RCL OF SINGAPORE vs. NETHERLANDSFor our resolution is the petition for review oncertiorarifiled by petitioners Regional Container Lines of Singapore (RCL) and EDSA Shipping Agency (EDSA Shipping) to annul and set aside the decision[1]and resolution[2]of the Court of Appeals (CA) datedMay 26, 2004andMay 10, 2005, respectively, in CA-G.R. CV No. 76690.RCL is a foreign corporation based inSingapore. It does business in thePhilippinesthrough its agent, EDSA Shipping, a domestic corporation organized and existing under Philippine laws. Respondent Netherlands Insurance Company (Philippines), Inc. (Netherlands Insurance) is likewise a domestic corporation engaged in the marine underwriting business.FACTUAL ANTECEDENTSThe pertinent facts, based on the records are summarized below.OnOctober 20, 1995, 405 cartons of Epoxy Molding Compound were consigned to be shipped fromSingaporetoManilafor Temic Telefunken MicroelectronicsPhilippines(Temic).U-Freight Singapore PTE Ltd.[3](U-Freight Singapore), a forwarding agent based inSingapore, contracted the services of Pacific Eagle Lines PTE. Ltd. (Pacific Eagle) to transport the subject cargo.The cargo was packed, stored, and sealed by Pacific Eagle in its Refrigerated Container No. 6105660 with Seal No. 13223.As the cargo was highly perishable, the inside of the container had to be kept at a temperature of 0 Celsius. Pacific Eagle then loaded the refrigerated container on board theM/V Piya Bhum, a vessel owned by RCL, with which Pacific Eagle had a slot charter agreement. RCL duly issued its own Bill of Lading in favor of Pacific Eagle.To insure the cargo against loss and damage, Netherlands Insurance issued a Marine Open Policy in favor of Temic, as shown by MPO-21-05081-94 and Marine Risk Note MRN-21 14022, to cover all losses/damages to the shipment.OnOctober 25, 1995, theM/V Piya Bhumdocked inManila.After unloading the refrigerated container, it was plugged to the power terminal of the pier to keep its temperature constant.Fidel Rocha (Rocha), Vice-President for Operations of Marines Adjustment Corporation, accompanied by two surveyors, conducted a protective survey of the cargo. They found that based on the temperature chart, the temperature reading was constant from October 18, 1995 to October 25, 1995 at 0 Celsius.However, atmidnightofOctober 25, 1995 when the cargo had already been unloaded from the ship the temperature fluctuated with a reading of 33 Celsius. Rocha believed the fluctuation was caused by the burnt condenser fan motor of the refrigerated container.OnNovember 9, 1995, Temic received the shipment. It found the cargo completely damaged. Temic filed a claim for cargo loss against Netherlands Insurance, with supporting claims documents. The Netherlands Insurance paid Temic the sum ofP1,036,497.00 under the terms of the Marine Open Policy. Temic then executed a loss and subrogation receipt in favor of Netherlands Insurance.Seven months from delivery of the cargo or on June 4, 1996, Netherlands Insurance filed a complaint for subrogation of insurance settlement with the Regional Trial Court, Branch 5, Manila, against the unknown owner ofM/V Piya BhumandTMS Ship Agencies (TMS), the latter thought to be the local agent ofM/V Piya Bhums unknown owner.[4]The complaint was docketed as Civil Case No. 96-78612.Netherlands Insurance amended the complaint onJanuary 17, 1997to implead EDSA Shipping, RCL, Eagle Liner Shipping Agencies, U-Freight Singapore, and U-Ocean (Phils.), Inc. (U-Ocean), as additional defendants. A third amended complaint was later made, impleading Pacific Eagle in substitution of Eagle Liner Shipping Agencies.TMS filed its answer to the original complaint. RCL and EDSA Shipping filed their answers with cross-claim and compulsory counterclaim to the second amended complaint. U-Ocean likewise filed an answer with compulsory counterclaim and cross-claim. During the pendency of the case, U-Ocean, jointly with U-Freight Singapore, filed another answer with compulsory counterclaim. Only Pacific Eagle and TMS filed their answers to the third amended complaint.The defendants all disclaimed liability for the damage caused to the cargo, citing several reasons why Netherland Insurances claims must be rejected.Specifically, RCL and EDSA Shipping denied negligence in the transport of the cargo; they attributed any negligence that may have caused the loss of the shipment to their co-defendants. They likewise asserted that no valid subrogation exists, as the payment made by Netherlands Insurance to the consignee was invalid.By way of affirmative defenses, RCL and EDSA Shipping averred that the Netherlands Insurance has no cause of action, and is not the real party-in-interest, and that the claim is barred by laches/prescription.After Netherlands Insurance had made its formal offer of evidence, the defendants including RCL and EDSA Shipping sought leave of court to file their respective motions to dismiss based on demurrer to evidence.RCL and EDSA Shipping, in their motion, insisted that Netherlands Insurance had (1) failed to prove any valid subrogation, and (2) failed to establish that any negligence on their part or that the loss was sustained while the cargo was in their custody.OnMay 22, 2002, the trial court handed down an Order dismissing Civil Case No. 96-78612 on demurrer to evidence. The trial court ruled that while there was valid subrogation, the defendants could not be held liable for the loss or damage, as their respective liabilities ended at the time of the discharge of the cargo from the ship at thePortofManila.Netherlands Insurance seasonably appealed the order of dismissal to the CA.OnMay 26, 2004, the CA disposed of the appeal as follows:WHEREFORE, in view of the foregoing,the dismissal of the complaint against defendants Regional Container Lines and Its local agent, EDSA ShippingAgency, is REVERSED and SET ASIDE.The dismissal of the complaint against the other defendants is AFFIRMED. Pursuant to Section 1, Rule 33 of the 1997 Rules of Civil Procedure, defendants Regional Container Lines and EDSA Shipping Agency are deemed to have waived the right to present evidence.As such, defendantsRegional Container Lines and EDSA Shipping Agency are ordered to reimburse plaintiff in the sum ofP1,036,497.00 with interestfrom date hereof until fully paid.No costs.SO ORDERED. [Emphasis supplied.]The CA dismissed Netherland Insurances complaint against the other defendants after finding that the claim had already been barred by prescription.[5]Having been found liable for the damage to the cargo, RCL and EDSA Shipping filed a motion for reconsideration, but the CA maintained its original conclusions.The sole issue for our resolution iswhether the CA correctly held RCL and EDSA Shipping liable as common carriers under the theory of presumption of negligence.THE COURTS RULINGThe present case is governed by the following provisions of the Civil Code:ART. 1733. Common carriers, from the nature of their business and for reasons of public policy,are bound to observe extraordinary diligence in the vigilance over the goodsand for the safety of the passengers transported by them according to all the circumstances of each case.Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in articles1755 and 1756.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 of 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.ART. 1735. In all cases other that those mentioned in Nos. 1, 2, 3, 4 and 5 of the preceding article,if the goods are lost, destroyed, or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required by article 1733.ART. 1736.The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the sane are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them,without prejudice to the provisions of articles 1738.ART. 1738. The extraordinary liability of the common carrier continues to be operative even during the time the goods are stored in a warehouse of the carrier at the place of destination, until the consignee has been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise dispose of them.ART. 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the character of the goods, orthe faulty nature of the packing or of the containers, the common carrier must exercise due diligence to forestall or lessen the loss.InCentral Shipping Company, Inc. v. Insurance Company of North America,[6]we reiterated the rules for the liability of a common carrier for lost or damaged cargo as follows:(1)Common carriers are bound to observe extraordinary diligence over the goods they transport, according to all the circumstances of each case;(2)In the event of loss, destruction, or deterioration of the insured goods, common carriers are responsible, unless they can prove that such loss, destruction, or deterioration was brought about by, among others, flood, storm, earthquake, lightning, or other natural disaster or calamity; and(3)In all other cases not specified under Article 1734 of the Civil Code, common carriers are presumed to have been at fault or to have acted negligently, unless they observed extraordinary diligence.[7]In the present case, RCL and EDSA Shipping disclaim any responsibility for the loss or damage to the goods in question. They contend that the cause of the damage to the cargo was the fluctuation of the temperature in the reefer van, which fluctuation occurredafterthe cargo had already been discharged from the vessel; no fluctuation, they point out, arose when the cargo was still on boardM/V Piya Bhum. As the cause of the damage to the cargo occurred after the same was already discharged from the vessel and was under the custody of the arrastre operator (International Container Terminal Services, Inc. orICTSI), RCL and EDSA Shipping posit that the presumption of negligence provided in Article 1735 of the Civil Code should not apply.What applies in this case is Article 1734, particularly paragraphs 3 and 4 thereof, which exempts the carrier from liability for loss or damage to the cargo when it is caused either by an act or omission of the shipper or by the character of the goods or defects in the packing or in the containers. Thus, RCL and EDSA Shipping seek to lay the blame at the feet of other parties.We do not find the arguments of RCL and EDSA Shipping meritorious.A common carrier is presumed to have been negligent if it fails to prove that it exercised extraordinary vigilance over the goods it transported.[8]When the goods shipped are either lost or arrived in damaged condition, a presumption arises against the carrier of its failure to observe that diligence, and there need not be an express finding of negligence to hold it liable.[9]To overcome the presumption of negligence, the common carrier must establish by adequate proof that it exercised extraordinary diligence over the goods.It must do more than merely show that some other party could be responsible for the damage.[10]In the present case, RCL and EDSA Shipping failed to prove that they did exercise that degree of diligence required by law over the goods they transported.Indeed, there is sufficient evidence showing that the fluctuation of the temperature in the refrigerated container van, as recorded in the temperature chart, occurredafterthe cargo had been discharged from the vessel and was already under the custody of the arrastre operator, ICTSI. This evidence, however, does not disprove that the condenser fan which caused the fluctuation of the temperature in the refrigerated container was not damaged while the cargo was being unloaded from the ship.It is settled in maritime law jurisprudence thatcargoes while being unloaded generally remain under the custody of the carrier;[11]RCL and EDSA Shipping failed to dispute this.RCL and EDSA Shipping could have offered evidence before the trial court to show that the damage to the condenser fan did not occur: (1) while the cargo was in transit; (2) while they were in the act of discharging it from the vessel; or (3) while they were delivering it actually or constructively to the consignee.They could have presented proof to show that they exercised extraordinary care and diligence in the handling of the goods, but they opted to file a demurrer to evidence.As the order granting their demurrer was reversed on appeal, the CA correctly ruled that they are deemed to have waived their right to present evidence,[12]and the presumption of negligence must stand.It is for this reason as well that we find RCL and EDSA Shippings claim that the loss or damage to the cargo was caused by a defect in the packing or in the containers.To exculpate itself from liability for the loss/damage to the cargo under any of the causes, the common carrier is burdened to prove any of the causes in Article 1734 of the Civil Code claimed by it by a preponderance of evidence.If the carrier succeeds, the burden of evidence is shifted to the shipper to prove that the carrier is negligent.[13]RCL and EDSA Shipping, however, failed to satisfy this standard of evidence and in fact offered no evidence at all on this point; a reversal of a dismissal based on a demurrer to evidence bars the defendant from presenting evidence supporting its allegations.WHEREFORE, weDENYthe petition for review oncertiorarifiled by the Regional Container Lines of Singapore and EDSA Shipping Agency. The decision of the Court of Appeals datedMay 26, 2004in CA-G.R. CV No. 76690 isAFFIRMEDIN TOTO.Costs against the petitioners.SO ORDERED.

THE PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC.,petitioner,vs.MGG MARINE SERVICES, INC. and DOROTEO GAERLAN,respondents.KAPUNAN,J.:This petition for review seeks the reversal of the Decision, dated September 23, 1998, of the Court of Appeals in CA-G.R. CV No. 43915,1which absolved private respondents MCG Marine Services, Inc. and Doroteo Gaerlan of any liability regarding the loss of the cargo belonging to San Miguel Corporation due to the sinking of the M/V Peatheray Patrick-G owned by Gaerlan with MCG Marine Services, Inc. as agent.On March 1, 1987, San Miguel Corporation insured several beer bottle cases with an aggregate value of P5,836,222.80 with petitioner Philippine American General Insurance Company.2The cargo were loaded on board the M/V Peatheray Patrick-G to be transported from Mandaue City to Bislig, Surigao del Sur.After having been cleared by the Coast Guard Station in Cebu the previous day, the vessel left the port of Mandaue City for Bislig, Surigao del Sur on March 2, 1987. The weather was calm when the vessel started its voyage.The following day, March 3, 1987, M/V Peatheray Patrick-G listed and subsequently sunk off Cawit Point, Cortes, Surigao del Sur. As a consequence thereof, the cargo belonging to San Miguel Corporation was lost.Subsequently, San Miguel Corporation claimed the amount of its loss from petitioner.Upon petitioner's request, on March 18, 1987, Mr. Eduardo Sayo, a surveyor from the Manila Adjusters and Surveyors Co., went to Taganauan Island, Cortes, Surigao del Sur where the vessel was cast ashore, to investigate the circumstances surrounding the loss of the cargo. In his report, Mr. Sayo stated that the vessel was structurally sound and that he did not see any damage or crack thereon. He concluded that the proximate cause of the listing and subsequent sinking of the vessel was the shifting of ballast water from starboard to portside. The said shifting of ballast water allegedly affected the stability of the M/V Peatheray Patrick-G.Thereafter, petitioner paid San Miguel Corporation the full amount of P5,836,222.80 pursuant to the terms of their insurance contract.1wphi1.ntOn November 3, 1987, petitioner as subrogee of San Miguel Corporation filed with the Regional Trial Court (RTC) of Makati City a case for collection against private respondents to recover the amount it paid to San Miguel Corporation for the loss of the latter's cargo.Meanwhile, the Board of Marine Inquiry conducted its own investigation of the sinking of the M/V Peatheray Patrick-G to determine whether or not the captain and crew of the vessel should be held responsible for the incident.3On May 11, 1989, the Board rendered its decision exonerating the captain and crew of the ill-fated vessel for any administrative liability. It found that the cause of the sinking of the vessel was the existence of strong winds and enormous waves in Surigao del Sur, a fortuitous event that could not have been for seen at the time the M/V Peatheray Patrick-G left the port of Mandaue City. It was further held by the Board that said fortuitous event was the proximate and only cause of the vessel's sinking.On April 15, 1993, the RTC of Makati City, Branch 134, promulgated its Decision finding private respondents solidarily liable for the loss of San Miguel Corporation's cargo and ordering them to pay petitioner the full amount of the lost cargo plus legal interest, attorney's fees and costs of suit.4Private respondents appealed the trial court's decision to the Court of Appeals. On September 23, 1998, the appellate court issued the assailed Decision, which reversed the ruling of the RTC. It held that private respondents could not be held liable for the loss of San Miguel Corporation's cargo because said loss occurred as a consequence of a fortuitous event, and that such fortuitous event was the proximate and only cause of the loss.5Petitioner thus filed the present petition, contending that:(A)IN REVERSING AND SETTING ASIDE THE DECISION OF RTC BR. 134 OF MAKATI CITY ON THE BASIS OF THE FINDINGS OF THE BOARD OF MARINE INQUIRY, APPELLATE COURT DECIDED THE CASE AT BAR NOT IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE HONORABLE COURT;(B)IN REVERSING THE TRIAL COURT'S DECISION, THE APPELLATE COURT GRAVELY ERRED IN CONTRADICTING AND IN DISTURBING THE FINDINGS OF THE FORMER;(C)THE APPELLATE COURT GRAVELY ERRED IN REVERSING THE DECISION OF THE TRIAL COURT AND IN DISMISSING THE COMPLAINT.6Common carriers, from the nature of their business and for reasons of public policy, are mandated to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them.7Owing to this high degree of diligence required of them, common carriers, as a general rule, are presumed to have been at fault or negligent if the goods transported by them are lost, destroyed or if the same deteriorated.8However, this presumption of fault or negligence does not arise in the cases enumerated under Article 1734 of the Civil Code: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.In order that a common carrier may be absolved from liability where the loss, destruction or deterioration of the goods is due to a natural disaster or calamity, it must further be shown that the such natural disaster or calamity was the proximate andonlycause of the loss;9there must be "an entire exclusion of human agency from the cause of the injury of the loss."10Moreover, even in cases where a natural disaster is the proximate and only cause of the loss, a common carrier is still required to exercise due diligence to prevent or minimize loss before, during and after the occurrence of the natural disaster, for it to be exempt from liability under the law for the loss of the goods.11If a common carrier fails to exercise due diligence--or that ordinary care which the circumstances of the particular case demand12-- to preserve and protect the goods carried by it on the occasion of a natural disaster, it will be deemed to have been negligent, and the loss will not be considered as having been due to a natural disaster under Article 1734 (1).In the case at bar, the issues may be narrowed down to whether the loss of the cargo was due to the occurrence of a natural disaster, and if so, whether such natural disaster was the sole and proximate cause of the loss or whether private respondents were partly to blame for failing to exercise due diligence to prevent the loss of the cargo.The parties do not dispute that on the day the M/V Peatheray Patrick-G sunk, said vessel encountered strong winds and huge waves ranging from six to ten feet in height. The vessel listed at the port side and eventually sunk at Cawit Point, Cortes, Surigao del Sur.The Court of Appeals, citing the decision of the Board of Marine Inquiry in the administrative case against the vessel's crew (BMI--646-87), found that the loss of the cargo was due solely to the existence of a fortuitous event, particularly the presence of strong winds and huge waves at Cortes, Surigao del Sur on March 3, 1987:x x xIII. WHAT WAS THE PROXIMATE CAUSE OF SINKING?Evidence shows that when "LCT Peatheray Patrick-G" left the port of Mandawe, Cebu for Bislig, Surigao del Sur on March 2, 1987 the Captain had observed the fair atmospheric condition of the area of the pier and confirmed this good weather condition with the Coast Guard Detachment of Mandawe City. However, on March 3, 1987 at about 10:00 o'clock in the evening, when the vessel had already passed Surigao Strait. the vessel started to experience waves as high as 6 to 7 feet and that the Northeasterly wind was blowing at about five (5) knot velocity. At about 11:00 o'clock P.M. when the vessel was already about 4.5 miles off Cawit Point, Cortes, Surigao del Sur, the vessel was discovered to be listing 15 degrees to port side and that the strength of the wind had increased to 15 knots and the waves were about ten (10) feet high [Ramilo TSN 10-27-87 p. 32). Immediately thereafter, emergency measures were taken by the crew. The officers had suspected that a leak or crack might had developed at the bottom hull particularly below one or two of the empty wing tanks at port side serving as buoyancy tanks resulting in ingress of sea water in the tanks was confirmed when the Captain ordered to use the cargo pump. The suction valves to the said tanks of port side were opened in order to suck or draw out any amount of water that entered into the tanks. The suction pressure of the pump had drawn out sea water in large quantity indicating therefore, that a leak or crack had developed in the hull as the vessel was continuously batted and pounded by the huge waves. Bailing out of the water through the pump was done continuously in an effort of the crew to prevent the vessel from sinking. but then efforts were in vain. The vessel still continued to list even more despite the continuous pumping and discharging of sea water from the wing tanks indicating that the amount of the ingress of sea water was greater in volume that that was being discharged by the pump. Considering therefore, the location of the suspected source of the ingress of sea water which was a crack or hole at the bottom hull below the buoyancy tank's port side which was not accessible (sic) for the crew to check or control the flow of sea water into the said tank. The accumulation of sea water aggravated by the continuous pounding, rolling and pitching of the vessel against huge waves and strong northeasterly wind, the Captain then had no other recourse except to order abandonship to save their lives.13The presence of a crack in the ill-fated vessel through which water seeped in was confirmed by the Greutzman Divers who were commissioned by the private respondents to conduct an underwater survey and inspection of the vessel to determine the cause and circumstances of its sinking. In its report, Greutzman Divers stated that "along the port side platings, a small hole and two separate cracks were found at about midship."14The findings of the Board of Marine Inquiry indicate that the attendance of strong winds and huge waves while the M/V Peatheray Patrick-G was sailing through Cortes, Surigao del Norte on March 3, 1987 was indeed fortuitous. A fortuitous event has been defined as one which could not be foreseen, or which though foreseen, is inevitable.15An event is considered fortuitous if the following elements concur:xxx (a) the cause of the unforeseen and unexpected occurrence, or the failure of the debtor to comply with his obligations, must be independent of human will; (b) it must be impossible to foresee the event which constitutes thecaso fortuito, or if it can be foreseen, it must be impossible to avoid; (c) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and (d) the obligor must be free from any participation in the aggravation of the injury resulting to the creditor. xxx16In the case at bar, it was adequately shown that before the M/V Peatheray Patrick-G left the port of Mandaue City, the Captain confirmed with the Coast Guard that the weather condition would permit the safe travel of the vessel to Bislig, Surigao del Sur. Thus, he could not be expected to have foreseen the unfavorable weather condition that awaited the vessel in Cortes, Surigao del Sur. It was the presence of the strong winds and enormous waves which caused the vessel to list, keel over, and consequently lose the cargo contained therein. The appellate court likewise found that there was no negligence on the part of the crew of the M/V Peatheray Patrick-G, citing the following portion of the decision of the Board of Marine Inquiry:I. WAS LCT PEATHERAY PATRICK-G SEAWORTHY WHEN SHE LEFT THE PORT OF MANDAWE, CEBU AND AT THE TIME OF SINKING?Evidence clearly shows that the vessel was propelled with three (3) diesel engines of 250 BHP each or a total of 750 BHP. It had three (3) propellers which were operating satisfactorily from the time the vessel left the port of Mandawe up to the time when the hull on the double bottom tank was heavily floaded (sic) by uncontrollable entry of sea water resulting in the stoppage of engines. The vessel was also equipped with operating generator pumps for emergency cases. This equipment was also operating satisfactorily up to the time when the engine room was heavily floaded (sic) with sea water. Further, the vessel had undergone emergency drydocking and repair before the accident occurred (sic) on November 9, 1986 at Trigon Shipyard, San Fernando, Cebu as shown by the billing for the Drydocking and Repair and certificate of Inspection No. 2588-86 issued by the Philippine coast Guard on December 5, 1986 which expired on November 8, 1987.LCT Peatheray Patrick-G was skippered by Mr. Manuel P. Ramilo, competent and experienced licensed Major Patron who had been in command of the vessel for more than three (3) years from July 1984 up to the time of sinking March 3, 1987. His Chief Mate Mr. Mariano Alalin also a licensed Major Patron had been the Chief Mate of " LCT Peatheray Patrick-G" for one year and three months at the time of the accident. Further Chief Mate Alalin had commanded a tanker vessel named M/T Mercedes of MGM Corporation for almost two (2) years from 1983-1985 (Alalin TSN-4-13-88 pp. 32-33).That the vessel was granted SOLAS clearance by the Philippine Coast Guard on March 1, 1987 to depart from Mandawe City for Bislig, Surigao del Sur as evidenced by a certification issued to D.C. Gaerlan Oil Products by Coast Guard Station Cebu dated December 23, 1987.1wphi1.ntBased on the foregoing circumstances, "LCT Peatheray Patrick-G" should be considered seaworthy vessel at the time she undertook that fateful voyage on March 2, 1987.To be seaworthy, a vessel must not only be staunch and fit in the hull for the voyage to be undertaken but also must be properly equipped and for that purpose there is a duty upon the owner to provide a competent master and a crew adequate in number and competent for their duty and equals in disposition and seamanship to the ordinary in that calling. (Ralph 299 F-52, 1924 AMC 942). American President 2td v. Ren Fen Fed 629. AMC 1723 LCA 9 CAL 1924).17Overloading was also eliminated as a possible cause of the sinking of the vessel, as the evidence showed that its freeboard clearance was substantially greater than the authorized freeboard clearance.18Although the Board of Marine Inquiry ruled only on the administrative liability of the captain and crew of the M/V Peatheray Patrick-G, it had to conduct a thorough investigation of the circumstances surrounding the sinking of the vessel and the loss of its cargo in order to determine their responsibility, if any. The results of its investigation as embodied in its decision on the administrative case clearly indicate that the loss of the cargo was due solely to the attendance of strong winds and huge waves which caused the vessel accumulate water, tilt to the port side and to eventually keel over. There was thus no error on the part of the Court of Appeals in relying on the factual findings of the Board of Marine Inquiry, for such factual findings, being supported by substantial evidence are persuasive, considering that said administrative body is an expert in matters concerning marine casualties.19Since the presence of strong winds and enormous waves at Cortes, Surigao del Sur on March 3, 1987 was shown to be the proximate and only cause of the sinking of the M/V Peatheray Patrick-G and the loss of the cargo belonging to San Miguel Corporation, private respondents cannot be held liable for the said loss.WHEREFORE, the assailed Decision of the Court of Appeals is herebyAFFIRMEDand the petition is herebyDENIED.SO ORDERED.

FGU Insurance Corporation vs. Court of AppealsG.R. No.137775.March 31,2005

Facts:Anco Enterprises Company (ANCO), a partnership between Ang Gui and Co To, was engaged inthe shipping business.It owned the D/B Lucio bargewhich had no engine of its own and the M/TANCO tugboat which towed the former in order tomaneuver it from one place to another. On 23September 1979, San Miguel Corporation (SMC) shipped from Mandaue City, Cebu, on board theD/BLucio, for towage by M/T ANCO for a number of cases of its product. The barge and tugboat arrivedat San Jose, Antique, inthe afternoon of 30 September 1979, however, At about ten to elevenoclockin the evening of 01 October 1979, the crew of D/B Lucio abandoned the vessel because the bargesrope attached to the wharf was cut off by the big waves.At around midnight, the barge run agroundand was broken and the cargoes of beer in the barge were swept away. As a result, ANCO failed todeliver to SMCs consignee Twenty-Nine Thousand Two Hundred Ten (29,210) cases of Pale Pilsen andFive Hundred Fifty (550) cases of Cerveza Negra. Prior to such event, ANCO evidently asserted thatthere was an agreement between them and SMC to insure the cargoes with FGU InsuranceCorporation in order to recover indemnity in case of loss.

Issue:Whether or not FGU can be held liable under the insurance policy to reimburse ANCO for the lossof the cargoes despite the findings of the respondent court that such loss was occasioned by theblatant negligence of the latters employees.

Anent ANCOs first assignment of error,i.e., the appellate court committed error in concluding that the negligence of ANCOs representatives was the proximate cause of the loss, said issue is a question of fact assailing the lower courts appreciation of evidence on the negligence or lack thereof of the crewmembers of the D/B Lucio. As a rule, findings of fact of lower courts, particularly when affirmed by the appellate court, are deemed final and conclusive. The Supreme Court cannot review such findings on appeal, especially when they are borne out by the records or are based on substantial evidence.[9]As held in the case ofDonato v. Court of Appeals,[10]in this jurisdiction, it is a fundamental and settled rule that findings of fact by the trial court are entitled to great weight on appeal and should not be disturbed unless for strong and cogent reasons because the trial court is in a better position to examine real evidence, as well as to observe the demeanor of the witnesses while testifying in the case.[11]It is not the function of this Court to analyze or weigh evidence all over again, unless there is a showing that the findings of the lower court are totally devoid of support or are glaringly erroneous as to constitute palpable error or grave abuse of discretion.[12]A careful study of the records shows no cogent reason to fault the findings of the lower court, as sustained by the appellate court, that ANCOs representatives failed to exercise the extraordinary degree of diligence required by the law to exculpate them from liability for the loss of the cargoes.First, ANCO admitted that they failed to deliver to the designated consignee the Twenty Nine Thousand Two Hundred Ten (29,210) cases of Pale Pilsen and Five Hundred Fifty (550) cases of Cerveza Negra.Second, it is borne out in the testimony of the witnesses on record that the barge D/B Lucio had no engine of its own and could not maneuver by itself. Yet, the patron of ANCOs tugboat M/T ANCO left it to fend for itself notwithstanding the fact that as the two vessels arrived at the port of San Jose, Antique, signs of the impending storm were already manifest. As stated by the lower court, witness Mr. Anastacio Manilag testified that the captain or patron of the tugboat M/T ANCO left the barge D/B Lucio immediately after it reached San Jose, Antique, despite the fact that there were already big waves and the area was already dark. This is corroborated by defendants own witness, Mr. Fernando Macabueg.[13]The trial court continued:At that precise moment, since it is the duty of the defendant to exercise and observe extraordinary diligence in the vigilance over the cargo of the plaintiff, the patron or captain of M/T ANCO, representing the defendant could have placed D/B Lucio in a very safe location before they left knowing or sensing at that time the coming of a typhoon. The presence of big waves and dark clouds could have warned the patron or captain of M/T ANCO to insure the safety of D/B Lucio including its cargo. D/B Lucio being a barge, without its engine, as the patron or captain of M/T ANCO knew, could not possibly maneuver by itself. Had the patron or captain of M/T ANCO, the representative of the defendants observed extraordinary diligence in placing the D/B Lucio in a safe place, the loss to the cargo of the plaintiff could not have occurred. In short, therefore, defendants through their representatives, failed to observe the degree of diligence required of them under the provision of Art. 1733 of the Civil Code of the Philippines.[14]Petitioners Estate of Ang Gui and Co To, in theirMemorandum, asserted that the contention of respondents SMC and FGU that the crewmembers of D/B Lucio should have left port at the onset of the typhoon is like advising the fish to jump from the frying pan into the fire and an advice that borders on madness.[15]The argument does not persuade. The records show that the D/B Lucio was the only vessel left at San Jose, Antique, during the time in question. The other vessels were transferred and temporarily moved to Malandong, 5 kilometers from wharf where the barge remained.[16]Clearly, the transferred vessels were definitely safer in Malandong than at the port of San Jose, Antique, at that particular time, a fact which petitioners failed to disputeANCOs arguments boil down to the claim that the loss of the cargoes was caused by the typhoonSisang, a fortuitous event (caso fortuito), and there was no fault or negligence on their part. In fact, ANCO claims that their crewmembers exercised due diligence to prevent or minimize the loss of the cargoes but their efforts proved no match to the forces unleashed by the typhoon which, in petitioners own words was, by any yardstick, a natural calamity, a fortuitous event, an act of God, the consequences of which petitioners could not be held liable for.[17]The Civil Code provides:Art. 1733. Common carriers, from the nature of their business and for reasons of public policy are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case.Such extraordinary diligence in vigilance over the goods is further expressed in Articles 1734, 1735, and 1745 Nos. 5, 6, and 7 . . .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;. . .Art. 1739.In order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss. However, the common carrier must exercise due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm, or other natural disaster in order that the common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods . . . (Emphasis supplied)Caso fortuitoorforce majeure(which in law are identical insofar as they exempt an obligor from liability)[18]by definition, are extraordinary events not foreseeable or avoidable, events that could not be foreseen, or which though foreseen, were inevitable. It is therefore not enough that the event should not have been foreseen or anticipated, as is commonly believed but it must be one impossible to foresee or to avoid.[19]In this case, the calamity which caused the loss of the cargoes was not unforeseen nor was it unavoidable. In fact, the other vessels in the port of San Jose, Antique, managed to transfer to another place, a circumstance which prompted SMCs District Sales Supervisor to request that the D/B Lucio be likewise transferred, but to no avail. The D/B Lucio had no engine and could not maneuver by itself. Even if ANCOs representatives wanted to transfer it, they no longer had any means to do so as the tugboat M/T ANCO had already departed, leaving the barge to its own devices. The captain of the tugboat should have had the foresight not to leave the barge alone considering the pending storm.While the loss of the cargoes was admittedly caused by the typhoonSisang, a natural disaster, ANCO could not escape liability to respondent SMC. The records clearly show the failure of petitioners representatives to exercise the extraordinary degree of diligence mandated by law. To be exempted from responsibility, the natural disaster should have been the proximate and only cause of the loss.[20]There must have been no contributory negligence on the part of the common carrier. As held in the case ofLimpangco Sons v. Yangco Steamship Co.:[21]. . . To be exempt from liability because of an act of God, the tug must be free from any previous negligence or misconduct by which that loss or damage may have been occasioned. For, although the immediate or proximate cause of the loss in any given instance may have been what is termed an act of God, yet, if the tug unnecessarily exposed the two to such accident by any culpable act or omission of its own, it is not excused.[22]Therefore, as correctly pointed out by the appellate court, there was blatant negligence on the part of M/T ANCOs crewmembers, first in leaving the engine-less barge D/B Lucio at the mercy of the storm without the assistance of the tugboat, and again in failing to heed the request of SMCs representatives to have the barge transferred to a safer place, as was done by the other vessels in the port; thus, making said blatant negligence the proximate cause of the loss of the cargoes.We now come to the issue of whether or not FGU can be held liable under the insurance policy to reimburse ANCO for the loss of the cargoes despite the findings of the respondent court that such loss was occasioned by the blatant negligence of the latters employees.One of the purposes for taking out insurance is to protect the insured against the consequences of his own negligence and that of his agents. Thus, it is a basic rule in insurance that the carelessness and negligence of the insured or his agents constitute no defense on the part of the insurer.[23]This rule however presupposes that the loss has occurred due to causes which could not have been prevented by the insured, despite the exercise of due diligence.The question now is whether there is a certain degree of negligence on the part of the insured or his agents that will deprive him the right to recover under the insurance contract. We say there is. However, to what extent such negligence must go in order to exonerate the insurer from liability must be evaluated in light of the circumstances surrounding each case. When evidence show that the insureds negligence or recklessness is so gross as to be sufficient to constitute a willful act, the insurer must be exonerated.In the case ofStandard Marine Ins. Co. v. Nome Beach L. & T. Co.,[24]the United States Supreme Court held that:The ordinary negligence of the insured and his agents has long been held as a part of the risk which the insurer takes upon himself, and the existence of which, where it is the proximate cause of the loss, does not absolve the insurer from liability.But willful exposure, gross negligence, negligence amounting to misconduct, etc., have often been held to release the insurer from such liability.[25][Emphasis ours]. . .In the case of Williams v. New England Insurance Co., 3 Cliff. 244, Fed. Cas. No. 17,731, the owners of an insured vessel attempted to put her across the bar at Hatteras Inlet. She struck on the bar and was wrecked. The master knew that the depth of water on the bar was such as to make the attempted passage dangerous. Judge Clifford held that, under the circumstances, the loss was not within the protection of the policy, saying:Authorities to prove that persons insured cannot recover for a loss occasioned by their own wrongful acts are hardly necessary, as the proposition involves an elementary principle of universal application. Losses may be recovered by the insured, though remotely occasioned by the negligence or misconduct of the master or crew, if proximately caused by the perils insured against, because such mistakes and negligence are incident to navigation and constitute a part of the perils which those who engage in such adventures are obliged to incur;but it was never supposed that the insured could recover indemnity for a loss occasioned by his own wrongful act or by that of any agent for whose conduct he was responsible.[26][Emphasis ours]From the above-mentioned decision, the United States Supreme Court has made a distinction between ordinary negligence and gross negligence or negligence amounting to misconduct and its effect on the insureds right to recover under the insurance contract. According to the Court, while mistake and negligence of the master or crew are incident to navigation and constitute a part of the perils that the insurer is obliged to incur, such negligence or recklessness must not be of such gross character as to amount to misconduct or wrongful acts; otherwise, such negligence shall release the insurer from liability under the insurance contract.In the case at bar, both the trial court and the appellate court had concluded from the evidence that the crewmembers of both the D/B Lucio and the M/T ANCO were blatantly negligent. To wit:There wasblatant negligenceon the part of the employees of defendants-appellants when the patron (operator) of the tug boat immediately left the barge at the San Jose, Antique wharf despite the looming bad weather. Negligence was likewise exhibited by the defendants-appellants representative who did not heed Macabuags request that the barge be moved to a more secure place. The prudent thing to do, as was done by the other sea vessels at San Jose, Antique during the time in question, was to transfer the vessel to a safer wharf.The negligence of the defendants-appellants is proved by the fact that on 01 October 1979, the only simple vessel left at the wharf in San Jose was the D/B Lucio.[27][Emphasis ours]As stated earlier, this Court does not find any reason to deviate from the conclusion drawn by the lower court, as sustained by the Court of Appeals, that ANCOs representatives had failed to exercise extraordinary diligence required of common carriers in the shipment of SMCs cargoes. Such blatant negligence being the proximate cause of the loss of the cargoes amounting to One Million Three Hundred Forty-Six Thousand One Hundred Ninety-Seven Pesos (P1,346,197.00)This Court, taking into account the circumstances present in the instant case, concludes that the blatant negligence of ANCOs employees is of such gross character that it amounts to a wrongful act which must exonerate FGU from liability under the insurance contract.WHEREFORE, premises considered, the Decision of the Court of Appeals dated 24 February 1999 is hereby AFFIRMED with MODIFICATION dismissing the third-party complaint.SO ORDERED.

SULPICIO LINES, INC.,petitioner, vs.FIRST LEPANTO-TAISHO INSURANCE CORPORATION,respondent.THE FACTSOn 25 February 1992, Taiyo Yuden Philippines, Inc. (owner of the goods) and Delbros, Inc. (shipper) entered into a contract, evidenced by Bill of Lading No. CEB/SIN-008/92 issued by the latter in favor of the owner of the goods, for Delbros, Inc. to transport a shipment of goods consisting of three (3) wooden crates containing one hundred thirty-six (136) cartons of inductors and LC compound on board the V Singapore V20 from Cebu City to Singapore in favor of the consignee, Taiyo Yuden Singapore Pte, Ltd.For the carriage of said shipment from Cebu City to Manila, Delbros, Inc. engaged the services of the vessel M/V Philippine Princess, owned and operated by petitioner Sulpicio Lines, Inc. (carrier). The vessel arrived at the North Harbor, Manila, on 24 February 1992.During the unloading of the shipment, one crate containing forty-two (42) cartons dropped from the cargo hatch to the pier apron. The owner of the goods examined the dropped cargo, and upon an alleged finding that the contents of the crate were no longer usable for their intended purpose, they were rejected as a total loss and returned to Cebu City.The owner of the goods filed a claim with herein petitioner-carrier for the recovery of the value of the rejected cargo which was refused by the latter. Thereafter, the owner of the goods sought payment from respondent First Lepanto-Taisho Insurance Corporation (insurer) under a marine insurance policy issued to the former. Respondent-insurer paid the claim less thirty-five percent (35%) salvage value or P194, 220.31.The payment of the insurance claim of the owner of the goods by the respondent-insurer subrogated the latter to whatever right or legal action the owner of the goods may have against Delbros, Inc. and petitioner-carrier, Sulpicio Lines, Inc. Thus, respondent-insurer then filed claims for reimbursement from Delbros, Inc. and petitioner-carrier Sulpicio Lines, Inc. which were subsequently denied.On 04 November 1992, respondent-insurer filed a suit for damages docketed as Civil Case No. 92-63337 with the trial court against Delbros, Inc. and herein petitioner-carrier. On 05 February 1993, petitioner-carrier filed its Answer with Counterclaim. Delbros, Inc. filed on 15 April 1993 its Answer with Counterclaim and Cross-claim, alleging that assuming the contents of the crate in question were truly in bad order, fault is with herein petitioner-carrier which was responsible for the unloading of the crates.Petitioner-carrier filed its Answer to Delbros, Inc.s cross-claim asserting that it observed extraordinary diligence in the handling, storage and general care of the shipment and that subsequent inspection of the shipment by the Manila Adjusters and Surveyors Company showed that the contents of the third crate that had fallen were found to be in apparent sound condition, except that 2 cello bags each of 50 pieces ferri inductors No. LC FL 112270K-60 (c) were unaccounted for and missing as per packaging list.After hearing, the trial court dismissed the complaint for damages as well as the counterclaim filed by therein defendant Sulpicio Lines, Inc. and the cross-claim filed by Delbros, Inc. According to the RTC:The plaintiff has failed to prove its case. The first witness for the plaintiff merely testified about the payment of the claim based on the documents accompanying the claim which were the Packing List, Commercial Invoices, Bill of Lading, Claims Statement, Marine Policies, Survey Report, Marine Risk Note, and the letter to Third Party carriers and shipping lines (Exhibit A-J).The check was paid and delivered to the assured as evidenced by the check voucher and the subrogation receipt.On cross-examination by counsel for the Sulpicio Lines, he said that their company paid the claim less 35% salvage value based on the adjuster report. This testimony is hearsay.The second witness for the plaintiff, Arturo Valdez, testified, among others, that he, together with a co-surveyor and a representative of Sulpicio Lines had conducted a survey of the shipment at the compound of Sulpicio Lines. He prepared a survey report (Exhibits G and G-1) and took a picture of shipment (Exhibit G-2).On cross-examination, he said that two cartons were torn at the sides with top portion flaps opened and the 41 cartons were properly sealed and in good order conditions. Two cartons were already opened and slightly damaged. He merely looked at them but did not conduct an inspection of the contents. What he was referring to as slightly damaged were the cartons only and not the contents.From the foregoing evidence, it is apparent that the plaintiff had failed to prove its case with a preponderance of evidence..WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered dismissing the Complaint, defendant Sulpicio Lines counterclaim and defendant Delbros Inc.s cross-claim.[4]A Motion for Reconsideration was then filed by herein respondent-insurer and subsequently denied by the trial court in an Order dated 07 February 1995 on the ground that it did not raise any new issue. Thus, respondent-insurer instituted an appeal with the Court of Appeals, which reversed the dismissal of the complaint by the lower court, the decretal portion of which reads:WHEREFORE, the appeal is granted. The decision appealed from is REVERSED. Defendants-appellees Delbros and Sulpicio Lines are hereby ordered to pay, jointly and severally, plaintiff-appellant the sum of P194,220.31 representing actual damages, plus legal interest counted from the filing of the complaint until fully paid.[5]The appellate court disposed of the issues in the case in this wise:Furthermore, the evidence shows that one of the three crates fell during the unloading at the pier in Manila. The wooden crate which fell was damaged such that this particular crate was not anymore sent to Singapore and was instead shipped back to Cebu from Manila. Upon examination, it was found that two (2) cartons of the forty-two (42) cartons contained in this crate were externally damaged. They were torn at the sides and their top portions or flaps were open. These facts were admitted by all the parties. Defendant-appellees, however, insist that it was only the external packaging that was damaged, and that there was no actual damage to the goods such that would make them liable to the shipper. This theory is erroneous. When the goods are placed at a common carriers possession for delivery to a specified consignee, they are in good order and condition and are supposed to be transported and delivered to the consignee in the same state. In the case herein, the goods were received by defendant-appellee Delbros in Cebu properly packed in cardboard cartons and then placed in wooden crates, for delivery to the consignee in Singapore. However, before the shipment reached Singapore (while it was in Manila) one crate and 2 cartons contained therein were not anymore in their original state. They were no longer fit to be sent to Singapore..As We have already found, there is damage suffered by the goods of the shipper. This consists in the destruction of one wooden crate and the tearing of two of the cardboard boxes therein rendering then unfit to be sent to Singapore. Defendant-appellee Sulpicio Lines admits that this crate fell while it was being unloaded at the Manila pier. Falling of the crate was negligence on the part of defendant-appellee Sulpicio Lines under the doctrine ofres ipsa loquitur. Defendant-appellee Sulpicio Lines cannot exculpate itself from liability because it failed to prove that it exercised due diligence in the selection and supervision of its employees to prevent the damage.[6]On 21 June 1999, herein petitioner-carrier filed its Motion for Reconsideration of the decision of the Court of Appeals which was subsequently denied in a Resolution dated 13 October 1999. Hence, the instant petition.During the pendency of the appeal before this Court, Delbros, Inc. filed a manifestation stating that its appeal[7]filed before this Court had been dismissed for being filed out of time and thus the case as against it was declared closed and terminated. As a consequence, it paid in full the amount of the damages awarded by the appellate court to the respondent-insurer. Before this Court, Delbros, Inc. prays for reimbursement, contribution, or indemnity from its co-defendant, herein petitioner-carrier Sulpicio Lines, Inc. for whatever it had paid to respondent-insurer in consonance with the decision of the appellate court declaring both Delbros, Inc. and petitioner-carrier Sulpicio Lines, Inc. jointly and severally liable.ISSUESPetitioner-carrier raises the following issues in its petition:1.The Court of Appeals erred in not holding that the trial court justly and correctly dismissed the complaint against Sulpicio Lines, which dismissal is already final.2.The Court of Appeals erred in not dismissing the appeal for failure of appellant to comply with the technical requirement of the Rules of Court.RULING OF THE COURTWe shall first address the procedural issue raised by petitioner-carrier, Sulpicio Lines, Inc. that the Court of Appeals should have dismissed the appeal for failure of respondent-insurer to attach a copy of the decision of the trial court to its appellants brief in violation of Rule 44, Section 13(h) of the Rules of Civil Procedure.[8]A perusal of the records will show, however, that in a Resolution[9]dated 13 August 1996, the Court of Appeals required herein respondent-insurer to submit seven (7) copies of the questioned decision within five (5) days from notice. Said Resolution was properly complied with.As a rule, the right to appeal is a statutory right and one who seeks to avail of that right must comply with the manner required by the pertinent rules for the perfection of an appeal. Nevertheless, this Court has allowed the filing of an appeal upon subsequent compliance with the requirements imposed by law, where a strict application of the technical rules will impair the proper administration of justice. As enunciated by the Court in the case ofJaro v. Court of Appeals:[10]There is ample jurisprudence holding that the subsequent and substantial compliance of an appellant may call for the relaxation of the rules of procedure. InCusi-Hernandez vs. Diaz[336 SCRA 113] andPiglas-Kamao vs. National Labor Relations Commission[357SCRA 640], we ruled that the subsequent submission of the missing documents with the motion for reconsideration amounts to substantial compliance. The reasons behind the failure of the petitioners in these two cases to comply with the required attachments were no longer scrutinized.[11]We see no error, therefore, on the part of the Court of Appeals when it gave due course to the appeal after respondent-insurer had submitted copies of the RTC decision, albeit belatedly.We now come to the substantial issues alleged by petitioner-carrier. The pivotal question to be considered in the resolution of this issue is whether or not, based on the evidence presented during the trial, the owner of the goods, respondent-insurers predecessor-in-interest, did incur damages, and if so, whether or not petitioner-carrier is liable for the same.It cannot be denied that the shipment sustained damage while in the custody of petitioner-carrier. It is not disputed that one of the three (3) crates did fall from the cargo hatch to the pier apron while petitioner-carrier was unloading the cargo from its vessel. Neither is it impugned that upon inspection, it was found that two (2) cartons were torn on the side and the top flaps were open and that two (2) cello bags, each of 50 pieces ferri inductors, were missing from the cargo.Petitioner-carrier contends that its liability, if any, is only to the extent of the cargo damage or loss and should not include the lack of fitness of the shipment for transport to Singapore due to the damaged packing. This is erroneous. Petitioner-carrier seems to belabor under the misapprehension that a distinction must be made between the cargo packaging and the contents of the cargo. According to it, damage to the packaging is not tantamount to damage to the cargo. It must be stressed that in the case at bar, the damage sustained by the packaging of the cargo while in petitioner-carriers custody resulted in its unfitness to be transported to its consignee in Singapore. Such failure to ship the cargo to its final destination because of the ruined packaging, indeed, resulted in damages on the part of the owner of the goods.The falling of the crate during the unloading is evidence of petitioner-carriers negligence in handling the cargo. As a common carrier, it is expected to observe extraordinary diligence in the handling of goods placed in its possession for transport.[12]The standard of extraordinary diligence imposed upon common carriers is considerably more demanding than the standard of ordinary diligence,i.e., the diligence of a goodpaterfamiliasestablished in respect of the ordinary relations between members of society.[13]A common carrier is bound to transport its cargo and its passengers safely "as far as human care and foresight can provide, using theutmost diligenceofa very cautious person,with due regard to all circumstances.[14]The extraordinary diligence in the vigilance over the goods tendered for shipment requires the common carrier to know and to follow the required precaution for avoiding the damage to, or destruction of, the goods entrusted to it for safe carriage and delivery.[15]It requires common carriers to render service with the greatest skill and foresight and to use all reasonable means to ascertain the nature and characteristic of goods tendered for shipment, and to exercise due care in the handling and stowage, including such methods as their nature requires.[16]Thus, when the shipment suffered damages as it was being unloaded, petitioner-carrier is presumed to have been negligent in the handling of the damaged cargo. Under Articles 1735[17]and 1752[18]of the Civil Code, common carriers are presumed to have been at fault or to have acted negligently in case the goods transported by them are lost, destroyed or had deteriorated. To overcome the presumption of liability for loss, destruction or deterioration of goods under Article 1735, the common carrier must prove that they observed extraordinary diligence as required in Article 1733[19]of the Civil Code.[20]Petitioner-carrier miserably failed to adduce any shred of evidence of the required extraordinary diligence to overcome the presumption that it was negligent in transporting the cargo.Coming now to the issue of the extent of petitioner-carriers liability, it is undisputed that respondent-insurer paid the owner of the goods under the insurance policy the amount of P194,220.31 for the alleged damages the latter has incurred. Neither is there dispute as to the fact that Delbros, Inc. paid P194,220.31 to respondent-insurer in satisfaction of the whole amount of the judgment rendered by the Court of Appeals. The question then is: To what extent is Sulpicio Lines, Inc., as common carrier, liable for the damages suffered by the owner of the goods?Upon respondent-insurers payment of the alleged amount of loss suffered by the insured (the owner of the goods), the insurer is entitled to be subrogatedpro tantoto any right of action which the insured may have against the common carrier whose negligence or wrongful act caused the loss.[21]Subrogation is the substitution of one person in the place of another with reference to a lawful claim or right, so that he who is substituted succeeds to the rights of the other in relation to a debt or claim, including its remedies or securities.[22]The rights to which the subrogee succeeds are the same as, but not greater than, those of the person for whom he is substituted, that is, he cannot acquire any claim, security or remedy the subrogor did not have.[23]In other words, a subrogee cannot succeed to a right not possessed by the subrogor.[24]A subrogee in effect steps into the shoes of the insured and can recover only if the insured likewise could have recovered.[25]As found by the Court of Appeals, there was damage suffered by the goods which consisted in the destruction of one wooden crate and the tearing of two (2) cardboard boxes therein which rendered them unfit to be sent to Singapore.[26]The falling of the crate was negligence on the part of Sulpicio Lines, Inc. for which it cannot exculpate itself from liability because it failed to prove that it exercised extraordinary diligence.[27]Hence, we uphold the ruling of the appellate court that herein petitioner-carrier is liable to pay the amount paid by respondent-insurer for the damages sustained by the owner of the goods.As stated in the manifestation filed by Delbros, Inc., however, respondent-insurer had already been paid the full amount granted by the Court of Appeals, hence, it will be tantamount to unjust enrichment for respondent-insurer to again recover damages from herein petitioner-carrier.With respect to Delbros, Inc.s prayer contained in its manifestation that, in case the decision in the instant case be adverse to petitioner-carrier, a pronouncement as to the matter of reimbursement, indemnification or contribution in favor of Delbros, Inc. be included in the decision, this Court will not pass upon said issue since Delbros, Inc. has no personality before this Court, it not being a party to the instant case. Notwithstanding, this shall not bar any action Delbros, Inc. may institute against petitioner-carrier Sulpicio Lines, Inc. with respect to the damages the latter is liable to pay.WHEREFORE, premises considered, the assailed Decision of the Court of Appeals dated 26 May 1999 and its Resolution dated 13 October 1999 are hereby AFFIRMED. No costs.SO ORDERED.

Common carrier; liability. Petitioner, through its bus driver, failed to observe extraordinary diligence, and was, therefore, negligent in transporting the passengers of the bus safely to Gapan, Nueva Ecija on January 27, 1995, since the bus bumped a tree and a house, and caused physical injuries to respondent. Article 1759 of the Civil Code explicitly states that the common carrier is liable for the death or injury to passengers through the negligence or willful acts of its employees, and that such liability does not cease upon proof that the common carrier exercised all the diligence of a good father of a family in the selection and supervision of its employees. Hence, even if petitioner was able to prove that it exercised the diligence of a good father of the family in the selection and supervision of its bus driver, it is still liable to respondent for the physical injuries he sustained due to the vehicular accident. R Transport Corporation vs. Eduardo Pante,G.R. No. 162104, September 15, 2009.Calalas v CA

FACTS:At 10 o'clock in the morning of August 23, 1989, private respondent Eliza Jujeurche G. Sunga, then a college freshman majoring in Physical Education at the Siliman University, took a passenger jeepney owned and operated by petitioner Vicente Calalas. As the jeepney was filled to capacity of about 24 passengers, Sunga was given by the conductor an "extension seat," a wooden stool at the back of the door at the rear end of the vehicle.On the way to Poblacion Sibulan, Negros Occidental, the jeepney stopped to let a passenger off. As she was seated at the rear of the vehicle, Sunga gave way to the outgoing passenger. Just as she was doing so, an Isuzu truck driven by Iglecerio Verena and owned by Francisco Salva bumped the left rear portion of the jeepney. As a result, Sunga was injured.On October 9, 1989, Sunga filed a complaint for damages against Calalas, alleging violation of the contract of carriage by the former in failing to exercise the diligence required of him as a common carrier. Calalas, on the other hand, filed a third-party complaint against Francisco Salva, the owner of the Isuzu truck.

DECISION OF LOWER COURTS:1. RTC Dumaguete rendered judgment against Salva holding that the driver of the Isuzu truck was responsibleIt took cognizance of another case (Civil Case No. 3490), filed by Calalas against Salva and Verena, for quasi-delict, in which Branch 37 of the same court held Salva and his driver Verena jointly liable to Calalas for the damage to his jeepney.2. CA reversed the RTC, awarding damages instead to Sunga as plaintiff in an action for breach of contract of carriage since the cause of action was based on such and not quasi delict.Hence, current petition for review on certiorari.

ISSUE:Whether (per ruling in Civil Case) negligence of Verena was the proximate cause of the accident negates his liability and that to rule otherwise would be to make the common carrier an insurer of the safety of its passengersIn relation thereto, does the principle of res judicata apply?

RULING:No.The issue in Civil Case No. 3490 was whether Salva and his driver Verena were liable for quasi-delict for the damage caused to petitioner's jeepney. On the other hand, the issue in this case is whether petitioner is liable on his contract of carriage.

Quasi-delict / culpa aquiliana / culpa extra contractual1. Has as its source the negligence of the tortfeasor2. negligence or fault should be clearly established because it is the basis of the action3. doctrine of proximate cause is applicable(device for imputing liability to a person where there is no relation between him and another party, obligation is created by law itself)

Breach of contract / culpa contractual1. premised upon the negligence in the performance of a contractual obligation2. action can be prosecuted merely by proving the existence of the contract and the fact that the obligor (here, the common carrier) failed to transport his passenger safely to his destination3. not available; it is the parties themselves who create the obligation and the function of the law is merely to regulate the relation thus createdIn case of death or injuries to passengers, Art. 1756 of the Civil Code provides that common carriers are presumed to have been at fault or to have acted negligently unless they prove that they observed extraordinary diligence as defined in Arts. 1733 and 1755 of the Code. This provision necessarily shifts to the common carrier the burden of proof.

Hence, Vicente Calalas (operator) is liable since he did not exercise utmost diligence.1. Jeepney was not properly parked;2. Overloading of passengers.

Victory Liner v. GammadYnares-Santiago | Nov. 25, 2004Pet: Victory Linerowner of bus that killed Marie Grace Gammad wifeofResp: Respondent Rosalito Gammad, April Rossan, Rois Rozano and Diana Gammad (children)Facts:1.3:00 am,14 Mar 96: Aircon Victory Liner bus (Tugegarao to Manila). The bus was running at high speed. The bus fellinto a ravine at Sta Fe, Nueva Vizcaya.2.Death of Marir Grace and physical injuries of other passengers.3.FILED:Damages arising from culpa contractual.ANSWER: Incident was purelyaccidental. Always exercised extra-ord diligence in 50yr ops.4.RTC :In favor of Gammad. Awarded: Actual Damages 122K, Death Indemnity 50K, Exemplary and Moral Damages400K, Compensatory Dam 1.5M, attys fees 10% total, costs of suit.CA:Affirmed but changed amounts, deleting completely the death indemnity andcosts of suit. Actual P88K, Compe1.5M, Moral and Exemp P400, attys fees 10%.Issues:1. w/n the pet. counsel wasguilty of gross negligence2. w/n pet should be held liable for breach of C of Carriage3. w/n the award of damages was proper.Held:1.Counsel guilty of negligence, but Pet. also guilty of contributory negligence.a.GN: Negligence counsel binds the client.EXC: where reckless or gross negligence deprives clientof due process.Application will result in outright deprivation of liberty.b.The exceptions are not present in this case. Although initially declared in default Atty Paguirigan wasable tosuccessfully move for setting aside of the order of default. He also filed a timely appeal. Hence petwas not deprived ofDP. Pet also was late in issuing an SPA, onlyafter the order of default. Therefore contributory negligence.2.Victory liner was correctly found liable for breach of contract of carriage.a.When a passenger dies or id injured, CC presumed at fault. Unless presumption rebutted. Here no evidence waspresented to rebut this statutory presumption that the proximate cause of the deathof Marie Grace is the negligenceof petitioner.The award of damages should be modified.3.Compensatory damagesshould be deleted for lack ofbasis.GN:Docu evi should be presented to substantiate damages for loss ofearn capacity.EXC: (1) Deceased was self-employed earning less than minwage. (2) deceased was a daily wage worker earning less thanminimum wage.HERE:Only testimony of Resp. was presented that the deceased was 39yo, employed as Section Chief of BIR, earningP83K per annum. No docu evidencewas presented and the case fall on neither ofthe two exception. Therefore the claimfor loss of earn capacity was unsubstantiated.4.Loss having been established, but the amount unsubstantiated, temperate damagesmay be awarded @P500K, pursuantto NCC 2224, when the court finds that thereis a loss but its amount cannot beproved with certainty.a.Pleno v. CAthe court awarded P200K temperate damages because the income of the victim was not sufficientlyproven.5.Moral Damagescannot be lumped with exemplarydamages. They are based on different jural foundations. (People v.Trapane)In Culpa Contractual, moral damages may be awarded when the defendant acted in bad faith or was guilty ofgrossnegligence (amounting to BF) or in wanton disregard of contractual obli and AS IN THIS CASE when the act ofbreachof contract itself constitutes the ort that results in physical injuries. By special provision (NCC1764 in relation to NCC2206) moral damages may also beawarded in case of the death of apassenger results from the breach of carriage.HERE: respondents should be awarded moral damages due to compensate forthe grief caused by the death of thedeceased.6.Furthermore Victory failed to prove the exercise the extra ord diligence, and is presumed to have actedrecklessly. Thus.The award forexemplary damagesis proper.7.People v. Duban: Only substantiated and provenexpenses or those that appear to have been genuinely incurred will berecognized. HERE actual damages will be further reduced to the amount actually supported byreceipts in Ex J and F.8.Attys feesmay also be recovered in case at bar where exemplary damages are awarded. 10%WHEREFORE Affirmed with modification. P50K indemnity for death, P100K moral damages, P100Kexemplary damages,P78K actual damages, P500K temperate damages, 10% total amount as attys fees.

LRTA vs. NAVIDADFACTS: October 14, 1993, 7:30 p.m. : Drunk Nicanor Navidad (Nicanor)enteredthe EDSA LRT station after purchasing a token. While Nicanor was standing at the platform near the LRT tracks, the guard Junelito Escartin approached him. Due to misunderstanding, they had a fist fight. Nicanor fell on the tracks and killed instantaneously upon being hit by a moving train operated by Rodolfo Roman December 8, 1994: The widow of Nicanor, along with her children, filed a complaint for damages against Escartin, Roman, LRTA, Metro Transit Org. Inc. and Prudent (agency of security guards) for the death of her husband. LRTA and Roman filed a counter-claim against Nicanor and a cross-claim against Escartin and Prudent. Prudent: denied liability averred that it had exercised due diligence in the selection and surpervision of its security guards. LRTA and Roman: presented evidence. Prudent and Escartin: demurrer contending that Navidad had failed to prove that Escartin was negligent in his assigned task RTC: In favour of widow and against Prudent and Escartin, complaint against LRT and Roman were dismissed for lack ofmerit CA: reversed by exonerating Prudent and held LRTA and Roman liable

ISSUE: W/N LRTA and Roman should be liableaccordingto the contract of carriage

HELD: NO. Affirmed with Modification: (a) nominal damages is DELETED (CANNOT co-exist w/ compensatory damages) (b) Roman is absolved. Law and jurisprudence dictate that a common carrier, both from the nature of its business and for reasons of publicpolicy, is burdened with the duty off exercising utmost diligence in ensuring the safety of passengers Civil Code: Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances Art. 1756. In case of death or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755 Art. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or wilful acts of the formers employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers

This liability of the common carriers does NOT cease upon proof that they Exercised all the diligence of a good father of a family in the selection and supervision of their employees

. Art. 1763. A common carrier is responsible for injuries suffered by a passenger on account of the wilful acts or negligence of other passengers or of strangers, if the common carriers employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission. Carriers presumed to be at fault or been negligent and by simple proof of injury, the passenger is relieaved of the duty to still establish the fault or negligence of the carrier or of its employees and the burden shifts upon the carrier to prove that the injury is due to an unforeseen event or to force majeure Where it hires its own employees or avail itself of theservicesof an outsider or an independent firm to undertake the task, the common carrier is NOT relieved of its responsibilities under the contract of carriage GR: Prudent can be liable only for tort under Art. 2176 and related provisions in conjunction with Art. 2180 of the Civil Code. (Tort may arise even under a contract, where tort [quasi-delict liability] is that which breaches the contract) EX: if employers liability is negligence or fault on the part of the employee, employer can be made liable on the basis of the presumption juris tantum that the employer failed to exercise diligentissimi patris families in the selection and supervision of its employees. EX to the EX: Upon showing due diligence in the selection and supervision of the employee Factual finding of the CA: NO link bet. Prudent and the death of Nicanor for the reason that the negligence of Escartin was NOT proven NO showing that Roman himself is guilty of anyculpableact or omission, he must also be absolved from liability Contractual tie bet. LRT and Nicanor is NOT itself a juridical relation bet. Nicanor and Roman. Roman can be liable only for his own fault or negligence

BaliwagTransit vs. CA (GR 116110, 15 May 1996)Second Division, Puno (J): 4 concurFacts:On 31 July 1980, Leticia Garcia, and her 5-year old son, Allan Garcia, boardedBaliwagTransit Bus2036 bound for Cabanatuan City driven by Jaime Santiago. They took the seat behind the driver. At about7:30 p.m., in Malimba, Gapan, Nueva Ecija, the bus passengers saw a cargo truck, owned by A & J Trading,parked at the shoulder of the national highway. Its left rear portion jutted to the outer lane, as the shoulder ofthe road was too narrow to accommodate the whole truck. A kerosene lamp appeared at the edge of the roadobviously to serve asa warning device. The truckdriver, Julio Recontique, and his helper, Arturo Escala, werethen replacing a flat tire. Bus driver Santiago was driving at an inordinately fast speed and failed to notice thetruck and the kerosene lamp at the edge of the road. Santiagos passengers urged him to slow down but hepaid them no heed.Santiago even carried animated conversations with his co-employees while driving. Whenthe danger of collision became imminent, the bus passengers shouted Babangga tayo!. Santiago stepped onthe brake, but it was too late. His bus rammed into the stalled cargo truck. It caused the instant death ofSantiago and Escala, and injury to several others. Leticia and Allan Garcia were among the injuredpassengers. Leticia suffered a fracture in her pelvis and right leg. They rushed her to the provincial hospital inCabanatuan City where she was given emergency treatment. After 3 days, she was transferred to the NationalOrthopedic Hospital where she was confined for more than a month. She underwent an operation for partialhip prosthesis. Allan, on theother hand, broke aleg. He wasalso given emergency treatment at the provincialhospital.Spouses Antonio and Leticia Garcia suedBaliwagTransit, Inc., A & J Trading and Julio Recontique fordamages in the RTC of Bulacan. Leticia sued as an injured passenger ofBaliwagand as mother of Allan. Atthe time of the complaint, Allan was a minor, hence, the suit initiated by his parents in his favor. Afterhearing, the trial court foundBaliwagTransit, Inc. liable for having failed to deliver Garcia and her son totheir point of destination safely in violation of Garcias andBaliwagTransits contractual relation; andlikewise found A & J and Julio Recontique liable for failure to provide its cargo truck with an early warningdevice in violation ofthe Motor Vehicle Law. The trial court orderedBaliwag, A & J Trading and Recontiqueto pay jointly and severally the Garcia spouses (1) P25,000.00 hospitalization and medication fee, (2)P450,000.00 loss of earnings in eight(8) years, (3)P2,000.00 for the hospitalization of their son Allan Garcia,(4) P50,000.00 moral damages,and (5) P30,000.00 attorneys fee.On appeal,the Court of Appealsmodified the trialcourts Decision byabsolving A & J Trading from liabilityand by reducing the award of attorneys fees to P10,000.00 and loss of earnings to P300,000.00, respectively.Hence, the petition for certiorari.The Supreme Courtaffirmed the Decision of theCourt of Appeals (CA-GR CV-31246) with themodificationreducing the actual damages forhospitalization and medical feesto P5,017.74; without costs.As a common carrier,Baliwagbreached its contract of carriage when it failed to deliver itspassengers, Leticia and Allan Garcia to their destination safe and sound. A common carrier is bound to carryits passengers safely as far as human care and foresight can provide, using the utmost diligence of a verycautious person, with due regard for all the circumstances. In a contract of carriage, it is presumed that thecommon carrier was at fault or was negligent when a passenger dies or is injured. Unless the presumption isrebutted, the court need not even make an express finding of fault or negligence on the part of the commoncarrier. This statutory presumption may only be overcome byevidence that the carrier exercised extraordinarydiligence as prescribed in Articles 1733 and 1755of the CivilCode.2.Baliwag didnot exercise extraordinarydiligence;Driverwas recklessThe records are bereft of any proof to show thatBaliwagexercised extraordinary diligence. On thecontrary, theevidence demonstrates its drivers recklessness. Leticia Garcia testified thatthe bus wasrunningat a very highspeed despite the drizzle and the darkness of thehighway. The passengers pleaded for its driverto slow down, but their plea was ignored. Leticia also revealed that the driver was smelling of liquor. Shecould smell him as she was seated right behind the driver. Another passenger, Felix Cruz testified thatimmediately before the collision, the bus driver was conversing with a co-employee. All these prove the busdrivers wanton disregard for the physical safety of his passengers, which makesBaliwagas acommon carrierliable for damages under Article 1759 ofthe Civil Code.3.Article1759,NCCArticle 1759 of the Civil Code provides that Common carriers are liable for the death of or injuriesto passengers through the negligence or willfull acts of the formers employees, although such employeesmay have acted beyond the scope of their authority or in violation of the orders of the common carriers. Thisliability of the common carriers do not cease upon proof that they exercised all the diligence of a good fatherof a family in theselection or supervision of their employees.4.Section 34 (g)ofthe Land Transportationand Traffic CodeSection 34 (g) of the Land Transportation and Traffic Code provides Lights and reflector whenparked or disabled. Appropriate parking lights or flares visible one hundred meters away shall bedisplayedat the corner of the vehicle whenever such vehicle is parkedon highways or in places that are not well-lightedor, is placed in such manner as to endanger passing traffic. Furthermore, every motor vehicle shall beprovided at all times with built-in reflectors or othersimilar warning devices either pasted, painted or attachedat its front and back which shall likewise be visible at night at least one hundred meters away. No vehicle notprovided with any of the requirements mentioned in this subsection shall be registered. 4.Use ofkerosene lamp a substantialcompliance of law as toearly warning deviceHerein,Baliwagcannot evade its liability by insisting that the accident was caused solely by thenegligence of A & J Trading and Julio Recontique, for the alleged non use of an early warning device (astestified to by Col. Demetrio dela Cruz, the station commander of Gapan, Nueva Ecija who investigated theincident, and Francisco Romano, the bus conductor). The records do not bear outBaliwags contention. Col.dela Cruz and Romano testified that they did not see any early warning device at the scene of the accident.They were referring to the triangular reflectorized plates in red and yellow issued by the Land TransportationOffice. However, the evidence shows that Recontique and Ecala placed a kerosene lamp or torch at the edgeof the road, near the rear portion of the truck to serve as an early warning device. This substantially complieswith Section 34 (g) of theLand Transportation and Traffic Code. The law clearly allows the usenot only of anearly warning device of the triangular reflectorized plates variety but also parking lights or flares visible 100meters away. Indeed, Col. dela Cruz himself admitted that a kerosene lamp is an acceptable substitute for thereflectorized plates. No negligence, therefore, maybe imputed to A & J Trading and its driver, Recontique.5.Testimony of injured passengers and disinterestedwitnessesagainst testimony ofbusconductorThe testimonies of injured passengers who may well be considered as disinterested witness appear tobe natural and more probable than the testimony given by Francisco Romano who isundoubtedly interested inthe outcome of the case, being the conductor ofBaliwagTransit Inc. Thus, among the testimonies offered bythe witnesses who were present at the scene of the accident, the affirmative testimonies given by the twoinjured passengers must be upheld and less credence must be given to the testimony of the bus conductor whosolely testified that no such early warning device exists.6.Testimonysupporting parked truck noticedin drizzlyanddark night duetokerosenelampThe situation then prevailing at the time of the accident was admittedly drizzly and all dark. Thisbeing so, it would be improbable and perhaps impossible on the part of the truck helper without the torch northe kerosene to remove the flat tires of the truck. Moreover, witness including the bus conductor himselfadmitted that the passengers shouted, that they are going to bump before the collision which consequentlycaused the bus driver to apply the brake 3 to 4 meters away from the truck. Again, without the kerosene northe torch in front of thetruck, it would be improbable for the driver, more so the passengers to notice thetruckto be bumped by the bus considering the darkness ofthe place at the time ofthe accident.7.Testimonyofinvestigating officeroflittleprobative valueAlthough that the investigating officer testified that he found no early warning device at the time ofhis investigation, the Court gives less credence to such testimony insofar as he himself admitted on crossexamination that he did not notice the presence of anykerosene lamp at the back ofthe truck because when hearrived at the scene of the accident, there were already many people surrounding the place. He furtheradmitted that there exists a probability that the lights of the truck may have been smashed by the bus at thetime of the accident considering the location of the truck where its rear portion was connected with the frontportion of the bus. Investigators testimony therefore did not confirm nor deny the existence of such warningdevice, making his testimony of littleprobative value.8.Award of P25,000 as hospitalization and medical fees not supported by evidence; Reduced toP5,017.74The awardofP25,000.00,ashospitalizationand medicalfees, isnot supportedby theevidence onrecord. The Garcias presented receiptsbut their total amounted onlyto P5,017.74. To be sure, Leticia testifiedas to the extra amount spent for her medical needs but without more reliable evidence, her lone testimonycannot justify the award of P25,000.00. To prove actual damages, the best evidence available to the injuredparty must be presented. The court cannot rely on uncorroborated testimony whose truth is suspect, but mustdepend upon competent proof that damages have been actually suffered. Thus, herein, the Court reduced theactual damages for medical andhospitalization expenses to P5,017.74.9.Award foramount representing lost earningsreasonableThe award of P300,000.00 representing Leticias lost earnings is reasonable. Before the accident,Leticia was engaged in embroidery, earning P5,000.00 per month. Her injuries forced her to stop working.Considering the nature and extent of her injuries and thelength of time it would take herto recover, the Courtfound it proper thatBaliwagshould compensate her lost income for 5 years.10.Awardofmoral damagesinaccordwithlawThe award ofmoral damages is in accord with law. In abreach of contract of carriage,moral damagesare recoverable if the carrier, through its agent, acted fraudulently or in bad faith. The evidence shows thegross negligence of the driver ofBaliwagbus which amounted to bad faith. Without doubt, Leticia and Allanexperiencedphysical suffering, mentalanguish andserious anxiety byreasonofthe accident.Leticiaunderwent an operation to replace her broken hip bone with a metal plate. She was confined at the NationalOrthopedic Hospital for 45 days. The young Allan was also confined in the hospital for his foot injury.Contrary to the contention ofBaliwag, the award of moral damages to Antonio and Leticia Garcia was not intheir capacity as parents of Allan. Leticia was given moral damages as an injured party. Allan was alsogranted moral damages as an injured party but because of his minority, the award in his favor has to be givento his father who represented him in thesuit.11.Awardof attorneys fees justifiedThe award of attorneys fees is justified. The complaint for damages was instituted by the Garciaspouses on 15 December 1982,following the unjustified refusal ofBaliwagto settletheir claim. The Decisionwas promulgated by the trial court only on 29 January 1991 or about 9 years later. Numerous pleadings werefiled