[ GR No. 172682, Jul 27, 2016 ] 2.

Moral damages in the amount of One

Million Pesos (P1,000,000.00);
3. Costs of suit.
SULPICIO LINES v. NAPOLEON SESANTE +

DECISION
BERSAMIN, J.:
Moral damages are meant to enable the injured party to obtain the
means, diversions or amusements in order to alleviate the moral
suffering. Exemplary damages are designed to permit the courts to
reshape behavior that is socially deleterious in its consequence by
creating negative incentives or deterrents against such behavior.
The Case
This appeal seeks to undo and reverse the adverse decision
promulgated on June 27, 2005,[1] whereby the Court of Appeals
(CA) affirmed with modification the judgment of the Regional Trial
Court (RTC), Branch 91, in Quezon City holding the petitioner liable
to pay temperate and moral damages due to breach of contract of
carriage.[2]
Antecedents
SO ORDERED.[10]
The RTC observed that the petitioner, being negligent, was liable to
Sesante pursuant to Articles 1739 and 1759 of the Civil Code; that
the petitioner had not established its due diligence in the selection
and supervision of the vessel crew; that the ship officers had failed
to inspect the stowage of cargoes despite being aware of the storm
signal; that the officers and crew of the vessel had not immediately
sent a distress signal to the Philippine Coast Guard; that the ship
captain had not called for then "abandon ship" protocol; and that
based on the report of the Board of Marine Inquiry (BMI), the
erroneous maneuvering of the vessel by the captain during the
extreme weather condition had been the immediate and proximate
cause of the sinking.
The petitioner sought reconsideration, but the RTC only partly
granted its motion by reducing the temperate damages from
P500,000.00 to P300,000.00.[11]
Dissatisfied, the petitioner appealed.[12] It was pending the appeal
in the CA when Sesante passed away. He was substituted by his
heirs.[13]

On September 18, 1998, at around 12:55 p.m., the M/V Princess of Judgment of the CA
the Orient, a passenger vessel owned and operated by the
petitioner, sank near Fortune Island in Batangas. Of the 388 On June 27, 2005, the CA promulgated its assailed decision. It
recorded passengers, 150 were lost.[3] Napoleon Sesante, then a lowered the temperate damages to P120,000.00, which
member of the Philippine National Police (PNP) and a lawyer, was approximated the cost of Sesante's lost personal belongings; and
one of the passengers who survived the sinking. He sued the held that despite the seaworthiness of the vessel, the petitioner
petitioner for breach of contract and damages.[4] remained civilly liable because its officers and crew had been
negligent in performing their duties.[14]
Sesante alleged in his complaint that the M/V Princess of the Orient
left the Port of Manila while Metro Manila was experiencing stormy Sttill aggrieved, Sulpicio Lines moved for reconsideration, but the
weather; that at around 11:00 p.m., he had noticed the vessel listing CA denied the motion.[15]
starboard, so he had gone to the uppermost deck where he
witnessed the strong winds and big waves pounding the vessel; Hence, this appeal.
that at the same time, he had seen how the passengers had been
panicking, crying for help and frantically scrambling for life jackets Issues
in the absence of the vessel's officers and crew; that sensing
danger, he had called a certain Vency Ceballos through his The petitioner attributes the following errors to the CA, to wit:
cellphone to request him to inform the proper authorities of the I
situation; that thereafter, big waves had rocked the vessel, tossing
him to the floor where he was pinned by a long steel bar; that he
had freed himself only after another wave had hit the vessel;
THE ASSAILED DECISION
[5] that he had managed to stay afloat after the vessel had sunk,
ERRED IN SUSTAINING THE
and had been carried by the waves to the coastline of Cavite and
AWARD OF MORAL
Batangas until he had been rescued; that he had suffered
DAMAGES, AS THE INSTANT
tremendous hunger, thirst, pain, fear, shock, serious anxiety and
CASE IS FOR ALLEGED
mental anguish; that he had sustained injuries,[6] and had lost
PERSONAL INJURIES
money, jewelry, important documents, police uniforms and the .45
PREDICATED ON BREACH OF
caliber pistol issued to him by the PNP; and that because it had
CONTRACT OF CARRIAGE,
committed bad faith in allowing the vessel to sail despite the storm
AND THERE BEING NO
signal, the petitioner should pay him actual and moral damages of
PROOF OF BAD FAITH ON
P500,000.00 and P1,000,000.00, respectively.[7]
THE PART OF SULPICIO
In its defense, the petitioner insisted on the seaworthiness of the
M/V Princess of the Orient due to its having been cleared to sail II
from the Port of Manila by the proper authorities; that the sinking
had been due to force majeure; that it had not been negligent; and
that its officers and crew had also not been negligent because they THE ASSAILED DECISION ERRED IN
had made preparations to abandon the vessel because they had SUSTAINING THE AMOUNT OF MORAL
launched life rafts and had provided the passengers assistance in DAMAGES AWARDED, THE SAME BEING
that regard.[8] UNREASONABLE, EXCESSIVE AND
UNCONSCIONABLE, AND TRANSLATES TO
Decision of the RTC UNJUST ENRICHMENT AGAINST SULPICIO

On October 12, 2001, the RTC rendered its judgment in favor of the III
respondent,[9] holding as follows:
WHEREFORE, judgment is hereby rendered in
favor of plaintiff Napoleon Sesante and against
defendant Sulpicio Lines, Inc., ordering said THE ASSAILED DECISION ERRED IN
defendant to pay plaintiff: SUSTAINING THE AWARD OF TEMPERATE
DAMAGES AS THE SAME CANNOT SUBSTITUTE
FOR A FAILED CLAIM FOR ACTUAL DAMAGES,
1. Temperate damages in the amount of THERE BEING NO COMPETENT PROOF TO
P400,000.00; WARRANT SAID AWARD
 IV
THE AWARD OF TEMPERATE DAMAGES IS
UNTENABLE AS THE REQUISITE NOTICE
UNDER THE LAW WAS NOT GIVEN TO SULPICIO
IN ORDER TO HOLD IT LIABLE FOR THE
ALLEGED LOSS OF SESANTE'S PERSONAL
BELONGINGS
V duty, neglect or malfeasance of the carrier's employees and gives
THE ASSAILED DECISION ERRED IN
SUBSTITUTING THE HEIRS OF RESPONDENT
SESANTE IN THE INSTANT CASE, THE SAME
BEING A PERSONAL ACTION WHICH DOES NOT
SURVIVE
VI
THE ASSAILED DECISION ERRED IN APPLYING
ARTICLE 1759 OF THE NEW CIVIL CODE
AGAINST SULPICIO SANS A CLEAR-CUT
FINDING OF SULPICIO'S BAD FAITH IN THE
INCIDENT[16]
In other words, to be resolved are the following, namely: (1) Is the
complaint for breach of contract and damages a personal action
that does not survive the death of the plaintiff?; (2) Is the petitioner
liable for damages under Article 1759 of the Civil Code?; and (3) Is
there sufficient basis for awarding moral and temperate damages?
Ruling of the Court
The appeal lacks merit.
I the negligence or willful acts of the former's
An action for breach of contract of carriage survives the death
of the plaintiff
The petitioner urges that Sesante's complaint for damages was
purely personal and cannot be transferred to his heirs upon his
death. Hence, the complaint should be dismissed because the death
of the plaintiff abates a personal action.
The petitioner's urging is unwarranted.
Section 16, Rule 3 of the Rules of Court lays down the proper
procedure in the event of the death of a litigant, viz.:
Section 16. Death of party; duty of counsel.
- Whenever a party to a pending action dies,
and the claim is not thereby extinguished, it
shall be the duty of his counsel to inform the
court within thirty (30) days after such death of
the fact thereof, and to give the name and
address of his legal representative or
representatives. Failure of counsel to comply
with his duty shall be a ground for disciplinary
action.
The heirs of the deceased may be allowed to
be substituted for the deceased, without
requiring the appointment of an executor or
administrator and the court may appoint a
guardian ad litem for the minor heirs.
xxxx
Substitution by the heirs is not a matter of jurisdiction, but a
requirement of due process.[17] It protects the right of due process
belonging to any party, that in the event of death the deceased
litigant continues to be protected and properly represented in the
suit through the duly appointed legal representative of his estate.
[18]
The application of the rule on substitution depends on whether or
not the action survives the death of the litigant. Section 1, Rule 87
of the Rules of Court enumerates the following actions that survive
the death of a party, namely: (1) recovery of real or personal
property, or an interest from the estate; (2) enforcement of liens on
the estate; and (3) recovery of damages for an injury to person or
property. On the one hand, Section 5, Rule 86 of the Rules of
Court lists the actions abated by death as including: (1) claims for
funeral expenses and those for the last sickness of the decedent; (2)
judgments for money; and (3) all claims for money against the
deceased, arising from contract, express or implied.
A contract of carriage generates a relation attended with public
ground for an action for damages.[19] Sesante's claim against the
petitioner involved his personal injury caused by the breach of the
contract of carriage. Pursuant to the aforecited rules, the complaint
survived his death, and could be continued by his heirs following
the rule on substitution.
II
The petitioner is liable for breach of contract of carriage
The petitioner submits that an action for damages based on breach
of contract of carriage under Article 1759 of the Civil Code should
be read in conjunction with Article 2201 of the same code; that
although Article 1759 only provides for a presumption of
negligence, it does not envision automatic liability; and that it was
not guilty of bad faith considering that the sinking of M/V Princess
of the Orient had been due to a fortuitous event, an exempting
circumstance under Article 1174 of the Civil Code.
The submission has no substance.
Article 1759 of the Civil Code does not establish a presumption of
negligence because it explicitly makes the common carrier liable in
the event of death or injury to passengers due to the negligence or
fault of the common carrier's employees. It reads:
Article 1759. Common carriers are liable for
the death or injuries to passengers through
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 liability of common carriers under Article 1759 is demanded
by the duty of extraordinary diligence required of common carriers
in safely carrying their passengers.[20]
On the other hand, Article 1756 of the Civil Code lays down the
presumption of negligence against the common carrier in the event
of death or injury of its passenger, viz.:
Article 1756. In case of death of or injuries to
passengers, common carriers are presumed to
have been at fault or to have acted negligently,
unless they prove that they observed
extraordinary diligence as prescribed in Articles
1733 and 1755.
Clearly, the trial court is not required to make an express finding of
the common carrier's fault or negligence.[21] Even the mere proof
of injury relieves the passengers from establishing the fault or
negligence of the carrier or its employees.[22] The presumption of
negligence applies so long as there is evidence showing that: (a) a
contract exists between the passenger and the common carrier;
and (b) the injury or death took place during the existence of such
contract.[23] In such event, the burden shifts to the common
carrier to prove its observance of extraordinary diligence, and that
an unforeseen event or force majeure had caused the injury.[24]
Sesante sustained injuries due to the buffeting by the waves and
consequent sinking of M/V Princess of the Orient where he was a
passenger. To exculpate itself from liability, the common carrier
vouched for the seaworthiness of M/V Princess of the Orient, and
referred to the BMI report to the effect that the severe weather
condition - a force majeure - had brought about the sinking of the
vessel.
The petitioner was directly liable to Sesante and his heirs.
A common carrier may be relieved of any liability arising from a
fortuitous event pursuant to Article 1174[25] of the Civil Code. But
while it may free a common carrier from liability, the provision still
requires exclusion of human agency from the cause of injury or
loss.[26] Else stated, for a common carrier to be absolved from
liability in case of force majeure, it is not enough that the accident
was caused by a fortuitous event. The common carrier must still
prove that it did not contribute to the occurrence of the incident
due to its own or its employees' negligence.[27] We explained
in Schmitz Transport & Brokerage Corporation v. Transport Venture,
Inc.,[28] as follows:
In order to be considered a fortuitous event,
however, (1) the cause of the unforeseen and
unexpected occurrence, or the failure of the
debtor to comply with his obligation, must be
independent of human will; (2) it must be
impossible to foresee the event which constitute
the caso fortuito, or if it can be foreseen it must
be impossible to avoid; (3) the occurrence must
be such as to render it impossible for the debtor
to fulfill his obligation in any manner; and (4)
the obligor must be free from any participation
in the aggravation of the injury resulting to the
creditor.
[T]he principle embodied in
the act of God doctrine
strictly requires that the act
must be occasioned solely
by the violence of nature.
Human intervention is to
be excluded from creating
or entering into the cause
of the mischief. When the
effect is found to be in part
the result of the
participation of man,
whether due to his active
intervention or neglect or
failure to act, the whole
occurrence is then
humanized and removed
from the rules applicable to
the acts of God.[29] (bold
underscoring supplied for
emphasis)
The petitioner has attributed the sinking of the vessel to the storm
notwithstanding its position on the seaworthiness of M/V Princess
of the Orient. Yet, the findings of the BMI directly contradicted the
petitioner's attribution, as follows:
7. The Immediate and the Proximate Cause of
the Sinking
The Captain's erroneous maneuvers of the M/V
Princess of the Orient minutes before she sunk
[sic] had caused the accident. It should be noted
that during the first two hours when the ship left
North Harbor, she was navigating smoothly
towards Limbones Point. During the same
period, the ship was only subjected to the
normal weather stress prevailing at the time.
She was then inside Manila Bar. The waves were
observed to be relatively small to endanger the
safety of the ship. It was only when the MV
Princess of the Orient had cleared Limbones Pt.
while navigating towards the direction of the
Fortune Island when this agonizing misfortune
struck the ship.
Initially, a list of three degrees was observed.
The listing of the ship to her portside had
continuously increased. It was at this point that
the captain had misjudged the situation. While
the ship continuously listed to her portside and
was battered by big waves, strong southwesterly
winds, prudent judgement [sic] would dictate
that the Captain should have considerably
reduced the ship's speed. He could have
immediately ordered the Chief Engineer to
slacken down the speed. Meanwhile, the winds
and waves continuously hit the ship on her
starboard side. The waves were at least seven to
eight meters in height and the wind velocity was
a[t] 25 knots. The MV Princess of the Orient being
a close-type ship (seven decks, wide and high
superstructure) was vulnerable and exposed to
the howling winds and ravaging seas. Because of
the excessive movement, the solid and liquid
cargo below the decks must have shifted its
weight to port, which could have contributed to
the tilted position of the ship.
Minutes later, the Captain finally ordered to
reduce the speed of the ship to 14 knots. At the
same time, he ordered to put ballast water to the
starboard-heeling tank to arrest the continuous
listing of the ship. This was an exercise in futility
because the ship was already listing between 15
to 20 degrees to her portside. The ship had
almost reached the maximum angle of her loll.
At this stage, she was about to lose her stability.
Despite this critical situation, the Captain
executed several starboard maneuvers. Steering
the course of the Princess to starboard had
greatly added to her tilting. In the open seas,
with a fast speed of 14 knots, advance
maneuvers such as this would tend to bring the
body of the ship in the opposite side. In
navigational terms, this movement is described
as the centripetal force. This force is produced
by the water acting on the side of the ship away
from the center of the turn. The force is
considered to act at the center of lateral
resistance which, in this case, is the centroid of
the underwater area of the ship's side away
from the center of the turn. In the case of
the Princess, when the Captain maneuvered her
to starboard, her body shifted its weight to port.
Being already inclined to an angle of 15 degrees,
coupled with the instantaneous movement of
the ship, the cargoes below deck could have
completely shifted its position and weight
towards portside. By this time, the ship being
ravaged simultaneously by ravaging waves and
howling winds on her starboard side, finally lost
her grip.[30]
Even assuming the seaworthiness of the MA/ Princess of the
Orient, the petitioner could not escape liability considering that, as
borne out by the aforequoted findings of the BMI, the immediate
and proximate cause of the sinking of the vessel had been the gross
negligence of its captain in maneuvering the vessel.
The Court also notes that Metro Manila was experiencing Storm
Signal No. 1 during the time of the sinking.[31] The BMI observed
that a vessel like the M/V Princess of the Orient, which had a
volume of 13.734 gross tons, should have been capable of
withstanding a Storm Signal No. 1 considering that the responding
fishing boats of less than 500 gross tons had been able to weather
through the same waves and winds to go to the succor of the
sinking vessel and had actually rescued several of the latter's
distressed passengers.[32]
III
The award of moral damages and temperate damages is
proper
The petitioner argues that moral damages could be meted against a
common carrier only in the following instances, to wit: (1) in the
situations enumerated by Article 2201 of the Civil Code; (2) in cases
of the death of a passenger; or (3)where there was bad faith on the
part of the common carrier. It contends that none of these
instances obtained herein; hence, the award should be deleted.
We agree with the petitioner that moral damages may be recovered
in an action upon breach of contract of carriage only when: (a)
death of a passenger results, or (b) it is proved that the carrier was
guilty of fraud and bad faith, even if death does not result.
[33] However, moral damages may be awarded if the contractual
breach is found to be wanton and deliberately injurious, or if the
one responsible acted fraudulently or with malice or bad faith.[34]
The CA enumerated the negligent acts committed by the officers
and crew of M/V Princess of the Orient, viz.:
x x x. [W]hile this Court yields to the findings of
the said investigation report, yet it should be
observed that what was complied with by
Sulpicio Lines were only the basic and minimal
safety standards which would qualify the vessel
as seaworthy. In the same report however it also
revealed that the immediate and proximate
cause of the sinking of the M/V Princess of the
Orient was brought by the following: erroneous
maneuvering command of Captain Esrum
Mahilum and due to the weather condition
prevailing at the time of the tragedy. There is no
doubt that under the circumstances the crew of
the vessel were negligent in manning it. In fact
this was clearly established by the investigation
of the Board of Marine Inquiry where it was
found that:
The Chief Mate, when
interviewed under oath, had
attested that he was not able
to make stability calculation
of the ship vis-a-vis her cargo.
He did not even know the
metacentric height (GM) of
the ship whether it be
positive or negative.
As cargo officer of the ship, he
failed to prepare a detailed
report of the ship's cargo
stowage plan.
He likewise failed to conduct the soundings
(measurement) of the ballast tanks before the
ship departed from port. He readily presumed
that the ship was full of ballast since the ship
was fully ballasted when she left Cebu for Manila
on 16 September 1998 and had never
discharge[d] its contents since that time.
Being the officer-in-charge for emergency
situation (sic) like this, he failed to execute and
supervise the actual abandonship (sic)
procedure. There was no announcement at the
public address system of abandonship (sic), no
orderly distribution of life jackets and no
orderly launching of life rafts. The witnesses
have confirmed this finding on their sworn
statements.
There was miscalculation in judgment on the
part of the Captain when he erroneously
navigated the ship at her last crucial moment. x x
x travellers in hotels or inns shall also be regarded
To aggravate his case, the Captain, having full
command and responsibility of the MV Princess
of the Orient, had failed to ensure the proper
execution of the actual abandoning of the ship.
The deck and engine officers (Second Mate,
Third Mate, Chief Engineers, Second Engineer,
Third Engineer and Fourth Engineer), being in
charge of their respective abandonship (sic)
post, failed to supervise the crew and
passengers in the proper execution of
abandonship (sic) procedure.
The Radio Officer (spark) failed to send the SOS
message in the internationally accepted
communication network (VHF Channel 16).
Instead, he used the Single Side Band (SSB)
radio in informing the company about the
emergency situation. x x x x[35]
The aforestated negligent acts of the officers and crew of M/V
Princess of the Orient could not be ignored in view of the
extraordinary duty of the common carrier to ensure the safety of
the passengers. The totality of the negligence by the officers and
crew of M/V Princess of the Orient, coupled with the seeming
indifference of the petitioner to render assistance to Sesante,
[36] warranted the award of moral damages.
While there is no hard-and-fast rule in determining what is a fair
and reasonable amount of moral damages, the discretion to make
the determination is lodged in the trial court with the limitation
that the amount should not be palpably and scandalously excessive.
The trial court then bears in mind that moral damages are not
intended to impose a penalty on the wrongdoer, or to enrich the
plaintiff at the expense of the defendant.[37] The amount of the
moral damages must always reasonably approximate the extent of
injury and be proportional to the wrong committed.[38]
The Court recognizes the mental anguish, agony and pain suffered
by Sesante who fought to survive in the midst of the raging waves
of the sea while facing the immediate prospect of losing his life. His
claim for moral and economic vindication is a bitter remnant of
that most infamous tragedy that left hundreds of families broken in
its wake. The anguish and moral sufferings he sustained after
surviving the tragedy would always include the memory of facing
the prospect of his death from drowning, or dehydration, or being
preyed upon by sharks. Based on the established circumstances, his
survival could only have been a miracle wrought by God's grace, by
which he was guided in his desperate swim for the safety of the
shore. But even with the glory of survival, he still had to grapple
with not just the memory of having come face to face with almost
certain death, but also with having to answer to the instinctive guilt
for the rest of his days of being chosen to live among the many who
perished in the tragedy.[39]
While the anguish, anxiety, pain and stress experienced by Sesante
during and after the sinking cannot be quantified, the moral
damages to be awarded should at least approximate the reparation
of all the consequences of the petitioner's negligence. With moral
damages being meant to enable the injured party to obtain the
means, diversions or amusements in order to alleviate his moral
and physical sufferings,[40] the Court is called upon to ensure that
proper recompense be allowed to him, through his heirs. For this
purpose, the amount of P1,000,000.00, as granted by the RTC and
affirmed by the CA, is maintained.
The petitioner contends that its liability for the loss of Sesante's
personal belongings should conform with Article 1754, in relation
to Articles 1998, 2000 to 2003 of the Civil Code, which provide:
Article 1754. The provisions of Articles 1733 to
1753 shall apply to the passenger's baggage
which is not in his personal custody or in that of
his employees. As to other baggage, the rules in
Articles 1998 and 2000 to 2003 concerning the
responsibility of hotel-keepers shall be
applicable.
xxxx
Article 1998. The deposit of effects made by
as necessary. The keepers of hotels or inns shall
be responsible for them as depositaries,
provided that notice was given to them, or to
their employees, of the effects brought by the
guests and that, on the part of the latter, they
take the precautions which said hotel-keepers or
their substitutes advised relative to the care and
vigilance of their effects.
xxxx
Article 2000. The responsibility referred to in
the two preceding articles shall include the loss
of, or injury to the personal property of the
guests caused by the servants or employees of
 the keepers of hotels or inns as well as by
strangers; but not that which may proceed from
any force majeure. The fact that travellers are
constrained to rely on the vigilance of the
keeper of the hotel or inn shall be considered in
determining the degree of care required of him.
Article 2001. The act of a thief or robber, who
has entered the hotel is not deemed force
majeure, unless it is done with the use of arms or
through an irresistible force.
Article 2002. The hotel-keeper is not liable for
compensation if the loss is due to the acts of the
guest, his family, servants or visitors, or if the
loss arises from the character of the things
brought into the hotel.
Article 2003. The hotel-keeper cannot free
himself from responsibility by posting notices to
the effect that he is not liable for the articles
brought by the guest. Any stipulation to the
contrary between the hotel-keeper and the
guest whereby the responsibility of the former
as set forth in Articles 1998 to 2001 is
suppressed or diminished shall be void.
The petitioner denies liability because Sesante's belongings had
remained in his custody all throughout the voyage until the sinking,
and he had not notified the petitioner or its employees about such
belongings. Hence, absent such notice, liability did not attach to the
petitioner.
Is notification required before the common carrier becomes liable
for lost belongings that remained in the custody of the passenger?
We answer in the negative.
The rule that the common carrier is always responsible for the
passenger's baggage during the voyage needs to be emphasized.
Article 1754 of the Civil Code does not exempt the common carrier
from liability in case of loss, but only highlights the degree of care
required of it depending on who has the custody of the belongings.
Hence, the law requires the common carrier to observe the same
diligence as the hotel keepers in case the baggage remains with the
passenger; otherwise, extraordinary diligence must be exercised.
[41] Furthermore, the liability of the common carrier attaches even
if the loss or damage to the belongings resulted from the acts of the
common carrier's employees, the only exception being where such
loss or damages is due to force majeure.[42]
In YHT Realty Corporation v. Court of Appeals,[43] we declared the
actual delivery of the goods to the innkeepers or their employees as
unnecessary before liability could attach to the hotelkeepers in the
event of loss of personal belongings of their guests considering that
the personal effects were inside the hotel or inn because the
hotelkeeper shall remain accountable.[44] Accordingly, actual
notification was not necessary to render the petitioner as the
common carrier liable for the lost personal belongings of Sesante.
By allowing him to board the vessel with his belongings without
any protest, the petitioner became sufficiently notified of such
belongings. So long as the belongings were brought inside the
premises of the vessel, the petitioner was thereby effectively
notified and consequently duty-bound to observe the required
diligence in ensuring the safety of the belongings during the
voyage. Applying Article 2000 of the Civil Code, the petitioner
assumed the liability for loss of the belongings caused by the
negligence of its officers or crew. In view of our finding that the
negligence of the officers and crew of the petitioner was the
immediate and proximate cause of the sinking of the M/V Princess
of the Orient, its liability for Sesante's lost personal belongings was
beyond question.
The petitioner claims that temperate damages were erroneously
awarded because Sesante had not proved pecuniary loss; and that
the CA merely relied on his self-serving testimony.
The award of temperate damages was proper.
Temperate damages may be recovered when some pecuniary loss
has been suffered but the amount cannot, from the nature of the
case, be proven with certainty.[45] Article 2224[46] of the Civil
Code expressly authorizes the courts to award temperate damages
despite the lack of certain proof of actual damages.[47]
Indubitably, Sesante suffered some pecuniary loss from the sinking
of the vessel, but the value of the loss could not be established with
certainty. The CA, which can try facts and appreciate evidence,
pegged the value of the lost belongings as itemized in the police
report at P120,000.00. The valuation approximated the costs of the
lost belongings. In that context, the valuation of P120,000.00 is
correct, but to be regarded as temperate damages.
In fine, the petitioner, as a common carrier, was required to
observe extraordinary diligence in ensuring the safety of its
passengers and their personal belongings. It being found herein
short of the required diligence rendered it liable for the resulting
injuries and damages sustained by Sesante as one of its passengers.
Should the petitioner be further held liable for exemplary
damages?
In contracts and quasi-contracts, the Court has the discretion to
award exemplary damages if the defendant acted in a wanton,
fraudulent, reckless, oppressive, or malevolent manner.
[48] Indeed, exemplary damages cannot be recovered as a matter
of right, and it is left to the court to decide whether or not to award
them.[49] In consideration of these legal premises for the exercise
of the judicial discretion to grant or deny exemplary damages in
contracts and quasi-contracts against a defendant who acted in a
wanton, fraudulent,' reckless, oppressive, or malevolent manner,
the Court hereby awards exemplary damages to Sesante.
First of all, exemplary damages did not have to be specifically
pleaded or proved, because the courts had the discretion to award
them for as long as the evidence so warranted. In Marchan v.
Mendoza,[50] the Court has relevantly discoursed:
x x x. It is argued that this Court is without
jurisdiction to adjudicate this exemplary
damages since there was no allegation nor
prayer, nor proof, nor counterclaim of error
for the same by the appellees. It is to be
observed however, that in the complaint,
plaintiffs "prayed for such other and further
relief as this Court may deem just and
equitable." Now, since the body of the
complaint sought to recover damages against
the defendant-carrier wherein plaintiffs
prayed for indemnification for the damages
they suffered as a result of the negligence of
said Silverio Marchan who is appellant's
employee; and since exemplary damages is
intimately connected with general damages,
plaintiffs may not be expected to single out
by express term the kind of damages they are
trying to recover against the defendant's
carrier. Suffice it to state that when plaintiffs
prayed in their complaint for such other
relief and remedies that may be availed of
under the premises, in effect, therefore, the
court is called upon to exercise and use its
discretion whether the imposition of
punitive or exemplary damages even though
not expressly prayed or pleaded in the
plaintiffs' complaint.
x x x It further appears that the amount of
exemplary damages need not be proved,
because its determination depends upon the
amount of compensatory damages that may
be awarded to the claimant. If the amount of
exemplary damages need not be proved, it
need not also be alleged, and the reason is
obvious because it is merely incidental or
dependent upon what the court may award
as compensatory damages. Unless and until
this premise is determined and established,
what may be claimed as exemplary damages
would amount to a mere surmise or
speculation. It follows as a necessary
consequence that the amount of exemplary
damages need not be pleaded in the
 complaint because the same cannot be
predetermined. One can merely ask that it be
determined by the court if in the use of its
discretion the same is warranted by the
evidence, and this is just what appellee has
done. (Bold underscoring supplied for
emphasis)
And, secondly, exemplary damages are designed by our civil law to
"permit the courts to reshape behavior that is socially deleterious
in its consequence by creating negative incentives or deterrents
against such behavior."[51] The nature and purpose for this kind of
damages have been well-stated in People v. Dalisay,[52] to wit:
Also known as 'punitive' or 'vindictive'
damages, exemplary or corrective damages
are intended to serve as a deterrent to
serious wrong doings, and as a vindication of
undue sufferings and wanton invasion of the
rights of an injured or a punishment for
those guilty of outrageous conduct. These
terms are generally, but not always, used
interchangeably. In common law, there is
preference in the use of exemplary damages
when the award is to account for injury to
feelings and for the sense of indignity and
humiliation suffered by a person as a result of an
injury that has been maliciously and wantonly
inflicted, the theory being that there should be
compensation for the hurt caused by the highly
reprehensible conduct of the defendant -
associated with such circumstances as
willfulness, wantonness, malice, gross
negligence or recklessness, oppression, insult or
fraud or gross fraud - that intensifies the injury.
The terms punitive or vindictive damages are
often used to refer to those species of damages
that may be awarded against a person to punish
him for his outrageous conduct. In either case,
these damages are intended in good measure
to deter the wrongdoer and others like him
from similar conduct in the future. (Bold
underscoring supplied for emphasis)
The BMI found that the "erroneous maneuvers" during the ill-fated
voyage by the captain of the petitioner's vessel had caused the
sinking. After the vessel had cleared Limbones Point while
navigating towards the direction of Fortune Island, the captain
already noticed the listing of the vessel by three degrees to the
portside of the vessel, but, according to the BMI, he did not exercise
prudence as required by the situation in which his vessel was
suffering the battering on the starboard side by big waves of seven
to eight meters high and strong southwesterly winds of 25 knots.
The BMI pointed out that he should have considerably reduced the
speed of the vessel based on his experience about the vessel - a
close-type ship of seven decks, and of a wide and high
superstructure - being vulnerable if exposed to strong winds and
high waves. He ought to have also known that maintaining a high
speed under such circumstances would have shifted the solid and
liquid cargo of the vessel to port, worsening the tilted position of
the vessel. It was only after a few minutes thereafter that he finally
ordered the speed to go down to 14 knots, and to put ballast water
to the starboard-heeling tank to arrest the continuous listing at
portside. By then, his moves became an exercise in futility because,
according to the BMI, the vessel was already listing to her portside
between 15 to 20 degrees, which was almost the maximum angle of
the vessel's loll. It then became inevitable for the vessel to lose her
stability.
The BMI concluded that the captain had executed several starboard
maneuvers despite the critical situation of the vessel, and that the
maneuvers had greatly added to the tilting of the vessel. It
observed:
x x x In the open seas, with a fast speed of 14
knots, advance maneuvers such as this would
tend to bring the body of the ship in the
opposite side. In navigational terms, this
movement is described as the centripetal
force. This force is produced by the water
acting on the side of the ship away from the
center of the turn. The force is considered to
act at the center of lateral resistance which,
in this case, is the centroid of the underwater
area of the ship's side away from the center
of the turn. In the case of the Princess, when
the Captain maneuvered her to starboard,
her body shifted its weight to port. Being
already inclined to an angle of 15 degrees,
coupled with the instantaneous movement of
the ship, the cargoes below deck could have
completely shifted its position and weight
towards portside. By this time, the ship being
ravaged simultaneously by ravaging waves
and howling winds on her starboard side,
finally lost her grip.[53]
Clearly, the petitioner and its agents on the scene acted wantonly
and recklessly. Wanton and reckless are virtually synonymous in
meaning as respects liability for conduct towards others.
[54] Wanton means characterized by extreme recklessness and
utter disregard for the rights of others; or marked by or
manifesting arrogant recklessness of justice or of rights or feelings
of others.[55] Conduct is reckless when it is an extreme departure
from ordinary care, in a situation in which a high degree of danger
is apparent. It must be more than any mere mistake resulting from
inexperience, excitement, or confusion, and more than mere
thoughtlessness or inadvertence, or simple inattention.[56]
The actuations of the petitioner and its agents during the incident
attending the unfortunate sinking of the M/V Princess of the Orient
were far below the standard of care and circumspection that the
law on common carriers demanded. Accordingly, we hereby fix the
sum of P1,000,000.00 in order to serve fully the objective of
exemplarity among those engaged in the business of transporting
passengers and cargo by sea. The amount would not be excessive,
but proper. As the Court put it in Pereña v. Zarate:[57]
Anent the P1,000,000.00 allowed as exemplary
damages, we should not reduce the amount if
only to render effective the desired example for
the public good. As a common carrier, the
Perenas needed to be vigorously reminded to
observe their duty to exercise extraordinary
diligence to prevent a similarly senseless
accident from happening again. Only by an
award of exemplary damages in that amount
would suffice to instill in them and others
similarly situated like them the ever-present
need for greater and constant vigilance in the
conduct of a business imbued with public
interest.[58] (Bold underscoring supplied for
emphasis)
WHEREFORE, the Court AFFIRMS the decision promulgated on
June 27, 2005 with the MODIFICATIONS that: (a) the amount of
moral damages is fixed at P1,000,000.00; (b) the amount of
P1,000,000.00 is granted as exemplary damages; and (c) the sum of
P120,000.00 is allowed as temperate damages, all to be paid to the
heirs of the late Napoleon Sesante. In addition, all the amounts
hereby awarded shall earn interest of 6% per annum from the
finality of this decision until fully paid. Costs of suit to be paid by
the petitioner.
SO ORDERED.
G.R. No. 208802
G.V. FLORIDA TRANSPORT, INC., Petitioner
vs.
HEIRS OF ROMEO L. BATTUNG, SR., represented by ROMEO
BATTUNG, SR., Respondent
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the
Decision2 dated May 31, 2013 and the Resolution 3 dated August 23,
2013 of the Court of Appeals (CA) in CA-G.R. CV No. 97757, which
affirmed in toto the Decision4 dated August 29, 2011 of the
Regional Trial Court of Cabagan, Isabela, Branch 22 (RTC) in Civil
Case No. 22-1103 finding petitioner G.V. Florida Transport, Inc.
(petitioner), Federico M. Duplio, Jr. (Duplio ), and Christopher
Daraoay (Daraoay) jointly and severally liable to respondents heirs
of Romeo L. Battung, Jr. (respondents) for damages arising
from culpa contractual.
The Facts
Respondents alleged that in the evening of March 22, 2003, Romeo
L. Battung, Jr. (Battung) boarded petitioner’s bus with body
number 037 and plate number BVJ-525 in Delfin Albano, Isabela,
bound for Manila.5 Battung was seated at the first row behind the
driver and slept during the ride. When the bus reached the
Philippine Carabao Center in Muñ oz, Nueva Ecija, the bus driver,
Duplio, stopped the bus and alighted to check the tires. At this
point, a man who was seated at the fourth row of the bus stood up,
shot Battung at his head, and then left with a companion. The bus
conductor, Daraoay, notified Duplio of the incident and thereafter,
brought Romeo to the hospital, but the latter was pronounced dead
on arrival.6 Hence, respondents filed a complaint 7 on July 15, 2008
for damages in the aggregate amount of ₱1,826,000.00 8 based on a
breach of contract of carriage against petitioner, Duplio, and
Baraoay (petitioner, et al.) before the RTC, docketed as Civil Case
No. 22-1103. Respondents contended that as a common carrier,
petitioner and its employees are bound to observe extraordinary
diligence in ensuring the safety of passengers; and in case of
injuries and/or death on the part of a passenger, they are
presumed to be at fault and, thus, responsible therefor. As such,
petitioner, et al. should be held civilly liable for Battung’s death. 9
In their defense, petitioner, et al. maintained that they had
exercised the extraordinary diligence required by law from
common carriers.1âwphi1 In this relation, they claimed that a
common carrier is not an absolute insurer of its passengers and
that Battung’s death should be properly deemed a fortuitous event.
Thus, they prayed for the dismissal of the complaint, as well as the
payment of their counterclaims for damages and attorney’s fees. 10
The RTC Ruling
In a Decision11 dated August 29, 2011, the RTC ruled
respondents’ favor and, accordingly, ordered petitioner, et al.
pay respondent the amounts of: (a) ₱1,586,000.00
compensatory damages for unearned income; (b) ₱50,000.00
actual damages; and (c) ₱50,000.00 as moral damages. 12
The petition is meritorious.
I.
The law exacts from common carriers (i.e., those 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
public20) the highest degree of diligence (i.e., extraordinary
diligence) in ensuring the safety of its passengers. Articles 1733
and 1755 of the Civil Code state:
Art. 1733. Common carriers, from the nature of
their business and for reasons of public policy,
are bound to observe extraordinary diligence in
the vigilance over the goods and for the safety of
the passengers transported by them, according
to all the circumstances of each case.
Art. 1755. A common carrier is bound to carry
the passengers safely as far as human care and
foresight can provide, using the utmost diligence
of very cautious persons, with a due regard for
all the circumstances.
In this relation, Article 1756 of the Civil Code provides that "[i]n
case of death of or injuries to passengers, common carriers are
presumed to have been at fault or to have acted negligently, unless
they prove that they observed extraordinary diligence as
prescribed in Articles 1733 and 1755." This disputable
presumption may also be overcome by a showing that the accident
was caused by a fortuitous event. 21 The foregoing provisions
notwithstanding, it should be pointed out that the law does not
make the common carrier an insurer of the absolute safety of its
passengers. In Mariano, Jr. v. Callejas,22 the Court explained that:
While the law requires the highest degree of
diligence from common carriers in the safe
transport of their passengers and creates a
presumption of negligence against them, it does
in not, however, make the
to
as
as carrier an insurer of the absolute safety of its
passengers.

The RTC found that petitioner, et al. were unable to rebut the
presumed liability of common carriers in case of injuries/death to
its passengers due to their failure to show that they implemented
the proper security measures to prevent passengers from carrying
deadly weapons inside the bus which, in this case, resulted in the
killing of Battung. As such, petitioner, et al. were held civilly liable
for the latter’s death based on culpa contractual.13
Article 1755 of the Civil Code qualifies the duty
of extraordinary care, vigilance[,] and
precaution in the carriage of passengers by
common carriers to only such as human care
and foresight can provide. What constitutes
compliance with said duty is adjudged with
due regard to all the circumstances.

Dissatisfied, petitioner, et al. appealed to the CA. 14
The CA Ruling
In a Decision15 dated May 31, 2013, the CA affirmed the ruling of
the RTC in toto.16 It held that the killing of Battung cannot be
deemed as a fortuitous event, considering that such killing
happened right inside petitioner’s bus and that petitioner, et al. did
not take any safety measures in ensuring that no deadly weapon
would be smuggled inside the bus.17
Aggrieved, only petitioner moved for reconsideration 18 which was,
however, denied in a Resolution 19 dated August 23, 2013; hence,
the instant petition.
The Issue Before the Court
The core issue for the Court’s resolution is whether or not the CA
correctly affirmed the ruling of the RTC finding petitioner liable for
damages to respondent arising from culpa contractual.
The Court’s Ruling
Article 1756 of the Civil Code, in creating a
presumption of fault or negligence on the part of
the common carrier when its passenger is
injured, merely relieves the latter, for the time
being, from introducing evidence to fasten the
negligence on the former, because the
presumption stands in the place of
evidence. Being a mere presumption,
however, the same is rebuttable by proof
that the common carrier had exercised
extraordinary diligence as required by law in
the performance of its contractual obligation,
or that the injury suffered by the passenger
was solely due to a fortuitous event.
In fine, we can only infer from the law the
intention of the Code Commission and Congress
to curb the recklessness of drivers and
operators of common carriers in the conduct of
their business.
Thus, it is clear that neither the law nor the
nature of the business of a transportation
company makes it an insurer of the passenger’s
safety, but that its liability for personal injuries
sustained by its passenger rests upon its
negligence, its failure to exercise the degree of
diligence that the law requires.23 (Emphases and
underscoring supplied)
Therefore, it is imperative for a party claiming
against a common carrier under the above-said
provisions to show that the injury or death to
the passenger/s arose from the negligence of the
common carrier and/or its employees in
providing safe transport to its passengers.
In Pilapil v. CA,24 the Court clarified that where
the injury sustained by the passenger was in no
way due (1) to any defect in the means of
transport or in the method of transporting,
or (2) to the negligent or willful acts of the
common carrier’s employees with respect to the
foregoing – such as when the injury arises wholly
from causes created by strangers which the
carrier had no control of or prior knowledge to
prevent – there would be no issue regarding the
common carrier’s negligence in its duty to
provide safe and suitable care, as well as
competent employees in relation to its transport
business; as such, the presumption of
fault/negligence foisted under Article 1756 of
the Civil Code should not apply:
First, as stated earlier, the
presumption of fault or
negligence against the carrier
is only a disputable
presumption. [The
presumption] gives in
where contrary facts are
established proving either
that the carrier had
exercised the degree of
diligence required by law
or the injury suffered by
the passenger was due to a
fortuitous event. Where, as
in the instant case, the
injury sustained by the
petitioner was in no way
due to any defect in the
means of transport or in
the method of transporting
or to the negligent or wilful
acts of [the common
carrier’s] employees, and
therefore involving no
issue of negligence in its
duty to provide safe and
suitable [care] as well as
competent employees, with
the injury arising wholly
from causes created by
strangers over which the
carrier had no control or
even knowledge or could
not have prevented, the
presumption is rebutted
and the carrier is not and
ought not to be held
liable. To rule otherwise
would make the common
carrier the insurer of the
absolute safety of its
passengers which is not the
intention of the lawmakers.
(Emphasis and underscoring
supplied)
In this case, Battung’s death was neither caused
by any defect in the means of transport or in the
method of transporting, or to the negligent or
willful acts of petitioner’s employees, namely,
that of Duplio and Daraoay, in their capacities as
driver and conductor, respectively. Instead, the
case involves the death of Battung wholly caused
by the surreptitious act of a copassenger who,
after consummating such crime, hurriedly
alighted from the vehicle. 25 Thus, there is no
proper issue on petitioner’s duty to observe
extraordinary diligence in ensuring the safety of
the passengers transported by it, and the
presumption of fault/negligence against
petitioner under Article 1756 in relation to
Articles 1733 and 1755 of the Civil Code should
not apply.
II.
On the other hand, since Battung’s death was
caused by a copassenger, the applicable
provision is Article 1763 of the Civil Code,
which states that "a common carrier is
responsible for injuries suffered by a passenger
on account of the willful acts or negligence of
other passengers or of strangers, if the
common carrier’s employees through the
exercise of the diligence of a good father of a
family could have prevented or stopped the act
or omission." Notably, for this obligation, the law
provides a lesser degree of diligence, i.e.,
diligence of a good father of a family, in
assessing the existence of any culpability on the
common carrier’s part.
Case law states that the concept of diligence of a
good father of a family "connotes reasonable
care consistent with that which an ordinarily
prudent person would have observed when
confronted with a similar situation. The test to
determine whether negligence attended the
performance of an obligation is: did the
defendant in doing the alleged negligent act use
that reasonable care and caution which an
ordinarily prudent person would have used in
the same situation? If not, then he is guilty of
negligence."26
In ruling on this case, the CA cited Fortune
Express, Inc. v. Court of Appeals 27 (Fortune) in
ascribing negligence on the part of petitioner,
ratiocinating that it failed to implement
measures to detect if its passengers were
carrying firearms or deadly weapons which
would pose a danger to the other
passengers.28 However, the CA’s reliance was
plainly misplaced in view of Fortune’s factual
variance with the case at bar.
In Fortune, the common carrier had already
received intelligence reports from law
enforcement agents that certain lawless
elements were planning to hijack and burn some
of its buses; and yet, it failed to implement the
necessary precautions to ensure the safety of its
buses and its passengers. A few days later, one
of the company’s buses was indeed hijacked and
burned by the lawless elements pretending as
mere passengers, resulting in the death of one of
the bus passengers. Accordingly, the Court held
that the common carrier’s failure to take
precautionary measures to protect the safety of
its passengers despite warnings from law
enforcement agents showed that it failed to
exercise the diligence of a good father of a family
in preventing the attack against one of its buses;
thus, the common carrier was rightfully held
liable for the death of the aforementioned
passenger.
In contrast, no similar danger was shown to
exist in this case so as to impel petitioner or its
employees to implement heightened security
measures to ensure the safety of its passengers.
There was also no showing that during the
course of the trip, Battung’s killer made
suspicious actions which would have
forewarned petitioner’s employees of the need
to conduct thorough checks on him or any of the
passengers. Relevantly, the Court, in Nocum v.
Laguna Tayabas Bus Company,29 has held that
common carriers should be given sufficient
leeway in assuming that the passengers they
take in will not bring anything that would prove
dangerous to himself, as well as his
copassengers, unless there is something that will
indicate that a more stringent inspection should
be made, viz.:
In this particular case before
Us, it must be considered that
while it is true the passengers
of appellant’s bus should not
be made to suffer for
something over which they
had no control, as enunciated
in the decision of this Court
cited by His Honor, fairness
demands that in measuring
a common carrier’s duty
towards its passengers,
allowance must be given to
the reliance that should be
reposed on the sense of
responsibility of all the
passengers in regard to
their common safety. It is to
be presumed that a understood.30 (Emphases and
passenger will not take
with him anything
dangerous to the lives and
limbs of his co-passengers,
not to speak of his own. Not
to be lightly considered must
be the right to privacy to
which each passenger is
entitled. He cannot be
subjected to any unusual
search, when he protests
the innocuousness of his
baggage and nothing
appears to indicate the
contrary, as in the case at
bar. In other words, inquiry
may be verbally made as to
the nature of a passenger’s
baggage when such is not
outwardly perceptible, but
beyond this, constitutional
boundaries are already in
danger of being
transgressed. Calling a held civilly liable.
policeman to his aid, as
suggested by the service
manual invoked by the trial
judge, in compelling the
passenger to submit to more
rigid inspection, after the
passenger had already
declared that the box
contained mere clothes and
other miscellaneous, could
not have justified invasion of
a constitutionally protected
domain. Police officers acting
without judicial authority
secured in the manner
provided by law are not
beyond the pale of
constitutional inhibitions
designed to protect individual
human rights and liberties.
Withal, what must be
importantly considered here
is not so much the
infringement of the
fundamental sacred rights of
the particular passenger
herein involved, but the
constant threat any contrary
ruling would pose on the
right of privacy of all
passengers of all common
carriers, considering how
easily the duty to inspect can
be made an excuse for
mischief and abuse. Of
course, when there are
sufficient indications that
the representations of the
passenger regarding the
nature of his baggage may
not be true, in the interest
of the common safety of all,
the assistance of the police
authorities may be
solicited, not necessarily to
force the passenger to open
his baggage, but to conduct
the needed investigation
consistent with the rules of
propriety and, above all,
the constitutional rights of
the passenger. It is in the
sense that the mentioned
srvices manual issued by
appellant to its conductors
must be
underscoring supplied)
In this case, records reveal that when the bus
stopped at San Jose City to let four (4) men ride
petitioner's bus (two [2] of which turned out to
be Battung's murderers), the bus driver, Duplio,
saw them get on the bus and even took note of
what they were wearing. Moreover, Duplio made
the bus conductor, Daraoay, approach these men
and have them pay the corresponding fare,
which Daraoay did. 31 During the foregoing,
both Duplio and Daraoay observed nothing
which would rouse their suspicion that the men
were armed or were to carry out an unlawful
activity. With no such indication, there was no
need for them to conduct a more stringent
search (i.e., bodily search) on the aforesaid men.
By all accounts, therefore, it cannot be
concluded that petitioner or any of its
employees failed to employ the diligence of a
good father of a family in relation to its
responsibility under Article 1763 of the Civil
Code. As such, petitioner cannot altogether be
WHEREFORE, the petition is GRANTED.
Accordingly, the Decision dated May 31, 2013
and the Resolution dated August 23, 2013 of the
Court of Appeals in CA-G.R. CV No. 97757 are
hereby REVERSED and SET ASIDE. Accordingly,
the complaint for damages filed by respondents
heirs of Romeo L. Battung, Jr. is DISMISSED for
lack of merit.
SO ORDERED.
[ GR No. 190271, Sep 14, 2016 ]
TRANSIMEX CO. v. MAFRE ASIAN INSURANCE CORP. +
RESOLUTION
SERENO, C.J.:
This case involves a money claim filed by an insurance company
against the ship agent of a common carrier. The dispute stemmed
from an alleged shortage in a shipment of fertilizer delivered by the
carrier to a consignee. Before this Court, the ship agent insists that
the shortage was caused by bad weather, which must be
considered either a storm under Article 1734 of the Civil Code or a
peril of the sea under the Carriage of Goods by Sea Act (COGSA).[1]
In the Decision[2] and the Resolution[3] assailed in this Petition for
Review on Certiorari,[4] the Court of Appeals (CA) affirmed the
Decision[5] of the Regional Trial Court (RTC). The RTC ordered
petitioner Transimex Co. (Transimex) to pay respondent Mafre
Asian Insurance Corp.[6] the amount of P1,617,527.37 in addition
to attorney's fees and costs. Petitioner is the local ship agent of the
vessel, while respondent is the subrogee of Fertiphil Corporation
(Fertiphil),[7] the consignee of a shipment of Prilled Urea Fertilizer
transported by M/V Meryem Ana.
FACTUAL ANTECEDENTS
On 21 May 1996, M/V Meryem Ana received a shipment consisting
of 21,857 metric tons of Prilled Urea Fertilizer from Helm
Duengemittel GMBH at Odessa, Ukraine.[8] The shipment was
covered by two separate bills of lading and consigned to Fertiphil
for delivery to two ports - one in Poro Point, San Fernando, La
Union; and the other in Tabaco, Albay.[9] Fertiphil insured the
cargo against all risks under Marine Risk Note Nos. MN-MAR-HO-
0001341 and MN-MAR-HO-0001347 issued by respondent.[10]
On 20 June 1996, M/V Meryem Ana arrived at Poro Point, La Union,
and discharged 14,339.507 metric tons of fertilizer under the first
bill of lading.[11] The ship sailed on to Tabaco, Albay, to unload the
remainder of the cargo. The fertilizer unloaded at Albay appeared
to have a gross weight of 7,700 metric tons.[12] The present
controversy involves only this second delivery.
As soon as the vessel docked at the Tabaco port, the fertilizer was
bagged and stored inside a warehouse by employees of the
consignee.[13] When the cargo was subsequently weighed, it was
discovered that only 7,350.35 metric tons of fertilizer had been
delivered.[14] Because of the alleged shortage of 349.65 metric
tons, Fertiphil filed a claim with respondent for P1,617,527.37,
[15] which was found compensable.[16]
After paying the claim of Fertiphil, respondent demanded
reimbursement from petitioner on the basis of the right of
subrogation. The claim was denied, prompting respondent to file a
Complaint with the RTC for recovery of sum of money.[17] In
support of its claim, respondent presented a Report of
Survey[18] and a Certification[19] from David Cargo Survey
Services to prove the shortage. In addition, respondent submitted
an Adjustment Report[20] prepared by Adjustment Standards
Corporation (ASC) to establish the outturn quantity and condition
of the fertilizer discharged from the vessel at the Tabaco port.
[21] In the report, the adjuster also stated that the shortage was
attributable to the melting of the fertilizer while inside the hatches,
when the vessel took on water because of the bad weather
experienced at sea.[22] Two witnesses were then presented by
respondent to buttress its documentary evidence.[23]
Petitioner, on the other hand, denied that there was loss or damage
to the cargo.[24] It submitted survey certificates and presented the
testimony of a marine surveyor to prove that there was, in fact, an
excess of 3.340 metric tons of fertilizer delivered to the consignee.
[25] Petitioner also alleged that defendants had exercised
extraordinary diligence in the transport and handling of the cargo.
[26]
THE RTC RULING
The RTC ruled in favor of respondent and ordered petitioner to pay
the claim of P1,617,527.37. In its Decision,[27] the trial court found
that there was indeed a shortage in the cargo delivered, for which
the common carrier must be held responsible under Article 1734 of
the Civil Code. The RTC also refused to give credence to petitioner's
claim of overage and noted that the presumption of fault and/or
negligence on the part of the carrier remained unrebutted. The trial
court explained:
The defendants' defense is that there was no
loss/damage to the cargo because instead of a
shortage there was an overage of 3.340,
invoking the findings of Raul Pelagio, a marine
surveyor connected with Survey Specialists, Inc.
whose services were engaged by the defendants.
However, the Court notes that what was loaded
in the vessel M/V Meryem Ana at Odessa,
Ukraine on May 21, 1996 was 21,857 metric
tons of prilled urea fertilizer (Draft Survey
Report, Exhibit F). How the quantity loaded had
increased to 21,860.34 has not been explained
by the defendants. Thus, the Court finds
incredible the testimony of Raul Pelagio that he
found an overage of 3.340 metric tons. The
Court is inclined to give credence to the
testimonies of witness Jaime David, the cargo
surveyor engaged by consignee Fertiphil
Corporation, and witness Fabian Bon, a cargo
surveyor of Adjustment Standards Corporation,
whose services were engaged by plaintiff Mafre
Asian Insurance Corporation, there being no
reason for the Court to disregard their findings
which jibe with one another.
Thus, it appears crystal clear that on the vessel
M/V Meryem Ana was loaded in bulk on May 21,
1996 at Odessa, Ukraine a cargo consisting of
21,857 metric tons of prilled urea fertilizer
bound for delivery at Poro Point, San Fernando,
La Union and at Tabaco, Albay; that the cargo
unloaded at said ports of destination had a
shortage of 349.65 metric tons.
xxxx
As to the defense that defendants had
supposedly exercised extraordinary care and
diligence in the transport and handling of the
cargo, the Court finds that the evidence
presented by the defendants is absolutely and
completely bereft of anything to support their
claim of having exercised extraordinary care and
diligence.
Hence, the presumption of fault and/or
negligence as provided in Art. 1735 of the Civil
Code on the part of the defendants stands
unrebutted as against the latter.[28]
THE CA RULING
The CA affirmed the ruling of the RTC and denied petitioner's
appeal.[29] After evaluating the evidence presented during trial,
the appellate court found no reason to disturb the trial court's
conclusion that there was indeed a shortage in the shipment.[30]
The CA also rejected the assertion that petitioner was not a
common carrier.[31] Because the latter offered services to the
public for the transport of goods in exchange for compensation, it
was considered a common carrier in accordance with Article 1732
of the Civil Code. The CA further noted that petitioner had already
admitted this fact in the Answer[32] and even raised the defenses
usually invoked by common carriers during trial and on appeal, i.e.,
the exercise of extraordinary care and diligence, and fortuitous
event.[33] These defenses were, however, found unmeritorious:
Defendants-appellants claim that the loss was
due to a fortuitous event as the Survey Report of
Jaime David stated that during its voyage, the
vessel encountered bad weather. But to excuse a
common carrier fully of any liability, Article
1739 of the Civil Code requires that the
fortuitous event must have been the proximate
and only cause of the loss. Moreover, it should
have exercised due diligence to prevent or
minimize the loss before, during and after the
occurrence of the fortuitous event.
xxxx
In the present case, defendants-appellants did
not present proof that the "bad weather" they
encountered was a "storm" as contemplated by
Article 1734(1). String winds are the ordinary
 vicissitudes of a sea voyage. Even if the weather
encountered by the ship was to be deemed a
natural disaster under Article 1739 of the Civil
Code, defendants-appellants failed to show that
such natural disaster or calamity was the
proximate and only cause of the loss. The
shortage must not have been caused or
worsened by human participation. The defense
of fortuitous event or natural disaster cannot be
successfully made when the injury could have
been avoided by human precaution.[34]
Petitioner moved for reconsideration of the CA Decision, but the
motion was denied.[35] Not only did the Motion for
Reconsideration lack meit according to the appellate court; it was
also filed out of time.[36]
PROCEEDINGS BEFORE THIS COURT
On 3 December 2009, Transimex filed a Petition for Review
on Certiorari[37] before this Court praying for the reversal of the
CA Decision and Resolution.[38] Petitioner asserts that the lower
courts erred in holding it liable for the alleged shortage in the
shipment of fertilizer. While it no longer questions the existence of
the shortage, it claims that the loss or damage was caused by bad
weather.[39] It then insists that the dispute is governed by Section
4 of COGSA, which exempts the carrier from liability for any loss or
damage arising from "perils, dangers and accidents of the sea.[40]
In its Comment,[41] respondent maintains that petitioner was
correctly held liable for the shortage of the cargo in accordance
with the Civil Code provisions on common carriers.[42] It insists
that the factual findings of the lower courts must be
respected[43] particularly in this case, since petitioner failed to
timely appeal the Decision of the CA.[44]
Petitioner, in its Reply,[45] takes a position different from its initial
stance as to the law applicable to the dispute. It concedes that the
Civil Code primarily governs its liability as a carrier, with COGSA as
a suppletory source.[46] Under both laws, petitioner contends that
it is exempt from liability, because damage to the cargo was caused
by the bad weather encountered by the vessel while at sea. This
kind of weather supposedly qualifies as a violent storm under the
Civil Code; or as a peril, danger or accident of the sea under COGSA.
[47]
ISSUES
The following issues are presented for resolution by this Court:
1. Whether the CA Decision has become final and executory
2. Whether the transaction is governed by the provisions of
the Civil Code on common carriers or by the provisions of
COGSA
3. Whether petitioner is liable for the loss or damage
sustained by the cargo because of bad weather
OUR RULING
We DENY the Petition.
This Court finds that the CA Decision has become final because of
the failure of petitioner to timely file a motion for reconsideration.
Furthermore, contrary to the argument raised by the latter, there is
insufficient evidence to establish that the loss or damage to the
cargo was caused by a storm or a peril of the sea.
The CA Decision has become final and executory.
In the assailed Resolution, in which the CA ruled that petitioner's
Motion for Reconsideration was filed late, it explained:
Defendants-appellants' motion for
reconsideration of the Court's Decision dated
August 7, 2009 was filed out of time, as based on
the reply letter dated October 13, 2009 of the
Chief, Administrative Unit, Office of the
Postmaster, Makati City, copy of said Decision
was received by defendants-appellants' counsel
on September 4, 2009, not September 14, 2009
as alleged in the motion for reconsideration.
Consequently, the subject Decision dated August
27, 2009 had become final and executory
considering that the motion for reconsideration
was filed only on September 29, 2009, beyond
the fifteen (15)-day reglementary period which
lasted until September 19, 2009.[48]
The Court agrees. The Certification issued by the Office of the
Postmaster of Makati, which states that the Decision was received
by respondent's counsel on 4 September 2009, is entitled to full
faith and credence. In the absence of contradictory evidence, the
presumption is that the postmaster has regularly performed his
duty.[49] In this case, there is no reason to doubt his statement as
to the date respondent received the CA Decision.
Significantly, Transimex failed to address this matter in its Petition.
While it continued to allege that it received the CA Decision on 14
September 2009, it did not refute the finding of the appellate court
that the former's Motion for Reconsideration had been filed late. It
was only after respondent again asserted the finality of the CA
Decision in its Comment did petitioner attempt to explain the
discrepancy:
x x x Apparently, the said Decision dated 27
August 2009 was delivered by the postman to
the guard on duty at the ground floor of the
building where undersigned counsel's office is
located. It was the guard on duty who received
the said decision on 4 September 2009 but it
was only on 14 September 2009 that
undersigned counsel actually received the said
decision. Hence, the date of receipt of the
decision should be reckoned from the date of
receipt by the counsel of the decision and not
from the date of receipt of the guard who is not
an employee of the law office of the undersigned
counsel.
This Court notes that the foregoing account remains unsupported
by evidence. The guard on duty or any employee of the law firm
could have easily substantiated the explanation offered by counsel
for petitioner, but no statement from any of them was ever
submitted. Since petitioner was challenging the official statement
of the Office of the Postmaster of Makati on the matter, the former
had the burden of proving its assertions and presenting
countervailing evidence. Unfounded allegations would not suffice.
In any event, this Court has decided to review the merits of this
case in the interest of justice. After a judicious evaluation of the
arguments interposed by the parties, we find no reason to reverse
the CA Decision and Resolution.
The provisions of the Civil Code on common carriers are
applicable.
As previously discussed, petitioner initially argued that the CA
erred in applying the provisions of the Civil Code to this case. It
insisted that the contract of carriage between the parties was
governed by COGSA,[50] the law applicable to "all contracts for the
carriage of goods by sea to and from Philippine ports in foreign
trade."[51] This assertion is bereft of merit.
This Court upholds the ruling of the CA with respect to the
applicable law. As expressly provided in Article 1753 of the Civil
Code, "[t]he law of the country to which the goods are to be
transported shall govern the liability of the common carrier for
their loss, destruction or deterioration." Since the cargo in this case
was transported from Odessa, Ukraine, to Tabaco, Albay, the
liability of petitioner for the alleged shortage must be determined
in accordance with the provisions of the Civil Code on common
carriers. In Eastern Shipping Lines, Inc. v. BPI/MS Insurance Corp.,
the Court declared:
According to the New Civil Code, the law of the
country to which the goods are to be
transported shall govern the liability of the
common carrier for their loss, destruction or
deterioration. The Code takes precedence as the
primary law over the rights and obligations of
common carriers with the Code of Commerce
and COGSA applying suppletorily.[52]
Besides, petitioner itself later conceded in its Reply that the Civil
Code provisions on common carriers are primarily applicable to
the present dispute, while COGSA only applies in a suppletory
manner.[53]
Petitioner is liable for the shortage incurred by the shipment.
Having settled the foregoing preliminary issues, the only argument
left for this Court to resolve is petitioner's assertion that it is
exempt from liability for the loss or damage to the cargo. As
grounds for this exemption, petitioner cites both the Civil Code and
COGSA, particularly the provisions absolving a carrier from loss or
damage sustained as the result of a "storm" or a "peril of the sea."
In its Petition, Transimex summarizes the testimony of one witness
for respondent supposedly proving that the shortage in the
shipment was caused by inclement weather encountered by the
vessel at sea. Petitioner claims that this testimony proves that
damage to the cargo was the result of the melting of the fertilizer
after seawater entered Hatch No. 1 of the vessel as a result of the
bad weather conditions at sea:
The evidence for the respondent clearly proves
that the loss/damage/shortage [suffered by] the
cargo was caused by the bad weather
encountered by the vessel during the voyage
from Odessa, Ukraine to Poro Point, San
Fernando, La Union, wherein due to bad
weather[,] sea water found its way inside Hatch
No. 1 resulting in the wetting, melting and
discoloration of the prilled urea fertilizer. The
fact that sea water found its way inside Hatch
No. 1 was clearly testified to by the witness for
the respondent. Jaime R. Davis testified that:
"He was present during the
discharging operation,
that he saw the hatches
opened whereupon he
noticed the presence of
water thereat; accordingly,
he informed the master of
the vessel of the presence
of water at the hatches to
which the master of the
vessel replied that on the
way they encountered bad
weather."[54] (Emphasis in
the original)
Petitioner also cites a portion of the Adjustment Report submitted
by respondent during trial as proof that damage to the cargo was
caused by a storm:
How the sea water found its way inside Hatch
No. 1 was clearly explained by another witness
for the respondent by the name of Fabian Bon
who stated in his Adjustment as follows:
Our inquiries disclosed that
the master of the vessel
interviewed by the
consignee's surveyor (David
Cargo Survey Services) that
during sailing from Odessa
(Ukraine) bound to Poro
Point, San Fernando, La
Union, Philippines, the vessel
encountered bad weather
on June 3, 1996 and was
rolling from starboard to
portside top of the 1, 2, 3, 4,
5, 6 & 7 hatch covers and
sea water were washing
over all main deck.
On the following day, June
4, 1996, wind reading up to
40 knots and very high
swells were coming from
south west direction. The
vessel was rolling and
pitching heavily. Heavy sea
water were washing all
main deck and were
jumping from main deck to
top of the seven (7) hatch
covers. As a result, the
master filed a Marine Note
of Protest on June 19, 1996
at the Port of Poro Point,
San Fernando, La Union,
Philippines.[55] (Emphases
in the original)
The question before this Court therefore comes down to whether
there is sufficient proof that the loss or damage incurred by the
cargo was caused by a "storm" or a "peril of the sea."
We rule in the negative. As will be discussed, petitioner failed to
prove the existence of a storm or a peril of the sea within the
context of Article 1734(1) of the Civil Code or Section 4(2)(c) of
COGSA. Furthermore, there was no sufficient proof that the damage
to the shipment was solely and proximately caused by bad weather.
The presence of a "storm" or a "peril of the sea" was not
established.
It must be emphasized that not all instances of bad weather may be
categorized as "storms" or "perils of the sea" within the meaning of
the provisions of the Civil Code and COGSA on common carriers. To
be considered absolutory causes under either statute, bad weather
conditions must reach a certain threshold of severity.
With respect to storms, this Court has explained the difference
between a storm and ordinary weather conditions in Central
Shipping Co. Inc. v. Insurance Company of North America:[56]
Nonetheless, to our mind it would not be
sufficient to categorize the weather condition at
the time as a "storm" within the absolutory
causes enumerated in the law. Significantly, no
typhoon was observed within the Philippine
area of responsibility during that period.
According to PAGASA, a storm has a wind force
of 48 to 55 knots, equivalent to 55 to 63
miles per hour or 10 to 11 in the Beaufort
Scale. The second mate of the vessel stated that
the wind was blowing around force 7 to 8 on the
Beaufort Scale. Consequently, the strong
winds accompanying the southwestern
monsoon could not be classified as a "storm."
Such winds are the ordinary vicissitudes of a
sea voyage.[57] (Emphases supplied; citations
omitted)
The phrase "perils of the sea" carries the same connotation.
Although the term has not been definitively defined in Philippine
jurisprudence, courts in the United States of America generally
limit the application of the phrase to weather that is "so unusual,
unexpected and catastrophic as to be beyond reasonable
expectation."[58] Accordingly, strong winds and waves are not
automatically deemed perils of the sea, if these conditions are not
unusual for that particular sea area at that specific time, or if they
could have been reasonably anticipated or foreseen.[59] While
cases decided by U.S. courts are not binding precedents in this
jurisdiction, the Court considers these pronouncements
persuasive[60] in light of the fact that COGSA was originally an
American statute[61] that was merely adopted by the Philippine
Legislature in 1936.[62]
In this case, the documentary and testimonial evidence cited by
petitioner indicate that M/V Meryem Ana faced winds of only up to
40 knots while at sea. This wind force clearly fell short of the 48 to
55 knots required for "storms" under Article 1734(1) of the Civil
Code based on the threshold established by PAGASA.[63] Petitioner
also failed to prove that the inclement weather encountered by the
vessel was unusual, unexpected, or catastrophic. In particular, the
strong winds and waves, which allegedly assaulted the ship, were
not shown to be worse than what should have been expected in
that particular location during that time of the year. Consequently,
this Court cannot consider these weather conditions as "perils of
the sea" that would absolve the carrier from liability.
As a side note, we observe that there are no definite statutory
standards for determining the existence of a "storm" or "peril of the
sea" that would exempt a common carrier from liability. Hence, in
marine insurance cases, courts are constrained to rely upon their
own understanding of these terms of art, or upon imprecise
accounts of the speed of the winds encountered and the strength of
the waves experienced by a vessel. To obviate uncertainty, it may
be time for Congress to lay down specific rules to distinguish
"storms" and other "perils of the sea" from the ordinary action of
the wind and waves. While uniform measures of severity may
prove difficult to establish, the legislature may consider providing
more detailed standards to be used by the judiciary in resolving
maritime cases. These may include wind velocity, violence of the
seas, the height of the waves, or even the expected weather
conditions in the area involved at the time of the incident.
Petitioner failed to prove the other requisites for exemption
from liability under Article 1734 of the Civil Code.
Even assuming that the inclement weather encountered by the
vessel amounted to a "storm" under Article 1734(1) of the Civil
Code, there are two other reasons why this Court cannot absolve
petitioner from liability for loss or damage to the cargo under the
Civil Code. First, there is no proof that the bad weather
encountered by M/V Meryem Ana was the proximate and only
cause of damage to the shipment. Second, petitioner failed to
establish that it had exercised the diligence required from common
carriers to prevent loss or damage to the cargo.
We emphasize that common carriers are automatically presumed
to have been at fault or to have acted negligently if the goods they
were transporting were lost, destroyed or damaged while in
transit.[64] This presumption can only be rebutted by proof that
the carrier exercised extraordinary diligence and caution to ensure
the protection of the shipment in the event of foul weather.[65] As
this Court explained in Fortune Sea Carrier, Inc. v. BPI/MS Insurance
Corp.:
While the records of this case clearly establish
that M/V Sea Merchant was damaged as result of
extreme weather conditions, petitioner cannot
be absolved from liability. As pointed out by this
Court in Lea Mer Industries, Inc. v. Malayan
Insurance, Inc., a common carrier is not liable
for loss only when (1) the fortuitous event was
the only and proximate cause of the loss and (2)
it exercised due diligence to prevent or
minimize the loss. The second element is absent
here. As a common carrier, petitioner should
have been more vigilant in monitoring weather
disturbances within the country and their
(possible) effect on its routes and destination.
More specifically, it should have been more alert
on the possible attenuating and dysfunctional
effects of bad weather on the parts of the ship. It
should have foreseen the likely prejudicial
effects of the strong waves and winds on the
ship brought about by inclement weather and
should have taken the necessary precautionary
measures through extraordinary diligence to
prevent the weakening or dysfunction of the
parts of the ship to avoid or prune down the loss
to cargo.[66] (citations omitted)
In the instant case, there is absolutely no evidence that petitioner
satisfied the two requisites. Before the trial court, petitioner
limited itself to the defense of denial. The latter refused to admit
that the shipment sustained any loss or damage and even alleged
overage of the cargo delivered.[67] As a result, the evidence it
submitted was severely limited, i.e., the testimony of a witness that
supposedly confirmed the alleged excess in the quantity of the
fertilizer delivered to the consignee in Albay.[68] No other
evidence was presented to demonstrate either the proximate and
exclusive cause of the loss or the extraordinary diligence of the
carrier.
Under these circumstances, the Court cannot absolve petitioner
from liability for the shortage incurred by the shipment.
WHEREFORE, the Petition is DENIED. The Court of Appeals
Decision and Resolution dated 27 August 2009 and 10 November
2009, respectively, are hereby AFFIRMED.
SO ORDERED.
G.R. No. 161745 September 30, 2005
LEA MER INDUSTRIES, INC., Petitioners,
vs.
MALAYAN INSURANCE CO., INC.,* Respondent.
DECISION
PANGANIBAN, J.:
ommon carriers are bound to observe extraordinary diligence in
their vigilance over the goods entrusted to them, as required by the
nature of their business and for reasons of public policy.
Consequently, the law presumes that common carriers are at fault
or negligent for any loss or damage to the goods that they
transport. In the present case, the evidence submitted by petitioner
to overcome this presumption was sorely insufficient.
The Case
Before us is a Petition for Review 1 under Rule 45 of the Rules of
Court, assailing the October 9, 2002 Decision 2 and the December
29, 2003 Resolution3 of the Court of Appeals (CA) in CA-GR CV No.
66028. The challenged Decision disposed as follows:
"WHEREFORE, the appeal is GRANTED. The December 7, 1999
decision of the Regional Trial Court of Manila, Branch 42 in Civil
Case No. 92-63159 is hereby REVERSED and SET ASIDE.
[Petitioner] is ordered to pay the [herein respondent] the value of
the lost cargo in the amount of ₱565,000.00. Costs against the
[herein petitioner]."4
The assailed Resolution denied reconsideration.
The Facts
Ilian Silica Mining entered into a contract of carriage with Lea Mer
Industries, Inc., for the shipment of 900 metric tons of silica sand
valued at ₱565,000.5 Consigned to Vulcan Industrial and Mining
Corporation, the cargo was to be transported from Palawan to
Manila. On October 25, 1991, the silica sand was placed on
board Judy VII, a barge leased by Lea Mer. 6 During the voyage, the
vessel sank, resulting in the loss of the cargo. 7
Malayan Insurance Co., Inc., as insurer, paid Vulcan the value of the
lost cargo.8 To recover the amount paid and in the exercise of its
right of subrogation, Malayan demanded reimbursement from Lea
Mer, which refused to comply. Consequently, Malayan instituted a
Complaint with the Regional Trial Court (RTC) of Manila on
September 4, 1992, for the collection of ₱565,000 representing the
amount that respondent had paid Vulcan.9
On October 7, 1999, the trial court dismissed the Complaint, upon
finding that the cause of the loss was a fortuitous event. 10 The RTC
noted that the vessel had sunk because of the bad weather
condition brought about by Typhoon Trining. The court ruled that
petitioner had no advance knowledge of the incoming typhoon, and
that the vessel had been cleared by the Philippine Coast Guard to
travel from Palawan to Manila. 11
Ruling of the Court of Appeals
Reversing the trial court, the CA held that the vessel was not
seaworthy when it sailed for Manila. Thus, the loss of the cargo was
occasioned by petitioner’s fault, not by a fortuitous event. 12
Hence, this recourse.13
The Issues
Petitioner states the issues in this wise:
"A. Whether or not the survey report of the cargo surveyor, Jesus
Cortez, who had not been presented as a witness of the said report
during the trial of this case before the lower court can be admitted
in evidence to prove the alleged facts cited in the said report.
"B. Whether or not the respondent, Court of Appeals, had validly or
legally reversed the finding of fact of the Regional Trial Court which
clearly and unequivocally held that the loss of the cargo subject of
this case was caused by fortuitous event for which herein
petitioner could not be held liable.
"C. Whether or not the respondent, Court of Appeals, had
committed serious error and grave abuse of discretion in
disregarding the testimony of the witness from the MARINA, Engr.
Jacinto Lazo y Villegal, to the effect that the vessel ‘Judy VII’ was
seaworthy at the time of incident and further in disregarding the
testimony of the PAG-ASA weather specialist, Ms. Rosa Barba y
Saliente, to the effect that typhoon ‘Trining’ did not hit Metro
Manila or Palawan."14
In the main, the issues are as follows: (1) whether petitioner is
liable for the loss of the cargo, and (2) whether the survey report of
Jesus Cortez is admissible in evidence.
The Court’s Ruling
The Petition has no merit.
First Issue:
Liability for Loss of Cargo
Question of Fact
The resolution of the present case hinges on whether the loss of the
cargo was due to a fortuitous event. This issue involves primarily a
question of fact, notwithstanding petitioner’s claim that it pertains
only to a question of law. As a general rule, questions of fact may
not be raised in a petition for review. 15 The present case serves as
an exception to this rule, because the factual findings of the
appellate and the trial courts vary. 16 This Court meticulously
reviewed the records, but found no reason to reverse the CA.
Rule on Common Carriers
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 -- when this service is
offered to the public for compensation. 17 Petitioner is clearly a
common carrier, because it offers to the public its business of
transporting goods through its vessels. 18
Thus, the Court corrects the trial court’s finding that petitioner
became a private carrier when Vulcan chartered it. 19 Charter
parties are classified as contracts of demise (or bareboat) and
affreightment, which are distinguished as follows:
"Under the demise or bareboat charter of the vessel, the charterer
will generally be considered as owner for the voyage or service
stipulated. The charterer mans the vessel with his own people and
becomes, in effect, the owner pro hac vice,  subject to liability to
others for damages caused by negligence. To create a demise, the
owner of a vessel must completely and exclusively relinquish
possession, command and navigation thereof to the charterer;
anything short of such a complete transfer is a contract of
affreightment (time or voyage charter party) or not a charter party
at all."20
The distinction is significant, because a demise or bareboat charter
indicates a business undertaking that is private in
character. 21 Consequently, the rights and obligations of the parties
to a contract of private carriage are governed principally by their
stipulations, not by the law on common carriers.22
The Contract in the present case was one of affreightment, as
shown by the fact that it was petitioner’s crew that manned the
tugboat M/V Ayalit and controlled the barge Judy VII.23 Necessarily,
petitioner was a common carrier, and the pertinent law governs
the present factual circumstances.
Extraordinary Diligence Required
Common carriers are bound to observe extraordinary diligence in
their vigilance over the goods and the safety of the passengers they
transport, as required by the nature of their business and for
reasons of public policy.24 Extraordinary diligence requires
rendering service with the greatest skill and foresight to avoid
damage and destruction to the goods entrusted for carriage and
delivery.25
Common carriers are presumed to have been at fault or to have
acted negligently for loss or damage to the goods that they have
transported.26 This presumption can be rebutted only by proof that
they observed extraordinary diligence, or that the loss or damage
was occasioned by any of the following causes: 27
"(1) Flood, storm, earthquake, lightning, or other natural disaster
or calamity;
"(2) Act of the public enemy in war, whether international or civil;
"(3) Act or omission of the shipper or owner of the goods;
"(4) The character of the goods or defects in the packing or in the
containers;
"(5) Order or act of competent public authority." 28
Rule on Fortuitous Events
Article 1174 of the Civil Code provides that "no person shall be
responsible for a fortuitous event which could not be foreseen, or
which, though foreseen, was inevitable." Thus, if the loss or damage
was due to such an event, a common carrier is exempted from
liability.
Jurisprudence defines the elements of a "fortuitous event" as
follows: (a) the cause of the unforeseen and unexpected
occurrence, or the failure of the debtors to comply with their
obligations, must have been independent of human will; (b) the
event that constituted the caso fortuito  must have been impossible
to foresee  or, if foreseeable, impossible to avoid; (c) the occurrence
must have been such as to render it impossible for the debtors to
fulfill their obligation in a normal manner; and (d) the obligor must
have been free from any participation in the aggravation of the
resulting injury to the creditor.29
To excuse the common carrier fully of any liability, the fortuitous
event must have been the proximate and only cause of the
loss.30 Moreover, it should have exercised due diligence to prevent
or minimize the loss before, during and after the occurrence of the
fortuitous event.31
Loss in the Instant Case
There is no controversy regarding the loss of the cargo in the
present case. As the common carrier, petitioner bore the burden of
proving that it had exercised extraordinary diligence to avoid the
loss, or that the loss had been occasioned by a fortuitous event -- an
exempting circumstance.
It was precisely this circumstance that petitioner cited to escape
liability. Lea Mer claimed that the loss of the cargo was due to the
bad weather condition brought about by Typhoon
Trining.32 Evidence was presented to show that petitioner had not
been informed of the incoming typhoon, and that the Philippine
Coast Guard had given it clearance to begin the voyage. 33 On
October 25, 1991, the date on which the voyage commenced and
the barge sank, Typhoon Trining was allegedly far from Palawan,
where the storm warning was only "Signal No. 1."34
The evidence presented by petitioner in support of its defense of
fortuitous event was sorely insufficient. As required by the
pertinent law, it was not enough for the common carrier to show
that there was an unforeseen or unexpected occurrence. It had to
show that it was free from any fault -- a fact it miserably failed to
prove.
First, petitioner presented no evidence that it had attempted to
minimize or prevent the loss before, during or after the alleged
fortuitous event.35 Its witness, Joey A. Draper, testified that he could
no longer remember whether anything had been done to minimize
loss when water started entering the barge. 36 This fact was
confirmed during his cross-examination, as shown by the following
brief exchange:
"Atty. Baldovino, Jr.:
Other than be[a]ching the barge Judy VII, were there other
precautionary measure[s] exercised by you and the crew of Judy
VII so as to prevent the los[s] or sinking of barge Judy VII?
xxxxxxxxx
Atty. Baldovino, Jr.:
Your Honor, what I am asking [relates to the] action taken by the
officers and crew of tugboat Ayalit and barge Judy VII x x x to
prevent the sinking of barge Judy VII?
xxxxxxxxx
Court:
Mr. witness, did the captain of that tugboat give any instruction on
how to save the barge Judy VII?
Joey Draper:
I can no longer remember sir, because that happened [a] long time
ago."37
Second, the alleged fortuitous event was not the sole and proximate
cause of the loss. There is a preponderance of evidence that the
barge was not seaworthy when it sailed for Manila. 38 Respondent
was able to prove that, in the hull of the barge, there were holes
that might have caused or aggravated the sinking. 39 Because the
presumption of negligence or fault applied to petitioner, it was
incumbent upon it to show that there were no holes; or, if there
were, that they did not aggravate the sinking.
Petitioner offered no evidence to rebut the existence of the holes.
Its witness, Domingo A. Luna, testified that the barge was in "tip-
top" or excellent condition,40 but that he had not personally
inspected it when it left Palawan.41
The submission of the Philippine Coast Guard’s Certificate of
Inspection of Judy VII, dated July 31, 1991, did not conclusively
prove that the barge was seaworthy. 42 The regularity of the
issuance of the Certificate is disputably presumed. 43 It could be
contradicted by competent evidence, which respondent offered.
Moreover, this evidence did not necessarily take into account the
actual condition of
the vessel at the time of the commencement of the voyage. 44
Second Issue:
Admissibility of the Survey Report
Petitioner claims that the Survey Report 45 prepared by Jesus
Cortez, the cargo surveyor, should not have been admitted in
evidence. The Court partly agrees. Because he did not testify during
the trial,46 then the Report that he had prepared was hearsay and
therefore inadmissible for the purpose of proving the truth of its
contents.
The Survey Report Not the Sole Evidence
The facts reveal that Cortez’s Survey Report was used in the
testimonies of respondent’s witnesses -- Charlie M. Soriano; and
Federico S. Manlapig, a cargo marine surveyor and the vice-
president of Toplis and Harding Company.47 Soriano testified that
the Survey Report had been used in preparing the final Adjustment
Report conducted by their company. 48 The final Report showed that
the barge was not seaworthy because of the existence of the holes.
Manlapig testified that he had prepared that Report after taking
into account the findings of the surveyor, as well as the pictures
and the sketches of the place where the sinking
occurred.49 Evidently, the existence of the holes was proved by the
testimonies of the witnesses, not merely by Cortez’ Survey Report.
Rule on Independently
Relevant Statement
That witnesses must be examined and presented during the
trial,50 and that their testimonies must be confined to personal
knowledge is required by the rules on evidence, from which we
quote:
"Section 36. Testimony generally confined to personal knowledge;
hearsay excluded. –A witness can testify only to those facts which
he knows of his personal knowledge; that is, which are derived
from his own perception, except as otherwise provided in these
rules."51
On this basis, the trial court correctly refused to admit Jesus
Cortez’s Affidavit, which respondent had offered as
evidence.52 Well-settled is the rule that, unless the affiant is
presented as a witness, an affidavit is considered hearsay. 53
An exception to the foregoing rule is that on "independently
relevant statements." A report made by a person is admissible if it
is intended to prove the tenor, not the truth, of the
statements.54 Independent of the truth or the falsity of the
statement given in the report, the fact that it has been made is
relevant. Here, the hearsay rule does not apply. 55
In the instant case, the challenged Survey Report prepared by
Cortez was admitted only as part of the testimonies of respondent’s
witnesses. The referral to Cortez’s Report was in relation to
Manlapig’s final Adjustment Report. Evidently, it was the existence
of the Survey Report that was testified to. The admissibility of that
Report as part of the testimonies of the witnesses was correctly
ruled upon by the trial court.
At any rate, even without the Survey Report, petitioner has already
failed to overcome the presumption of fault that applies to common
carriers.
WHEREFORE, the Petition is DENIED  and the assailed Decision and
Resolution are AFFIRMED. Costs against petitioner.
SO ORDERED.
G.R. No. 182705               July 18, 2014
VICENTE JOSEFA, Petitioner,
vs.
MANILA ELECTRIC COMPANY, Respondent.
DECISION
BRION, J.:
We resolve the petition for review on certiorari 1 filed by petitioner
Vicente Josefa, doing business under the name and style of 747
Lumber and Construction Supply, to challenge the January 31, 2008
decision2 and the April 29, 2008 resolution 3 of the Court of Appeals
(CA) in CA-G.R. CV No. 87512.
The Factual Antecedents
At around 1 :45 p.m. on April 21, 1991, a dump truck, a j eepney
and a car figured in a vehicular accident along Ortigas Avenue,
Pasig City.4 As a result of the accident, a 45-foot wooden electricity
post, three 75 KVA transformers, and other electrical line
attachments were damaged.5 Upon investigation, respondent
Manila Electric Company (Meralco) discovered that it was the truck
with plate number PAK-874 and registered in Josefa’s name that hit
the electricity post.6
In a letter dated April 19, 1993, Meralco demanded from Josefa
reimbursement for the replacement cost of the electricity post and
its attachments, but Josefa refused to pay. 7 Thus, on September 28,
1993, Meralco sued Josefa and Pablo Manoco, the truck driver, for
damages before the Regional Trial Court (RTC) of Pasig City. 8
Proceedings before the RTC
In its complaint, Meralco alleged that Manoco’s reckless driving
resulted in damage to itsproperties. It also imputed primary
liability on Josefa for his alleged negligence in the selection and
supervision of Manoco. It thus prayed for the indemnification of the
amount of ₱384,846.00 as actual damages, ₱50,000.00 as
attorney’s fees, ₱10,000.00 as litigation expenses, and the costs of
the suit.9
In defense, Josefa denied thatManoco was his employee when the
accident occurred. He also maintained that he exercised the
diligence of a good father of a family in the selection and
supervision of all his employees. As a counterclaim, he sought the
payment of attorney’s fees for Meralco’s filing of a baseless
complaint.10
On January 11, 1994, Meralco amended its complaint to correct the
name "Pablo Manoco" toPablo Manojo Bautista (Bautista), 11 but
soon dropped him as a party defendant in the case for failure to
serve him summons.12
A. Evidence for Meralco
During trial, Meralco offered the testimonies of six witnesses as
well as documentary evidence to substantiate its claim for damages
against Josefa:
Juan Fernandez, Meralco’s senior legal investigator, testified that
he arrived at the scene of the accident at around 2:30 p.m. on that
fateful day and saw Meralco employees installing a new electricity
post. He interviewed the people in the vicinity who told him that it
was the truck that rammed the electricity post. 13 He thus proceeded
to the police station at Caruncho Complex, Pasig City and talked
toSPO2 Alexander Galang who informed him that the owner of the
offending vehicle was Josefa. 14 Fernandez also identified and
authenticated the investigation report dated April 21,
199115 (Exhibit "A") summarizing the result of his
investigation.16 Elmer Albio identified himself as the driver of the
jeepney that was involved in the accident. He testified thata truck
suddenly hit the rear of his jeepney while he was driving along
OrtigasAvenue, Pasig City; he thus lost control of the jeepney and
hit a Nissan car on the other lane of the road. Thereafter, the truck
hit the electricity post.
SPO2 Manuel Valiente testified that he immediately went to the
scene of the accident after a concerned citizen went to the police
station and informed him about the accident. 17 However, he could
no longer recall the truck’s exact position with reference to the
electricity post at the time of his arrival at the scene of the
accident.18
SPO2 Galang stated that one of his functions as a traffic accident
investigator was to record vehicular accidents in the police blotter
book. He identified and authenticated a certified true copy of the
police blotter dated January 7, 1994 (Exhibit "B") but admitted that
he neither saw nor investigated the accident. 19
Vitaliano Espiritu, Meralco’s foreman,testified that he replaced the
damaged electricity post, transformers, and other electrical line
attachments after receiving an emergency radio call from a Meralco
personnel.20
Carlos Zapanta, Meralco’s supervising accountant, affirmed that
Meralco incurred actual damages totaling ₱384,846.00. To support
his finding, he identified and authenticated two pieces ofevidence,
the memorandum dated October 7, 1992 (Exhibit "C") and the
document dated March 29, 1993 (Exhibit "D"). Exhibit "C" is a letter
from Meralco’s legal department requesting the accounting
department for a computation of actual damages. 21 On the other
hand, Exhibit "D" provides a detailed computation of actual
damages that Meralco allegedly suffered. 22 On cross-examination,
Zapanta stated that the computation was based on "supplementary
time sheets," "trip tickets," and other documents provided by
Meralco’s distribution office; 23 however, Meralco did not present
these documents during trial.
In an order dated January 15, 1997, the RTC admitted all
documentary evidence that Meralco offered after its presentation
of testimonial evidence.24
B. Evidence for Josefa
Upon Meralco’s presentment of evidence, Josefa filed a demurrer to
Evidence25 , but was denied by the RTC. 26 Josefa assailed the denial
of his demurrer in a petition for certiorari before the CA which,
however, affirmed the RTC rulings. 27 Thereafter, Josefa filed a
motion for extension to file a petition for review on certiorari
before the Court. After we denied the motion for its procedural
infirmities,28 the RTC ordered Josefa to present his evidence-in-
chief. The RTC eventually declared the case as submitted for
decision without Josefa’s evidence-in-chief due to the numerous
and unreasonable delays that he incurred in the presentation of
evidence.29
The RTC Ruling
In a decision dated April 10, 2006,the RTC dismissed the complaint
for insufficiency of evidence. The RTC held that Meralco failed to
establish that it was the truck that hit the electricity post. The RTC
ruled that SPO2 Galang’s account of the accident was merely
hearsay since he did not personally witness the incident. It alsodid
not give probative value to the police blotter entry dated January 7,
1994 since the accident had long occurred in 1991. The RTC
likewise denied Meralco’s claim for actual damages for lack of
evidentiary support.30
The CA Ruling
The CA reversed the RTC ruling and held that the RTC erred in
disregarding the parties’ stipulation at the pre-trial that it was the
truck that hit the electricity post. The CA also found that Bautista
was Josefa’s employee when the accident occurred since Josefa did
not specifically deny this material allegation in the amended
complaint. It likewise noted that the sheriff’s return stated that
Bautista was under Josefa’s employ until 1993.
The CA concluded that the fact thatthe truck hit the electricity post
was sufficient to hold Josefa vicariously liable regardless of
whether Bautista was negligent in driving the truck. In the same
breath, the CA also stated that the employer’s presumptive liability
in quasi-delicts was anchored on injuries caused by the employee’s
negligence. It further ruled that Josefa failed to rebut the
presumption that he negligently selected and supervised Bautista
in employment since he did not present his evidence-inchief during
trial. Even assuming thatBautista was not Josefa’s employee, the CA
maintained that Josefa would still be liable for damages since the
law presumes that the registered owner has control of his vehicle
and its driver at the time of the accident. It thus ordered Josefa to
pay Meralco: (1) ₱384,846.00 as actual damages; (2) ₱50,000.00 as
attorney’s fees; (3) ₱10,000.00 as expenses of litigation; and (4)
double the costs of the suit.
Josefa filed the present petition after the CA denied 31 his motion for
reconsideration.32
The Petition
Josefa argues that the CA gravely erred in reversing the RTC’s
factual findings. He insists that the finding that it was the truck that
hit the electricity post lacks evidentiary support. Furthermore,
Meralco failed to substantiate its claim for actual damages by
competent testimonial and documentary evidence. Josefa likewise
asserts that Meralco is not entitled to attorney’s fees since it also
contributedto the delay in the proceedings. He points out that
Meralco sought for postponements of hearings during trial and
failed to assist the sheriff in serving the summons to Bautista. 33
The Respondent’s Position
In its Comment, Meralco takes the opposite view that it is the RTC
ruling that is unsupported by evidence. Meralco maintains that the
RTC erroneously ruled in favor of Josefawho did not present his
evidence-inchief during trial. Meralco also posits that Josefa’s
vicariously liability finds support in Articles 2176 and 2180 of the
Civil Code which hold the employer primarily liable for damages
caused by the employee who acted within the scope of his assigned
tasks. It also asserts that Josefa’s unjustified refusal to pay its just
and valid claim for actual damages warrants the award of
attorney’s fees.34
The Issues
This case presents to us the following issues:
(1) Whether the truck with plate number PAK-874 hit the
electricity post;
(2) Whether Bautista exercised due diligence in driving when the
truck hit the electricity post;
(3) Whether Josefa is vicariously liable for Bautista’s negligence
under paragraph 5, Article 2180 of the Civil Code;
(a) Whether there is an employer-employee relationship between
Bautista and Josefa;
(b) Whether Josefa exercised the diligence of a good father of a
family in the selection and supervision of Bautista; and
(4) Whether Meralco is entitled to actual damages, attorney’s fees,
and expenses of litigation.
Our Ruling
We partially affirm the CA’s ruling.
I. The Court may review factual
questions in a petition for review on
certiorari when a conflict exists in
findings of the lower courts
We are aware that the issues beforeus involve factual questions
which require us to review the presented pieces of evidence before
the trial court. While a petition for review on certiorariprecludes
this Court from entertaining factual issues, we can review the
pieces of evidence, by way of exception, when a conflict exists in
the findings of the RTC and the CA.35 We see this exceptional
situation here and thus examine the relevant pieces of evidence
presented before the trial court.
II. Bautista’s negligence was the
proximate cause of the property
damage caused to Meralco
A. The truck hit the electricity post
Whoever by act or omission causes damage to another, there being
fault or negligence, is obliged to pay for the damage done. This fault
or negligence, if there is no pre-existing contractual relation
between the parties, is called quasi-delict. 36 Thus, for a quasi-delict
case to prosper, the complainant must establish: (1) damages to the
complainant; (2) negligence, by act or omission, of the defendant or
by some person for whose acts the defendant must respond, was
guilty; and (3) the connection of cause and effect between such
negligence and the damages.37 With respect to the third element,
the negligent act or omission must be the proximate cause of the
injury.
Contrary to the CA’s finding, the parties did not stipulate that the
truck hit the electricity post. The pre-trial order shows that the
parties merely agreed that the truck "was involvedin an accident on
April 21, 1991 at around 1:45 o’clock in the afternoon along Ortigas
Avenue, Rosario, Pasig City." The parties in fact posed the issue of
whether the truck rammed the electricity post as one of the factual
questions to be resolved by the trial court during the pre-trial
conference.38
We also agree with Josefa that Fernandez and SPO2 Galang’s
testimonies regarding the truck hitting the electricity post are
hearsay and should not be given credence. Fernandez and SPO2
Galang merely testified and conveyed to the court matters only
narrated to them by other people who were not presented in court.
Hearsay evidence has no probative value because it is merely the
witness’ recitation of what someone else has told him, whether
orally or in writing. A witness can testify only to those facts which
are derived from his own perception.39
Nonetheless, Meralco has sufficiently established the direct causal
link between the truck and the electricity post through Abio’s
testimony. Abio categorically stated during trial that he saw the
truck hit the electricity post. We find his first-hand account of the
incident during the directexamination frank and straightforward.
More importantly, Josefa failed to impeach the veracity of Abio’s
testimony during the cross-examination. Abio even reiterated that
it was Josefa’s truck that rammed the electricity post. 40 We thus
give full faith and credence to his positive, unrebutted, and
categorical declaration on the witness stand, made under solemn
oath, that it was the truck that caused damage to Meralco’s
property.
Even without Abio’s testimony, it does not escape this Court’s
attention that Josefa judicially admittedin his motions and pleading
that his truck hit the electricity post. In a motion to dismiss dated
March 17, 1997, Josefa stated:
"1. This action was commenced by plaintiff to recover from
defendant the sum of ₱384,846.00 as actual damages resulting
from the vehicular mishap which occurred on April 21, 1991 along
Ortigas Avenue, Rosario, Pasig City, Metro Manila, whereby
defendant’s dump truck with plate No. PAK 874 hit and bumped
plaintiff’s 45-foot wooden pole;41 " (emphasis and underline ours)
Josefa further declared in his motion for reconsideration dated
February 22, 2008:
[T]he manner who and why the accident occurred was not
explained. In the absence of any description on such important
aspect, fault or negligence cannot be properly imputed to Pablo
Manojo Bautista simply because the truck he was then driving
bumped to electric post. The causal connection between the fault or
negligence and the damage must be shown. x x x Analyzing the
testimony of Elmer Abio, what was established is the following:
a) Somebodybumped the back of the jeepney he was driving on
April 21, 1991;
b) When his back was bumped, he had no control because it was so
sudden;
c) He bumped the approaching car, while the truck bumped into
the Meralco post that three (3) transformers;
d) The pole with 3 transformers fell on the truck.
It may be asked: "Who was that somebody that bumped the back of
Abio" "What was the reason why the truck bumped the
post?""What happened to the car that was bumped by Abio because
he had no control?" "Which happened first, the bumping of the back
of Abio or the bumping of the post by the truck?" "Was the
bumping of the back of Abio and the bumping of the car the
proximate cause why the truck hit the Meralco post?" 42 (Emphases
and underlines ours) Lastly, Josefa pleaded in his petition before
this Court:
Nowhere in the records was it shown how and why the accident
occurred on April 21, 1991.
In the absence of any description on such important aspect, fault or
negligence cannot be properly imputed to petitioner, simply
because his truck bumped into Meralco’s electricity post. The
causal connection between the petitioner’s supposed negligence
and the damage was not shown. Neither was it proved tobe the
proximate cause of the damage.43 (Emphases and underlines ours)
These statements constitute deliberate, clear and unequivocal
admissions of the causation in fact between the truck and the
electricity post.Judicial admissions made by the parties in the
pleadings or in the course of the trial or other proceedingsin the
same case are conclusive and do not require further evidence to
prove them. These admissions cannot be contradicted unless
previously shown to have been made through palpable mistake or
that no such admission was made. 44 A party who judicially admits a
fact cannot later challenge this fact for the reason that judicial
admissions remove an admitted fact from the field of controversy. 45
B. Bautista is presumed to be
negligent in driving the truck
under the doctrine of res ipsa
loquitur
Contrary to the CA’s opinion, the finding that it was the truck that
hit the electricity post would not immediately result in Josefa’s
liability. It is a basic rule that it is essentially the wrongful or
negligent act or omission that creates the vinculum jurisin extra-
contractual obligations. 46 In turn, the employee’s negligence
established to bethe proximate cause of the damage would give rise
to the disputable presumption that the employer did not exercise
the diligence of a good father of a family in the selection and
supervision of the erring employee.47
Nonetheless, in some cases where negligence is difficult to prove,
the doctrine of res ipsa loquitur permits an inference of negligence
on the part of the defendant or some other person who is charged
with negligence where the thing or transaction speaks for
itself.48 This doctrine postulates that, as a matter of common
knowledge and experience and in the absence of some explanation
by the defendant who is charged with negligence, the very nature
of occurrences may justify an inference of negligence on the part of
the person who controls the instrumentality causing the injury. In
other words, res ipsa loquitur is grounded on the superior logic of
ordinary human experience that negligence may be deduced from
the mere occurrence of the accident itself. 49
The procedural effect of res ipsa loquiturin quasi-delict cases is
that the defendant’s negligence is presumed.1awp++i1 In other
words, the burden of evidence shifts to the defendant to prove that
he did not act with negligence. 50 This doctrine thus effectively
furnishes a bridge by which the complainant, without knowledge of
the cause of the injury, reaches over to the defendant, who knows
or should know the cause, for any explanation of care exercised by
him to prevent the injury.51 For this doctrine to apply, the
complainant must show that: (1) the accident is of such character
as to warrant an inference that it would not have happened except
for the defendant’s negligence; (2) the accident must have been
caused by an agency or instrumentality within the exclusive
management or control of the person charged with the negligence
complained of; and (3) the accident must not have been due to any
voluntary action or contribution on the part of the person injured.
The present case satisfiesall the elements of res ipsa loquitur. It is
very unusual and extraordinary for the truck to hit an electricity
post, an immovable and stationary object, unless Bautista, who had
the exclusive management and control of the truck, acted with fault
or negligence. We cannot also conclude that Meralco contributed to
the injury since it safely and permanently installed the electricity
post beside the street. Thus, in Republic v. Luzon Stevedoring
Corp.,52 we imputed vicarious responsibility to Luzon Stevedoring
Corp. whose barge rammed the bridge, also an immovable and
stationary object. In that case, we found it highly unusual for the
barge to hit the bridge which had adequate openings for the
passage of water craft unless Luzon Stevedoring Corp.’s employee
had acted with negligence.
In his pleadings, Josefa raises the possibility that the fault or
negligence of the jeepney and/or the car drivers may have been the
proximate cause of the damage. As a matter of defense, Josefa
should have substantiated this theory considering that the burden
of evidence has shifted against him after Meralco had established
that it was the truck that hit the electricity post. However, Josefa
did not adduce any evidence in support of his defense during trial.
Consequently, we sustain the CA’s finding that there is a direct and
proximate causal link between the truck and the injury that
Meralco suffered.
III. Josefa is vicariously liable under
paragraph 5, Article 2180 of the
Civil Code
A. There is an employer-
employee relations between
Bautista and Josefa
The finding that Bautista acted withnegligence in driving the truck
gives rise to the application of paragraph 5, Article 2180 of the Civil
Code which holds the employer vicariouslyliable for damages
caused by his employees within the scope of their assigned tasks. In
the present case, Josefa avoids the application of this provision by
denying that Bautista was his employee at the time of the incident.
Josefa cannot evade his responsibility by mere denial of his
employment relations with Bautista in the absence of proof that his
truck was used without authorization or that it was stolen when
the accident occurred. 53 In quasi-delict cases, the registered owner
of a motor vehicle is the employer of its driver in contemplation of
law.54 The registered owner of any vehicle, even if not used for
public service, would primarily be responsible to the public or to
third persons for injuries caused while the vehicle was being
driven on highways or streets. The purpose of motor vehicle
registration is precisely to identify the owner so that if any injury is
caused by the vehicle, responsibility canbe imputed to the
registered owner.55
B. Josefa failed to show that he
exercised the diligence of a
good father of a family in the
selection and supervision of
Bautista
In order for Josefa to be relieved of his vicarious liability, he must
show that he exercised due diligence in the selection and
supervision of Bautista. In concrete terms, Josefa should show by
competent object or documentary evidence that he examined
Bautista as to the latter’s qualifications, experience and service
records prior to employment. He should likewise prove by
competent objector documentary evidence that he formulated
standard operating procedures, monitored their implementation
and imposed disciplinary measures for breach of these
procedures.56 However, Josefa failed to overcome the presumption
of negligence against him since he waived his right to present
evidence during trial. We are thus left with no other conclusion
other than to rule that Josefa is primarily liable for all natural and
probable consequences of Bautista’s negligence. 57
IV. Meralco is only entitled to
temperate damages with interest at
legal rate
A. Meralco failed to prove its
entitlement to actual damages
Despite Josefa’s vicarious liability inthis case, Meralco failed to
point out the specific facts that afforda basis for its claim for actual
damages.58 Actual damages cannot be presumed; they must be
pleaded and proven in court in order to be recoverable. One is
entitled to an adequate compensation only for the pecuniary loss
that he has adequately proved based upon competent proof and on
the best evidence obtainable by him.59
We cannot give weight to Exhibit "D" as to the amount of actual
damages for being hearsay.Exhibit "D" constitutes hearsay
evidence since it was derived on alleged pieces of documentary
evidence that were not identified and authenticated in court during
trial. The trial court thus erred in even admitting Exhibit "D" in
evidence whose contents were offered without any other
competent evidence to corroborate them. Consequently, we delete
the CA’s award of actual damages for lack of evidentiary support.
B. Meralco is entitled to
temperate damages because it
clearly suffered pecuniary loss
as a result of Bautista and
Josefa’s negligence
Nonetheless, Meralco is entitled totemperate damages because
there is no doubt that it suffered pecuniary loss as a result of
Bautista and Josefa’s negligence. 60 When the court finds that some
pecuniary loss has been suffered but the amount cannot, from the
nature of the case, be proven with certainty, the court may award
temperate damages in the exercise of its sound
discretion.61 Considering the attendant circumstances of this case,
we find the amount of ₱200,000.00 to be a fair and sufficient award
by way of temperate damages.
C. Meralco is not entitled to
attorney’s fees and expenses
of litigation
The CA likewise erred in awarding Meralco attorney’s fees and
expenses of litigation without explaining its basis.1âwphi1 In Buan
v. Camaganacan,62 we held that the text of the decision should state
the reason why attorney's fees are being awarded; otherwise, the
award should be disallowed. Besides, no bad faith has been
imputed to Josefa that would warrant the award of attorney’s fees
under Article 2208 (5) of the Civil Code. It is a settled rule that
attorney'sfees shall not be recovered as cost where the party’s
persistence in litigation is based on his mistaken belief in he
righteousness of his cause.63 There is also no factual, legal, or
equitable justification that would justify the Court's award of
attorney's fees under Article 2208 (11) of the Civil Code.
D. The award of temperate
damages is subject to 6% per
annum reckoned from the
promulgation of the decision
until fully paid
Finally, we impose an interest rate of 6% per annum on temperate
damages pursuant to the guidelines enunciated in Eastern Shipping
Lines v. CA,64 as modified by Nacar v. Gallery Frames.65 The interest
rate shall commence to run from the promulgation of this decision,
the date when the amount of temperate damages has been
determined with certainty. WHEREFORE, premises considered, we
PARTIALLY GRANT the petition. The January 31, 2008 decision and
the April 29, 2008 resolution of the Court of Appeals in CA-G.R. CV.
No. 87512 is AFFIRMED with MODIFICATION. Petitioner Vicente
Josefa is ordered to pay respondent Manila Electric Company the
amount of ₱200,000.00 as temperate damages with legal interest at
6% per annum from the promulgation of this decision until full
payment has been effected. Costs against petitioner Vicente Josefa.
SO ORDERED.
G.R. No. 152033              March 16, 2011
FILIPINAS SYNTHETIC FIBER CORPORATION, Petitioner,
vs.
WILFREDO DE LOS SANTOS, BENITO JOSE DE LOS SANTOS,
MARIA ELENA DE LOS SANTOS and CARMINA VDA. DE LOS
SANTOS, Respondents.
DECISION
PERALTA, J.:
This Petition for Review under Rule 45 of the 1997 Rules of Civil
Procedure assails the Decision1 of the Court of Appeals (CA) dated
August 15, 2001, affirming with modification, the Decision 2 dated
February 14, 1994 of the Regional Trial Court (RTC), and the
Resolution dated January 29, 2002 of the CA, denying petitioner's
Motion for Reconsideration.
This all stems from a case for damages filed against the petitioner
and one of its employees. The facts, as found by the RTC and the CA,
are as follows:
On the night of September 30, 1984, Teresa Elena Legarda-de los
Santos (Teresa Elena), the wife of respondent Wilfredo de los
Santos (Wilfredo), performed at the Rizal Theater in Makati City,
Metro Manila as a member of the cast for the musical play, Woman
of the Year.
On that same night, at the request of Wilfredo, his brother Armando
de los Santos (Armando), husband of respondent Carmina Vda. de
los Santos, went to the Rizal Theater to fetch Teresa Elena after the
latter's performance. He drove a 1980 Mitsubishi Galant Sigma
(Galant Sigma) with Plate No. NSL 559, a company car assigned to
Wilfredo.
Two other members of the cast of Woman of the Year, namely,
Annabel Vilches (Annabel) and Jerome Macuja, joined Teresa Elena
in the Galant Sigma.
Around 11:30 p.m., while travelling along the Katipunan Road
(White Plains), the Galant Sigma collided with the shuttle bus
owned by petitioner and driven by Alfredo S. Mejia (Mejia), an
employee of petitioner. The Galant Sigma was dragged about 12
meters from the point of impact, across the White Plains Road
landing near the perimeter fence of Camp Aguinaldo, where the
Galant Sigma burst into flames and burned to death beyond
recognition all four occupants of the car.
A criminal charge for reckless imprudence resulting in damage to
property with multiple homicide was brought against Mejia, which
was decided in favor of Mejia. The family of Annabel filed a civil
case against petitioner and Mejia docketed as Civil Case No. Q-
51382, which was raffled to Branch 82 of the RTC of Quezon City.
Wilfredo and Carmina, joined by their minor children, also filed
separate actions for damages against petitioner and Mejia. The said
cases were eventually consolidated.
After trial on the merits, the RTC decided in favor of herein
respondents. The dispositive portion of the decision reads:
WHEREFORE, in view of the foregoing, this Court finds the herein
plaintiffs in Civil Case Nos. Q-44498 and Q-45602, namely Wilfredo
de los Santos, et al. and Carmina Vda. de los Santos, et al.,
respectively, to have duly proven their causes of action against
Filipinas Synthetic Fiber Corporation and Alfredo S. Mejia,
defendants in both cases, thru preponderance of evidence, hence,
Judgment is hereby rendered ordering defendants, jointly and
severally, to pay the herein plaintiffs in Civil Case No. Q-44498, (1)
for actual damages, ₱29,550.00, with interest thereon at the legal
rate until paid; (2) the amount of ₱4,769,525.00 as compensatory
damages and unrealized income of Teresa Elena, which is one-half
of the amount of ₱9,539,050.00, taking into consideration her
status in life, and that during her lifetime she was not only
spending for herself. The latter's average expenses would either be
more or less than one-half of her gross income for the year; (3)
₱100,000.00 as moral damages to assuage the family of the
deceased Teresa Elena for the loss of a love one who was charred
beyond recognition; and (4) attorney's fees of ₱150,000.00. As to
exemplary damages, the same cannot be granted for the reason
that no one wanted this unfortunate accident to happen, which was
a costly one.
For Civil Case No. Q-45602, the herein defendants are hereby
ordered, jointly and severally, to pay the plaintiffs (1) ₱20,550.00
for actual damages, with interest thereon at the legal rate until the
same is paid; (2) ₱444,555.00 as compensatory damages and
unrealized income of the deceased Armando de los Santos, for the
same reason as the deceased Teresa Elena, who during his lifetime,
Armando was not only spending for himself; (3) ₱100,000.00 as
moral damages to assuage the loss of a love one who was burnt
beyond recognition; and (4) ₱100,000.00 as attorney's fees. As to
exemplary damages, the same could not be granted for the same
reason as that in Civil Case No. Q-44498.
SO ORDERED.
After the denial of the motion for reconsideration, petitioner
appealed to the CA, and the latter ruled:
WHEREFORE, the assailed February 14, 1994 Decision of the
Regional Trial Court of Quezon City, Branch 100 is AFFIRMED,
subject to modification that in Civil Case No. Q-44498 the
compensatory damages and unrealized income of deceased Teresa
Elena shall be ₱3,120,300.00, and in Civil Case No. Q-45602 the
compensatory damages and unrealized income of deceased
Armando shall be ₱509,649.00.
SO ORDERED.
The subsequent motion for reconsideration was also denied.
Hence, the present petition wherein the petitioner assigned the
following errors:
ASSIGNMENT OF ERRORS
I. THE HONORABLE COURT OF APPEALS ERRED IN FINDING THE
PETITIONER MEJIA NEGLIGENT, SUCH NOT BEING SUPPORTED BY
THE EVIDENCE ON RECORD.
II. THE HONORABLE COURT OF APPEALS' FINDING THAT
PETITIONER FILSYN DID NOT EXERCISE THE DUE DILIGENCE OF
A GOOD FATHER OF A FAMILY IN THE SELECTION AND
SUPERVISION OF ITS EMPLOYEES IS NOT SUPPORTED BY THE
EVIDENCE ON RECORD.
III. THE DAMAGES AWARDED BY THE HONORABLE COURT OF
APPEALS IS NOT IN ACCORD WITH THE EVIDENCE ON RECORD.
The respondents filed their Comment3 dated June 7, 2002, while
the petitioner filed its Reply4 dated January 29, 2003. Subsequently,
their respective memoranda5 were filed.
The petition lacks merit.
Petitioner insists that the CA was not correct in ruling that Mejia
was negligent. It argues that the said conclusion was not derived
from the evidence adduced during the trial, which, upon further
analysis, makes the nature of the issue presented to be factual.
Whether a person is negligent or not is a question of fact which this
Court cannot pass upon in a petition for review on certiorari, as its
jurisdiction is limited to reviewing errors of law. 6 As a rule, factual
findings of the trial court, affirmed by the CA, are final and
conclusive and may not be reviewed on appeal. The established
exceptions are: (1) when the inference made is manifestly
mistaken, absurd or impossible; (2) when there is grave abuse of
discretion; (3) when the findings are grounded entirely on
speculations, surmises or conjectures; (4) when the judgment of
the CA is based on misapprehension of facts; (5) when the findings
of fact are conflicting; (6) when the CA, in making its findings, went
beyond the issues of the case and the same is contrary to the
admissions of both appellant and appellee; (7) when the findings of
fact are conclusions without citation of specific evidence on which
they are based; (8) when the CA manifestly overlooked certain
relevant facts not disputed by the parties and which, if properly
considered, would justify a different conclusion; and (9) when the
findings of fact of the CA are premised on the absence of evidence
and are contradicted by the evidence on record. 7
Not falling under any of the exceptions enumerated above, this
Court must defer to the findings of the RTC and the CA.
Petitioner argues that the RTC admitted that De los Santos made a
turn along White Plains Road without exercising the necessary care
which could have prevented the accident from happening. It quoted
the following portion of the RTC's decision:
The Court is convinced that defendant Mejia was running real fast
along EDSA when he saw a vehicle on the opposite side suddenly
turn left towards White Plains.
According to petitioner, the sudden turn of the vehicle used by the
victims should also be considered as negligence on the part of the
driver of that same vehicle, thus, mitigating, if not absolving
petitioner's liability. However, the said argument deserves scant
consideration.
It was well established that Mejia was driving at a speed beyond
the rate of speed required by law, specifically Section 35 of
Republic Act No. (RA) 4136. 8 Given the circumstances, the allowed
rate of speed for Mejia's vehicle was 50 kilometers per hour, while
the records show that he was driving at the speed of 70 kilometers
per hour. Under the New Civil Code, 9 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. Apparently, in the present case, Mejia's violation
of the traffic rules does not erase the presumption that he was the
one negligent at the time of the collision. Even apart from statutory
regulations as to speed, a motorist is nevertheless expected to
exercise ordinary care and drive at a reasonable rate of speed
commensurate with all the conditions encountered 10 which will
enable him to keep the vehicle under control and, whenever
necessary, to put the vehicle to a full stop to avoid injury to others
using the highway.11 To suggest that De los Santos was equally
negligent based on that sole statement of the RTC is erroneous. The
entire evidence presented must be considered as a whole.
Incidentally, a close reading of the ruling of the CA would clearly
show the negligence of Mejia. A portion of the decision reads:
A closer study of the Police Accident Report, Investigation Report
and the sketch of the accident would reveal nothing but that the
shuttle bus was traveling at such a reckless speed that it collided
with the car bearing the deceased. The impact was such that the
bus landed astride the car, dragged the car across the right lane of
White Plains Road, across the concrete island/flower box in the
center of White Plains Road, destroying the lamp post in the island
until both vehicles landed by the petitioner fence of Camp
Aguinaldo.
From those evidence, borne out by the records, there was proof
more than preponderant to conclude that Mejia was traveling at an
unlawful speed, hence, the negligent driver. We, therefore, cannot
find any error on the part of the trial court in concluding that he
(Mejia) was driving more than his claim of 70 kilometers per hour.
Significantly, the claimed speed of Mejia is still unlawful,
considering that Section 35 of RA 4136 states that the maximum
allowable speed for trucks and buses must not exceed 50
kilometers per hour. We are, therefore, unpersuaded by the
defendants-appellants’ claim that it was the driver of [the] Galant
Sigma who was negligent by not observing Sections 42(d) and
43(c) of RA 4136-A. Second sentence of Section 42 provides that
the driver of any vehicle traveling at any unlawful speed shall
forfeit any right of way which he might otherwise have. A person
driving a vehicle is presumed negligent if at the time of the mishap,
he was violating a traffic regulation. The excessive speed employed
by Mejia was the proximate cause of the collision that led to the
sudden death of Teresa Elena and Armando. If the defendants-
appellants truly believe that the accident was caused by the
negligence of the driver of the Galant Sigma, they should have
presented Mejia to the witness stand. Being the driver, Mejia would
have been in the best position to establish their thesis that he was
negligent when the mishap happened. Under the RULES OF
EVIDENCE (Section 3[e], Rule 131), such suppression gives rise to
the presumption that his testimony would have been adverse, if
presented. It must be stressed further that Mejia left the scene, not
reporting the fatal accident to the authorities neither did he wait
for the police to arrive. He only resurfaced on the day after the
incident. This is a clear transgression of Section 55 of RA 4136-A
which provides:
SEC. 55 Duty of driver in case of accident. - In the [event] that any
accident should occur as a result of the operation of a motor vehicle
upon a highway, the driver shall stop immediately, and, if
requested by any person present, shall show his driver's license,
give his true name and address and also the true name and address
of the owner of the motor vehicle.
No driver of a motor vehicle concerned in a vehicular accident shall
leave the scene of the accident without aiding the victim, except
under any of the following circumstances:
1. If he is in imminent danger of being seriously harmed by any
person or persons by reason of the accident;
2. If he reports the accident to the nearest officer of the law; or
3. If he has to summon a physician or nurse to aid the victim.
xxxx
Equally untenable is the defendants-appellants contention that it
would be impossible for the shuttle bus which was traveling at 70
kilometers per hour to stop. In view of this assertion, we quote
with favor the statement of Justice Feliciano in the Kapalaran case
that the law seeks to stop and prevent the slaughter and maiming
of people (whether passenger or not) and the destruction of
property (whether freight or not) on our highways by buses, the
very size and power of which seem often to inflame the minds of
the drivers. To our mind, if a vehicle was travelling in an allowable
speed, its driver would not have a difficulty in applying the brakes.
Anent the second issue raised, petitioner insists that it exercised
the due diligence of a good father of a family in the selection and
supervision of its employees. The RTC and the CA find otherwise.
Under Article 218012 of the New Civil Code, when an injury is
caused by the negligence of the employee, there instantly arises a
presumption of law that there was negligence on the part of the
master or employer either in the selection of the servant or
employee, or in supervision over him after selection or both. The
liability of the employer under Article 2180 is direct and
immediate; it is not conditioned upon prior recourse against the
negligent employee and a prior showing of the insolvency of such
employee. Therefore, it is incumbent upon the private respondents
(in this case, the petitioner) to prove that they exercised the
diligence of a good father of a family in the selection and
supervision of their employee.13
Petitioner asserts that it had submitted and presented during trial,
numerous documents in support of its claim that it had exercised
the proper diligence in both the selection and supervision of its
employees. Among those proofs are documents showing Mejia's
proficiency and physical examinations, as well as his NBI
clearances. The Employee Staff Head of the Human Resource
Division of the petitioner also testified that Mejia was constantly
under supervision and was given daily operational briefings.
Nevertheless, the RTC and the CA were correct in finding those
pieces of evidence presented by the petitioner insufficient.
In Manliclic v. Calaunan,14 this Court ruled that:
In the selection of prospective employees, employers are required
to examine them as to their qualifications, experience and service
records. In the supervision of employees, the employer must
formulate standard operating procedures, monitor their
implementation and impose disciplinary measures for the breach
thereof. To fend off vicarious liability, employers must submit
concrete proof, including documentary evidence, that they
complied with everything that was incumbent on them.
In Metro Manila Transit Corporation v. Court of Appeals, it was
explained that:
Due diligence in the supervision of employees on the other hand,
includes the formulation of suitable rules and regulations for the
guidance of employees and the issuance of proper instructions
intended for the protection of the public and persons with whom
the employer has relations through his or its employees and the
imposition of necessary disciplinary measures upon employees in
case of breach or as may be warranted to ensure the performance
of acts indispensable to the business of and beneficial to their
employer. To this, we add that actual implementation and
monitoring of consistent compliance with said rules should be the
constant concern of the employer, acting through dependable
supervisors who should regularly report on their supervisory
functions.
In order that the defense of due diligence in the selection and
supervision of employees may be deemed sufficient and plausible,
it is not enough to emptily invoke the existence of said company
guidelines and policies on hiring and supervision. As the negligence
of the employee gives rise to the presumption of negligence on the
part of the employer, the latter has the burden of proving that it has
been diligent not only in the selection of employees but also in the
actual supervision of their work. The mere allegation of the
existence of hiring procedures and supervisory policies, without
anything more, is decidedly not sufficient to overcome such
presumption.
We emphatically reiterate our holding, as a warning to all
employers, that "the formulation of various company policies on
safety without showing that they were being complied with is not
sufficient to exempt petitioner from liability arising from
negligence of its employees. It is incumbent upon petitioner to
show that in recruiting and employing the erring driver the
recruitment procedures and company policies on efficiency and
safety were followed." x x x.15
Applying the above ruling, the CA, therefore, committed no error in
finding that the evidence presented by petitioner is wanting. Thus,
the CA ruled:
In the present case, Filsyn merely presented evidence on the
alleged care it took in the selection or hiring of Mejia way back in
1974 or ten years before the fatal accident. Neither did Filsyn
present any proof of the existence of the rules and regulations
governing the conduct of its employees. It is significant to note that
in employing Mejia, who is not a high school graduate, Filsyn
waived its long-standing policy requirement of hiring only high
school graduates. It insufficiently failed to explain the reason for
such waiver other than their allegation of Mejia's maturity and skill
for the job.
As revealed by the testimony of Rolando Landicho, Filsyn admitted
that their shuttle buses were used to ferry Filsyn's employees for
three shifts. It failed to show whether or not Mejia was on duty
driving buses for all three shifts. On the other hand, the trial court
found that Mejia, by the different shifts would have been on the job
for more than eight hours. Fylsin did not even sufficiently prove
that it exercised the required supervision of Mejia by ensuring rest
periods, particularly for its night shift drivers who are working on a
time when most of us are usually taking rest. As correctly argued
by the plaintiffs-appellees, this is significant because the accident
happened at 11:30 p.m., when the shuttle bus was under the
control of a driver having no passenger at all. Despite, the lateness
of the hour and the darkness of the surrounding area, the bus was
travelling at a speed of 70 kilometers per hour.
In view of the absence of sufficient proof of its exercise of due
diligence, Filsyn cannot escape its solidary liability as the owner of
the wayward bus and the employer of the negligent driver of the
wayward bus. x x x
As to the amount of the damages awarded by the CA, petitioner
claims that it is not in accord with the evidence on record. It
explained that the amounts used in computing for compensatory
damages were based mainly on the assertions of the respondents
as to the amount of salary being received by the two deceased at
the time of their deaths.1awphil
This Court, in its ruling, 16 expounded on the nature of
compensatory damages, thus:
Under Article 2199 of the New Civil Code, actual damages include
all the natural and probable consequences of the act or omission
complained of, classified as one for the loss of what a person
already possesses (daño emergente) and the other, for the failure to
receive, as a benefit, that which would have pertained to him (lucro
cesante). As expostulated by the Court in PNOC Shipping and
Transport Corporation v. Court of Appeals:17

Under Article 2199 of the Civil Code, actual or compensatory

damages are those awarded in satisfaction of, or in recompense for,
loss or injury sustained. They proceed from a sense of natural
justice and are designed to repair the wrong that has been done, to
compensate for the injury inflicted and not to impose a penalty. In
actions based on torts or quasi-delicts, actual damages include all
the natural and probable consequences of the act or omission
complained of. There are two kinds of actual or compensatory
damages: one is the loss of what a person already possesses  (daño
emergente), and the other is the failure to receive as a benefit that
which would have pertained to him (lucro cesante).18

The burden of proof is on the party who would be defeated if no

evidence would be presented on either side. The burden is to
establish one’s 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. Actual damages are not presumed. The claimant
must prove the actual amount of loss with a reasonable degree of
certainty premised upon competent proof and on the best evidence
obtainable. Specific facts that could afford a basis for measuring
whatever compensatory or actual damages are borne must be
pointed out. Actual damages cannot be anchored on mere surmises,
speculations or conjectures. As the Court declared:

As stated at the outset, to enable an injured party to recover actual

or compensatory damages, he is required to prove the actual
amount of loss with reasonable degree of certainty premised upon
competent proof and on the best evidence available. The burden of
proof is on the party who would be defeated if no evidence would
be presented on either side. He 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. In other
words, damages cannot be presumed and courts, in making an
award, must point out specific facts that could afford a basis for
measuring whatever compensatory or actual damages are borne. 19

The records show that the CA did not err in awarding the said
amounts, nor was there any mistake in its computation. The
respondents were able to establish their case by a preponderance
of evidence. However, the petitioner is correct when it stated that
the award of ₱100,000.00 as moral damages is excessive.
Jurisprudence has set the amount to ₱50,000.00.20

WHEREFORE, the Petition for Review is hereby DENIED.

Consequently, the Decision of the Court of Appeals, dated August
15, 2001, is hereby AFFIRMED with the MODIFICATION that the
moral damages be reduced to ₱50,000.00.

SO ORDERED.