Contractual Effects

8/13/2019 Contractual Effects

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and "C-1", and defendant's own witness, Rafael Altonaga, confirmed plaintiff's testimonyand testified as follows:

Q. In these tickets there are marks "O.K." From what you know, what does thisOK mean?

A. That the space is confirmed.Q. Confirmed for first class?

A. Yes, "first class". (Transcript, p. 169)x x x x x x x x x

Defendant tried to prove by the testimony of its witnesses Luis Zaldariaga and Rafael Altonaga that although plaintiff paid for, and was issued a "first class" airplane ticket, the

ticket was subject to confirmation in Hongkong. The court cannot give credit to thetestimony of said witnesses. Oral evidence cannot prevail over written evidence, andplaintiff's Exhibits "A", "A-l", "B", "B-l", "C" and "C-1" belie the testimony of said witnesses,and clearly show that the plaintiff was issued, and paid for, a first class ticket without anyreservation whatever.

Furthermore, as hereinabove shown, defendant's own witness Rafael Altonagatestified that the reservation for a "first class" accommodation for the plaintiff was confirmed.The court cannot believe that after such confirmation defendant had a verbal understandingwith plaintiff that the "first class" ticket issued to him by defendant would be subject toconfirmation in Hongkong. 23

We have heretofore adverted to the fact that except for a slight difference of a fewpesos in the amount refunded on Carrascoso's ticket, the decision of the Court of FirstInstance was affirmed by the Court of Appeals in all other respects. We hold the view thatsuch a judgment of affirmance has merged the judgment of the lower court. 24 Implicit in thataffirmance is a determination by the Court of Appeals that the proceeding in the Court of

First Instance was free from prejudicial error and "all questions raised by the assignmentsof error and all questions that might have been raised are to be regarded as finallyadjudicated against the appellant". So also, the judgment affirmed "must be regarded asfree from all error". 25 We reached this policy construction because nothing in the decisionof the Court of Appeals on this point would suggest that its findings of fact are in any way atwar with those of the trial court. Nor was said affirmance by the Court of Appeals upon aground or grounds different from those which were made the basis of the conclusions of thetrial court. 26

If, as petitioner underscores, a first-class-ticket holder is not entitled to a first classseat, notwithstanding the fact that seat availability in specific flights is therein confirmed,then an air passenger is placed in the hollow of the hands of an airline. What security thencan a passenger have? It will always be an easy matter for an airline aided by itsemployees, to strike out the very stipulations in the ticket, and say that there was a verbalagreement to the contrary. What if the passenger had a schedule to fulfill? We have longlearned that, as a rule, a written document speaks a uniform language; that spoken word

could be notoriously unreliable. If only to achieve stability in the relations betweenpassenger and air carrier, adherence to the ticket so issued is desirable. Such is the casehere. The lower courts refused to believe the oral evidence intended to defeat thecovenants in the ticket.

The foregoing are the considerations which point to the conclusion that there arefacts upon which the Court of Appeals predicated the fi nding that respondent Carrascosohad a first class ticket and was entitled to a first class seat at Bangkok, which is a stopoverin the Saigon to Beirut leg of the flight. 27 We perceive no "welter of distortions by the Courtof Appeals of petitioner's statement of its position", as charged by petitioner. 28 Nor do wesubscribe to petitioner's accusation that respondent Carrascoso "surreptitiously took a firstclass seat to provoke an issue". 29 And this because, as petitioner states, Carrascoso wentto see the Manager at his office in Bangkok "to confirm my seat and because from Saigon Iwas told again to see the Manager". 30 Why, then, was he allowed to take a first class seatin the plane at Bangkok, if he had no seat? Or, if another had a better right to the seat?

4. Petitioner assails respondent court's award of moral damages. Petitioner'strenchant claim is that Carrascoso's action is planted upon breach of contract; that toauthorize an award for moral damages there must be an averment of fraud or bad

faith;31 and that the decision of the Court of Appeals fails to make a finding of bad faith. Thepivotal allegations in the complaint bearing on this issue are:

3. That ... plaintiff entered into a contract of air carriage with the Philippine AirLines for a valuable consideration, the latter acting as general agents for and inbehalf of the defendant, under which said contract, plaintiff was entitled to, asdefendant agreed to furnish plaintiff, First Class passage on defendant's planeduring the entire duration of plaintiff's tour of Europe with Hongkong as startingpoint up to and until plaintiff's return trip to Manila, ... .4. That, during the first two legs of the trip from Hongkong to Saigon and fromSaigon to Bangkok, defendant furnished to the plaintiff First Class

accommodation but only after protestations, arguments and/or insistence weremade by the plaintiff with defendant's employees.5. That finally, defendant failed to provide First Class passage, but insteadfurnished plaintiff only Tourist Class accommodations from Bangkok to Teheranand/or Casablanca, ... the plaintiff has been compelled by defendant's employeesto leave the First Class accommodation berths at Bangkok after he was alreadyseated .6. That consequently, the plaintiff, desiring no repetition of the inconvenience andembarrassments brought by defendant's breach of contract was forced to take aPan American World Airways plane on his return trip from Madrid to Manila.32

x x x x x x x x x2. That likewise, as a result of defendant's failure to furnish First Class

accommodations aforesaid, plaintiff suffered inconveniences, embarrassments, andhumiliations, thereby causing plaintiff mental anguish, serious anxiety, wounded feelings,social humiliation, and the like injury, resulting in moral damages in the amount of

P30,000.00.33

x x x x x x x x xThe foregoing, in our opinion, substantially aver: First , That there was a contract to

furnish plaintiff a first class passage covering, amongst others, the Bangkok-Teheranleg; Second , That said contract was breached when petitioner failed to furnish first classtransportation at Bangkok; and Third, that there was bad faith when petitioner's employeecompelled Carrascoso to leave his first class accommodation berth "after he was already,seated" and to take a seat in the tourist class, by reason of which he sufferedinconvenience, embarrassments and humiliations, thereby causing him mental anguish,serious anxiety, wounded feelings and social humiliation, resulting in moral damages. It istrue that there is no specific mention of the term bad faith in the complaint. But, theinference of bad faith is there, it may be drawn from the facts and circumstances set forththerein. 34 The contract was averred to establish the relation between the parties. But thestress of the action is put on wrongful expulsion.

Quite apart from the foregoing is that (a) right the start of the trial, respondent's

counsel placed petitioner on guard on what Carrascoso intended to prove: That while sittingin the plane in Bangkok, Carrascoso was ousted by petitioner's manager who gave his seatto a white man; 35 and (b) evidence of bad faith in the fulfillment of the contract waspresented without objection on the part of the petitioner. It is, therefore, unnecessary toinquire as to whether or not there is sufficient averment in the complaint to justify an awardfor moral damages. Deficiency in the complaint, if any, was cured by the evidence. Anamendment thereof to conform to the evidence is not even required. 36 On the question ofbad faith, the Court of Appeals declared:

That the plaintiff was forced out of his seat in the first class compartment ofthe plane belonging to the defendant Air France while at Bangkok, and wastransferred to the tourist class not only without his consent but against his will,has been sufficiently established by plaintiff in his testimony before the court,corroborated by the corresponding entry made by the purser of the plane in hisnotebook which notation reads as follows:

"First-class passenger was forced to go to the tourist classagainst his will, and that the captain refused to intervene",

and by the testimony of an eye-witness, Ernesto G. Cuento, who was a co-passenger. The captain of the plane who was asked by the manager of



defendant company at Bangkok to intervene even refused to do so. It isnoteworthy that no one on behalf of defendant ever contradicted or denied thisevidence for the plaintiff. It could have been easy for defendant to present itsmanager at Bangkok to testify at the trial of the case, or yet to secure hisdisposition; but defendant did neither. 37

The Court of appeals further stated — Neither is there evidence as to whether or not a prior reservation was made

by the white man. Hence, if the employees of the defendant at Bangkok sold afirst-class ticket to him when all the seats had already been taken, surely theplaintiff should not have been picked out as the one to suffer the consequences

and to be subjected to the humiliation and indignity of being ejected from his seatin the presence of others. Instead of explaining to the white man theimprovidence committed by defendant's employees, the manager adopted themore drastic step of ousting the plaintiff who was then safely ensconsced in hisrightful seat. We are strengthened in our belief that this probably was whathappened there, by the testimony of defendant's witness Rafael Altonaga who,when asked to explain the meaning of the letters "O.K." appearing on the ticketsof plaintiff, said "that the space is confirmed for first class. Likewise, ZenaidaFaustino, another witness for defendant, who was the chief of the ReservationOffice of defendant, testified as follows:

"Q How does the person in the ticket-issuing office know whatreservation the passenger has arranged with you?

A They call us up by phone and ask for the confirmation." (t.s.n., p.247, June 19, 1959)

In this connection, we quote with approval what the trial Judge has said on

this point: Why did the, using the words of witness Ernesto G. Cuento,"white man" have a "better right" to the seat occupied by Mr.Carrascoso? The record is silent. The defendant airline did not prove"any better", nay, any right on the part of the "white man" to the "Firstclass" seat that the plaintiff was occupying and for which he paid andwas issued a corresponding "first class" ticket.

If there was a justified reason for the action of the defendant'sManager in Bangkok, the defendant could have easily proven it byhaving taken the testimony of the said Manager by deposition, butdefendant did not do so; the presumption is that evidence willfullysuppressed would be adverse if produced [Sec. 69, par (e), Rules ofCourt]; and, under the circumstances, the Court is constrained to find,as it does find, that the Manager of the defendant airline in Bangkoknot merely asked but threatened the plaintiff to throw him out of the

plane if he did not give up his "first class" seat because the saidManager wanted to accommodate, using the words of the witnessErnesto G. Cuento, the "white man".38

It is really correct to say that the Court of Appeals in the quoted portion firsttranscribed did not use the term "bad faith". But can it be doubted that the recitalof facts therein points to bad faith? The manager not only prevented Carrascosofrom enjoying his right to a first class seat; worse, he imposed his arbitrary will; heforcibly ejected him from his seat, made him suffer the humiliation of having to goto the tourist class compartment - just to give way to another passenger whoseright thereto has not been established. Certainly, this is bad faith. Unless, ofcourse, bad faith has assumed a meaning different from what is understood inlaw. For, "bad faith" contemplates a "state of mind affirmatively operating withfurtive design or with some motive of self-interest or will or for ulterior purpose." 39

And if the foregoing were not yet sufficient, there is the express findingof bad faith in the judgment of the Court of First Instance, thus:

The evidence shows that the defendant violated its contract oftransportation with plaintiff in bad faith, with the aggravatingcircumstances that defendant's Manager in Bangkok went to the extent

of threatening the plaintiff in the presence of many passengers to havehim thrown out of the airplane to give the "first class" seat that he wasoccupying to, again using the words of the witness Ernesto G. Cuento,a "white man" whom he (defendant's Manager) wished toaccommodate, and the defendant has not proven that this "white man"had any "better right" to occupy the "first class" seat that the plaintiffwas occupying, duly paid for, and for which the corresponding "firstclass" ticket was issued by the defendant to him.40

5. The responsibility of an employer for the tortious act of its employees need not beessayed. It is well settled in law.41 For the willful malevolent act of petitioner's manager,

petitioner, his employer, must answer. Article 21 of the Civil Code says: ART. 21. Any person who willfully causes loss or injury to another in amanner that is contrary to morals, good customs or public policy shallcompensate the latter for the damage.

In parallel circumstances, we applied the foregoing legal precept; and, we held thatupon the provisions of Article 2219 (10), Civil Code, moral damages are recoverable. 42

6. A contract to transport passengers is quite different in kind and degree from anyother contractual relation. 43 And this, because of the relation which an air-carrier sustainswith the public. Its business is mainly with the travelling public. It invites people to avail ofthe comforts and advantages it offers. The contract of air carriage, therefore, generates arelation attended with a public duty. Neglect or malfeasance of the carrier's employees,naturally, could give ground for an action for damages.

Passengers do not contract merely for transportation. They have a right to be treatedby the carrier's employees with kindness, respect, courtesy and due consideration. Theyare entitled to be protected against personal misconduct, injurious language, indignities and

abuses from such employees. So it is, that any rule or discourteous conduct on the part ofemployees towards a passenger gives the latter an action for damages against thecarrier. 44

Thus, "Where a steamship company 45 had accepted a passenger's check, it was abreach of contract and a tort, giving a right of action for its agent in the presence of thirdpersons to falsely notify her that the check was worthless and demand payment underthreat of ejection, though the language used was not insulting and she was notejected." 46 And this, because, although the relation of passenger and carrier is "contractualboth in origin and nature" nevertheless "the act that breaks the contract may be also atort". 47 And in another case, "Where a passenger on a railroad train, when the conductorcame to collect his fare tendered him the cash fare to a point where the train was schedulednot to stop, and told him that as soon as the train reached such point he would pay the cashfare from that point to destination, there was nothing in the conduct of the passenger which

justified the conductor in using insulting language to him, as by calling him a lunatic," 48 andthe Supreme Court of South Carolina there held the carrier liable for the mental suffering of

said passenger.1awphîl.nèt Petitioner's contract with Carrascoso is one attended with public duty. The stress ofCarrascoso's action as we have said, is placed upon his wrongful expulsion. This is aviolation of public duty by the petitioner air

Petitioner charges that the finding of the Court of Appeals that the purser made anentry in his notebook reading "First class passenger was forced to go to the tourist classagainst his will, and that the captain refused to intervene" is predicated upon evidence[Carrascoso's testimony above] which is incompetent. We do not think so. The subject ofinquiry is not the entry, but the ouster incident. Testimony on the entry does not come withinthe proscription of the best evidence rule. Such testimony is admissible. 49a

Besides, from a reading of the transcript just quoted, when the dialogue happened,the impact of the startling occurrence was still fresh and continued to be felt. Theexcitement had not as yet died down. Statements then, in this environment, are admissibleas part of the res gestae. 50 For, they grow "out of the nervous excitement and mental andphysical condition of the declarant". 51 The utterance of the purser regarding his entry in thenotebook was spontaneous, and related to the circumstances of the ouster incident. Itstrustworthiness has been guaranteed. 52 It thus escapes the operation of the hearsay rule. Itforms part of the res gestae.



At all events, the entry was made outside the Philippines. And, by an employee ofpetitioner. It would have been an easy matter for petitioner to have contradictedCarrascoso's testimony. If it were really true that no such entry was made, the deposition ofthe purser could have cleared up the matter.

We, therefore, hold that the transcribed testimony of Carrascoso is admissible inevidence.

8. Exemplary damages are well awarded. The Civil Code gives the court amplepower to grant exemplary damages — in contracts and quasi- contracts. The only conditionis that defendant should have "acted in a wanton, fraudulent, reckless, oppressive, ormalevolent manner." 53 The manner of ejectment of respondent Carrascoso from his first

class seat fits into this legal precept. And this, in addition to moral damages.54

9. The right to attorney's fees is fully established. The grant of exemplary damages justifies a similar judgment for attorneys' fees. The least that can be said is that the courtsbelow felt that it is but just and equitable that attorneys' fees be given. 55 We do not intendto break faith with the tradition that discretion well exercised — as it was here — should notbe disturbed.

10. Questioned as excessive are the amounts decreed by both the trial court and theCourt of Appeals, thus: P25,000.00 as moral damages; P10,000.00, by way of exemplarydamages, and P3,000.00 as attorneys' fees. The task of fixing these amounts is primarilywith the trial court. 56 The Court of Appeals did not interfere with the same. The dictates ofgood sense suggest that we give our imprimatur thereto. Because, the facts andcircumstances point to the reasonableness thereof.57

On balance, we say that the judgment of the Court of Appeals does not suffer fromreversible error. We accordingly vote to affirm the same. Costs against petitioner. Soordered.

Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon, Regala, Makalintal, Zaldivar and Castro,JJ., concur.Bengzon, J.P., J., took no part.

Republic of the PhilippinesSUPREME COURT

ManilaSECOND DIVISION

G.R. No. 138060 September 1, 2004 WILLIAM TIU, doing business under the name and style of "D’ Rough Riders," andVIRGILIO TE LAS PIÑASpetitioners,vs.PEDRO A. ARRIESGADO, BENJAMIN CONDOR, SERGIO PEDRANO and PHILIPPINEPHOENIX SURETY AND INSURANCE, INC., respondents.

D E C I S I O N

CALLEJO, SR., J.: This is a petition for review on certiorari under Rule 45 of the Rules of Court from theDecision1 of the Court of Appeals in CA-G.R. CV No. 54354 affirming with modification theDecision2 of the Regional Trial Court, 7th Judicial Region, Cebu City, Branch 20, in CivilCase No. CEB-5963 for breach of contract of carriage, damages and attorney‘s fees, andthe Resolution dated February 26, 1999 denying the motion for reconsideration thereof.The following facts are undisputed:

At about 10:00 p.m. of March 15, 1987, the cargo truck marked "Condor HollowBlocks and General Merchandise" bearing plate number GBP-675 was loadedwith firewood in Bogo, Cebu and left for Cebu City. Upon reaching Sitio Aggies,Poblacion, Compostela, Cebu, just as the truck passed over a bridge, one of itsrear tires exploded. The driver, Sergio Pedrano, then parked along the right sideof the national highway and removed the damaged tire to have it vulcanized at anearby shop, about 700 meters away.3 Pedrano left his helper, Jose Mitante, Jr.to keep watch over the stalled vehicle, and instructed the latter to place a sparetire six fathoms away4 behind the stalled truck to serve as a warning for oncomingvehicles. The truck‘s tail lights were also left on. It was about 12:00 a.m., March16, 1987.

At about 4:45 a.m., D‘ Rough Riders passenger bus with plate number PBP-724 driven byVirgilio Te Laspiñas was cruising along the national highway of Sitio Aggies, Poblacion,Compostela, Cebu. The passenger bus was also bound for Cebu City, and had come fromMaya, Daanbantayan, Cebu. Among its passengers were the Spouses Pedro A. Arriesgadoand Felisa Pepito Arriesgado, who were seated at the right side of the bus, about three (3)or four (4) places from the front seat.

As the bus was approaching the bridge, Laspiñas saw the stalled truck, which was thenabout 25 meters away.5 He applied the breaks and tried to swerve to the left to avoid hittingthe truck. But it was too late; the bus rammed into the truck‘s left rear. The impact damagedthe right side of the bus and left several passengers injured. Pedro Arriesgado lost

consciousness and suffered a fracture in his right colles.6

His wife, Felisa, was brought tothe Danao City Hospital. She was later transferred to the Southern Island Medical Centerwhere she died shortly thereafter.7 Respondent Pedro A. Arriesgado then filed a complaint for breach of contract of carriage,damages and attorney‘s fees before the Regional Trial Court of Cebu City, Branch 20,against the petitioners, D‘ Rough Riders bus operator William Tiu and his driver, Virgilio Te

Laspiñas on May 27, 1987. The respondent alleged that the passenger bus in question wascruising at a fast and high speed along the national road, and that petitioner Laspiñas didnot take precautionary measures to avoid the accident.8 Thus:

6. That the accident resulted to the death of the plaintiff‘s wife, Felisa Pepito Arriesgado, as evidenced by a Certificate of Death, a xerox copy of which ishereto attached as integral part hereof and marked as ANNEX – "A", andphysical injuries to several of its passengers, including plaintiff himself whosuffered a "COLLES FRACTURE RIGHT," per Medical Certificate, a xerox copyof which is hereto attached as integral part hereof and marked as ANNEX – "B"

hereof.7. That due to the reckless and imprudent driving by defendant Virgilio TeLaspiñas of the said Rough Riders passenger bus, plaintiff and his wife, FelisaPepito Arriesgado, failed to safely reach their destination which was Cebu City,the proximate cause of which was defendant-driver‘s failure to observe utmostdiligence required of a very cautious person under all circumstances.8. That defendant William Tiu, being the owner and operator of the said RoughRiders passenger bus which figured in the said accident, wherein plaintiff and hiswife were riding at the time of the accident, is therefore directly liable for thebreach of contract of carriage for his failure to transport plaintiff and his wifesafely to their place of destination which was Cebu City, and which failure in hisobligation to transport safely his passengers was due to and in consequence ofhis failure to exercise the diligence of a good father of the family in the selectionand supervision of his employees, particularly defendant-driver Virgilio TeLaspiñas.9

The respondent prayed that judgment be rendered in his favor and that the petitioners becondemned to pay the following damages:1). To pay to plaintiff, jointly and severally, the amount of P30,000.00 for the

death and untimely demise of plaintiff‘s wife, Felisa Pepito Arriesgado; 2). To pay to plaintiff, jointly and severally, the amount of P38,441.50,

representing actual expenses incurred by the plaintiff in connection with thedeath/burial of plaintiff‘s wife; 3). To pay to plaintiff, jointly and severally, the amount of P1,113.80, representing

medical/hospitalization expenses incurred by plaintiff for the injuries sustained byhim;4). To pay to plaintiff, jointly and severally, the amount of P50,000.00 for moral

damages;5). To pay to plaintiff, jointly and severally, the amount of P50,000.00 by way of

exemplary damages;6). To pay to plaintiff, jointly and severally, the amount of P20,000.00 for

attorney‘s fees; 7). To pay to plaintiff, jointly and severally, the amount of P5,000.00 for litigationexpenses.



PLAINTIFF FURTHER PRAYS FOR SUCH OTHER RELIEFS AND REMEDIESIN LAW AND EQUITY.10

The petitioners, for their part, filed a Third-Party Complaint11 on August 21, 1987 against thefollowing: respondent Philippine Phoenix Surety and Insurance, Inc. (PPSII), petitioner Tiu‘sinsurer; respondent Benjamin Condor, the registered owner of the cargo truck; andrespondent Sergio Pedrano, the driver of the truck. They alleged that petitioner Laspiñaswas negotiating the uphill climb along the national highway of Sitio Aggies, Poblacion,Compostela, in a moderate and normal speed. It was further alleged that the truck wasparked in a slanted manner, its rear portion almost in the middle of the highway, and that noearly warning device was displayed. Petitioner Laspiñas promptly applied the brakes and

swerved to the left to avoid hitting the truck head-on, but despite his efforts to avoiddamage to property and physical injuries on the passengers, the right side portion of thebus hit the cargo truck‘s left rear. The petitioners further alleged, thus:

5. That the cargo truck mentioned in the aforequoted paragraph is owned andregistered in the name of the third-party defendant Benjamin Condor and was leftunattended by its driver Sergio Pedrano, one of the third-party defendants, at thetime of the incident;6. That third-party defendant Sergio Pedrano, as driver of the cargo truck withmarked (sic) "Condor Hollow Blocks & General Merchandise," with Plate No.GBP-675 which was recklessly and imprudently parked along the nationalhighway of Compostela, Cebu during the vehicular accident in question, andthird-party defendant Benjamin Condor, as the registered owner of the cargotruck who failed to exercise due diligence in the selection and supervision ofthird-party defendant Sergio Pedrano, are jointly and severally liable to the third-party plaintiffs for whatever liability that may be adjudged against said third-party

plaintiffs or are directly liable of (sic) the alleged death of plaintiff‘s wife; 7. That in addition to all that are stated above and in the answer which areintended to show reckless imprudence on the part of the third-party defendants,the third-party plaintiffs hereby declare that during the vehicular accident inquestion, third-party defendant was clearly violating Section 34, par. (g) of theLand Transportation and Traffic Code…

… 10. That the aforesaid passenger bus, owned and operated by third-party plaintiffWilliam Tiu, is covered by a common carrier liability insurance with Certificate ofCover No. 054940 issued by Philippine Phoenix Surety and Insurance, Inc., CebuCity Branch, in favor of third-party plaintiff William Tiu which covers the periodfrom July 22, 1986 to July 22, 1987 and that the said insurance coverage wasvalid, binding and subsisting during the time of the aforementioned incident(Annex "A" as part hereof);11. That after the aforesaid alleged incident, third-party plaintiff notified third-party

defendant Philippine Phoenix Surety and Insurance, Inc., of the alleged incidenthereto mentioned, but to no avail;12. That granting, et arguendo et arguendi, if herein third-party plaintiffs will beadversely adjudged, they stand to pay damages sought by the plaintiff andtherefore could also look up to the Philippine Phoenix Surety and Insurance, Inc.,for contribution, indemnification and/or reimbursement of any liability or obligationthat they might [be] adjudged per insurance coverage duly entered into by andbetween third-party plaintiff William Tiu and third-party defendant PhilippinePhoenix Surety and Insurance, Inc.;…12

The respondent PPSII, for its part, admitted that it had an existing contract with petitionerTiu, but averred that it had already attended to and settled the claims of those who wereinjured during the incident.13 It could not accede to the claim of respondent Arriesgado, assuch claim was way beyond the scheduled indemnity as contained in the contract ofinsurance.14

After the parties presented their respective evidence, the trial court ruled in favor ofrespondent Arriesgado. The dispositive portion of the decision reads:

WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor ofplaintiff as against defendant William Tiu ordering the latter to pay the plaintiff thefollowing amounts:

1 - The sum of FIFTY THOUSAND PESOS (P50,000.00) as moral

damages;2 - The sum of FIFTY THOUSAND PESOS (P50,000.00) as exemplary

damages;3 - The sum of THIRTY-EIGHT THOUSAND FOUR HUNDREDFORTY-ONE PESOS (P38,441.00) as actual damages;4 - The sum of TWENTY THOUSAND PESOS (P20,000.00) as

attorney‘s fees;5 - The sum of FIVE THOUSAND PESOS (P5,000.00) as costs of suit;

SO ORDERED.15 According to the trial court, there was no dispute that petitioner William Tiu was engaged inbusiness as a common carrier, in view of his admission that D‘ Rough Rider passenger buswhich figured in the accident was owned by him; that he had been engaged in thetransportation business for 25 years with a sole proprietorship; and that he owned 34buses. The trial court ruled that i f petitioner Laspiñas had not been driving at a fast pace, hecould have easily swerved to the left to avoid hitting the truck, thus, averting the unfortunateincident. It then concluded that petitioner Laspiñas was negligent.The trial court also ruled that the absence of an early warning device near the place wherethe truck was parked was not sufficient to impute negligence on the part of respondentPedrano, since the tail lights of the truck were fully on, and the vicinity was well lighted bystreet lamps.16 It also found that the testimony of petitioner Tiu, that he based the selectionof his driver Laspiñas on efficiency and in -service training, and that the latter had been so

far an efficient and good driver for the past six years of his employment, was insufficient toprove that he observed the diligence of a good father of a family in the selection andsupervision of his employees.

After the petitioner‘s motion for reconsideration of the said decision was denied, thepetitioners elevated the case to the Court of Appeals on the following issues:

I WHETHER THIRD PARTY DEFENDANT SERGIO PEDRANO WASRECKLESS AND IMPRUDENT WHEN HE PARKED THE CARGO TRUCK IN

AN OBLIQUE MANNER;II WHETHER THE THIRD PARTY DEFENDANTS ARE JOINTLY ANDSEVERALLY LIABLE DIRECTLY TO PLAINTIFF-APPELLEE OR TODEFENDANTS-APPELLANTS FOR WHATEVER LIABILITY THAT MAY BE

ADJUDGED TO THE SAID DEFENDANTS-APPELLANTS;III WHETHER DEFENDANT-APPELLANT VIRGILIO TE LASPIÑAS WASGUILTY OF GROSS NEGLIGENCE;IV WHETHER DEFENDANT-APPELLANT WILLIAM TIU HAD EXERCISED THE

DUE DILIGENCE OF A GOOD FATHER OF A FAMILY IN THE SELECTION AND SUPERVISION OF HIS DRIVERS;V GRANTING FOR THE SAKE OF ARGUMENT THAT DEFENDANT-

APPELLANT WILLIAM TIU IS LIABLE TO PLAINTIFF-APPELLEE, WHETHERTHERE IS LEGAL AND FACTUAL BASIS IN AWARDING EXCESSIVE MORALDAMAGES, EX[E]MPLARY DAMAGES, ATTORNEY‘S FEES AND LITIGATIONEXPENSES TO PLAINTIFF-APPELLEE;VI WHETHER THIRD PARTY DEFENDANT PHILIPPINE PHOENIX SURETY

AND INSURANCE, INC. IS LIABLE TO DEFENDANT- APPELLANT WILLIAMTIU.17

The appellate court rendered judgment affirming the trial court‘s decision with themodification that the awards for moral and exemplary damages were reduced to P25,000.

The dispositive portion reads:WHEREFORE, the appealed Decision dated November 6, 1995 is herebyMODIFIED such that the awards for moral and exemplary damages are eachreduced to P25,000.00 or a total of P50,000.00 for both. The judgment is

AFFIRMED in all other respects.SO ORDERED.18



According to the appellate court, the action of respondent Arriesgado was based not onquasi-delict but on breach of contract of carriage. As a common carrier, it was incumbentupon petitioner Tiu to prove that extraordinary diligence was observed in ensuring thesafety of passengers during transportation. Since the latter failed to do so, he should beheld liable for respondent Arriesgado‘s claim. The CA also ruled that no evidence waspresented against the respondent PPSII, and as such, it could not be held liable forrespondent Arriesgado‘s claim, nor for contribution, indemnification and/or reimbursementin case the petitioners were adjudged liable.The petitioners now come to this Court and ascribe the following errors committed by theappellate court:

I. THE HONORABLE COURT OF APPEALS ERRED IN NOT DECLARINGRESPONDENTS BENJAMIN CONDOR AND SERGIO PEDRANO GUILTY OFNEGLIGENCE AND HENCE, LIABLE TO RESPONDENT PEDRO A.

ARRIESGADO OR TO PETITIONERS FOR WHATEVER LIABILITY THAT MAYBE ADJUDGED AGAINST THEM.II. THE HONORABLE COURT OF APPEALS ERRED IN FINDINGPETITIONERS GUILTY OF NEGLIGENCE AND HENCE, LIABLE TORESPONDENT PEDRO A. ARRIESGADO.III. THE HONORABLE COURT OF APPEALS ERRED IN FINDING PETITIONERWILLIAM TIU LIABLE FOR EXEMPLARY DAMAGES, ATTORNEY‘S FEES ANDLITIGATION EXPENSES.IV. THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDINGRESPONDENT PHILIPPINE PHOENIX SURETY AND INSURANCE, INC.LIABLE TO RESPONDENT PEDRO A. ARRIESGADO OR TO PETITIONERWILLIAM TIU.19

According to the petitioners, the appellate court erred in failing to appreciate the absence ofan early warning device and/or built-in reflectors at the front and back of the cargo truck, inclear violation of Section 34, par. (g) of the Land Transportation and Traffic Code. Theyaver that such violation is only a proof of respondent Pedrano‘s negligence, as providedunder Article 2185 of the New Civil Code. They also question the appellate court‘s failure totake into account that the truck was parked in an oblique manner, its rear portion almost atthe center of the road. As such, the proximate cause of the incident was the grossrecklessness and imprudence of respondent Pedrano, creating the presumption ofnegligence on the part of respondent Condor in supervising his employees, whichpresumption was not rebutted. The petitioners then contend that respondents Condor andPedrano should be held jointly and severally liable to respondent Arriesgado for thepayment of the latter‘s claim. The petitioners, likewise, aver that expert evidence should have been presented to provethat petitioner Laspiñas was driving at a very fast speed, and that the CA could not reachsuch conclusion by merely considering the damages on the cargo truck. It was also pointed

out that petitioner Tiu presented evidence that he had exercised the diligence of a goodfather of a family in the selection and supervision of his drivers.The petitioners further allege that there is no legal and factual basis to require petitioner Tiuto pay exemplary damages as no evidence was presented to show that the latter acted in afraudulent, reckless and oppressive manner, or that he had an active participation in thenegligent act of petitioner Laspiñas.Finally, the petitioners contend that respondent PPSII admitted in its answer that while ithad attended to and settled the claims of the other injured passengers, respondent

Arriesgado‘s claim remained unsettled as it was beyond the scheduled indemnity under theinsurance contract. The petitioners argue that said respondent PPSII should have settledthe said claim in accordance with the scheduled indemnity instead of just denying thesame.On the other hand, respondent Arriesgado argues that two of the issues raised by thepetitioners involved questions of fact, not reviewable by the Supreme Court: the finding ofnegligence on the part of the petitioners and their liability to him; and the award ofexemplary damages, attorney‘s fees and litigation expenses in his favor. Invoking the

principle of equity and justice, respondent Arriesgado pointed out that if there was an errorto be reviewed in the CA decision, it should be geared towards the restoration of the moral

and exemplary damages to P50,000 each, or a total of P100,000 which was reduced by the

Court of Appeals to P25,000 each, or a total of only P50,000.

Respondent Arriesgado also alleged that respondents Condor and Pedrano, andrespondent Phoenix Surety, are parties with whom he had no contract of carriage, and hadno cause of action against. It was pointed out that only the petitioners needed to be sued,as driver and operator of the ill-fated bus, on account of their failure to bring the ArriesgadoSpouses to their place of destination as agreed upon in the contract of carriage, using theutmost diligence of very cautious persons with due regard for all circumstances.Respondents Condor and Pedrano point out that, as correctly ruled by the Court of

Appeals, the proximate cause of the unfortunate incident was the fast speed at which

petitioner Laspiñas was driving the bus owned by petitioner Tiu. According to therespondents, the allegation that the truck was not equipped with an early warning devicecould not in any way have prevented the incident from happening. It was also pointed outthat respondent Condor had always exercised the due diligence required in the selectionand supervision of his employees, and that he was not a party to the contract of carriagebetween the petitioners and respondent Arriesgado.Respondent PPSII, for its part, alleges that contrary to the allegation of petitioner Tiu, i tsettled all the claims of those injured in accordance with the insurance contract. It furtheraver s that it did not deny respondent Arriesgado‘s claim, and emphasizes that its liabilityshould be within the scheduled limits of indemnity under the said contract. The respondentconcludes that while it is true that insurance contracts are contracts of indemnity, themeasure of the insurer‘s liability is determined by the insured‘s compliance with the termsthereof.

The Court’s Ruling At the outset, it must be stressed that this Court is not a trier of facts.20 Factual findings of

the Court of Appeals are final and may not be reviewed on appeal by this Court, exceptwhen the lower court and the CA arrived at diverse factual findings.21 The petitioners in thiscase assail the finding of both the trial and the appellate courts that petitioner Laspiñas wasdriving at a very fast speed before the bus owned by petitioner Tiu collided with respondentCondor‘s stalled truck. This is clearly one of fact, not reviewable by the Court in a petitionfor review under Rule 45.22 On this ground alone, the petition is destined to fail.However, considering that novel questions of law are likewise involved, the Court resolvesto examine and rule on the merits of the case.Petiti one r Las piñas

Was negligent in dr iv ing

The Ill-fated bus In his testimony before the trial court, petitioner Laspiñas claimed that he was traversing thetwo-lane road at Compostela, Cebu at a speed of only forty (40) to fifty (50) kilometers perhour before the incident occurred.23 He also admitted that he saw the truck which was

parked in an "oblique position" at about 25 meters before impact,

24

and tried to avoid hittingit by swerving to the left. However, even in the absence of expert evidence, the damagesustained by the truck25 itself supports the finding of both the trial court and the appellatecourt, that the D‘ Rough Rider bus driven by petitioner Laspiñas was traveling at a fastpace. Since he saw the stalled truck at a distance of 25 meters, petitioner Laspiñas hadmore than enough time to swerve to his left to avoid hitting it; that is, if the speed of the buswas only 40 to 50 kilometers per hour as he claimed. As found by the Court of Appeals, it iseasier to believe that petitioner Laspiñas was driving at a very fast speed, since at 4:45a.m., the hour of the accident, there were no oncoming vehicles at the opposite direction.Petitioner Laspiñas could have swerved to the left lane with proper clearance, and, thus,could have avoided the truck.26 Instinct, at the very least, would have prompted him to applythe breaks to avert the impending disaster which he must have foreseen when he caughtsight of the stalled truck. As we had occasion to reiterate:

A man must use common sense, and exercise due reflection in all his acts; it ishis duty to be cautious, careful and prudent, if not from instinct, then through fearof recurring punishment. He is responsible for such results as anyone mightforesee and for acts which no one would have performed except through culpable



abandon. Otherwise, his own person, rights and property, and those of his fellowbeings, would ever be exposed to all manner of danger and injury. 27

We agree with the following findings of the trial court, which were affirmed by the CA onappeal:

A close study and evaluation of the testimonies and the documentary proofssubmitted by the parties which have direct bearing on the issue of negligence,this Court as shown by preponderance of evidence that defendant Virgilio TeLaspiñas failed to observe extraordinary diligence as a driver of the commoncarrier in this case. It is quite hard to accept his version of the incident that he didnot see at a reasonable distance ahead the cargo truck that was parked when the

Rough Rider [Bus] just came out of the bridge which is on an (sic) [more]elevated position than the place where the cargo truck was parked. With itsheadlights fully on, defendant driver of the Rough Rider was in a vantage positionto see the cargo truck ahead which was parked and he could just easily haveavoided hitting and bumping the same by maneuvering to the left without hittingthe said cargo truck. Besides, it is (sic) shown that there was still much room orspace for the Rough Rider to pass at the left lane of the said national highwayeven if the cargo truck had occupied the entire right lane thereof. It is not true thatif the Rough Rider would proceed to pass through the left lane it would fall into acanal considering that there was much space for it to pass without hitting andbumping the cargo truck at the left lane of said national highway. The records,further, showed that there was no incoming vehicle at the opposite lane of thenational highway which would have prevented the Rough Rider from not swervingto its left i n order to avoid hitting and bumping the parked cargo truck. But theevidence showed that the Rough Rider instead of swerving to the still spacious

left lane of the national highway plowed directly into the parked cargo truck hittingthe latter at its rear portion; and thus, the (sic) causing damages not only toherein plaintiff but to the cargo truck as well.28

Indeed, petitioner Laspiñas‘ negligence in driving the bus is apparent in the records. By hisown admission, he had just passed a bridge and was traversing the highway ofCompostela, Cebu at a speed of 40 to 50 kilometers per hour before the collision occurred.The maximum speed allowed by law on a bridge is only 30 kilometers per hour.29 And, ascorrectly pointed out by the trial court, petitioner Laspiñas also violated Section 35 of theLand Transportation and Traffic Code, Republic Act No. 4136, as amended:1avvphil.net

Sec. 35. Restriction as to speed . – (a) Any person driving a motor vehicle on ahighway shall drive the same at a careful and prudent speed, not greater nor lessthan is reasonable and proper, having due regard for the traffic, the width of thehighway, and or any other condition then and there existing; and no person shalldrive any motor vehicle upon a highway at such speed as to endanger the life,limb and property of any person, nor at a speed greater than will permit him tobring the vehicle to a s top within the assured clear distance ahead.30

Under Article 2185 of the Civil Code, a person driving a vehicle is presumed negligent if atthe time of the mishap, he was violating any traffic regulation.31 Petit ioner Tiu failed to

Overcome the presumpt ion

Of negl igence against him as

One engaged in the business

Of common carr iage The rules which common carriers should observe as to the safety of their passengers areset forth in the Civil Code, Articles 1733,32 175533 and 1756.34 In this case, respondent

Arriesgado and his deceased wife contracted with petitioner Tiu, as owner and operator ofD‘ Rough Riders bus service, for transportation from Maya, Daanbantayan, Cebu, to CebuCity for the price of P18.00.35 It is undisputed that the respondent and his wife were notsafely transported to the destination agreed upon. In actions for breach of contract, only theexistence of such contract, and the fact that the obligor, in this case the common carrier,failed to transport his passenger safely to his destination are the matters that need to beproved.36 This is because under the said contract of carriage, the petitioners assumed theexpress obligation to transport the respondent and his wife to their destination safely and to

observe extraordinary diligence with due regard for all circumstances.37 Any injury sufferedby the passengers in the course thereof is immediately attributable to the negligence of thecarrier.38 Upon the happening of the accident, the presumption of negligence at once arises,and it becomes the duty of a common carrier to prove that he observed extraordinarydiligence in the care of his passengers.39 It must be stressed that in requiring the highestpossible degree of diligence from common carriers and in creating a presumption ofnegligence against them, the law compels them to curb the recklessness of their drivers.40 While evidence may be submitted to overcome such presumption of negligence, it must beshown that the carrier observed the required extraordinary diligence, which means that thecarrier must show the utmost dil igence of very cautious persons as far as human care and

foresight can provide, or that the accident was caused by fortuitous event.41

As correctlyfound by the trial court, petitioner Tiu failed to conclusively rebut such presumption. Thenegligence of petitioner Laspiñas as driver of the passenger bus is, thus, binding againstpetitioner Tiu, as the owner of the passenger bus engaged as a common carrier.42 The Doctr ine of

Last Clear Chance

Is Inappli cable in the

Case at Bar Contrary to the petitioner‘s contention, the principle of last clear chance is inapplicable inthe instant case, as it only applies in a suit between the owners and drivers of two collidingvehicles. It does not arise where a passenger demands responsibility from the carrier toenforce its contractual obligations, for it would be inequitable to exempt the negligent driverand its owner on the ground that the other driver was likewise guilty of negligence.43 Thecommon law notion of last clear chance permitted courts to grant recovery to a plaintiff whohas also been negligent provided that the defendant had the last clear chance to avoid the

casualty and failed to do so. Accordingly, it is difficult to see what role, if any, the commonlaw of last clear chance doctrine has to play in a jurisdiction where the common law conceptof contributory negligence as an absolute bar to recovery by the plaintiff, has itself beenrejected, as it has been in Article 2179 of the Civil Code.44 Thus, petitioner Tiu cannot escape liability for the death o f respondent Arriesgado‘s wifedue to the negligence of petitioner Laspiñas, his employee, on this score.Respondents Pedrano and

Condor were l ikewise

Negligent In Phoenix Construction, Inc. v. Intermediate Appellate Court,45 where therein respondentDionisio sustained injuries when his vehicle rammed against a dump truck parked askew,the Court ruled that the improper parking of a dump truck without any warning lights orreflector devices created an unreasonable risk for anyone driving within the vicinity, and forhaving created such risk, the truck driver must be held responsible. In ruling against thepetitioner therein, the Court elucidated, thus:

… In our view, Dionisio‘s negligence, although later in point of time than the truckdriver‘s negligence, and therefore closer to the accident, was not an efficientintervening or independent cause. What the petitioners describe as an"intervening cause" was no more than a foreseeable consequence of the riskcreated by the negligent manner in which the truck driver had parked the dumptruck. In other words, the petitioner truck driver owed a duty to private respondentDionisio and others similarly situated not to impose upon them the very risk thetruck driver had created. Dionisio‘s negligence was not that of an independentand overpowering nature as to cut, as it were, the chain of causation in factbetween the improper parking of the dump truck and the accident, nor to severthe juris vinculum of liability. …

… We hold that private respondent Dionisio‘s negligence was "only contributory,"that the "immediate and proximate cause" of the injury remained the truck driver‘s"lack of due care."…46

In this case, both the trial and the appellate courts failed to consider that respondentPedrano was also negligent in leaving the truck parked askew without any warning lights orreflector devices to alert oncoming vehicles, and that such failure created the presumption



of negligence on the part of his employer, respondent Condor, in supervising his employeesproperly and adequately. As we ruled in Poblete v. Fabros:47

It is such a firmly established principle, as to have virtually formed part of the lawitself, that the negligence of the employee gives rise to the presumption ofnegligence on the part of the employer. This is the presumed negligence in theselection and supervision of employee. The theory of presumed negligence, incontrast with the American doctrine of respondeat superior, where the negligenceof the employee is conclusively presumed to be the negligence of the employer,is clearly deducible from the last paragraph of Article 2180 of the Civil Codewhich provides that the responsibility therein mentioned shall cease if the

employers prove that they observed all the diligence of a good father of a familyto prevent damages. …48

The petitioners were correct in invoking respondent Pedrano‘s failure to observe Article IV,Section 34(g) of the Rep. Act No. 4136, which provides:1avvphil.net

(g) Lights when parked or disabled. – Appropriate parking lights or flares visibleone hundred meters away shall be displayed at a corner of the vehicle wheneversuch vehicle is parked on highways or in places that are not well-lighted or isplaced in such manner as to endanger passing traffic.

The manner in which the truck was parked clearly endangered oncoming traffic on bothsides, considering that the tire blowout which stalled the truck in the first place occurred inthe wee hours of the morning. The Court can only now surmise that the unfortunate incidentcould have been averted had respondent Condor, the owner of the truck, equipped the saidvehicle with lights, flares, or, at the very least, an early warning device.49 Hence, we cannotsubscribe to respondents Condor and Pedrano‘s claim that they should be absolved fromliability because, as found by the trial and appellate courts, the proximate cause of the

collision was the fast speed at which petitioner Laspiñas drove the bus. To accept thisproposition would be to come too close to wiping out the fundamental principle of law that aman must respond for the foreseeable consequences of his own negligent act or omission.Indeed, our law on quasi-delicts seeks to reduce the risks and burdens of living in societyand to allocate them among its members. To accept this proposition would be to weakenthe very bonds of society.50 The Liabi l i ty of

Respon dent PPSII

as Insu rer The trial court in this case did not rule on the liability of respondent PPSII, while theappellate court ruled that, as no evidence was presented against it, the insurance companyis not liable.

A perusal of the records will show that when the petitioners filed the Third-Party Complaintagainst respondent PPSII, they failed to attach a copy of the terms of the insurance contractitself. Only Certificate of Cover No. 05494051 issued in favor of "Mr. William Tiu, Lahug,Cebu City" signed by Cosme H. Boniel was appended to the third-party complaint. The dateof issuance, July 22, 1986, the period of i nsurance, from July 22, 1986 to July 22, 1987, aswell as the following items, were also indicated therein:In its Answer 53 to the Third-Party Complaint, the respondent PPSII admitted the existenceof the contract of insurance, in view of its failure to specifically deny the same as requiredunder then Section 8(a), Rule 8 of the Rules of Court,54 which reads:

Sec. 8. How to contest genuineness of such documents. When an action ordefense is founded upon a written instrument copied in or attached to thecorresponding pleading as provided in the preceding section, the genuinenessand due execution of the instrument shall be deemed admitted unless theadverse party, under oath, specifically denies them, and sets forth what he claimsto be the facts; but the requirement of an oath does not apply when the adverseparty does not appear to be a party to the instrument or when compliance with anorder for inspection of the original instrument is refused.

In fact, respondent PPSII did not dispute the existence of such contract, and admitted that itwas liable thereon. It claimed, however, that it had attended to and settled the claims ofthose injured during the incident, and set up the following as special affirmative defenses:

Third party defendant Philippine Phoenix Surety and Insurance, Inc. herebyreiterates and incorporates by way of reference the preceding paragraphs andfurther states THAT:-

8. It has attended to the claims of Vincent Canales, Asuncion Batiancilaand Neptali Palces who sustained injuries during the incident inquestion. In fact, it settled financially their claims per vouchers dulysigned by them and they duly executed Affidavit[s] of Desistance to thateffect, xerox copies of which are hereto attached as Annexes 1, 2, 3, 4,5, and 6 respectively;9. With respect to the claim of plaintiff, herein answering third party

defendant through its authorized insurance adjuster attended to saidclaim. In fact, there were negotiations to that effect. Only that it cannotaccede to the demand of said claimant considering that the claim wasway beyond the scheduled indemnity as per contract entered into withthird party plaintiff William Tiu and third party defendant (PhilippinePhoenix Surety and Insurance, Inc.). Third party Plaintiff William Tiuknew all along the limitation as earlier stated, he being an old hand inthe transportation business;55…

Considering the admissions made by respondent PPSII, the existence of the insurancecontract and the salient terms thereof cannot be dispatched. It must be noted that after filingits answer, respondent PPSII no longer objected to the presentation of evidence byrespondent Arriesgado and the insured petitioner Tiu. Even in its Memorandum56 before theCourt, respondent PPSII admitted the existence of the contract, but averred as follows:

Petitioner Tiu is insisting that PPSII is liable to him for contribution,indemnification and/or reimbursement. This has no basis under the contract.

Under the contract, PPSII will pay all sums necessary to discharge liability of theinsured subject to the limits of liability but not to exceed the limits of liability as sostated in the contract. Also, it is stated in the contract that in the event of accidentinvolving indemnity to more than one person, the limits of liability shall not exceedthe aggregate amount so specified by law to all persons to be indemnified.57

As can be gleaned from the Certificate of Cover, such insurance contract was issuedpursuant to the Compulsory Motor Vehicle Liability Insurance Law. It was expresslyprovided therein that the limit of the insurer‘s liability for each person wasP12,000, while thelimit per accident was pegged at P50,000. An insurer in an indemnity contract for third partyliability is directly li able to the injured party up to the extent specified in the agreement but itcannot be held solidarily liable beyond that amount.58 The respondent PPSII could not then

just deny petitioner Tiu‘s claim; it should have paid P12,000 for the death of Felisa Arriesgado,59 and respondent Arriesgado‘s hospitalization expenses of P1,113.80, whichthe trial court found to have been duly supported by receipts. The total amount of theclaims, even when added to that of the other injured passengers which the respondentPPSII claimed to have settled,60 would not exceed the P50,000 limit under the insuranceagreement.Indeed, the nature of Compulsory Motor Vehicle Liability Insurance is such that it isprimarily intended to provide compensation for the death or bodily injuries suffered byinnocent third parties or passengers as a result of the negligent operation and use of motorvehicles. The victims and/or their dependents are assured of immediate financialassistance, regardless of the financial capacity of motor vehicle owners.61 As the Court,speaking through Associate Justice Leonardo A. Quisumbing, explained in GovernmentService Insurance System v. Court of Appeals:62

However, although the victim may proceed directly against the insurer forindemnity, the third party liability is only up to the extent of the insurance policyand those required by law. While it is true that where the insurance contractprovides for indemnity against liability to third persons, and such persons candirectly sue the insurer, the direct liability of the insurer under indemnity contractsagainst third party liability does not mean that the insurer can be held li able insolidum with the insured and/or the other parties found at fault. For the liability ofthe insurer is based on contract; that of the insured carrier or vehicle owner isbased on tort. …



Obviously, the insurer could be held liable only up to the extent of what wasprovided for by the contract of insurance, in accordance with the CMVLI law. Atthe time of the incident, the schedule of indemnities for death and bodily injuries,professional fees and other charges payable under a CMVLI coverage wasprovided for under the Insurance Memorandum Circular (IMC) No. 5-78 whichwas approved on November 10, 1978. As therein provided, the maximumindemnity for death was twelve thousand (P12,000.00) pesos per victim. Theschedules for medical expenses were also provided by said IMC, specifically inparagraphs (C) to (G).63

Damages to be

Awarded The trial court correctly awarded moral damages in the amount of P50,000 in favor ofrespondent Arriesgado. The award of exemplary damages by way of example or correctionof the public good,64 is likewise in order. As the Court ratiocinated in Kapalaran Bus Line v.Coronado:65

…While the immediate beneficiaries of the standard of extraordinary diligence

are, of course, the passengers and owners of cargo carried by a common carrier,they are not the only persons that the law seeks to benefit. For i f common carrierscarefully observed the statutory standard of extraordinary diligence in respect oftheir own passengers, they cannot help but simultaneously benefit pedestriansand the passengers of other vehicles who are equally entitled to the safe andconvenient use of our roads and highways. The law seeks to stop and preventthe slaughter and maiming of people (whether passengers or not) on ourhighways and buses, the very size and power of which seem to inflame the mindsof their drivers. Article 2231 of the Civil Code explicitly authorizes the imposition

of exemplary damages in cases of quasi-delicts "if the defendant acted with grossnegligence."…66 The respondent Pedro A. Arriesgado, as the surviving spouse and heir of Felisa

Arriesgado, is entitled to indemnity in the amount of P50,000.00.67 The petitioners, as well as the respondents Benjamin Condor and Sergio Pedrano are

jointly and severally liable for said amount, conformably with the following pronouncementof the Court in Fabre, Jr. vs. Court of Appeals:68

The same rule of liability was applied in situations where the negligence of thedriver of the bus on which plaintiff was riding concurred with the negligence of athird party who was the driver of another vehicle, thus causing an accident. In

Anuran v. Buño, Batangas Laguna Tayabas Bus Co. v. Intermediate AppellateCourt, and Metro Manila Transit Corporation v. Court of Appeals, the buscompany, its driver, the operator of the other vehicle and the driver of the vehiclewere jointly and severally held liable to the injured passenger or the latter‘s heirs.The basis of this allocation of liability was explained in Viluan v. Court of Appeals,thus:

"Nor should it make difference that the liability of petitioner [bus owner]springs from contract while that of respondents [owner and driver ofother vehicle] arises from quasi-delict. As early as 1913, we alreadyruled in Gutierrez vs. Gutierrez, 56 Phil. 177, that in case of injury to apassenger due to the negligence of the driver of the bus on which hewas riding and of the driver of another vehicle, the drivers as well asthe owners of the two vehicles are jointly and severally liable fordamages. Some members of the Court, though, are of the view thatunder the circumstances they are liable on quasi-delict."69

IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED. TheDecision of the Court of Appeals isAFFIRMED with MODIFICATIONS:

(1) Respondent Philippine Phoenix Surety and Insurance, Inc. and petitionerWilliam Tiu are ORDERED to pay, jointly and severally, respondent Pedro A.

Arriesgado the total amount of P13,113.80;(2) The petitioners and the respondents Benjamin Condor and Sergio Pedranoare ORDERED to pay, jointly and severally, respondent Pedro A.

Arriesgado P50,000.00 as indemnity; P26,441.50 as actual

damages; P50,000.00 as moral damages; P50,000.00 as exemplary damages;and P20,000.00 as attorney‘s fees.

SO ORDERED. Puno

* , Austria-Martinez

** , Tinga, and Chico-Nazario, JJ., concur.

EXTRAORDINARY DILIGENCE:

FIRST DIVISION[G.R. No. 153563. February 07, 2005]

NATIONAL TRUCKING AND FORWARDING CORPORATION, petit ion er, vs. LORENZO

SHIPPING CORPORATION,respondent . D E C I S I O NQUISUMBING, J .:

For review on certiorari are the Decision[1] dated January 16, 2002, of the Court of Appeals, in CA-G.R. CV No. 48349, and its Resolution,[2] of May 13, 2002, denying themotion for reconsideration of herein petitioner National Trucking and ForwardingCorporation (NTFC). The impugned decision affirmed in toto the judgment[3] datedNovember 14, 1994 of the Regional Trial Court (RTC) of Manila, Branch 53, in Civil CaseNo. 90-52102.

The undisputed facts, as summarized by the appellate court, are as follows:On June 5, 1987, the Republic of the Philippines, through the Department of Health

(DOH), and the Cooperative for American Relief Everywhere, Inc. (CARE) signed anagreement wherein CARE would acquire from the United States government donations ofnon-fat dried milk and other food products from January 1, 1987 to December 31, 1989. Inturn, the Philippines would transport and distribute the donated commodities to the intended

beneficiaries in the country.The government entered into a contract of carriage of goods with herein petitionerNational Trucking and Forwarding Corporation (NTFC). Thus, the latter shipped 4,868 bagsof non-fat dried milk through herein respondent Lorenzo Shipping Corporation (LSC) fromSeptember to December 1988. The consignee named in the bills of lading issued by therespondent was Abdurahman Jama, petitioner‘s branch supervisor in Zamboanga City.

On reaching the port of Zamboanga City, respondent‘s agent, Efren Rust e[4] Shipping Agency, unloaded the 4,868 bags of non-fat dried milk and delivered the goods topetitioner‘s warehouse. Before each delivery, Rogelio Rizada and Ismael Zamora, bothdelivery checkers of Efren Ruste Shipping Agency, requested Abdurahman to surrender theoriginal bills of lading, but the latter merely presented certified true copies thereof. Uponcompletion of each delivery, Rogelio and Ismael asked Abdurahman to sign the deliveryreceipts. However, at times when Abdurahman had to attend to other business before adelivery was completed, he instructed his subordinates to sign the delivery receipts for him.

Notwithstanding the precautions taken, the petitioner allegedly did not receive thesubject goods. Thus, in a letter dated March 11, 1989, petitioner NTFC filed a formal claimfor non-delivery of the goods shipped through respondent.

In its letter of April 26, 1989, the respondent explained that the cargo had alreadybeen delivered to Abdurahman Jama. The petitioner then decided to investigate the loss ofthe goods. But before the investigation was over, Abdurahman Jama resigned as branchsupervisor of petitioner.

Noting but disbelieving respondent‘s insistence that the goods were delivered, thegovernment through the DOH, CARE, and NTFC as plaintiffs filed an action for breach ofcontract of carriage, against respondent as defendant, with the RTC of Manila.

After trial, the RTC resolved the case as follows:WHEREFORE, judgment is hereby rendered in favor of the defendant and against theplaintiffs, dismissing the latter‘s complaint, and ordering the plaintiffs, pursuant to thedefendant‘s counterclaim, to pay, jointly and solidarily, to the defendant , actual damages inthe amount of P50,000.00, and attorney‘s fees in the amount of P70,000.00, plus the costsof suit.SO ORDERED.[5]

Dissatisfied with the foregoing ruling, herein petitioner appealed to the Court of Appeals. It faulted the lower court for not holding that respondent failed to deliver the

http://sc.judiciary.gov.ph/jurisprudence/2005/feb2005/153563.htm#_ftn1






















cargo, and that respondent failed to exercise the extraordinary diligence required ofcommon carriers. Petitioner also assailed the lower court for denying its claims for actual,moral, and exemplary damages, and for awarding actual damages and attorney‘s fees tothe respondent.[6]

The Court of Appeals found that the trial court did not commit any reversible error. Itdismissed the appeal, and affirmed the assailed decision in toto.

Undaunted, petitioner now comes to us, assigning the following errors:I

THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO APPRECIATE AND APPLY THE LEGAL STANDARD OF EXTRAORDINARY DILIGENCE IN THE SHIPMENT

AND DELIVERY OF GOODS TO THE RESPONDENT AS A COMMON CARRIER, ASWELL AS THE ACCOMPANYING LEGAL PRESUMPTION OF FAULT OR NEGLIGENCEON THE PART OF THE COMMON CARRIER, IF THE GOODS ARE LOST, DESTROYEDOR DETERIORATED, AS REQUIRED UNDER THE CIVIL CODE.

IITHE COURT OF APPEALS GRAVELY ERRED WHEN IT SUSTAINED THE BASELESS

AND ARBITRARY AWARD OF ACTUAL DAMAGES AND ATTORNEY‘S FEESINASMUCH AS THE ORIGINAL COMPLAINT WAS FILED IN GOOD FAITH, WITHOUTMALICE AND WITH THE BEST INTENTION OF PROTECTING THE INTEREST ANDINTEGRITY OF THE GOVERNMENT AND ITS CREDIBILITY AND RELATIONSHIP WITHINTERNATIONAL RELIEF AGENCIES AND DONOR STATES AND ORGANIZATION.[7]

The issues for our resolution are: (1) Is respondent presumed at fault or negligent ascommon carrier for the loss or deterioration of the goods? and (2) Are damages andattorney‘s fees due respondent?

Anent the first issue, petitioner contends that the respondent is presumed negligent

and liable for failure to abide by the terms and conditions of the bills of lading; that Abdurahman Jama‘s failure to testify should not be held against petitioner; and that thetestimonies of Rogelio Rizada and Ismael Zamora, as employees of respondent‘s agent,Efren Ruste Shipping Agency, were biased and could not overturn the legal presumption ofrespondent‘s fault or negligence.

For its part, the respondent avers that it observed extraordinary diligence in thedelivery of the goods. Prior to releasing the goods to Abdurahman, Rogelio and Ismaelrequired the surrender of the original bills of lading, and in their absence, the certified truecopies showing that Abdurahman was indeed the consignee of the goods. In addition, theyrequired Abdurahman or his designated subordinates to sign the delivery receipts uponcompletion of each delivery.

We rule for respondent. Article 1733[8] of the Civil Code demands that a common carrier observe

extraordinary diligence over the goods transported by it. Extraordinary diligence is thatextreme measure of care and caution which persons of unusual prudence andcircumspection use for securing and preserving their own property or rights.[9] This exactingstandard imposed on common carriers in a contract of carriage of goods is intended to tiltthe scales in favor of the shipper who is at the mercy of the common carrier once the goodshave been lodged for shipment. Hence, in case of loss of goods in transit, the commoncarrier is presumed under the law to have been at fault or negligent.[10] However, thepresumption of fault or negligence, may be overturned by competent evidence showing thatthe common carrier has observed extraordinary diligence over the goods.

In the instant case, we agree with the court a quo that the respondent adequatelyproved that it exercised extraordinary diligence. Although the original bills of ladingremained with petitioner, respondent‘s agents demanded from Abdurahman the certifiedtrue copies of the bills of lading. They also asked the latter and in his absence, hisdesignated subordinates, to sign the cargo delivery receipts.

This practice, which respondent‘s agents testified to be their standard operatingprocedure, finds support in Article 353 of the Code of Commerce:

ART. 353. . . . After the contract has been complied with, the bill of lading which the carrier has issuedshall be returned to him, and by virtue of the exchange of this title with the thingtransported, the respective obligations and actions shall be considered cancelled, ….

In case the consignee, upon receiving the goods, cannot return the bill of ladingsubscribed by the carrier, because of its loss or of any other cause, he must give thelatter a receipt for the goods delivered, this receipt producing the same effects as thereturn of the bill of lading. (Emphasis supplied)

Conformably with the aforecited provision, the surrender of the original bill of lading isnot a condition precedent for a common carrier to be discharged of its contractualobligation. If surrender of the original bill of l ading is not possible, acknowledgment of thedelivery by signing the delivery receipt suffices. This is what respondent did.

We also note that some delivery receipts were signed by Abdurahman‘s subordinatesand not by Abdurahman himself as consignee. Further, delivery checkers Rogelio and

Ismael testified that Abdurahman was always present at the initial phase of each delivery,although on the few occasions when Abdurahman could not stay to witness the completedelivery of the shipment, he authorized his subordinates to sign the delivery receipts forhim. This, to our mind, is sufficient and substantial compliance with the requirements.

We further note that, strangely, petitioner made no effort to disapprove Abdurahman‘sresignation until after the investigation and after he was cleared of any responsibility for theloss of the goods. With Abdurahman outside of its reach, petitioner cannot now pass torespondent what could be Abdurahman‘s negligence, if indeed he were responsib le.

On the second issue, petitioner submits there is no basis for the award of actualdamages and attorney‘s fees. It maintains that its original complaint for sum of money withdamages for breach of contract of carriage was not fraudulent, in bad faith, nor malicious.Neither was the institution of the action rash nor precipitate. Petitioner avers the filing of theaction was intended to protect the integrity and interest of the government and itsrelationship and credibility with international relief agencies and donor states.

On the other hand, respondent maintains that petitioner‘s suit was baseless and

malicious because instead of going after its absconding employee, petitioner wanted torecoup its losses from respondent. The trial court and the Court of Appeals were justified ingranting actual damages and reasonable attorney‘s fees to respondent.

On this point, we agree with petitioner.The right to litigate should bear no premium. An adverse decision does not ipso

facto justify an award of attorney‘s fees to the winning party.[11]When, as in the instant case,

petitioner was compelled to sue to protect the credibility of the government withinternational organizations, we are not inclined to grant attorney‘s fees. We find no illmotive on petitioner‘s part, only an erroneous belief in the righteousness of its claim.

Moreover, an award of attorney‘s fees, in the concept of damages under Article 2208of the Civil Code,[12] requires factual and legal justifications. While the law allows somedegree of discretion on the part of the courts in awarding attorney‘s fees and expenses oflitigation, the discretion must be exercised with great care approximating as closely aspossible, the instances exemplified by the law.[13] We have searched but found nothing inpetitioner‘s suit that justifies the award of attorney‘s fees.

Respondent failed to show proof of actual pecuniary loss, hence, no actual damagesare due in favor of respondent.[14]

WHEREFORE, the petition is PARTIALLY GRANTED. The assailed decision andresolution of the Court of Appeals in CA-G.R. CV No. 48349 dated January 16, 2002 andMay 13, 2002 respectively, denying petitioner‘s claim for actual, moral and exemplarydamages are AFFIRMED. The award of actual damages and attorney‘s fees to respondentpursuant to the latter‘s counterclaim in the trial court is DELETED.

SO ORDERED.Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio and Azcuna, JJ., concur.






































THIRD DIVISION[G.R. No. 150751. September 20, 2004]

CENTRAL SHIPPING COMPANY, INC., pet i t ioner , vs . INSURANCE COMPANY OFNORTH AMERICA, respondent .

D E C I S I O NPANGANIBAN, J.:

A common carrier is presumed to be at fault or negligent. It shall be liable for theloss, destruction or deterioration of its cargo, unless it can prove that the sole andproximate cause of such event is one of the causes enumerated in Article 1734 of the CivilCode, or that it exercised extraordinary diligence to prevent or minimize the loss. In the

present case, the weather condition encountered by petitioner‘s vessel was not a ―storm‖ ora natural disaster comprehended in the law. Given the known weather condition prevailingduring the voyage, the manner of stowage employed by the carrier was insufficient tosecure the cargo from the rolling action of the sea. The carrier took a calculated risk inimproperly securing the cargo. Having lost that risk, it cannot now disclaim any liability forthe loss.

The CaseBefore the Court is a Petition for Review [1] under Rule 45 of the Rules of Court,

seeking to reverse and set aside the March 23, 2001 Decision[2] of the Court of Appeals(CA) in CA-GR CV No. 48915. The assailed Decision disposed as follows:―WHEREFORE, the decision of the Regional Trial Court of Makati City, Branch 148 dated

August 4, 1994 is hereby MODIFIED in so far as the award of attorney‘s fees is DELETED.The decision is AFFIRMED in all other respects.‖[3]

The CA denied petitioner‘s Motion for Reconsideration in its November 7, 2001Resolution.[4]

The FactsThe factual antecedents, summarized by the trial court and adopted by the appellatecourt, are as follows:―On July 25, 1990 at Puerto Princesa, Palawan, the [petitioner] received on board itsvessel, the M/V ‗Central Bohol‘, 376 pieces [of] Philippine Apitong Round Logs andundertook to transport said shipment to Manila for delivery to Alaska Lumber Co., Inc.―The cargo was insured for P3,000,000.00 against total loss under [respondent‘s] MarineCargo Policy No. MCPB-00170.―On July 25, 1990, upon completion of loading of the car go, the vessel left Palawan andcommenced the voyage to Manila.―At about 0125 hours on July 26, 1990, while enroute to Manila, the vessel listed about 10degrees starboardside, due to the shifting of logs in the hold.―At about 0128 hours, after the listing of the vessel had increased to 15 degrees, the shipcaptain ordered his men to abandon ship and at about 0130 hours of the same day thevessel completely sank. Due to the sinking of the vessel, the cargo was totally lost.―[Respondent] alleged that the total loss of the shipment was caused by the fault andnegligence of the [petitioner] and its captain and as direct consequence thereof theconsignee suffered damage in the sum of P3,000,000.00.―The consignee, Alaska Lumber Co. Inc., presented a claim for the value of the shipment tothe [petitioner] but the latter failed and refused to settle the claim, hence [respondent], beingthe insurer, paid said claim and now seeks to be subrogated to all the rights and actions ofthe consignee as against the [petitioner].―[Petitioner], while admitting the sinking of the vessel, interposed the defense that thevessel was fully manned, fully equipped and in all respects seaworthy; that all the logs wereproperly loaded and secured; that the vessel‘s master exercised due diligence to prevent orminimize the loss before, during and after the occurrence of the storm.―It raised as its main defense that the proximate and only cause of the sinking of its vesseland the loss of its cargo was a natural disaster, a tropical storm which neither [petitioner]nor the captain of its vessel could have foreseen.‖[5]

The RTC was unconvinced that the sinking of M/V Central Bohol had been caused bythe weather or any other caso fortuito. It noted that monsoons, which were commonoccurrences during the months of July to December, could have been foreseen andprovided for by an ocean-going vessel. Applying the rule of presumptive fault or negligence

against the carrier, the trial court held petitioner liable for the loss of the cargo. Thus, theRTC deducted the salvage value of the logs in the amount of P200,000 from the principalclaim of respondent and found that the latter was entitled to be subrogated to the rights ofthe insured. The court a quo disposed as follows:―WHEREFORE, premises considered, judgment is hereby rendered in favor of the[respondent] and against the [petitioner] ordering the latter to pay the following:

1) the amount of P2,800,000.00 with legal interest thereof from the filing ofthis complaint up to and until the same is fully paid;

2) P80,000.00 as and for attorney‘s fees; 3) Plus costs of suit.‖[6]

Ruling of the Court of AppealsThe CA affirmed the trial court‘s finding that the southwestern monsoon encounteredby the vessel was not unforeseeable. Given the season of rains and monsoons, the shipcaptain and his crew should have anticipated the perils of the sea. The appellate courtfurther held that the weather disturbance was not the sole and proximate cause of thesinking of the vessel, which was also due to the concurrent shifting of the logs in the holdthat could have resulted only from improper stowage. Thus, the carrier was heldresponsible for the consequent loss of or damage to the cargo, because its own negligencehad contributed thereto.

The CA found no merit in petitioner‘s assertion of the vessel‘s seaworthiness. It heldthat the Certificates of Inspection and Drydocking were not conclusive proofs thereof. Inorder to consider a vessel to be seaworthy, it must be fit to meet the perils of the sea.

Found untenable was petitioner‘s insistence that the trial court should have givengreater weight to the factual findings of the Board of Marine Inquiry (BMI) in theinvestigation of the Marine Protest filed by the ship captain, Enriquito Cahatol. The CA

further observed that what petitioner had presented to the court a quo were mere excerptsof the testimony of Captain Cahatol given during the course of the proceedings before theBMI, not the actual findings and conclusions of the agency. Citing Arada v. CA,[7] it saidthat findings of the BMI were limited to the administrative liability of the owner/operator,officers and crew of the vessel. However, the determination of whether the carrier observedextraordinary diligence in protecting the cargo it was transporting was a function of thecourts, not of the BMI.

The CA concluded that the doctrine of limited liability was not applicable, in view ofpetitioner‘s negligence -- particularly its improper stowage of the logs.

Hence, this Petition.[8] Issues

In its Memorandum, petitioner submits the following issues for our consideration:―(i) Whether or not the weather disturbance which caused thesinking of the vessel M/V Central Bohol was a fortuitous event.―(ii) Whether or not the investigation report prepared by Claimsmen

Adjustment Corporation is hearsay evidence under Section 36, Rule130 of the Rules of Court.―(iii) Whether or not the finding of the Court of Appeals that ‗the logsin the hold shifted and such shifting could only be due to improperstowage‘ has a valid and factual basis.―(iv) Whether or not M/V Central Bohol is seaworthy.―(v) Whether or not the Court of Appeals erred in not givingcredence to the factual finding of the Board of Marine Inquiry (BMI), anindependent government agency tasked to conduct inquiries onmaritime accidents.―(vi) Whether or not the Doctrine of Limited Liability is applicable tothe case at bar.‖[9]

The issues boil down to two: (1) whether the carrier is liable for the loss of the cargo;and (2) whether the doctrine of limited liability is applicable. These issues involve adetermination of factual questions of whether the loss of the cargo was due to theoccurrence of a natural disaster; and if so, whether its sole and proximate cause was suchnatural disaster or whether petitioner was partly to blame for failing to exercise duediligence in the prevention of that loss.

http://sc.judiciary.gov.ph/jurisprudence/2004/sep2004/150751.htm#_ftn1





































The Court’s Ruling The Petition is devoid of merit.

First Issue:Liabi l i ty for Lost Cargo

From the nature of their business and for reasons of public policy, common carriersare bound to observe extraordinary diligence over the goods they transport, according to allthe circumstances of each case.[10] In the event of loss, destruction or deterioration of theinsured goods, common carriers are responsible; that is, unless they can prove that suchloss, destruction or deterioration was brought about -- among others -- by ―flood, storm,earthquake, lightning or other natural disaster or calamity.‖[11] In all other cases not specified

under Article 1734 of the Civil Code, common carriers are presumed to have been at faultor to have acted negligently, unless they prove that they observed extraordinarydiligence.[12]

In the present case, petitioner disclaims responsibility for the loss of the cargo byclaiming the occurrence of a ―storm‖ under Article 1734(1) . It attributes the sinking of itsvessel solely to the weather condition between 10:00 p.m. on July 25, 1990 and 1:25 a.m.on July 26, 1990.

At the outset, it must be stressed that only questions of law[13] may be raised in apetition for review on certiorari under Rule 45 of the Rules of Court. Questions of fact arenot proper subjects in this mode of appeal ,[14] for ―[t]he Supreme Court is not a trier offacts.‖[15] Factual findings of the CA may be reviewed on appea l[16] only under exceptionalcircumstances such as, among others, when the inference is manifestly mistaken,[17] the

judgment is based on a misapprehension of facts,[18] or the CA manifestly overlookedcertain relevant and undisputed facts that, if properly considered, would justify a differentconclusion.[19]

In the present case, petitioner has not given the Court sufficient cogent reasons todisturb the conclusion of the CA that the weather encountered by the vessel was not a―storm‖ as contemplated by Article 1734(1). Established is the fact that between 10:00 p.m.on July 25, 1990 and 1:25 a.m. on July 26, 1990, M/V Central Bohol encountered asouthwestern monsoon in the course of its voyage.

The Note of Marine Protest,[20] which the captain of the vessel issued under oath,stated that he and his crew encountered a southwestern monsoon about 2200 hours onJuly 25, 1990, and another monsoon about 2400 hours on July 26, 1990. Even petitioneradmitted in its Answer that the sinking of M/V Central Bohol had been caused by the strongsouthwest monsoon.[21] Having made such factual representation, it cannot now be allowedto retreat and claim that the southwestern monsoon was a ―storm.‖

The pieces of evidence with respect to the weather conditions encountered by thevessel showed that there was a southwestern monsoon at the time. Normally expected onsea voyages, however, were such monsoons, during which strong winds were not unusual.Rosa S. Barba, weather specialist of the Philippine Atmospheric Geophysical and

Astronomical Services Administration (PAGASA), testified that a thunderstorm might occurin the midst of a southwest monsoon. According to her, one did occur between 8:00 p.m.on July 25, 1990, and 2 a.m. on July 26, 1990, as recorded by the PAGASA WeatherBureau.[22]

Nonetheless, to our mind it would not be sufficient to categorize the weather conditionat the time as a ―storm‖ within the absolutory causes enumerated in the law. Significantly,no typhoon was observed within the Philippine area of responsibility during that period.[23]

According to PAGASA, a storm has a wind force of 48 to 55 knots,[24] equivalent to 55to 63 miles per hour or 10 to 11 in the Beaufort Scale. The second mate of the vesselstated that the wind was blowing around force 7 to 8 on the BeaufortScale.[25] Consequently, the strong winds accompanying the southwestern monsoon couldnot be classified as a ―storm.‖ Such winds are the ordinary vicissitudes of a sea voyage.[26]

Even if the weather encountered by the ship is to be deemed a natural disaster under Article 1739 of the Civil Code, petitioner failed to show that such natural disaster or calamitywas the proximate and only cause of the loss. Human agency must be entirely excludedfrom the cause of injury or loss. In other words, the damaging effects blamed on the eventor phenomenon must not have been caused, contributed to, or worsened by the presence

of human participation.[27] The defense of fortuitous event or natural disaster cannot besuccessfully made when the injury could have been avoided by human precaution.[28]

Hence, if a common carrier fails to exercise due diligence -- or that ordinary care thatthe circumstances of the particular case demand -- to prevent or minimize the loss before,during and after the occurrence of the natural disaster, the carrier shall be deemed to havebeen negligent. The loss or injury is not, in a legal sense, due to a natural disaster under

Article 1734(1).[29] We also find no reason to disturb the CA‘s finding that the loss of the vessel was

caused not only by the southwestern monsoon, but also by the shifting of the logs in thehold. Such shifting could been due only to improper stowage. The assailed Decision

stated:―Notably, in Master Cahatol‘s account, the vessel encountered the first southwesternmonsoon at about 1[0]:00 in the evening. The monsoon was coupled with heavy rains andrough seas yet the vessel withstood the onslaught. The second monsoon attack occurredat about 12:00 midnight. During this occasion, the master ‗felt‘ that the logs in the holdshifted, prompting him to order second mate Percival Dayanan to look at the bodega.Complying with the captain‘s order, 2nd mate Percival Dayanan found that there wasseawater in the bodega. 2nd mate Dayanan‘s account was: ‘14.T – Kung inyo pong natatandaan ang mga pangyayari, maari mo bang isalaysay angnaganap na paglubog sa barkong M/V Central Bohol? ‘S – Opo, noong ika-26 ng Julio 1990 humigit kumulang alas 1:20 ng umaga (dst) habangkami ay nagnanabegar patungong Maynila sa tapat ng Cadlao Island at Cauayan Islandsakop ng El Nido, Palawan, inutusan ako ni Captain Enriquito Cahatol na tingnan ko angbodega; nang ako ay nasa bodega, nakita ko ang loob nang bodega na maraming tubig atnaririnig ko ang malakas na agos ng tubig-dagat na pumapasok sa loob ng bodega ng

barko; agad bumalik ako kay Captain Enriquito Cahatol at sinabi ko ang malakas na pagpasok ng tubig-dagat sa loob nang bodega ng barko na ito ay naka-tagilid humigitkumulang sa 020 degrees, nag-order si Captain Cahatol na standby engine at tinawag anglahat ng mga officials at mga crew nang maipon kaming lahat ang barko ay naka-tagilid atito ay tuloy-tuloy ang pagtatagilid na ang ilan sa mga officials ay naka-hawak na sabarandilla ng barko at di-nagtagal sumigaw nang ABANDO[N] SHIP si Captain Cahatol atkami ay nagkanya-kanya nang talunan at languyan sa dagat na malakas ang alon at nangako ay lumingon sa barko ito ay di ko na nakita.’ ―Additionally, [petitioner‘s] own witnesses, boatswain Eduardo Viñas Castro and oilerFrederick Perena, are one in saying that the vessel encountered two weather disturbances,one at around 10 o‘clock to 11 o‘clock in the evening and the other at around 12 o‘clockmidnight. Both disturbances were coupled with waves and heavy rains, yet, the vesselendured the first and not the second. Why? The reason is plain. The vessel felt the strainduring the second onslaught because the logs in the bodega shifted and there were alreadyseawater that seeped inside.‖[30]

The above conclusion is supported by the fact that the vessel proceeded through thefirst southwestern monsoon without any mishap, and that it began to list only during thesecond monsoon immediately after the logs had shifted and seawater had entered thehold. In the hold, the sloshing of tons of water back and forth had created pressures thateventually caused the ship to sink. Had the logs not shifted, the ship could have survivedand reached at least the port of El Nido. In fact, there was another motor launch that hadbeen buffeted by the same weather condition within the same area, yet it was able to arrivesafely at El Nido.[31]

In its Answer, petitioner categorically admitted the allegation of respondent inparagraph 5 of the latter‘s Complaint ―[t]hat at about 0125 hours on 26 July 1990, whileenroute to Manila, the M/V ‗Central Bohol‘ listed about 10 degrees starboardside, due to theshifting of logs in the hold.‖ Further, petitioner averred that ―[t]he vessel, while navigatingthrough this second southwestern monsoon, was under extreme stress. At about 0125hours, 26 July 1990, a thud was heard in the cargo hold and the logs therein were felt tohave shifted. The vessel thereafter immediately listed by ten (10) degreesstarboardside.‖[32]































































































The crucial factor then is the existence of a fortuitous event or force majeure. Without it, theright to damages and indemnity exists against a captain who fails to fulfill his undertaking orwhere the interruption has been caused by the captain exclusively.

As found by both Courts below, there was no fortuitous event or force majeure whichprevented the vessel from fulfilling its undertaking of taking private respondents toCatbalogan. In the first place, mechanical defects in the carrier are not considered a casofortuito that exempts the carrier from responsibility. 1 In the second place, even granting arguendo that the engine failure was a fortuitous event,it accounted only for the delay in departure. When the vessel finally left the port of Cebu onJuly 10, 1972, there was no longer any force majeure that justified by-passing a port of call.

The vessel was completely repaired the following day after it was towed back to Cebu. Infact, after docking at Tacloban City, it left the next day for Manila to complete its voyage. 2 The reason for by-passing the port of Catbalogan, as admitted by petitioner's GeneralManager, was to enable the vessel to catch up with its schedule for the next week. Therecord also discloses that there were 50 passengers for Tacloban compared to 20passengers for Catbalogan, 3 so that the Catbalogan phase could be scrapped without toomuch loss for the company.In defense, petitioner cannot rely on the conditions in small bold print at the back of theticket reading.

The passenger's acceptance of this ticket shall be considered as anacceptance of the following conditions:3. In case the vessel cannot continue or complete the trip for any causewhatsoever, the carrier reserves the right to bring the passenger tohis/her destination at the expense of the carrier or to cancel the ticketand refund the passenger the value of his/her ticket;xxx xxx xxx11. The sailing schedule of the vessel for which this ticket was issued issubject to change without previous notice. (Exhibit "l -A")

Even assuming that those conditions are squarely applicable to the case at bar, petitionerdid not comply with the same. It did not cancel the ticket nor did it refund the value of thetickets to private respondents. Besides, it was not the vessel's sailing schedule that wasinvolved. Private respondents' complaint is directed not at the delayed departure the nextday but at the by- passing of Catbalogan, their destination. Had petitioner notified thempreviously, and offered to bring them to their destination at its expense, or refunded thevalue of the tickets purchased, perhaps, this controversy would not have arisen.Furthermore, the conditions relied upon by petitioner cannot prevail over Articles 614 and698 of the Code of Commerce heretofore quoted.The voyage to Catbalogan was "interrupted" by the captain upon instruction ofmanagement. The "interruption" was not due to fortuitous event or for majeure nor todisability of the vessel. Having been caused by the captain upon instruction ofmanagement, the passengers' right to indemnity is evident. The owner of a vessel and theship agent shall be civilly liable for the acts of the captain. 4 Under Article 2220 of the Civil Code, moral damages are justly due in breaches of contractwhere the defendant acted fraudulently or in bad faith. Both the Trial Court and the

Appellate Court found that there was bad faith on the part of petitioner in that:(1) Defendants-appellants did not give notice to plaintiffs- appellees asto the change of schedule of the vessel;(2) Knowing fully well that it would take no less than fifteen hours toeffect the repairs of the damaged engine, defendants-appellantsinstead made announcement of assurance that the vessel would leavewithin a short period of time, and when plaintiffs-appellees wanted toleave the port and gave up the trip, defendants-appellants' employeeswould come and say, 'we are leaving, already.'(3) Defendants-appellants did not offer to refund plaintiffs-appellees'tickets nor provide them with transportation from Tacloban City toCatbalogan. 5

That finding of bad faith is binding on us, since it is not the function of the Court to analyzeand review evidence on this point all over again, 6 aside from the fact that we find it faithfulto the meaning of bad faith enunciated thus:

Bad faith means a breach of a known duty through some motive orinterest or illwill. Self-enrichment or fraternal interest, and not personalillwill may have been the motive, but it is malice nevertheless. 7

Under the circumstances, however, we find the award of moral damages excessive andaccordingly reduce them to P3,000.00, respectively, for each of the private respondents.The total award of attorney's fees of P5,000.00 is in order considering that the case hasreached this Tribunal.

Insofar as exemplary damages are concerned, although there was bad faith, we are notinclined to grant them in addition to moral damages. Exemplary damages cannot berecovered as a matter of right; the Court decides whether or not they should beadjudicated. 8 The objective to meet its schedule might have been called for, but petitionershould have taken the necessary steps for the protection of its passengers under itscontract of carriage.

Article 2215(2) of the Civil Code 9 invoked by petitioner is inapplicable herein. The harmdone to private respondents outweighs any benefits they may have derived from beingtransported to Tacloban instead of being taken to Catbalogan, their destination and thevessel's first port of call, pursuant to its normal schedule.

ACCORDINGLY, the judgment appealed from is hereby modified in that petitioner is herebysentenced to indemnify private respondents in the sum of P3,000.00 each, without interest,plus P1,250.00, each, by way of att/rney's fees and litigation expenses. Costs againstpetitioner.SO ORDERED.Teehankee (Chairman), Plana, Vasquez, Relova and Gutierrez, Jr., JJ., concur.


ManilaEN BANC

G.R. No. L-20761 July 27, 1966 LA MALLORCA, petitioner,vs.HONORABLE COURT OF APPEALS, MARIANO BELTRAN, ET AL., respondents.G. E. Yabut, R. Monterey and M.C. Lagman for petitioner.

Ahmed Garcia for respondents. BARRERA, J.: La Mallorca seeks the review of the decision of the Court of Appeals in CA-G.R. No. 23267-R, holding it liable for quasi-delict and ordering it to pay to respondents Mariano Beltran, etal., P6,000.00 for the death of his minor daughter Raquel Beltran, plus P400.00 as actualdamages.The facts of the case as found by the Court of Appeals, briefly are:

On December 20, 1953, at about noontime, plaintiffs, husband and wife, togetherwith their minor daughters, namely, Milagros, 13 years old, Raquel, about 4½years old, and Fe, over 2 years old, boarded the Pambusco Bus No. 352, bearingplate TPU No. 757 (1953 Pampanga), owned and operated by the defendant, atSan Fernando, Pampanga, bound for Anao, Mexico, Pampanga. At the time, theywere carrying with them four pieces of baggages containing their personalbelonging. The conductor of the bus, who happened to be a half-brother ofplaintiff Mariano Beltran, issued three tickets (Exhs. A, B, & C) covering the fullfares of the plaintiff and their eldest child, Milagros. No fare was charged onRaquel and Fe, since both were below the height at which fare is charged inaccordance with the appellant's rules and regulations.

After about an hour's trip, the bus reached Anao whereat it stopped to allow thepassengers bound therefor, among whom were the plaintiffs and their children to

get off. With respect to the group of the plaintiffs, Mariano Beltran, then carryingsome of their baggages, was the first to get down the bus, followed by his wife



and his children. Mariano led his companions to a shaded spot on the leftpedestrians side of the road about four or five meters away from the vehicle.

Afterwards, he returned to the bus in controversy to get his other bayong , whichhe had left behind, but in so doing, his daughter Raquel followed him, unnoticedby her father. While said Mariano Beltran was on the running board of the buswaiting for the conductor to hand him his bayong which he left under one of itsseats near the door, the bus, whose motor was not shut off while unloading,suddenly started moving forward, evidently to resume its trip, notwithstanding thefact that the conductor has not given the driver the customary signal to start,since said conductor was still attending to the baggage left behind by Mariano

Beltran. Incidentally, when the bus was again placed into a complete stop, it hadtravelled about ten meters from the point where the plaintiffs had gotten off.Sensing that the bus was again in motion, Mariano Beltran immediately jumpedfrom the running board without getting his bayong from the conductor. He landedon the side of the road almost in front of the shaded place where he left his wifeand children. At that precise time, he saw people beginning to gather around thebody of a child lying prostrate on the ground, her skull crushed, and without life.The child was none other than his daughter Raquel, who was run over by the busin which she rode earlier together with her parents.For the death of their said child, the plaintiffs commenced the present suit againstthe defendant seeking to recover from the latter an aggregate amount of P16,000to cover moral damages and actual damages sustained as a result thereof andattorney's fees. After trial on the merits, the court below rendered the judgment inquestion.

On the basis of these facts, the trial court found defendant liable for breach of contract ofcarriage and sentenced it to pay P3,000.00 for the death of the child and P400.00 ascompensatory damages representing burial expenses and costs.On appeal to the Court of Appeals, La Mallorca claimed that there could not be a breach ofcontract in the case, for the reason that when the child met her death, she was no longer apassenger of the bus involved in the incident and, therefore, the contract of carriage hadalready terminated. Although the Court of Appeals sustained this theory, it neverthelessfound the defendant-appellant guilty of quasi-delict and held the latter liable for damages,for the negligence of its driver, in accordance with Article 2180 of the Civil Code. And, theCourt of Appeals did not only find the petitioner liable, but increased the damages awardedthe plaintiffs-appellees to P6,000.00, instead of P3,000.00 granted by the trial court.In its brief before us, La Mallorca contends that the Court of Appeals erred (1) in holding itliable for quasi-delict , considering that respondents complaint was one for breach ofcontract, and (2) in raising the award of damages from P3,000.00 to P6,000.00 althoughrespondents did not appeal from the decision of the lower court.Under the facts as found by the Court of Appeals, we have to sustain the judgement holdingpetitioner liable for damages for the death of the child, Raquel Beltran. It may be pointedout that although it is true that respondent Mariano Beltran, his wife, and their children(including the deceased child) had alighted from the bus at a place designated fordisembarking or unloading of passengers, it was also established that the father had toreturn to the vehicle (which was still at a stop) to get one of his bags or bayong that was leftunder one of the seats of the bus. There can be no controversy that as far as the father isconcerned, when he returned to the bus for his bayong which was not unloaded, therelation of passenger and carrier between him and the petitioner remained subsisting. For,the relation of carrier and passenger does not necessarily cease where the latter, afteralighting from the car, aids the carrier's servant or employee in removing his baggage fromthe car.1 The issue to be determined here is whether as to the child, who was already led bythe father to a place about 5 meters away from the bus, the liability of the carrier for hersafety under the contract of carriage also persisted.It has been recognized as a rule that the relation of carrier and passenger does not ceaseat the moment the passenger alights from the carrier's vehicle at a place selected by thecarrier at the point of destination, but continues until the passenger has had a reasonable

time or a reasonable opportunity to leave the carrier's premises. And, what is a reasonabletime or a reasonable delay within this rule is to be determined from all the circumstances.

Thus, a person who, after alighting from a train, walks along the station platform isconsidered still a passenger.2 So also, where a passenger has alighted at his destinationand is proceeding by the usual way to leave the company's premises, but before actuallydoing so is halted by the report that his brother, a fellow passenger, has been shot, and hein good faith and without intent of engaging in the difficulty, returns to relieve his brother, heis deemed reasonably and necessarily delayed and thus continues to be a passengerentitled as such to the protection of the railroad and company and its agents.3 In the present case, the father returned to the bus to get one of his baggages which was notunloaded when they alighted from the bus. Raquel, the child that she was, must havefollowed the father. However, although the father was still on the running board of the bus

awaiting for the conductor to hand him the bag or bayong , the bus started to run, so thateven he (the father) had to jump down from the moving vehicle. It was at this instance thatthe child, who must be near the bus, was run over and killed. In the circumstances, itcannot be claimed that the carrier's agent had exercised the "utmost diligence" of a "verycautions person" required by Article 1755 of the Civil Code to be observed by a commoncarrier in the discharge of its obligation to transport safely its passengers. In the first place,the driver, although stopping the bus, nevertheless did not put off the engine. Secondly, hestarted to run the bus even before the bus conductor gave him the signal to go and whilethe latter was still unloading part of the baggages of the passengers Mariano Beltran andfamily. The presence of said passengers near the bus was not unreasonable and they are,therefore, to be considered still as passengers of the carrier, entitled to the protection undertheir contract of carriage.But even assuming arguendo that the contract of carriage has already terminated, hereinpetitioner can be held liable for the negligence of its driver, as ruled by the Court of

Appeals, pursuant to Article 2180 of the Civil Code. Paragraph 7 of the complaint, whichreads —

That aside from the aforesaid breach of contract, the death of Raquel Beltran,plaintiffs' daughter, was caused by the negligence and want of exercise of theutmost diligence of a very cautious person on the part of the defendants and theiragent, necessary to transport plaintiffs and their daughter safely as far as humancare and foresight can provide in the operation of their vehicle.

is clearly an allegation for quasi-delict . The inclusion of this averment for quasi-delict , whileincompatible with the other claim under the contract of carriage, is permissible underSection 2 of Rule 8 of the New Rules of Court, which allows a plaintiff to allege causes ofaction in the alternative, be they compatible with each other or not, to the end that the realmatter in controversy may be resolved and determined.4 The plaintiffs sufficiently pleaded the culpa or negligence upon which the claim waspredicated when it was alleged in the complaint that "the death of Raquel Beltran, plaintiffs'daughter, was caused by the negligence and want of exercise of the utmost diligence of avery cautious person on the part of the defendants and their agent." This allegation wasalso proved when it was established during the trial that the driver, even before receivingthe proper signal from the conductor, and while there were still persons on the runningboard of the bus and near it, started to run off the vehicle. The presentation of proof of thenegligence of its employee gave rise to the presumption that the defendant employer didnot exercise the diligence of a good father of the family in the selection and supervision ofits employees. And this presumption, as the Court of Appeals found, petitioner had failed toovercome. Consequently, petitioner must be adjudged peculiarily liable for the death of thechild Raquel Beltran.The increase of the award of damages from P3,000.00 to P6,000.00 by the Court of

Appeals, however, cannot be sustained. Generally, the appellate court can only pass uponand consider questions or issues raised and argued in appellant's brief. Plaintiffs did notappeal from that portion of the judgment of the trial court awarding them on P3,000.00damages for the death of their daughter. Neither does it appear that, as appellees in theCourt of Appeals, plaintiffs have pointed out in their brief the inadequacy of the award, orthat the inclusion of the figure P3,000.00 was merely a clerical error, in order that the mattermay be treated as an exception to the general rule.5 Herein petitioner's contention,

therefore, that the Court of Appeals committed error in raising the amount of the award fordamages is, evidently, meritorious.1äwphï1.ñët



Wherefore, the decision of the Court of Appeals is hereby modified by sentencing, thepetitioner to pay to the respondents Mariano Beltran, et al., the sum of P3,000.00 for thedeath of the child, Raquel Beltran, and the amount of P400.00 as actual damages. No costsin this instance. So ordered.Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Bengzon, J.P., Zaldivar, Sanchez andCastro, JJ., concur.Makalintal, J., concurs in the result.


Manila

SECOND DIVISIONG.R. No. 84458 November 6, 1989ABOITIZ SHIPPING CORPORATION, petitioner,vs.HON. COURT OF APPEALS, ELEVENTH DIVISION, LUCILA C. VIANA, SPS. ANTONIOVIANA and GORGONIA VIANA, and PIONEER STEVEDORINGCORPORATION, respondents.Herenio E. Martinez for petitioner.M.R. Villaluz Law Office for private respondent.

REGALADO, J.: In this appeal by certiorari, petitioner Aboitiz Shipping Corporation seeks a review of thedecision 1 of respondent Court of Appeals, dated July 29, 1988, the decretal portion ofwhich reads:

WHEREFORE, the judgment appealed from as modified by the order ofOctober 27, 1982, is hereby affirmed with the modification thatappellant Aboitiz Shipping is hereby ordered to pay plaintiff-appelleesthe amount of P30,000.00 for the death of Anacleto Viana; actualdamages of P9,800.00; P150,000.00 for unearned income; P7,200.00as support for deceased's parents; P20,000.00 as moral damages;P10,000.00 as attorney's fees; and to pay the costs.

The undisputed facts of the case, as found by the court a quo and adopted by respondentcourt, are as follows: .

The evidence disclosed that on May 11, 1975, Anacleto Viana boardedthe vessel M/V Antonia, owned by defendant, at the port at San Jose,Occidental Mindoro, bound for Manila, having purchased a ticket (No.117392) in the sum of P23.10 (Exh. 'B'). On May 12, 1975, said vesselarrived at Pier 4, North Harbor, Manila, and the passengers thereindisembarked, a gangplank having been provided connecting the side ofthe vessel to the pier. Instead of using said gangplank Anacleto Vianadisembarked on the third deck which was on the level with the pier.

After said vessel had landed, the Pioneer Stevedoring Corporation tookover the exclusive control of the cargoes loaded on said vesselpursuant to the Memorandum of Agreement dated July 26, 1975 (Exh.'2') between the third party defendant Pioneer Stevedoring Corporationand defendant Aboitiz Shipping Corporation.The crane owned by the third party defendant and operated by itscrane operator Alejo Figueroa was placed alongside the vessel andone (1) hour after the passengers of said vessel had disembarked, itstarted operation by unloading the cargoes from said vessel. While thecrane was being operated, Anacleto Viana who had alreadydisembarked from said vessel obviously remembering that some of hiscargoes were still loaded in the vessel, went back to the vessel, and itwas while he was pointing to the crew of the said vessel to the placewhere his cargoes were loaded that the crane hit him, pinning himbetween the side of the vessel and the crane. He was thereafter

brought to the hospital where he later expired three (3) days thereafter,on May 15, 1975, the cause of his death according to the Death

Certificate (Exh. "C") being "hypostatic pneumonia secondary totraumatic fracture of the pubic bone lacerating the urinary bladder"(See also Exh. "B"). For his hospitalization, medical, burial and othermiscellaneous expenses, Anacleto's wife, herein plaintiff, spent a totalof P9,800.00 (Exhibits "E", "E-1", to "E-5"). Anacleto Viana who wasonly forty (40) years old when he met said fateful accident (Exh. 'E')was in good health. His average annual income as a farmer or a farmsupervisor was 400 cavans of palay annually. His parents, hereinplaintiffs Antonio and Gorgonia Viana, prior to his death had beenrecipient of twenty (20) cavans of palay as support or P120.00 monthly.

Because of Anacleto's death, plaintiffs suffered mental anguish andextreme worry or moral damages. For the filing of the instant case, theyhad to hire a lawyer for an agreed fee of ten thousand (P10,000.00)pesos. 2

Private respondents Vianas filed a complaint 3 for damages against petitioner corporation(Aboitiz, for brevity) for breach of contract of carriage.In its answer. 4 Aboitiz denied responsibility contending that at the time of the accident, thevessel was completely under the control of respondent Pioneer Stevedoring Corporation(Pioneer, for short) as the exclusive stevedoring contractor of Aboitiz, which handled theunloading of cargoes from the vessel of Aboitiz. It is also averred that since the craneoperator was not an employee of Aboitiz, the latter cannot be held liable under the fellow-servant rule.Thereafter, Aboitiz, as third-party plaintiff, filed a third-party complaint 5 against Pioneerimputing liability thereto for Anacleto Viana's death as having been allegedly caused by thenegligence of the crane operator who was an employee of Pioneer under its exclusivecontrol and supervision.Pioneer, in its answer to the third-party complaint, 6 raised the defenses that Aboitiz had nocause of action against Pioneer considering that Aboitiz is being sued by the Vianas forbreach of contract of carriage to which Pioneer is not a party; that Pioneer had observedthe diligence of a good father of a family both in the selection and supervision of itsemployees as well as in the prevention of damage or injury to anyone including the victim

Anacleto Viana; that Anacleto Viana's gross negligence was the direct and proximate causeof his death; and that the filing of the third-party complaint was premature by reason of thependency of the criminal case for homicide through reckless imprudence filed against thecrane operator, Alejo Figueroa.In a decision rendered on April 17, 1980 by the trial court, 7 Aboitiz was ordered to pay theVianas for damages incurred, and Pioneer was ordered to reimburse Aboitiz for whateveramount the latter paid the Vianas. The dispositive portion of said decision provides:

WHEREFORE, judgment is hereby rendered in favor of the plantiffs:(1) ordering defendant Aboitiz Shipping Corporation to pay to plaintiffsthe sum of P12,000.00 for the death of Anacleto Viana P9,800.00 asactual damages; P533,200.00 value of the 10,664 cavans of palaycomputed at P50.00 per cavan; P10,000.00 as attorney's fees; F5,000.00, value of the 100 cavans of palay as support for five (5) yearsfor deceased (sic) parents, herein plaintiffs Antonio and GorgoniaViana computed at P50.00 per cavan; P7,200.00 as support fordeceased's parents computed at P120.00 a month for five yearspursuant to Art. 2206, Par. 2, of the Civil Code; P20,000.00 as moraldamages, and costs; and(2) ordering the third party defendant Pioneer Stevedoring Corporationto reimburse defendant and third party plaintiff Aboitiz ShippingCorporation the said amounts that it is ordered to pay to hereinplaintiffs.

Both Aboitiz and Pioneer filed separate motions for reconsideration wherein they similarlyraised the trial court's failure to declare that Anacleto Viana acted with gross negligencedespite the overwhelming evidence presented in support thereof. In addition, Aboitiz

alleged, in opposition to Pioneer's motion, that under the memorandum of agreement the



liability of Pioneer as contractor is automatic for any damages or losses whatsoeveroccasioned by and arising from the operation of its arrastre and stevedoring service.In an order dated October 27, 1982, 8 the trial court absolved Pioneer from liability for failureof the Vianas and Aboitiz to preponderantly establish a case of negligence against thecrane operator which the court a quo ruled is never presumed, aside from the fact that thememorandum of agreement supposedly refers only to Pioneer's liability in case of loss ordamage to goods handled by it but not in the case of personal injuries, and, finally that

Aboitiz cannot properly invoke the fellow-servant rule simply because its liability stems froma breach of contract of carriage. The dispositive portion of said order reads:

WHEREFORE, judgment is hereby modified insofar as third party

defendant Pioneer Stevedoring Corporation is concerned rendered infavor of the plaintiffs-,:(1) Ordering defendant Aboitiz Shipping Corporation to pay theplaintiffs the sum of P12,000.00 for the death of Anacleto Viana;P9,000.00 (sic) as actual damages; P533,200.00 value of the 10,664cavans of palay computed at P50.00 per cavan; P10,000.00 asattorney's fees; P5,000.00 value of the 100 cavans of palay as supportfor five (5) years for deceased's parents, herein plaintiffs Antonio andGorgonia Viana,computed at P50.00 per cavan; P7,200.00 as supportfor deceased's parents computed at P120.00 a month for five yearspursuant to Art. 2206, Par. 2, of the Civil Code; P20,000.00 as moraldamages, and costs; and(2) Absolving third-party defendant Pioneer Stevedoring Corporation for(sic) any liability for the death of Anacleto Viana the passenger of M/V

Antonia owned by defendant third party plaintiff Aboitiz ShippingCorporation it appearing that the negligence of its crane operator hasnot been established therein.

Not satisfied with the modified judgment of the trial court, Aboitiz appealed the same torespondent Court of Appeals which affirmed the findings of of the trial court except as to theamount of damages awarded to the Vianas.Hence, this petition wherein petitioner Aboitiz postulates that respondent court erred:

(A) In holding that the doctrine laid down by this honorable Court in LaMallorca vs. Court of Appeals, et al. (17 SCRA 739, July 27, 1966) isapplicable to the case in the face of the undisputable fact that thefactual situation under the La Mallorca case is radically different fromthe facts obtaining in this case;(B) In holding petitioner liable for damages in the face of the finding ofthe court a quo and confirmed by the Honorable respondent court of

Appeals that the deceased, Anacleto Viana was guilty of contributorynegligence, which, We respectfully submit contributory negligence wasthe proximate cause of his death; specifically the honorable respondentCourt of Appeals failed to apply Art. 1762 of the New Civil Code;(C) In the alternative assuming the holding of the Honorablerespondent Court of Appears that petitioner may be legally condemnedto pay damages to the private respondents we respectfully submit thatit committed a reversible error when it dismissed petitioner's third partycomplaint against private respondent Pioneer Stevedoring Corporationinstead of compelling the latter to reimburse the petitioner for whateverdamages it may be compelled to pay to the private respondentsVianas. 9

At threshold, it is to be observed that both the trial court and respondent Court of Appealsfound the victim Anacleto Viana guilty of contributory negligence, but holding that it was thenegligence of Aboitiz in prematurely turning over the vessel to the arrastre operator for theunloading of cargoes which was the direct, immediate and proximate cause of t he victim'sdeath.I. Petitioner contends that since one (1) hour had already elapsed from the time Anacleto

Viana disembarked from the vessel and that he was given more than ample opportunity tounload his cargoes prior to the operation of the crane, his presence on the vessel was no

longer reasonable e and he consequently ceased to be a passenger. Corollarily, it insiststhat the doctrine in La Mallorca vs. Court of Appeals, et al . 10 is not applicable to the case atbar.The rule is that the relation of carrier and passenger continues until the passenger hasbeen landed at the port of destination and has left the vessel owner's dock orpremises. 11 Once created, the relationship will not ordinarily terminate until the passengerhas, after reaching his destination, safely alighted from the carrier's conveyance or had areasonable opportunity to leave the carrier's premises. All persons who remain on thepremises a reasonable time after leaving the conveyance are to be deemed passengers,and what is a reasonable time or a reasonable delay within this rule is to be determined

from all the circumstances, and includes a reasonable time to see after his baggage andprepare for his departure. 12 The carrier-passenger relationship is not terminated merely bythe fact that the person transported has been carried to his destination if, for example, suchperson remains in the carrier's premises to claim his baggage. 13 It was in accordance with this rationale that the doctrine in the aforesaid case of LaMallorca was enunciated, to wit:

It has been recognized as a rule that the relation of carrier andpassenger does not cease at the moment the passenger alights fromthe carrier's vehicle at a place selected by the carrier at the point ofdestination, but continues until the passenger has had a reasonabletime or a reasonable opportunity to leave the carrier's premises. And,what is a reasonable time or a reasonable delay within this rule is to bedetermined from all the circumstances. Thus, a person who, afteralighting from a train, walks along the station platform is considered stilla passenger. So also, where a passenger has alighted at hisdestination and is proceeding by the usual way to leave the company'spremises, but before actually doing so is halted by the report that hisbrother, a fellow passenger, has been shot, and he in good faith andwithout intent of engaging in the difficulty, returns to relieve his brother,he is deemed reasonably and necessarily delayed and thus continuesto be a passenger entitled as such to the protection of the railroadcompany and its agents.In the present case, the father returned to the bus to get one of hisbaggages which was not unloaded when they alighted from the bus.Racquel, the child that she was, must have followed the father.However, although the father was still on the running board of the buswaiting for the conductor to hand him the bag or bayong , the busstarted to run, so that even he (the father) had to jump down from themoving vehicle. It was at this instance that the child, who must be nearthe bus, was run over and killed. In the circumstances, it cannot beclaimed that the carrier's agent had exercised the 'utmost diligence' ofa 'very cautious person' required by Article 1755 of the Civil Code to beobserved by a common carrier i n the discharge of its obligation totransport safely its passengers. ... The presence of said passengersnear the bus was not unreasonable and they are, therefore, to beconsidered still as passengers of the carrier, entitled to the protectionunder their contract of carriage. 14

It is apparent from the foregoing that what prompted the Court to rule as it did in said caseis the fact of the passenger's reasonable presence within the carrier's premises. Thatreasonableness of time should be made to depend on the attending circumstances of thecase, such as the kind of common carrier, the nature of its business, the customs of theplace, and so forth, and therefore precludes a consideration of the time element perse without taking into account such other factors. It is thus of no moment whether in thecited case of La Mallorca there was no appreciable interregnum for the passenger thereinto leave the carrier's premises whereas in the case at bar, an interval of one (1) hour hadelapsed before the victim met the accident. The primary factor to be considered is the

existence of a reasonable cause as will justify the presence of the victim on or near thepetitioner's vessel. We believe there exists such a justifiable cause.



It is of common knowledge that, by the very nature of petitioner's business as a shipper, thepassengers of vessels are allotted a longer period of time to disembark from the ship thanother common carriers such as a passenger bus. With respect to the bulk of cargoes andthe number of passengers it can load, such vessels are capable of accommodating a biggervolume of both as compared to the capacity of a regular commuter bus. Consequently, aship passenger will need at least an hour as is the usual practice, to disembark from thevessel and claim his baggage whereas a bus passenger can easily get off the bus andretrieve his luggage in a very short period of time. Verily, petitioner cannot categoricallyclaim, through the bare expedient of comparing the period of time entailed in getting thepassenger's cargoes, that the ruling in La Mallorca is inapplicable to the case at bar. On the

contrary, if we are to apply the doctrine enunciated therein to the instant petition, we cannotin reason doubt that the victim Anacleto Viana was still a passenger at the time of theincident. When the accident occurred, the victim was in the act of unloading his cargoes,which he had every right to do, from petitioner's vessel. As earlier stated, a carrier is dutybound not only to bring its passengers safely to their destination but also to afford them areasonable time to claim their baggage.It is not definitely shown that one (1) hour prior to the incident, the victim had alreadydisembarked from the vessel. Petitioner failed to prove this. What is clear to us is that at thetime the victim was taking his cargoes, the vessel had already docked an hour earlier. Inconsonance with common shipping procedure as to the minimum time of one (1) hourallowed for the passengers to disembark, it may be presumed that the victim had just gottenoff the vessel when he went to retrieve his baggage. Yet, even if he had alreadydisembarked an hour earlier, his presence in petitioner's premises was not without cause.The victim had to claim his baggage which was possible only one (1) hour after the vesselarrived since it was admittedly standard procedure in the case of petitioner's vessels thatthe unloading operations shall start only after that time. Consequently, under the foregoingcircumstances, the victim Anacleto Viana is still deemed a passenger of said carrier at thetime of his tragic death.II. Under the law, common carriers are, from the nature of their business and for reasons ofpublic policy, bound to observe extraordinary diligence in the vigilance over the goods andfor the safety of the passengers transported by them, according to all the circumstances ofeach case. 15 More particularly, a common carrier is bound to carry the passengers safelyas far as human care and foresight can provide, using the utmost diligence of very cautiouspersons, with a due regard for all the circumstances. 16 Thus, where a passenger dies or isinjured, the common carrier is presumed to have been at fault or to have actednegligently. 17 This gives rise to an action for breach of contract of carriage where all that isrequired of plaintiff is to prove the existence of the contract of carriage and its non-performance by the carrier, that is, the failure of the carrier to carry the passenger safely tohis destination, 18 which, in the instant case, necessarily includes its failure to safeguard itspassenger with extraordinary diligence while such relation subsists.The presumption is, therefore, established by law that in case of a passenger's death orinjury the operator of the vessel was at fault or negligent, having failed to exerciseextraordinary diligence, and it is incumbent upon it to rebut the same. This is in consonancewith the avowed policy of the State to afford full protection to the passengers of commoncarriers which can be carried out only by imposing a stringent statutory obligation upon thelatter. Concomitantly, this Court has likewise adopted a rigid posture in the application ofthe law by exacting the highest degree of care and diligence from common carriers, bearingutmost in mind the welfare of the passengers who often become hapless victims ofindifferent and profit-oriented carriers. We cannot in reason deny that petitioner failed torebut the presumption against it. Under the facts obtaining in the present case, it cannot begainsaid that petitioner had inadequately complied with the required degree of diligence toprevent the accident from happening.

As found by the Court of Appeals, the evidence does not show that there was a cordon ofdrums around the perimeter of the crane, as claimed by petitioner. It also adverted to thefact that the alleged presence of visible warning signs in the vicinity was disputable and notindubitably established. Thus, we are not inclined to accept petitioner's explanation that the

victim and other passengers were sufficiently warned that merely venturing into the area inquestion was fraught with serious peril. Definitely, even assuming the existence of the

supposed cordon of drums loosely placed around the unloading area and the guard'sadmonitions against entry therein, these were at most insufficient precautions which paleinto insignificance if considered vis-a-vis the gravity of the danger to which the deceasedwas exposed. There is no showing that petitioner was extraordinarily diligent in requiring orseeing to it that said precautionary measures were strictly and actually enforced tosubserve their purpose of preventing entry into the forbidden area. By no stretch of liberalevaluation can such perfunctory acts approximate the "utmost diligence of very cautiouspersons" to be exercised "as far as human care and foresight can provide" which isrequired by law of common carriers with respect to their passengers.While the victim was admittedly contributorily negligent, still petitioner's aforesaid failure to

exercise extraordinary diligence was the proximate and direct cause of, because it coulddefinitely have prevented, the former's death. Moreover, in paragraph 5.6 of its petition, atbar, 19 petitioner has expressly conceded the factual finding of respondent Court of Appealsthat petitioner did not present sufficient evidence in support of its submission that thedeceased Anacleto Viana was guilty of gross negligence. Petitioner cannot now be heard toclaim otherwise.No excepting circumstance being present, we are likewise bound by respondent court'sdeclaration that there was no negligence on the part of Pioneer Stevedoring Corporation, aconfirmation of the trial court's finding to that effect, hence our conformity to Pioneer's beingabsolved of any liability.

As correctly observed by both courts, Aboitiz joined Pioneer in proving the alleged grossnegligence of the victim, hence its present contention that the death of the passenger wasdue to the negligence of the crane operator cannot be sustained both on grounds, ofestoppel and for lack of evidence on its present theory. Even in its answer filed in the courtbelow it readily alleged that Pioneer had taken the necessary safeguards insofar as itsunloading operations were concerned, a fact which appears to have been accepted by theplaintiff therein by not impleading Pioneer as a defendant, and likewise inceptively by

Aboitiz by filing its third-party complaint only after ten (10) months from the institution of thesuit against it. Parenthetically, Pioneer is not within the ambit of the rule on extraordinarydiligence required of, and the corresponding presumption of negligence foisted on, commoncarriers like Aboitiz. This, of course, does not detract from what we have said that nonegligence can be imputed to Pioneer but, that on the contrary, the failure of Aboitiz toexercise extraordinary diligence for the safety of its passenger is the rationale for ourfinding on its liability.WHEREFORE, the petition is DENIED and the judgment appealed from is hereby

AFFIRMED in toto.SO ORDERED.Melencio-Herrera (Chairperson), Paras, Padilla and Sarmiento, JJ., concur.



Pusuan Radia, Dimantong Dimarosing and Mike Randa, all of Marawi City and members ofthe Moro National Liberation Front (MNLF), were their co-passengers, three (3) armed withgrenades, two (2) with .45 caliber pistols, and one with a .22 caliber pistol. Ten (10) minutesafter take off at about 2:30 in the afternoon, the hijackers brandishing their respectivefirearms announced the hijacking of the aircraft and directed its pilot to fly to Libya. With thepilot explaining to them especially to its leader, Commander Zapata, of the inherent fuellimitations of the plane and that they are not rated for international flights, the hijackersdirected the pilot to fly to Sabah. With the same explanation, they relented and directed theaircraft to land at Zamboanga Airport, Zamboanga City for refueling. The aircraft landed at3:00 o'clock in the afternoon of May 21, 1976 at Zamboanga Airport. When the plane beganto taxi at the runway, it was met by two armored cars of the military with machine gunspointed at the plane, and it stopped there. The rebels thru its commander demanded that aDC-aircraft take them to Libya with the President of the defendant company as hostage andthat they be given $375,000 and six (6) armalites, otherwise they will blow up the plane iftheir demands will not be met by the government and Philippine Air Lines. Meanwhile, thepassengers were not served any food nor water and it was only on May 23, a Sunday, atabout 1:00 o'clock in the afternoon that they were served 1/4 slice of a sandwich and 1/10cup of PAL water. After that, relatives of the hijackers were allowed to board the plane butimmediately after they alighted therefrom, an armored car bumped the stairs. Thatcommenced the battle between the military and the hijackers which led ultimately to theliberation of the surviving crew and the passengers, with the final score of ten (10)passengers and three (3) hijackers dead on the spot and three (3) hijackers captured.City Fiscal Franklin G. Gacal was unhurt. Mrs. Corazon M. Gacal suffered injuries in thecourse of her jumping out of the plane when it was peppered with bullets by the army andafter two (2) hand grenades exploded inside the plane. She was hospitalized at GeneralSantos Doctors Hospital, General Santos City, for two (2) days, spending P245.60 forhospital and medical expenses, Assistant City Fiscal Bonifacio S. Anislag also escapedunhurt but Mrs. Anislag suffered a fracture at the radial bone of her left elbow for which shewas hospitalized and operated on at the San Pedro Hospital, Davao City, and therefore, atDavao Regional Hospital, Davao City, spending P4,500.00. Elma de Guzman died becauseof that battle. Hence, the action of damages instituted by the plaintiffs demanding thefollowing damages, to wit:

Civil Case No. 1701 — City Fiscal Franklin G. Gacal and Mrs. Corazon M. Gacal — actual damages: P245.60 forhospital and medical expenses of Mrs Gacal; P8,995.00 for their personal belongings whichwere lost and not recovered; P50,000.00 each for moral damages; and P5,000.00 forattorney's fees, apart from the prayer for an award of exemplary damages (Record, pp. 4-6,Civil Case No. 1701).

Civil Case No. 1773 — xxx xxx xxx

Civil Case No. 1797 —

xxx xxx xxxThe trial court, on August 26, 1980, dismissed the complaints finding that all the damagessustained in the premises were attributed to force majeure.On September 12, 1980 the spouses Franklin G. Gacal and Corazon M. Gacal, plaintiffs inCivil Case No. 1701, filed a notice of appeal with the lower court on pure questions of law(Rollo, p. 55) and the petition for review on certiorari was filed with this Court on October20, 1980 (Rollo, p. 30).The Court gave due course to the petition (Rollo, p. 147) and both parties filed theirrespective briefs but petitioner failed to file reply brief which was noted by the Court in theresolution dated May 3, 1982 (Rollo, p. 183).Petitioners alleged that the main cause of the unfortunate incident is the gross, wanton andinexcusable negligence of respondent Airline personnel in their failure to frisk thepassengers adequately in order to discover hidden weapons in the bodies of the six (6)hijackers. They claimed that despite the prevalence of skyjacking, PAL did not use a metaldetector which is the most effective means of discovering potential skyjackers among the

passengers (Rollo, pp. 6-7).

Respondent Airline averred that in the performance of its obligation to safely transportpassengers as far as human care and foresight can provide, it has exercised the utmostdiligence of a very cautious person with due regard to all circumstances, but the securitychecks and measures and surveillance precautions in all flights, including the inspection ofbaggages and cargo and frisking of passengers at the Davao Airport were performed andrendered solely by military personnel who under appropriate authority had assumedexclusive jurisdiction over the same in all airports in the Philippines.Similarly, the negotiations with the hijackers were a purely government matter and a militaryoperation, handled by and subject to the absolute and exclusive jurisdiction of the militaryauthorities. Hence, it concluded that the accident that befell RP-C1161 was caused byfortuitous event, force majeure and other causes beyond the control of the respondent

Airline.The determinative issue in this case is whether or not hijacking or air piracy during martiallaw and under the circumstances obtaining herein, is a caso fortuito or force majeure whichwould exempt an aircraft from payment of damages to its passengers whose lives were putin jeopardy and whose personal belongings were lost during the incident.Under the Civil Code, common carriers are required to exercise extraordinary diligence intheir vigilance over the goods and for the safety of passengers transported by them,according to all the circumstances of each case (Article 1733). They are presumed at faultor to have acted negligently whenever a passenger dies or is injured (Philippine Airlines,Inc. v. National Labor Relations Commission, 124 SCRA 583 [1983]) or for the loss,destruction or deterioration of goods in cases other than those enumerated in Article 1734of the Civil Code (Eastern Shipping Lines, Inc. v. Intermediate Appellate Court, 150 SCRA463 [1987]).The source of a common carrier's legal liability is the contract of carriage, and by enteringinto said contract, it binds itself to carry the passengers safely as far as human care andforesight can provide. There is breach of this obligation if it fails to exert extraordinarydiligence according to all the circumstances of the case in exercise of the utmost diligenceof a very cautious person (Isaac v. Ammen Transportation Co., 101 Phil. 1046 [1957];Juntilla v. Fontanar, 136 SCRA 624 [1985]).It is the duty of a common carrier to overcome the presumption of negligence (PhilippineNational Railways v. Court of Appeals, 139 SCRA 87 [1985]) and it must be shown that thecarrier had observed the required extraordinary diligence of a very cautious person as faras human care and foresight can provide or that the accident was caused by a fortuitousevent (Estrada v. Consolacion, 71 SCRA 523 [1976]). Thus, as ruled by this Court, noperson shall be responsible for those "events which could not be foreseen or which thoughforeseen were inevitable. (Article 1174, Civil Code). The term is synonymous with casofortuito (Lasam v. Smith, 45 Phil. 657 [1924]) which is of the same sense as "force majeure"(Words and Phrases Permanent Edition, Vol. 17, p. 362).In order to constitute a caso fortuito or force majeure that would exempt a person fromliability under Article 1174 of the Civil Code, it is necessary that the following elements must

concur: (a) the cause of the breach of the obligation must be independent of the human will(the will of the debtor or the obligor); (b) the event must be either unforeseeable orunavoidable; (c) the event must be such as to render it impossible for the debtor to fulfill hisobligation in a normal manner; and (d) the debtor must be free from any participation in, oraggravation of the injury to the creditor (Lasam v. Smith, 45 Phil. 657 [1924]; Austria v.Court of Appeals, 39 SCRA 527 [1971]; Estrada v. Consolacion, supra; Vasquez v. Court of

Appeals, 138 SCRA 553 [1985]; Juan F. Nakpil & Sons v. Court of Appeals, 144 SCRA 596[1986]). Caso fortuito or force majeure, by definition, are extraordinary events notforeseeable or avoidable, events that could not be foreseen, or which, though foreseen, areinevitable. It is, therefore, not enough that the event should not have been foreseen oranticipated, as is commonly believed, but it must be one impossible to foresee or to avoid.The mere difficulty to foresee the happening is not impossibility to foresee the same(Republic v. Luzon Stevedoring Corporation, 21 SCRA 279 [1967]).

Applying the above guidelines to the case at bar, the failure to transport petitioners safelyfrom Davao to Manila was due to the skyjacking incident staged by six (6) passengers of

the same plane, all members of the Moro National Liberation Front (MNLF), without any



connection with private respondent, hence, independent of the will of either the PAL or of i tspassengers.Under normal circumstances, PAL might have foreseen the skyjacking incident which couldhave been avoided had there been a more thorough frisking of passengers and inspectionof baggages as authorized by R.A. No. 6235. But the incident in question occurred duringMartial Law where there was a military take-over of airport security including the frisking ofpassengers and the inspection of their luggage preparatory to boarding domestic andinternational flights. In fact military take-over was specifically announced on October 20,1973 by General Jose L. Rancudo, Commanding General of the Philippine Air Force in aletter to Brig. Gen. Jesus Singson, then Director of the Civil Aeronautics Administration(Rollo, pp. 71-72) later confirmed shortly before the hijacking incident of May 21, 1976 byLetter of Instruction No. 399 issued on April 28, 1976 (Rollo, p. 72).Otherwise stated, these events rendered it impossible for PAL to perform its obligations in anominal manner and obviously it cannot be faulted with negligence in the performance ofduty taken over by the Armed Forces of the Philippines to the exclusion of the former.Finally, there is no dispute that the fourth element has also been satisfied. Consequentlythe existence of force majeurehas been established exempting respondent PAL from thepayment of damages to its passengers who suffered death or injuries in their persons andfor loss of their baggages.PREMISES CONSIDERED, the petition is hereby DISMISSED for lack of merit and thedecision of the Court of First Instance of South Cotabato, Branch I is hereby AFFIRMED.SO ORDERED.Melencio-Herrera, Padilla, Sarmiento and Regalado, JJ., concur.Pilapil vs. CA Case DigestPilapil vs. Court of Appeals 180 SCRA 546

Facts: On September 16, 1971, Jose Pilapil boarded defendant‘s bus bearing No. 409 atSan Nicolas, Iriga City at about 6:00PM. Upon reaching the vicinity of the cemetery of theMunicipality of Baao, Camarines Sur, on the way to Naga City City, an unidentified man ( abystander) hurled a stone at the left side of the bus, which apparently hit petitioner abovehis left eye. He was then immediately brought by private respondent‘s personnel to theprovincial hospital in Naga City.

Issue: Whether or not the nature of the business of a transportation company requires theassumption of certain risks and the stroking of the bus by a bystander resulting in injury topetitioner-passenger is one such risk from which the common carrier may not exempt itselffrom liability?

Held: The Supreme Court held that while the law requires the highest degree of diligencefrom common carriers in the safe transport of their passengers and creates a presumption

of negligence against them, it does not however, make the carrier an insurer of absolutesafety of its passengers. A tort, committed by a stranger which causes an injury to apassenger does not accord the latter a cause of action against the carrier. The negligencefor which a common carrier is responsible is the negligent omission by the carrier‘semployees to prevent the tort from being committed when the same could have beenforeseen and prevented by them. Further, it is to be noted that when the violation of thecontract is due to the willful acts of strangers, as in the instant case, the degree of careessential to be exercised by the common carrier for the protection of its passenger is onlythat of a good father of the family.



G.R. No. L-36481-2 October 23, 1982AMPARO C. SERVANDO, CLARA UY BICO, plaintiffs-appellees,vs.PHILIPPINE STEAM NAVIGATION CO., defendant-appellant.Zoilo de la Cruz, Jr. & Associate for plaintiff-appellee Amparo Servando.Benedicto, Sumbingco & Associate for appellee Clara Uy Bico.Ross, Salcedo, del Rosario, Bito & Misa for defendant-appellant.

ESCOLIN, J.: This appeal, originally brought to the Court of Appeals, seeks to set aside the decision ofthe Court of First Instance of Negros Occidental in Civil Cases Nos. 7354 and 7428,declaring appellant Philippine Steam Navigation liable for damages for the loss of theappellees' cargoes as a result of a fire which gutted the Bureau of Customs' warehouse inPulupandan, Negros Occidental.The Court of Appeals certified the case to Us because only pure questions of law are raisedtherein.The facts culled from the pleadings and the stipulations submitted by the parties are asfollows:On November 6, 1963, appellees Clara Uy Bico and Amparo Servando loaded on board theappellant's vessel, FS-176, for carriage from Manila to Pulupandan, Negros Occidental, thefollowing cargoes, to wit:

Clara Uy Bico — 1,528 cavans of rice valuedat P40,907.50;

Amparo Servando — 44 cartons of colored paper,toys and general merchandise valued atP1,070.50;

as evidenced by the corresponding bills of lading issued by the appellant. 1 Upon arrival of the vessel at Pulupandan, in the morning of November 18, 1963, thecargoes were discharged, complete and in good order, unto the warehouse of the Bureauof Customs. At about 2:00 in the afternoon of the same day, said warehouse was razed bya fire of unknown origin, destroying appellees' cargoes. Before the fire, however, appelleeUy Bico was able to take delivery of 907 cavans of rice 2 Appellees' claims for the value ofsaid goods were rejected by the appellant.On the bases of the foregoing facts, the lower court rendered a decision, the decretalportion of which reads as follows:

WHEREFORE, judgment is rendered as follows:1. In case No. 7354, the defendant is hereby ordered to pay the plaintiff

Amparo C. Servando the aggregate sum of P1,070.50 with legalinterest thereon from the date of the filing of the complaint until fullypaid, and to pay the costs.2. In case No. 7428, the defendant is hereby ordered to pay to plaintiffClara Uy Bico the aggregate sum of P16,625.00 with legal interestthereon from the date of the filing of the complaint until fully paid, andto pay the costs.

Article 1736 of the Civil Code imposes upon common carriers the duty to observeextraordinary diligence from the moment the goods are unconditionally placed in theirpossession "until the same are delivered, actually or constructively, by the carrier to theconsignee or to the person who has a right to receive them, without prejudice to theprovisions of Article 1738. "The court a quo held that the delivery of the shipment in question to the warehouse of the

Bureau of Customs is not the delivery contemplated by Article 1736; and since the burning

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of the warehouse occurred before actual or constructive delivery of the goods to theappellees, the loss is chargeable against the appellant.It should be pointed out, however, that in the bills of lading issued for the cargoes inquestion, the parties agreed to limit the responsibility of the carrier for the loss or damagethat may be caused to the shipment by inserting therein the following stipulation:

Clause 14. Carrier shall not be responsible for loss or damage toshipments billed 'owner's risk' unless such loss or damage is due tonegligence of carrier. Nor shall carrier be responsible for loss ordamage caused by force majeure, dangers or accidents of the sea orother waters; war; public enemies; . . . fire . ...

We sustain the validity of the above stipulation; there is nothing therein that is contrary tolaw, morals or public policy.

Appellees would contend that the above stipulation does not bind them because it wasprinted in fine letters on the back-of the bills of lading; and that they did not sign the same.This argument overlooks the pronouncement of this Court in Ong Yiu vs. Court of Appeals,promulgated June 29, 1979, 3 where the same issue was resolved in this wise:

While it may be true that petitioner had not signed the plane ticket (Exh.'12'), he is nevertheless bound by the provisions thereof. 'Suchprovisions have been held to be a part of the contract of carriage, andvalid and binding upon the passenger regardless of the latter's lack ofknowledge or assent to the regulation'. It is what is known as a contractof 'adhesion', in regards which it has been said that contracts ofadhesion wherein one party imposes a ready made form of contract onthe other, as the plane ticket in the case at bar, are contracts notentirely prohibited. The one who adheres to the contract is in realityfree to reject it entirely; if he adheres, he gives his consent." (Tolentino,Civil Code, Vol. IV, 1962 Ed., p. 462, citing Mr. Justice J.B.L. Reyes,Lawyer's Journal, Jan. 31, 1951, p. 49).

Besides, the agreement contained in the above quoted Clause 14 is a mere iteration of thebasic principle of law written in Article 1 1 7 4 of the Civil Code:

Article 1174. Except in cases expressly specified by the law, or when itis otherwise declared by stipulation, or when the nature of theobligation requires the assumption of risk, no person shall beresponsible for those events which could not be foreseen, or which,though foreseen, were inevitable.

Thus, where fortuitous event or force majeure is the immediate and proximate cause of theloss, the obligor is exempt from liability for non-performance. The Partidas, 4 the antecedentof Article 1174 of the Civil Code, defines 'caso fortuito' as 'an event that takes place byaccident and could not have been foreseen. Examples of this are destruction of houses,unexpected fire, shipwreck, violence of robbers.'In its dissertation of the phrase 'caso fortuito' the Enciclopedia Juridicada Espanola 5 says:

"In a legal sense and, consequently, also in relation to contracts, a 'caso fortuito' presentsthe following essential characteristics: (1) the cause of the unforeseen and unexpectedoccurrence, or of the failure of the debtor to comply with his obligation, must beindependent of the human will; (2) it must be impossible to foresee the event whichconstitutes the 'caso fortuito', or if it can be foreseen, it must be impossible to avoid; (3) theoccurrence must be such as to render i t impossible for the debtor to fulfill his obligation in anormal manner; and (4) the obligor must be free from any participation in the aggravation ofthe injury resulting to the creditor." In the case at bar, the burning of the customswarehouse was an extraordinary event which happened independently of the will of theappellant. The latter could not have foreseen the event.There is nothing in the record to show that appellant carrier ,incurred in delay in theperformance of its obligation. It appears that appellant had not only notified appellees of thearrival of their shipment, but had demanded that the same be withdrawn. In fact, pursuantto such demand, appellee Uy Bico had taken delivery of 907 cavans of rice before theburning of the warehouse.

Nor can the appellant or its employees be charged with negligence. The storage of thegoods in the Customs warehouse pending withdrawal thereof by the appellees was

undoubtedly made with their knowledge and consent. Since the warehouse belonged toand was maintained by the government, it would be unfair to impute negligence to theappellant, the latter having no control whatsoever over the same.The lower court in its decision relied on the ruling laid down in Yu Biao Sontua vs. Ossorio 6,where this Court held the defendant liable for damages arising from a fire caused by thenegligence of the defendant's employees while loading cases of gasoline and petroleonproducts. But unlike in the said case, there is not a shred of proof in the present case thatthe cause of the fire that broke out in the Custom's warehouse was in any way attributableto the negligence of the appellant or its employees. Under the circumstances, the appellantis plainly not responsible.WHEREFORE, the judgment appealed from is hereby set aside. No costs.SO ORDERED.Makasiar (Chairman), Concepcion, Jr., Guerrero, Abad Santos and De Castro, JJ., concur.

THIRD DIVISION[G.R. No. 135377. October 7, 2003]

DSR-SENATOR LINES AND C.F. SHARP AND COMPANY, INC., petit ioners,vs. FEDERAL PHOENIX ASSURANCE CO., INC.,respondent .

D E C I S I O NSANDOVAL-GUTIERREZ, J .:

Before us is a petition for review on certiorar i [1] assailing the Decision[2] dated June 5,1998 of the Court of Appeals in CA-G.R. CV No. 50833 which affirmed the Decision of theRegional Trial Court (RTC), Manila City, Branch 16, in Civil Case No. 94-69699, ―FederalPhoenix Assurance Company, Inc. vs. DSR-Senator Lines and C.F. Sharp & Co., Inc., ‖ fordamages arising from the loss of cargo while in transit.

Berde Plants, Inc. (Berde Plants) delivered 632 units of artificial trees to C.F. Sharpand Company, Inc. (C.F. Sharp), the General Ship Agent of DSR-Senator Lines, a foreignshipping corporation, for transportation and delivery to the consignee, Al-Mohr InternationalGroup, in Riyadh, Saudi Arabia. C.F. Sharp issued International Bill of Lading No. SENUMNL-26548[3] for the cargo with an invoice value of $34,579.60. Under the Bill of Lading,the port of discharge for the cargo was at the Khor Fakkan port and the port of delivery wasRiyadh, Saudi Arabia, via Port Dammam. The cargo was loaded in M/S ―Arabian Senator.‖

Federal Phoenix Assurance Company, Inc. (Federal Phoenix Assurance) insured thecargo against all risks in the amount of P941,429.61.[4]

On June 7, 1993, M/S ―Arabian Senator‖ left the Manila South Harbor for Saudi Arabia with the cargo on board. When the vessel arrived in Khor Fakkan Port, the cargowas reloaded on board DSR-Senator Lines‘ feeder vessel, M/V ―Kapitan Sakharov,‖ boundfor Port Dammam, Saudi Arabia. However, while in transit, the vessel and all its cargocaught fire.

On July 5, 1993, DSR-Senator Lines informed Berde Plants that M/V ―KapitanSakharov‖ with its cargo was gutted by fire and sank on or about July 4, 1993. OnDecember 16, 1993, C.F. Sharp issued a certification to that effect.

Consequently, Federal Phoenix Assurance paid Berde Plants P941,429.61corresponding to the amount of insurance for the cargo. In turn Berde Plants executed inits favor a ―Subrogation Receipt‖[5] dated January 17, 1994.

On February 8, 1994, Federal Phoenix Assurance sent a letter to C.F. Sharpdemanding payment of P941,429.61 on the basis of the Subrogation Receipt. C.F. Sharpdenied any liability on the ground that such liability was extinguished when the vesselcarrying the cargo was gutted by fire.

Thus, on March 11, 1994, Federal Phoenix Assurance filed with the RTC, Branch 16,Manila a complaint for damages against DSR-Senator Lines and C.F. Sharp, praying thatthe latter be ordered to pay actual damages of P941,429.61, compensatory damagesof P100,000.00 and costs.

On August 22, 1995, the RTC rendered a Decision in favor of Federal Phoenix Assurance, the dispositive portion of which reads:―WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff andagainst the defendants who are hereby ordered jointly and severally to pay plaintiff:

I. The amount of P941,439.61 (should be P941,429.61[6]) with legal interest of6% per annum from the date of the letter of demand of February 8, 1993

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(EXH. L) and 12% per annum from the date the judgment becomes finaland executory until its satisfaction (Eastern Shipping Lines vs. Court of

Appeals, G.R. No. 97412, July 12, 1994);II. The amount of P15,000.00 by way of reasonable attorney‘s fees; and III. To pay costs.

―The counterclaim of defendants is DISMISSED. ―SO ORDERED.‖[7]

On appeal, the Court of Appeals rendered a Decision dated June 5, 1998, affirmingthe RTC Decision, thus:―In the present recourse, the appellant carrier was presumed to have acted negligently forthe fire that gutted the feeder vessel and the consequent loss or destruction of thecargo. Hence, the appellant carrier is liable for appellee‘s claim under the New Civil Codeof the Philippines.―Contrary to C.F. Sharp and Co., Inc.‘s pose, its liability as ship agent continued andremained until the cargo was delivered to the consignee. The status of the appellant asship agent subsisted and its liability as a ship agent was co-terminous with and subsistedas long as the cargo was not delivered to the consignee under the terms of the Bill ofLading.―IN LIGHT OF ALL THE FOREGOING, the appeal of the appellants is DISMISSED. TheDecision appealed from is affirmed. With costs against the appellants.―SO ORDERED.‖[8]

On September 7, 1998, the Court of Appeals denied the motion for reconsideration ofDSR-Senator Lines and C.F. Sharp, prompting them to file with this Court the instantpetition.

We find the petition bereft of merit. Article 1734 of the Civil Code provides:―Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration

of the goods, unless the same is due to any of the following causes only:(1)Flood, storm, earthquake, lightning, or other natural disaster or calamity;(2) Act of the public enemy in war, whether international or civil;(3) Act or omission of the shipper or owner of the goods;(4) The character of the goods or defects in the packing or in the containers;(5) Order or act of competent public authority.‖

Fire is not one of those enumerated under the above provision which exempts acarrier from liability for loss or destruction of the cargo.

In Eastern Shipping Lines, Inc. vs. Intermediate Appellate Court ,[9] we ruled that sincethe peril of fire is not comprehended within the exceptions in Article 1734, then the commoncarrier shall be presumed to have been at fault or to have acted negligently, unless itproves that it has observed the extraordinary diligence required by law.

Even if fire were to be considered a natural disaster within the purview of Article1734, it is required under Article 1739[10] of the same Code that the natural disaster must

have been the proximate and only cause of the loss, and that the carrier has exerciseddue diligence to prevent or minimize the loss before, during or after the occurrenceof the disaster.

We have held that a common carrier‘s duty to observe the requisite diligence in theshipment of goods lasts from the time the articles are surrendered to or unconditionallyplaced in the possession of, and received by, the carrier for transportation until delivered toor until the lapse of a reasonable time for their acceptance by the person entitled to receivethem. When the goods shipped either are lost or arrive in damaged condition, apresumption arises against the carrier of its failure to observe that diligence, and there neednot be an express finding of negligence to hold it liable.[11]

Common carriers are obliged to observe extraordinary diligence in the vigilance overthe goods transported by them. Accordingly, they are presumed to have been at fault or tohave acted negligently if the goods are lost, destroyed or deteriorated. There are very fewinstances when the presumption of negligence does not attach and these instances areenumerated in Article 1734. In those cases where the presumption is applied, the common

carrier must prove that it exercised extraordinary diligence in order to overcome thepresumption.[12]

Respondent Federal Phoenix Assurance raised the presumption of negligenceagainst petitioners. However, they failed to overcome it by sufficient proof of extraordinarydiligence.

WHEREFORE, the instant petition is DENIED. The assailed Decision of the Court of Appeals dated June 5, 1998, in CA-G.R. CV No. 50833 is hereby AFFIRMED.

SO ORDERED.Puno, J., (Chairman), Panganiban, and Carpio Morales JJ., concur .Corona, J., on leave.



G.R. Nos. 74387-90 November 14, 1988BATANGAS LAGUNA TAYABAS BUS COMPANY & ARMANDO PON, petitioners,vs.INTERMEDIATE APPELLATE COURT, THE HEIRS OF PAZ VDA. DE PAMFILO, THEHEIRS OF NORMA NERI, and BAYLON SALES and NENA VDA. DEROSALES, respondents.Sibal, Custodia, Santos & Nofuente for petitioners.Restituto L. Opis for respondents Pamfilos and Rosaleses.Citizens Legal Assistance Office for N. Neri and Baylon Sales.

PARAS, J. : Before Us is a Petition to Review by Certiorari, the decision 1 of the respondent appellatecourt which affirmed with modification the joint decision of the trial court in four (4) casesinvolving similar facts and issues, finding favorably for the plaintiffs (private respondentsherein), the dispositive portion of said appellate judgment reading as follows:

WHEREFORE, with the modification that the death indemnity is raisedto P30,000.00 to each set of the victims' heirs, the rest of the judgmentappealed from is hereby affirmed in toto. Costs against the defendants-appellants.SO ORDERED. (p. 20, Rollo)

From the records of the case We have gathered the following antecedent facts:The collision between Bus No. 1046 of the Batangas Laguna Tayabas Bus Company(BLTB, for brevity) driven by Armando Pon and Bus No. 404 of Superlines TransportationCompany (Superlines, for brevity) driven by Ruben Dasco took place at the highwaytraversing Barangay Isabong, Tayabas, Quezon in the afternoon of August 11, 1978, whichcollision resulted in the death of Aniceto Rosales, Francisco Pamfilo and Romeo Neri and in

several injuries to Nena Rosales (wife of Anecito) and Baylon Sales, all passengers of theBLTB Bus No. 1046. The evidence shows that as BLTB Bus No. 1046 was negotiating thebend of the highway, it tried to overtake a Ford Fiera car just as Bus No. 404 of Superlineswas coming from the opposite direction. Seeing thus, Armando Pon (driver of the BLTBBus) made a belated attempt to slacken the speed of his bus and tried to return to hisproper lane. It was an unsuccessful try as the two (2) buses collided with each other.Nena Vda. de Rosales and Baylon Sales and the surviving heirs of the deceased FranciscoPamfilo, Aniceto Rosales and Romeo Neri instituted separate cases in the Court o f FirstInstance of Marinduque against BLTB and Superlines together with their respective driverspraying for damages, attorney's fees and litigation expenses plus costs. Criminal casesagainst the drivers of the two buses were filed in the Court of First Instance of Quezon.Defendants BLTB and Superlines, together with their drivers Pon and Dasco, denied liabilityby claiming that they exercised due care and diligence and shifted the fault, against eachother. They all interposed counterclaims against the plaintiffs and crossclaims against eachother.

After trial on the merits, the lower court exonerated defendants Superlines and its driverDasco from liability and attributed sole responsibility to defendants BLTB and its driver Pon,



























and ordered them jointly and severally to pay damages to the plaintiffs. Defendants BLTBand Armando Pon appealed from the decision of the lower court to respondent appellatecourt which affirmed with modification the judgment of the lower court as earlier stated.Hence, this petition to review by certiorari of defendant BLTB assigning a lone error, to wit:

THE INTERMEDIATE APPELLATE COURT ERRED IN ADJUDGINGTHAT THE ACTIONS OF PRIVATE RESPONDENTS ARE BASEDON CULPA CONTRACTUAL. (p. 12, Rollo)

It is argued by petitioners that if the intention of private respondents were to file an actionbased on culpa contractual or breach of contract of carriage, they could have done so bymerely impleading BLTB and its driver Pon. As it was in the trial court, private respondentsfiled an action against all the defendants basing their action on culpa aquiliana or tort.Petitioners' contentions deserve no merit. A reading of the respondent court's decisionshows that it anchored petitioners' liability both on culpa contractual and culpa aquiliana, towit:

The proximate cause of the collision resulting in the death of three andinjuries to two of the passengers of BLTB was the negligence of thedriver of the BLTB bus, who recklessly operated and drove said bus byovertaking a Ford Fiera car as he was negotiating the ascending bendof the highway (tsn, October 4, 1979, pp. 9-10, 35, 36, 61; Exhibit 6Superlines, p. 47) which was divided into two lanes by a continuousyellow strip (tsn, October 4, 1979, p. 36). The driver of the BLTB busadmitted in his cross-examination that the continuous yellow line on theascending bend of the highway signifies a no-overtaking zone (tsn,October 4, 1979, p. 36). It is no surprise then that the driver of theSuperlines bus was exonerated by the lower court. He had a validreason to presuppose that no one would overtake in such a dangeroussituation. These facts show that patient imprudence of the BLTB driver.It is well settled that a driver abandoning his proper lane for thepurpose of overtaking another vehicle in ordinary situation has the dutyto see that the road is clear and not to proceed if he can not do so insafety (People v. Enriquez, 40 O.G. No. 5, 984).... Before attempting to pass the vehicle ahead, the rear driver mustsee that the road is clear and if there is no sufficient room for a safepassage, or the driver ahead does not turn out so as to affordopportunity to pass, or if, after attempting to pass, the driver of theovertaking vehicle finds that he cannot make the passage in safety, thelatter must slacken his speed so as to avoid the danger of a collision,even bringing his car to a stop if necessary. (3-4 Huddy Encyclopediaof Automobile Law, Sec. 212, p. 195).The above rule becomes more particularly applicable in this case whenthe overtaking took place on an ascending curved highway divided into

two lanes by a continuous yellow line. Appellant Pon should haveremembered that:When a motor vehicle is approaching or rounding a curve there isspecial necessity for keeping to the right side of the road and the driverhas not the right to drive on the left hand side relying upon having timeto turn to the right if a car is approaching from the opposite directioncomes into view. (42 C.J. 42 906).Unless there is proof to the contrary, it is presumed that a persondriving a motor vehicle has been negligent if at the time of the mishap,he was violating any traffic regulation. (Art. 2165, Civil Code).In failing to observe these simple precautions, BLTB's driverundoubtedly failed to act with the diligence demanded by thecircumstances.We now come to the subject of liability of the appellants.For his own negligence in recklessly driving the truck owned by his

employer, appellant Armando Pon is primarily liable (Article 2176, CivilCode).<äre||anº•1àw>

On the other hand the liability of Pon's employer, appellant BLTB, isalso primary, direct and immediate in view of the fact that the death ofor injuries to its passengers was through the negligence of itsemployee (Marahan v. Mendoza, 24 SCRA 888, 894), and such liabilitydoes not cease even upon proof that BLTB had exercised all thediligence of a good father of a family in the selection and supervision ofits employees (Article 1759, Civil Code).The common carrier's liability for the death of or injuries to itspassengers is based on its contractual obligation to carry itspassengers safely to their destination. That obligation is so serious thatthe Civil Code requires "utmost diligence of very cautious person(Article 1755, Civil Code). They are presumed to have been at fault orto have acted negligently unless they prove that they have observedextraordinary diligence" (Article 1756, Civil Code). In the present case,the appellants have failed to prove extraordinary diligence. Indeed, thislegal presumption was confirmed by the fact that the bus driver ofBLTB was negligent. It must follow that both the driver and the ownermust answer for injuries or death to its passengers.The liability of BLTB is also solidarily with its driver (Viluan v. Court of

Appeals, 16 SCRA 742, 747) even though the liability of the driversprings from quasi delict while that of the bus company from contract.(pp. 17-19, Rollo)

Conclusively therefore in consideration of the foregoing findings of the respondent appellatecourt it is settled that the proximate cause of the collision resulting in the death of three andinjuries to two of the passengers of BLTB was the sole negligence of the driver of the BLTBBus, who recklessly operated and drove said bus in a lane where overtaking is not allowedby Traffic Rules and Regulations. Such negligence and recklessness is binding againstpetitioner BLTB, more so when We consider the fact that in an action based on a contractof carriage, the court need not make an express finding of fault or negligence on the part ofthe carrier in order to hold it responsible for the payment of the damages sought by thepassenger. By the contract of carriage, the carrier BLTB assumed the express obligation totransport the passengers to their destination safely and to observe extraordinary diligencewith a due regard for all the circumstances, and any injury that might be suffered by itspassengers is right away attributable to the fault or negligence of the carrier (Art. 1756, NewCivil Code).Petitioners also contend that "a common carrier is not an absolute insurer against all risksof travel and are not liable for acts or accidents which cannot be foreseen or inevitable andthat responsibility of a common carrier for the safety of its passenger prescribed in Articles1733 and 1755 of the New Civil Code is not susceptible of a precise and definiteformulation." (p. 13, Rollo) Petitioners' contention holds no water because they had totallyfailed to point out any factual basis for their defense of force majeure in the light of the

undisputed fact that the cause of the collision was the sole negligence and recklessness ofpetitioner Armando Pon. For the defense of force majeure or act of God to prosper theaccident must be due to natural causes and exclusively without human intervention.WHEREFORE, premises considered, the appealed decision is hereby AFFIRMED.SO ORDERED.Melencio-Herrera (Chairperson), Padilla, Sarmiento and Regalado, JJ., concur.




ManilaTHIRD DIVISION

G.R. No. 75308 March 23, 1992LOPE SARREAL, SR.,vs.JAPAN AIRLINES CO., LTD., and HON. INTERMEDIATE APPELATECOURT, respondents.

GUTIERREZ, JR., J.: This is a petition for a review of the Intermediate appelate Court's (now the Court of

Appeals) decision promulgated on April 9, 1986, reversing the decision of the Regional Trialcourt dated April 11, 1984.The facts are as follows:The petitioner alleged in his complaint that the is a prominent international boxingmatchmaker and business manager of world champion boxers which require him to takefrequent international trips.On September 14, 1979, the petitioner purchased in Bangkok from private respondentJapan Air Lines (JAL) ticket no. 131-4442-517-368, having various foreign destinations fromBangkok and back to Bangkok.On or about June 23, 1980, he was in Los Angleles, USA with his business representative

Atty. Pol Tiglao, and Luis Espada, the boxing manager of World Flyweight BoxingChampion Hilario Zapata. They were negotiating a possible match between the latter andthe winner of the " Netrnoi Vorasing - Brigildo Cañada" main event fight which wasscheduled on July 4, 1980 in Manila. This agreement was to be confirmed by the petitionerthrough overseas call in Manila on or before July 2, 1980.The petitioner then flew from Los Angeles to Tokyo arriving thereat on June 26, 1980.

At the Narita Airport Office, the petitioner inquired if there was a JAL flight from Bangkok toManila on July 2, 1980. He explained to a lady employee of JAL that he had a veryimportant business in Manila on July 2, 1980. He also told her that i f he could not take aflight from Bangkok to Manila on that date, he would not be going to Bangkok anymore.The JAL lady employee looked into her scheduled book put a stamp on the petitioner'sticket and told him not to worry because she has endorsed his JAL ticket to ThaiInternational leaving Bangkok on July 2, 1980 for Manila.Relying on the assurance of the lady employee, the petitioner then proceeded to Bangkok.However, in the morning of July 2, 1980, when the petitioner was about to board the saidThai International, he was not allowed to board the said plane through it had available seatsbecause he was told that his ticket was not endorseable.Since the petitioner failed to reach Manila by July 2, 1980, Espada cancelled his transaction

with the petitioner and decided to have the champion fight in Japan instead.Had the petitioner been able to reach Manila on July 2, 1980, he could have confirmed theworld championship match between the winner Vorasing and the champion Zapata fromwhich Vorasing and the champion Zapata from which Vorasing could have earned at leastUS$20,000.00, twenty percent (20%) of which was equivalent to US$4,000.00 orapproximately P30,000.00 which could have received by him and had the said world titlefight been realized, petitioner would have earned around $120,000.00 net or approximatelyP900,000.00. (Rollo, p. 39)This led the petitioner to file an action for damages with the Regional Trail Court (RTC ),Pasay City against private respondent JAL premised on the breach of contract of carriage.On April 11, 1984, the RTC of Pasay City rendered a decision with the following dispositiveportion:

WHEREFORE, judgment is hereby rendered ordering defendant Japan Air Lines to pay plaintiff the following amounts:a) $20,000.00 or its pesos equivalent with legal rate of interest thereon

from the time of filing of the complaint until the same is fully paid;b) P50,000.00 as moral damages;

c) P30,000.00 as exemplary damages;d) P10,00.00 for and as attorney's fees; ande) the costs of suit.SO ORDERED. (p. 273, Record) (Rollo, p. 28)

On appeal by JAL, the Court of Appeals reversed and set aside said decision and entered anew one dismissing the complaint for damages. (Rollo, p. 35)The petitioner now alleges that the respondent Court of Appeals has decided a question ofsubstance in a way that is not in accord with law and/or applicable decisions of this Court;that the questioned decision dated April 9, 1986 and the resolution of July 11, 1986 arecontrary to and not supported by the evidence on record; and that the Court of Appealscommitted grave abuse of discretion amounting to lack of excess of jurisdiction in issuing itsaforesaid Decision and the Resolution in question.

At the outset, it appears that the above-stated issues involve a review of the factual findingsof the respondent court which this Court is not prepared to do under the circumstances ofthis case. It is a long established and well observed axiom that subject only to a view clearlydefined exceptions, the findings of facts of the Court of Appeals are conclusive on this courtand are not reviewable by it. (Lauron v. Court of Appeals, 184 SCRA 215 {1990]; SocialSecurity System v. Court of Appeals, 177 SCRA 1 {1989]; Rizal Cement Co., Inc. v.Villareal, 135 SCRA 15 [1985]In finding for the petitioner, the lower court held that JAL through the lady employee atNarita Airport had endorsed petitioner's ticket to Thai International on its July 2, 1980 10:30

A.M. scheduled flight. Assuming that petitioner's ticket was not at all endorsed to ThaiInternational, the petitioner was nevertheless assured of a seat in Thai International by theJAL lady employee. JAL was held liable for breaching the contract of carriage entered intowhen it issued the ticket to the petitioner. JAL undertook the obligation to carry petitioner tohis destination. The trial court ruled that since on July 2, 1980, JAL had no flight schedulefrom Bangkok to Manila, the request made by the lady employee of JAL to ThaiInternational to accommodate petitioner in the latter's flight No. 620 on July 2, 1980 forBangkok to Manila and the undisputed assurance by the said lady employee that petitionerwould have a seat in that flight became definitely part of that contract of carriage.This argument is not based on the records. The evidence on record, reveals that the ticketbears no endorsement at all nor an assurance that petitioner would get a seat in ThaiInternational flight from Bangkok to Manila on July 2.The ticket purchased by the petitioner was a discounted one and as testified by the JALTraffic Supervisor, it was not endorseable. The petitioner also testified that it was not hisintention to have his ticket endorsed. We quote:

Atty. Fojas:You mentioned also a while ago that yourequested the Japan Air Lines Office In Tokyo foran indorsement of this ticket now marked Exhibit"A". To which air line did you request the

indorsement. A — I don't exactly request because I do not knowthe schedule. What I actually request to Japan AirLines Office was to book me in any flight fromBangkok to Manila on July 2, and she looked herbook, look for the schedule and she told me shewill indorse my ticket to Thai International. (p. 11,tsn, February 10, 1981)

xxx xxx xxxQ — What else if any did the lady of the Japan AirLines in Tokyo tell you in connection with yourrequest for endorsement of the ticket relative toyour trip from Bangkok to Manila on July 2, 1980?

xxx xxx xxx A — It is not an indorsement. It is a request for a

date, any date or any flight leaving on July 2, Ididn't request for an indorsement.

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