981 which bookings were
again cancelled by the petitioner without any prior notice to either private
respondent or the workers. Thereafter, the 7 workers were rebooked to the
July 4,1981 flight of petitioner with 6 more workers booked for said flight.
Unfortunately, the confirmed bookings of the 13 workers were again
cancelled and rebooked to July 7,
1981.chanroblesvirtualawlibrarychanrobles virtual law library

On July 6, 1981, private respondent paid the travel tax of the said workers
as required by the petitioner but when the receipt of the tax payments was
submitted, the latter informed private respondent that it can only confirm
the seats of the 12 workers on its July 7, 1981 flight. However, the
confirmed seats of said workers were again cancelled without any prior
notice either to the private respondent or said workers. The 12 workers were
finally able to leave for Jeddah after private respondent had bought tickets
from the other airlines.chanroblesvirtualawlibrarychanrobles virtual law
library

As a result of these incidents, private respondent sent a letter to petitioner

demanding compensation for the damages it had incurred by the latter's
repeated failure to transport its contract workers despite confirmed bookings
and payment of the corresponding travel
taxes.chanroblesvirtualawlibrarychanrobles virtual law library

On July 23, 1981, the counsel of private respondent sent another letter to
the petitioner demanding the latter to pay the amount of P350,000.00
representing damages and unrealized profit or income which was denied by
the petitioner.chanroblesvirtualawlibrarychanrobles virtual law library

On August 8, 1981, private respondent received a telex message from its

principal cancelling the hiring of the remaining recruited workers due to the
delay in transporting the workers to Jeddah. 5chanrobles virtual law library

On January 27, 1982, private respondent filed a complaint for damages

against petitioner with the Regional Trial Court of Manila, Branch 1 in Civil
Case No. 82-4653.chanroblesvirtualawlibrarychanrobles virtual law library

On the other hand, petitioner, alleged in its Answer with counterclaims that
it received a telex message from Jeddah on March 20, 1981 advising that
the principal of private respondent had prepaid the airfares of 100 persons
to transport private respondent's contract workers from Manila to Jeddah on
or before March 30, 1981. However, due to the unavailability of space and
limited time, petitioner had to return to its sponsor in Jeddah the prepaid
ticket advice consequently not even one of the alleged 93 contract workers
were booked in any of its flights.chanroblesvirtualawlibrarychanrobles
virtual law library

On June 5, 1981, petitioner received another prepaid ticket advice to

transport 16 contract workers of private respondent to Jeddah but the travel
agent of the private respondent booked only 10 contract workers for
petitioner's June 9, 1981 flight. However, only 9 contract workers boarded
the scheduled flight with 1 passenger not showing up as evidenced by the
Philippine Airlines' passenger manifest for Flight BA-020 (Exhibit "7", "7-A",
"7-B" and "7-C"). 6chanrobles virtual law library
Thereafter, private respondent's travel agent booked seats for 5 contract
workers on petitioner's July 4, 1981 flight but said travel agent cancelled
the booking of 2 passengers while the other 3 passengers did not show up
on said flight.chanroblesvirtualawlibrarychanrobles virtual law library

Sometime in July 1981, the travel agent of the private respondent booked 7
more contract workers in addition to the previous 5 contract workers who
were not able to board the July 4, 1981 flight with the petitioner's July 7,
1981 flight which was accepted by petitioner subject to
reconfirmation.chanroblesvirtualawlibrarychanrobles virtual law library

However on July 6, 1981, petitioner's computer system broke down which

resulted to petitioner's failure to get a reconfirmation from Saudi Arabia
Airlines causing the automatic cancellation of the bookings of private
respondent's 12 contract workers. In the morning of July 7, 1981, the
computer system of the petitioner was reinstalled and immediately petitioner
tried to reinstate the bookings of the 12 workers with either Gulf Air or
Saudi Arabia Airlines but both airlines replied that no seat was available on
that date and had to place the 12 workers on the wait list. Said information
was duly relayed to the private respondent and the 12 workers before the
scheduled flight.chanroblesvirtualawlibrarychanrobles virtual law library

After due trial on or on August 27, 1985, the trial court rendered its
decision, the dispositive portion of which reads as follows:

WHEREFORE, in view of all the foregoing, this Court renders

judgment:chanrobles virtual law library

1. Ordering the defendant to pay the plaintiff actual damages in the sum of
P308,016.00;chanrobles virtual law library

2. Ordering defendant to pay moral damages to the plaintiff in the amount of

P20,000.00;chanrobles virtual law library

3. Ordering the defendant to pay the plaintiff P10,000.00 by way of

corrective or exemplary damages;chanrobles virtual law library

4. Ordering the defendant to pay the plaintiff 30% of its total claim for and
as attorney's fees; andchanrobles virtual law library

5. To pay the costs. 7chanrobles virtual law library

On March 13, 1986, petitioner appealed said decision to respondent

appellate court after the trial court denied its Motion for Reconsideration on
February 28, 1986.chanroblesvirtualawlibrarychanrobles virtual law library

On November 15, 1989, respondent appellate court affirmed the decision of

the trial court, the dispositive portion of which reads:
WHEREFORE, the decision appealed from is hereby AFFIRMED with costs
against the appellant. 8chanrobles virtual law library

On December 9, 1989, petitioner filed a Motion for Reconsideration which

was also denied.chanroblesvirtualawlibrarychanrobles virtual law library

Hence, this petition.chanroblesvirtualawlibrarychanrobles virtual law library

It is the contention of petitioner that private respondent has no cause of

action against it there being no perfected contract of carriage existing
between them as no ticket was ever issued to private respondent's contract
workers and, therefore, the obligation of the petitioner to transport said
contract workers did not arise. Furthermore, private respondent's failure to
attach any ticket in the complaint further proved that it was never a party to
the alleged transaction.chanroblesvirtualawlibrarychanrobles virtual law
library

Petitioner's contention is untenable.chanroblesvirtualawlibrarychanrobles

virtual law library

Private respondent had a valid cause of action for damages against

petitioner. A cause of action is an act or omission of one party in violation of
the legal right or rights of the other. 9Petitioner's repeated failures to
transport private respondent's workers in its flight despite confirmed
booking of said workers clearly constitutes breach of contract and bad faith
on its part. In resolving petitioner's theory that private respondent has no
cause of action in the instant case, the appellate court correctly held that:

In dealing with the contract of common carriage of passengers for purpose of

accuracy, there are two (2) aspects of the same, namely: (a) the contract "to
carry (at some future time)," which contract is consensual and is necessarily
perfected by mere consent (See Article 1356, Civil Code of the Philippines),
and (b) the contract "of carriage" or "of common carriage" itself which should
be considered as a real contract for not until the carrier is actually used can
the carrier be said to have already assumed the obligation of a carrier.
(Paras, Civil Code Annotated, Vol. V, p. 429, Eleventh Ed.)chanrobles virtual
law library

In the instant case, the contract "to carry" is the one involved which is
consensual and is perfected by the mere consent of the
parties.chanroblesvirtualawlibrarychanrobles virtual law library

There is no dispute as to the appellee's consent to the said contract "to

carry" its contract workers from Manila to Jeddah. The appellant's consent
thereto, on the other hand, was manifested by its acceptance of the PTA or
prepaid ticket advice that ROLACO Engineering has prepaid the airfares of
the appellee's contract workers advising the appellant that it must transport
the contract workers on or before the end of March, 1981 and the other
batch in June, 1981.chanroblesvirtualawlibrarychanrobles virtual law
library

Even if a PTA is merely an advice from the sponsors that an airline is

authorized to issue a ticket and thus no ticket was yet issued, the fact
remains that the passage had already been paid for by the principal of the
appellee, and the appellant had accepted such payment. The existence of
this payment was never objected to nor questioned by the appellant in the
lower court. Thus, the cause or consideration which is the fare paid for the
passengers exists in this case.chanroblesvirtualawlibrarychanrobles virtual
law library

The third essential requisite of a contract is an object certain. In this

contract "to carry", such an object is the transport of the passengers from
the place of departure to the place of destination as stated in the
telex.chanroblesvirtualawlibrarychanrobles virtual law library

Accordingly, there could be no more pretensions as to the existence of an

oral contract of carriage imposing reciprocal obligations on both
parties.chanroblesvirtualawlibrarychanrobles virtual law library

In the case of appellee, it has fully complied with the obligation, namely, the
payment of the fare and its willingness for its contract workers to leave for
their place of destination.chanroblesvirtualawlibrarychanrobles virtual law
library

On the other hand, the facts clearly show that appellant was remiss in its
obligation to transport the contract workers on their flight despite
confirmation and bookings made by appellee's travelling agent.

xxx xxx xxxchanrobles virtual law library

Besides, appellant knew very well that time was of the essence as the
prepaid ticket advice had specified the period of compliance therewith, and
with emphasis that it could only be used if the passengers fly on BA. Under
the circumstances, the appellant should have refused acceptance of the PTA
from appellee's principal or to at least inform appellee that it could not
accommodate the contract workers.

xxx xxx xxxchanrobles virtual law library

While there is no dispute that ROLACO Engineering advanced the payment

for the airfares of the appellee's contract workers who were recruited for
ROLACO Engineering and the said contract workers were the intended
passengers in the aircraft of the appellant, the said contract "to carry" also
involved the appellee for as recruiter he had to see to it that the contract
workers should be transported to ROLACO Engineering in Jeddah thru the
appellant's transportation. For that matter, the involvement of the appellee
in the said contract "to carry" was well demonstrated when 
the appellant upon receiving the PTA immediately advised the appellee
thereof. 10chanrobles virtual law library

Petitioner also contends that the appellate court erred in awarding actual
damages in the amount of P308,016.00 to private respondent since all
expenses had already been subsequently reimbursed by the latter's
principal.chanroblesvirtualawlibrarychanrobles virtual law library

In awarding actual damages to private respondent, the appellate court held

that the amount of P308,016.00 representing actual damages refers to
private respondent's second cause of action involving the expenses incurred
by the latter which were not reimbursed by ROLACO Engineering. However,
in the Complaint 11filed by private respondent, it was alleged that private
respondent suffered actual damages in the amount of P308,016.00
representing the money it borrowed from friends and financiers which is
P304,416.00 for the 93 airline tickets and P3,600.00 for the travel tax of the
12 workers. It is clear therefore that the actual damages private respondent
seeks to recover are the airline tickets and travel taxes it spent for its
workers which were already reimbursed by its principal and not for any
other expenses it had incurred in the process of recruiting said contract
workers. Inasmuch as all expenses including the processing fees incurred by
private respondent had already been paid for by the latter's principal on a
staggered basis as admitted in open court by its managing director, Mrs.
Bienvenida Brusellas. 12We do not find anymore justification in the appellate
court's decision in granting actual damages to private
respondent.chanroblesvirtualawlibrarychanrobles virtual law library

Thus, while it may be true that private respondent was compelled to borrow
money for the airfare tickets of its contract workers when petitioner failed to
transport said workers, the reimbursements made by its principal to private
respondent failed to support the latter's claim that it suffered actual
damages as a result of petitioner's failure to transport said workers. It is
undisputed that private respondent had consistently admitted that its
principal had reimbursed all its
expenses.chanroblesvirtualawlibrarychanrobles virtual law library

Article 2199 of the Civil Code provides that:

Except as provided by law or by stipulations, one is entitled to an adequate

compensation only for such pecuniary loss suffered by him as he has duly
proved. Such compensation is referred to as actual or compensatory
damages.

Furthermore, actual or compensatory damages cannot be presumed, but

must be duly proved, and proved with reasonable degree of certainty. A
court cannot rely on speculation, conjecture or guesswork as to the fact and
amount of damages, but must depend upon competent proof that they have
suffered and on evidence of the actual amount thereof. 13chanrobles virtual
law library
However, private respondent is entitled to an award of moral and exemplary
damages for the injury suffered as a result of petitioner's failure to transport
the former's workers because of the latter's patent bad faith in the
performance of its obligation. As correctly pointed out by the appellate court:

As evidence had proved, there was complete failure on the part of the
appellant to transport the 93 contract workers of the appellee on or before
March 30, 1981 despite receipt of the payment for their airfares, and
acceptance of the same by the appellant, with specific instructions from the
appellee's principal to transport the contract workers on or before March 30,
1981. No previous notice was ever registered by the appellant that it could
not comply with the same. And then followed the detestable act of appellant
in unilaterally cancelling, booking and rebooking unreasonably the flight of
appellee's contract workers in June to July, 1981 without prior notice. And
all of these actuations of the appellant indeed constitute malice and evident
bad faith which had caused damage and besmirched the reputation and
business image of the appellee. 14chanrobles virtual law library

As to the alleged damages suffered by the petitioner as stated in its

counterclaims, the record shows that no claim for said damages was ever
made by the petitioner immediately after their alleged occurrence therefore
said counterclaims were mere afterthoughts when private respondent filed
the present case.chanroblesvirtualawlibrarychanrobles virtual law library

WHEREFORE, the assailed decision is hereby AFFIRMED with the

MODIFICATION that the award of actual damages be deleted from said
decision.chanroblesvirtualawlibrarychanrobles virtual law library

SO ORDERED.

Narvasa, C.J., Feliciano, Regalado and Campos, Jr., JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 95582 October 7, 1991

DANGWA TRANSPORTATION CO., INC. and THEODORE LARDIZABAL y

MALECDAN, petitioners, 
vs.
COURT OF APPEALS, INOCENCIA CUDIAMAT, EMILIA CUDIAMAT
BANDOY, FERNANDO CUDLAMAT, MARRIETA CUDIAMAT, NORMA
CUDIAMAT, DANTE CUDIAMAT, SAMUEL CUDIAMAT and LIGAYA
CUDIAMAT, all Heirs of the late Pedrito Cudiamat represented by
Inocencia Cudiamat, respondents.

Francisco S. Reyes Law Office for petitioners.

Antonio C. de Guzman for private respondents.

REGALADO, J.:

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
petitioner Theodore M. Lardizabal was driving a passenger bus belonging to
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 and without regard to the welfare of the victim, first brought his other
passengers and cargo to their respective destinations before banging said
victim to the Lepanto Hospital where he expired.

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
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
a counterclaim.

On July 29, 1988, the trial court rendered a decision, effectively in favor of
petitioners, with this decretal portion:

IN VIEW OF ALL THE FOREGOING, judgment is hereby pronounced

that Pedrito Cudiamat was negligent, which negligence was the
proximate cause of his death. Nonetheless, defendants in equity, are
hereby ordered to pay 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.

SO ORDERED. 2
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, 1990, set aside the decision of the lower
court, and ordered petitioners to pay private respondents:
 1. The sum of Thirty Thousand (P30,000.00) Pesos by way of
indemnity for death of the victim Pedrito Cudiamat;

2. The sum of Twenty Thousand (P20,000.00) by way of moral

damages;

3. The sum of Two Hundred Eighty Eight Thousand (P288,000.00)

Pesos as actual and compensatory damages;

4. The costs of this suit. 4

Petitioners' motion for reconsideration was denied by the Court of Appeals in 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.

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.
However, this is subject to settled exceptions, one of which is when the
findings of the appellate court are contrary to those of the trial court, in
which case a reexamination of the facts and evidence may be undertaken. 6

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 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:

This Court is satisfied that Pedrito Cudiamat was negligent in trying to board a moving vehicle, especially with one of his

hands holding an umbrella. And, 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 instead of being

closed. This should be so, for it is hard to believe that one 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 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

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

 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 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 declared that Pedrito Cudiamat was no

longer walking and made a sign to 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.

Evidently, the incident took place due to the gross negligence of the appellee-driver in prematurely stepping on the

accelerator and in not waiting for the passenger to first secure his seat especially so when we take into account that the

platform of the bus was at the time slippery and wet 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 supported by the testimony of petitioners' own witnesses. One of them, Virginia Abalos, testified on cross-examination

as follows:

Q It is not a fact Madam witness, that at bunkhouse 54, that is before the place of the incident, there is a crossing?

A The way going to the mines but it is not being pass(ed) by the bus.

Q And the incident happened before bunkhouse 56, is that not correct?

A It happened between 54 and 53 bunkhouses. 9

The bus conductor, Martin Anglog, also declared:

Q When you arrived at Lepanto on March 25, 1985, will you please inform this Honorable Court if there was anv unusual

incident that occurred?

A When we delivered a baggage at Marivic because  a person alighted there between Bunkhouse 53 and 54.

Q What happened when you delivered this passenger at this particular place in Lepanto?
 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
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 sought by the passenger. By contract

of carriage, the carrier assumes the express obligation to transport the passenger to his destination safely and 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 incumbent upon the carrier to prove that it has exercised extraordinary diligence as prescribed in Articles 1733 and 1755

of the Civil Code. 18

Moreover, the circumstances under which the driver and the conductor failed to bring the gravely injured victim immediately to the

hospital for medical treatment is a patent and incontrovertible proof of their negligence. It defies 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

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:

... 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:

Q Why, what happened to your refrigerator at that particular time?

A I asked them to bring it down because that is the nearest place to

our house and when I went down and asked somebody to bring down
the refrigerator, I also asked somebody to call the family of Mr.
Cudiamat.
 COURT:

Q Why did you ask somebody to call the family of Mr. Cudiamat?

A Because Mr. Cudiamat met an accident, so I ask somebody to call

for the family of Mr. Cudiamat.

Q But nobody ask(ed) you to call for the family of Mr. Cudiamat?

A No sir. 21
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.

G.R. No. 101503 September 15, 1993

PLANTERS PRODUCTS, INC., petitioner, 

vs.
COURT OF APPEALS, SORIAMONT STEAMSHIP AGENCIES AND KYOSEI
KISEN KABUSHIKI KAISHA, respondents.

Gonzales, Sinense, Jimenez & Associates for petitioner.

Siguion Reyna, Montecillo & Ongsiako Law Office for private respondents.

BELLOSILLO, J.:
Does a charter-party1 between a shipowner and a charterer transform a
common carrier into a private one as to negate the civil law presumption of
negligence in case of loss or damage to its cargo?

Planters Products, Inc. (PPI), purchased from Mitsubishi International

Corporation (MITSUBISHI) of New York, U.S.A., 9,329.7069 metric tons
(M/T) of Urea 46% fertilizer which the latter shipped in bulk on 16 June
1974 aboard the cargo vessel M/V "Sun Plum" owned by private respondent
Kyosei Kisen Kabushiki Kaisha (KKKK) from Kenai, Alaska, U.S.A., to Poro
Point, San Fernando, La Union, Philippines, as evidenced by Bill of Lading
No. KP-1 signed by the master of the vessel and issued on the date of
departure.

On 17 May 1974, or prior to its voyage, a time charter-party on the vessel

M/V "Sun Plum" pursuant to the Uniform General Charter2 was entered into
between Mitsubishi as shipper/charterer and KKKK as shipowner, in Tokyo,
Japan.3 Riders to the aforesaid charter-party starting from par. 16 to 40
were attached to the pre-printed agreement. Addenda Nos. 1, 2, 3 and 4 to
the charter-party were also subsequently entered into on the 18th, 20th,
21st and 27th of May 1974, respectively.

Before loading the fertilizer aboard the vessel, four (4) of her holds 4 were all
presumably inspected by the charterer's representative and found fit to take
a load of urea in bulk pursuant to par. 16 of the charter-party which reads:

16. . . . At loading port, notice of readiness to be accomplished

by certificate from National Cargo Bureau inspector or
substitute appointed by charterers for his account certifying the
vessel's readiness to receive cargo spaces. The vessel's hold to
be properly swept, cleaned and dried at the vessel's expense and
the vessel to be presented clean for use in bulk to the satisfaction
of the inspector before daytime commences. (emphasis supplied)

After the Urea fertilizer was loaded in bulk by stevedores hired by and under
the supervision of the shipper, the steel hatches were closed with heavy iron
lids, covered with three (3) layers of tarpaulin, then tied with steel bonds.
The hatches remained closed and tightly sealed throughout the entire
voyage.5

Upon arrival of the vessel at her port of call on 3 July 1974, the steel
pontoon hatches were opened with the use of the vessel's boom. Petitioner
unloaded the cargo from the holds into its steelbodied dump trucks which
were parked alongside the berth, using metal scoops attached to the ship,
pursuant to the terms and conditions of the charter-partly (which provided
for an F.I.O.S. clause).6 The hatches remained open throughout the duration
of the discharge.7

Each time a dump truck was filled up, its load of Urea was covered with
tarpaulin before it was transported to the consignee's warehouse located
some fifty (50) meters from the wharf. Midway to the warehouse, the trucks
were made to pass through a weighing scale where they were individually
weighed for the purpose of ascertaining the net weight of the cargo. The port
area was windy, certain portions of the route to the warehouse were sandy
and the weather was variable, raining occasionally while the discharge was
in progress.8 The petitioner's warehouse was made of corrugated galvanized
iron (GI) sheets, with an opening at the front where the dump trucks entered
and unloaded the fertilizer on the warehouse floor. Tarpaulins and GI sheets
were placed in-between and alongside the trucks to contain spillages of the
ferilizer.9

It took eleven (11) days for PPI to unload the cargo, from 5 July to 18 July
1974 (except July 12th, 14th and 18th).10A private marine and cargo
surveyor, Cargo Superintendents Company Inc. (CSCI), was hired by PPI to
determine the "outturn" of the cargo shipped, by taking draft readings of the
vessel prior to and after discharge. 11 The survey report submitted by CSCI
to the consignee (PPI) dated 19 July 1974 revealed a shortage in the cargo of
106.726 M/T and that a portion of the Urea fertilizer approximating 18 M/T
was contaminated with dirt. The same results were contained in a Certificate
of Shortage/Damaged Cargo dated 18 July 1974 prepared by PPI which
showed that the cargo delivered was indeed short of 94.839 M/T and about
23 M/T were rendered unfit for commerce, having been polluted with sand,
rust and 
dirt. 12

Consequently, PPI sent a claim letter dated 18 December 1974 to Soriamont

Steamship Agencies (SSA), the resident agent of the carrier, KKKK, for
P245,969.31 representing the cost of the alleged shortage in the goods
shipped and the diminution in value of that portion said to have been
contaminated with dirt. 13

Respondent SSA explained that they were not able to respond to the
consignee's claim for payment because, according to them, what they
received was just a request for shortlanded certificate and not a formal
claim, and that this "request" was denied by them because they "had
nothing to do with the discharge of the shipment." 14 Hence, on 18 July
1975, PPI filed an action for damages with the Court of First Instance of
Manila. The defendant carrier argued that the strict public policy governing
common carriers does not apply to them because they have become private
carriers by reason of the provisions of the charter-party. The court a
quo however sustained the claim of the plaintiff against the defendant
carrier for the value of the goods lost or damaged when it ruled thus: 15

. . . Prescinding from the provision of the law that a common

carrier is presumed negligent in case of loss or damage of the
goods it contracts to transport, all that a shipper has to do in a
suit to recover for loss or damage is to show receipt by the carrier
of the goods and to delivery by it of less than what it
received. After that, the burden of proving that the loss or
 damage was due to any of the causes which exempt him from
liability is shipted to the carrier, common or private he may be.
Even if the provisions of the charter-party aforequoted are
deemed valid, and the defendants considered private carriers, it
was still incumbent upon them to prove that the shortage or
contamination sustained by the cargo is attributable to the fault
or negligence on the part of the shipper or consignee in the
loading, stowing, trimming and discharge of the cargo. This they
failed to do. By this omission, coupled with their failure to
destroy the presumption of negligence against them, the
defendants are liable (emphasis supplied).

On appeal, respondent Court of Appeals reversed the lower court and

absolved the carrier from liability for the value of the cargo that was lost or
damaged. 16 Relying on the 1968 case of Home Insurance Co. v. American
Steamship Agencies, Inc.,17 the appellate court ruled that the cargo vessel
M/V "Sun Plum" owned by private respondent KKKK was a private carrier
and not a common carrier by reason of the time charterer-party.
Accordingly, the Civil Code provisions on common carriers which set forth a
presumption of negligence do not find application in the case at bar. Thus —

. . . In the absence of such presumption, it was incumbent upon

the plaintiff-appellee to adduce sufficient evidence to prove the
negligence of the defendant carrier as alleged in its complaint. It
is an old and well settled rule that if the plaintiff, upon whom
rests the burden of proving his cause of action, fails to show in
a satisfactory manner the facts upon which he bases his claim,
the defendant is under no obligation to prove his exception or
defense (Moran, Commentaries on the Rules of Court, Volume 6,
p. 2, citing Belen v. Belen, 13 Phil. 202).

But, the record shows that the plaintiff-appellee dismally failed

to prove the basis of its cause of action, i.e. the alleged
negligence of defendant carrier. It appears that the plaintiff was
under the impression that it did not have to establish
defendant's negligence. Be that as it may, contrary to the trial
court's finding, the record of the instant case discloses ample
evidence showing that defendant carrier was not negligent in
performing its obligation . . . 18 (emphasis supplied).

Petitioner PPI appeals to us by way of a petition for review assailing the

decision of the Court of Appeals. Petitioner theorizes that the Home
Insurance case has no bearing on the present controversy because the issue
raised therein is the validity of a stipulation in the charter-party delimiting
the liability of the shipowner for loss or damage to goods cause by want of
due deligence on its part or that of its manager to make the vessel
seaworthy in all respects, and not whether the presumption of negligence
provided under the Civil Code applies only to common carriers and not to
private carriers. 19 Petitioner further argues that since the possession and
control of the vessel remain with the shipowner, absent any stipulation to
the contrary, such shipowner should made liable for the negligence of the
captain and crew. In fine, PPI faults the appellate court in not applying the
presumption of negligence against respondent carrier, and instead shifting
the onus probandi on the shipper to show want of due deligence on the part
of the carrier, when he was not even at hand to witness what transpired
during the entire voyage.

As earlier stated, the primordial issue here is whether a common carrier

becomes a private carrier by reason of a charter-party; in the negative,
whether the shipowner in the instant case was able to prove that he had
exercised that degree of diligence required of him under the law.

It is said that etymology is the basis of reliable judicial decisions in

commercial cases. This being so, we find it fitting to first define important
terms which are relevant to our discussion.

A "charter-party" is defined as 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; 20 a contract of affreightment by which the owner of a ship or
other vessel lets the whole or a 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; 21 Charter parties are of two types: (a) contract of
affreightment which involves the use of shipping space on vessels leased by
the owner in part or as a whole, to carry goods for others; and, (b) charter by
demise or bareboat charter, by the terms of which the whole vessel is let to
the charterer with a transfer to him of its entire command and possession
and consequent control over its navigation, including the master and the
crew, who are his servants. Contract of affreightment may either be time
charter, wherein the vessel is leased to the charterer for a fixed period of
time, or voyage charter, wherein the ship is leased for a single voyage. 22 In
both cases, the charter-party provides for the hire of vessel only, either for a
determinate period of time or for a single or consecutive voyage, the
shipowner to supply the ship's stores, pay for the wages of the master and
the crew, and defray the expenses for the maintenance of the ship.

Upon the other hand, the term "common or public carrier" is defined in Art.
1732 of the Civil Code. 23 The definition extends to carriers either by land,
air or water which hold themselves out as ready to engage in carrying goods
or transporting passengers or both for compensation as a public
employment and not as a casual occupation. The distinction between a
"common or public carrier" and a "private or special carrier" lies in the
character of the business, such that if the undertaking is a single
transaction, not a part of the general business or occupation, although
involving the carriage of goods for a fee, the person or corporation offering
such service is a private carrier. 24

Article 1733 of the New Civil Code mandates that common carriers, by
reason of the nature of their business, should observe extraordinary
diligence in the vigilance over the goods they carry.25 In the case of private
carriers, however, the exercise of ordinary diligence in the carriage of goods
will suffice. Moreover, in the case of loss, destruction or deterioration of the
goods, common carriers are presumed to have been at fault or to have acted
negligently, and the burden of proving otherwise rests on them. 26 On the
contrary, no such presumption applies to private carriers, for whosoever
alleges damage to or deterioration of the goods carried has the onus of
proving that the cause was the negligence of the carrier.

It is not disputed that respondent carrier, in the ordinary course of

business, operates as a common carrier, transporting goods indiscriminately
for all persons. When petitioner chartered the vessel M/V "Sun Plum", the
ship captain, its officers and compliment were under the employ of the
shipowner and therefore continued to be under its direct supervision and
control. Hardly then can we charge the charterer, a stranger to the crew and
to the ship, with the duty of caring for his cargo when the charterer did not
have any control of the means in doing so. This is evident in the present
case considering that the steering of the ship, the manning of the decks, the
determination of the course of the voyage and other technical incidents of
maritime navigation were all consigned to the officers and crew who were
screened, chosen and hired by the shipowner. 27

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 shipowner 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. 28

Respondent carrier's heavy reliance on the case of Home Insurance

Co. v. American Steamship Agencies, supra, is misplaced for the reason
that the meat of the controversy therein was the validity of a stipulation in
the charter-party exempting the shipowners from liability for loss due to the
negligence of its agent, and not the effects of a special charter on common
carriers. At any rate, the rule in the United States that a ship chartered by a
single shipper to carry special cargo is not a common carrier, 29 does not
find application in our jurisdiction, for we have observed that the growing
concern for safety in the transportation of passengers and /or carriage of
goods by sea requires a more exacting interpretation of admiralty laws, more
particularly, the rules governing common carriers.

We quote with approval the observations of Raoul Colinvaux, the learned

barrister-at-law 30 —

As a matter of principle, it is difficult to find a valid distinction

between cases in which a ship is used to convey the goods of
 one and of several persons. Where the ship herself is let to a
charterer, so that he takes over the charge and control of her,
the case is different; the shipowner is not then a carrier. But
where her services only are let, the same grounds for imposing a
strict responsibility exist, whether he is employed by one or
many. The master and the crew are in each case his servants,
the freighter in each case is usually without any representative
on board the ship; the same opportunities for fraud or collusion
occur; and the same difficulty in discovering the truth as to
what has taken place arises . . .

In an action for recovery of damages against a common carrier on the goods

shipped, the shipper or consignee should first prove the fact of shipment
and its consequent loss or damage while the same was in the possession,
actual or constructive, of the carrier. Thereafter, the burden of proof shifts
to respondent to prove that he has exercised extraordinary diligence
required by law or that the loss, damage or deterioration of the cargo was
due to fortuitous event, or some other circumstances inconsistent with its
liability. 31

To our mind, respondent carrier has sufficiently overcome, by clear and

convincing proof, the prima faciepresumption of negligence.

The master of the carrying vessel, Captain Lee Tae Bo, in his deposition
taken on 19 April 1977 before the Philippine Consul and Legal Attache in
the Philippine Embassy in Tokyo, Japan, testified that before the fertilizer
was loaded, the four (4) hatches of the vessel were cleaned, dried and
fumigated. After completing the loading of the cargo in bulk in the ship's
holds, the steel pontoon hatches were closed and sealed with iron lids, then
covered with three (3) layers of serviceable tarpaulins which were tied with
steel bonds. The hatches remained close and tightly sealed while the ship
was in transit as the weight of the steel covers made it impossible for a
person to open without the use of the ship's boom. 32

It was also shown during the trial that the hull of the vessel was in good
condition, foreclosing the possibility of spillage of the cargo into the sea or
seepage of water inside the hull of the vessel. 33 When M/V "Sun Plum"
docked at its berthing place, representatives of the consignee boarded, and
in the presence of a representative of the shipowner, the foreman, the
stevedores, and a cargo surveyor representing CSCI, opened the hatches
and inspected the condition of the hull of the vessel. The stevedores
unloaded the cargo under the watchful eyes of the shipmates who were
overseeing the whole operation on rotation basis. 34

Verily, the presumption of negligence on the part of the respondent carrier

has been efficaciously overcome by the showing of extraordinary zeal and
assiduity exercised by the carrier in the care of the cargo. This was
confirmed by respondent appellate court thus —
 . . . Be that as it may, contrary to the trial court's finding, the
record of the instant case discloses ample evidence showing that
defendant carrier was not negligent in performing its obligations.
Particularly, the following testimonies of plaintiff-appellee's own
witnesses clearly show absence of negligence by the defendant
carrier; that the hull of the vessel at the time of the discharge of
the cargo was sealed and nobody could open the same except in
the presence of the owner of the cargo and the representatives
of the vessel (TSN, 20 July 1977, p. 14); that the cover of the
hatches was made of steel and it was overlaid with tarpaulins,
three layers of tarpaulins and therefore their contents were
protected from the weather (TSN, 5 April 1978, p. 24); and, that
to open these hatches, the seals would have to be broken, all
the seals were found to be intact (TSN, 20 July 1977, pp. 15-16)
(emphasis supplied).

The period during which private respondent was to observe the degree of
diligence required of it as a public carrier began from the time the cargo was
unconditionally placed in its charge after the vessel's holds were duly
inspected and passed scrutiny by the shipper, up to and until the vessel
reached its destination and its hull was reexamined by the consignee, but
prior to unloading. This is clear from the limitation clause agreed upon by
the parties in the Addendum to the standard "GENCON" time charter-party
which provided for an F.I.O.S., meaning, that the loading, stowing, trimming
and discharge of the cargo was to be done by the charterer, free from all risk
and expense to the carrier. 35 Moreover, a shipowner is liable for damage to
the cargo resulting from improper stowage only when the stowing is done by
stevedores employed by him, and therefore under his control and
supervision, not when the same is done by the consignee or stevedores
under the employ of the latter. 36

Article 1734 of the New Civil Code provides that common carriers are not
responsible for the loss, destruction or deterioration of the goods if caused
by the charterer of the goods or defects in the packaging or in the
containers. The Code of Commerce also provides that all losses and
deterioration which the goods may suffer during the transportation by
reason of fortuitous event, force majeure, or the inherent defect of the
goods, shall be for the account and risk of the shipper, and that proof of
these accidents is incumbent upon the carrier. 37 The carrier, nonetheless,
shall be liable for the loss and damage resulting from the preceding causes if
it is proved, as against him, that they arose through his negligence or by
reason of his having failed to take the precautions which usage has
established among careful persons. 38

Respondent carrier presented a witness who testified on the characteristics

of the fertilizer shipped and the expected risks of bulk shipping. Mr.
Estanislao Chupungco, a chemical engineer working with Atlas Fertilizer,
described Urea as a chemical compound consisting mostly of ammonia and
carbon monoxide compounds which are used as fertilizer. Urea also
contains 46% nitrogen and is highly soluble in water. However, during
storage, nitrogen and ammonia do not normally evaporate even on a long
voyage, provided that the temperature inside the hull does not exceed eighty
(80) degrees centigrade. Mr. Chupungco further added that in unloading
fertilizer in bulk with the use of a clamped shell, losses due to spillage
during such operation amounting to one percent (1%) against the bill of
lading is deemed "normal" or "tolerable." The primary cause of these
spillages is the clamped shell which does not seal very tightly. Also, the wind
tends to blow away some of the materials during the unloading process.

The dissipation of quantities of fertilizer, or its daterioration in value, is

caused either by an extremely high temperature in its place of storage, or
when it comes in contact with water. When Urea is drenched in water, either
fresh or saline, some of its particles dissolve. But the salvaged portion which
is in liquid form still remains potent and usable although no longer saleable
in its original market value.

The probability of the cargo being damaged or getting mixed or

contaminated with foreign particles was made greater by the fact that the
fertilizer was transported in "bulk," thereby exposing it to the inimical effects
of the elements and the grimy condition of the various pieces of equipment
used in transporting and hauling it.

The evidence of respondent carrier also showed that it was highly

improbable for sea water to seep into the vessel's holds during the voyage
since the hull of the vessel was in good condition and her hatches were
tightly closed and firmly sealed, making the M/V "Sun Plum" in all respects
seaworthy to carry the cargo she was chartered for. If there was loss or
contamination of the cargo, it was more likely to have occurred while the
same was being transported from the ship to the dump trucks and finally to
the consignee's warehouse. This may be gleaned from the testimony of the
marine and cargo surveyor of CSCI who supervised the unloading. He
explained that the 18 M/T of alleged "bar order cargo" as contained in their
report to PPI was just an approximation or estimate made by them after the
fertilizer was discharged from the vessel and segregated from the rest of the
cargo.

The Court notes that it was in the month of July when the vessel arrived
port and unloaded her cargo. It rained from time to time at the harbor area
while the cargo was being discharged according to the supply officer of PPI,
who also testified that it was windy at the waterfront and along the shoreline
where the dump trucks passed enroute to the consignee's warehouse.

Indeed, we agree with respondent carrier that bulk shipment of highly

soluble goods like fertilizer carries with it the risk of loss or damage. More
so, with a variable weather condition prevalent during its unloading, as was
the case at bar. This is a risk the shipper or the owner of the goods has to
face. Clearly, respondent carrier has sufficiently proved the inherent
character of the goods which makes it highly vulnerable to deterioration; as
well as the inadequacy of its packaging which further contributed to the
loss. On the other hand, no proof was adduced by the petitioner showing
that the carrier was remise in the exercise of due diligence in order to
minimize the loss or damage to the goods it carried.

WHEREFORE, the petition is DISMISSED. The assailed decision of the Court

of Appeals, which reversed the trial court, is AFFIRMED. Consequently, Civil
Case No. 98623 of the then Court of the First Instance, now Regional Trial
Court, of Manila should be, as it is hereby DISMISSED.

Costs against petitioner.

SO ORDERED.

SECOND DIVISION

G.R. No. 111127 July 26, 1996

MR. & MRS. ENGRACIO FABRE, JR. and PORFIRIO

CABIL, Petitioners, v. COURT OF APPEALS, THE WORD FOR THE WORLD
CHRISTIAN FELLOWSHIP, INC., AMYLINE ANTONIO, JOHN RICHARDS,
GONZALO GONZALES, VICENTE V. QUE, JR., ICLI CORDOVA, ARLENE
GOJOCCO, ALBERTO ROXAS CORDERO, RICHARD BAUTISTA,
JOCELYN GARCIA, YOLANDA CORDOVA, NOEL ROQUE, EDWARD TAN,
ERNESTO NARCISO, ENRIQUETA LOCSIN, FRANCIS NORMAN O.
LOPES, JULIUS CAESAR, GARCIA, ROSARIO MA. V. ORTIZ, MARIETTA
C. CLAVO, ELVIE SENIEL, ROSARIO MARA-MARA, TERESITA REGALA,
MELINDA TORRES, MARELLA MIJARES, JOSEFA CABATINGAN, MARA
NADOC, DIANE MAYO, TESS PLATA, MAYETTE JOCSON, ARLENE Y.
MORTIZ, LIZA MAYO, CARLOS RANARIO, ROSAMARIA T. RADOC and
BERNADETTE FERRER, Respondents.

MENDOZA, J.:

This is a petition for review on certiorari of the decision of the Court of

Appeals 1 in CA-GR No. 28245, dated September 30, 1992, which affirmed
with modification the decision of the Regional Trial Court of Makati, Branch
58, ordering petitioners jointly and severally to pay damages to private
respondent Amyline Antonio, and its resolution which denied petitioners'
motion for reconsideration for lack of merit.

Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model
Mazda minibus. They used the bus principally in connection with a bus
service for school children which they operated in Manila. The couple had a
driver, Porfirio J. Cabil, whom they hired in 1981, after trying him out for
two weeks, His job was to take school children to and from the St.
Scholastica's College in Malate, Manila.
On November 2, 1984 private respondent Word for the World Christian
Fellowship Inc. (WWCF) arranged with petitioners for the transportation of
33 members of its Young Adults Ministry from Manila to La Union and back
in consideration of which private respondent paid petitioners the amount of
P3,000.00.

The group was scheduled to leave on November 2, 1984, at 5:00 o'clock in

the afternoon. However, as several members of the party were late, the bus
did not leave the Tropical Hut at the corner of Ortigas Avenue and EDSA
until 8:00 o'clock in the evening. Petitioner Porfirio Cabil drove the minibus.

The usual route to Caba, La Union was through Carmen, Pangasinan.

However, the bridge at Carmen was under repair, sot hat petitioner Cabil,
who was unfamiliar with the area (it being his first trip to La Union), was
forced to take a detour through the town of Baay in Lingayen, Pangasinan.
At 11:30 that night, petitioner Cabil came upon a sharp curve on the
highway, running on a south to east direction, which he described as "siete."
The road was slippery because it was raining, causing the bus, which was
running at the speed of 50 kilometers per hour, to skid to the left road
shoulder. The bus hit the left traffic steel brace and sign along the road and
rammed the fence of one Jesus Escano, then turned over and landed on its
left side, coming to a full stop only after a series of impacts. The bus came to
rest off the road. A coconut tree which it had hit fell on it and smashed its
front portion.

Several passengers were injured. Private respondent Amyline Antonio was

thrown on the floor of the bus and pinned down by a wooden seat which
came down by a wooden seat which came off after being unscrewed. It took
three persons to safely remove her from this portion. She was in great pain
and could not move.

The driver, petitioner Cabil, claimed he did not see the curve until it was too
late. He said he was not familiar with the area and he could not have seen
the curve despite the care he took in driving the bus, because it was dark
and there was no sign on the road. He said that he saw the curve when he
was already within 15 to 30 meters of it. He allegedly slowed down to 30
kilometers per hour, but it was too late.

The Lingayen police investigated the incident the next day, November 3,
1984. On the basis of their finding they filed a criminal complaint against
the driver, Porfirio Cabil. The case was later filed with the Lingayen Regional
Trial Court. Petitioners Fabre paid Jesus Escano P1,500.00 for the damage
to the latter's fence. On the basis of Escano's affidavit of desistance the case
against petitioners Fabre was dismissed.

Amyline Antonio, who was seriously injured, brought this case in the RTC of
Makati, Metro Manila. As a result of the accident, she is now suffering from
paraplegia and is permanently paralyzed from the waist down. During the
trial she described the operations she underwent and adduced evidence
regarding the cost of her treatment and therapy. Immediately after the
accident, she was taken to the Nazareth Hospital in Baay, Lingayen. As this
hospital was not adequately equipped, she was transferred to the Sto. Niño
Hospital, also in the town of Ba-ay, where she was given sedatives. An x-ray
was taken and the damage to her spine was determined to be too severe to
be treated there. She was therefore brought to Manila, first to the Philippine
General Hospital and later to the Makati Medical Center where she
underwent an operation to correct the dislocation of her spine.

In its decision dated April 17, 1989, the trial court found that:

No convincing evidence was shown that the minibus was properly checked
for travel to a long distance trip and that the driver was properly screened
and tested before being admitted for employment. Indeed, all the evidence
presented have shown the negligent act of the defendants which ultimately
resulted to the accident subject of this case.

Accordingly, it gave judgment for private respondents holding:

Considering that plaintiffs Word for the World Christian Fellowship, Inc. and
Ms. Amyline Antonio were the only ones who adduced evidence in support of
their claim for damages, the Court is therefore not in a position to award
damages to the other plaintiffs.

WHEREFORE, premises considered, the Court hereby renders judgment

against defendants Mr. & Mrs. Engracio Fabre, Jr. and Porfirio Cabil y Jamil
pursuant to articles 2176 and 2180 of the Civil Code of the Philippines and
said defendants are ordered to pay jointly and severally to the plaintiffs the
following amount:

1) P93,657.11 as compensatory and actual damages;

2) P500,000.00 as the reasonable amount of loss of earning capacity of

plaintiff Amyline Antonio;

3) P20,000.00 as moral damages;

4) P20,000.00 as exemplary damages; and

5) 25% of the recoverable amount as attorney's fees;

6) Costs of suit.

SO ORDERED.

The Court of Appeals affirmed the decision of the trial court with respect to
Amyline Antonio but dismissed it with respect to the other plaintiffs on the
ground that they failed to prove their respective claims. The Court of
Appeals modified the award of damages as follows:
1) P93,657.11 as actual damages;

2) P600,000.00 as compensatory damages;

3) P50,000.00 as moral damages;

4) P20,000.00 as exemplary damages;

5) P10,000.00 as attorney's fees; and

6) Costs of suit.

The Court of Appeals sustained the trial court's finding that petitioner Cabil
failed to exercise due care and precaution in the operation of his vehicle
considering the time and the place of the accident. The Court of Appeals
held that the Fabres were themselves presumptively negligent. Hence, this
petition. Petitioners raise the following issues:

I. WHETHER OR NOT PETITIONERS WERE NEGLIGENT.

II. WHETHER OF NOT PETITIONERS WERE LIABLE FOR THE INJURIES

SUFFERED BY PRIVATE RESPONDENTS.

III WHETHER OR NOT DAMAGES CAN BE AWARDED AND IN THE

POSITIVE, UP TO WHAT EXTENT.

Petitioners challenge the propriety of the award of compensatory damages in

the amount of P600,000.00. It is insisted that, on the assumption that
petitioners are liable an award of P600,000.00 is unconscionable and highly
speculative. Amyline Antonio testified that she was a casual employee of a
company called "Suaco," earning P1,650.00 a month, and a dealer of Avon
products, earning an average of P1,000.00 monthly. Petitioners contend that
as casual employees do not have security of tenure, the award of
P600,000.00, considering Amyline Antonio's earnings, is without factual
basis as there is no assurance that she would be regularly earning these
amounts.

With the exception of the award of damages, the petition is devoid of merit.

First, it is unnecessary for our purpose to determine whether to decide this

case on the theory that petitioners are liable for breach of contract of
carriage or culpa contractual or on the theory of quasi delict or culpa
aquiliana as both the Regional Trial Court and the Court of Appeals held,
for although the relation of passenger and carrier is "contractual both in
origin and nature," nevertheless "the act that breaks the contract may be
also a tort." 2 In either case, the question is whether the bus driver,
petitioner Porfirio Cabil, was negligent.
The finding that Cabil drove his bus negligently, while his employer, the
Fabres, who owned the bus, failed to exercise the diligence of a good father
of the family in the selection and supervision of their employee is fully
supported by the evidence on record. These factual findings of the two
courts we regard as final and conclusive, supported as they are by the
evidence. Indeed, it was admitted by Cabil that on the night in question, it
was raining, and as a consequence, the road was slippery, and it was dark.
He averred these facts to justify his failure to see that there lay a sharp
curve ahead. However, it is undisputed that Cabil drove his bus at the speed
of 50 kilometers per hour and only slowed down when he noticed the curve
some 15 to 30 meters ahead. 3 By then it was too late for him to avoid falling
off the road. Given the conditions of the road and considering that the trip
was Cabil's first one outside of Manila, Cabil should have driven his vehicle
at a moderate speed. There is testimony 4that the vehicles passing on that
portion of the road should only be running 20 kilometers per hour, so that
at 50 kilometers per hour, Cabil was running at a very high speed.

Considering the foregoing the fact that it was raining and the road was
slippery, that it was dark, that he drove his bus at 50 kilometers an hour
when even on a good day the normal speed was only 20 kilometers an hour,
and that he was unfamiliar with the terrain, Cabil was grossly negligent and
should be held liable for the injuries suffered by private respondent Amyline
Antonio.

Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise
to the presumption that his employers, the Fabres, were themselves
negligent in the selection and supervisions of their employee.

Due diligence in selection of employees is not satisfied by finding that the

applicant possessed a professional driver's license. The employer should
also examine the applicant for his qualifications, experience and record of
service. 5 Due diligence in supervision, on the other hand, requires the
formulation of rules and regulations for the guidance of employees and
issuance of proper instructions as well as actual implementation and
monitoring of consistent compliance with the rules. 6

In the case at bar, the Fabres, in allowing Cabil to drive the bus to La Union,
apparently did not consider the fact that Cabil had been driving for school
children only, from their homes to the St. Scholastica's College in Metro
Manila. 7 They had hired him only after a two-week apprenticeship. They
had hired him only after a two-week apprenticeship. They had tested him for
certain matters, such as whether he could remember the names of the
children he would be taking to school, which were irrelevant to his
qualification to drive on a long distance travel, especially considering that
the trip to La Union was his first. The existence of hiring procedures and
supervisory policies cannot be casually invoked to overturn the presumption
of negligence on the part of an employer. 8
Petitioners argue that they are not liable because (1) an earlier departure
(made impossible by the congregation's delayed meeting) could have a
averted the mishap and (2) under the contract, the WWCF was directly
responsible for the conduct of the trip. Neither of these contentions hold
water. The hour of departure had not been fixed. Even if it had been, the
delay did not bear directly on the cause of the accident. With respect to the
second contention, it was held in an early case that:

[A] person who hires a public automobile and gives the driver directions as
to the place to which he wishes to be conveyed, but exercises no other
control over the conduct of the driver, is not responsible for acts of
negligence of the latter or prevented from recovering for injuries suffered
from a collision between the automobile and a train, caused by the
negligence or the automobile driver. 9

As already stated, this case actually involves a contract of carriage.

Petitioners, the Fabres, did not have to be engaged in the business of public
transportation for the provisions of the Civil Code on common carriers to
apply to them. As this Court has held: 10

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 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 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 1732
deliberately refrained from making such distinctions.

As common carriers, the Fabres were found to exercise "extraordinary

diligence" for the safe transportation of the passengers to their destination.
This duty of care is not excused by proof that they exercise the diligence of a
good father of the family in the selection and supervision of their employee.
As Art. 1759 of the Code provides:

Common carriers are liable for the death of or injuries to passengers

through the negligence or willful acts of the former's employees although
such employees may have acted beyond the scope of their authority or in
violation of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they
exercised all the diligence of a good father of a family in the selection and
supervision of their employees.

The same circumstances detailed above, supporting the finding of the trial
court and of the appellate court that petitioners are liable under Arts. 2176
and 2180 for quasi delict, fully justify findings them guilty of breach of
contract of carriage under Arts. 1733, 1755 and 1759 of the Civil Code.

Secondly, we sustain the award of damages in favor of Amyline Antonio.

However, we think the Court of Appeals erred in increasing the amount of
compensatory damages because private respondents did not question this
award as inadequate. 11 To the contrary, the award of P500,000.00 for
compensatory damages which the Regional Trial Court made is reasonable
considering the contingent nature of her income as a casual employee of a
company and as distributor of beauty products and the fact that the
possibility that she might be able to work again has not been foreclosed. In
fact she testified that one of her previous employers had expressed
willingness to employ her again.

With respect to the other awards, while the decisions of the trial court and
the Court of Appeals do not sufficiently indicate the factual and legal basis
for them, we find that they are nevertheless supported by evidence in the
records of this case. Viewed as an action for quasi delict, this case falls
squarely within the purview of Art. 2219(2) providing for the payment of
moral damages in cases of quasi delict. On the theory that petitioners are
liable for breach of contract of carriage, the award of moral damages is
authorized by Art. 1764, in relation to Art. 2220, since Cabil's gross
negligence amounted to bad faith. 12 Amyline Antonio's testimony, as well as
the testimonies of her father and copassengers, fully establish the physical
suffering and mental anguish she endured as a result of the injuries caused
by petitioners' negligence.

The award of exemplary damages and attorney's fees was also properly
made. However, for the same reason that it was error for the appellate court
to increase the award of compensatory damages, we hold that it was also
error for it to increase the award of moral damages and reduce the award of
attorney's fees, inasmuch as private respondents, in whose favor the awards
were made, have not appealed. 13

As above stated, the decision of the Court of Appeals can be sustained either
on the theory of quasi delict or on that of breach of contract. The question
is whether, as the two courts below held, petitioners, who are the owners
and driver of the bus, may be made to respond jointly and severally to
private respondent. We hold that they may be. In Dangwa
Trans. Co. Inc. v. Court of Appeals, 14 on facts similar to those in this
case, this Court held the bus company and the driver jointly and severally
liable for damages for injuries suffered by a passenger. Again, in Bachelor
Express, Inc. v. Court of
Appeals 15 a driver found negligent in failing to stop the bus in order to let
off passengers when a fellow passenger ran amuck, as a result of which the
passengers jumped out of the speeding bus and suffered injuries, was held
also jointly and severally liable with the bus company to the injured
passengers.

The same rule of liability was applied in situations where the negligence of
the driver of the bus on which plaintiff was riding concurred with the
negligence of a third party who was the driver of another vehicle, thus
causing an accident. In Anuran v. Buño, 16 Batangas Laguna Tayabas Bus
Co. v. Intermediate Appellate Court, 17 and Metro Manila Transit Corporation
v. Court of Appeals, 18 the bus company, its driver, the operator of the other
vehicle and the driver of the vehicle were jointly and severally held liable to
the injured passenger or the latters' heirs. The basis of this allocation of
liability was explained in Viluan v. Court of Appeals, 19 thus:

Nor should it make any difference that the liability of petitioner [bus owner]
springs from contract while that of respondents [owner and driver of other
vehicle] arises from quasi-delict. As early as 1913, we already ruled
in Gutierrez vs. Gutierrez, 56 Phil. 177, that in case of injury to a passenger
due to the negligence of the driver of the bus on which he was riding and of
the driver of another vehicle, the drivers as well as the owners of the two
vehicles are jointly and severally liable for damages. Some members of the
Court, though, are of the view that under the circumstances they are liable
on quasi-delict. 20

It is true that in Philippine Rabbit Bus Lines, Inc. v. Court of Appeals 21this

Court exonerated the jeepney driver from liability to the injured passengers
and their families while holding the owners of the jeepney jointly and
severally liable, but that is because that case was expressly tried and
decided exclusively on the theory of culpa contractual. As this Court there
explained:

The trial court was therefore right in finding that Manalo (the driver) and
spouses Mangune and Carreon (the jeepney owners) were negligent.
However, its ruling that spouses Mangune and Carreon are jointly and
severally liable with Manalo is erroneous. The driver cannot be held jointly
and severally liable with carrier in case of breach of the contract of carriage.
The rationale behind this is readily discernible. Firstly, the contract of
carriage is between the carrier is exclusively responsible therefore to the
passenger, even if such breach be due to the negligence of his driver (see
Viluan v. The Court of Appeals, et al., G.R. Nos. L-21477-81, April 29, 1966,
16 SCRA 742). 22

As in the case of BLTB, private respondents in this case and her coplaintiffs
did not stake out their claim against the carrier and the driver exclusively on
one theory, much less on that of breach of contract alone. After all, it was
permitted for them to allege alternative causes of action and join as many
parties as may be liable on such causes of action 23 so long as private
respondent and her coplaintiffs do not recover twice for the same injury.
What is clear from the cases is the intent of the plaintiff there to recover
from both the carrier and the driver, thus, justifying the holding that the
carrier and the driver were jointly and severally liable because their separate
and distinct acts concurred to produce the same injury.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED with

MODIFICATION as to award of damages. Petitioners are ORDERED to PAY
jointly and severally the private respondent Amyline Antonio the following
amounts:

1) P93,657.11 as actual damages;

2) P500,000.00 as the reasonable amount of loss of earning capacity of

plaintiff Amyline Antonio;

3) P20,000.00 as moral damages;

4) P20,000.00 as exemplary damages;

5) 25% of the recoverable amount as attorney's fees; and

6) costs of suit.

SO ORDERED.

Regalado, Romero, Puno and Torres, Jr., JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 101089. April 7, 1993.

ESTRELLITA M. BASCOS, petitioners, 

vs.
COURT OF APPEALS and RODOLFO A. CIPRIANO, respondents.

Modesto S. Bascos for petitioner.

Pelaez, Adriano & Gregorio for private respondent.

SYLLABUS

1. CIVIL LAW; COMMON CARRIERS; DEFINED; TEST TO DETERMINE

COMMON CARRIER. — Article 1732 of the Civil Code defines a common
carrier as "(a) person, corporation or firm, or association 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 test
to determine a common carrier is "whether the given undertaking is a part of
the business engaged in by the carrier which he has held out to the general
public as his occupation rather than the quantity or extent of the business
transacted." . . . The holding of the Court in De Guzman vs. Court of
Appeals is instructive. In referring to Article 1732 of the Civil Code, it held
thus: "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 service on an occasional, episodic or
unscheduled basis. Neither does Article 1732 distinguished 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
1732 deliberately refrained from making such distinctions."

2. ID.; ID.; DILIGENCE REQUIRED IN VIGILANCE OVER GOODS

TRANSPORTED; WHEN PRESUMPTION OF NEGLIGENCE ARISES; HOW
PRESUMPTION OVERCAME; WHEN PRESUMPTION MADE ABSOLUTE. —
Common carriers are obliged to observe extraordinary diligence in the
vigilance over the goods transported by them. Accordingly, they are
presumed to have been at fault or to have acted negligently if the goods are
lost, destroyed or deteriorated. There are very few instances when the
presumption of negligence does not attach and these instances are
enumerated in Article 1734. In those cases where the presumption is
applied, the common carrier must prove that it exercised extraordinary
diligence in order to overcome the presumption . . . The presumption of
negligence was raised against petitioner. It was petitioner's burden to
overcome it. Thus, contrary to her assertion, private respondent need not
introduce any evidence to prove her negligence. Her own failure to adduce
sufficient proof of extraordinary diligence made the presumption conclusive
against her.

3. ID.; ID.; HIJACKING OF GOODS; CARRIER PRESUMED NEGLIGENT;

HOW CARRIER ABSOLVED FROM LIABILITY. — In De Guzman vs. Court of
Appeals, the Court held that hijacking, not being included in the provisions
of Article 1734, must be dealt with under the provisions of Article 1735 and
thus, the common carrier is presumed to have been at fault or negligent. To
exculpate the carrier from liability arising from hijacking, he must prove
that the robbers or the hijackers acted with grave or irresistible threat,
violence, or force. This is in accordance with Article 1745 of the Civil Code
which provides: "Art. 1745. Any of the following or similar stipulations shall
be considered unreasonable, unjust and contrary to public policy . . . (6)
That the common carrier's liability for acts committed by thieves, or of
robbers who do not act with grave or irresistible threat, violences or force, is
dispensed with or diminished"; In the same case, the Supreme Court also
held that: "Under Article 1745 (6) above, a common carrier is held
responsible — and will not be allowed to divest or to diminish such
responsibility — even for acts of strangers like thieves or robbers, except
where such thieves or robbers in fact acted "with grave of irresistible threat,
violence of force," We believe and so hold that the limits of the duty of
extraordinary diligence in the vigilance over the goods carried are reached
where the goods are lost as a result of a robbery which is attended by "grave
or irresistible threat, violence or force."

4. REMEDIAL LAW; EVIDENCE; JUDICIAL ADMISSIONS CONCLUSIVE. —

In this case, petitioner herself has made the admission that she was in the
trucking business, offering her trucks to those with cargo to move. Judicial
admissions are conclusive and no evidence is required to prove the same.

5. ID.; ID.; BURDEN OF PROOF RESTS WITH PARTY WHO ALLEGES A

FACT. — Petitioner presented no other proof of the existence of the contract
of lease. He who alleges a fact has the burden of proving it.

6. ID.; ID.; AFFIDAVITS NOT CONSIDERED BEST EVIDENCE IF AFFIANTS

AVAILABLE AS WITNESSES. — While the affidavit of Juanito Morden, the
truck helper in the hijacked truck, was presented as evidence in court, he
himself was a witness as could be gleaned from the contents of the petition.
Affidavits are not considered the best evidence if the affiants are available as
witnesses.

7. CIVIL LAW; OBLIGATIONS AND CONTRACTS; CONTRACT IS WHAT LAW

DEFINES IT TO BE. — Granting that the said evidence were not self-serving,
the same were not sufficient to prove that the contract was one of lease. It
must be understood that a contract is what the law defines it to be and not
what it is called by the contracting parties.

DECISION

CAMPOS, JR., J p:

This is a petition for review on certiorari of the decision ** of the Court of

Appeals in "RODOLFO A. CIPRIANO, doing business under the name
CIPRIANO TRADING ENTERPRISES plaintiff-appellee, vs. ESTRELLITA M.
BASCOS, doing business under the name of BASCOS TRUCKING,
defendant-appellant," C.A.-G.R. CV No. 25216, the dispositive portion of
which is quoted hereunder:
"PREMISES considered, We find no reversible error in the decision appealed
from, which is hereby affirmed in toto. Costs against appellant." 1

The facts, as gathered by this Court, are as follows:

Rodolfo A. Cipriano representing Cipriano Trading Enterprise (CIPTRADE for

short) entered into a hauling contract 2 with Jibfair Shipping Agency
Corporation whereby the former bound itself to haul the latter's 2,000
m/tons of soya bean meal from Magallanes Drive, Del Pan, Manila to the
warehouse of Purefoods Corporation in Calamba, Laguna. To carry out its
obligation, CIPTRADE, through Rodolfo Cipriano, subcontracted with
Estrellita Bascos (petitioner) to transport and to deliver 400 sacks of soya
bean meal worth P156,404.00 from the Manila Port Area to Calamba,
Laguna at the rate of P50.00 per metric ton. Petitioner failed to deliver the
said cargo. As a consequence of that failure, Cipriano paid Jibfair Shipping
Agency the amount of the lost goods in accordance with the contract which
stated that:

"1. CIPTRADE shall be held liable and answerable for any loss in bags due
to theft, hijacking and non-delivery or damages to the cargo during
transport at market value, . . ." 3

Cipriano demanded reimbursement from petitioner but the latter refused to

pay. Eventually, Cipriano filed a complaint for a sum of money and damages
with writ of preliminary attachment 4 for breach of a contract of carriage.
The prayer for a Writ of Preliminary Attachment was supported by an
affidavit 5 which contained the following allegations:

"4. That this action is one of those specifically mentioned in Sec. 1, Rule 57
the Rules of Court, whereby a writ of preliminary attachment may lawfully
issue, namely:

"(e) in an action against a party who has removed or disposed of his

property, or is about to do so, with intent to defraud his creditors;"

5. That there is no sufficient security for the claim sought to be enforced by

the present action;

6. That the amount due to the plaintiff in the above-entitled case is above all
legal counterclaims;"

The trial court granted the writ of preliminary attachment on February 17,
1987.

In her answer, petitioner interposed the following defenses: that there was
no contract of carriage since CIPTRADE leased her cargo truck to load the
cargo from Manila Port Area to Laguna; that CIPTRADE was liable to
petitioner in the amount of P11,000.00 for loading the cargo; that the truck
carrying the cargo was hijacked along Canonigo St., Paco, Manila on the
night of October 21, 1988; that the hijacking was immediately reported to
CIPTRADE and that petitioner and the police exerted all efforts to locate the
hijacked properties; that after preliminary investigation, an information for
robbery and carnapping were filed against Jose Opriano, et al.; and that
hijacking, being a force majeure, exculpated petitioner from any liability to
CIPTRADE.

After trial, the trial court rendered a decision *** the dispositive portion of
which reads as follows:

"WHEREFORE, judgment is hereby rendered in favor of plaintiff and against

defendant ordering the latter to pay the former:

1. The amount of ONE HUNDRED FIFTY-SIX THOUSAND FOUR HUNDRED

FOUR PESOS (P156,404.00) as an (sic) for actual damages with legal
interest of 12% per cent per annum to be counted from December 4, 1986
until fully paid;

2. The amount of FIVE THOUSAND PESOS (P5,000.00) as and for attorney's

fees; and

3. The costs of the suit.

The "Urgent Motion To Dissolve/Lift preliminary Attachment" dated March

10, 1987 filed by defendant is DENIED for being moot and academic.

SO ORDERED." 6

Petitioner appealed to the Court of Appeals but respondent Court affirmed

the trial court's judgment.

Consequently, petitioner filed this petition where she makes the following
assignment of errors; to wit:

"I. THE RESPONDENT COURT ERRED IN HOLDING THAT THE

CONTRACTUAL RELATIONSHIP BETWEEN PETITIONER AND PRIVATE
RESPONDENT WAS CARRIAGE OF GOODS AND NOT LEASE OF CARGO
TRUCK.

II. GRANTING, EX GRATIA ARGUMENTI, THAT THE FINDING OF THE

RESPONDENT COURT THAT THE CONTRACTUAL RELATIONSHIP
BETWEEN PETITIONER AND PRIVATE RESPONDENT WAS CARRIAGE OF
GOODS IS CORRECT, NEVERTHELESS, IT ERRED IN FINDING
PETITIONER LIABLE THEREUNDER BECAUSE THE LOSS OF THE CARGO
WAS DUE TO FORCE MAJEURE, NAMELY, HIJACKING.

III. THE RESPONDENT COURT ERRED IN AFFIRMING THE FINDING OF

THE TRIAL COURT THAT PETITIONER'S MOTION TO DISSOLVE/LIFT THE
WRIT OF PRELIMINARY ATTACHMENT HAS BEEN RENDERED MOOT AND
ACADEMIC BY THE DECISION OF THE MERITS OF THE CASE." 7

The petition presents the following issues for resolution: (1) was petitioner a
common carrier?; and (2) was the hijacking referred to a force majeure?

The Court of Appeals, in holding that petitioner was a common carrier,

found that she admitted in her answer that she did business under the
name A.M. Bascos Trucking and that said admission dispensed with the
presentation by private respondent, Rodolfo Cipriano, of proofs that
petitioner was a common carrier. The respondent Court also adopted in toto
the trial court's decision that petitioner was a common carrier, Moreover,
both courts appreciated the following pieces of evidence as indicators that
petitioner was a common carrier: the fact that the truck driver of petitioner,
Maximo Sanglay, received the cargo consisting of 400 bags of soya bean
meal as evidenced by a cargo receipt signed by Maximo Sanglay; the fact
that the truck helper, Juanito Morden, was also an employee of petitioner;
and the fact that control of the cargo was placed in petitioner's care.

In disputing the conclusion of the trial and appellate courts that petitioner
was a common carrier, she alleged in this petition that the contract between
her and Rodolfo A. Cipriano, representing CIPTRADE, was lease of the truck.
She cited as evidence certain affidavits which referred to the contract as
"lease". These affidavits were made by Jesus Bascos 8 and by petitioner
herself. 9 She further averred that Jesus Bascos confirmed in his testimony
his statement that the contract was a lease contract. 10 She also stated
that: she was not catering to the general public. Thus, in her answer to the
amended complaint, she said that she does business under the same style
of A.M. Bascos Trucking, offering her trucks for lease to those who have
cargo to move, not to the general public but to a few customers only in view
of the fact that it is only a small business. 11

We agree with the respondent Court in its finding that petitioner is a

common carrier.

Article 1732 of the Civil Code defines a common carrier as "(a) person,
corporation or firm, or association 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 test to determine a
common carrier is "whether the given undertaking is a part of the business
engaged in by the carrier which he has held out to the general public as his
occupation rather than the quantity or extent of the business transacted."
12 In this case, petitioner herself has made the admission that she was in
the trucking business, offering her trucks to those with cargo to move.
Judicial admissions are conclusive and no evidence is required to prove the
same. 13

But petitioner argues that there was only a contract of lease because they
offer their services only to a select group of people and because the private
respondents, plaintiffs in the lower court, did not object to the presentation
of affidavits by petitioner where the transaction was referred to as a lease
contract.

Regarding the first contention, the holding of the Court in De Guzman vs.
Court of Appeals 14 is instructive. In referring to Article 1732 of the Civil
Code, it held thus:

"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 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 1732
deliberately refrained from making such distinctions."

Regarding the affidavits presented by petitioner to the court, both the trial
and appellate courts have dismissed them as self-serving and petitioner
contests the conclusion. We are bound by the appellate court's factual
conclusions. Yet, granting that the said evidence were not self-serving, the
same were not sufficient to prove that the contract was one of lease. It must
be understood that a contract is what the law defines it to be and not what
it is called by the contracting parties. 15 Furthermore, petitioner presented
no other proof of the existence of the contract of lease. He who alleges a fact
has the burden of proving it. 16

Likewise, We affirm the holding of the respondent court that the loss of the
goods was not due to force majeure.

Common carriers are obliged to observe extraordinary diligence in the

vigilance over the goods transported by them. 17 Accordingly, they are
presumed to have been at fault or to have acted negligently if the goods are
lost, destroyed or deteriorated. 18 There are very few instances when the
presumption of negligence does not attach and these instances are
enumerated in Article 1734. 19 In those cases where the presumption is
applied, the common carrier must prove that it exercised extraordinary
diligence in order to overcome the presumption.

In this case, petitioner alleged that hijacking constituted force majeure

which exculpated her from liability for the loss of the cargo. In De Guzman
vs. Court of Appeals, 20 the Court held that hijacking, not being included in
the provisions of Article 1734, must be dealt with under the provisions of
Article 1735 and thus, the common carrier is presumed to have been at
fault or negligent. To exculpate the carrier from liability arising from
hijacking, he must prove that the robbers or the hijackers acted with grave
or irresistible threat, violence, or force. This is in accordance with Article
1745 of the Civil Code which provides:

"Art. 1745. Any of the following or similar stipulations shall be considered

unreasonable, unjust and contrary to public policy;

xxx xxx xxx

(6) That the common carrier's liability for acts committed by thieves, or of
robbers who do not act with grave or irresistible threat, violences or force, is
dispensed with or diminished;"

In the same case, 21 the Supreme Court also held that:

"Under Article 1745 (6) above, a common carrier is held responsible — and
will not be allowed to divest or to diminish such responsibility — even for
acts of strangers like thieves or robbers except where such thieves or
robbers in fact acted with grave or irresistible threat, violence or force. We
believe and so hold that the limits of the duty of extraordinary diligence in
the vigilance over the goods carried are reached where the goods are lost as
a result of a robbery which is attended by "grave or irresistible threat,
violence or force."

To establish grave and irresistible force, petitioner presented her accusatory

affidavit, 22 Jesus Bascos' affidavit, 23 and Juanito Morden's 24 "Salaysay".
However, both the trial court and the Court of Appeals have concluded that
these affidavits were not enough to overcome the presumption. Petitioner's
affidavit about the hijacking was based on what had been told her by
Juanito Morden. It was not a first-hand account. While it had been admitted
in court for lack of objection on the part of private respondent, the
respondent Court had discretion in assigning weight to such evidence. We
are bound by the conclusion of the appellate court. In a petition for review
on certiorari, We are not to determine the probative value of evidence but to
resolve questions of law. Secondly, the affidavit of Jesus Bascos did not
dwell on how the hijacking took place. Thirdly, while the affidavit of Juanito
Morden, the truck helper in the hijacked truck, was presented as evidence
in court, he himself was a witness as could be gleaned from the contents of
the petition. Affidavits are not considered the best evidence if the affiants are
available as witnesses. 25 The subsequent filing of the information for
carnapping and robbery against the accused named in said affidavits did not
necessarily mean that the contents of the affidavits were true because they
were yet to be determined in the trial of the criminal cases.

The presumption of negligence was raised against petitioner. It was

petitioner's burden to overcome it. Thus, contrary to her assertion, private
respondent need not introduce any evidence to prove her negligence. Her
own failure to adduce sufficient proof of extraordinary diligence made the
presumption conclusive against her.
Having affirmed the findings of the respondent Court on the substantial
issues involved, We find no reason to disturb the conclusion that the motion
to lift/dissolve the writ of preliminary attachment has been rendered moot
and academic by the decision on the merits.

In the light of the foregoing analysis, it is Our opinion that the petitioner's
claim cannot be sustained. The petition is DISMISSED and the decision of
the Court of Appeals is hereby AFFIRMED.

SO ORDERED.

FIRST DIVISION

G.R. No. 141910 - August 6, 2002

FGU INSURANCE CORPORATION, Petitioner, vs. G.P. SARMIENTO

TRUCKING CORPORATION and LAMBERT M. EROLES, Respondents.

VITUG, J.:

G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver on 18 June

1994 thirty (30) units of Condura S.D. white refrigerators aboard one of its
Isuzu truck, driven by Lambert Eroles, from the plant site of Concepcion
Industries, Inc., along South Superhighway in Alabang, Metro Manila, to the
Central Luzon Appliances in Dagupan City. While the truck was traversing
the north diversion road along McArthur highway in Barangay Anupol,
Bamban, Tarlac, it collided with an unidentified truck, causing it to fall into
a deep canal, resulting in damage to the cargoes.

FGU Insurance Corporation (FGU), an insurer of the shipment, paid to

Concepcion Industries, Inc., the value of the covered cargoes in the sum of
P204,450.00. FGU, in turn, being the subrogee of the rights and interests of
Concepcion Industries, Inc., sought reimbursement of the amount it had
paid to the latter from GPS. Since the trucking company failed to heed the
claim, FGU filed a complaint for damages and breach of contract of carriage
against GPS and its driver Lambert Eroles with the Regional Trial Court,
Branch 66, of Makati City. In its answer, respondents asserted that GPS
was the exclusive hauler only of Concepcion Industries, Inc., since 1988,
and it was not so engaged in business as a common carrier. Respondents
further claimed that the cause of damage was purely accidental.

The issues having thus been joined, FGU presented its evidence,
establishing the extent of damage to the cargoes and the amount it had paid
to the assured. GPS, instead of submitting its evidence, filed with leave of
court a motion to dismiss the complaint by way of demurrer to evidence on
the ground that petitioner had failed to prove that it was a common carrier.

The trial court, in its order of 30 April 1996,1 granted the motion to dismiss,
explaining thusly:
"Under Section 1 of Rule 131 of the Rules of Court, it is provided that 'Each
party must prove his own affirmative allegation, xxx.'

"In the instant case, plaintiff did not present any single evidence that would
prove that defendant is a common carrier.

"x x x - x x x - x x x

"Accordingly, the application of the law on common carriers is not warranted

and the presumption of fault or negligence on the part of a common carrier
in case of loss, damage or deterioration of goods during transport under
1735 of the Civil Code is not availing.

"Thus, the laws governing the contract between the owner of the cargo to
whom the plaintiff was subrogated and the owner of the vehicle which
transports the cargo are the laws on obligation and contract of the Civil
Code as well as the law on quasi delicts.

"Under the law on obligation and contract, negligence or fault is not

presumed. The law on quasi delict provides for some presumption of
negligence but only upon the attendance of some circumstances. Thus,
Article 2185 provides:

'Art. 2185. Unless there is proof to the contrary, it is presumed that a

person driving a motor vehicle has been negligent if at the time of the
mishap, he was violating any traffic regulation.'

"Evidence for the plaintiff shows no proof that defendant was violating any
traffic regulation. Hence, the presumption of negligence is not obtaining.

"Considering that plaintiff failed to adduce evidence that defendant is a

common carrier and defendant's driver was the one negligent, defendant
cannot be made liable for the damages of the subject cargoes." 2

The subsequent motion for reconsideration having been denied,3 plaintiff

interposed an appeal to the Court of Appeals, contending that the trial court
had erred (a) in holding that the appellee corporation was not a common
carrier defined under the law and existing jurisprudence; and (b) in
dismissing the complaint on a demurrer to evidence.

The Court of Appeals rejected the appeal of petitioner and ruled in favor of
GPS. The appellate court, in its decision of 10 June 1999,4 discoursed,
among other things, that -

"x x x in order for the presumption of negligence provided for under the law
governing common carrier (Article 1735, Civil Code) to arise, the appellant
must first prove that the appellee is a common carrier. Should the appellant
fail to prove that the appellee is a common carrier, the presumption would
not arise; consequently, the appellant would have to prove that the carrier
was negligent.

"x x x - x x x - x x x

"Because it is the appellant who insists that the appellees can still be
considered as a common carrier, despite its `limited clientele,' (assuming it
was really a common carrier), it follows that it (appellant) has the burden of
proving the same. It (plaintiff-appellant) `must establish his case by a
preponderance of evidence, which means that the evidence as a whole
adduced by one side is superior to that of the other.' (Summa Insurance
Corporation vs. Court of Appeals, 243 SCRA 175). This, unfortunately, the
appellant failed to do -- hence, the dismissal of the plaintiff's complaint by
the trial court is justified.

"x x x - x x x - x x x

"Based on the foregoing disquisitions and considering the circumstances

that the appellee trucking corporation has been `its exclusive contractor,
hauler since 1970, defendant has no choice but to comply with the directive
of its principal,' the inevitable conclusion is that the appellee is a private
carrier.

"x x x - x x x - x x x

"x x x the lower court correctly ruled that 'the application of the law on
common carriers is not warranted and the presumption of fault or
negligence on the part of a common carrier in case of loss, damage or
deterioration of good[s] during transport under [article] 1735 of the Civil
Code is not availing.' x x x.

"Finally, We advert to the long established rule that conclusions and

findings of fact of a trial court are entitled to great weight on appeal and
should not be disturbed unless for strong and valid reasons." 5

Petitioner's motion for reconsideration was likewise denied; 6 hence, the

instant petition,7 raising the following issues:

WHETHER RESPONDENT GPS MAY BE CONSIDERED AS A COMMON

CARRIER AS DEFINED UNDER THE LAW AND EXISTING
JURISPRUDENCE.

II

WHETHER RESPONDENT GPS, EITHER AS A COMMON CARRIER OR A

PRIVATE CARRIER, MAY BE PRESUMED TO HAVE BEEN NEGLIGENT
WHEN THE GOODS IT UNDERTOOK TO TRANSPORT SAFELY WERE
SUBSEQUENTLY DAMAGED WHILE IN ITS PROTECTIVE CUSTODY AND
POSSESSION.

III

WHETHER THE DOCTRINE OF RES IPSA LOQUITUR IS APPLICABLE IN

THE INSTANT CASE.

On the first issue, the Court finds the conclusion of the trial court and the
Court of Appeals to be amply justified. GPS, being an exclusive contractor
and hauler of Concepcion Industries, Inc., rendering or offering its services
to no other individual or entity, cannot be considered a common carrier.
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 hire or compensation, offering their services to
the public,8 whether to the public in general or to a limited clientele in
particular, but never on an exclusive basis.9 The true test of a common
carrier is the carriage of passengers or goods, providing space for those who
opt to avail themselves of its transportation service for a fee. 10 Given
accepted standards, GPS scarcely falls within the term "common carrier."

The above conclusion nothwithstanding, GPS cannot escape from liability.

In culpa contractual, upon which the action of petitioner rests as being the
subrogee of Concepcion Industries, Inc., the mere proof of the existence of
the contract and the failure of its compliance justify, prima facie, a
corresponding right of relief.11 The law, recognizing the obligatory force of
contracts,12 will not permit a party to be set free from liability for any kind of
misperformance of the contractual undertaking or a contravention of the
tenor thereof.13 A breach upon the contract confers upon the injured party a
valid cause for recovering that which may have been lost or suffered. The
remedy serves to preserve the interests of the promisee that may include his
"expectation interest," which is his interest in having the benefit of his
bargain by being put in as good a position as he would have been in had the
contract been performed, or his "reliance interest," which is his interest in
being reimbursed for loss caused by reliance on the contract by being put in
as good a position as he would have been in had the contract not been
made; or his "restitution interest," which is his interest in having restored to
him any benefit that he has conferred on the other party.14 Indeed,
agreements can accomplish little, either for their makers or for society,
unless they are made the basis for action.15 The effect of every infraction is
to create a new duty, that is, to make recompense to the one who has been
injured by the failure of another to observe his contractual
obligation16 unless he can show extenuating circumstances, like proof of his
exercise of due diligence (normally that of the diligence of a good father of a
family or, exceptionally by stipulation or by law such as in the case of
common carriers, that of extraordinary diligence) or of the attendance of
fortuitous event, to excuse him from his ensuing liability.
Respondent trucking corporation recognizes the existence of a contract of
carriage between it and petitioner's assured, and admits that the cargoes it
has assumed to deliver have been lost or damaged while in its custody. In
such a situation, a default on, or failure of compliance with, the obligation -
in this case, the delivery of the goods in its custody to the place of
destination - gives rise to a presumption of lack of care and corresponding
liability on the part of the contractual obligor the burden being on him to
establish otherwise. GPS has failed to do so.

Respondent driver, on the other hand, without concrete proof of his

negligence or fault, may not himself be ordered to pay petitioner. The driver,
not being a party to the contract of carriage between petitioner's principal
and defendant, may not be held liable under the agreement. A contract can
only bind the parties who have entered into it or their successors who have
assumed their personality or their juridical position. 17 Consonantly with the
axiom res inter alios acta aliis neque nocet prodest, such contract can
neither favor nor prejudice a third person. Petitioner's civil action against
the driver can only be based on culpa aquiliana, which, unlike culpa
contractual, would require the claimant for damages to prove negligence or
fault on the part of the defendant.18

A word in passing. Res ipsa loquitur, a doctrine being invoked by petitioner,

holds a defendant liable where the thing which caused the injury
complained of is shown to be under the latter's management and the
accident is such that, in the ordinary course of things, cannot be expected
to happen if those who have its management or control use proper care. It
affords reasonable evidence, in the absence of explanation by the defendant,
that the accident arose from want of care.19 It is not a rule of substantive
law and, as such, it does not create an independent ground of liability.
Instead, it is regarded as a mode of proof, or a mere procedural convenience
since it furnishes a substitute for, and relieves the plaintiff of, the burden of
producing specific proof of negligence. The maxim simply places on the
defendant the burden of going forward with the proof.20 Resort to the
doctrine, however, may be allowed only when (a) the event is of a kind which
does not ordinarily occur in the absence of negligence; (b) other responsible
causes, including the conduct of the plaintiff and third persons, are
sufficiently eliminated by the evidence; and (c) the indicated negligence is
within the scope of the defendant's duty to the plaintiff. 21 Thus, it is not
applicable when an unexplained accident may be attributable to one of
several causes, for some of which the defendant could not be responsible. 22

Res ipsa loquitur generally finds relevance whether or not a contractual

relationship exists between the plaintiff and the defendant, for the inference
of negligence arises from the circumstances and nature of the occurrence
and not from the nature of the relation of the parties. 23 Nevertheless, the
requirement that responsible causes other than those due to defendant's
conduct must first be eliminated, for the doctrine to apply, should be
understood as being confined only to cases of pure (non-contractual) tort
since obviously the presumption of negligence in culpa contractual, as
previously so pointed out, immediately attaches by a failure of the covenant
or its tenor. In the case of the truck driver, whose liability in a civil action is
predicated on culpa acquiliana, while he admittedly can be said to have been
in control and management of the vehicle which figured in the accident, it is
not equally shown, however, that the accident could have been exclusively
due to his negligence, a matter that can allow, forthwith, res ipsa loquitur to
work against him.

If a demurrer to evidence is granted but on appeal the order of dismissal is

reversed, the movant shall be deemed to have waived the right to present
evidence.24 Thus, respondent corporation may no longer offer proof to
establish that it has exercised due care in transporting the cargoes of the
assured so as to still warrant a remand of the case to the trial court.

WHEREFORE, the order, dated 30 April 1996, of the Regional Trial Court,
Branch 66, of Makati City, and the decision, dated 10 June 1999, of the
Court of Appeals, are AFFIRMED only insofar as respondent Lambert M.
Eroles is concerned, but said assailed order of the trial court and decision of
the appellate court are REVERSED as regards G.P. Sarmiento Trucking
Corporation which, instead, is hereby ordered to pay FGU Insurance
Corporation the value of the damaged and lost cargoes in the amount of
P204,450.00. No costs.

SO ORDERED.

EN BANC

G.R. No. L-27166 March 25, 1970chanrobles virtual law library

GERMAN CRISOSTOMO, as heirs of QUITERIO CRISOSTOMO; FELIPA

CRISOSTOMO; PEREGRINA FLORES DIMAGUIBA, as heiress of
POTENCIANA CRISOSTOMO; and PURIFICACION CRISOSTOMO-REYES,
as heiress of NARCISO CRISOSTOMO; who are all heirs of the late
PEDRO CRISOSTOMO, Petitioners, vs. THE COURT OF APPEALS, THE
HEIRS OF LAUREANO MARQUEZ, JOSE A. AGUILING, in his capacity as
Clerk of Court, Court of Appeals, Respondents.

Viola and Associates for petitioners.chanroblesvirtualawlibrarychanrobles

virtual law library

Rosendo J. Tansinsin for respondents.

CASTRO, J.:

The essential facts upon which the issues posed in this petition rest are not
controverted.chanroblesvirtualawlibrarychanrobles virtual law library

After proceedings duly had in Registration Case 1183, the Court of First
Instance of Bulacan decreed the registration of a parcel of land situated in
the municipality of Hagonoy of the same province in the name of the estate
of the late Laureano Marquez. On November 29, 1956, however, before the
decree of registration could issue, the petitioners German Crisostomo, et al.
sought a review of the judgment rendered in that case and prayed the court
that issued the decree of registration to order its transfer in their names.
After a protracted hearing, the petitioners lost out to the respondents heirs
of Marquez, per the order of the court dated April 26,
1960.chanroblesvirtualawlibrarychanrobles virtual law library

In due time, the petitioners gave notice to the trial court that they were
appealing its order to the respondent Court of Appeals, and subsequently,
on May 20, 1960, they moved the lower court for approval of their record on
appeal and appeal bond and, further, for transmittal of these, together with
the evidence presented at the trial, to the respondent Court of
Appeals.chanroblesvirtualawlibrarychanrobles virtual law library

On July 14, 1961, after the contending parties had submitted their printed
briefs to the respondent appellate court (CA-G.R. 28678-R), the respondents
heirs of Marquez, then appellees, moved that court to forward the case to
this Court for the reason that the value of the land under litigation,
something in excess of P200,000, placed the matter within this Court's
exclusive appellate jurisdiction. Asked for comment, the petitioners, then
appellants, bracssssssed to block the move for a change of forum and filed
on July 18, 1961 an opposition secured on the arguments that the valuation
of the property submitted by the heirs of Marquez was based on self-serving
and unreliable affidavits and that, moreover, the best evidence of the true
valuation of the property was the amount certified by the provincial assessor
which stood at only P29,170 - an amount which placed the controversy
within the exclusive reviewing power of the respondent Court of Appeals on
questions of law and fact.1chanrobles virtual law library

The matter of jurisdiction was calendared for oral argument, but on the date
set therefor, the respondent court instead required the parties to submit
their respective memoranda on the matter, after which the case was to be
deemed submitted for decision. Opposing memoranda were thus submitted.
The respondents heirs of Marquez insisted that the amount in controversy
based on the affidavits submitted justified the elevation of the appeal to this
Court whereas the petitioners German Crisostomo, et al., defended the
exclusive authority of the respondent Court of Appeals to review the
case.chanroblesvirtualawlibrarychanrobles virtual law library

On November 8, 1966, about five years after the appeal and its incidents
were submitted for consideration, the respondent appellate court rendered a
decision on the merits of the appeal, upholding the judgment of the trial
court. Although it did not expressly pass upon the question of jurisdiction
raised by the respondents heirs of Marquez, it is to be assumed that the
respondent Court of Appeals considered itself possessed of jurisdiction over
the appeal.chanroblesvirtualawlibrarychanrobles virtual law library
The petitioners who received a copy of the adverse decision on November 9,
1966, filed thirteen days thereafter, or on November 23, 1966, a one-
sentence "motion for consideration" on the ground that the decision was
"contrary to law and evidence." In addition, they asked for 15 days within
which to file their memorandum in support of the general ground alleged.
Acting on their motion, the respondent court granted them "15 days from
November 22, 1966 within which to file motion for reconsideration." At the
end of the 15-day period, however, or on December 7, 1966, they moved the
respondent court for another extension, this time 30 days, within which to
submit their "memorandum." The following day, December 8, the
respondent court resolved to deny the extension of time asked for and
declared that its decision had become
final.chanroblesvirtualawlibrarychanrobles virtual law library

The petitioners' motion for reconsideration of this last order was summarily
denied on December 21, 1966.chanroblesvirtualawlibrarychanrobles virtual
law library

Hence, this petitioner for certiorari and mandamus which raises two

issues, namely, first, the value of the property under litigation and whether
the same removed the controversy from the jurisdiction of the Court of
Appeals, and second, whether the respondent Court of Appeals abused its
discretion in denying the petitioners' motion for 30-day extension within
which to file their "memorandum" and in declaring its decision
final.chanroblesvirtualawlibrarychanrobles virtual law library

The records of this case clearly demonstrate, as pointed out by the

respondents heirs of Marquez, that it was the petitioners themselves who
urged the trial court to transmit the records of the case to the respondent
Court of Appeals for review. The Court of Appeals was thus the petitioners'
own choice of tribunal, pursued by them at the precise time 2when the
jurisdictional amount should have been determined. It happened that none
of the parties, and surely not the petitioners, raised the issue of the value of
the controversy before the trial court. It is therefore to be assumed that the
latter court, in transmitting the case to the respondent Court of Appeals,
was guided principally by petitioners' own written manifestation of their
desire to invoke the jurisdiction of that particular appellate court. And as we
have previously quoted approvingly,3"a party cannot invoke the jurisdiction
of a court to secure affirmative relief against his opponent and, after
obtaining or failing to obtain such relief, repudiate or question that same
jurisdiction." While the jurisdiction of a tribunal may be challenged at any
time, sound public policy bars the petitioners from so doing after their
having procured that jurisdiction themselves, speculating on the fortunes of
litigation.chanroblesvirtualawlibrarychanrobles virtual law library

More, when the respondents heirs of Marquez challenged, for the first time,
the jurisdiction of the respondent Court of Appeals, the petitioners were the
very ones to rush to the defense of that court. They went a long way to
convince the respondent court - and they succeeded - that it had the power
and authority to pass judgment upon the appeal. The petitioners had stood
fast, with the respondent court, so that not even their abbreviated motion
for reconsideration of the decision of November 8, 1966 nor their motion for
reconsideration of the order of December 8, 1966 declaring the court's
decision final, hinted at any objection to that court's
jurisdiction.chanroblesvirtualawlibrarychanrobles virtual law library

Overnight, the petitioners' position has assumed a deep contrast color,

revealed for the first time when they came up to this Court
on certiorari and mandamus - obviously a weak attempt to replace by
certiorari the remedy of ordinary appeal which was foreclosed by the
respondent court's order of December 8, 1966 declaring its decision
final.chanroblesvirtualawlibrarychanrobles virtual law library

Whereas the petitioners at one time persuaded the respondent Court of

Appeals with these words:

... we submit that the most competent proof to show the valuation of the
land is the corresponding certification of the proper assessor of the province
where it is situated. For the convenience of this Honorable Court, we are
submitting herewith, marked as Annex "A", the tax declaration of the
property in question showing that the assessed value of said land is only
P29,170. Although said amount merely represent the assessed value of the
property, nevertheless the same is material to disprove the valuation made
by oppositors-appellees in their affidavits. If we compare this assessed value
of P29,170 to the claim of oppositors-appellees that the value of the land in
dispute is more than P200,000 we can easily see that they have over inflated
the actual value of the property by more than nine times its assessed
value,chanrobles virtual law library

now that the respondent court's decision is adverse to them, they would
attempt to convince us that:chanrobles virtual law library

The Court of Appeals in deciding Civil Case CA-G.R. No. 28678-R, entitled
Vicente Valencia vs. Heirs of Laureano Marquez; German Crisostomo, et al.,
had no, or lacked, jurisdiction over the same for the reason that the value of
the real estate involved in the cause or controversy exceeded the amount of
P200,000.00. Said respondent Courts of Appeals was propitiously informed
of such matter by none other than the appellees themselves in their
memorandum and in AFFIDAVITS executed by Felimon Marquez, son and
one of the heirs of the late Laureano Marquez, hence a party to [the] cause.

Whereas before their receipt of the adverse decision, they implored the
respondent Court of Appeals in this fashion:

WHEREFORE, it is respectfully prayed that the motion of oppositors-

appellees, dated July 14, 1961, seeking the elevation of the case to the
Supreme Court be denied for lack of merit,
now in their prayer, they would want us to do no less than:

b) To set aside the decision of the Court of Appeals promulgated on

November 22, 1966 being sought to be vacated as the same was rendered
without said court's authority and jurisdiction, then "c) [To order] the Court
of Appeals to forward to this Honorable Court the record of Civil Case CA-
G.R. No. 28678-R, entitled Vicente Valencia vs. The Heirs of Laureano
Marquez; German Crisostomo, et al., for its exclusive review as if directly
appealed to it from the Court of First
Instance.chanroblesvirtualawlibrarychanrobles virtual law library

In short, now that the respondent court has decided against them, the
petitioners, who had induced the same court to believe that it was clothed
with power to decide the appeal, would now want us to declare it to have
acted without authority.

The petitioners, to borrow the language of Mr. Justice Bautista

Angelo,4"cannot adopt a posture of double-dealing without running afoul of
the doctrine of estoppel." The principle of estoppel is in the interest of a
sound administration of the laws.5It should deter those who are disposed to
trifle with the courts by taking inconsistent positions contrary to the
elementary principles of right dealing and good faith.6For this reason, this
Court closes the door to the petitioners' challenge against the jurisdiction of
the Court of Appeals and will not even honor the question with a
pronouncement.chanroblesvirtualawlibrarychanrobles virtual law library

The remaining issue raised by the petitioners centers on the resolution of

the respondent court dated December 8, 1966. This resolution denied their
motion for extension of time to file their "memorandum" and, furthermore,
declared the decision of November 8, 1966 final and
executory.chanroblesvirtualawlibrarychanrobles virtual law library

The petitioners argue that the decision of the respondent court could not
have become final and executory for the reason that they had filed on
November 23, 1966 a motion for reconsideration which should suspend the
tolling of the period to take an appeal. It follows, continue the petitioners,
that until the respondent court has acted on that motion, the decision can
never attain finality.chanroblesvirtualawlibrarychanrobles virtual law library

The petitioners' motion for reconsideration, a one-sentence affair, reads:

COMES NOW the petitioners-appellants in the above entitled case and to

this Honorable Court respectfully move for the reconsideration of the
decision promulgated on November 8, 1966, copy of which was received by
the undersigned on November 9, 1966, on the ground that the same is
contrary to law and the evidence.chanroblesvirtualawlibrarychanrobles
virtual law library
This, if ever there was one, is a pro forma motion for reconsideration; it
does not specify the findings or conclusions in the decision which are not
supported by the evidence or which are contrary to law. A mere scrap of
paper, it cannot stay the period for taking an appeal. 7chanrobles virtual law
library

The records show that the land subject of this petition has been under
litigation for the last three and a half decades. Three times the respondent
Court of Appeals had Been asked to review the various judgments of the
lower court relating to the ownership of the land in question. The matter is
at present with us also for the third time. The long delay in the final
termination of the contest between the parties should have placed the
petitioners on guard against further prorogation in the case. Thirteen days
after they had received a copy of the decision of the respondent court, they
asked that court, and were granted, 15 days extension within which to file
their "memorandum," nay, their motion for reconsideration. They allowed
this extension to lapse, and at the eleventh hour, they asked the respondent
court anew for a longer additional extension of 30 days. Their error was in
taking for granted that the court would approve their motion for extension.
They merely filed it and did nothing else. The risk of denial was
theirs.8Moreover, the respondent court premised its denial of the application
for extension of time on their manifest intention to delay the proceedings.
Considering the history of this case, we cannot find any reason to state that
it was not so.chanroblesvirtualawlibrarychanrobles virtual law library

ACCORDINGLY, the present petition is denied, with treble costs against

petitioners, to be paid by their counsel.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Fernando,

Teehankee, Barredo and Villamor, JJ., concur.

FIRST DIVISION

[G.R. NO. 146426 : June 27, 2006]

CARGOLIFT SHIPPING, INC. Petitioner, v. L. ACUARIO MARKETING

CORP. and SKYLAND BROKERAGE, INC., Respondents.

DECISION

YNARES-SANTIAGO, J.:

This is a Petition for Review on Certiorari of the July 6, 2000 Decision1 of the
Court of Appeals in CA-G.R. CV No. 55664, which affirmed the judgment 2 of
the Regional Trial Court of Caloocan City, Branch 121, in Civil Case No. C-
16120 in so far as it found petitioner Cargolift Shipping, Inc. ("Cargolift")
liable, as third-party defendant, for actual damages in the sum of
P97,021.20, as well as the November 28, 2000 Resolution3 denying the
motion for reconsideration.

The antecedent facts of the case are as follows:

Sometime in March 1993, respondent L. Acuario Marketing Corp.,

("Acuario") and respondent Skyland Brokerage, Inc., ("Skyland") entered into
a time charter agreement4 whereby Acuario leased to Skyland its L. Acuario
II barge for use by the latter in transporting electrical posts from Manila to
Limay, Bataan. At the same time, Skyland also entered into a separate
contract5 with petitioner Cargolift, for the latter's tugboats to tow the
aforesaid barge.

In accordance with the foregoing contracts, petitioner's tugboat M/T Beejay

left the Manila South Harbor on April 1, 1993 with Acuario's barge in tow. It
reached the port of Limay, Bataan on April 3, 1993, whereupon M/T Beejay
disengaged and once again set sail for Manila. Petitioner's other tugboat, the
M/T Count, remained in Bataan to secure the barge for unloading.

Off-loading operations went underway until April 7, 1993, when operations

were interrupted for the next two days to give way to the observance of the
lenten season. The unloading of the cargo was concluded on April 12, 1993,
by which time M/T Beejay had gone back to Bataan for the return trip. The
M/T Beejay and the barge returned to the port of Manila on April 13, 1993.

On the same day, the barge was brought to Acuario's shipyard where it was
allegedly discovered by Acuario's dry-docking officer, Guillermo Nacu, Jr.,
that the barge was listing due to a leak in its hull. According to Nacu, he
was informed by the skipper of the tugboat that the damage was sustained
in Bataan. To confirm the same, Nacu ordered an underwater survey of the
barge and prepared a damage report dated April 14, 1993. No representative
of Skyland was present during the inspection although it was furnished with
a copy of the said report.

The barge was consequently dry-docked for repairs at the Western Shipyard
from April 16 to April 26, 1993. Acuario spent the total sum of P97,021.20
for the repairs.6

Pursuant to its contract with Skyland which provided that "(a)ny damage or
loss on the barge due to the fault or negligence of charterers shall be the
responsibility of the (c)harterer or his representative," 7Acuario wrote Skyland
seeking reimbursement of its repair costs, failing which, it filed a complaint
for damages against Skyland before the Regional Trial Court of Caloocan
City, where the case was docketed as Civil Case No. C-16120 and raffled to
Branch 121.

Skyland, in turn, filed a third-party complaint8 against petitioner alleging

that it was responsible for the damage sustained by the barge.
According to Acuario and its witnesses, the weather in Bataan shifted
drastically at dawn of April 7, 1993 while the barge was docked at the Limay
port eight meters away from the stone wall. Due to strong winds and large
waves, the barge repeatedly hit its hull on the wall, thus prompting the
barge patron to alert the tugboat captain of the M/T Count to tow the barge
farther out to sea. However, the tugboat failed to pull the barge to a safer
distance due to engine malfunction, thereby causing the barge to sustain a
hole in its hull. Fortunately, no part of the cargo was lost even if only half of
it had been unloaded at that time.9

On the other hand, petitioner and Skyland denied that the barge had been
damaged. One of its witnesses, Salvador D. Ocampo, claimed that he was
involved in all aspects of the operation and that no accident of any sort was
brought to his knowledge. He alleged that the barge patron and tug master
made no mention of any maritime casualty during the clearing of the vessels
at the Philippine Ports Authority in Limay, Bataan. The barge was in good
condition and was not damaged when it was turned over to Acuario on April
13, 1993.10

In due course, the trial court promulgated its decision dated June 10, 1996,
the dispositive part of which reads:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. Ordering the defendant Skyland Brokerage to pay to the plaintiff L.

Acuario Marketing Corporation the cost of repairs of the barge L. Acuario II
in the amount of P97,021.20 and to seek reimbursement from the third-
party defendant Cargolift Shipping;

2. Ordering the defendant to pay attorney's fees in the amount of

P24,255.30 and to seek reimbursement thereof from the third-party
defendant; andcralawlibrary

3. Ordering the defendant to pay the costs of suit subject to reimbursement

from the third-party defendant.

SO ORDERED.11

The trial court gave credence to the testimonies of Acuario's witnesses that
the barge sustained damage while it was being chartered by Skyland. It held
that the positive testimonies of Acuario's witnesses, coupled with
documentary evidence detailing the nature and extent of the damage as well
as the repairs done on the barge, should prevail over the bare denials of
Skyland and petitioner. It also noted that two of the latter's three witnesses
were not in Limay, Bataan when the incident happened.

The trial court further held that Skyland was liable under its time charter
agreement with Acuario pursuant to Article 1159 of the Civil Code which
states that "contracts have the force of law between the contracting parties."
Skyland must bear the consequences of the tugboat's incapacity to respond
to the barge's request for assistance because Acuario had no control in the
selection of the tugboats used by Skyland. But since the ultimate fault lies
with petitioner, justice demands that the latter reimburse Skyland for
whatever it may be adjudged to pay Acuario.12

Both Skyland and petitioner elevated the matter to the Court of Appeals
which, on July 6, 2000, rendered the assailed Decision affirming the trial
court, but deleting the award of attorney's fees. Upon denial of its motion for
reconsideration,13 petitioner brought the instant petition raising the
following issues:

WHETHER THE COURT OF APPEALS ERRED IN AFFIRMING THE FINDING

OF THE TRIAL COURT THAT L. ACUARIO II SUSTAINED DAMAGE AND
THAT IT WAS SUSTAINED DURING ITS CHARTER TO RESPONDENT
SKYLAND.

II

ASSUMING THAT L. ACUARIO II SUFFERED DAMAGE, WHETHER THE

COURT OF APPEALS ERRED IN UPHOLDING THE TRIAL COURT DECISION
HOLDING PETITIONER LIABLE THEREFOR.14

The petition lacks merit.

On the first assigned error, petitioner is asking this Court to resolve factual
issues that have already been settled by the courts below. The question of
whether the barge had been damaged during its charter to Skyland is a
factual matter, the determination of which may not be generally disturbed
on appeal. Questions of fact are not reviewable by this Court except under
certain exceptional circumstances.15 No such exceptional circumstance
exists in the case at bar.

On the contrary, the factual conclusions reached by the courts below are
consistent with the evidence on record. Acuario's witnesses testified that
strong winds and waves caused the barge to bump into the walls of the pier
where it was berthed for unloading. Petitioner's tugboat failed to tow it
farther away due to engine breakdown, thus causing the barge to sustain a
hole in its hull. These testimonies were duly supported and corroborated by
documentary evidence detailing the damage and repairs done on the barge. 16

On the other hand, petitioner and Skyland's denial that there was inclement
weather in the early hours of April 7, 1993 and that the barge sustained no
damage on this occasion were not supported by evidence to overcome the
positive allegations of Acuario's witnesses who were present at the place and
time of the incident. The categorical declaration of Acuario's witnesses
regarding the events which led to the damage on the barge shifted the
burden of evidence on petitioner and Skyland. They could have easily
disproved Acuario's claims by presenting competent proof that there was no
weather disturbance on that day or, by presenting the testimony of
individuals who have personal knowledge of the events which transpired.

Moreover, the inability of petitioner's and Skyland's witnesses to

unequivocally declare that it was still the M/T Count that secured the barge
during the resumption of off-loading operations casts suspicion on their
credibility. As aptly observed by the trial court, such hesitation on the part
of its witnesses is indicative of uncertainty, if not a propensity to withhold
information that could be unfavorable to their cause. 17 To our mind,
therefore, the trial court rightly concluded that petitioner's M/T Count
indeed encountered mechanical trouble, as asserted by Acuario. The fact
that petitioner did not categorically deny the allegation of mechanical
trouble only serves to strengthen the trial court's conclusion.

Petitioner's assertion that it is contrary to human experience for the barge to

have made the return trip to Manila if it sustained the alleged damage
deserves short shrift. The trial court found that the damage on the barge
was not too extensive as to render it incapable of staying afloat and being
used in operation. Neither was it impossible for the barge's cargo to remain
intact and undamaged during the weather disturbance. Apart from the fact
that the cargo which consisted of wooden electric poles are, by nature, not
easily damaged by adverse weather,18 part of it had already been unloaded
when the unfortunate incident occurred.

Consequently, we find no cogent reason to disturb the lower courts' finding

that the barge sustained a hole in its hull when petitioner's tugboat failed to
tow it to a safer distance as the weather changed in the port of Limay. This
Court is bound by the factual determinations of the appellate court
especially when these are supported by substantial evidence and merely
affirm those of the trial court,19 as in this case. There is no showing here
that the inferences made by the Court of Appeals were manifestly mistaken,
or that the appealed judgment was based on a misapprehension of facts, or
that the appellate court overlooked certain relevant, undisputed facts which,
if properly considered, would justify a different conclusion. 20 Thus, a
reversal of the factual findings in this case is unwarranted.

As for the second assigned error, petitioner asserts that it could not be held
liable for the damage sustained by Acuario's barge because the latter sought
to recover upon its contract with Skyland, to which petitioner was not a
party. Since it had no contractual relation with Acuario, only Skyland
should be held liable under the contract. Besides, Skyland contractually
assumed the risk that the tugboat might encounter engine trouble when it
acknowledged in its contract with petitioner that the latter's vessels were in
good order and in seaworthy condition. At any rate, it was neither negligent
in the performance of its obligation nor the proximate cause of the damage.

We do not agree.
It was not Acuario that seeks to hold petitioner liable for the damage to the
barge, as the former in fact sued only Skyland pursuant to their charter
agreement. It was Skyland that impleaded petitioner as third-party
defendant considering that Skyland was being held accountable for the
damage attributable to petitioner. In other words, petitioner was not sued
under Skyland's charter agreement with Acuario, but pursuant to its
separate undertaking with Skyland. Strictly speaking, therefore, petitioner is
not being held liable under any charter agreement with Acuario.

Consequently, it is not correct for petitioner to assert that Acuario could not
recover damages from it due to lack of privity of contract between them. It is
not Acuario that is seeking damages from petitioner but Skyland, with
whom it undoubtedly had a juridical tie. While Acuario could hold Skyland
liable under its charter agreement, Skyland in turn could enforce liability on
petitioner based on the latter's obligation to Skyland. In other words,
petitioner is being held liable by Skyland and not by Acuario.

Thus, in the performance of its contractual obligation to Skyland, petitioner

was required to observe the due diligence of a good father of the family. This
much was held in the old but still relevant case of Baer Senior & Co.'s
Successors v. La Compania Maritima21 where the Court explained that a tug
and its owners must observe ordinary diligence in the performance of its
obligation under a contract of towage. The negligence of the obligor in the
performance of the obligation renders him liable for damages for the
resulting loss suffered by the obligee. Fault or negligence of the obligor
consists in his failure to exercise due care and prudence in the performance
of the obligation as the nature of the obligation so demands. 22

In the case at bar, the exercise of ordinary prudence by petitioner means

ensuring that its tugboat is free of mechanical problems. While adverse
weather has always been a real threat to maritime commerce, the least that
petitioner could have done was to ensure that the M/T Count or any of its
other tugboats would be able to secure the barge at all times during the
engagement. This is especially true when considered with the fact that
Acuario's barge was wholly dependent upon petitioner's tugboat for
propulsion. The barge was not equipped with any engine and needed a
tugboat for maneuvering.23

Needless to say, if petitioner only subjected the M/T Count to a more rigid
check-up or inspection, the engine malfunction could have been discovered
or avoided. The M/T Count was exclusively controlled by petitioner and the
latter had the duty to see to it that the tugboat was in good running
condition. There is simply no basis for petitioner's assertion that Skyland
contractually assumed the risk of any engine trouble that the tugboat may
encounter. Skyland merely procured petitioner's towing service but in no
way assumed any such risk.

That petitioner's negligence was the proximate cause of the damage to the
barge cannot be doubted. Had its tugboat been serviceable, the barge could
have been moved away from the stone wall with facility. It is too late in the
day for petitioner to insist that the proximate cause of the damage was the
barge patron's negligence in not objecting to the position of the barge by the
stone wall. Aside from the fact that the position of the barge is quite
understandable since off-loading operations were then still underway, 24 the
alleged negligence of the barge patron is a matter that is also being raised
for the first time before this Court.

Thus, the damage to the barge could have been avoided had it not been for
the tugboat's inability to tow it away from the stone wall. Considering that a
barge has no power of its own and is totally defenseless against the ravages
of the sea, it was incumbent upon petitioner to see to it that it could secure
the barge by providing a seaworthy tugboat. Petitioner's failure to do so did
not only increase the risk that might have been reasonably anticipated
during the shipside operation but was the proximate cause of the
damage.25 Hence, as correctly found by the courts below, it should
ultimately be held liable therefor.

WHEREFORE, the petition is DENIED for lack of merit. The Decision of the
Court of Appeals in CA-G.R. CV No. 55664 dated July 6, 2000 and the
Resolution dated November 28, 2000, finding petitioner Cargolift Shipping,
Inc. liable, as third-party defendant, for actual damages in the sum of
P97,021.20, are AFFIRMED.

SO ORDERED.

G.R. No. L-9605             September 30, 1957

GAUDIOSO EREZO, ET AL., plaintiff-appellee, 

vs.
AGUEDO JEPTE, defendant-appellant.

Gesolgon, Matti and Custodio for appellees.

Aguedo Y. Jepte in his own behalf.

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.

FIRST DIVISION

G.R. No. L-26815 May 26, 19810

ADOLFO L. SANTOS, Petitioner, vs. ABRAHAM SIBUG and

COURT OF APPEALS, Respondents.

MELENCIO-HERRERA, J.:

The controversy in this case will be resolved on the basis of the

following facts and expositions. Prior to April 26, 1963 (the
ACCIDENT DATE), Vicente U. Vidad (VIDAD, for short) was a duly
authorized passenger jeepney operator. Also prior to the
ACCIDENT DATE, petitioner Adolfo L. Santos (SANTOS, for short)
was the owner of a passenger jeep, but he had no certificate of
public convenience for the operation of the vehicle as a public
passenger jeep. SANTOS then transferred his jeep to the name of
VIDAD so that it could be operated under the latter's certificate of
public convenience. ln other words, SANTOS became what is
known in ordinary parlance as a kabit operator. For the protection
of SANTOS, VIDAD executed a re-transfer document to the
former, which was to be a private document presumably to be
registered if and where it was decided that the passenger jeep of
SANTOS was to be withdrawn from the kabit  arrangement.   chanroblesvirtualawlibrary chanrobles virtual law library

On the ACCIDENT DATE, private respondent Abraham Sibug

(SIBUG for short) was bumped by a passenger jeepney operated
by VIDAD and driven by Severe Gragas. As a result thereof,
SIBUG filed a complaint for damages against VIDAD and Gragas
with the Court of First Instance of Manila, Branch XVII, then
presided by Hon. Arsenic Solidum. That Civil Case will hereinafter
be referred to as the BRANCH XVII CASE.   chanroblesvirtualawlibrary chanrobles virtual law library

On December 5, 1963, a judgment was rendered by Branch

XVII,  sentencing VIDAD and Gragas, jointly and severally, to pay
SIBUG the sums of P506.20 as actual damages; P3,000.00 as
moral damages; P500.00 as attorney's fees, and costs. 1 chanrobles virtual law library

On April 10, 1964, the Sheriff of Manila levied on a motor vehicle,

with Plate No. PUJ-343-64, registered in the name of VIDAD, and
scheduled the public auction sale thereof on May 8,1964.   chanroblesvirtualawlibrary chanrobles virtual law library

On April 11, 1964, SANTOS presented a third-party claim with the

Sheriff alleging actual ownership of the motor vehicle levied upon,
and stating that registration thereof in the name of VIDAD was
merely to enable SANTOS to make use of VIDAD'S Certificate of
Public Convenience. After the third-party complaint was filed,
SIBUG submitted to the Sheriff a bond issued by the Philippine
Surety Insurance Company (THE BONDING COMPANY, for short),
To save the Sheriff from liability if he were to proceed with the
sale and if SANTOS' third-party claim should be ultimately
upheld.  
chanroblesvirtualawlibrary chanrobles virtual law library

On April 22, 1964, that is, before the scheduled sale of May 8,
1964, SANTOS instituted an action for Damages and injunction
with a prayer for Preliminary Mandatory Injunction against
SIBUG; VIDAD; and the Sheriff in Civil Case No. 56842 of Branch
X, of the same Court of First Instance of Manila (hereinafter
referred to as the BRANCH X CASE). The complaint was later
amended to include the BONDING COMPANY as a party defendant
although its bond had not become effective. ln the Complaint,
SANTOS alleged essentially that he was the actual owner of the
motor vehicle subject of levy: that a fictitious Deed of Sale of said
motor vehicle was executed by him in VIDAD'S favor for purposes
of operating said vehicle as a passenger jeepney under the
latter's franchise; that SANTOS did not receive any payment from
VIDAD in consideration of said sale; that to protect SANTOS'
proprietary interest over the vehicle in question, VIDAD in turn
had executed a Deed of Sale in favor of SANTOS on June 27,
1962; that SANTOS was not a party in the BRANCH XVII CASE
and was not in any manner liable to the registered owner VIDAD
and the driver Gragas; that SANTOS derived a daily income of
P30.00 from the operation of said motor vehicle as a passenger
jeepney and stood to suffer irreparable damage will possession of
said motor vehicle were not restored to him. SANTOS then
prayed that 1,) pending trial, a Writ of Preliminary Mandatory
injunction be issued ex-parte commanding the Sheriff of Manila to
restore the motor vehicle to him and that the Sheriff be enjoined
from proceeding with its sale; 2) that, after trial, the Deed of Sale
in favor of VIDAD be declared absolutely fictitious and, therefore,
null and void, and adjudging SANTOS to be the absolute owner of
the vehicle in questioned and 3) that damages be awarded to
SANTOS as proven during the trial plus attorney's fees in the
amount of P450.00 and costs. 2 chanrobles virtual law library

No public sale was conducted on May 8, 1964. On May 11,

1964, Branch X  issued a Restraining Order enjoining the Sheriff
from conducting the public auction sale of the motor vehicle
levied upon. 3 The Restraining Order was issued wrongfully.
Under the provisions of Section 17, Rule 39, the action taken by
the Sheriff cannot be restrained by another Court or by another
Branch of the same Court. The Sheriff has the right to continue
with the public sale on his own responsibility, or he can desist
from conducting the public sale unless the attaching creditor files
a bond securing him against the third-party-claim. But the
decision to proceed or not with the public sale lies with him. As
said in Uy Piaoco vs. Osmea 9 Phil. 299, 307, "the powers of the
Sheriff involve both discretional power and personal liability." The
mentioned discretional power and personal liability have been
further elucidated in Planes and Verdon vs. Madrigal & Co., et al.,
94 Phil. 754, where it was held. chanroblesvirtualawlibrary chanrobles virtual law library

The duty of the sheriff in connection with the execution and

satisfaction of judgment of the court is governed by Rule 39 of
the Rules of Court. Section 15 thereof provides for the procedure
to be. followed where the property levied on execution 'is claimed
by a by person. lf the third-party claim is sufficient, the sheriff,
upon receiving it, is not bound to proceed with the levy of the
property, unless he is given by the judgment creditor an
indemnity bond against the claim (Mangaoang vs. Provincial
Sheriff, 91 Phil., 368). Of course, the sheriff may proceed with
the levy even without the Indemnity bond, but in such case he
will answer for any damages with his own personal funds (Waits
vs. Peterson, et al., S Phil. 419 Alzua et al. vs. Johnson, 21 Phil.,
308; Consults No. 341 de los abogados de Smith, Bell & Co., 48
Phil., 565). And the rule also provides that nothing therein
contained shall prevent a third person from vindicating his claim
to the property by any proper action (Sec. 15 of Rule 39.).

It appears from the above that if the attaching creditor should

furnish an adequate bond. the Sheriff has to proceed with the
public auction. When such bond is not filed, then the Sheriff shall
decide whether to proceed. or to desist from proceeding, with the
public auction. lf he decides to proceed, he will incur personal
liability in favor of the successful third-party claimant.   chanroblesvirtualawlibrary chanrobles virtual law library

On October 14, 1965, Branch X  affirmed SANTOS' ownership of

the jeepney in question based on the evidence adduced, and
decreed:  chanrobles virtual law library

WHEREFORE, judgment is hereby rendered, enjoining the

defendants from proceeding with the sale of the vehicle in
question ordering its return to the plaintiff and furthermore
sentencing the defendant Abraham Sibug to pay the plaintiff the
sum of P15.00 a day from April 10, 1964 until the vehicle is
returned to him, and P500.00 as attorney's fee's as well as the
costs. 4
chanrobles virtual law library

This was subsequently amended on December 5, 1965, upon

motion for reconsideration filed by SANTOS, to include the
BONDING COMPANY as jointly slid severally liable with SIBUG. 5

... provided that the liability of the Philippine Surety & insurance
Co., Inc. shall in no case exceed P6,500.00. Abraham Sibug is
furthermore condemned to pay the Philippine Surety & Insurance
Co., Inc. the same sums it is ordered to pay under this decision.

The jugdment in the BRANCH X CASE appears to be quite legally

unpalatable For instance, since the undertaking furnished to the
Sheriff by the BONDING COMPANY did not become effective for
the reason that the jeep was not sold, the public sale thereof
having been restrained, there was no reason for promulgating
judgment against the BONDING COMPANY. lt has also been noted
that the Complaint against VIDAD was dismissed.   chanroblesvirtualawlibrary chanrobles virtual law library

Most important of all, the judgment against SIBUG was

inequitable. ln asserting his rights of ownership to the vehicle in
question, SANTOS candidly admitted his participation in the illegal
and pernicious practice in the transportation business known as
the kabit  system. Sec.. 20 (g) of the Public Service Act, then the
applicable law, specifically provided: 
chanrobles virtual law library

... it shall be unlawful for any public service or for the owner,
lessee or operator thereof, without the approval and authorization
of the Commission previously had ... (g) to sell, alienate,
mortgage, encumber or lease its property, franchise, certificates,
privileges, or rights, or any part thereof.

In this case, SANTOS had fictitiously sold the jeepney to VIDAD,

who had become the registered owner and operator of record at
the time of the accident. lt is true that VIDAD had executed a re-
sale to SANTOS, but the document was not registered. Although
SANTOS, as the kabit  was the true owner as against VIDAD, the
latter, as the registered owner/operator and grantee of the
franchise, is directly and primarily responsible and liable for the
damages caused to SIBUG, the injured party, as a consequence
of the negligent or careless operation of the vehicle. 6This ruling
is based on the principle that the operator of record is considered
the operator of the vehicle in contemplation of law as regards the
public and third persons 7even if the vehicle involved in the
accident had been sold to another where such sale had not been
approved by the then Public Service Commission. 8For the same
basic reason, as the vehicle here in question was registered in
VIDAD'S name, the levy on execution against said vehicle should
be enforced so that the judgment in the BRANCH XVII CASE may
be satisfied, notwithstanding the fact that the secret ownership of
the vehicle belonged to another. SANTOS, as the kabit should not
be allowed to defeat the levy on his vehicle and to avoid his
responsibilities as a kabit owner for he had led the public to
believe that the vehicle belonged to VIDAD. This is one way of
curbing the pernicious kabitsystem  that facilitates the
commission of fraud against the travelling public.   chanroblesvirtualawlibrary chanrobles virtual law library

As indicated in the Erezo case, supra, SANTOS' remedy. as the

real owner of the vehicle, is to go against VIDAD, the actual
operator who was responsible for the accident, for the recovery of
whatever damages SANTOS may suffer by reason of the
execution. In fact, if SANTOS, as the kabit had been impleaded as
a party defendant in the BRANCH XVII CASE, he should be held
jointly and severally liable with VIDAD and the driver for damages
suffered by SIBUG, 9 as well as for exemplary damages. 10 chanrobles virtual law library

From the judgment in the BRANCH X CASE SIBUG appealed.

Meanwhile, SANTOS moved for immidiately execution. SIBUG
opposed it on the ground that Branch X  had no jurisdiction over
the BRANCH XVII CASE, and that Branch X  had no power to
interfere by injunction with the judgment of Branch XVII a Court
of concurrent or coordinate jurisdiction. 11 chanrobles virtual law library

On November 13, 1965, Branch X  released an order authorizing

immediate execution on the theory that the BRANCH X CASE is
"principally an action for the issuance of a writ of prohibition to
forbid the Sheriff from selling at public auction property not
belonging to the judgment creditor (sic) and there being no
attempt in this case to interfere with the Judgment or decree of
another court of concurrent jurisdiction." 12 chanrobles virtual law library

Without waiting for the resolution of his Motion for

Reconsideration, SIBUG sought relief from respondent Appellate
Court in a Petition for certiorari with Preliminary injunction. On
November 18, 1965, respondent Court of Appeals enjoined the
enforcement of the Branch X  Decision and the Order of execution
issued by said Branch. 13 On September 28, 1966, respondent
Count of Appeals rendered the herein challenged Decision
nullifying the judgment renderred in the Branch X  Case and
permanently restraining V from taking cognizance of the BRANCH
X CASE SANTOS. It ruled that:  chanrobles virtual law library

... the respondent Court Branch X, indeed, encroached and

interfered with the judgment of Branch XVII when it issued a
restraining order and finally a decision permanently enjoining the
other court from excuting the decision rendered in Civil Case No.
54335. This to our mind constitutes an interference with the
powers and authority of the other court having co-equal and
coordinate jurisdiction. To rule otherwise, would indubitably lead
to confusion which might hamper or hinder the proper
administration of justice. ... 14 chanrobles virtual law library

Respondent Court further held that SANTOS may not be

permitted to prove his ownership over a particular vehicle being
levied upon but registered in another's name in a separated
action, observing that: chanrobles virtual law library
As the vehicle in question was registered in the name of Vicente
U. Vidad, the government or any person affected by the
representation that said vehicle is registered under the name of a
particular person had the right to rely on his declaration of
ownership and registration: and the registered owner or any
other person for that matter cannot be permitted to repudiate
said declaration with the objective of proving that said registered
vehicle is owned by another person and not by the registered
owner (sec. 68, (a), Rule 123, and art. 1431, New Civil Code) chanrobles virtual law library

xxx xxx xxx chanrobles virtual law library

Were we to allow a third person to prove that he is the real owner

of a particular vehicle and not the registered owner it would in
effect be tantamount to sanctioning the attempt of the registered
owner of the particular vehicle in evading responsibility for it
cannot be dispelled that the door would be opened to collusion
between a person and a registered owner for the latter to escape
said responsibility to the public or to any person. ...

SANTOS now seeks a review of respondent Court's Decision

contending that:  chanrobles virtual law library

1) The respondent Court of Appeals erred in holding that Branch

X of the Court of First Instance of Manila has no jurisdiction to
restrain by Writ of Injunction the auction sale of petitioner's
motor vehicle to satisfy the judgment indebtedness of another
person: chanrobles virtual law library

2) The respondent Court of Appeals erred in holding that

petitioner as owner of a motor vehicle that was levied upon
pursuant to a Writ of Execution issued by Branch XVII of the
Court of i stance of Manila in Civil Case No. 54335 cannot be
allowed to prove in a separate suit filed in Branch X of the same
court (Civil Case No. 56842) that he is the true owner of the said
motor vehicle and not its registered owner;  chanrobles virtual law library

3) The respondent Court of Appeals erred in declaring null and

void the decision of the Court of First Instance of Manila (Branch
X ) in Civil Case No. 56482.
We gave due course to the Petition for Review on certiorari on
December 14, 1966 and considered the case submitted for
decision on July 20, 1967.   chanroblesvirtualawlibrary chanrobles virtual law library

One of the issues ventilated for resolution is the general question

of jurisdiction of a Court of First Instance to issue, at the instance
of a third-party claimant, an Injunction restraining the execution
sale of a passenger jeepney levied upon by a judgment creditor in
another Court of First Instance. The corollary issue is whether or
not the third-party claimant has a right to vindicate his claim to
the vehicle levied upon through a separate action.   chanroblesvirtualawlibrary chanrobles virtual law library

Since this case was submitted for decision in July, 1967, this
Court, in Arabay, lnc. vs. Hon. Serafin Salvador, 15 speaking
through Mr. Justice Ramon Aquino, succinctly held:  chanrobles virtual law library

It is noteworthy that, generally, the rule, that no court has

authority to interfere by injunction with the judgments or decrees
of a concurrent or coordinate jurisdiction having equal power to
grant the injunctive relief, is applied in cases, where no third-
party claimant is involved, in order to prevent one court from
nullifying the judgment or process of another court of the same
rank or category, a power which devolves upon the proper
appellate court.   chanroblesvirtualawlibrary chanrobles virtual law library

xxx xxx xxx chanrobles virtual law library

When the sheriff, acting beyond the bounds of his authority,

seizes a stranger's property, the writ of injunction, which is
issued to stop the auction sale of that property, is not an
interference with the writ of execution issued by another court
because the writ of execution was improperly implemented by the
sheriff. Under that writ, he could attach the property of the
judgment debtor. He is not authorized to levy upon the property
of the third-party claimant (Polaris Marketing Corporation vs.
Plan, L-40666, January 22, 1976, 69 SCRA 93, 97; Manila Herald
Publishing Co., Inc. vs. Ramos, 88 Phil. 94, 102).

An earlier case, Abiera vs. Hon. Court of Appeals, et

al., 16explained the doctrine more extensively:

Courts; Jurisdiction Courts without power to interfere by

injunction with judgments or decrees of a court of concurrent
jurisdiction.  No court has power to interfere by injunction with
the judgments or decrees of a court of concurrent or coordinate
jurisdiction having equal power to grant the relief sought by
injunction.

Same, Same; Same; When applicable. For this doctrine to apply,

the injunction issued by one court must interfere with the
judgment or decree issued by another court of equal or
coordinate jurisdiction and the relief sought by such injunction
must be one which could be granted by the court which rendered
the judgment or issued the decree.

Same, Same Same; Exception Judgment rendered by another

court in favor of a third person who claims property levied upon
on execution.  Under section 17 of Rule 39 a third person who
claims property levied upon on execution may vindicate such
claim by action. A judgment rendered in his favor - declaring him
to be the owner of the property - would not constitute
interference with the powers or processes of the court which
rendered the judgment to enforce which the execution was
levied. lf that be so - and it is so because the property, being that
of a stranger, is not subject to levy - then an interlocutory order,
such as injunction, upon a claim and prima facie showing of
ownership by the claimant, cannot be considered as such
interference either.

Execution; Where property levied on claimed by third person;

"Action" in section l7, Rule 39 of the Rules of Court,
interpreted  The right of a person who claims to be the owner of
property levied upon on execution to file a third-party claim with
the sheriff is not exclusive, and he may file an action to vindicate
his claim even if the judgment creditor files an indemnity bond in
favor of the sheriff to answer for any damages that may be
suffered by the third party claimant. By "action", as stated in the
Rule, what is meant is a separate and independent action.

Applied to the case at bar, it mill have to be held that, contrary to

the rationale in the Decision of respondent Court, it was
appropriate, as a matter of procedure, for SANTOS, as an
ordinary third-party claimant, to vindicate his claim of ownership
in a separate action under Section 17 of Rule 39. And the
judgment rendered in his favor by Branch X, declaring him to be
the owner of the property, did not as a basic proposition,
constitute interference with the powers or processes of Branch
XVII  which rendered the judgment, to enforce which the was
levied upon. And this is so because property belonging to a
stranger is not ordinarily subject to levy. While it is true that the
vehicle in question was in custodia legis,  and should not be
interfered with without the permission of the proper Court, the
property must be one in which the defendant has proprietary
interest. Where the Sheriff seizes a stranger's property, the rule
does not apply and interference with his custody is not
interference with another Court's Order of attachment. 17 chanrobles virtual law library

However, as a matter of substance and on the merits, the

ultimate conclusion of respondent Court nullifying the Decision
of Branch X  permanently enjoining the auction sale, should be
upheld. Legally speaking, it was not a "stranger's property" that
was levied upon by the Sheriff pursuant to the judgment
rendered by Branch XVII.  The vehicle was, in fact, registered in
the name of VIDAD, one of the judgment debtors. And what is
more, the aspect of public service, with its effects on the riding
public, is involved. Whatever legal technicalities may be invoked,
we find the judgment of respondent Court of Appeals to be in
consonance with justice.  chanroblesvirtualawlibrary chanrobles virtual law library

WHEREFORE, as prayed for by private respondent Abraham

Sibug, the petition for review on certiorari filed by Adolfo L.
Santos is dismissed with costs against the petitioner.   chanroblesvirtualawlibrary chanrobles virtual law library

SO ORDERED.

Makasiar, Guerrero and De Castro,  *  JJ., concur. chanroblesvirtualawlibrary chanrobles virtual law library

Teehankee (Chairman), concurs in the result.

ss