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1 RepublicofthePhilippines SUPREMECOURT Manila FIRSTDIVISION G.R.Nos.6610204August30,1990 PHILIPPINERABBITBUSLINES,INC.,petitioner, vs.

THE HONORABLE INTERMEDIATE APPELLATE COURT AND CASIANO PASCUA, ET AL., respondents. Santiago&Santiagoforpetitioner. FedericoR.Vinluanforprivaterespondents. MEDIALDEA,J.: ThisisapetitionforreviewoncertiorariofthedecisionoftheIntermediateAppellateCourt (nowCourtofAppeals)datedJuly29,1983inACG.R.Nos.CV65885,CV65886andCV 65887whichreversedthedecisionoftheCourtofFirstInstance(nowRegionalTrialCourt)of PangasinandatedDecember27,1978;anditsresolutiondatedNovember28,1983denying themotionforreconsideration. ItisanestablishedprinciplethatthefactualfindingsoftheCourtofAppealsarefinalandmay not be reviewed by this Court on appeal. However, this principle is subject to certain exceptions.Oneoftheseiswhenthefindingsoftheappellatecourtarecontrarytothoseofthe trialcourt(seeSabinosav.TheHonorableCourtofAppeals,etal.,G.R.No.L47981,July24, 1989)inwhichcase,areexaminationofthefactsandevidencemaybeundertaken.Thisis Ourtasknow. Theantecedentfactsareasfollows: About11:00o'clockinthemorningonDecember24,1966,CatalinaPascua,CaridadPascua, AdelaidaEstomo,ErlindaMeriales,MercedesLorenzo,AlejandroMoralesandZenaidaParejas boardedthejeepneyownedbyspousesIsidroManguneandGuillermaCarreonanddrivenby TranquilinoManaloatDau,Mabalacat,PampangaboundforCarmen,Rosales,Pangasinanto spendChristmasattheirrespectivehomes.Althoughtheyusuallyrideinbuses,theyhadto rideinajeepneythatdaybecausethebuseswerefull.TheircontractwithManalowasfor them to pay P24.00 for the trip. The private respondents' testimonial evidence on this contractual relationship was not controverted by Mangune, Carreon and Manalo, nor by Filriters Guaranty Assurance Corporation, Inc., the insurer of the jeepney, with contrary evidence.PurportedlyridingonthefrontseatwithManalowasMercedesLorenzo.Ontheleft rearpassengerseatwereCaridadPascua,AlejandroMoralesandZenaidaParejas.Ontheright rearpassengerseatwereCatalinaPascua,AdelaidaEstomo,andErlindaMeriales.Afterabrief stopoveratMoncada,Tarlacforrefreshment,thejeepneyproceededtowardsCarmen,Rosales, Pangasinan. UponreachingbarrioSinayoan,SanManuel,Tarlac,therightrearwheelofthejeepneywas detached,soitwasrunninginanunbalancedposition.Manalosteppedonthebrake,asa resultofwhich,thejeepneywhichwasthenrunningontheeasternlane(itsrightofway) madeaUturn,invadingandeventuallystoppingonthewesternlaneoftheroadinsucha mannerthatthejeepney'sfrontfacedthesouth(fromwhereitcame)anditsrearfacedthe north(towardswhereitwasgoing).Thejeepneypracticallyoccupiedandblockedthegreater

2 portionofthewesternlane,whichistherightofwayofvehiclescomingfromthenorth, amongwhichwasBusNo.753ofpetitionerPhilippineRabbitBusLines,Inc.(Rabbit)driven by Tomas delos Reyes. Almost at the time when the jeepney made a sudden Uturn and encroachedonthewesternlaneofthehighwayasclaimedbyRabbitanddelosReyes,orafter stopping for a couple of minutes as claimed by Mangune, Carreon and Manalo, the bus bumpedfrombehindtherightrearportionofthejeepney.Asaresultofthecollision,three passengersofthejeepney(CatalinaPascua,ErlindaMerialesandAdelaidaEstomo)diedwhile the other jeepney passengers sustained physical injuries. What could have been a festive Christmasturnedouttobetragic. Thecausesofthedeathofthethreejeepneypassengerswereasfollows(p.101,Recordon Appeal): ThedeceasedCatalinaPascuasufferedthefollowinginjuries,towit:fractureof theleftparietalandtemporalregionsoftheskull;fractureoftheleftmandible; fractureoftherighthumenous;compoundfractureoftheleftradiousandullma middlethirdandlowerthird;fractureoftheupperthirdoftherighttibiaand fillnea;avulsionofthehead,leftinternal;andmultipleabrasions.Thecauseof her death was shock, secondary to fracture and multiple hemorrhage. The fractureswereproducedasaresultofthehittingofthevictimbyastrongforce. Theabrasionscouldbeproducedwhenapersonfallsfromamovingvehicles (sic)andrubspartsofherbodyagainstacementroadpavement.... Erlinda Mariles (sic) sustained external lesions such as contusion on the left parietalregionoftheskull;hematomaontherightupperlid;andabrasions(sic) ontheleftknee.Herinternallesionswere:hematomaontheleftthorax;multiple lacerationsoftheleftlowerlobeofthelungs;contusionsontheleftlowerlobeof thelungs;andsimplefracturesofthe2nd,3rd,4th,5th,6th,7th,and8thribs, left.Theforcibleimpactofthejeepcausedtheaboveinjurieswhichresultedin herdeath.... ThecauseofdeathofErlindaorFloridaEstomo(alsocalledasperautopsyofDr. Panlasiquiwasduetoshockduetointernalhemorrhage,rupturedspleenand trauma.... CaridadPascuasufferedphysicalinjuriesasfollows(p.101,RecordonAppeal): ...laceratedwoundontheforeheadandoccipitalregion,hematomaonthe forehead,multipleabrasionsontheforearm,rightupperarm,backandrightleg. ... ThepoliceinvestigatorsofTacpalandpolicemenofSanManuel,Tarlac,Tarlac,uponarrivalat thesceneofthemishap,preparedasketch(commonexhibit"K"forprivaterespondents"19" forRabbit)showingtherelativepositionsofthetwovehiclesaswellastheallegedpointof impact(p.100,RecordonAppeal): ...ThepointofcollisionwasacementpaveportionoftheHighway,aboutsix (6)meterswide,withnarrowshoulderswithgrassesbeyondwhicharecanalson bothsides.Theroadwasstraightandpoints200metersnorthandsouthofthe pointofcollisionarevisibleandunobstructed.Purportedly,thepointofimpactor collision(Exh."K4",PascuaonthesketchExh."K"Pascua)wasonthewestern laneofthehighwayabout3feet(oroneyard)fromthecenterlineasshownby thebedris(sic),dirtandsoil(obviouslyfromtheundercarriageofbothvehicles) aswellaspaint,marron(sic)fromtheRabbitbusandgreenishfromthejeepney.

3 Thepointofimpactencircledandmarkedwiththeletter"X"inExh."K"4Pascua, hadadiameteroftwometers,thecenterofwhichwasabouttwometersfrom thewesternedgeofcementpavementoftheroadway.Picturestakenbywitness Bisquerainthecourseoftheinvestigationshowedtherelativepositionsofthe pointofimpactandcenterline(Exh."P"Pascua)thebackoftheRabbitbus(Exh. "P"1Pascua"),thelifelessbodyofCatalinaPascua(Exh."P2Pascua"),andthe damagedfrontpartoftheRabbitbus(Exh."P3Pascua").Noskidmarksofthe Rabbitbuswasfoundinthevicinityofthecollision,beforeorafterthepointof impact. On the other hand, there was a skid mark about 45 meters long purportedlyofthejeepneyfromtheeasternshoulderoftheroadsouthof,and extendinguptothepointofimpact. Atthetimeandinthevicinityoftheaccident,therewerenovehiclesfollowingthejeepney, neitherwerethereoncomingvehiclesexceptthebus.Theweatherconditionofthatdaywas fair. Afterconductingtheinvestigation,thepolicefiledwiththeMunicipalCourtofSanManuel, Tarlac,acriminalcomplaintagainstthetwodriversforMultipleHomicide.Atthepreliminary investigation,aprobablecausewasfoundwithrespecttothecaseofManalo,thus,hiscase waselevatedtotheCourtofFirstInstance.However,findingnosufficiencyofevidenceas regardsthecaseofdelosReyes,theCourtdismissedit.Manalowasconvictedandsentencedto sufferimprisonment.Nothavingappealed,heservedhissentence. Complaints for recovery of damages were then filed before the Court of First Instance of Pangasinan.InCivilCaseNo.1136,spousesCasianoPascuaandJuanaValdezsuedasheirsof Catalina Pascua while Caridad Pascua sued inher behalf.In Civil Case No.1139, spouses ManuelMillaresandFidenciaArcicasuedasheirsofErlindaMeriales.InCivilCaseNo.1140, spousesMarianoEstomoandDionisiaSarmientoalsosuedasheirsofAdelaidaEstomo. Inallthreecases,spousesManguneandCarreon,Manalo,RabbitanddelosReyeswereall impleadedasdefendants.PlaintiffsanchoredtheirsuitsagainstspousesManguneandCarreon andManaloontheircontractualliability.AsagainstRabbitanddelosReyes,plaintiffsbased theirsuitsontheirculpabilityforaquasidelict.FilritersGuarantyAssuranceCorporation,Inc. wasalsoimpleadedasadditionaldefendantinCivilCaseNo.1136only. For the death of Catalina Pascua, plaintiffs in Civil Case No. 1136 sought to collect the aggregateamountofP70,060.00indamages,itemizedasfollows:P500.00forburialexpenses; P12,000.00forlossofwagesfor24years;P10,000.00forexemplarydamages;P10,000.00for moraldamages;andP3,000.00forattorney'sfees.Inthesamecase,plaintiffCaridadPascua claimedP550.00formedicalexpenses;P240.00forlossofwagesfortwomonths;P2,000.00 for disfigurement of her face; P3,000.00 for physical pain and suffering; P2,500.00 as exemplarydamagesandP2,000.00forattorney'sfeesandexpensesoflitigation. InCivilCaseNo.1139,plaintiffsdemandedP500.00forburialexpenses;P6,000.00forthe deathofErlinda,P63,000.00forlossofincome;P10,000.00formoraldamagesandP3,000.00 forattorney'sfeesortotalofP80,000.00. InCivilCaseNo.1140,plaintiffsclaimedP500.00forburialexpenses;P6,000.00forthedeath of Adelaide, P56,160.00 for loss of her income or earning capacity; P10,000.00 for moral damages;andP3,000.00forattorney'sfees. RabbitfiledacrossclaimintheamountofP15,000.00forattorney'sfeesandexpensesof litigation.Ontheotherhand,spousesManguneandCarreonfiledacrossclaimintheamount ofP6,168.00fortherepairofthejeepneyandP3,000.00foritsnonuseduringtheperiodof

4 repairs. OnDecember27,1978,thetrialcourtrendereditsdecisionfindingManalonegligent,the dispositiveportionofwhichreads(pp.113114,RecordonAppeal): PREMISESCONSIDERED,thisCourtisoftheopinionandsoholds: 1)ThatdefendantsIsidroMangune,GuillermaCarreonandTranquilinoManalo thrutheir negligence, breached contract of carriage with their passengers the plaintiffs' and/or their heirs, and this Court renders judgment ordering said defendants,jointlyandseverally,topaytheplaintiffs a)InCivilCaseNo.1136,forthedeathofCatalinaPascua,topayherheirsthe amountsofP12,000.00forindemnityforlossofherlife;P41,760.00forlossof earnings;P324.40foractualexpensesandP2,000.00formoraldamages; b)InthesameCivilCaseNo.1136fortheinjuriesofCaridadPascua,topayher the amounts of P240.00 for loss of wages, P328.20 for actual expenses and P500.00formoraldamages; c)InCivilCaseNo.1139forthedeathofErlindaMeriales,topayherheirs(the plaintiffs)theamountofP12,000.00forindemnityforlossofherlife;P622.00 foractualexpenses,P60,480.00forlossofwagesorincomeandP2,000.00for moraldamages; d) In Civil Case No. 1140, for the death of Erlinda (also called Florida or AdelaidaEstomo),topayherheirs(theplaintifftheamountofP12,000.00for indemnityforthelossofherlife;P580.00foractualexpenses;P53,160.00for lossofwagesorincomeandP2,000.00formoraldamages. 2)ThedefendantFilritersGuarantyInsuranceCo.,havingcontractedtoensure andanswerfortheobligationsofdefendantsManguneandCarreonfordamages duetheirpassengers,thisCourtrendersjudgmentagainstthesaiddefendants Filriters Guaranty Insurance Co., jointly and severally with said defendants (Mangune and Carreon) to pay the plaintiffs the amount herein above adjudicatedintheirfavorinCivilCaseNo.1136only.Alltheamountsawarded saidplaintiff,assetforthinparagraphone(1)hereinabove; 3) On the cross claim of Phil. Rabbit Bus Lines, Inc. ordering the defendant, IsidroMangune,GuillermaCarreonandTranquilinoManalo,topayjointlyand severally,crossclaimantPhil.RabbitBusLines,Inc.,theamountsofP216.27as actualdamagestoitsBusNo.753andP2,173.60forlossofitsearning. All of the above amount, shall bear legal interest from the filing of the complaints. Costs are adjudged against defendants Mangune, Carreon and Manalo and FilritersGuaranty. SOORDERED Onappeal,theIntermediateAppellateCourtreversedtheabovequoteddecisionbyfinding delosReyesnegligent,thedispositiveportionofwhichreads(pp.5557,Rollo): WHEREFORE, PREMISES CONSIDERED, the lower court's decision is hereby REVERSEDastoitemNo.3ofthedecisionwhichreads: 3)OnthecrossclaimofPhilippineRabbitBusLines,Inc.orderingthedefendants IsidroMangune,GuillermaCarreonandTranquilinoManalo,topayjointlyand severally, the amounts of P216.27 as actual damages to its Bus No. 753 and P2,173.60forlossofitsearnings.

5 andanotherjudgmentisherebyrenderedinfavorofplaintiffsappellantsCasiana Pascua, Juan Valdez and Caridad Pascua, ordering the Philippine Rabbit Bus Lines, Inc. and its driver Tomas delos Reyes to pay the former jointly and severallydamagesinamountsawardedasfollows: ForthedeathofCatalinaPascua,theparentsand/orheirsareawarded CivilCaseNo.1136 a)IndemnityforthelossoflifeP12,000.00 b)LossofSalariesorearningcapacity14,000.00 c)Actualdamages(burialexpenses)800.00 d)Formoraldamages10,000.00 e)Exemplarydamages3,000.00 f)Forattorney'sfees3,000.00 TotalP38,200.00(sic) ForthephysicalinjuriessufferedbyCaridadPascua: CivilCaseNo.1136 a)Actualdamages(hospitalizationexpenses)P550.00 b)Moraldamages(disfigurementofthe faceandphysicalsuffering8,000.00 c)Exemplarydamages2,000.00 TotalP10,550.00 ForthedeathofErlindaArcegaMeriales.theparentsand/orheirs: CivilCaseNo.1139 a)IndemnityforlossoflifeP12,000.00 b)LossofSalaryorEarningCapacity20,000.00 c)Actualdamages(burialexpenses)500.00 d)Moraldamages15,000.00 e)Exemplarydamages15,000.00 f)Attorney'sfees3,000.00 TotalP65,500.00 ForthedeathofFloridaSarmientoEstomo: CivilCaseNo.1140 a)IndemnityforlossoflifeP12,000.00 b)LossofSalaryorEarningcapacity20,000.00 c)Actualdamages(burialexpenses)500.00 d)Moraldamages3,000.00 e)Exemplarydamages3,000.00 f)Attorney'sfees3,000.00 TotalP41,500.00 WithcostsagainstthePhilippineRabbitBusLines,Inc. SOORDERED. Themotionforreconsiderationwasdenied.Hence,thepresentpetition. Theissueiswhoisliableforthedeathandphysicalinjuriessufferedbythepassengersofthe

6 jeepney? The trial court,indeclaring thatManalo wasnegligent, considered the following (p.106, RecordonAppeal): (1)ThattheunrebuttedtestimonyofhispassengerplaintiffCaridadPascuathat alongways(sic)beforereachingthepointofcollision,theMangunejeepneywas "runningfast"thathispassengerscautioneddriverManalotoslowdownbutdid not heed the warning: that the right rear wheel was detached causing the jeepneytoruntotheeasternshoulderoftheroadthenbacktotheconcrete pavement;thatdriverManaloappliedthebrakesafterwhichthejeepneymadea Uturn(halfturn)insuchamannerthatitinverteditsdirectionmakingitface Southinsteadofnorth;thatthejeepneystoppedonthewesternlaneoftheroad ontherightofwayoftheoncomingPhil.RabbitBuswhereitwasbumpedbythe latter; (2)ThelikewiseunrebuttedtestimonyofPoliceInvestigatorTacpaloftheSan Manuel(Tarlac)Policewho,uponrespondingtothereportedcollission,found therealevidencethereatindicateinhissketch(Exh.K,Pascua),thetracksofthe jeepney of defendant Mangune and Carreon running onthe Eastern shoulder (outside the concrete paved road) until itreturned to the concrete road at a sharp angle, crossing the Eastern lane and the (imaginary) center line and encroaching fully into the western lane where the collision took place as evidencedbythepointofimpact; (3)TheobservationofwitnessPoliceCorporalCacaldaalsooftheSanManuel Policethatthepathofthejeepneytheyfoundontheroadandindicatedinthe sketch (Exh. KPascua) was shown by skid marks which he described as "scratches on the road caused by the iron of the jeep, after its wheel was removed;" (4) His conviction for the crime of Multiple Homicide and Multiple Serious PhysicalInjurieswithDamagetoPropertythruRecklessImprudencebytheCourt ofFirstInstanceofTarlac(Exh.24Rabbit)uponthecriminalInformationbythe ProvincialFiscalofTarlac(Exh.23Rabbit),asaresultofthecollision,andhis commitment to prison and service of his sentence (Exh. 25Rabbit) upon the finalityofthedecisionandhisfailuretoappealtherefrom;and (5) The application of the doctrine of resipsa loquitar (sic) attesting to the circumstance that the collision occured (sic) on the right of way of the Phil. RabbitBus. Therespondentcourthadacontraryopinion.Applyingprimarily(1)thedoctrineoflastclear chance,(2)thepresumptionthatdriverswhobumptherearofanothervehicleguiltyandthe causeoftheaccidentunlesscontradictedbyotherevidence,and(3)thesubstantialfactortest. concludedthatdelosReyeswasnegligent. The misappreciation of the facts and evidence and the misapplication of the laws by the respondentcourtwarrantareversalofitsquestioneddecisionandresolution. Wereiteratethat"[t]heprincipleabout"thelastclear"chance,wouldcallforapplicationina suitbetweentheownersanddriversofthetwocollidingvehicles.Itdoesnotarisewherea passengerdemandsresponsibilityfromthecarriertoenforceitscontractualobligations.Forit wouldbeinequitabletoexemptthenegligentdriverofthejeepneyanditsownersonthe groundthattheotherdriverwaslikewiseguiltyofnegligence."ThiswasOurrulinginAnuran,

7 etal.v.Buoetal.,G.R.Nos.L21353andL21354,May20,1966,17SCRA224.1Thus,the respondentcourterredinapplyingsaiddoctrine. Onthepresumptionthatdriverswhobumptherearofanothervehicleguiltyandthecauseof theaccident,unlesscontradictedbyotherevidence,therespondentcourtsaid(p.49,Rollo): ...thejeepneyhadalreadyexecutedacompleteturnaboutandatthetimeof impact was already facing the western side of the road. Thus the jeepney assumedanewfrontalpositionvisavis,thebus,andthebusassumedanewrole of defensive driving. The spirit behind the presumption of guilt on one who bumpstherearendofanothervehicleisforthedriverfollowingavehicletobe atalltimespreparedofapendingaccidentshouldthedriverinfrontsuddenly cometoafullstop,orchangeitscourseeitherthroughchangeofmindofthe frontdriver,mechanicaltrouble,ortoavoidanaccident.Therearvehicleisgiven theresponsibilityofavoidingacollisionwiththefrontvehicleforitistherear vehiclewhohasfullcontrolofthesituationasitisinapositiontoobservethe vehicleinfrontofit. TheabovediscussionwouldhavebeencorrectwereitnotfortheundisputedfactthattheU turn made by the jeepney was abrupt (Exhibit "K," Pascua). The jeepney, which was then travelingontheeasternshoulder,makingastraight,skidmarkofapproximately35meters, crossedtheeasternlaneatasharpangle,makingaskidmarkofapproximately15metersfrom theeasternshouldertothepointofimpact(Exhibit"K"Pascua).Hence,delosReyescouldnot haveanticipatedthesuddenUturnexecutedbyManalo.Therespondentcourtdidnotrealize thatthepresumptionwasrebuttedbythispieceofevidence. Withregardtothesubstantialfactortest,itwastheopinionoftherespondentcourtthat(p. 52,Rollo): ...Itistheruleunderthesubstantialfactortestthatiftheactor'sconductisa substantial factor in bringing about harm to another, the fact that the actor neitherforesawnorshouldhaveforeseentheextentoftheharmorthemanner inwhichitoccurreddoesnotpreventhimfrombeingliable(Restatement,Torts, 2d).Here,We find defendant busrunning ata fast speedwhenthe accident occurredanddidnotevenmaketheslightestefforttoavoidtheaccident,.... Thebusdriver'sconductisthusasubstantialfactorinbringingaboutharmtothe passengersofthejeepney,notonlybecausehewasdrivingfastanddidnoteven attempt to avoid the mishap but also because it was the bus which was the physicalforcewhichbroughtabouttheinjuryanddeathtothepassengersofthe jeepney. Thespeedofthebuswascalculatedbyrespondentcourtasfollows(pp.5455,Rollo): Accordingtotherecordofthecase,thebusdepartedfromLaoag,IlocosNorte,at 4:00o'clockA.M.andtheaccidenttookplaceatapproximatelyaround12:30 P .M.,aftertravellingroughlyfor8hoursand30minutes.Deductfromthisthe actualstopovertimeoftwoHours(computedfromthetestimonyofthedriver thathemadethree40minutestopovers),Wewillhaveanactualtravellingtime of6hoursand30minutes. Underthecircumstances,WecalculatethattheLaoagTarlacroute(365kms.) drivingatanaverageof56km.perhourwouldtake6hoursand30minutes. Therefore,theaveragespeedofthebus,giveandtake10minutes,fromthepoint ofimpactonthehighwaywithexcellentvisibilityfactorwouldbe80to90kms.

8 per hour, as this is the place where buses would make up for lost time in traversingbusycitystreets. Still,Wearenotconvinced.Itcannotbesaidthatthebuswastravellingatafastspeedwhen the accident occurred because the speed of 80 to 90 kilometers per hour, assuming such calculationtobecorrect,isyetwithinthespeedlimitallowedinhighways.Wecannoteven faultdelosReyesfornothavingavoidedthecollision.Asaforestated,thejeepneyleftaskid markofabout45meters,measuredfromthetimeitsrightrearwheelwasdetacheduptothe pointofcollision.DelosReyesmusthavenoticedtheperilousconditionofthejeepneyfrom thetimeitsrightrearwheelwasdetachedorsome90metersaway,consideringthattheroad was straight and points 200 meters north and south of the point of collision, visible and unobstructed.DelosReyesadmittedthathewasrunningmoreorless50kilometersperhour atthetimeoftheaccident.Usingthisspeed,delosReyescoveredthedistanceof45metersin 3.24 seconds. If We adopt the speed of 80 kilometers per hour, delos Reyes would have coveredthatdistanceinonly2.025seconds.Verily,hehadlittletimetoreacttothesituation. TorequiredelosReyestoavoidthecollisionistoasktoomuchfromhim.Asidefromthetime elementinvolved,therewerenooptionsavailabletohim.Asthetrialcourtremarked(pp.107 108,RecordonAppeal): ...They(plaintiffs)triedtoimpressthisCourtthatdefendantdelosReyes, could have taken either of two options: (1) to swerve to its right (western shoulder)or(2)toswervetoitsleft(easternlane),andthussteerclearofthe Mangune jeepney. This Court does not so believe, considering the existing exigenciesofspaceandtime. Astothefirstoption,Phil.Rabbit'sevidenceisconvincingandunrebuttedthat theWesternshoulderoftheroadwasnarrowandhadtallgrasseswhichwould indicate that it was not passable. Even plaintiffs own evidence, the pictures (Exhs.PandP2,Pascua)aremuteconfirmationofsuchfact.Indeed,itcanbe noticedinthepicture(Exh.P2,Pascua)aftertheRabbitbuscametoafullstop, itwastiltedtorightfrontside,itsfrontwheelsrestingmostprobablyonacanal onamuchlowerelevationthatoftheshoulderorpavedroad.Ittooshowsthat allofthewheelsoftheRabbitbuswereclearoftheroadwayexcepttheouterleft rearwheel.Theseobservationappearinginsaidpicture(ExhP2,Pascua)clearly shows coupled with the finding the Rabbit bus came to a full stop only five metersfromthepointofimpact(seesketch,Exh.KPascua)clearlyshowthat driverdelosReyesveeredhisRabbitbustotherightattempttoavoidhittingthe Mangune's jeepney. That it was not successful in fully clearing the Mangune jeepneyasits(Rabbit's)leftfronthitsaidjeepney(seepictureExh.10ARabbit) musthavebeenduetolimitationsofspaceandtime. PlaintiffsalternativelyclaimthatdefendantdelosReyesoftheRabbitbuscould also have swerved to its left (eastern lane) to avoid bumping the Mangune jeepneywhichwasthenonthewesternlane.Suchaclaimispremisedonthe hypothesis(sic)thattheeasternlanewasthenempty.Thisclaimwouldappearto be good copy of it were based alone on the sketch made after the collision. Nonetheless,itlosesforceitoneweretoconsiderthetimeelementinvolved,for momentsbeforethat,theMangunejeepneywascrossingthatveryeasternlaneat asharpangle.Undersuchasituationthen,fordriverdelosReyestoswerveto theeasternlane,hewouldrunthegreaterriskofrunningsmackintheMangune

9 jeepneyeitherheadonorbroadside. Afteraminute scrutinyofthefactualmattersanddulyprovenevidence,Wefindthatthe proximate cause of the accidentwasthe negligence of Manalo and spousesMangune and Carreon.Theyallfailedtoexercisetheprecautionsthatareneededpreciselyprohacvice. Inculpacontractual,themomentapassengerdiesorisinjured,thecarrierispresumedto havebeenatfaultortohaveactednegligently,andthisdisputablepresumptionmayonlybe overcomebyevidencethathehadobservedextraordinarydiligenceasprescribedinArticles 1733,1755and1756oftheNewCivilCode2orthatthedeathorinjuryofthepassengerwas duetoafortuitousevent3(Lasamv.Smith,Jr.,45Phil.657). The negligence of Manalo was proven during the trial by the unrebutted testimonies of CaridadPascua,PoliceInvestigatorTacpal,PoliceCorporalCacalda,his(Manalo's)conviction forthecrimeofMultipleHomicideandMultipleSeriousInjurieswithDamagetoPropertythru Reckless Imprudence, and the application of the doctrine of res ipsa loquitur supra. The negligenceofspousesManguneandCarreonwaslikewiseprovenduringthetrial(p.110, RecordonAppeal): Toescapeliability,defendantsManguneandCarreonofferedtoshowthrutheir witnessNatalioNavarro,anallegedmechanic,thatheperiodicallychecksand maintainsthejeepneyofsaiddefendants,thelastonDec.23,thedaybeforethe collision,whichincludedthetighteningofthebolts.Thisnotwithstandingthe rightrearwheelofthevehiclewasdetachedwhileintransit.Astothecause thereofnoevidencewasoffered.Saiddefendantdidnotevenattempttoexplain, muchlessestablish,ittobeonecausedbyacasofortuito.... Inanyevent,"[i]nanactionfordamagesagainstthecarrierforhisfailuretosafely carry his passenger to his destination, an accident caused either by defects in the automobileorthroughthenegligenceofitsdriver,isnotacasofortuitowhichwould avoidthecarriersliabilityfordamages(Sonv.CebuAutobusCompany,94Phil.892 citingLasam,etal.v.Smith,Jr.,45Phil.657;Necesito,etc.v.Paras,etal.,104Phil.75). ThetrialcourtwasthereforerightinfindingthatManaloandspousesManguneandCarreon were negligent. However, its ruling that spouses Mangune and Carreon are jointly and severallyliablewithManaloiserroneousThedrivercannotbeheldjointlyandseverallyliable with thecarrier incase ofbreach of the contract of carriage. The rationalebehind this is readilydiscernible.Firstly,thecontractofcarriageisbetweenthecarrierandthepassenger, andintheeventofcontractualliability,thecarrierisexclusivelyresponsiblethereforetothe passenger,evenifsuchbreachbeduetothenegligenceofhisdriver(seeViluanv.TheCourtof Appeals,etal.,G.R.Nos.L2147781,April29,1966,16SCRA742).Inotherwords,the carriercanneithershifthisliabilityonthecontracttohisdrivernorshareitwithhim,forhis driver'snegligenceishis.4Secondly,ifWemakethedriverjointlyandseverallyliablewiththe carrier, that would make the carrier's liability personal instead of merely vicarious and consequently, entitled to recover only the share which corresponds to the driver, 5 contradictorytotheexplicitprovisionofArticle2181oftheNewCivilCode.6 We affirm the amount of damagesadjudged bythe trial court, except with respect to the indemnityforlossoflife.UnderArticle1764inrelationtoArticle2206oftheNewCivilCode, the amount of damages for the death of a passenger is at least three thousand pesos (P3,000.00). The prevailing jurisprudence has increased the amount of P3,000.00 to P30,000.00(seeHeirsofAmparodelosSantos,etal.v.HonorableCourtofAppeals,etal.,G.R. No.51165,June21,1990citingDeLimav.LagunaTayabasCo.,G.R.Nos.L3569799,April

10 15,1988,160SCRA70). ACCORDINGLY,thepetitionisherebyGRANTED.ThedecisionoftheIntermediateAppellate CourtdatedJuly29,1983anditsresolutiondatedNovember28,1983areSETASIDE.The decision of the Court of First Instance dated December 27, 1978 is REINSTATED MODIFICATIONthatonlyIsidroMangune,GuillermaCarreonandFilritersGuarantyAssurance Corporation,Inc.areliabletothevictimsortheirheirsandthattheamountofindemnityfor lossoflifeisincreasedtothirtythousandpesos(P30,000.00). SOORDERED. Narvasa(Chairman),Cruz,GancaycoandGrioAquinoJJ.,concur. RepublicofthePhilippines SUPREMECOURT Manila THIRDDIVISION G.R.No.82318May18,1989 GILBERTOM.DUAVIT,petitioner, vs. THEHON.COURTOFAPPEALS,ActingthroughtheThirdDivision,asPublicRespondent,and ANTONIOSARMIENTO,SR.&VIRGILIOCATUARrespondents. Rodolfod.DelaCruzforpetitioner. Bito,Lozada,Ortega&Castilloforrespondents. GUTIERREZ,JR.,J.: This petitionraisesthe sole issue ofwhether or nottheowner ofa private vehicle which figuredinanaccidentcanbeheldliableunderArticle2180oftheCivilCodewhenthesaid vehiclewasneitherdrivenbyanemployeeoftheownernortakenwiththeconsentofthe latter. Thefactsaresummarizedinthecontesteddecision,asfollows: From the evidence adduced by the plaintiffs, consisting of the testimonies of witnesses Virgilio Catuar, Antonio Sarmiento, Jr., Ruperto Catuar, Jr. and NorbertoBernarteitappearsthatonJuly28,1971plaintiffsAntonioSarmiento, Sr.andVirgilioCatuarwereaboardajeepwithplatenumber7799FIManila, 1971,ownedbyplaintiff,RupertoCatuarwasdrivingthesaidjeeponOrtigas Avenue, San Juan, Rizal; that plaintiff's jeep, at the time, was running moderatelyat20to35kilometersperhourandwhileapproachingRoosevelt Avenue, Virgilio Catuar slowed down; that suddenly, another jeep with plate number 9997FJ Manila 1971 driven by defendant Oscar Sabiniano hit and bumpedplaintiff'sjeepontheportionneartheleftrearwheel,andasaresultof theimpactplaintiff'sjeepfellonitsrightandskiddedbyabout30yards;thatas aresultplaintiffsjeepwasdamaged,particularlythewindshield,thedifferential, thepartneartheleftrearwheelandthetopcoverofthejeep;thatplaintiff VirgilioCatuarwasthrowntothemiddleoftheroad;hiswristwasbrokenand hesustainedcontusionsonthehead;thatlikewiseplaintiffAntonioSarmiento, Sr.wastrappedinsidethefallenjeep,andoneofhislegswasfractured. EvidencealsoshowsthattheplaintiffVirgilioCatuarspentatotalofP2,464.00

11 forrepairsofthejeep,asshownbythereceiptsofpaymentoflaborandspare parts (Exhs. H to H7 Plaintiffs likewise tried to prove that plaintiff Virgilio Catuar, immediately after the accident was taken to Immaculate Concepcion Hospital, and then was transferred to the National Orthopedic Hospital; that whileplaintiffCatuarwasnotconfinedinthehospital,hiswristwasinaplaster cast for a period of one month, and the contusions on his head were under treatmentforabouttwo(2)weeks;thatforhospitalization,medicineandallied expenses,plaintiffCatuarspentP5,000.00. Evidencealsoshowsthatasaresultoftheincident,plaintiffAntonioSarmiento, Sr. sustained injuries on his leg; that at first, he was taken to the National OrthopedicHospital(Exh.KbutlaterhewasconfinedattheMakatiMedical CenterfromJuly29,toAugust29,1971andthenfromSeptember15to25, 1971;thathislegwasinaplastercastforaperiodofeight(8)months;andthat forhospitalizationandmedicalattendance,plaintiffAntonioSarmiento,Sr.spent nolessthanP13,785.25asevidencedbyreceiptsinhispossession.(Exhs.NtoN 1). Proofs were adduced also to show that plaintiff Antonio sarmiento Sr. is employedasAssistantAccountantoftheCanlubangSugarEstatewithasalaryof P1,200.00 a month; that as sideline he also works as accountant of United Haulers Inc. with a salary of P500.00 a month; and that as a result of this incident,plaintiffSarmientowasunabletoperformhisnormalworkforaperiod ofatleast8months.Ontheotherhand,evidenceshowsthattheotherplaintiff Virgilio Catuar is a Chief Clerk in Canlubang Sugar Estate with a salary of P500.00amonth,andasaresultoftheincident,hewasincapacitatedtowork foraperiodofone(1)month. TheplaintiffshavefiledthiscasebothagainstOscarSabinianoasdriver,and againstGualbertoDuavitasownerofthejeep. DefendantGualbertoDuavit,whileadmittingownershipoftheotherjeep(Plate No.9907FJManila,1971),deniedthattheotherdefendant(OscarSabiniano) washisemployee.Duavitclaimedthathehasnotbeenanemployerofdefendant OscarSabinianoatanytimeuptothepresent. Ontheotherhanddocumentaryandtestimonialevidenceshowthatdefendant OscarSabinianowasanemployeeoftheBoardofLiquidatorsfromNovember14, 1966uptoJanuary4,1973(AnnexAofAnswer). DefendantSabiniano,inhistestimony,categoricallyadmittedthathetookthe jeepfromthegarageofdefendantDuavitwithouttheconsentorauthorityofthe latter(TSN,September7,1978,p.8).Hetestifiedfurther,thatDuavitevenfiled chargesagainsthimfortheftofthejeep,butwhichDuavitdidnotpushthrough ashis(Sabiniano's)parentsapologizedtoDuavitonhisbehalf. DefendantOscarSabiniano,ontheotherhandinanattempttoexculpatehimself fromliability,makesitappearthathewastakingallnecessaryprecautionwhile driving and the accident occurred due to the negligence of Virgilio Catuar. Sabinianoclaimsthatitwasplaintiffsvehiclewhichhitandbumpedtheirjeep. (Reno,pp.2123) ThetrialcourtfoundOscarSabinianonegligentindrivingthevehiclebutfoundnoemployer employee relationship between him and the petitioner because the latter was then a

12 governmentemployeeandhetookthevehiclewithouttheauthorityandconsentoftheowner. Thepetitionerwas,thus,absolvedfromliabilityunderArticle2180oftheCivilCode. Theprivaterespondentsappealedthecase. On January 7, 1988, the Court of Appeals rendered the questioned decision holding the petitionerjointlyandseverallyliablewithSabiniano.Theappellatecourtinpartruled: Wecannotgoalongwithappellee'sargument.ItwillbeseenthatinVargasv. Langcay,supra,itwasheldthatitisimmaterialwhetherornotthedriverwas actuallyemployedbytheoperatorofrecordorregisteredowner,anditiseven not necessary to prove who the actual owner of the vehicle and who the employerofthedriveris.WhentheSupremeCourtruled,thus:'Wemusthold andconsidersuchowneroperatorofrecord(registeredowner)astheemployer incontemplationoflaw,ofthedriver,'itcannotbeconstruedotherthanthatthe registeredowneristheemployerofthedriverincontemplationoflaw.Itisa conclusivepresumptionoffactandlaw,andisnotsubjecttorebuttalofproofto thecontrary.Otherwise,asstatedinthedecision,wequote: Thepurposeoftheprinciplesevolvedbythedecisionsinthesematterswillbe defeatedandthwartedifweentertaintheargumentofpetitionerthatsheisnot liablebecausetheactualownerandemployerwasestablishedbytheevidence... . Alongthesamevein,thedefendantappelleeGualbertoDuavitcannotbeallowedtoprovethat thedriverSabinianowasnothisemployeeatthetimeofthevehicularaccident. TherulinglaiddowninAmarV .Soberano(1966),63O.G.6850,bythisCourtto theeffectthattheburdenofprovingthenonexistenceofanemployeremployee relationship is upon the defendant and this he must do by a satisfactory preponderanceofevidence,hastodefertothedoctrinesevolvedbytheSupreme Courtincasesofdamagesarisingfromvehicularmishapsinvolvingregistered motorvehicle.(SeeTugadev.CourtofAppeals,85SCRA226,230).(Rollo,pp. 2627) The appellate court also denied the petitioner's motion for reconsideration. Hence, this petition. The petitioner contends that the respondent appellate court committed grave abuse of discretioninholdinghimjointlyandseverallyliablewithSabinianoinspiteoftheabsenceof anemployeremployee relationshipbetweenthemanddespitethefactthatthepetitioner's jeepwastakenoutofhisgarageandwasdrivenbySabinianowithouthisconsent. Asearlyasin1939,wehaveruledthatanownerofavehiclecannotbeheldliableforan accidentinvolvingthesaidvehicleifthesamewasdrivenwithouthisconsentorknowledge and byapersonnotemployed byhim.Thus,inDuquillov.Bayot(67Phil.131133134) [1939]wesaid: Underthefactsestablished,thedefendantcannotbeheldliableforanything.At thetimeoftheaccident,JamesMcGurkwasdrivingthetruck,andhewasnotan employee of the defendant, nor did he have anything to do with the latter's business; neither the defendant nor Father Ayson, who was in charge of her business,consentedtohaveanyofhertrucksdrivenonthedayoftheaccident, asitwasaholyday,andmuchlessbyachauffeurwhowasnotinchargeof drivingit;theuseofthedefendant'struckinthecircumstancesindicatedwas donewithoutherconsentorknowledge;itmay,therefore,besaid,thattherewas

13 nottheremotestcontractualrelationbetweenthedeceasedPioDuquilloandthe defendant.Itnecessarilyfollowsfromallthisthatarticles1101andfollowingof the Civil Code, cited by the appellant, have no application in this case, and, therefore,theerrorsattributedtotheinferiorcourtarewithoutbasis. The Court upholds the above ruling as still relevant and better applicable to present day circumstances. Therespondentcourt'smisplacedrelianceonthecasesofErezov.Jepte(102Phil.103[1957] andVargasv.Langcay(6SCRA174[1962])cannotbesustained.IntheErezocase,Jepte,the registeredownerofthetruckwhichcollidedwithataxicab,andwhichresultedinthekilling ofErezo,claimedthatatthetimeoftheaccident,thetruckbelongedtothePortBrokeragein an arrangement with the corporation but the same was not known to the Motor Vehicles Office.ThisCourtsustainedthetrialcourt'srulingthatsinceJepterepresentedhimselftobe theownerofthetruckandtheMotorVehiclesOffice,relyingonhisrepresentation,registered thevehicleinhisname,theGovernmentandallpersonsaffectedbytherepresentationhadthe righttorelyonhisdeclarationofownershipandregistration.Thus,evenifJeptewerenotthe ownerofthetruckatthetimeoftheaccident,hewasstillheldliableforthedeathofErezo significantly,thedriverofthetruckwasfullyauthorizedtodriveit. Likewise,intheVargascase,justbeforetheaccidentoccurredVargashadsoldherjeepneytoa thirdperson,sothatatthetimeoftheaccidentshewasnolongertheownerofthejeepney. Thiscourt,nevertheless,affirmedVargas'liabilitysinceshefailedtosurrendertotheMotor VehiclesOfficethecorrespondingACplatesinviolationoftheRevisedMotorVehicleLawand CommonwealthActNo.146.Wefurtherruledthattheoperatorofrecordcontinuestobethe operatorofthevehicleincontemplationoflaw,asregardsthepublicandthirdpersons,andas suchisresponsiblefortheconsequencesincidenttoitsoperator.Thevehicleinvolvedwasa publicutilityjeepneyforhire.Insuchcases,thelawdoesnotonlyrequirethesurrenderofthe ACplatesbutordersthevendoroperatortostoptheoperationofthejeepneyasaformof publictransportationuntilthematterisreportedtotheauthorities. Ascanbeseen,thecircumstancesoftheabovecasesareentirelydifferentfromthoseinthe presentcase.Hereinpetitionerdoesnotdenyownershipofthevehicleinvolvedintiremishap butcompletelydenieshavingemployedthedriverSabinianoorevenhavingauthorizedthe lattertodrivehisjeep.Thejeepwasvirtuallystolenfromthepetitioner'sgarage.Tohold, therefore,thepetitionerliablefortheaccidentcausedbythenegligenceofSabinianowhowas neitherhisdrivernoremployeewouldbeabsurdasitwouldbelikeholdingliabletheowner ofastolenvehicleforanaccidentcausedbythepersonwhostolesuchvehicle.Inthisregard, wecannotignorethemanycasesofvehiclesforciblytakenfromtheirownersatgunpointor stolen from garages and parking areas and the instances of service station attendants or mechanicsofautorepairshopsusing,withouttheowner'sconsent,vehiclesentrustedtothem forservicingorrepair. We cannot blindly apply absolute rules based on precedents whose facts do not jibe four square with pending cases. Every case must be determined on its own peculiar factual circumstances.Where,asinthiscase,therecordsofthepetitionfailtoindicatetheslightest indiciaofanemployeremployeerelationshipbetweentheownerandtheerringdriverorany consentgivenbytheownerforthevehicle'suse,wecannotholdtheownerliable. We,therefore,findthattherespondentappellatecourtcommittedreversibleerrorinholding thepetitionerjointlyandseverallyliablewithSabinianototheprivaterespondent. WHEREFORE,thepetitionisGRANTEDandthedecisionandresolutionappealedfromare

14 herebyANNULLEDandSETASIDE.ThedecisionofthethenCourtofFirstInstance(now Regional Trial Court) of Laguna, 8th Judicial District, Branch 6, dated July 30, 1981 is REINSTATED. SOORDERED. Fernan,C.J.,(Chairman),Feliciano,BidinandCortesJJ.,concur.

G.R.No.87434August5,1992 PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC. and TAGUM PLASTICS, INC., petitioners, vs. SWEETLINES,INC.,DAVAOVETERANSARRASTREANDPORTSERVICES,INC.andHON. COURTOFAPPEALS,respondents. DeLara,DeLunas&Rosalesforpetitioners. CarloL.AquinoforSweetLines,Inc. REGALADO,J.: Amaritimesuit1wascommencedonMay12,1978byhereinPetitionerPhilippineAmerican General Insurance Co., Inc. (Philamgen) and Tagum Plastics, Inc. (TPI) against private respondents Sweet Lines, Inc. (SLI) and Davao Veterans Arrastre and Port Services, Inc. (DVAPSI),alongwithS.C.I.Line(TheShippingCorporationofIndiaLimited)andF.E.Zuellig, Inc.,ascodefendantsinthecourtaquo,seekingrecoveryofthecostoflostordamaged shipment plus exemplary damages, attorney's fees and costs allegedly due to defendants' negligence,withthefollowingfactualbackdropyieldedbythefindingsofthecourtbelowand adoptedbyrespondentcourt: It would appear that in or about March 1977, the vessel SS "VISHVA YASH" belongingtooroperatedbytheforeigncommoncarrier,tookonboardatBaton Rouge,LA,two(2)consignmentsofcargoesforshipmenttoManilaandlaterfor transhipmenttoDavaoCity,consistingof600bagsLowDensityPolyethylene631 andanother6,400bagsLowDensityPolyethylene647,bothconsignedtothe order of Far East Bank and Trust Company of Manila, with arrival notice to TagumPlastics,Inc.,Madaum,Tagum,DavaoCity.Saidcargoeswerecovered, respectively,byBillsofLadingNos.6and7issuedbytheforeigncommoncarrier (Exhs.EandF).ThenecessarypackingorWeightList(Exhs.AandB),aswellas the Commercial Invoices (Exhs. C and D) accompanied the shipment. The cargoeswerelikewiseinsuredbytheTagumPlasticsInc.withplaintiffPhilippine AmericanGeneralInsuranceCo.,Inc.,(Exh.G). Inthecourseoftime,thesaidvesselarrivedatManilaanddischargeditscargoes inthePortofManilafortranshipmenttoDavaoCity.Forthispurpose,theforeign

RepublicofthePhilippines SUPREMECOURT Manila SECONDDIVISION

15 carrierawaitedandmadeuseoftheservicesofthevesselcalledM/V"Sweet Love"ownedandoperatedbydefendantinterislandcarrier. SubjectcargoeswereloadedinHoldsNos.2and3oftheinterislandcarrier. ThesewerecommingledwithsimilarcargoesbelongingtoEvergreenPlantation andalsoStandfilco. OnMay15,1977,theshipment(s)weredischargedfromtheinterislandcarrier intothecustodyoftheconsignee.AlatersurveyconductedonJuly8,1977,upon theinstanceoftheplaintiff,showsthefollowing: OfthecargocoveredbyBillofLadingNo.25or(2)6,supposedtocontain6,400 bagsofLowDensityPolyethylene647originallyinside160pallets,therewere deliveredtotheconsignee5,413bagsingoodordercondition.Thesurveyshows shortages,damagesandlossestobeasfollows: Undelivered/Damagedbagsastalliedduringdischargefromvessel 173bags;undeliveredanddamagedasnotedandobservedwhilst storedatthepier699bags;andshortlanded110bags(Exhs.Pand P1). Ofthe600bagsofLowDensityPolyethylene631,thesurveyconductedonthe samedayshowsanactualdeliverytotheconsigneeofonly507bagsingood order condition. Likewise noted were the following losses, damages and shortages,towit: Undelivered/damagedbagsandtallysheetsduringdischargefrom vessel17bags. Undeliveredanddamagedasnotedandobservedwhilststoredat thepier66bags;Shortlanded10bags. Therefore, of said shipment totalling 7,000 bags, originally contained in 175 pallets,onlyatotalof5,820bagsweredeliveredtotheconsigneeingoodorder condition, leaving a balance of 1,080 bags. Such loss from this particular shipmentiswhatanyoralldefendantsmaybeanswerableto(sic). Asalreadystated,somebagswereeithershortlandedorweremissing,andsome of the 1,080 bags were torn, the contents thereof partly spilled or were fully/partially emptied, but, worse, the contents thereof contaminated with foreignmattersandthereforecouldnolongerservetheirintendedpurpose.The positiontakenbytheconsigneewasthateventhosebagswhichstillhadsome contents were considered as total losses as the remaining contents were contaminatedwithforeignmattersandthereforedidnot(sic)longerservethe intendedpurposeofthematerial.Eachbagwasvalued,takingintoaccountthe customsdutiesandothertaxespaidaswellaschargesandtheconversionvalue thenofadollartothepeso,atP110.28perbag(seeExhs.LandL1MandO).2 Beforetrial,acompromiseagreementwasenteredintobetweenpetitioners,asplaintiffs,and defendantsS.C.I.LineandF.E.Zuellig,uponthelatter'spaymentofP532.65insettlementof theclaimagainstthem.Whereupon,thetrialcourtinitsorderofAugust12,19813granted plaintiffs'motiontodismissgroundedonsaidamicablesettlementandthecaseastoS.C.I. LineandF.E.Zuelligwasconsequently"dismissedwithprejudiceandwithoutpronouncement astocosts." Thetrialcourtthereafterrenderedjudgmentinfavorofhereinpetitionersonthisdispositive portion:

16 WHEREFORE,judgmentisherebyrenderedinfavoroftheplaintiffPhilippine General American Insurance Company Inc. and against the remaining defendants,SweetLinesInc.andDavaoVeteransArrastreInc.asfollows: Defendant Sweet Lines, Inc. is ordered to pay said plaintiff the sum of P34,902.00, with legal interestthereonfrom date of extrajudicial demand on April28,1978(Exh.M)untilfullypaid; DefendantSweetLinesInc.andDavaoVeteransArrastreand(Port)ServicesInc. aredirectedtopayjointlyandseverally,theplaintiffthesumofP49,747.55,with legalinterestthereonfromApril28,1978untilfullypaid; Eachofsaiddefendantsareorderedtopaytheplaintiffstheadditionalsumof P5,000isreimbursableattorney'sfeesandotherlitigationexpenses; Eachofsaiddefendantsshallpayonefourth(1/4)costs.4 Duetothereversalonappealbyrespondentcourtofthetrialcourt'sdecisiononthegroundof prescription,5ineffectdismissingthecomplaintofhereinpetitioners,andthedenialoftheir motionfor reconsideration,6 petitionersfiled theinstantpetitionfor review oncertiorari, faultingrespondentappellatecourtwiththefollowingerrors:(1)inupholding,withoutproof, the existence of the socalled prescriptive period; (2) granting arguendo that the said prescriptiveperioddoesexist,innotfindingthesametobenullandvoid;and(3)assuming arguendo that the said prescriptive period is valid and legal, in failing to conclude that petitionerssubstantiallycompliedtherewith.7 Parenthetically,weobservethathereinpetitionersarejointlypursuingthiscase,considering their common interest in the shipment subject of the present controversy, to obviate any questionastowhotherealpartyininterestisandtoprotecttheirrespectiverightsasinsurer andinsured.Inanycase,thereisnoimpedimenttothelegalstandingofPetitionerPhilamgen, evenifitaloneweretosuehereinprivaterespondentsinitsowncapacityasinsurer,ithaving beensubrogatedtoallrightsofrecoveryforlossofordamagetotheshipmentinsuredunder itsMarineRiskNoteNo.438734datedMarch31,19778inviewofthefullsettlementofthe claimthereunderasevidencedbythesubrogationreceipt9issuedinitsfavorbyFarEastBank andTrustCo.,DavaoBranch,fortheaccountofpetitionerTPI. Uponpaymentofthelosscoveredbythepolicy,theinsurer'sentitlementtosubrogationpro tanto,beingofthehighestequity,equipsitwithacauseofactionagainstathirdpartyincase ofcontractualbreach.10Further,theinsurer'ssubrogatoryrighttosueforrecoveryunderthe billofladingincaseoflossofordamagetothecargoisjurisprudentiallyupheld.11However, ifaninsurer,intheexerciseofitssubrogatoryright,mayproceedagainsttheerringcarrierand forallintentsandpurposesstandsintheplaceandinsubstitutionoftheconsignee,afortiori suchinsurerispresumedtoknowandisjustasboundbythecontractualtermsunderthebill ofladingastheinsured. Onthefirstissue,petitionerscontendthatitwaserrorfortheCourtofAppealstoreversethe appealed decision on the supposed ground of prescription when SLI failed to adduce any evidenceinsupportthereofandthatthebillsofladingsaidtocontaintheshortenedperiods forfilingaclaimandforinstitutingacourtactionagainstthecarrierwereneverofferedin evidence.Consideringthattheexistenceandtenorofthisstipulationontheaforesaidperiods haveallegedlynotbeenestablished,petitionersmaintainthatitisinconceivablehowtheycan possibly comply therewith. 12 In refutation, SLI avers that it is standard practice in its operationstoissuebillsofladingforshipmentsentrustedtoitforcarriageandthatitinfact issued bills of lading numbered MD25 and MD26 therefor with proof of their existence

17 manifestintherecordsofthecase.13Foritspart,DVAPSIinsistsontheproprietyofthe dismissalofthecomplaintastoitduetopetitioners'failuretoproveitsdirectresponsibilityfor thelossofand/ordamagetothecargo.14 Onthispoint,indenyingpetitioner'smotionforreconsideration,theCourtofAppealsresolved thatalthoughthebillsofladingwerenotofferedinevidence,thelitigationobviouslyrevolves onsuchbillsofladingwhicharepracticallythedocumentsorcontractssuedupon,hence,they areinevitablyinvolvedandtheirprovisionscannotbedisregardedinthedeterminationofthe relativerightsofthepartiesthereto.15 Respondentcourtcorrectlypasseduponthematterofprescription,sincethatdefensewasso consideredandcontrovertedbytheparties.Thisissuemayaccordinglybetakencognizanceof by the court even if not inceptively raised as a defense so long as its existence is plainly apparentonthefaceofrelevantpleadings.16Inthecaseatbar,prescriptionasanaffirmative defense was seasonably raised by SLI in its answer, 17 except that the bills of lading embodying the same were not formally offered in evidence, thus reducing the bone of contentiontowhetherornotprescriptioncanbemaintainedassuchdefenseand,asinthis case,consequentlyupheldonthestrengthofmerereferencesthereto. AspetitionersaresuinguponSLI'scontractualobligationunderthecontractofcarriageas containedinthebillsoflading,suchbillsofladingcanbecategorizedasactionabledocuments whichundertheRulesmustbeproperlypleadedeitherascausesofactionordefenses,18and thegenuinenessanddueexecutionofwhicharedeemedadmittedunlessspecificallydenied underoathbytheadverseparty.19Therulesonactionabledocumentscoverandapplyto bothacauseofactionordefensebasedonsaiddocuments.20 Inthepresentcaseandundertheaforestatedassumptionthatthetimelimitinvolvedisa prescriptiveperiod,respondentcarrierdulyraisedprescriptionasanaffirmativedefenseinits answer setting forth paragraph 5 of the pertinent bills of lading which comprised the stipulationthereonbyparties,towit: 5. Claims for shortage, damage, must be made at the time of delivery to consignee or agent, if container shows exterior signs of damage or shortage. Claimsfornondelivery,misdelivery,lossordamagemustbefiledwithin30days from accrual. Suits arising from shortage, damage or loss, nondelivery or misdeliveryshallbeinstitutedwithin60daysfromdateofaccrualofrightof action.Failuretofileclaimsorinstitutejudicialproceedingsashereinprovided constituteswaiverofclaimorrightofaction.Innocaseshallcarrierbeliablefor anydelay,nondelivery,misdelivery,lossofdamagetocargowhilecargoisnotin actualcustodyofcarrier.21 Intheirreplythereto,hereinpetitioners,bytheirownassertionsthat 2.InconnectionwithPars.14and15ofdefendantSweetLines,Inc.'sAnswer, plaintiffsstatethatsuchagreementsarewhattheSupremeCourtconsidersas contractsofadhesion(seeSweetLines,Inc.vs.Hon.BernardoTeves,etal.,G.R. No.L37750,May19,1978)and,consequently,theprovisionsthereinwhichare contrarytolawandpublicpolicycannotbeavailedofbyansweringdefendantas validdefenses.22 therebyfailedtocontroverttheexistenceofthebillsofladingandtheaforequotedprovisions therein,hencetheyimpliedlyadmittedthesamewhentheymerelyassailedthevalidityof subjectstipulations. Petitioners' failure to specifically deny the existence, much less the genuineness and due

18 execution,oftheinstrumentsinquestionamountstoanadmission.Judicialadmissions,verbal or written, made by the parties in the pleadings or in the course of the trial or other proceedingsinthesamecaseareconclusive,noevidencebeingrequiredtoprovethesame, andcannotbecontradictedunlessshowntohavebeenmadethroughpalpablemistakeorthat nosuchadmissionwasmade.23Moreover,whenthedueexecutionandgenuinenessofan instrument are deemed admitted because of the adverse party's failure to make a specific verifieddenialthereof,theinstrumentneednotbepresentedformallyinevidenceforitmay beconsideredanadmittedfact.24 Even granting that petitioners' averment in their reply amounts to a denial, it has the proceduralearmarksofwhatinthelawonpleadingsiscalledanegativepregnant,thatis,a denialpregnantwiththeadmissionofthesubstantialfactsinthepleadingrespondedtowhich arenotsquarelydenied.Itisineffectanadmissionoftheavermentitisdirectedto.25Thus, whilepetitionersobjectedtothevalidityofsuchagreementforbeingcontrarytopublicpolicy, theexistenceofthebillsofladingandsaidstipulationswereneverthelessimpliedlyadmitted bythem. Wefindmeritinrespondentcourt'scommentsthatpetitionersfailedtotouchonthematterof the nonpresentation of the bills of lading in their brief and earlier on in the appellate proceedings in this case, hence it istoo late in the day to now allow the litigation to be overturnedonthatscore,fortodosowouldmeananoverindulgenceintechnicalities.Hence, forthereasonsalreadyadvanced,thenoninclusionofthecontrovertedbillsofladinginthe formalofferofevidencecannot,underthefactsofthisparticularcase,beconsideredafatal procedural lapse aswould bar respondentcarrier from raising the defense of prescription. Petitioners'feignedignoranceoftheprovisionsofthebillsoflading,particularlyonthetime limitationsfor filinga claimandforcommencingasuitincourt,astheirexcuse for non compliancetherewithdoesnotdeserveseriousattention. It is to be noted that the carriage of the cargo involved was effected pursuant to an "ApplicationforDeliveryofCargoeswithoutOriginalBillofLading"issuedonMay20,1977in DavaoCity26withthenotationthereinthatsaidapplicationcorrespondstoandissubjectto thetermsofbillsofladingMD25andMD26.Itwouldbeasafeassessmenttointerpretthis tomeanthat,sightunseen,petitionersacknowledgedtheexistenceofsaidbillsoflading.By havingthecargoshippedonrespondentcarrier'svesselandlatermakingaclaimforlosson thebasis ofthebillsoflading,petitionersforallintentsand purposesaccepted saidbills. Havingdonesotheyareboundbyallstipulationscontainedtherein.27Verily,aspetitioners aresuingforrecoveryonthecontract,andinfactevenwentasfarasassailingitsvalidityby categorizing it as a contract of adhesion, then they necessarily admit that there is such a contract,theirknowledgeoftheexistenceofwhichwithitsattendantstipulationstheycannot nowbeallowedtodeny. Ontheissueofthevalidityofthecontrovertedparagraph5ofthebillsofladingabovequoted whichunequivocallyprescribesatimeframeofthirty(30)daysforfilingaclaimwiththe carrierincaseoflossofordamagetothecargoandsixty(60)daysfromaccrualoftherightof actionforinstitutinganactionincourt,whichperiodsmustconcur,petitionerspositthatthe allegedshorterprescriptiveperiodwhichisinthenatureofalimitationonpetitioners'rightof recoveryisunreasonableandthatSLIhastheburdenofprovingotherwise,citingtheearlier caseofSouthernLines,Inc.vs.CourtofAppeals,etal.28Theypostulatethisonthetheory thatthebillsofladingcontainingthesameconstitutecontractsofadhesionandare,therefore, voidforbeingcontrarytopublicpolicy,supposedlypursuanttothedictuminSweetLines,Inc.

19 vs.Teves,etal.29 Furthermore, they contend, since the liability of private respondents has been clearly established,tobarpetitioners'rightofrecoveryonameretechnicalitywillpavethewayfor unjust enrichment. 30 Contrarily, SLI asserts and defends the reasonableness of the time limitationwithinwhichclaimsshouldbefiledwiththecarrier;thenecessityforthesame,as thisconditionforthecarrier'sliabilityisuniformlyadoptedbynearlyallshippingcompaniesif they are to survive the concomitant rigors and risks of the shipping industry; and the countervailing balance afforded by such stipulationto the legal presumption of negligence underwhichthecarrierlaborsintheeventoflossofordamagetothecargo.31 IthaslongbeenheldthatArticle366oftheCodeofCommerceappliesnotonlytooverland andrivertransportationbutalsotomaritimetransportation.32Moreover,weagreethatin thisjurisdiction,asviewedfromanotherangle,itismoreaccuratetostatethatthefilingofa claimwiththecarrierwithinthetimelimitationthereforunderArticle366actuallyconstitutes aconditionprecedenttotheaccrualofarightofactionagainstacarrierfordamagescausedto themerchandise.Theshipperortheconsigneemustallegeandprovethefulfillmentofthe conditionandifheomitssuchallegationsandproof,norightofactionagainstthecarriercan accrueinhisfavor.AstherequirementsinArticle366,restatedwithaslightmodificationin theassailedparagraph5ofthebillsoflading,arereasonableconditionsprecedent,theyare notlimitationsofaction.33Beingconditionsprecedent,theirperformancemustprecedeasuit for enforcement 34 and the vesting of the right to file spit does not take place until the happeningoftheseconditions.35 Now,beforeanactioncanproperlybecommencedalltheessentialelementsofthecauseof actionmustbeinexistence,thatis,thecauseofactionmustbecomplete.Allvalidconditions precedenttotheinstitutionoftheparticularaction,whetherprescribedbystatute,fixedby agreement of the parties or implied by law must be performed or complied with before commencingtheaction,unlesstheconductoftheadversepartyhasbeensuchastopreventor waiveperformanceorexcusenonperformanceofthecondition.36 Itbearsrestatingthatarightofactionistherighttopresentlyenforceacauseofaction,while acauseofactionconsistsoftheoperativefactswhichgiverisetosuchrightofaction.The rightofactiondoesnotariseuntiltheperformanceofallconditionsprecedenttotheaction andmaybetakenawaybytherunningofthestatuteoflimitations,throughestoppel,orby othercircumstanceswhichdonotaffectthecauseofaction.37Performanceorfulfillmentof allconditionsprecedentuponwhicharightofactiondependsmustbesufficientlyalleged,38 consideringthattheburdenofprooftoshowthatapartyhasarightofactionisuponthe personinitiatingthesuit.39 Moreparticularly,wherethecontractofshipmentcontainsareasonablerequirementofgiving noticeoflossoforinjurytothegoods,thegivingofsuchnoticeisaconditionprecedenttothe actionforlossorinjuryortherighttoenforcethecarrier'sliability.Suchrequirementisnotan emptyformalism.Thefundamentalreasonorpurposeofsuchastipulationisnottorelievethe carrierfromjustliability,butreasonablytoinformitthattheshipmenthasbeendamagedand thatitischargedwithliabilitytherefor,andtogiveitanopportunitytoexaminethenature andextentoftheinjury.Thisprotectsthecarrierbyaffordingitanopportunitytomakean investigationofaclaimwhilethematterisfreshandeasilyinvestigatedsoastosafeguard itselffromfalseandfraudulentclaims.40 Stipulationsinbillsofladingorothercontractsofshipmentwhichrequirenoticeofclaimfor loss of or damage to goods shipped in order to impose liability on the carrier operate to

20 preventtheenforcementofthecontractwhennotcompliedwith,thatis,noticeisacondition precedentandthecarrierisnotliableifnoticeisnotgiveninaccordancewiththestipulation, 41asthefailuretocomplywithsuchastipulationinacontractofcarriagewithrespectto noticeoflossorclaimfordamagebarsrecoveryforthelossordamagesuffered.42 Onthe otherhand,thevalidityof a contractual limitationoftimefor filingthesuititself againstacarriershorterthanthestatutoryperiodthereforhasgenerallybeenupheldassuch stipulationmerelyaffectstheshipper'sremedyanddoesnotaffecttheliabilityofthecarrier.In the absence of any statutory limitation and subject only to the requirement on the reasonablenessofthestipulatedlimitationperiod,thepartiestoacontractofcarriagemayfix byagreementashortertimeforthebringingofsuitonaclaimforthelossofordamagetothe shipmentthanthatprovidedbythestatuteoflimitations.Suchlimitationisnotcontraryto publicpolicyforitdoesnotinanywaydefeatthecompletevestitureoftherighttorecover, butmerelyrequirestheassertionofthatrightbyactionatanearlierperiodthanwouldbe necessarytodefeatitthroughtheoperationoftheordinarystatuteoflimitations.43 In the case at bar, there is neither any showing of compliance by petitioners with the requirementforthefilingofanoticeofclaimwithintheprescribedperiodnoranyallegation tothateffect.Itmaythenbesaidthatwhilepetitionersmaypossiblyhaveacauseofaction, forfailuretocomplywiththeaboveconditionprecedenttheylostwhateverrightofaction theymayhaveintheirfavoror,tokeninanothersense,thatremedialrightorrighttorelief hadprescribed.44 TheshipmentinquestionwasdischargedintothecustodyoftheconsigneeonMay15,1977, and it was from this date that petitioners' cause of action accrued, with thirty (30) days therefromwithinwhichtofileaclaimwiththecarrierforanylossordamagewhichmayhave beensufferedbythecargoandtherebyperfecttheirrightofaction.Thefindingsofrespondent courtassupportedbypetitioners'formalofferofevidenceinthecourtbelowshowthatthe claimwasfiledwithSLIonlyonApril28,1978,waybeyondtheperiodprovidedinthebillsof lading45andviolativeofthecontractualprovision,theinevitableconsequenceofwhichisthe lossofpetitioners'remedyorrighttosue.EventhefilingofthecomplaintonMay12,1978is ofnoremedialorpracticalconsequence,sincethetimelimitsforthefilingthereof,whether viewedasaconditionprecedentorasaprescriptiveperiod,wouldinthiscasebeproductiveof thesameresult,thatis,thatpetitionershadnorightofactiontobeginwithor,atanyrate, theirclaimwastimebarred. WhatthecourtfindsratheroddisthefactthatpetitionerTPIfiledaprovisionalclaimwith DVAPSIasearlyasJune14,197746and,asfoundbythetrialcourt,asurveyfixingtheextent of loss of and/or damage to the cargo wasconducted on July 8, 1977 at the instance of petitioners.47Ifpetitionershadtheopportunityandawarenesstofilesuchprovisionalclaim andtocauseasurveytobeconductedsoonafterthedischargeofthecargo,thentheycould veryeasilyhave filedthenecessaryformal,orevenaprovisional,claimwithSLIitself48 withinthestipulatedperiodtherefor,insteadofdoingsoonlyonApril28,1978despitethe vessel'sarrivalattheportofdestinationonMay15,1977.Theirfailuretotimelyactbringsus tonoinferenceotherthanthefactthatpetitionerssleptontheirrightsandtheymustnowface theconsequencesofsuchinaction. TheratiocinationoftheCourtofAppealsonthisaspectisworthreproducing: xxxxxxxxx It must be noted, atthis juncture, that the aforestated time limitation in the presentation of claim for loss or damage, is but a restatement of the rule

21 prescribedunderArt.366oftheCodeofCommercewhichreadsasfollows: Art.366.Withinthetwentyfourhoursfollowingthereceiptofthe merchandise,theclaimagainstthecarrierfordamageoraverage whichmaybefoundthereinuponopeningthepackages,maybe made, provided that the indications of the damage or average whichgivesrisetotheclaimcannotbeascertainedfromtheoutside partofthepackages,inwhichcasetheclaimsshallbeadmitted onlyatthetimeofthereceipt. After the periods mentioned have elapsed, or the transportation charges have been paid, no claim shall be admitted against the carrierwithregardtotheconditioninwhichthegoodstransported weredelivered. Gleanable therefrom is the fact that subject stipulation even lengthened the period for presentation of claims thereunder. Such modification has been sanctionedbytheSupremeCourt.InthecaseofOngYet(M)uaHardwareCo., Inc.vs.MitsuiSteamshipCo.,Ltd.,etal.,59O.G.No.17,p.2764,itruledthat Art.366oftheCodeofCommercecanbemodifiedbyabillofladingprescribing theperiodof90daysafterarrivaloftheship,forfilingofwrittenclaimwiththe carrieroragent,insteadofthe24hourtimelimitafterdeliveryprovidedinthe aforecitedlegalprovision. Tested,too,underparagraph5ofsaidBillofLading,itiscrystalclearthatthe commencementoftheinstantsuitonMay12,1978wasindeedfatallylate.In viewoftheexpressprovisionthat"suitsarisingfrom ...damageorlossshallbeinstitutedwithin60daysfromdateofaccrualofright ofaction,"thepresentactionnecessarilyfailsongroundofprescription. Intheabsenceofconstitutionalorstatutoryprohibition,itisusually heldorrecognizedthatitiscompetentforthepartiestoacontract of shipment to agree on a limitation of time shorter than the statutory period, within which action for breach of the contract shallbebrought,andsuchlimitationwillbeenforcedifreasonable. ..(13C.J.S.496497) Aperusalofthepertinentprovisionsoflawonthematterwoulddisclosethat there is no constitutional or statutory prohibition infirming paragraph 5 of subjectBillofLading.Thestipulatedperiodof60daysisreasonableenoughfor appelleestoascertainthefactsandthereaftertosue,ifneedbe,andthe60day periodagreeduponbythepartieswhichshortenedthestatutoryperiodwithin whichtobringactionforbreachofcontractisvalidandbinding....(Emphasis intheoriginaltext.)49 Asexplainedabove,theshortenedperiodforfilingsuitisnotunreasonableandhasinfact beengenerallyrecognizedtobeavalidbusinesspracticeintheshippingindustry.Petitioners' advertenceto theCourt'sholding inthe SouthernLinescase,supra,isfutile as whatwas involvedwasaclaimforrefundofexcesspayment.Weruledthereinthatnoncompliancewith therequirementoffilinganoticeofclaimunderArticle366oftheCodeofCommercedoesnot affecttheconsignee'srightofactionagainstthecarrierbecausesaidrequirementappliesonly tocasesforrecoveryofdamagesonaccountoflossofordamagetocargo,nottoanactionfor refundofoverpayment,andonthefurtherconsiderationthatneithertheCodeofCommerce

22 northebillsofladingthereinprovidedanytimelimitationforsuingforrefundofmoneypaid inexcess,exceptonlythatitbefiledwithinareasonabletime. TherulinginSweetLinescategorizingthestipulatedlimitationonvenueofactionprovidedin thesubjectbillofladingasacontractofadhesionand,underthecircumstancestherein,void for being contrary to public policy is evidently likewise unavailing in view of the discrete environmentalfactsinvolvedandthefactthattherestrictionthereinwasunreasonable.Inany case,OngYiuvs.CourtofAppeals,etal.,50instructsusthat"contractsofadhesionwherein onepartyimposesareadymadeformofcontractontheother...arecontractsnotentirely prohibited.Theonewhoadherestothecontractisinrealityfreetorejectitentirely;ifhe adhereshegiveshisconsent."Inthepresentcase,notevenanallegationofignoranceofa party excuses noncompliance with the contractual stipulations since the responsibility for ensuringfullcomprehensionoftheprovisionsofacontractofcarriagedevolvesnotonthe carrierbutontheowner,shipper,orconsigneeasthecasemaybe. Whileitistruethatsubstantialcompliancewithprovisionsonfilingofclaimforlossofor damagetocargomaysometimessuffice,theinvocationofsuchanassumptionmustbeviewed visavistheobjectorpurposewhichsuchaprovisionseekstoattainandthatistoaffordthe carrier a reasonable opportunity to determine the merits and validity of the claim and to protect itself against unfounded impositions. 51 Petitioners' would nevertheless adopt an adamantposturehingedontheissuancebySLIofa"ReportonLossesandDamages,"dated May15,1977,52fromwhichpetitionerstheorizethatthischargesprivaterespondentswith actualknowledgeofthelossanddamageinvolvedinthepresentcaseaswouldobviatethe needfororrendersuperfluousthefilingofaclaimwithinthestipulatedperiod. Withal,ithasmerelytobepointedoutthattheaforementionedreportbearsthisnotationat thelowerpartthereof:"DamagedbyMla.laboruponunloading;B/Lnotedatportoforigin," as an explanation for the cause of loss of and/or damage to the cargo, together with an iterativenotestatingthat"(t)hisCopyshouldbesubmittedtogetherwithyourclaiminvoiceor receiptwithin30daysfromdateofissueotherwiseyourclaimwillnotbehonored." Moreover,knowledgeonthepartofthecarrierofthelossofordamagetothegoodsdeducible fromtheissuanceofsaidreportisnotequivalenttonordoesitapproximatethelegalpurpose servedbythefilingoftherequisiteclaim,thatis,topromptlyapprisethecarrierabouta consignee'sintentiontofileaclaimandthuscausethepromptinvestigationoftheveracityand meritthereofforitsprotection.Itwouldbeanunfairimpositiontorequirethecarrier,upon discoveryintheprocessofpreparingthereportonlossesordamagesofanyandallsuchloss ordamage,topresumetheexistenceofaclaimagainstitwhenatthattimethecarrieris expectedlyconcernedmerelywithaccountingforeachandeveryshipmentandassessingits condition.Unlessanduntilanoticeofclaimistherewithtimelyfiled,thecarriercannotbe expectedtopresumethatforeverylossordamagetallied,acorrespondingclaimthereforhas been filed or is already in existence as would alert it to the urgency for an immediate investigationofthesoundnessoftheclaim.Thereportonlossesanddamagesisnottheclaim referredtoandrequiredbythebillsofladingforitdoesnotfixresponsibilityforthelossor damage,butmerelystatestheconditionofthegoodsshipped.Theclaimcontemplatedherein, inwhateverform,mustbesomethingmorethananoticethatthegoodshavebeenlostor damaged;itmustcontainaclaimforcompensationorindicateanintenttoclaim.53 Thus, to put the legal effect of respondent carrier's report on losses or damages, the preparationofwhichisstandardprocedureuponunloadingofcargoattheportofdestination, onthesamelevelasthatofanoticeofclaimbyimploringsubstantialcomplianceisdefinitely

23 farfetched.Besides,thecitednotationonthecarrier'sreportitselfmakesitclearthatthefiling ofanoticeofclaiminanycaseisimperativeifcarrieristobeheldliableatallforthelossofor damagetocargo. TurningnowtorespondentDVAPSIandconsideringthatwhateverrightofactionpetitioners may have against respondent carrier was lost due to their failure to seasonably file the requisiteclaim,itwouldbeawkward,tosaytheleast,thatbysomeconvenientprocessof elimination DVAPSI should proverbially be left holding the bag, and it would be pure speculationtoassumethatDVAPSIisprobablyresponsibleforthelossofordamagetocargo. Unlike a common carrier, an arrastre operator does not labor under a presumption of negligenceincaseofloss,destructionordeteriorationofgoodsdischargedintoitscustody.In otherwords,toholdanarrastreoperatorliableforlossofand/ordamagetogoodsentrusted toittheremustbepreponderantevidencethatitdidnotexerciseduediligenceinthehandling andcareofthegoods. Petitionersfailedtopinpointliabilityonanyoftheoriginaldefendantsandinthisseemingly wildgoosechase,theycannotquiteputtheirfingerdownonwhen,where,howandunder whoseresponsibilitythelossordamageprobablyoccurred,orasstatedinparagraph8oftheir basiccomplaintfiledinthecourtbelow,whether"(u)pondischargeofthecargoesfromthe originalcarryingvessel,theSSVISHVAYASH,"and/orupondischargeofthecargoesfromthe interisland vessel the MV"SWEETLOVE," inDavaoCityand laterwhileinthecustodyof defendantarrastreoperator.54 Thetestimonyofpetitioners'ownwitness,RobertoCabato,Jr.,MarineandAviationClaims ManagerofpetitionerPhilamgen,wasdefinitelyinconclusiveandtheresponsibilityfortheloss ordamagecouldstillnotbeascertainedtherefrom: QInotherwords,Mr.Cabato,youonlycomputedthelossonthe basisofthefiguressubmittedtoyouandbasedonthedocuments likethesurveycertificateandthecertificateofthearrastre? AYes,sir. Q Therefore, Mr. Cabato, you have no idea how or where these losseswereincurred? ANo,sir. xxxxxxxxx Q Mr.Witness,yousaid thatyouprocessedandinvestigated the claiminvolvingtheshipmentinquestion.Isitnotafactthatinyour processingandinvestigationyouconsideredhowtheshipmentwas transported?Wherethelossescouldhaveoccurredandwhatisthe extent of the respective responsibilities of the bailees and/or carriersinvolved? xxxxxxxxx A With respect to the shipment being transported, we have of coursetogetintoitinordertocheckwhethertheshipmentcoming intothisportisinaccordancewiththepolicycondition,likeinthis particular case, the shipment was transported to Manila and transhippedthroughaninterislandvesselinaccordancewiththe policy.Withrespecttothelosses,wehaveageneralviewwhere lossescouldhaveoccurred.Ofcoursewewillhavetoconsiderthe differentbaileeswhereintheshipmentmusthavepassedthrough,

24 liketheoceanvessel,theinterislandvesselandthearrastre,but definitelyatthatpointandtimewecannotdeterminetheextentof eachliability.Weareonlyinterestedatthatpointandtimeinthe liabilityasregardstheunderwriterinaccordancewiththepolicy thatweissued. xxxxxxxxx QMr.Witness,fromthedocuments,namely,thesurveyofManila Adjusters and Surveyors Company, the survey of Davao Arrastre contractor andthebillsofladingissuedbythe defendantSweet Lines,willyoubeabletotelltherespectiveliabilitiesofthebailees and/orcarriersconcerned? ANo,sir.(Emphasisours.)55 Neitherdidnorcouldthetrialcourt,muchlesstheCourtofAppeals,preciselyestablishthe stageinthecourseoftheshipmentwhenthegoodswerelost,destroyedordamaged.What canonlybeinferredfromthefactualfindingsofthetrialcourtisthatbythetimethecargo wasdischargedtoDVAPSI,lossordamagehadalreadyoccurredandthatthesamecouldnot havepossiblyoccurredwhilethesamewasinthecustodyofDVAPSI,asdemonstratedbythe observationsofthetrialcourtquotedatthestartofthisopinion. ACCORDINGLY,ontheforegoingpremises,theinstantpetitionisDENIEDandthedismissalof thecomplaintinthecourtaquoasdecreedbyrespondentCourtofAppealsinitschallenged judgmentisherebyAFFIRMED. SOORDERED. Narvasa,C.J.,PadillaandNocon,JJ.,concur.

RepublicofthePhilippines SUPREMECOURT Manila SECONDDIVISION G.R.No.127957February21,2001 COLLINA.MORRISandTHOMASP .WHITTIER,petitioner, vs. COURTOFAPPEALS(TenthDivision)andSCANDINAVIANAIRLINESSYSTEM, respondents. PARDO,J.: Petitionersappealviacertiorarifromthedecision1oftheCourtofAppeals,whichreversedthe decisionofthe trial courtand orderedthe dismissal of petitioners' complaintfor damages againstrespondentforbreachofcontractofaircarriage. OnFebruary14,1978,petitionersfiledwiththeRegionalTrialCourt,Makatibranch143an actionfordamagesforbreachofcontractofaircarriageagainstrespondentairlinebecause theywerebumpedofffromSASFlightSK893,ManilaTokyo,onFebruary14,1978,despitea confirmedbookinginthefirstclasssectionoftheflight.

25 PetitionersCollinA.MorrisandThomasP .WhittierwereAmericancitizens;thevicepresident fortechnicalserviceandthedirectorforqualityassurance,respectively,ofSterlingAsia,a foreigncorporationwithregionalheadquartersatNo.8741PaseodeRoxas,MakatiCity. RespondentScandinavianAirlineSystem(SASforbrevity)isandattimesmaterialheretohas beenengagedinthecommercialairtransportofpassengersglobally.1wphi1.nt PetitionerMorrisandcopetitionerWhittierhadaseriesofbusinessmeetingswithJapanese businessmeninJapanfromFebruary14toFebruary22,1978.Theyrequestedtheirtravel agent,StaatsTravelService.Inc.tobookthemasfirstclasspassengersinSASManilaTokyo flightonFebruary14,1978.RespondentbookedthemasfirstclasspassengersonFlightSK 893,ManilaTokyoflightonFebruary14,1978,at3:50intheafternoon. At1:30intheafternoonofFebruary14,1978,alimousineserviceofthetravelagencyfetched petitioner Morris at his house in Urdaneta Village, Makati City. Thereafter, they went to MervillePark,ParaaqueandfetchedpetitionerWhittier,arrivingthereataround2:00inthe afternoon.FromParaaque,theywenttotheManilaInternationalAirportandarrivedat2:35 intheafternoon. Upon arrival at the airport, representatives of the travel agency met petitioners. It took petitionerstwotothreeminutestocleartheirbagsatthecustomssection.Afterthat,they proceedtotheSAScheckincounterandpresentedtheirtickets,passports,immigrationcards andtraveldocumentstoMs.ErlindaPonceatthereceptiondesk. After about fifteen (15) minutes, petitioners noticed that their travel documents were not beingprocessedatthecheckincounter.Theywereinformedthattherewerenomoreseatson theplaneforwhichreasontheycouldnotbeaccommodatedontheflight. Petitioner Morris contacted Staats Travel Service and asked the latter to contact the managementofSAStofindoutwhatwastheproblem.Afterten(10)minutes,StaatsTravel Servicecalledandconfirmedtheirbooking.Thereafter,petitionerMorrisandWhittierreturned torespondent'scheckincounteranticipatingthattheywouldbeallowedtocheckin.However, thecheckincounterwasclosed.WhentheyinformedMs.Ponce,inchargeatthecheckin counterthatarrangementshadbeenmadewithrespondentsoffice,sheignoredthem.Even respondent'ssupervisor,RaulBasa,ignoredthemandrefusedtoanswertheirquestionwhy theycouldnotbeaccomodatedintheflightdespitetheirconfirmedbooking. Whenpetitionerswenttothesupervisor'sdesktochecktheflightmanifest,theysawthattheir names ontopof the listof the firstclass section had been crossed out.Theypressed the supervisortoallowthemintheflightastheyhadconfirmedtickets.Mr.Basainformedthem thatitcouldnotbedonebecausetheflightwasclosedanditwastoolatetodoanything.They checked in at exactly 3:10 inthe afternoon and the flight was scheduled to leave Manila InternationalAirportat3:50intheafternoon.2 Petitioner Morris said that they were advised to be at the airport at least an hour before departuretime.Thishasbeenrespondent'spolicyinpetitioner'sprevioustravelsabroad.3 Ms. Erlinda Ponce, SAS employee on duty at the checkin counter on February 14, 1978 testifiedthattheeconomyclassofSASFlightSK893wasoverbooked;however,thefirstclass sectionwasopen.Shemetpetitioners,whowerebookedinthefirstclasssection,whenthey approachedthecountertocheckin.Theynotaccomodatedontheflightbecausetheychecked

26 inaftertheflightmanifesthadbeenclosedforty(40)minutespriortotheplane'sdeparture. Petitioners'seatsweregiventoeconomyclasspassengerswhowereupgradedtofirstclass.4 Uponcrossexamination,Ms.Poncesaitthatpetitionersmighthavearriveattheairportearlier than3:10intheafternoonwhentheflightmanifestwasclosed;shewassurethattheyarrived atthecheckincounteratpast3:10intheafternoon.Thefirstclassseatsotpetitionerswere giventoupgradedeconomyclasspassengersthree(3)minutesbeforetheflightmanifestwas closed.5 RaulCruzBasa,asupervisorofrespondentairlinecompany,testifiedthatSASFlightSK893 onFebruary14,1978wasoverbookedintheeconomyclass.Petitioner.MorrisandWhittier wereamongthenameslistedinthefirstclasssectionoftheflightmanifest.However,their names were crossed out and the symbols"NOSH", meaning NO SHOW,written after their names.The"NOSHOW"notationcouldmeaneitherthatthebookedpassengersofhistravel documentswerenotatthecounteratthetimeoftheclosingoftheflightmanifest. Mr.Basasaidthathetalkedtopetitionersatabout3:20intheafternoonafterreceivingaradio callfromthegroundstaffatthecheckincounteraboutcomplaintsfrompassengers. HelearnedfromMs.Poncethatpetitionerscheckedinlateaftertheflightmanifesthadbeen closed,afterwhichtimewaitlistedpassengersfromtheeconomyclasshadbeenupgraded.He explainedtopetitionersthattheycouldnotbeaccommodatedontheplanebecausetheseats wereallfilledup.Headmittedthattherewereaboutsix(6)passengersinthecounterwho wererefusedboardingbecausewaitlistedpassengershadbeenaccepted.Mostofthosewho wererefusedboardingcameinlate.6 Alice Magtulac, another witness of the respondent, testified that she was supervisor of ticketingandreservationsection.ShesaidthatpetitionersMorrisandWhittierhadconfirmed reservation tickets to the first class section of SAS Flight SK 893, ManilaTokyo flight, on February14,1978.SheconfirmedthatMs.ThelmaLorraineSayerwasoneoftheeconomy classpassengerswhowasnotabletoleavebecausetheflightwasoverbookedontheeconomy class. Ms.MagtulacsaidthatitwasnotSAS'policytoupgradeeconomypassengertofirstclassif passengersbookedforfirstclassdidnotshowup.7 OnAugust24,1988,thetrialcourtrenderedajudgementagainstrespondentandinfavorof petitionersMorrisandWhittier.Thedispositiveportionreads: "WHEREFORE,inviewoftheforegoing,theCourtherebyrendersjudgementin favoroftheplaintiffsandagainstdefendant,orderingthelattertopaytheformer thefollowing: 1.MoraldamagestoplaintiffCollinA.MorrisintheamountofP1,000,000.00 andtoplaintiffThomasP .WhittierthesumofP750,000.00; 2.ExemplarydamagesinthesumofP200,00.00; 3.Attorney'sfeesintheamountofP300,000.00,plusthecostsofsuit. "Makati,MetroManila,August24,1988

27 [ORIGINALSIGNED]

TEOFILOGUADIZ, JR. Judgde"8 OnOctober5,1988,respondentfiledanoticeofappeal.9 Meanwhile,onOctober6,1988,petitionersMorrisandWhittiermovedforreconsiderationof thedecisionasregardstheawardofdamages. OnNovember2,1988,respondentopposedthemotionforreconsideration.10 On February 26, 1992, the trial court issued an order granting petitioners' motion for reconsideration,thedecretalportionofwhichisquotedherein,towit: "WHEREFORE,inviewoftheforegoing,theCourtherebygrantsthe"Motionfor Reconsideration". The dispositive portion of the "Decision" ishereby amended withrespecttotheamountofmoraldamages,orderingthedefendanttopay moraldamagestoCollinMorrisintheamountofP1,500,000.00andtoThomas whittiertheamountofP1,000.000.00. "SOORDERED. "Makati,MetroManila,February26,1992. [ORIGINALSIGNED]

TEOFILOGUADIZ, JR. Judgde"11 Respondent'sappealrestedmainlyonthegroundthatthetrialcourtmisappreciatedthefacts andevidenceadducedduringthetrial.Thethrustofitsdefensewaspetitioners'lackofcause ofaction,considering that they checkedin atthe SAS counter attheManilaInternational Airport after the flight manifest was closed and after their first class seats were given to waitlistedeconomyclasspassengers.12 OnJanuary21,1997,theCourtofAppealsPromulgatedadecisionreversingthedecisionof thecourt aquo,andorderingthedismissalofthe complaintfordamages.Thedispositive portionofthedecisionprovides: "WHEREFORE,theappealeddecisionisherebyREVERSEDandSETASIDEand anotheronerendereddismissingplaintiffsappellees'complaint.

28 SOORDERED."13 Inreversingthetrialcourt'sdecision,theCourtofAppealsfoundpetitioners'statementself serving. Petitioners failed to prove that they checkedin on time. The appellate court lent credencetorespondent'sclaimthatpetitionersweredeniedboardingonSASFlightSK893 becauseoftheirlatearrivalforcheckinattheinternationalairport.Respondent'semployee, Ms.ErlindaPonce,testifiedthatpetitionerscheckedinaftertheflightmanifestwasclosed. Hence,thispetition.14 PetitionersallegethattheCourtofAppealsgravelyerredindismissingtheircomplaintfor damagesandinfindingtheirtestimoniesselfserving.Theycontendthatthetrialcourtdidnot actarbitrarilyinlendingcredencetotheirtestimoniesandfindingtheirevidencesufficientto warranttheawardofdamagesagainstrespondent.Insum,theyclaimtobeentitledtothe awardfordamagesbecause,asfoundbythetrialcourt,theywerewrongfullyandinbadfaith, "bumpedoff"fromSASFlightSK893onFebruary14,1978,despitetheirtimelyarrivalatthe airportforcheckinandconfirmedbookingsasfirstclasspassengers.15 Thepetitionhasnomerit. "Tobeginwith,itmustbeemphasizedthatacontracttotransportpassengersisquitedifferent kindanddegreefromanyothercontractualrelations,andthisisbecauserelation,whichanair carriersustainswith thepublic.Itsbusiness ismainlywith the travelling public.Itinvites peoplebusinessismainlywiththetravelingpublic.Itinvitespeopletoavail[themselves]of the comforts and advantages it offers. The contract of air carriage, therefore, generates a relation attended wit h a pubic duty. Neglect or malfeasance of the carrier's employees naturallycouldgivegroundforanactionfordamages."16 "Inawardingmoraldamagesforbreachofcontractofcarriage,thebreachmustbewantonand deliberatelyinjuriousortheoneresponsibleactedfraudulentlyorwithmaliceorbadfaith."17 "Whereinbreachingthecontractofcarriagethedefendantairlineisnotshowntohaveacted fraudulently or in bad faith, liability for damages is limited to the natural and probable consequences of the breach of obligation which the parties had foreseen or could have reasonably foreseen. In that case, such liability does not include moral and exemplary damages."18"Moraldamagesaregenerallynotrecoverableinculpacontractualexceptwhen badfaithhad beenproven.However,thesame damagesmayberecoveredwhenreach of contractofcarriageresultsinthedeathofapassenger."19 "Theawardofexemplarydamageshaslikewisenofactualbasis.Itisrequisitethattheactmust be accompanied by bad faith or done in wanton, fraudulent or malevolent manner circumstances which are absent in this case. In addition, exemplary damages cannot be awardedastherequisiteelementofcompensatorydamageswasnotpresent."20 Intheinstantcase,assumingarguendothatbreachofcontractofcarriagemaybeattributedto respondent,petitioners'travailsweredirectlytraceabletotheirfailuretocheckinontime, whichlewdtorespondent'srefusaltoaccommodatethemontheflight. "Theruleisthatmoraldamagesarerecoverableinadamagesuitpredicateduponabreachof contractofcarriageonlywhere(a)themishapresultinthedeathofapassengerand(b)itis

29 provedthatthecarrierwasguiltyoffraudandbadfaithevenifdeathdoesnotresult."21 Forhavingarrivedattheairportaftertheclosureoftheflightmanifest,respondent'semployee could not be faulted for not entertaining petitioners' tickets and travel documents for processing,asthecheckinginofpassengersforSASFlightSK893wasfinished,therewasno fraudorbadfaithaswouldjustifythecourt'sawardornormaldamages. "Bad faith does not simply connote bad judgement or negligence, it imports a dishonest purposeorsomemoralobliquityandconsciousdoingofawrong,abreachofknownduty throughsomemotiveorinterestorillwillthatpartakesofthenatureoffraud."22 Intheinstantcase,respondent'sdenialofpetitioners'boardingonSASFlight893wasnot attendedbybadfaithormalice. Tothecontrary,factsrevealedthattheywerenotallowedtoboardtheplaneduetotheir failuretocheckinontime.PetitionerMorrisadmittedthattheywereatthecheckincounter ataround3:10,exactlythesametimetheflightmanifestwasclosed,butstilltoolatetobe accommodated on the plane. Respondent's supervisor, Raul C. Basa, testified that he met petitionersatabout3:20intheafternoonafterreceivingaradiocallfromthegroundstaff regardingpetitioners'complaints.Clearlydidnotarriveontimeforcheckin.1wphi1.nt Aswefindpetitionersnotentitledtomoraldamages,"anawardofexemplarydamagesis likewisebaseless."23 "Wheretheawardofmoralandexemplarydamagesiseliminated,so musttheawardforattorney'sfeesbedeleted."24 WHEREFORE, theCourt DENIES thepetitionforlackofmerit.TheCourtAFFIRMS intoto decisionoftheCourtofAppealsinCAG.R.CV .No.38684. NoCosts. SOORDERED. Davide,Jr.,Puno,Kapunan,andYnaresSantiago,JJ.,concur.

G.R.No.L49496May31,1979 MDTRANSIT,INC.,petitioner, vs. THE HONORABLE COURT OF APPEALS * and SERGIO MARIANO (for himself and in representation of his minors SERGIO, JR. and MICHAEL all surnamed MARIANO),

RepublicofthePhilippines SUPREMECOURT Manila FIRSTDIVISION

30 respondents. BernardoT.Dominguezforpetitioner. FiloteoBanzonforprivaterespondents. TEEHANKEE,J.: TheCourtmodifiestheawardtorespondentofcompensatorydamagesforlostearningsofhis deceased wife CarmenG. Mariano (who wasrecklessly hit, while crossing the street on a pedestrianlaneonAyalaAvenueinMakati,bypetitioner'sbus,thrownsixmetersawayand instantly killed) from P309,920.00 to P200,000.00. The award is based on the two main factorsoffifeexpectancyandlostnetearningcapacityofthedeceasedassetforthinthe controllingcaseofVillaReyTransitInc.vs.Courtofappeals. RespondentCourtofAppeals,initsdecisionofAugust31,1978,affirmedintotothejudgment ofDecember15,1976oftheCourtofFirstInstanceofBataaninfavorofrespondentSergio Mariano (for himself and in representation of two minor children) as plaintiffsappellees againsthereinpetitionerMDTransit,Inc.asdefendantappellant,asfollows: WHEREFORE, PREMISES ABOVE CONSIDERED, finding the defendant MD Transit,Inc.civillyliableforhavingfailedtoexercisethediligenceofagood fatherofafamilyinthesupervisionofitsemployee,RenatoDotewhodroveina recklessmannerdefendant'sMDBusbumpingandkillingCarmenG.Mariano, thecourtherebyawardsthefollowingdamages,tobepaidbysaiddefendantto hereinplaintiffs,towit: a)P50,000.00asmoraldamages; b)P309,920.00ascompensatorydamagesforlostearnings; c)P20,160.00asactualdamages; d)P10,000.00asattorney'sfees;and e)Costsofsuit. PetitionerfiledonJanuary8,1979withthisCourtthepresentpetitionforreviewoncertiorari ofrespondentappellatecourt'sjudgment.Uponreceiptofrespondents'commentasrequiredin itsResolutionofJanuary17,1979,theCourtinitsMarch5,1979Resolutionresolved"toGIVE LIMITEDDUECOURSEtothepetition,onlyastoItem(b)ofthejudgmentofthelowercourt as affirmed by the Court of Appeals, referring to the allegedly excessive compensatory damagesawardedintheamountofP309,920.00...,"andrequiredthepartiestosubmittheir respectivememorandaonthisfiledissuewhichwerefiledinduecourse. Respondent court found as 11 reasonable" the amount of P309,920.00 awarded as compensatorydamagesbythetrialcourt,whichhadestimatedthesameinthiswise: WhenthelifeofCarmenMarianowasuntimelysnappedshewasonly39yearsof age, in good health (Exhibit "E" "E2") and gainfully employed with the GeneralTelephoneDirectoryCo.receivingamonthlysalaryofP1,160.00(Exhibit "F" Withouttaking into considerationanymore the regular annual increase of salaryofthedeceased(Exhibit"F2"),hadnotheruntimelydeathsupervened,in hernext26moreyearsuntilher65thyear,shewouldhaveearnedP309,920.00 deductingalreadysomeP2,000.00astaxes(Exhibit'K')andmiscellaneousfrom herannualincomeofP13,920.00126yearsxP11,920.00=[P309,920.00].1 Respondent court had further rejected petitioner's objection to the Court's estimate of the deceased'slifeexpectancyat26yearsmore,affirmingthetrialcourt'sfindingsonthebasisof theevidencethatthedeceasedwasingoodphysicalhealth,thus:

31 Asregardsthecompensatorydamagesawarded,whileappellantdoesnotdispute thefindingsofthecourtaquothatCarmenG.Mariano'searningspermonthwas P1,160.00withtheGeneralTelephoneDirectoryandshewasonly39yearsold whenshemettheuntimelydeath,ithoweverassailstherulingthatthevictim wouldstillhavefor26yearssinceherdeathonApril5,1975,onthegroundthat while the victim was still living she did not deliver a baby normally but by Caesarian operation. A cursory reading of the Medical History and Physical Examinationrecord(Exh.E,E2)ofthevictimsubmittedbyMr.Marianoreveals thatindeedthevictimwasingoodphysicalhealthotherwisethephrase'fitto continuepresentoccupationcouldnothavebeenplacedinthe'remarks'portion oftherecordbytheexaminingdoctor. InthecontrollingcaseofVillaReyTransitInc.vs.CourtofAppeals2(whereP33,333.33for lossofnetearningsofP1,000.00peryearx331/3yearsoffifeexpectancywereawarded)as reaffirmedinDavilavs.PhilippineAirLines3(whereP195,000.00damageswereawarded basedonnetearningsofP7,200.00peryearx25yearsoflifeexpectancy),theCourtstressed twofactorsintheawardofsuchcompensatorydamages,towit,(1)"lifeexpectancyisnotonly relevantbutalsoanimportantelementinfixingtheamountrecoverable"and(2)"earning capacity,asanelementofdamagestoone'sestateforhisdeathbywrongfulactisnecessarily hisnetearningcapacityorhiscapacitytoacquiremoney,'lessthenecessaryexpenseforhis ownliving.'Statedotherwise,theamountrecoverableisnotlossoftheentireearning,but ratherthelossofthatportionoftheearningswhichthebeneficiarywouldhavereceived.In otherwords,onlynetearnings,notgrossearning,aretobeconsidered,thatis,thetotalofthe earningslessexpensesnecessaryinthecreationofsuchearningsorincomeandlesslivingand otherincidentalexpenses." Petitioner,citingtheVillaReydoctrine,contendsinitspetitionthatthemaximum damagesthatshouldbeawardedwouldamounttoonlyP103,680.00basedon itscontentionthatthevictim'slifeexpectancyshouldbe24years(not26years) andnetearningsonlyatP4,320.00ayear,thus: ThedeceasedCarmenG.Mariano,atthetimeofherdeath,was39yearsold.On the basis of the above formula (2/3 x 8030) the deceased's normal life expectancywouldbe24yearsandnot27years[sic])atthatageof39years old,...,inthecaseatbar,theamountofatleastP800.00shouldbeconsideredas reasonablemonthlydeductionfromtheincomeofthedeceasedorthesumof P9,600.00ayear. Thedeceased'syearlyincomewasP13,920.00.stheaboveamountofP9,600.00, thedeceased'snetearningcapacitywould,therefore,beonlyP4,320.00ayear. Multiplythisamountby24years(thedeceased'snormallifeexpectancyatage 39 years old, as above computed), the amount due private respondent, as compensatorydamages,willthenbeP103,680.00...4 In its memorandum, petitioner would further reduce the life expectancy of the deceased CarmenG.Marianoto20yearsinsteadof24years,arguingthat"whileitmaybesaidthatat thetimeofherdeath,CarmenG.Marianowasinrelativelygoodhealth,yetundergoinga major surgery such as caesarian operation is a circumstance that would have affected her normallifeexpectancyandthisfactshouldbeconsideredasfurtherallowanceandhence,for purposesofthiseherlifeexpectancymaybereducedfurtherto20years,"andonthisbasis "(T)hedeceased'syearlyincomewasP13,920.00.LesstheamountofP9,600.00,thedeceased's

32 netearningcapacitywould,therefore,beonlyP4,320.00ayear.Multiplythisamountby20 years(hernormallifeexpectancyashereinbeforecomputedbyus),theamountdueprivate respondent,ascompensatorydamages,willthenbeonlyP86,400.00.5 Respondents, on the other hand, contend that in the absence of a clear showing that the determinationoftheamountofcompensatorydamagesbasedonlifeexpectancyandthenet earningcapacityofthedeceasedismanifestlyarbitraryorexcessive,suchawardshouldbe sustained. Allfactorsconsidered,theCourtbelievesthatitisfairandreasonabletofixthedeductible livingandotherexpensesofthedeceasedatthesumofP4,800.00ayearorP400.00amonth (onehalfoftheamountofP9,600.00ayearorP800.00amonthurgedbypetitioner),since thedeceased'shusbandhadalsohisownearningsandthissumwouldbeherfairshareofthe family'sexpenses.Petitionerhasexpresslyconcededthedeceased'slifeexpectancytobeat20 to24years,supra.Allinall,theCourtbelievesthatanawardofP200,000.00ascompensatory damagesbywayofthedeceased'slostearningsiscompletelyjustified,underthefactsofthe caseatbar.TswouldberoughlybasedonanannualnetearningofP9,120.00[P13,920.00 grossearningslessP4,800.00annualexpenses]x22yearsoflifeexpectancyP200,640.00). SuchawardofP200,000.00forcompensatorydamagesincidentallycoincideswiththeexact amount prayed for as compensatory damages for loss of earning capacity in respondent's complaint.6 ThisawardofP200,000.00ascompensatorydamagesshallpertaininthreeequalonethird shares to respondent and the two minor children born of respondent's marriage with the deceased,namelySergioMariano,Jr.andMichaelMariano. ACCORDINGLY, judgment is hereby rendered reducing the lower court's award of compensatorydamages,asaffirmedbyrespondentcourt,torespondentandhistwominor children,Sergio,Jr.andMichael,bothsurnamedMarianotothesumofP200,000.00inthree equalonethirdsharesamongthem.Sincetheotheritemsofdamagesawardedtorespondent (P50,000.00moraldamages,P20,160.00actualdamages,P10,000.00attorney'sfeesandcosts ofsuit)inthetrialcourt'sjudgmentasaffirmedbyrespondentcourthavelongbecomefinal andexecutorywiththeCourt'sdenialofthepetitiontoreviewtheseitemsperitsResolutionof March5,1979,thisjudgmentshallbeimmediatelyexecutory. Makasiar,Fernandez,GuerreroandMelencioHerrera,JJ.,concur. DeCastro,J.,tooknopart.

G.R.No.78656August30,1988 TRANSWORLDAIRLINES,petitioner, vs. COURTOFAPPEALSandROGELIOA.VINLUAN,respondents. Guerrero&TorresLawOfficesforpetitioner.

RepublicofthePhilippines SUPREMECOURT Manila FIRSTDIVISION

33 Angara,Abello,Concepcion,Regala&Cruzforprivaterespondent. TheSolicitorGeneralforpublicrespondent. GANCAYCO,J.: RogelioA.VinluanisapracticinglawyerwhohadtotravelinApril,1979toseveralcitiesin EuropeandtheU.S.toattendtosomemattersinvolvingseveralclients.Heenteredintoa contractforaircarriageforvaluableconsiderationwithJapanAirlinesfirstclassfromManila to Tokyo, Moscow, Paris, Hamburg, Zurich, New York, Los Angeles, Honolulu and back to Manila thru the same airline and other airlines it represents for which he was issued the correspondingfirstclassticketsfortheentiretrip. OnApril18,1979,whileinParis,hewenttotheofficeofTransWorldAirlines(TWA)atthe DeGaulleAirportandsecuredtherefromconfirmedreservationforfirstclassaccommodation onboarditsFlightNo.41fromNewYorktoSanFranciscowhichwasscheduledtodeparton April20,1979.AvalidatedstubwasattachedtotheNewYorkLosAngelesportionofhisticket evidencinghisconfirmedreservationforsaidflightwiththemark"OK"1OnApril20,1979, atabout8:00o'clockA.M.,Vinluanreconfirrredhisreservationforfirstclassaccommodation onboardTWAFlightNo.41withitsNewYorkoffice.Hewasadvisedthathisreservationwas confirmed. He was even requested to indicate his seat preference on said flight on said scheduleddateofdepartureofTWAFlightNo.41.Vinluanpresentedhisticketforcheckinat thecounterofTWAatJFKInternationalAirportatabout9:45o'clockA.M.,thescheduledtime ofthedeparturebeing11:00o'clockA.M.Hewasinformedthattherewasnofirstclassseat available for him on the flight. He asked for an explanation but TWA employees on duty declinedtogiveanyreason.Whenhebegantoprotest,oneoftheTWAemployees,acertain Mr.Braam,rudelythreatenedhimwiththewords"Don'targuewithme,Ihaveaverybad temper." Tobeabletokeephisschedule,Vinluanwascompelledtotaketheeconomyseatofferedto himandhewasissuedarefundapplication"ashewasdowngradedfromfirstclasstoeconomy class. WhilewaitingforthedepartureofFlightNo.41.Vinluannoticedthatotherpassengerswho werewhiteCaucasiansandwhohadcheckedinlaterthanhimweregivenpreferenceinsome firstclassseatswhichbecameavailabledueto"noshow"passengers. OnFebruary15,1980,VinluanfiledanactionfordamagesagainsttheTWAintheCourtof FirstInstanceofRizalallegingbreachofcontractandbadfaith.Aftertrialonthemerits,a decisionwasrenderedthedispositivepartofwhichreadsasfollows: WHEREFORE,judgmentisherebyrenderedinfavoroftheplaintiffandagainst thedefendantholdingthelatterliabletotheformerfortheamountrepresenting thedifferenceinfarebetweenfirstclassandeconomyclassaccommodationson board Flight No. 6041 from New York to San Francisco, the amount of P500,000.00 as moral damages, the amount of P300,000.00 as exemplary damages, andthe amountof P100,000.00asand for attorney'sfees,all such amountstoearninterestattherateoftwelve(12%)percentperannumfrom February15,1980whenthecomplainantwasfileduntilfullypaid. Correspondingly, defendant's counterclaim is dismissed. Costs against the defendant. SOORDERED. Notsatisfiedtherewith,theTWAappealedtotheCourtofAppealswhereininduecoursea

34 decisionwasrenderedonMay27,1987,2thedispositivepartofwhichreadsasfollows: WHEREFORE,thedecisiondatedMarch8,1984isherebymodifiedby(1)fixing theinterestwhichappellantmustpayontheawardsofmoralandexemplary damagesatsixpercent(6%)perannumfromthedateofthedecisionaquo, March8,1984untildateoffullpaymentand(2)reducingtheattorne'sfeesto P50,000.00 withoutinterest,therestofthe decisionisaffirmed.Costagainst appellant. SOORDERED. Hence,thehereinpetitionforreview. Thetheoryofthepetitioneristhatbecauseofmaintenanceproblemsoftheaircraftontheday oftheflight,TWAFlightNo.41wascancelledandaspecialFlightNo.6041wasorganizedto operateinlieuofFlightNo.41.3FlightNo.41wastohaveutilizedaLockheed1011with34 firstclassseats,butinstead,asmallerBoeing707withonly16firstclassseatswassubstituted foruseinFlightNo.6041.Hence,passengerswhohadfirstclassreservationsonFlightNo.41 had to be accommodated on Flight No. 6041 on a firstcome, firstserved basis. An announcement was allegedly made to all passengers in the entire terminal of the airport advisingthemtogetboardingcardsforFlightNo.6041toSanFranciscoandthatthefirst onesgettingthemwouldgetfirstpreferenceastoseatsintheaircraft.Itdenieddecliningto giveanyexplanationforthedowngradingofprivaterespondentaswellasthediscourteous attitudeofMr.Braam. Ontheotherhand,privaterespondentassertsthathedidnothearsuchannouncementatthe terminalandthathewasamongtheearlypassengerstopresenthisticketforcheckinonlyto be informed that there was no first class seat available for him and that he had to be downgraded. ThepetitionercontendsthattherespondentCourtofAppealscommittedagraveabuseof discretioninfinding that petitioner acted maliciouslyand discriminatorily,and in granting excessivemoralandexemplarydamagesandattorney'sfees. Thecontentionisdevoidofmerit.PrivaterespondenthadafirstclassticketforFlightNo.41 ofpetitionerfromNewYorktoSanFranciscoonApril20,1979.Itwastwiceconfirmedand yetrespondentunceremoniouslytoldhimthattherewasnofirstclassseatavailableforhim andthathehadtobedowngradedtotheeconomyclass.Asheprotested,hewasarrogantly threatenedbyoneMr.Braam.Worststill,whilehewaswaitingfortheflight,hesawthat severalCaucasianswhoarrivedmuchlaterwereaccommodatedinfirstclassseatswhenthe otherpassengersdidnotshowup. Thediscriminationisobviousandthehumiliationtowhichprivaterespondentwassubjectedis undeniable. Consequently, the award of moral and exemplary damages by the respondent courtisinorder.4 Indeed,privaterespondenthadshownthattheallegedswitchofplanesfromaLockheed1011 toasmallerBoeing707wasbecausetherewereonly138confirmedeconomyclasspassengers whocouldverywellbeaccommodatedinthesmallerplaneandnotbecauseofmaintenance problems. Petitioner sacrificed the comfort of its first class passengers including private respondent Vinluanforthesakeofecononmy.Suchinattentionandlackofcarefortheinterestofits passengerswhoareentitledtoitsutmostconsideration,particularlyastotheirconvenience, amounttobadfaithwhichentitlesthepassengertotheawardofmoraldamages.5Moresoin thiscasewhereinsteadofcourteouslyinformingprivaterespondentofhisbeingdowngraded

35 underthecircumstances,hewasangrilyrebuffedbyanemployeeofpetitioner. Atthetimeofthisunfortunateincident,theprivaterespondentwasapracticinglawyer,a seniorpartnerofabiglawfirminManila.Hewasadirectorofseveralcompaniesandwas activeincivicandsocialorganizationsinthePhilippines.Consideringthecircumstancesofthis caseandthesocial standing ofprivaterespondentinthecommunity,he isentitledto the awardofmoralandexemplarydamages.However,themoraldamagesshouldbereducedto P300,000.00, and the exemplary damages should be reduced to P200,000.00. This award should be reasonably sufficient to indemnify private respondent for the humiliation and embarrassmentthathesufferedandtoserveasanexampletodiscouragetherepetitionof similaroppressiveanddiscriminatoryacts. WHEREFORE, withthe above modificationreducing the moraland exemplarydamagesas abovestated,thedecisionsubjectofthepetitionforreviewisAFFIRMEDinallotherrespects, withoutpronouncementastocostsinthisinstance. SOORDERED. Narvasa,Cruz,GrioAquinoandMedialdea,JJ.,concur. RepublicofthePhilippines SUPREMECOURT Manila FIRSTDIVISION G.R.No.135802March3,2000 PRISCILLAL.TAN,petitioner, vs. NORTHWESTAIRLINES,INC.,respondent. PARDO,J.: PetitionerPriscillaL.Tanappealsvia certiorari fromthedecisionoftheCourtofAppeals 1 affirmingwithmodification 2 thedecisionofthetrialcourt, 3 orderingrespondenttopay petitioner the following amounts:(1) P15,000.00, asactual damages;(2) P100,000.00,as moraldamages;(3)P50,000.00,asexemplarydamages;(4)P30,000.00,asandforattorney's fees;and(6)costs. ThecasebeforetheCourttracesitsrootsfromanactionfordamagesforbreachofcontractof aircarriageforfailuretodeliverpetitioner'sbaggagesonthedateofherarrivalfiledonJune 29,1994withtheRegionalTrialCourt,Makati,Branch150againstrespondentNorthwest Airlines,Inc.,aforeigncorporationengagedinthebusinessofairtransportation. Theantecedentfactsareasfollows: OnMay31,1994,PriscillaL.TanandConnieTanboardedNorthwestAirlinesFlight29in Chicago,U.S.A.boundforthePhilippines,withastopoveratDetroit,U.S.A.Theyarrivedat theNinoyAquinoInternationalAirport(NAIA)onJune1,1994atabout10:40intheevening.

36 Upontheirarrival,petitionerandhercompanionConnieTanfoundthattheirbaggageswere missing. They returned to the airport in the evening of the following day and they were informedthattheirbaggagesmightstillbeinanotherplaneinTokyo,Japan. OnJune3,1994,theyrecoveredtheirbaggagesanddiscoveredthatsomeofitscontentswere destroyedandsoiled. Claimingthatthey"sufferedmentalanguish,sleeplessnightsandgreatdamage"becauseof Northwest'sfailuretoinformtheminadvancethattheirbaggageswouldnotbeloadedonthe sameflighttheyboardedandbecauseoftheirdelayedarrival,theydemandedfromNorthwest Airlinescompensationforthedamagestheysuffered.OnJune15,1994andJune22,1994, petitionersentdemandletterstoNorthwestAirlines,butthelatterdidnotrespond.Hence,the filingofthecasewiththeregionaltrialcourt. Initsanswertothecomplaint,respondentNorthwestAirlinesdidnotdenythatthebaggages of petitioners were not loaded on Northwest Flight 29. Petitioner's baggages could not be carriedonthesameflightbecauseof"weightandbalancerestrictions."However,thebaggages were loaded in another Northwest Airlinesflight, which arrivedinthe evening ofJune 2, 1994. Whenpetitionerreceivedherbaggagesindamagedcondition,Northwestofferedtoeither(1) reimbursethecostorrepairofthebags;or(2)reimbursethecostforthepurchaseofnew bags,uponsubmissionofreceipts. After due trial, on June 10, 1996, the trial court rendered decision finding respondent NorthwestAirlines,Inc.liablefordamages,asfollows: WHEREFOREjudgmentisrenderedorderingthedefendanttopaytheplaintiff thefollowingamounts: 1.P15,000.00,asactualdamages; 2.P100,000.00,asmoraldamages; 3.P50,000.00,asexemplarydamages; 4.P30,000.00,asandforattorney'sfeesand 5.Costs. SOORDERED. Giventhis10thdayofJune,1996atMakatiCity. ERNAFALLORANALIPOSA Judge4 RespondentNorthwestAirlines,Inc.appealedfromthetrialcourt'sdecisiontotheCourtof Appealscontendingthatthecourt aquo erredinfindingitguiltyofbreachofcontractof carriageandofwillfulmisconductandawardeddamageswhichhadnobasisinfactorwere otherwiseexcessive. OnSeptember30,1998,theCourtofAppealspromulgateditsdecisionpartiallygrantingthe appealbydeletingtheawardofmoralandexemplarydamagesandreducingtheattorney's fees,specificallyprovidingthat:

37 WHEREFORE, PREMISES CONSIDERED, the appeal is hereby GRANTED partially.TheDecisionofthelowercourtdatedJune10,1996isAFFIRMEDwith themodificationthattheawardofmoralandexemplarydamagesisdeletedand theamountofattorney'sfeesisreducedtotenthousandpesos(P10,000.00). Nopronouncementastocosts. SOORDERED.5 Hence,thisappeal.6 The issue is whether respondent is liable for moral and exemplary damages for willful misconductandbreachofthecontractofaircarriage. Thepetitioniswithoutmerit. WeagreewiththeCourtofAppealsthatrespondentwasnotguiltyofwillfulmisconduct."For willfulmisconducttoexisttheremustbeashowingthattheactscomplainedofwereimpelled byanintentiontoviolatethelaw,orwereinpersistentdisregardofone'srights.Itmustbe evidencedbyaflagrantlyorshamefullywrongorimproperconduct."7 Contrary topetitioner's contention, there wasnothing in the conductof respondentwhich showedthattheyweremotivatedbymaliceorbadfaithinloadingherbaggagesonanother plane.Duetoweightandbalancerestrictions,asasafetymeasure,respondentairlinehadto transportthebaggagesonadifferentflight,butwiththesame expecteddateandtimeof arrivalinthePhilippines.Asaptlyexplainedbyrespondent: Toensurethesafetyofeachflight,Northwest'spersonneldetermineeveryflight's compliancewith"weightandbalancerestrictions."Theycheckthefactorslike weightofthe aircraftusedfor the flightgasinput,passengerandcrewload, baggageweight,allinrelationtothewindfactoranticipatedontheflight.If there is an overload, i.e., a perceived safety risk, the aircraft's load will be reducedbyoffloadingcargo,whichwillthenbeplacedonthenextavailable flight.8 Itisadmittedthatrespondentfailedtodeliverpetitioner'sluggagesontime.However,there wasnoshowingofmaliceinsuchfailure.Byitsconcernforsafety,respondenthadtoshipthe baggagesinanotherflightwiththesamedateofarrival. Hence,theCourtofAppealscorrectlyheldthatrespondentdidnotactinbadfaith.9 "Badfaithdoesnotsimplyconnotebadjudgmentornegligence,itimportsadishonestpurpose orsomemoralobliquityandconsciousdoingofawrong,abreachofknowndutythrough somemotiveorinterestorillwillthatpartakesofthenatureoffraud."10 "Whereinbreachingthecontractofcarriagethedefendantairlineisnotshowntohaveacted fraudulently or in bad faith, liability for damages is limited to the natural and probable consequences of the breach of obligation which the parties had foreseen or could have reasonably foreseen. In that case, such liability does not include moral and exemplary damages."11 Consequently,wehavenoreasontoreversethedecisionoftheCourtofAppeals. WHEREFORE, the Court DENIES the petition for lack of merit. The Court AFFIRMS the

38 decisionoftheCourtofAppealsdeleting,however,theawardofattorney'sfees.1wphi1.nt Nocosts. SOORDERED. Davide,Jr.,C.J.,Puno,KapunanandYnaresSantiago,JJ.,concur.

RepublicofthePhilippines SUPREMECOURT Manila SECONDDIVISION G.R.No.L49407August19,1988 NATIONALDEVELOPMENTCOMPANY,petitionerappellant, vs. THE COURTOFAPPEALSandDEVELOPMENTINSURANCE& SURETYCORPORATION, respondentsappellees. No.L49469August19,1988 MARITIMECOMPANYOFTHEPHILIPPINES,petitionerappellant, vs. THE COURTOFAPPEALSandDEVELOPMENTINSURANCE& SURETYCORPORATION, respondentsappellees. Balgos&PerezLawOfficeforprivaterespondentinbothcases. PARAS,J.: Theseareappealsbycertiorarifromthedecision*oftheCourtofAppealsinCAG.R.No:L 46513R entitled "Development Insurance and Surety Corporation plaintiffappellee vs. Maritime Company of the Philippines and National Development Company defendant appellants,"affirmingintotothedecision**inCivilCaseNo.60641ofthethenCourtofFirst InstanceofManila,SixthJudicialDistrict,thedispositiveportionofwhichreads: WHEREFORE, judgment is hereby rendered ordering the defendants National DevelopmentCompanyandMaritimeCompanyofthePhilippines,topayjointly andseverally,totheplaintiffDevelopmentInsuranceandSuretyCorp.,thesum ofTHREEHUNDREDSIXTYFOURTHOUSANDANDNINEHUNDREDFIFTEEN PESOSANDEIGHTYSIXCENTAVOS(364,915.86)withthelegalinterestthereon fromthefilingofplaintiffscomplaintonApril22,1965untilfullypaid,plusTEN THOUSANDPESOS(Pl0,000.00)bywayofdamagesasandforattorney'sfee. On defendant Maritime Company of the Philippines' crossclaim against the defendant National Development Company, judgment is hereby rendered, orderingtheNationalDevelopmentCompanytopaythecrossclaimantMaritime CompanyofthePhilippinesthetotalamountthattheMaritimeCompanyofthe

39 Philippinesmayvoluntarilyorbycompliancetoawritofexecutionpaytothe plaintiffpursuanttothejudgmentrenderedinthiscase. WithcostsagainstthedefendantMaritimeCompanyofthePhilippines. (pp.3435,Rollo,GRNo.L49469) ThefactsofthesecasesasfoundbytheCourtofAppeals,areasfollows: Theevidencebeforeusshowsthatinaccordancewithamemorandumagreement entered into between defendants NDC and MCP on September 13, 1962, defendant NDC as the first preferred mortgagee of three ocean going vessels includingonewiththename'DonaNati'appointeddefendantMCPasitsagentto manageandoperatesaidvesselforandinitsbehalfandaccount(Exh.A).Thus, onFebruary28,1964theE.PhilippCorporationofNewYorkloadedonboard the vessel "Dona Nati" at San Francisco, California, a total of 1,200 bales of American raw cotton consigned to the order of Manila Banking Corporation, ManilaandthePeople'sBankandTrustCompanyactingforandinbehalfofthe Pan Asiatic Commercial Company, Inc., who represents Riverside Mills Corporation(Exhs.K2toK7A&L2toL7A).Alsoloadedonthesamevesselat Tokyo,Japan,werethecargoofKyokutoBoekui,Kaisa,Ltd.,consignedtothe orderofManilaBankingCorporationconsistingof200cartonsofsodiumlauryl sulfateand10casesofaluminumfoil(Exhs.M&M1).EnroutetoManilathe vesselDofiaNatifiguredinacollisionat6:04a.m.onApril15,1964atIseBay, JapanwithaJapanesevessel'SSYasushimaMaru'asaresultofwhich550bales ofaforesaidcargoofAmericanrawcottonwerelostand/ordestroyed,ofwhich 535balesasdamaged were landedand sold ontheauthority of the General AverageSurveyorforYen6,045,500and15baleswerenotlandedanddeemed lost (Exh. G). The damaged and lost cargoes was worth P344,977.86 which amount,theplaintiffasinsurer,paidtotheRiversideMillsCorporationasholder ofthenegotiablebillsofladingdulyendorsed(Exhs.L7A,K8A,K2A,K3A, K4A,K5A,A2,N3andR3}.Alsoconsideredtotallylostweretheaforesaid shipment of Kyokuto, Boekui Kaisa Ltd., consigned to the order of Manila Banking Corporation, Manila, acting for Guilcon, Manila, The total loss was P19,938.00whichtheplaintiffasinsurerpaidtoGuilconasholderoftheduly endorsedbilloflading(ExhibitsM1andS3).Thus,theplaintiffhadpaidas insurerthetotalamountofP364,915.86totheconsigneesortheirsuccessorsin interest,forthesaidlostordamagedcargoes.Hence,plaintifffiledthiscomplaint torecoversaidamountfromthedefendantsNDCandMCPasownerandship agentrespectively,ofthesaid'DofiaNati'vessel.(Rollo,L49469,p.38) OnApril22,1965,theDevelopmentInsuranceandSuretyCorporationfiledbeforethethen CourtofFirstInstanceofManilaanactionfortherecoveryofthesumofP364,915.86plus attorney'sfeesofP10,000.00againstNDCandMCP(RecordonAppeal),pp.16). Interposingthedefensethatthecomplaintstatesnocauseofactionandevenifitdoes,the actionhasprescribed,MCPfiledonMay12,1965amotiontodismiss(RecordonAppeal,pp. 714).DISCfiledanOppositiononMay21,1965towhichMCPfiledareplyonMay27,1965 (RecordonAppeal,pp.1424).OnJune29,1965,thetrialcourtdeferredtheresolutionofthe motiontodismisstillafterthetrialonthemerits(RecordonAppeal,p.32).OnJune8,1965,

40 MCPfileditsanswerwithcounterclaimandcrossclaimagainstNDC. NDC,foritspart,fileditsanswertoDISC'scomplaintonMay27,1965(RecordonAppeal,pp. 2224).ItalsofiledananswertoMCP'scrossclaimonJuly16,1965(RecordonAppeal,pp. 3940).However,onOctober16,1965,NDC'sanswertoDISC'scomplaintwasstrickenoff fromtherecordforitsfailuretoanswerDISC'swritteninterrogatoriesandtocomplywiththe trial court's order dated August 14, 1965 allowing the inspection or photographing of the memorandumofagreementitexecutedwithMCP .SaidorderofOctober16,1965likewise declaredNDCindefault(RecordonAppeal,p.44).OnAugust31,1966,NDCfiledamotion tosetasidetheorderofOctober16,1965,butthetrialcourtdenieditinitsorderdated September21,1966. OnNovember12,1969,afterDISCandMCPpresentedtheirrespectiveevidence,thetrial courtrenderedadecisionorderingthedefendantsMCPandNDCtopayjointlyandsolidarity toDISCthesumofP364,915.86plusthelegalrateofinteresttobecomputedfromthefiling ofthecomplaintonApril22,1965,untilfullypaidandattorney'sfeesofP10,000.00.Likewise, insaiddecision,thetrialcourtgrantedMCP'scrossclaimagainstNDC. MCPinterposeditsappealonDecember20,1969,whileNDCfileditsappealonFebruary17, 1970afteritsmotiontosetasidethedecisionwasdeniedbythetrialcourtinitsorderdated February13,1970. OnNovember17,1978,theCourtofAppealspromulgateditsdecisionaffirming in toto the decisionofthetrialcourt. Hencetheseappealsbycertiorari. NDC'sappealwasdocketedasG.R.No.49407,whilethatofMCPwasdocketedasG.R.No. 49469.OnJuly25,1979,thisCourtorderedtheconsolidationoftheabovecases(Rollo,p. 103).OnAugust27,1979,theseconsolidatedcasesweregivenduecourse(Rollo,p.108)and submittedfordecisiononFebruary29,1980(Rollo,p.136). Initsbrief,NDCcitedthefollowingassignmentsoferror: I THECOURTOFAPPEALSERREDINAPPLYINGARTICLE827OFTHECODEOFCOMMERCE ANDNOTSECTION4(2a)OFCOMMONWEALTHACTNO.65,OTHERWISEKNOWNASTHE CARRIAGE OF GOODS BY SEA ACT IN DETERMINING THE LIABILITY FOR LOSS OF CARGOES RESULTING FROM THE COLLISION OF ITS VESSEL "DONA NATI" WITH THE YASUSHIMA MARU"OCCURRED AT ISE BAY, JAPAN OR OUTSIDE THE TERRITORIAL JURISDICTIONOFTHEPHILIPPINES. II THE COURT OF APPEALS ERRED IN NOT DISMISSING THE C0MPLAINT FOR REIMBURSEMENT FILED BY THE INSURER, HEREIN PRIVATE RESPONDENTAPPELLEE, AGAINST THE CARRIER, HEREIN PETITIONERAPPELLANT. (pp. 12, Brief for Petitioner AppellantNationalDevelopmentCompany;p.96,Rollo). Onitspart,MCPassignedthefollowingallegederrors: I

41 THERESPONDENTCOURTOFAPPEALSERREDINNOTHOLDINGTHATRESPONDENT DEVELOPMENTINSURANCEANDSURETYCORPORATIONHASNOCAUSEOFACTIONAS AGAINSTPETITIONERMARITIMECOMPANYOFTHEPHILIPPINESANDINNOT DISMISSINGTHECOMPLAINT. II THERESPONDENTCOURTOFAPPEALSERREDINNOTHOLDINGTHATTHECAUSEOF ACTION OF RESPONDENT DEVELOPMENT INSURANCE AND SURETY CORPORATION IF ANYEXISTSASAGAINSTHEREINPETITIONERMARITIMECOMPANYOFTHEPHILIPPINES ISBARREDBYTHESTATUTEOFLIMITATIONANDHASALREADYPRESCRIBED. III THE RESPONDENT COURT OF APPEALS ERRED IN ADMITTING IN EVIDENCE PRIVATE RESPONDENTS EXHIBIT "H" AND IN FINDING ON THE BASIS THEREOF THAT THE COLLISIONOFTHESSDONANATIANDTHEYASUSHIMAMARUWASDUETOTHEFAULT OF BOTH VESSELS INSTEAD OF FINDING THAT THE COLLISION WAS CAUSED BY THE FAULT, NEGLIGENCEAND LACKOF SKILL OFTHECOMPLEMENTS OF THE YASUSHIMA MARUWITHOUTTHEFAULTORNEGLIGENCEOFTHECOMPLEMENTOFTHESSDONA NATI IV THERESPONDENTCOURTOFAPPEALSERREDINHOLDINGTHATUNDERTHECODEOF COMMERCEPETITIONERAPPELLANTMARITIMECOMPANYOFTHEPHILIPPINESISASHIP AGENTORNAVIEROOFSSDONANATIOWNEDBYCOPETITIONERAPPELLANTNATIONAL DEVELOPMENTCOMPANYANDTHATSAIDPETITIONERAPPELLANTISSOLIDARILYLIABLE WITHSAIDCOPETITIONERFORLOSSOFORDAMAGESTOCARGORESULTINGINTHE COLLISIONOFSAIDVESSEL,WITHTHEJAPANESEYASUSHIMAMARU. V THE RESPONDENT COURT OF APPEALS ERRED IN FINDING THAT THE LOSS OF OR DAMAGESTOTHECARGOOF550BALESOFAMERICANRAWCOTTON,DAMAGESWERE CAUSEDINTHEAMOUNTOFP344,977.86INSTEADOFONLYP110,000ATP200.00PER BALE AS ESTABLISHED IN THE BILLS OF LADING AND ALSO IN HOLDING THAT PARAGRAPH1OOFTHEBILLSOFLADINGHASNOAPPLICATIONINTHEINSTANTCASE THEREBEINGNOGENERALAVERAGETOSPEAKOF. VI THERESPONDENTCOURTOFAPPEALSERREDINHOLDINGTHEPETITIONERSNATIONAL DEVELOPMENT COMPANY AND COMPANY OF THE PHILIPPINES TO PAY JOINTLY AND SEVERALLY TO HEREIN RESPONDENT DEVELOPMENT INSURANCE AND SURETY CORPORATIONTHESUMOFP364,915.86WITHLEGALINTERESTFROMTHEFILINGOF THE COMPLAINT UNTIL FULLY PAID PLUS P10,000.00 AS AND FOR ATTORNEYS FEES INSTEADOFSENTENCINGSAIDPRIVATERESPONDENTTOPAYHEREINPETITIONERSITS COUNTERCLAIMINTHEAMOUNTOFP10,000.00BYWAYOFATTORNEY'SFEESANDTHE COSTS.(pp.14,BrieffortheMaritimeCompanyofthePhilippines;p.121,Rollo) Thepivotalissueintheseconsolidatedcasesisthedeterminationofwhichlawsgovernlossor

42 destructionofgoodsduetocollisionofvesselsoutsidePhilippinewaters,andtheextentof liabilityaswellastherulesofprescriptionprovidedthereunder. ThemainthrustofNDC'sargumentistotheeffectthattheCarriageofGoodsbySeaAct should applyto the case atbar and notthe Civil Code or the Code of Commerce. Under Section4(2)ofsaidAct,thecarrierisnotresponsibleforthelossordamageresultingfrom the"act,neglectordefaultofthemaster,mariner,pilotortheservantsofthecarrierinthe navigationorinthemanagementoftheship."Thus,NDCinsiststhatbasedonthefindingsof thetrialcourtwhichwereadoptedbytheCourtofAppeals,bothpilotsofthecollidingvessels wereatfaultandnegligent,NDCwouldhavebeenrelievedofliabilityundertheCarriageof GoodsbySeaAct.Instead,Article287oftheCodeofCommercewasappliedandbothNDC andMCPwereorderedtoreimbursetheinsurancecompanyfortheamountthelatterpaidto theconsigneeasearlierstated. ThisissuehasalreadybeenlaidtorestbythisCourtofEasternShippingLinesInc.v.IAC(150 SCRA469470[1987])whereitwasheldundersimilarcircumstance"thatthelawofthe countrytowhichthegoodsaretobetransportedgovernstheliabilityofthecommoncarrierin caseoftheirloss,destructionordeterioration"(Article1753,CivilCode).Thus,therulewas specificallylaiddownthatforcargoestransportedfromJapantothePhilippines,theliability ofthecarrierisgovernedprimarilybytheCivilCodeandinallmattersnotregulatedbysaid Code, the rights and obligations of common carrier shall be governed by the Code of commerceandbylaws(Article1766,CivilCode).Hence,theCarriageofGoodsbySeaAct,a speciallaw,ismerelysuppletorytotheprovisionoftheCivilCode. Inthecaseatbar,ithasbeenestablishedthatthegoodsinquestionaretransportedfromSan Francisco,CaliforniaandTokyo,JapantothePhilippinesandthattheywerelostorduetoa collisionwhichwasfoundtohavebeencausedbythenegligenceorfaultofbothcaptainsof thecollidingvessels.Undertheaboveruling,itisevidentthatthelawsofthePhilippineswill apply,anditisimmaterialthatthecollisionactuallyoccurredinforeignwaters,suchasIse Bay,Japan. UnderArticle1733oftheCivilCode,commoncarriersfromthenatureoftheirbusinessand forreasonsofpublicpolicyareboundtoobserveextraordinarydiligenceinthevigilanceover the goods and for the safety of the passengers transported by them according to all circumstancesofeachcase.Accordingly,underArticle1735ofthesameCode,inallotherthan thosementionedisArticle1734thereof,thecommoncarriershallbepresumedtohavebeenat fault or to have acted negigently, unless it proves that it has observed the extraordinary diligencerequiredbylaw. Itappears,however,thatcollisionfallsamongmattersnotspecificallyregulatedbytheCivil Code,sothatnoreversibleerrorcanbefoundinrespondentcoursesapplicationtothecaseat barofArticles826to839,BookThreeoftheCodeofCommerce,whichdealexclusivelywith collisionofvessels. More specifically, Article 826 of the Code of Commerce provides that where collision is imputabletothepersonnelofavessel,theownerofthevesselatfault,shallindemnifythe lossesanddamagesincurredafteranexpertappraisal.Butmoreinpointtotheinstantcaseis Article827ofthesameCode,whichprovidesthatifthecollisionisimputabletobothvessels, eachoneshallsufferitsowndamagesandbothshallbesolidarilyresponsibleforthelosses anddamagessufferedbytheircargoes.

43 Significantly,undertheprovisionsoftheCodeofCommerce,particularlyArticles826to839, theshipownerorcarrier,isnotexemptfromliabilityfordamagesarisingfromcollisiondueto thefaultornegligenceofthecaptain.Primaryliabilityisimposedontheshipownerorcarrier inrecognitionoftheuniversallyaccepteddoctrinethattheshipmasterorcaptainismerelythe representativeoftheownerwhohastheactualorconstructivecontrolovertheconductofthe voyage(Y'eungShengExchangeandTradingCo.v.Urrutia&Co.,12Phil.751[1909]). Thereis,therefore,noroomforNDC'sinterpretationthattheCodeofCommerceshouldapply onlytodomestictradeandnottoforeigntrade.AsidefromthefactthattheCarriageofGoods bySeaAct(Com.ActNo.65)doesnotspecificallyprovideforthesubjectofcollision,saidAct innouncertainterms,restrictsitsapplication"toallcontractsforthecarriageofgoodsbysea toandfromPhilippineportsinforeigntrade."UnderSectionIthereof,itisexplicitlyprovided that"nothinginthisActshallbeconstruedasrepealinganyexistingprovisionoftheCodeof Commercewhichisnowinforce,oraslimitingitsapplication."Bysuchincorporation,itis obviousthatsaidlawnotonlyrecognizestheexistenceoftheCodeofCommerce,butmore importantlydoesnotrepealnorlimititsapplication. Ontheotherhand,MaritimeCompanyofthePhilippinesclaimsthatDevelopmentInsurance andSuretyCorporation,hasnocauseofactionagainstitbecausethelatterdidnotprovethat itsallegedsubrogershaveeithertheownershiporspecialpropertyrightorbeneficialinterest inthecargoinquestion;neitherwasitprovedthatthebillsofladingweretransferredor assignedtotheallegedsubrogers;thus,theycouldnotpossiblyhavetransferredanyrightof action to said plaintiff appellee in this case. (Brief for the Maritime Company of the Philippines,p.16). TherecordsshowthattheRiversideMillsCorporationandGuilcon,Manilaaretheholdersof thedulyendorsedbillsofladingcoveringtheshipmentsinquestionandanexaminationofthe invoices in particular, shows that the actual consignees of the said goods are the aforementionedcompanies.Moreover,nolessthanMCPitselfissuedacertificationattestingto this fact. Accordingly, as it is undisputed that the insurer, plaintiff appellee paid the total amountofP364,915.86tosaidconsigneesforthelossordamageoftheinsuredcargo,itis evidentthatsaidplaintiffappelleehasacauseofactiontorecover(whatithaspaid)from defendantappellantMCP(Decision,CAG.R.No.46513R,p.10;Rollo,p.43). MCP next contends that it can not be liable solidarity with NDC because it is merely the managerandoperatorofthevesselDonaNatinotashipagent.Asthegeneralmanaging agent,accordingtoMCP ,itcanonlybeliableifitactedinexcessofitsauthority. As found bythe trial court and bythe Courtof Appeals, the Memorandum Agreement of September13,1962(Exhibit6,Maritime)showsthatNDCappointedMCPasAgent,aterm broadenoughtoincludetheconceptofShipagentinMaritimeLaw.Infact,MCPwaseven conferredallthepowersoftheownerofthevessel,includingthepowertocontractinthe nameoftheNDC(Decision,CAG.R.No.46513,p.12;Rollo,p.40).Consequently,underthe circumstances,MCPcannotescapeliability. It is well settled thatboth the owner and agent of the offending vessel are liable for the damagedonewherebothareimpleaded(PhilippineShippingCo.v.GarciaVergara,96Phil. 281[1906]);thatincaseofcollision,boththeownerandtheagentarecivillyresponsiblefor theactsofthecaptain(YuengShengExchangeandTradingCo.v.Urrutia&Co.,supraciting Article586oftheCodeofCommerce;StandardOilCo.ofNewYorkv.LopezCastelo,42Phil.

44 256,262[1921]);thatwhileitistruethattheliabilityofthenavierointhesenseofcharterer or agent, is not expressly provided in Article 826 of the Code of Commerce, it is clearly deduciblefromthegeneraldoctrineofjurisprudenceundertheCivilCodebutmorespecially as regards contractual obligations inArticle 586 of the Code of Commerce. Moreover,the Courtheldthatboththeownerandagent(Naviero)shouldbedeclaredjointlyandseverally liable,sincetheobligationwhichisthesubjectoftheactionhaditsorigininatortiousactand didnotarisefromcontract(VerzosaandRuiz,RementeriayCiav.Lim,45Phil.423[1923]). Consequently,theagent,eventhoughhemaynotbetheownerofthevessel,isliabletothe shippersandownersofthecargotransportedbyit,forlossesanddamagesoccasionedtosuch cargo,withoutprejudice,however,tohisrightsagainsttheowneroftheship,totheextentof thevalueofthevessel,itsequipment,andthefreight(BehnMeyerYCo.v.McMickingetal.11 Phil.276[1908]). Astotheextentoftheirliability,MCPinsiststhattheirliabilityshouldbelimitedtoP200.00 perpackageorperbaleofrawcottonasstatedinparagraph17ofthebillsoflading.Alsothe MCParguesthatthelawonaveragesshouldbeappliedindeterminingtheirliability. MCP'scontentionisdevoidofmerit.Thedeclaredvalueofthegoodswasstatedinthebillsof ladingandcorroboratednolessbyinvoicesofferedasevidence'duringthetrial.Besides, commoncarriers,inthelanguageofthecourtinJuanYsmael&Co.,Inc.v.Barretteetal.,(51 Phil.90[1927])"cannotlimititsliabilityforinjurytoalossofgoodswheresuchinjuryorloss wascausedbyitsownnegligence."Negligenceofthecaptainsofthecollidingvesselbeingthe causeofthecollision,andthecargoesnotbeingjettisonedtosavesomeofthecargoesandthe vessel,thetrialcourtandtheCourtofAppealsactedcorrectlyinnotapplyingthelawon averages(Articles806to818,CodeofCommerce). MCP'sclaimthatthefaultornegligencecanonlybeattributedtothepilotofthevesselSS YasushimaMaruandnottotheJapaneseCoastpilotnavigatingthevesselDonaNatineednot be discussed lengthily as said claim is not only at variance with NDC's posture, but also contrarytothefactualfindingsofthetrialcourtaffirmednolessbytheCourtofAppeals,that both pilots were at fault for not changing their excessive speed despite the thick fog obstructingtheirvisibility. Finallyontheissueofprescription,thetrialcourtcorrectlyfoundthatthebillsofladingissued allowtransshipmentofthecargo,whichsimplymeansthatthedateofarrivaloftheship DonaNationApril18,1964wasmerelytentativetogiveallowancesforsuchcontingencies thatsaidvesselmightnotarriveonscheduleatManilaandtherefore,wouldnecessitatethe transshipmentofcargo,resultinginconsequentdelayoftheirarrival.Infact,becauseofthe collision,thecargowhichwassupposedtoarriveinManilaonApril18,1964arrivedonlyon June12,13,18,20andJuly10,13and15,1964.Hence,hadthecargoesinquestionbeen saved, they could have arrived in Manila on the abovementioned dates. Accordingly, the complaintintheinstantcasewasfiledonApril22,1965,thatis,longbeforethelapseofone (1)yearfromthedatethelostordamagedcargo"shouldhavebeendelivered"inthelightof Section3,subparagraph(6)oftheCarriageofGoodsbySeaAct. PREMISESCONSIDERED,thesubjectpetitionsareDENIEDforlackofmeritandtheassailed decisionoftherespondentAppellateCourtisAFFIRMED. SOORDERED.MelencioHerrera,(Chairperson),Padilla,andSarmiento,JJ.,concur.

45 RepublicofthePhilippines SUPREMECOURT Manila SECONDDIVISION

G.R.No.L25048May13,1975 PHOENIXASSURANCECOMPANY,plaintiffappellant, vs. MACONDRAY&CO.,INC.,defendantappellee. Quasha,Asperilla,Zafra,TayagandAnchetaforplaintiffappellant. Ross,Selph,Salcedo,DelRosario,BitoandMesafordefendantappellee. AQUINO,J.:+.wph!1 Thisisacaseinvolvingthelawofcommoncarriers.Thereisnodisputeastothefacts. OnOctober24,1961theSSFernbankreceivedfromSacoLowellShops,Greenville,South Carolina,ashipmentconsignedtotheorderoftheCommercialBankandTrustCompany,a Manilabank,witharrivalnoticetoFloroSpinningMills280Escolta,Manila. Theshipmentwasinsuredfor$5,450withPhoenixAssuranceCompanyofNewYorkagainst allrisksincludinglossordamage. Inthebillofladingtheshipmentisdescribedasoneboxandonecartoncontainingtextile machinerysparepartsincludingballbearingsweighing930pounds.Thebillofladingcontains thefollowingnotationbelowthedescriptionofthecargo:t.hqw L/CNo.FM1512/61,COMMERCIALBANK&TRUSTCO.OFTHEPHILIPPINES, MANILA,DATED7/3/61,EXPIRES10/31/61,AMOUNT:$4183.74 ThatnotationmeansthatonJuly3,1961theconsignee,FloroSpinningMills,openedaletter ofcreditthroughtheCommercialBankandTrustCompanyfortheamountof$4,183.74which wastoexpireonOctober31,1961. Thebillofladingfurthershowsonitsfacethattheshipperpaidtothevessel'sagentatthe portofloadingthesumof$46.20asfreightagebasedonthegrossweightoftheshipment. Printedinthesmallesttypeonthebackofthebillofladingisthefollowingstipulationlimiting thecarrier'sliabilityforlossordamageto$500perpackageunlesstheshipperinwriting declaresthenatureofthegoodsandahighervaluationandpaysadditionalfreightageonthe basisofsuchhighervaluation:t.hqw 17.Incaseofanylossordamagetoorinconnectionwithgoodsexceedingin actualvalue$500lawfulmoneyoftheUnitedStates,perpackage,or,incaseof goodsnotshippedinpackages,percustomaryfreightunit,thevalueofthegoods shallbedeemedtobe$500perpackageorperunit,onwhichbasisthefreightis adjustedandtheCarrier'sliability,ifany,shallbedeterminedonthebasisofa valueof$500perpackageorpercustomaryfreightunit,unlessthenatureofthe goodsandavaluationhigherthan$500shallhavebeendeclaredinwritingby theshipperupondeliverytotheCarrierandinsertedinthisbillofladingand extrafreightpaidifrequiredandinsuchcaseiftheactualvalueofthegoodsper packageorpercustomaryfreightunitshallexceedsuchdeclaredvalue,thevalue shallneverthelessbedeemedtobethedeclaredvalue. Wheneverthevalueofthegoodsislessthan$500perpackageorotherfreight unit,theirvalueinthecalculationandadjustmentofclaimsforwhichtheCarrier

46 maybeliableshallforthepurposeofavoidinguncertaintiesanddifficultiesin fixingvaluebedeemedtobetheinvoicevalue,plusfreightandinsuranceifpaid, irrespectiveofwhetheranyothervalueisgreaterorless. Thelimitationofliabilityandotherprovisionshereinshallinurenotonlytothe benefitofthecarrier,itsagents,servantsandemployees,butalsotothebenefit of any independent contractor performing services including stevedoring in connectionwiththegoodscoveredhereunder. The bill of lading provides that "in accepting this Bill of Lading, the shipper, owner and consignee of the goods,and the holder ofthe Bill ofLading agree to be bound byallits stipulations,exceptionsandconditions,whetherwritten,stampedorprinted,asfullyasifthey wereallsignedbysuchshipper,owner,consigneeorholder." TheSSFernbankarrivedattheportofManilaonNovember23,1961.Theshipmentwas dischargedintothecustodyoftheManilaPortService.Thesecondcartonwasinbadorder andwasalmostempty.Itcontainedonlyasmallpackagecontainingasteelwireclipwhich wasworthless. The Floro Spinning Mills, which is operated by P Floro & Sons, Inc., filed claims with . Macondray&Co.,Inc.,theagentofthevessel,andwithKer&Company,Ltd.,theagentofthe insurancecompany,forthevalueofthemissingcargointhetotalsumof$1,512.78(including freight, insurance premium and other charges) which was equivalent to P4,554.98 at the prevailingrateofexchangeof3.011. Macondray&Co.,Inc.repliedthatthemaximumlimitationofthevessel'sliabilitywas$500 perpackage. PhoenixAssuranceCompanypaidtheclaimofFloroSpinningMillsinthesumofP4,554.98. Assubrogee,itfiledthisactionagainstMacondray&Co.,Inc.fortherecoveryoftheactual valueofthemissingcargointhesumofP4,554.98. Macondray&Co.,Inc.pleadedthedefensethatitisliableonlyuptothesumof$500as stipulatedintheaforementionedClause17ofthebilloflading. Aftertrial,thelowercourtrenderedjudgment,orderingMacondray&Co.,Inc.topayPhoenix AssuranceCompanythesumofP1,505.50,asthepesoequivalentoffivehundreddollarsat theconversionrateofP3.011tothedollar,"withcostsagainsttheplaintiff,deductible"from theamountofthejudgment(CivilCaseNo.51900). PhoenixAssuranceCompanyappealedtothisCourtonaquestionoflaw.Itscontentionisthat, astheassigneeoftheconsignee,itisentitledtocollectfromthecarrieroritsagentthesumof P4,554.98astheactualvalueofthemissingcargoandnot$500only. Phoenix Assurance Company admits that the shipment in question was subject to all the provisions,exceptionsandconditionsappearinginthebilloflading.Itadmitsthatitisbound bytheaforequotedClause17ofthebilloflading.ItadmitsthatunderClause17inorderthat thecarrier'sliabilitymayexceed$500thenatureofthegoodsandavaluationhigherthan $500shouldbedeclaredinwritingbytheshipperandinsertedinthebillofladingandthat extrafreight,"ifrequired",shouldbepaidonthebasisoftheactualvalueofthecargo. Appellantcompanythenpointsoutthatthenatureoftheshipmentisindicatedinthebillof ladingastextilemachineryspareparts,includingballbearings,andthatthevaluethereofis shownintheaforequotednotationregardingtheletterofcreditfor$4,183.74whichnotation wasallegedlymadebytheshipper.Itarguesthatextrafreightwasnotpaidbecausethecarrier didnotdemandthepaymentofanincreasedfreight. PhoenixAssuranceCompanyspecifiedinitsnoticeofappealthatitisappealingtothisCourt

47 becausethelowercourt'sdecision"iscontrarytolawandapplicablejurisprudence."Appellant companyisboundbythefactsfoundbythelowercourt(Millarvs.Nadres,74Phil.307;2 Moran'sCommentsontheRulesofCourt,1970Ed.,p.456).Itisnotnecessaryinsuchacase toelevatetheevidencetothisCourt(See.2,Rule42,RulesofCourt). Thelowercourtfoundthatthenotationinthebillofladingastotheamountoftheletterof creditwasnotthedeclarationofthevalueoftheshipmentwhichwasrequiredbyClause17 and which would render the carrier liable for loss or damage to the cargo in an amount exceeding $500. The lower court said that notation was made for the convenience of the shippersandthebankinprocessingtheletterofcredit. Thedecisivefactinthiscaseisthattheshipperpaidthefreightonthebasisoftheweightof thecargoandnotonthebasisofitsactualvaluewhichwasnotproperlydeclared.Itwasnot anadvaloremshipment.Haditbeenanadvaloremshipmentthefreightratewouldhavebeen $213.55insteadof$46.20(Exh.2). The lower court did not err in holding that Macondray & Co., Inc. is liable to Phoenix AssuranceCompanyonlyintheamountof$500underClause17ofthebilloflading.Clause 17issanctionedbysection4oftheCarriageofGoodsbySeaActwhichprovides:t.hqw (5)Neitherthecarriernortheshipshallinanyeventbeorbecomeliableforany loss or damage to or in connection with the transportation of goods in the amountexceeding$500perpackagelawfulmoneyoftheUnitedStates,orin case of goods not shipped in packages, per customary freight unit, or the equivalentofthatsuminothercurrency,unlessthenatureandvalueofsuch goodshavebeendeclaredbytheshipperbeforeshipmentandinsertedinthebill oflading.Thisdeclaration,ifembodiedinthebilloflading,shallbeprimafacie evidence,butshallnotbeconclusiveonthecarrier. Byagreementbetweenthecarrier,masteroragentofthecarrier,andtheshipper anothermaximumamountthanthatmentionedinthisparagraphmaybefixed: Provided,Thatsuchmaximumshallnotbelessthanthefigureabovenamed.In noeventshallthecarrierbeliableformorethantheamountofdamageactually sustained. Neither the carrier nor the ship shall be responsible in any event for loss or damagetoorinconnectionwiththetransportationofthegoodsifthenatureor valuethereofhasbeenknowinglyandfraudulentlymisstatedbytheshipperin thebilloflading. Ithasbeenheldthattheforegoingprovisionsonlimitedliabilityareasmuchapartofabillof lading as though physically in it and as much a part thereof as though placed therein by agreementoftheparties(Shackmanvs.CunradWhiteStar,D.C.N.Y.1940,31F.Supp.948,46 USCA866). The legal issue posed by appellant insurance company is not new. This Court has already upheld the validity of a stipulation limiting the carrier's liability, similar to the stipulation foundinClause17.t.hqw Commoncarriers;Billoflading;Stipulationsregardingliabilityofcarrierforloss ofdamagetocrop;Validityofsuchstipulations.Threekindsofstipulation haveoftenbeenmadeinabilloflading.Thefirstisoneexemptingthecarrier fromanyandallliabilityforlossordamageoccasionedbyitsownnegligence. Thesecondisoneprovidingforanunqualifiedlimitationofsuchliabilitytoan agreedvaluation.Andthethirdisonelimitingtheliabilityofthecarriertoan

48 agreedvaluationunlesstheshipperdeclaresahighervalueandpaysahigher rateoffreight. Accordingtoanalmostuniformweightofauthority,thefirstandsecondkindsof stipulationsareinvalidasbeingcontrarytopublicpolicy,butthethirdisvalid andenforceable.(Syllabus,H.E.,HeacockCompanyvs.Macondray&Company, Inc.,42Phil.205;FreixasandCompanyvs.PacificMailSteamshipCo.,42Phil. 198;McCarthyvs.BarberSteamshipLines,Inc.,45Phil.488;NorthernMotors, Inc.vs.PrinceLine,107Phil.253,257). Thus,astipulationthatthevalueofthegoodsshippeddoesnotexceed$500perfreightton, or, in proportion for any part of ton, unless the value be expressly stated herein and ad valoremfreightpaidthereonwasregardedasvalid(Syllabus,McCarthyvs.BarberSteamship Lines,supra.SeeArts.1749and1750,CivilCode.ComparewithShewaramvs.PhilippineAir Lines,Inc.,L20099,July7,1966,17SCRA606,wheretheprintedlimitationofliabilityina planeticketwasdeclaredvoid).. Appellant company in its third assignment of error states that the lower court erred in adjudgingcostsagainstitonthebasisofsection9,Rule5oftheRulesofCourtwhichprovides that"ifthedefendant,atanytimebeforethetrial,offersinwritingtoallowjudgmenttobe takenagainsthimforaspecifiedsum,theplaintiffmayimmediatelyhavejudgmenttherefor, withcoststhenaccrued;butifhedoesnotacceptsuchofferbeforetrial,andfailstorecoverin theactionasuminexcessoftheoffer,hecannotrecovercosts,butcostsmustbeadjudged againsthim,and,ifherecovers,bedeductedfromhisrecovery.Theofferandfailuretoaccept itcannotaffecttherecoveryotherwisethanastocosts." Thetrialcourtappliedsection9ofRule5becausedefendantMacondray&Co.,Inc.pleadedin itsanswerthat"inordertoavoidinconvenienceandexpenseoflitigation",ithadofferedto payPhoenixAssuranceCompanytheequivalentinpesosof$500asacompromisesettlement ofitsclaim(14RecordonAppeal). Section9ofRule5referstoatrialininferiorcourts.Theinstantcasewascommencedinthe CourtofFirstInstanceofManila. However,inviewoftheresultarrivedatinthisappeal,appellantPhoenixAssuranceCompany, asthedefeatedparty,isliableforthecostsofthesuitwhichareallowedtothewinningparty asamatterofcourse(Sec.1,Rule142,RulesofCourt). ThelowercourtdecidedthiscaseonJuly12,1965.Itappliedtheconversionratewhichwas currentatthetimeofitsdecision.Injusticetotheplaintiff,itshouldbepaidthe$500atthe conversionrateprevailingatthetimeofpaymentwhichthetrialcourtshoulddetermineifthe partiescannotagreeonthesame.* WHEREFORE,thetrialcourt'sjudgmentisaffirmedinthesensethatthedefendant'sliabilityof $500totheplaintiffshouldbepaidattherateofexchangeprevailingatthetimethejudgment issatisfiedinsteadofattheconversionrateprevailingin1965.Costsagainsttheplaintiff appellant. SOORDERED. Fernando(Chairman),Barredo,AntonioandConcepcion,Jr.,JJ.,concur.1wph1.t

49 RepublicofthePhilippines SUPREMECOURT Manila FIRSTDIVISION G.R.No.L31087September27,1979 EASTERNSHIPPINGLINES,INC.,petitioner, vs. MARGARINEVERKAUFSUNIONGmbH,respondent. Ross,Salcedo,DelRosario,Bito&Misaforpetitioner. LichaucoPicazo&Agcaoiliforrespondent. TEEHANKEE,ActingC.J.: TheCourtaffirmstheappealedjudgmentholdingpetitionerliableunderthetermsofitsown billofladingforthedamagesufferedbyrespondent'scopracargoonboardpetitioner'svessel, butsetsasidetheawardofattorney'sfeestorespondentplaintiffforlackofanystatementor reasoninthelowercourt'sjudgmentthatwouldjustifytheaward. Respondent corporation, a West German corporation not engaged in business in the Philippines,wastheconsigneeof500longtonsofPhilippinecoprainbulkwithatotalvalue ofUS$108,750.00shippedfromCebuCityonboardpetitioner's(aPhilippinecorporation) vessel, the SS "EASTERN PLANET" for discharge at Hamburg, Germany. Petitioner's bill of ladingforthecargoprovidedasfollows: ...ExceptasotherwisestatedhereinandintheCharterParty,thiscontractshag begovernedbythelawsoftheFlagoftheShipcarryingthegoods.Incaseof average,sameshallbeadjustedaccordingtoYorkAntwerpRulesof1950. WhilethevesselwasoffGibraltar,afirebrokeoutaboardtheandcausedwaterdamagetothe copra shipment in the amount of US$ 591.38. Petitioner corporation rejected respondent's claimforpaymentoftheandrespondentfiledonJune18,1966intheManilacourtoffirst instanceitscomplaintagainstpetitionerasdefendantforrecoveryofthesameandUS$250.00 attorney'sfeesandexpensesoflitigation. Aftertrial,thelowercourtrejectedpetitioner'sdefensethatdidnotexceed5%ofrespondent's interestinthecargoitwasnotliableunderPhilippineLawforthedamagewhichIrendered judgmentonApril25,1969"orderingthedefendant,EasternShippingLines,Inc.topaytothe plaintiff,MargarineVerkaufsUnionGMBH,thesumofUS$591.38,withinterestatthelegal ratefromthedateofthefilingofthecomplaintuntilfullypaid,plusUS$250.00asattorney's feesandthecostsofthesuit." Inthisreviewonquestionsoflaw,petitionerreiteratesasitsfirstassignmenttoferrorits submittalthatArticle848oftheCodeofCommerce1whichwouldbarclaimsforaveragesnot exceeding5%oftheclaimant'sinterestshouldbeappliedratherthanthelowercourt'sruling thatpetitioner'sbillofladingexpresslycontained"anagreementtothecontrary,"i.e.forthe application of the YorkAntwerp Rules which provide for respondent's fun recovery of the damageloss. TheCourtfindsnoerrorandupholdsthelowercourt'srulingsustainingrespondent'sdamage claimalthoughtheamountthereofdidnotexceed5%ofrespondent'sinterestinthecargoand wouldhavebeenbarredbythecitedarticleoftheCommerceCode.Weholdthatthelower courtcorrectlyruledthecitedcodalarticletobe"notapplicableinthisparticularcaseforthe reasonthatthebilloflading(Exhibit"F")contains"anagreementtothecontrary"foritis

50 expresslyprovidedinthelastsentenceofthefirstparagraph(Exhibit"1A")that"Incaseof average,sameshallbeadjustedaccordingtoYorkAntwerpRulesof1950."Theinsertionof saidconditionisexpresslyauthorizedbyCommonwealthActNo.65whichhasadoptedintoto theU.S.CarriageofGoodsbySeaAct.Now,ithasnotbeenshownthatsaidruleslimitthe recoveryofdamagetocaseswithinacertainpercentageorproportionthatsaiddamagemay beartoclaimant'sinteresteitherinthevesselorcargoasprovidedinArticle848oftheCodeof CommerceOnthecontrary,Rule3ofsaidYorkAntwerpRulesexpresslystatesthat"Damage donetoa shipandcargo,or either ofthem,bywater or otherwise,includingdamageby breachingorscuttlingaburningship,inextinguishingafireonboardtheship,shallbemade goodasgeneralaverage...." ThereisaclearandirreconcilableinconsistencybetweentheYorkAntwerpRulesexpressly adoptedbythepartiesastheircontractunderthebillofladingwhichsustainsrespondent's claimandthecodalarticlecitedbypetitionerwhichwouldbarthesame.Furthermore,as correctly contended by respondent, what is here involved is a contract of adhesion as embodied in the printed bill of lading issued by petitioner for the shipment to which respondentastheconsigneemerelyadhered,havingnochoiceinthematter,andconsequently, anyambiguitythereinmustbeconstruedagainstpetitionerastheauthor. Wefind,however,petitioner'ssecondandonlyotherassignmentoferroragainsttheawardof attorney'sfeesofUS$250.00tobewelltaken.Thetextofthelowercourt'sdecisionstatedno justificationnorreasonfortheawardofattorney'sfeesandshouldthereforebedisallowed.As restatedinBuanvs.Camaganacan2,thegeneralruleisthatitiscontrarytosoundpublic policy to place a penalty on the right to litigate nor should attorney's fees be awarded everytimeapartywinsalawsuit.Hence,Article2208oftheCivilCodeprovidesthat"inthe absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannotberecovered,"savefortheelevenexceptionsthereinexpresslyprovided. Insofarasthepresentcaseisconcerned,thelowercourtmadenofindingthatitfallswithin any of the exceptions that would justify the award for attorney's fees, such as gross and evidentbadfaithinrefusingtosatisfyaplainlyvalid,justanddemandableclaim.Evenunder thebroadeleventhexceptionofthecitedarticlewhichallowstheimpositionofattorney'sfees "inanyothercasewherethecourtdeemsitjustandequitablethatattorney'sfeesandexpenses oflitigationshouldberecovered,"theCourtstressedinBuan,supra,that"theconclusionmust beborneoutbyfindingsoffactsandlaw.Whatisjustandequitableinagivencaseisnota merematteroffeelingbutofdemonstration....Hence,theexerciseofjudicialdiscretioninthe awardofattorney'sfeesunderArticle2208(11)oftheCivilCodedemandsafactual,legalor equitablejustificationuponthebasisofwhichthecourtexercisesitsdiscretion.Withoutsucha justification,theawardisaconclusionwithoutapremise,itsbasisbeingimproperlyleftto speculation and conjecture." The summary award of counsel's fees made in the appealed judgmentmustthereforebesetaside. Afinalobservation.Theappealedjudgmentorderedpetitionertopayrespondentthesumof US$591.38withinterestatthelegalrate(whichweholdtobetherateofsix[6%]percent underArticle2209oftheCivilCodeinforceatthetimeofthejudgmentofApril25,1969) fromthefilingofthecomplaintonJune18,1966untilfullypaid.Petitionerdidnotappeal fromnorquestionthisportionofthejudgmentrequiringthatitpayrespondentcreditorthe damageclaimwithinterestinU.S.currency(withreferencetothegeneralruleofdischarging obligations in Philippine currency measured at the prevailing rate of exchange 3 ). Consequently,wefindnonecessitytomakeanyfurtherpronouncementthereon.Wemerely

51 affirmthejudgmentinU.S.currencyinfavorofrespondentcorporation,aforeigncorporation not engaged in business herein, in view of petitioner's acquiescence therein and view the judgmentasonewhereinthelowercourtsentencedpetitionertopayandremittorespondent asanonresidentforeigncorporationtheamountdueunderthejudgmentinUS.currency. ACCORDINGLY, the appealed judgment is hereby affirmed with the modification that the awardofattorney'sfeesissetaside.Withcostsagainstpetitioner. Makasiar,Fernandez,Guerrero,DeCastroandMelencioHerrera,JJ.,concur.

RepublicofthePhilippines SUPREMECOURT Manila ENBANC G.R.No.L11407October30,1917 FAUSTORUBISOandBONIFACIOGELITO,plaintiffappellee, vs. FLORENTINOE.RIVERA,defendantappellant. FranciscoSevillaforappellant. SalvadorQ.Araulloforappellee. TORRES,J.: ThisappealbybillofexceptionswasfiledbycounselforFlorentinoE.Riveraagainstthe judgmentofSeptember6,1915,inwhichthedefendantandappellantwasorderedtoplaceat thedisposaloftheplaintiffFaustoRubisothepilotboatinlitigation.Nospecialfindingwas madeforcosts. OnApril10,1915,counselforplaintiffbroughtsuitintheCourtoftheFirstInstanceof thiscityandallegedinthecomplaintthathisclientsweretheownersofthepilotboatnamed Valentina, which had been in bad condition since the year 1914 and, on the date of the complaint,wasstrandedintheplacecalledTingloy,ofthemunicipalityofBauan,Batangas; thatthedefendantFlorentinoE.Riveratookchargeorpossessionofsaidvesselwithoutthe knowledgeorconsentoftheplaintiffandrefusedtodeliverittothem,underclaimthathewas theownerthereof;andthatsuchprocedureonthedefendant'spartcausedtheplaintiffsto sufferdamages,notonlybecausetheycouldnotproceedtorepairthevessel,butalsobecause theywereunabletoderiveprofitfromthevoyagesforwhichsaidpilotboatwascustomarily used; and that the net amount of such uncollected profit was P1,750. The complaint terminatedwithapetitionthatjudgmentberenderedbyorderingthedefendanttodeliver saidpilotboattotheplaintiffsandindemnifythemintheamountaforementionedorinsuch amountasshouldbeprovenattrial,andtopaythecosts. Counselforthedefendantenteredageneralandspecificdenialofallthefactssetforth inthecomplaint,withtheexceptionofthoseadmittedinthespecialdefenseandconsistingin thatsaidpilotboatbelongedtotheconcernnamed"GelitoandCo.,"BonifacioGelitobeinga

52 copartnerthereoftotheextentoftwothirds,andtheChinamanSyQui,tothatoftheone third, of the value of said vessel; the subsequently Bonifacio Gelito sold his share to his copartner Sy Qui, as attested by the instrument Exhibit A, registered in the office of the CollectorofCustomsandmadeapartofhisanswer;thatlatersaidChinaman,theabsolute ownerofthevessel,solditinturntothedefendantRivera,accordingtothepublicinstrument, alsoattachedtohisanswerasExhibitB;andthat,forthereason,Riveratookpossessionof said pilotboat Valentina, as its sole owner.He therefore petitioned that the defendant be absolvedfromthecomplaint,withthecostsagainsttheplaintiff. Afterthehearingofthecaseandintroductionofdocumentaryevidence,thejudgmentof September6,1915,wasrendered,fromwhichcounselforthedefendantappealedandmoved foranewtrial.Thismotionwasdeniedandtheappellantexcepted. TherecordshowsittohavebeenfullyproventhatBonifacioGelitosoldhisshareinthe pilotboatValentina,consistingofatwothirdsinteresttherein,totheChinamanSyQui,the coowner of the other onethird interest in said vessel; wherefore this vendor is no longer entitledtoexerciseanyactionwhateverinrespecttotheboatinquestion.Gelitowasoneof the partnership owners of the Valentina, as in fact his name appears in the certificate of protection issued by the Bureau of Customs, and the rights he held are evidenced by the articlesofpartnership;but,thewholeownershipinthevesselhavingbeenconsolidatedin behalfoftheChinamanSyQui,thislatter,intheuseofhisrightasthesoleownerofthe Valentina,soldthisboattoFlorentinoE.RiveraforP2,500,onJanuary4,1915,whichfacts, aresetforthinadeedratifiedonthesamedatebeforeanotary.Thisdocumentwasregistered intheBureauofCustomsonMarch17thofthesameyear. Onthe23dofJanuaryofthatyear,thatis,afterthesaleoftheboattothedefendant Rivera,suithavingbeenbroughtinthejusticeofthepeacecourtagainsttheChinamanSyQui toenforcepaymentofacertainsumofmoney,thelatter'screditorFaustoRubiso,theherein plaintiff,acquiredsaidvesselatapublicauctionsaleandforthesumofP55.45.Thecertificate ofsaleandadjudicationoftheboatinquestionwasissuedbythesheriffonbehalfofFausto Rubiso,intheofficeoftheCollectorofCustoms,onJanuary27ofthesameyearandwasalso enteredinthecommercialregistryonthe14thofMarch,following. SothatthepilotboatValentinawastwicesold:firstprivatelybyitsownerSyQuitothe defendantFlorentinoE.Rivera,onJanuary4,1915,andafterwardsbythesheriffatpublic auctioninconformitywiththeordercontainedinthejudgmentrenderedbythejusticeofthe peace,court,onJanuary23ofthesameyear,againsttheChinamanSyQuiandinbehalfof theplaintiff,FaustoRubiso. ItisundeniablethatthedefendantRiveraacquiredbypurchasethepilotboatValentina onadatepriortothatofthepurchaseandadjudicationmadeatpublicauction,byandon behalfoftheplaintiffRubiso;butitisnolesstruethatthesaleofthevesselbySyQuito FlorentinoE.Rivera,onJanuary4,1915,wasenteredinthecustomsregistryonlyonMarch 17,1915,whileitssaleatpublicauctiontoFaustoRubisoonthe23dofJanuaryofthesame year,1915,wasrecordedintheofficeoftheCollectorofCustomsonthe27thofthesame month,andinthecommercialregistryonthe4thofMarch,following;thatis,thesaleon behalfofthedefendantRiverawaspriortothatmadeatpublicauctiontoRubiso,butthe registrationofthislattersalewaspriorbymanydaystothesalemadetothedefendant. Article573oftheCodeofCommerceprovides,initsfirstparagraph:

53 Merchantvesselsconstitutepropertywhichmaybeacquiredandtransferredby anyofthemeansrecognizedbylaw.Theacquisitionofavesselmustbeincludedina writteninstrument,whichshallnotproduceanyeffectwithregardtothirdpersonsif notrecordedinthecommercialregistry. Sothat,pursuanytotheabovequotedarticle,inscriptioninthecommercialregistrywas indispensable, in order that said acquisition might affect, and produce consequences with respecttothirdpersons. However,sincetheenactmentofActNo.1900,onMay18,1909,saidarticleofthe CodeofCommercewasamended,asappearsbysection2ofthatAct,herebelowtranscribed. Thedocumenting,registering,enrolling,andlicensingofvesselsinaccordance withtheCustomsAdministrativeActandcustomsrulesandregulationsshallbedeemed tobearegistryofvesselswithinthemeaningofthetitletwooftheCodeofCommerce, unlessotherwiseprovidedinsaidCustomsAdministrativeActorinsaidcustomsrules and regulations, and the Insular Collector of Customs shall perform the duties of commercialregisterconcerningtheregisteringofvessels,asdefinedintitletwoofthe CodeofCommerce. Therequisiteofregistrationintheregistry,ofthepurchaseofavessel,isnecessaryand indispensableinorderthatthepurchaser'srightsmaybemaintainedagainstaclaimfiledbya thirdperson.SuchregistrationisrequiredbothbytheCodeofCommerceandbyActNo. 1900.TheamendmentsolelyconsistedinchargingtheInsularCollectorofCustoms,asat present,withthefulfillmentofthedutiesofthecommercialregisterconcerningtheregistering ofvessels;sothattheregistrationofabillofsaleofavesselshallbemadeintheofficeofthe insularCollectorofCustoms,who,sinceMay18,1909,hasbeenperformingthedutiesofthe commercialregisterinplaceofthislatterofficial. Inviewofsaidlegalprovisions,itisundeniablethatthedefendantFlorentinoE.Rivera's rightscannotprevailoverthoseacquiredbyFaustoRubisointheownershipofthepilotboat Valentina, inasmuch as, though the latter's acquisition of the vessel at public auction, on January23,1915,wassubsequenttoitspurchasebythedefendantRivera,neverthelesssaid saleatpublicauctionwasantecedentlyrecordedintheofficeoftheCollectorofCustoms,on January27,andenteredinthecommercialregistryanunnecessaryproceedingonMarch 4th; while the private and voluntary purchase made by Rivera on a prior date was not recordedintheofficeoftheCollectorofCustomsuntilmanydaysafterwards,thatis,notuntil March17,1915. ThelegalrulesetdownintheMercantileCodesubsists,inasmuchastheamendment solelyreferstotheofficialwhoshallmaketheentry;but,withrespecttotherightsofthetwo purchasers,whicheverofthemfirstregisteredhisacquisitionofthevesselistheoneentitledto enjoytheprotectionofthelaw,whichconsidershimtheabsoluteownerofthepurchasedboat, andthislattertobefreeofallencumbranceandallclaimsbystrangersfor,pursuanttoarticle 582 of the said code, after the bill of the judicial sale at auction has been executed and recorded in the commercial registry, all the other liabilities of the vessel in favor of the creditorsshallbeconsideredcanceled.1awphil.net The purchaser at public auction, Fausto Rubiso, who was careful to record his acquisition,opportunelyandonapriordate,has,accordingtothelaw,abetterrightthanthe

54 defendantRiverawhosubsequentlyrecordedhispurchase.Thelatterisathirdperson,who wasdirectlyaffectedbytheregistrationwhichtheplaintiffmadeofhisacquisition. Shipsorvessels,whethermovedbysteamorbysail,partake,toacertainextent,ofthe natureandconditionsofrealproperty,onaccountoftheirvalueandimportanceintheworld commerce;andforthisreasontheprovisionsofarticle573oftheCodeofCommerceare nearlyidenticalwiththoseofarticle1473oftheCivilCode. Withrespecttotheindemnityforlossesanddamages,requestedbytheplaintiff,aside fromthefact,asshownbytheevidence,that,subsequenttothedatewhenthejudgment appealedfromwasrendered,thevesselinquestionemergedunharmedfromtheplacewhere itwasstranded,andwas,atthetimeofthetrial,anchoredintheportofMaricaban,therecord certainlydoesnotfurnishanypositiveevidenceofthelossesanddamagesallegedtohave beenoccasioned.Ontheotherhand,itcannotbeaffirmedthatthedefendantactedinbad faithspecificallybecauseheacquiredthevesselonadatepriortothatofitsacquisitionat publicauctionbytheplaintiffRubiso,who,forthereasonaforestated,isthetrueandsole ownerofsaidpilotboat. Fortheforegoingconsiderations,wherebytheerrorsassignedtothejudgmentappealed fromaredeemedtohavebeenrefuted,itisouropinionthatsaidjudgmentshouldbe,asitis hereby,affirmed,withcostsagainsttheappellant.Soordered. Arellano,C.J.,Johnson,Carson,StreetandMalcolm,JJ.,concur. Araullo,J.,tooknopart.

55