Obligations of the Shipper_extraordinary Diligence_bill of Lading Full Text Cases

8/11/2019 Obligations of the Shipper_extraordinary Diligence_bill of Lading Full Text Cases

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OBLIGATIONS OF THE SHIPPER, CONSIGNEE AND PASSENGER

[G.R. No. 125138. Marc h 2, 1999]

NICHOLAS Y. CERVANTES, petit ioner, vs . COURT OF APPEALS AND THE PHILIPPINEAIR L INES, INC., respond ent.

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

This Petition for Review on certiorari assails the 25 July 1995 decision of the Court ofAppeals[1] in CA GR CV No. 41407, entitled Nicholas Y. Cervantes vs. Philippine Air LinesInc., affirming in toto the judgment of the trial court dismissing petitioners complaint fordamages.

On March 27, 1989, the private respondent, Philippines Air Lines, Inc. (PAL), issued to theherein petitioner, Nicholas Cervantes (Cervantes), a round trip plane ticket for Manila-Honolulu-Los Angeles-Honolulu-Manila, which ticket expressly provided an expiry of date of one year

from issuance, i.e., until March 27, 1990. The issuance of the said plane ticket was incompliance with a Compromise Agreement entered into between the contending parties in twoprevious suits, docketed as Civil Case Nos. 3392 and 3451 before the Regional Trial Court inSurigao City.[2]

On March 23, 1990, four days before the expiry date of subject ticket, the petitioner used it.Upon his arrival in Los Angeles on the same day, he immediately booked his Los Angeles-Manila return ticket with the PAL office, and it was confirmed for the April 2, 1990 flight.

Upon learning that the same PAL plane would make a stop-over in San Francisco, andconsidering that he would be there on April 2, 1990, petitioner made arrangements with PAL forhim to board the flight in San Francisco instead of boarding in Los Angeles.

On April 2, 1990, when the petitioner checked in at the PAL counter in San Francisco, he wasnot allowed to board. The PAL personnel concerned marked the following notation on his ticket:TICKET NOT ACCEPTED DUE EXPIRATION OF VALIDITY.

Aggrieved, petitioner Cervantes filed a Complaint for Damages, for breach of contract ofcarriage docketed as Civil Case No. 3807 before Branch 32 of the Regional Trial Court ofSurigao del Norte in Surigao City. But the said complaint was dismissed for lack of merit.[3]

On September 20, 1993, petitioner interposed an appeal to the Court of Appeals, which cameout with a Decision, on July 25, 1995, upholding the dismissal of the case.

On May 22, 1996, petitioner came to this Court via the Petition for Review under consideration.

The issues raised for resolution are: (1) Whether or not the act of the PAL agents in confirmingsubject ticket extended the period of validity of petitioners ticket; (2) Whether or not the defenseof lack of authority was correctly ruled upon; and (3) Whether or not the denial of the award fordamages was proper.


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To rule on the first issue, there is a need to quote the findings below. As a rule, conclusions andfindings of fact arrived at by the trial court are entitled to great weight on appeal and should notbe disturbed unless for strong and cogent reasons.[4]

The facts of the case as found by the lower court[5] are, as follows:

The plane ticket itself (Exhibit A for plaintiff; Exhibit 1 for defendant) provides that it is not validafter March 27, 1990. (Exhibit 1-F). It is also stipulated in paragraph 8 of the Conditions ofContract (Exhibit 1, page 2) as follows:

"8. This ticket is good for carriage for one year from date of issue, except as otherwise providedin this ticket, in carriers tariffs, conditions of carriage, or related regulations. The fare forcarriage hereunder is subject to change prior to commencement of carriage. Carrier may refusetransportation if the applicable fare has not been paid.[6]

The question on the validity of subject ticket can be resolved in light of the ruling in the case ofLufthansa vs. Court of Appeals[7]. In the said case, the Tolentinos were issued first classtickets on April 3, 1982, which will be valid until April 10,1983. On June 10, 1982, they changed

their accommodations to economy class but the replacement tickets still contained the samerestriction. On May 7, 1983, Tolentino requested that subject tickets be extended, whichrequest was refused by the petitioner on the ground that the said tickets had already expired.The non-extension of their tickets prompted the Tolentinos to bring a complaint for breach ofcontract of carriage against the petitioner. In ruling against the award of damages, the Courtheld that the ticket constitute the contract between the parties. It is axiomatic that when theterms are clear and leave no doubt as to the intention of the contracting parties, contracts are tobe interpreted according to their literal meaning.

In his effort to evade this inevitable conclusion, petitioner theorized that the confirmation by thePALs agents in Los Angeles and San Francisco changed the compromise agreement betweenthe parties.

As aptly ruled by the appellate court:

xxx on March 23, 1990, he was aware of the risk that his ticket could expire, as it did, before hereturned to the Philippines. (pp. 320-321, Original Records)[8]

The question is: Did these two (2) employees, in effect , extend the validity or lifetime of theticket in question? The answer is in the negative. Both had no authority to do so. Appellantknew this from the very start when he called up the Legal Department of appellee in thePhilippines before he left for the United States of America. He had first hand knowledge that theticket in question would expire on March 27,1990 and that to secure an extension, he wouldhave to file a written request for extension at the PALs office in the Philippines (TSN, Testimony

of Nicholas Cervantes, August 2, 1991, pp 20-23). Despite this knowledge, appellant persistedto use the ticket in question.[9]From the aforestated facts, it can be gleaned that the petitioner was fully aware that there was aneed to send a letter to the legal counsel of PAL for the extension of the period of validity of histicket.

Since the PAL agents are not privy to the said Agreement and petitioner knew that a writtenrequest to the legal counsel of PAL was necessary, he cannot use what the PAL agents did to


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his advantage. The said agents, according to the Court of Appeals,[10] acted without authoritywhen they confirmed the flights of the petitioner.

Under Article 1898[11] of the New Civil Code, the acts of an agent beyond the scope of hisauthority do not bind the principal, unless the latter ratifies the same expressly or impliedly.Furthermore, when the third person (herein petitioner) knows that the agent was acting beyond

his power or authority, the principal cannot be held liable for the acts of the agent. If the saidthird person is aware of such limits of authority, he is to blame, and is not entitled to recoverdamages from the agent, unless the latter undertook to secure the principals ratification.[12]

Anent the second issue, petitioners stance that the defense of lack of authority on the part ofthe PAL employees was deemed waived under Rule 9, Section 2 of the Revised Rules of Court,is unsustainable. Thereunder, failure of a party to put up defenses in their answer or in a motionto dismiss is a waiver thereof.

Petitioner stresses that the alleged lack of authority of the PAL employees was neither raised inthe answer nor in the motion to dismiss. But records show that the question of whether therewas authority on the part of the PAL employees was acted upon by the trial court when Nicholas

Cervantes was presented as a witness and the depositions of the PAL employees, Georgina M.Reyes and Ruth Villanueva, were presented.

The admission by Cervantes that he was told by PALs legal counsel that he had to submit aletter requesting for an extension of the validity of subject tickets was tantamount to knowledgeon his part that the PAL employees had no authority to extend the validity of subject tickets andonly PALs legal counsel was authorized to do so.

However, notwithstanding PALs failure to raise the defense of lack of authority of the said PALagents in its answer or in a motion to dismiss, the omission was cured since the said issue waslitigated upon, as shown by the testimony of the petitioner in the course of trial. Rule 10, Section5 of the 1997 Rules of Civil Procedure provides:

Sec. 5. Amendment to conform or authorize presentation of evidence. - When issues notraised by the pleadings are tried with express or implied consent of the parties, as if they hadbeen raised in the pleadings. Such amendment of the pleadings as may be necessary to causethem to conform to the evidence and to raise these issues may be made upon motion of anyparty at any time, even after judgment; but failure to amend does not affect the result of the trialof these issues. xxx

Thus, when evidence is presented by one party, with the express or implied consent of theadverse party, as to issues not alleged in the pleadings, judgment may be rendered validly asregards the said issue, which shall be treated as if they have been raised in the pleadings.There is implied consent to the evidence thus presented when the adverse party fails to object

thereto.[13]

Re: the third issue, an award of damages is improper because petitioner failed to show that PALacted in bad faith in refusing to allow him to board its plane in San Francisco.

In awarding moral damages for breach of contract of carriage, the breach must be wanton anddeliberately injurious or the one responsible acted fraudulently or with malice or bad faith.[14]Petitioner knew there was a strong possibility that he could not use the subject ticket, so muchso that he bought a back-up ticket to ensure his departure. Should there be a finding of bad


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faith, we are of the opinion that it should be on the petitioner. What the employees of PAL didwas one of simple negligence. No injury resulted on the part of petitioner because he had aback-up ticket should PAL refuse to accommodate him with the use of subject ticket.

Neither can the claim for exemplary damages be upheld. Such kind of damages is imposed byway of example or correction for the public good, and the existence of bad faith is established.

The wrongful act must be accompanied by bad faith, and an award of damages would beallowed only if the guilty party acted in a wanton, fraudulent, reckless or malevolent manner.[15]Here, there is no showing that PAL acted in such a manner. An award for attorneys fees is alsoimproper.

WHEREFORE, the Petition is DENIED and the decision of the Court of Appeals dated July 25,1995 AFFIRMED in toto. No pronouncement as to costs.

SO ORDERED.


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G.R. No. L-55347 Oc tober 4, 1985

PHILIPPINE NATIONAL RAILWAYS, petit ioner,vs.

THE HONORABLE COURT OF APPEALS and ROSARIO TUPANG, respon dents .

ESCOLIN, J.:

Invoking the principle of state immunity from suit, the Philippine National Railways, PNR forshort, instituted this petition for review on certiorari to set aside the decision of the respondent

Appellate Court which held petitioner PNR liable for damages for the death of WinifredoTupang, a paying passenger who fell off a train operated by the petitioner.

The pertinent facts are summarized by the respondent court as follows:

The facts show that on September 10, 1972, at about 9:00 o'clock in the evening, WinifredoTupang, husband of plaintiff Rosario Tupang, boarded 'Train No. 516 of appellant at Libmanan,Camarines Sur, as a paying passenger bound for Manila. Due to some mechanical defect, the

train stopped at Sipocot, Camarines Sur, for repairs, taking some two hours before the traincould resume its trip to Manila. Unfortunately, upon passing Iyam Bridge at Lucena, Quezon,Winifredo Tupang fell off the train resulting in his death.The train did not stop despite the alarmraised by the other passengers that somebody fell from the train. Instead, the train conductorPerfecto Abrazado, called the station agent at Candelaria, Quezon, and requested forverification of the information. Police authorities of Lucena City were dispatched to the IyamBridge where they found the lifeless body of Winifredo Tupang.

As shown by the autopsy report, Winifredo Tupang died of cardio-respiratory failure due tomassive cerebral hemorrhage due to traumatic injury [Exhibits B and C, Folder ofExhibits],Tupang was later buried in the public cemetery of Lucena City by the local policeauthorities. [Rollo, pp. 91-92]

Upon complaint filed by the deceased's widow, Rosario Tupang, the then Court of First Instanceof Rizal, after trial, held the petitioner PNR liable for damages for breach of contract of carriageand ordered "to pay the plaintiff the sum of P12,000,00 for the death of Winifredo Tupang, plusP20,000.00 for loss of his earning capacity and the further sum of P10,000.00 as moraldamages, and P2,000.00 as attorney's fees, and costs. 1

On appeal, the Appellate Court sustained the holding of the trial court that the PNR did notexercise the utmost diligence required by law of a common carrier. It further increased theamount adjudicated by the trial court by ordering PNR to pay the plaintiff an additional sum ofP5,000.00 as exemplary damages.

Moving for reconsideration of the above decision, the PNR raised for the first time, as adefense, the doctrine of state immunity from suit. It alleged that it is a mere agency of thePhilippine government without distinct or separate personality of its own, and that its funds aregovernmental in character and, therefore, not subject to garnishment or execution. The motionwas denied; the respondent court ruled that the ground advanced could not be raised for thefirst time on appeal.

Hence, this petition for review.


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The petition is devoid of merit. The PNR was created under Rep. Act 4156, as amended.Section 4 of the said Act provides:

The Philippine national Railways shall have the following powers:

a. To do all such other things and to transact all such business directly or indirectly

necessary, incidental or conducive to the attainment of the purpose of the corporation; and

b. Generally, to exercise all powers of a corporation under the Corporation Law.

Under the foregoing section, the PNR has all the powers, the characteristics and attributes of acorporation under the Corporation Law. There can be no question then that the PNR may sueand be sued and may be subjected to court processes just like any other corporation. 2

The petitioner's contention that the funds of the PNR are not subject to garnishment orexecution hardly raises a question of first impression. In Philippine National Railways v. Unionde Maquinistas, et al., 3 then Justice Fernando, later Chief Justice, said. "The main issue posedin this certiorari proceeding, whether or not the funds of the Philippine National Railways, could

be garnished or levied upon on execution was resolved in two recent decisions, the PhilippineNational Bank v. Court of Industrial Relations [81 SCRA 314] and Philippine National Bank v.Hon. Judge Pabalan [83 SCRA 595]. This Court in both cases answered the question in theaffirmative. There was no legal bar to garnishment or execution. The argument based on non-suability of a state allegedly because the funds are governmental in character wasunavailing.So it must be again."

In support of the above conclusion, Justice Fernando cited the Court's holding in PhilippineNational Bank v. Court of Industrial Relations, to wit: "The premise that the funds could bespoken of as public in character may be accepted in the sense that the People's Homesite andHousing Corporation was a government-owned entity. It does not follow though that they wereexempt from garnishment. National Shipyard and Steel Corporation v. Court of Industrial

Relations is squarely in point. As was explicitly stated in the opinion of then Justice, later ChiefJustice, Concepcion: "The allegation to the effect that the funds of the NASSCO are publicfunds of the government, and that, as such, the same may not be garnished, attached or leviedupon, is untenable for, as a government- owned and controlled corporation, the NASSCO has apersonality of its own, distinct and separate from that of the Government. It has-pursuant toSection 2 of Executive Order No. 356, dated October 23, 1950 * * *, pursuant to which theNASSCO has been established- 'all the powers of a corporation under the Corporation Law * **. 4

As far back as 1941, this Court in the case of Manila Hotel Employees Association v. ManilaHotel Co., 5 laid down the rule that "when the government enters into commercial business, itabandons its sovereign capacity and is to be treated like any other corporation. [Bank of the

U.S. v. Planters' Bank, 9 Waitch 904, 6 L. ed. 244]. By engaging in a particular business throughthe instrumentality of a corporation the government divests itself pro hac vice of its sovereigncharacter, so as to render the corporation subject to the rules of law governing privatecorporations. 6 Of Similar import is the pronouncement in Prisco v. CIR,' that "when thegovernment engages in business, it abdicates part of its sovereign prerogatives and descendsto the level of a citizen, ... . " In fine, the petitioner PNR cannot legally set up the doctrine of non-suability as a bar to the plaintiff's suit for damages.


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The appellate court found, the petitioner does not deny, that the train boarded by the deceasedWinifredo Tupang was so over-crowded that he and many other passengers had no choice butto sit on the open platforms between the coaches of the train. It is likewise undisputed that thetrain did not even slow down when it approached the Iyam Bridge which was under repair at thetime, Neither did the train stop, despite the alarm raised by other passengers that a person hadfallen off the train at lyam Bridge. 7

The petitioner has the obligation to transport its passengers to their destinations and to observeextraordinary diligence in doing so. Death or any injury suffered by any of its passengers givesrise to the presumption that it was negligent in the performance of its obligation under thecontract of carriage. Thus, as correctly ruled by the respondent court, the petitioner failed tooverthrow such presumption of negligence with clear and convincing evidence.

But while petitioner failed to exercise extraordinary diligence as required by law, 8 it appearsthat the deceased was chargeable with contributory negligence. Since he opted to sit on theopen platform between the coaches of the train, he should have held tightly and tenaciously onthe upright metal bar found at the side of said platform to avoid falling off from the speedingtrain. Such contributory negligence, while not exempting the PNR from liability, nevertheless

justified the deletion of the amount adjudicated as moral damages. By the same token, theaward of exemplary damages must be set aside. Exemplary damages may be allowed only incases where the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolentmanner. 9 There being no evidence of fraud, malice or bad faith on the part of petitioner, thegrant of exemplary damages should be discarded.

WHEREFORE, the decision of the respondent appellate court is hereby modified by eliminatingtherefrom the amounts of P10,000.00 and P5,000.00 adjudicated as moral and exemplarydamages, respectively. No costs.

SO ORDERED.


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EXTRAORDINARY DILIGENCE

G.R. No. 88052 Decemb er 14, 1989

JOSE P. MECENAS, ROMEO P. MECENAS, LILIA P. MECENAS, ORLANDO P. MECENAS,

VIOLETA M. ACERVO, LUZVIMINDA P. MECENAS; and OFELIA M. JAVIER, petit io ners,vs.HON. COURT OF APPEALS, CAPT. ROGER SANTISTEBAN and NEGROS NAVIGATION

CO., INC., respon dents.

FELICIANO, J.:

At 6:20 o'clock in the morning of 22 April 1980, the M/T "Tacloban City," a barge-type oil tankerof Philippine registry, with a gross tonnage of 1,241,68 tons, owned by the Philippine NationalOil Company (PNOC) and operated by the PNOC Shipping and Transport Corporation (PNOCShipping), having unloaded its cargo of petroleum products, left Amlan, Negros Occidental, andheaded towards Bataan. At about 1:00 o'clock in the afternoon of that same day, the M/V "Don

Juan," an interisland vessel, also of Philippine registry, of 2,391.31 tons gross weight, ownedand operated by the Negros Navigation Co., Inc. (Negros Navigation) left Manila bound forBacolod with seven hundred fifty (750) passengers listed in its manifest, and a complete set ofofficers and crew members.

On the evening of that same day, 22 April 1980, at about 10:30 o'clock, the "Tacloban City" andthe "Don Juan" collided at the Talbas Strait near Maestra de Ocampo Island in the vicinity of theisland of Mindoro. When the collision occurred, the sea was calm, the weather fair and visibilitygood. As a result of this collision, the M/V "Don Juan" sank and hundreds of its passengersperished. Among the ill-fated passengers were the parents of petitioners, the spouses PerfectoMecenas and Sofia Mecenas, whose bodies were never found despite intensive search bypetitioners.

On 29 December 1980, petitioners filed a complaint in the then Court- of First Instance ofQuezon City, docketed as Civil Case No. Q-31525, against private respondents NegrosNavigation and Capt. Roger Santisteban, the captain of the "Don Juan" without, however,impleading either PNOC or PNOC Shipping. In their complaint, petitioners alleged that theywere the seven (7) surviving legitimate children of Perfecto Mecenas and Sofia Mecenas andthat the latter spouses perished in the collision which had resulted from the negligence ofNegros Navigation and Capt. Santisteban. Petitioners prayed for actual damages of not lessthan P100,000.00 as well as moral and exemplary damages in such amount as the Court maydeem reasonable to award to them.

Another complaint, docketed as Civil Case No. Q-33932, was filed in the same court by Lilia

Ciocon claiming damages against Negros Navigation, PNOC and PNOC Shipping for the deathof her husband Manuel Ciocon, another of the luckless passengers of the "Don Juan." ManuelCiocon's body, too, was never found.

The two (2) cases were consolidated and heard jointly by the Regional Trial Court of QuezonCity, Branch 82. On 17 July 1986, after trial, the trial court rendered a decision, the dispositive ofwhich read as follows:

WHEREFORE, the Court hereby renders judgment ordering:


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a) The defendant Negros Navigation Co., Inc. and Capt. Roger Santisteban jointly andseverally liable to pay plaintiffs in Civil Case No Q-31525, the sum of P400,000.00 for the deathof plaintiffs' parents, Perfecto A. Mecenas and Sofia P. Mecenas; to pay said plaintiff's the sumof P15.000,00 as and for attorney's fees; plus costs of the suit.

b) Each of the defendants Negros Navigation Co Inc. and Philippine National OilCompany/PNOC Shipping and Transportation Company, to pay the plaintiff in Civil Case No. Q-33932, the sum of P100,000.00 for the death of Manuel Ciocon, to pay said plaintiff jointly andseverally, the sum of P1 5,000.00 as and for attorney's fees, plus costs of the suit. 1

Negros Navigation, Capt. Santisteban, PNOC and PNOC Shipping appealed the trial court'sdecision to the Court of Appeals. Later, PNOC and PNOC Shipping withdrew their appeal citinga compromise agreement reached by them with Negros Navigation; the Court of Appealsgranted the motion by a resolution dated 5 September 1988, subject to the reservation made byLilia Ciocon that she could not be bound by the compromise agreement and would enforce theaward granted her by the trial court.

In time, the Court of Appeals rendered a decision dated 26 January 1989 which decreed thefollowing:

WHEREFORE, in view of the foregoing, the decision of the court a quo is hereby affirmed asmodified with respect to Civil Case No. 31525, wherein defendant appellant Negros NavigationCo. Inc. and Capt. Roger Santisteban are held jointly and severally liable to pay the plaintiffs theamount of P100,000. 00 as actual and compensatory damages and P15,000.00 as attorney'sfees and the cost of the suit. 2

The issue to be resolved in this Petition for Review is whether or not the Court of Appeals haderred in reducing the amount of the damages awarded by the trial court to the petitioners fromP400,000.00 to P100,000.00.

We note that the trial court had granted petitioners the sum of P400,000,00 "for the death of[their parents]" plus P15,000.00 as attorney's fees, while the Court of Appeals awarded themP100,000.00 "as actual and compensatory damages" and P15,000.00 as attorney's fees. Todetermine whether such reduction of the damages awarded was proper, we must first determinewhether petitioners were entitled to an award of damages other than actual or compensatorydamages, that is, whether they were entitled to award of moral and exemplary damages.

We begin by noting that both the trial court and the Court of Appeals considered the action (CivilCase No. Q-31525) brought by the sons and daughters of the deceased Mecenas spousesagainst Negros Navigation as based on quasi-delict. We believed that action is moreappropriately regarded as grounded on contract, the contract of carriage between the Mecenas

spouses as regular passengers who paid for their boat tickets and Negros Navigation; thesurviving children while not themselves passengers are in effect suing the carrier inrepresentation of their deceased parents. 3 Thus, the suit (Civil Case No. Q-33932) filed by thewidow Lilia Ciocon was correctly treated by the trial and appellate courts as based on contract(vis-a-vis Negros Navigation) and as well on quasi-delict (vis-a-vis PNOC and PNOC Shipping).In an action based upon a breach of the contract of carriage, the carrier under our civil law isliable for the death of passengers arising from the negligence or willful act of the carrier'semployees although such employees may have acted beyond the scope of their authority oreven in violation of the instructions of the carrier, 4 which liability may include liability for moral


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damages. 5 It follows that petitioners would be entitled to moral damages so long as thecollision with the "Tacloban City" and the sinking of the "Don Juan" were caused or attended bynegligence on the part of private respondents.

In respect of the petitioners' claim for exemplary damages, it is only necessary to refer to Article2232 of the Civil Code:

Article 2332. In contracts and quasi-contracts, the court may exemplary damages if thedefendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. 6

Thus, whether petitioners are entitled to exemplary damages as claimed must depend uponwhether or not private respondents acted recklessly, that is, with gross negligence.

We turn, therefore, to a consideration of whether or not Negros Navigation and Capt.Santisteban were grossly negligent during the events which culminated in the collision with"Tacloban City" and the sinking of the "Don Juan" and the resulting heavy loss of lives.

The then Commandant of the Philippine Coast Guard, Commodore B.C. Ochoco, in a decision

dated 2 March 1981, held that the "Tacloban City" was "primarily and solely [sic] at fault andresponsible for the collision." 7 Initially, the Minister of National Defense upheld the decision ofCommodore Ochoco. 8 On Motion for Reconsideration, however, the Minister of NationalDefense reversed himself and held that both vessels had been at fault:

It is therefore evident from a close and thorough review of the evidence that fault is imputable toboth vessels for the collision. Accordingly, the decision dated March 12, 1982, subject of theMotion for Reconsideration filed by counsel of M/T Tacloban City, is hereby reversed. However,the administrative penalties imposed oil both vessels and their respective crew concerned arehereby affirmed. 9

The trial court, after a review of the evidence submitted during the trial, arrived at the same

conclusion that the Minister of National Defense had reached that both the "Tacloban City" andthe "Don Juan" were at fault in the collision. The trial court summarized the testimony andevidence of PNOC and PNOC Shipping as well as of Negros Navigation in the following terms:

Defendant PNOC's version of the incident:

M/V Don Juan was first sighted at about 5 or 6 miles from Tacloban City (TSN, January 21,1985, p. 13); it was on the starboard (right) side of Tacloban City. This was a visual contact; notpicked up by radar (p. 15, Ibid). Tacloban City was travelling 310 degrees with a speed of 6knots, estimated speed of Don Juan of 16 knots (TSN, May 9, pp. 5-6). As Don Juanapproached, Tacloban City gave a leeway of 1 0 degrees to the left. 'The purpose was to enableTacloban to see the direction of Don Juan (p. 19, Ibid). Don Juan switched to green light,

signifying that it will pass Tacloban City's right side; it will be a starboard to starboard passing(p. 21, Ibid) Tacloban City's purpose in giving a leeway of 10 degrees at this point, is to giveDon Juan more space for her passage (p. 22, Ibid). This was increased by Tacloban City to anadditional 15 degrees towards the left (p. 22, Ibid). The way was clear and Don Juan has notchanged its course (TSN, May 9,1985, p. 39).

When Tacloban City altered its course the second time, from 300 degrees to 285 degrees, DonJuan was about 4.5 miles away (TSN, May 9,1985, p. 7).


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Despite executing a hardport maneuver, the collision nonetheless occurred. Don Juan rammedthe Tacloban City near the starboard bow (p. 7, Ibid)."

NENACO's [Negros Navigation] version.

Don Juan first sighted Tacloban City 4 miles away, as shown by radar (p. 13, May 24, 1983).

Tacloban City showed its red and green lights twice; it proceeded to, and will cross, the path ofDon Juan. Tacloban was on the left side of Don Juan (TSN, April 20,1983, p. 4).

Upon seeing Tacloban's red and green lights, Don Juan executed hard starboard (TSN, p. 4,Ibid.) This maneuver is in conformity with the rule that 'when both vessels are head on or nearlyhead on, each vessel must turn to the right in order to avoid each other. (p. 5, Ibid).Nonetheless, Tacloban appeared to be heading towards Don Juan (p. 6, Ibid),

When Don Juan executed hard starboard, Tacloban was about 1,500 feet away (TSN, May24,1983, p. 6). Don Juan, after execution of hard starboard, will move forward 200 metersbefore the vessel will respond to such maneuver (p. 7, Ibid). The speed of Don Juan at that timewas 17 knits; Tacloban City 6.3 knots. t "Between 9 to 15 seconds from execution of hard

starboard, collision occurred (p. 8, Ibid). (pp. 3-4 Decision). 10

The trial court concluded:

M/ V Don Juan and Tacloban City became aware of each other's presence in the area by visualcontact at a distance of something like 6 miles from each other. They were fully aware that ifthey continued on their course, they will meet head on. Don Juan - steered to the right;Tacloban City continued its course to the left. There can be no excuse for them not to realizethat, with such maneuvers, they will collide. They executed maneuvers inadequate, and too late,to avoid collision.

The Court is of the considered view that the defendants are equally negligent and are liable for

damages. (p. 4, decision). 11

The Court of Appeals, for its part, reached the same conclusion. 12

There is, therefore, no question that the "Don Juan" was at least as negligent as the M/T"Tacloban City" in the events leading up to the collision and the sinking of the "Don Juan." Theremaining question is whether the negligence on the part of the "Don Juan" reached that level ofrecklessness or gross negligence that our Civil Code requires for the imposition of exemplarydamages. Our own review of the record in the case at bar requires us to answer this in theaffirmative.

In the first place, the report of the Philippine Coast Guard Commandant (Exhibit "l 0"), while

holding the "Tacloban City" as "primarily and solely [sic] at fault and responsible for thecollision," did itself set out that there had been fault or negligence on the part of Capt.Santisteban and his officers and crew before the collision and immediately after contact of thetwo (2) vessels. The decision of Commodore Ochoco said:

x x x x x x x x x

M/S Don Juan's Master, Capt. Rogelio Santisteban, was playing mahjong before and up to thetime of collision. Moreover, after the collision, he failed to institute appropriate measures to


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delay the sinking MS Don Juan and to supervise properly the execution of his order ofabandonship. As regards the officer on watch, Senior 3rd Mate Rogelio Devera, he admittedthat he failed or did not call or inform Capt. Santisteban of the imminent danger of collision andof the actual collision itself Also, he failed to assist his master to prevent the fast sinking of theship. The record also indicates that Auxiliary Chief Mate Antonio Labordo displayed laxity inmaintaining order among the passengers after the collision.

x x x x x x x x x. 13

We believe that the behaviour of the captain of the "Don Juan" in tills instance-playing mahjong"before and up to the time of collision constitutes behaviour that is simply unacceptable on thepart of the master of a vessel to whose hands the lives and welfare of at least seven hundredfifty (750) passengers had been entrusted. Whether or not Capt. Santisteban was "off-duty" or"on-duty" at or around the time of actual collision is quite immaterial; there is, both realisticallyspeaking and in contemplation of law, no such thing as "off-duty" hours for the master of avessel at sea that is a common carrier upon whom the law imposes the duty of extraordinarydiligence-

[t]he duty to carry the passengers safely as far as human care and foresight can provide, usingthe utmost diligence of very cautious persons, with a due regard for all the circumstances. 14

The record does not show that was the first or only time that Capt. Santisteban had entertainedhimself during a voyage by playing mahjong with his officers and passengers; NegrosNavigation in permitting, or in failing to discover and correct such behaviour, must be deemedgrossly negligent.

Capt. Santisteban was also faulted in the Philippine Coast Guard decision for failing after thecollision, "to institute appropriate measures to delay the sinking of M/V Don Juan." This appearsto us to be a euphemism for failure to maintain the sea-worthiness or the water-tight integrity ofthe "Don Juan." The record shows that the "Don Juan" sank within ten (10) to fifteen (15)

minutes after initial contact with the "Tacloban City. 15 While the failure of Capt. Santisteban tosupervise his officers and crew in the process of abandoning the ship and his failure to avail ofmeasures to prevent the too rapid sinking of his vessel after collision, did not cause the collisionby themselves, such failures doubtless contributed materially to the consequent loss of life and,moreover, were indicative of the kind and level of diligence exercised by Capt. Santisteban inrespect of his vessel and his officers and men prior to actual contact between the two (2)vessels. The officer-on-watch in the "Don Juan" admitted that he had failed to inform Capt.Santisteban not only of the "imminent danger of collision" but even of "the actual collision itself "

There is also evidence that the "Don Juan" was carrying more passengers than she had beencertified as allowed to carry. The Certificate of Inspection 16 dated 27 August 1979, issued bythe Philippine Coast Guard Commander at Iloilo City, the Don Juan's home port, states:

Passengers allowed : 810

Total Persons Allowed : 864

The report of the Philippine Coast Guard (Exhibit "10") stated that the "Don Juan" had been"officially cleared with 878 passengers on board when she sailed from the port of Manila on April22, 1980 at about 1:00 p.m." This head-count of the passengers "did not include the 126 crewmembers, children below three (3) years old and two (2) half-paying passengers" which had


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been counted as one adult passenger. 17 Thus, the total number of persons on board the "DonJuan" on that ill-starred night of 22 April 1 980 was 1,004, or 140 persons more than themaximum lumber that could be safely carried by the "Don Juan," per its own Certificate ofInspection. 18 We note in addition, that only 750 passengers had been listed in its manifest forits final voyage; in other words, at least 128 passengers on board had not even been enteredinto the "Don Juan's" manifest. The "Don Juan's" Certificate of Inspection showed that she

carried life boat and life raft accommodations for only 864 persons, the maximum number ofpersons she was permitted to carry; in other words, she did not carry enough boats and life raftsfor all the persons actually on board that tragic night of 22 April 1980.

We hold that under these circumstances, a presumption of gross negligence on the part of thevessel (her officers and crew) and of its ship-owner arises; this presumption was never rebuttedby Negros Navigation.

The grossness of the negligence of the "Don Juan" is underscored when one considers theforegoing circumstances in the context of the following facts: Firstly, the "Don Juan" was morethan twice as fast as the "Tacloban City." The "Don Juan's" top speed was 17 knots; while thatof the "Tacloban City" was 6.3. knots. 19 Secondly, the "Don Juan" carried the full complement

of officers and crew members specified for a passenger vessel of her class. Thirdly, the "DonJuan" was equipped with radar which was functioning that night. Fourthly, the "Don Juan's"officer on-watch had sighted the "Tacloban City" on his radar screen while the latter was stillfour (4) nautical miles away. Visual confirmation of radar contact was established by the "DonJuan" while the "Tacloban City" was still 2.7 miles away. 20 In the total set of circumstanceswhich existed in the instant case, the "Don Juan," had it taken seriously its duty of extraordinarydiligence, could have easily avoided the collision with the "Tacloban City," Indeed, the "DonJuan" might well have avoided the collision even if it had exercised ordinary diligence merely.

It is true that the "Tacloban City" failed to follow Rule 18 of the International Rules of the Roadwhich requires two (2) power- driven vessels meeting end on or nearly end on each to alter hercourse to starboard (right) so that each vessel may pass on the port side (left) of the other. 21

The "Tacloban City," when the two (2) vessels were only three-tenths (0.3) of a mile apart,turned (for the second time) 150 to port side while the "Don Juan" veered hard to starboard.This circumstance, while it may have made the collision immediately inevitable, cannot,however, be viewed in isolation from the rest of the factual circumstances obtaining before andup to the collision. In any case, Rule 18 like all other International Rules of the Road, are not tobe obeyed and construed without regard to all the circumstances surrounding a particularencounter between two (2) vessels. 22 In ordinary circumstances, a vessel discharges her dutyto another by a faithful and literal observance of the Rules of Navigation, 23 and she cannot beheld at fault for so doing even though a different course would have prevented the collision. Thisrule, however, is not to be applied where it is apparent, as in the instant case, that her captainwas guilty of negligence or of a want of seamanship in not perceiving the necessity for, or in soacting as to create such necessity for, a departure from the rule and acting accordingly. 24 In

other words, "route observance" of the International Rules of the Road will not relieve a vesselfrom responsibility if the collision could have been avoided by proper care and skill on her partor even by a departure from the rules. 25

In the petition at bar, the "Don Juan" having sighted the "Tacloban City" when it was still a longway off was negligent in failing to take early preventive action and in allowing the two (2)vessels to come to such close quarters as to render the collision inevitable when there was nonecessity for passing so near to the "Tacloban City" as to create that hazard or inevitability, forthe "Don Juan" could choose its own distance. 26, It is noteworthy that the "Tacloban City,"


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upon turning hard to port shortly before the moment of collision, signalled its intention to do soby giving two (2) short blasts with horn. 26A The "Don Juan " gave no answering horn blast tosignal its own intention and proceeded to turn hatd to starboard. 26B

We conclude that Capt. Santisteban and Negros Navigation are properly held liable for grossnegligence in connection with the collision of the "Don Juan" and "Tacloban City" and the

sinking of the "Don Juan" leading to the death of hundreds of passengers. We find no necessityfor passing upon the degree of negligence or culpability properly attributable to PNOC andPNOC Shipping or the master of the "Tacloban City," since they were never impleaded here.

It will be recalled that the trial court had rendered a lump sum of P400,000.00 to petitioners forthe death of their parents in the "Don Juan" tragedy. Clearly, the trial court should have includeda breakdown of the lump sum award into its component parts: compensatory damages, moraldamages and exemplary damages. On appeal, the Court of Appeals could have and shouldhave itself broken down the lump sum award of the trial court into its constituent parts; perhaps,it did, in its own mind. In any case, the Court of Appeals apparently relying upon ManchesterDevelopment Corporation V. Court of Appeals 27 reduced the P400,000.00 lump sum awardinto a P100,000.00 for actual and compensatory damages only.

We believe that the Court of Appeals erred in doing so, It is true that the petitioners' complaintbefore the trial court had in the body indicated that the petitioner-plaintiffs believed that moraldamages in the amount of at least P1,400,000.00 were properly due to them (notP12,000,000.00 as the Court of Appeals erroneously stated) as well as exemplary damages inthe sum of P100,000.00 and that in the prayer of their complaint, they did not specify theamount of moral and exemplary damages sought from the trial court. We do not believe,however, that the Manchester doctrine, which has been modified and clarified in subsequentdecision by the Court in Sun Insurance Office, Ltd. (SIOL), et al. v. Asuncion, et al. 28 can beapplied in the instant case so as to work a striking out of that portion of the trial court's awardwhich could be deemed nationally to constitute an award of moral and exemplary damages.Manchester was promulgated by the Court on 7 May 1987. Circular No. 7 of this Court, which

embodied the doctrine in Manchester, is dated 24 March 1988. Upon the other hand, thecomplaint in the case at bar was filed on 29 December 1980, that is, long before eitherManchester or Circular No. 7 of 24 March 1988 emerged. The decision of the trial court wasitself promulgated on 17 July 1986, again, before Manchester and Circular No. 7 werepromulgated. We do not believe that Manchester should have been applied retroactively to thiscase where a decision on the merits had already been rendered by the trial court, even thoughsuch decision was then under appeal and had not yet reached finality. There is no indication atall that petitioners here sought simply to evade payment of the court's filing fees or to misleadthe court in the assessment of the filing fees. In any event, we apply Manchester as clarified andamplified by Sun Insurance Office Ltd. (SIOL), by holding that the petitioners shall pay theadditional filing fee that is properly payable given the award specified below, and that suchadditional filing fee shall constitute a lien upon the judgment.

We consider, finally, the amount of damages-compensatory, moral and exemplary-properlyimposable upon private respondents in this case. The original award of the trial court ofP400,000.00 could well have been disaggregated by the trial court and the Court of Appeals inthe following manner:

actual or compensatory damages proved in the course of trial consisting of actual expensesincurred by petitioners


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in their search for their

parents' bodies- -P126,000.00

actual or compensatorydamages in case of

wrongful death

(P30,000.00 x 2) -P60,000.00 29

(3) moral damages -P107,000.00

(4) exemplary damages -P107,000.00

Total -P400,000.00

Considering that petitioners, legitimate children of the deceased spouses Mecenas, are seven

(7) in number and that they lost both father and mothe in one fell blow of fate, and consideringthe pain and anxiety they doubtless experienced while searching for their parents among thesurvivors and the corpses recovered from the sea or washed ashore, we believe that anadditional amount of P200,000.00 for moral damages, making a total of P307,000.00 for moraldamages, making a total of P307,000.00 as moral damages, would be quite reasonable.

Exemplary damages are designed by our civil law to permit the courts to reshape behaviour thatis socially deleterious in its consequence by creating negative incentives or deterrents againstsuch behaviour. In requiring compliance with the standard which is in fact that of the highestpossible degree of diligence, from common carriers and in creating a presumption of negligenceagainst them, the law seels to compel them to control their employees, to tame their recklessinstincts and to force them to take adequate care of human beings and their property. The Court

will take judicial notive of the dreadful regularity with which grievous maritime disasters occur inour waters with massive loss of life. The bulk of our population is too poor to afford domestic airtransportation. So it is that notwithstanding the frequent sinking of passenger vessels in ourwaters, crowds of people continue to travel by sea. This Court is prepared to use theinstruments given to it by the law for securing the ends of law and public policy. One of thoseinstruments is the institution of exemplary damages; one of those ends, of special importance inan archipelagic state like the Philippines, is the safe and reliable carriage of people and goodsby sea. Considering the foregoing, we believe that an additional award in the amount ofP200,000.00 as exmplary damages, is quite modest.

The Court is aware that petitioners here merely asked for the restoration of the P 400.000.00award of the trial court. We underscore once more, however, the firmly settled doctrine that this

Court may consider and resolved all issues which must be decided in order to render substantialjustice to the parties, including issues not explicity raised by the party affected. In the case atbar, as in Kapalaran Bus Line v. Coronado, et al., 30 both the demands of sustantial justice andthe imperious requirements of public policy compel us to the conclusion that the trial court'simplicit award of moral and exemplary damages was erronoeusly deledted and must berestored and augmented and brought more nearely to the level required by public policy andsubstantial justice.


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WHEREFORE, the Petition for Review on certiorari is hereby GRANTED and the Decision ofthe Court of Appeals insofar as it redurce the amount of damages awarded to petitioners toP100,000.00 is hereby REVERSED and SET ASIDE. The award granted by the trial court ishereby RESTORED and AUGMENTED as follows:

(a) P 126,000.00 for actual damages;

(b) P 60,000.00 as compensatory damages for wrongful death;

(c) P 307,000.00 as moral damages;

(d) P 307,000.00 as exemplary damages making a total of P 800,000.00; and

(e) P 15,000.00 as attorney's fees.

Petitioners shall pay the additional filing fees properly due and payable in view of the awardhere made, which fees shall be computed by the Clerks of Court of the trial court, and shallconstitute a lien upon the judgment here awarded. Cost against private respondents.

SO ORDERED.


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G.R. No. L-28692 Ju ly 30, 1982

CONRADA VDA. DE ABETO, CARME0000LO ABETO, CECILIA ABETO, CONCEPCIONABETO, MARIA ABETO, ESTELA A BETO, PERLA ABETO, PATRIA ABETO and ALBERTO

ABETO, plaintif fs-appellees,vs.

PHILIPPINE AIR LINES, INCORPORATED, d efendant-appellant.

RELOVA, J..

Appeal from the decision of the Court of First Instance of Iloilo finding that defendant-appellant"did not exercise extraordinary diligence or prudence as far as human foresight can provide ...but on the contrary showed negligence and indifference for the safety of the passengers that itwas bound to transport, " and for the death of Judge Quirico Abeto, defendant- appellant wasordered to pay plaintiffs, the heirs of Judge Abeto, the following:

1st For the death of Judge Quirico Abeto, the amount of P6,000.00;

2nd For the loss of his earning capacity, for 4.75 (4 ) years at the rate of P7,200.00 perannum in the amount of P34,200.00;

3rd For moral damages in favor of the plaintiffs in the sum of P10,000.00;

4th For actual damages in the sum of P2,000.00 minus P400.00 received under VoucherExhibit 'H' the amount of Pl,600.00;

5th For attorney's fees, the sum of P6,000.00 and/or the total sum of P57,800.00 and; To paythe costs of this proceedings.

Plaintiff's evidence shows that about 5:30 in the afternoon of November 23, 1960, Judge Quirico

Abeto, with the necessary tickets, boarded the Philippine Air Lines' PI-C133 plane at theMandurriao Airport, Iloilo City for Manila. He was listed as the No. 18 passenger in its LoadManifest (Exhibit A). The plane which would then take two hours from Iloilo to Manila did notreach its destination and the next day there was news that the plane was missing. After threeweeks, it was ascertained that the plane crashed at Mt. Baco, Province of Mindoro. All thepassengers, including Judge Abeto, must have been killed instantly and their remains werescattered all over the area. Among the articles recovered on the site of the crash was a leatherbag with the name "Judge Quirico Abeto. " (Exhibit C.)

Judge Abeto, prior to the plane crash, was a Technical Assistant in the Office of the Presidentreceiving an annual compensation of P7,200.00; and before that, has held the various positionsin the government, namely: Municipal President of Iloilo; Provincial Fiscal of Antique, Negros

Occidental and Cebu; Judge of the Court of First Instance of Manila, and Secretary of Justice.He was in good health before the incident even if he was already 79 years old at that time.

Plaintiff-appellee Conrada Vda. de Abeto was appointed administratrix of the estate of JudgeAbeto. The other plaintiffs-appellees are the children of the deceased. When they received thenews of the plane crash, Mrs. Abeto was shocked and until it was ascertained that the planehad crashed three weeks after, she could not sleep and eat. She felt sick and was miserableafter that. The members of the family also suffered.


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Personal belongings which were lost amounted to P300.00. Burial expenses of the late judgewas P1,700.00.

When defendant-appellant would not hear demands for settlement of damages, plaintiffs-appellees were compelled to hire counsel for the institution and prosecution of this case.

Defendant-appellant tried to prove that the plane crash at Mt. Baco was beyond the control ofthe pilot. The plane at the time of the crash was airworthy for the purpose of conveyingpassengers across the country as shown by the certificate of airworthiness issued by the Civil

Aeronautics Administration (CAA). There was navigational error but no negligence ormalfeasance on the part of the pilot. The plane had undergone 1,822 pre- flight checks, 364thorough checks, 957 terminating checks and 501 after maintenance checks. These checkswere part of the quality control operation of defendant airline Further, deviation from itsprescribed route was due to the bad weather conditions between Mt. Baco and Romblon andstrong winds which caused the plane to drift to Mt. Baco. Under the circumstances, appellantargues that the crash was a fortuitous event and, therefore, defendant-appellant cannot be heldliable under the provisions of Article 1174 of the New Civil Code. Besides, appellant tried toprove that it had exercised all the cares, skill and diligence required by law on that particular

flight in question.

The trial court, finding for the plaintiffs, said:

The Court after a thorough perusal of the evidences, testimonial and documentaries submittedby both parties has come into the conclusion that the evidence introduced by the plaintiffs haveestablished the following significant facts which proved the negligence of the defendant's pilot ofthe plane on that flight- in question.

1st That the Pilot of the plane disobeyed instruction given in not following the route of Amber1 prescribed by the CAA in Violation of Standard Regulation.

Second The defendant failed to perform the pre-flight test on plane PIC-133 before the sametook off from Mandurriao Airport to Manila in order to find out a possible defect of the plane.

Third When the defendant allowed during the flight in question, student Officer Rodriguez ontraining as proved when his body was found on the plane's cockpit with its microphone hangingstill on his left leg.

Fourth When the Pilot during the flight in question failed or did not report his position over orabeam Romblon which is a compulsory reporting point.

These facts as established by the evidence of the plaintiff lead to the inevitable conclusion thatthe defendant did not exercise extraordinary diligence or prudence as far as human foresight

can provide imposed upon by the Law, but on the contrary showed negligence and indifferencefor the safety of the passengers that it was bound to transport. By the very evidence of thedefendant, as shown by the deposition of one Jose Abanilla, dated December 13, 1963, SectionChief of the Actuarial Department of the Insular Life Insurance Company regarding lifeexpectancy through American experience, the late Judge Abeto at the age of 79 would still liveor have a life expectancy of 4.75 years.

Appealing to this Court, defendant claimed that the trial court erred:


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I

... in finding, contrary to the evidence, that the appellant was negligent;

III

... in not finding that the appellant, in the conduct and operation of PI-C133, exercised itsstatutory obligation over the passengers of PI C133 of extraordinary diligence as far as humancare and foresight can provide, using the utmost diligence of a very cautious person with dueregard for all the circumstances and in not finding that the crash of PI-C133 was caused byfortuitous events;

... in awarding damages to the appellees; and

IV

... in not finding that appellant acted in good faith and exerted efforts to minimize damages.

The issue before Us in this appeal is whether or not the defendant is liable for violation of itscontract of carriage.

The provisions of the Civil Code on this question of liability are clear and explicit. Article 1733binds common carriers, "from the nature of their business and by reasons of public policy, ... toobserve extraordinary diligence in the vigilance ... for the safety of the passengers transportedby them according to all the circumstances of each case." Article 1755 establishes the standardof care required of a common carrier, which is, "to carry the passengers safely as far as humancare and foresight can provide, using the utmost diligence of very cautious persons, with dueregard for all the circumstances." Article 1756 fixes the burden of proof by providing that "incase of death of or injuries to passengers, common carriers are presumed to have been at faultor to have acted negligently, unless they prove that they observed extra-ordinary diligence as

prescribed in Articles 1733 and 1755." Lastly, Article 1757 states that "the responsibility of acommon carrier for the safety of passengers ... cannot be dispensed with or lessened bystipulation, by the posting of notices, by statements on tickets, or otherwise."

The prescribed airway of plane PI-C133 that afternoon of November 23, 1960, with Capt. deMesa, as the pilot, was Iloilo-Romblon-Manila, denominated as airway "Amber l," and theprescribed elevation of the flight was 6,000 ft. The fact is, the plane did not take the designatedroute because it was some 30 miles to the west when it crashed at Mt. Baco. According todefendant's witness, Ramon A. Pedroza, Administrative Assistant of the Philippine Air Lines,Inc., this tragic crash would have not happened had the pilot continued on the route indicated.Hereunder is Mr. Pedroza's testimony on this point:

Q Had the pilot continued on the route indicated, Amber A-1 there would have been no crash,obviously?

A Yes, Your Honor

ATTY. HILADO:

(To the witness)


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Q Because Mt. Baco is 30 miles from Amber I?

A Yes,sir.(TSN,p.75,Oct.22,1963 hearing)

xxx xxx xxx

And, Assistant Director Cesar Mijares of the Civil Aeronautics Administration testified that thepilot of said plane was "off course."

Q But the fact is that you found him out, that he was off course?

A Yes, sir.

Q And off course, you mean that he did not follow the route prescribed for him?

A Yes, sir.

Q And the route for him to follow was Amber A-l?

A Yes, sir.

Q And the route for Iloilo direct to Manila, is passing Romblon to Manila?

A Yes, passing Romblon to Manila.

Q And you found that he was not at all following the route to Romblon to Manila?

A Yes, sir.

Q You know Mr. Witness that a disregard or, violation, or disregard of instruction is punishable

by law?

A Yes,sir. (TSN,pp.247-248,Dec. 20, 1963)

xxx xxx xxx

It is clear that the pilot did not follow the designated route for his flight between Romblon andManila. The weather was clear and he was supposed to cross airway "Amber I" over Romblon;instead, he made a straight flight to Manila in violation of air traffic rules.

At any rate, in the absence of a satisfactory explanation by appellant as to how the accidentoccurred, the presumption is, it is at fault.

In an action based on a contract of carriage, the court need not make an express finding of faultor negligence on the part of the carrier in order to hold it responsible to pay the damages soughtfor by the passenger. By the contract of carriage, the carrier assumes the express obligation totransport the passenger to his destination safely and to observe extraordinary diligence with adue regard for all the circumstances, and any injury that might be suffered by the passenger isright away attributable to the fault or negligence of the carrier (Art. 1756, New Civil Code). Thisis an exception to the general rule that negligence must be proved. (Batangas TransportationCompany vs. Caguimbal, 22 SCRA 171.)


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The total of the different items which the lower court adjudged herein appellant to pay theplaintiffs is P57,800.00. The judgment of the court a quo is modified in the sense that thedefendant is hereby ordered to pay the said amount to the plaintiffs, with legal interest thereonfrom the finality of this judgment. With costs against defendant-appellant.


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G.R. No. L-23733 Oct ob er 31, 1969

HERMINIO L. NOCUM, pl aintiff -appellee,vs.

LAGUNA TAYABAS BUS COMPANY, defendant-appel lant.

BARREDO, J.:

Appeal of the Laguna Tayabas Bus Co., defendant in the Court below, from a judgment of thesaid court (Court of First Instance of Batangas) in its Civil Case No. 834, wherein appelleeHerminio L. Nocum was plaintiff, sentencing appellant to pay appellee the sum of P1,351.00 foractual damages and P500.00 as attorney's fees with legal interest from the filing of thecomplaint plus costs. Appellee, who was a passenger in appellant's Bus No. 120 then making atrip within the barrio of Dita, Municipality of Bay, Laguna, was injured as a consequence of theexplosion of firecrackers, contained in a box, loaded in said bus and declared to its conductor ascontaining clothes and miscellaneous items by a co-passenger. The findings of fact of the trialcourt are not assailed. The appeal is purely on legal questions.

Appellee has not filed any brief. All that We have before Us is appellant's brief with the followingassignment of errors:

I

BASED ON THE FACTS THE LOWER COURT FOUND AS ESTABLISHED, IT ERRED AS AMATTER OF LAW IN NOT ABSOLVING APPELLANT FROM LIABILITY RESULTING FROMTHE EXPLOSION OF FIRECRACKERS CONTAINED IN A PACKAGE, THE CONTENTS OFWHICH WERE MISREPRESENTED BY A PASSENGER.

II

THE LOWER COURT ERRED, AS A MATTER OF LAW, IN AWARDING DAMAGES WITHLEGAL INTEREST IN FAVOR OF THE APPELLEE.

III

THE LOWER COURT ERRED IN NOT DISMISSING THE COMPLAINT, WITH COSTSAGAINST THE APPELLEE.

Upon consideration of the points raised and discussed by appellant, We find the appeal to bewell taken.

The main basis of the trial court's decision is that appellant did not observe the extraordinary or

utmost diligence of a very cautious person required by the following articles of the Civil Code:

ART. 1733. Common carriers, from the nature of their business and for reasons of publicpolicy, are bound to observe extraordinary diligence in the vigilance over the goods and for thesafety 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 articles1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of thepassengers is further set forth in articles 1755 and 1756.


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ART. 1755. A common carrier is bound to carry the passengers safely as far as human careand foresight can provide, using the utmost diligence of very cautious persons, with a dueregard for all the circumstances.

ART 1756. In case of death of or injuries to passengers, common carriers are presumed to

have been at fault or to have acted negligently, unless they prove that they observedextraordinary diligence as prescribed in articles 1733 and 1755.

Analyzing the evidence presented by the parties, His Honor found:

According to Severino Andaya, a witness for the plaintiff, a man with a box went up the baggagecompartment of the bus where he already was and said box was placed under the seat. Theyleft Azcarraga at about 11:30 in the morning and when the explosion occurred, he was thrownout. PC investigation report states that thirty seven (37) passengers were injured (Exhibits "O"and "2").

The bus conductor, Sancho Mendoza, testified that the box belonged to a passenger whose

name he does not know and who told him that it contained miscellaneous items and clothes. Hehelped the owner in loading the baggage which weighed about twelve (12) kilos and because ofcompany regulation, he charged him for it twenty-five centavos (P0.25). From its appearancethere was no indication at all that the contents were explosives or firecrackers. Neither did heopen the box because he just relied on the word of the owner.

Dispatcher Nicolas Cornista of defendant company corroborrated the testimony of Mendoza andhe said, among other things, that he was present when the box was loaded in the truck and theowner agreed to pay its fare. He added that they were not authorized to open the baggages ofpassengers because instruction from the management was to call the police if there werepackages containing articles which were against regulations.

xxx xxx xxx

There is no question that Bus No. 120 was road worthy when it left its Manila Terminal forLucena that morning of December 5, 1960. The injuries suffered by the plaintiff were not due tomechanical defects but to the explosion of firecrackers inside the bus which was loaded by a co-passenger.

... Turning to the present case, it is quite clear that extraordinary or utmost diligence of a verycautious person was not observed by the defendant company. The service manual, exhibits "3"and "3-A," prohibits the employees to allow explosives, such as dynamite and firecrackers to betransported on its buses. To implement this particular rule for 'the safety of passengers, it wastherefore incumbent upon the employees of the company to make the proper inspection of all

the baggages which are carried by the passengers.

But then, can it not be said that the breach of the contract was due to fortuitous event? TheSupreme Court in the case of Lasam vs. Smith, 45 Phil. 657, quoted Escriche's definition ofcaso fortuito as "an unexpected event or act of God which could neither be foreseen norresisted, such as floods, torrents, shipwrecks, conflagrations, lightning, compulsions,insurrections, destructions of buildings by unforeseen accidents and other occurrences of asimilar nature." In other words, the cause of the unexpected event must be independent of thewill of man or something which cannot be avoided. This cannot be said of the instant case. If


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proper and rigid inspection were observed by the defendant, the contents of the box could havebeen discovered and the accident avoided. Refusal by the passenger to have the packageopened was no excuse because, as stated by Dispatcher Cornista, employees should call thepolice if there were packages containing articles against company regulations. Neither wasfailure by employees of defendant company to detect the contents of the packages ofpassengers because like the rationale in the Necesito vs. Paras case (supra), a passenger has

neither choice nor control in the exercise of their discretion in determining what are inside thepackage of co-passengers which may eventually prove fatal.

We cannot agree. No doubt, the views of His Honor do seem to be in line with the reasons thatthe Code Commission had for incorporating the above-quoted provisions in its draft of the CivilCode. Indeed, in approving the said draft, Congress must have concurred with the Commissionthat by requiring the highest degree of diligence from common carriers in the safe transport oftheir passengers and by creating a presumption of negligence against them, the recklessness oftheir drivers which is a common sight even in crowded areas and, particularly, on the highwaysthroughout the country may, somehow, if not in a large measure, be curbed. We are notconvinced, however, that the exacting criterion of said provisions has not been met by appellantin the circumstances of this particular case.

It is undisputed that before the box containing the firecrackers were allowed to be loaded in thebus by the conductor, inquiry was made with the passenger carrying the same as to what was init, since its "opening ... was folded and tied with abaca." (Decision p. 16, Record on Appeal.)

According to His Honor, "if proper and rigid inspection were observed by the defendant, thecontents of the box could have been discovered and the accident avoided. Refusal by thepassenger to have the package opened was no excuse because, as stated by DispatcherCornista, employees should call the police if there were packages containing articles againstcompany regulations." That may be true, but it is Our considered opinion that the law does notrequire as much. Article 1733 is not as unbending as His Honor has held, for it reasonablyqualifies the extraordinary diligence required of common carriers for the safety of thepassengers transported by them to be "according to all the circumstances of each case." In fact,

Article 1755 repeats this same qualification: "A common carrier is bound to carry thepassengers safely as far as human care and foresight can provide, using the utmost diligence ofvery cautious persons, with due regard for all the circumstances."

In this particular case before Us, it must be considered that while it is true the passengers ofappellant's bus should not be made to suffer for something over which they had no control, asenunciated in the decision of this Court cited by His Honor,1 fairness demands that inmeasuring a common carrier's duty towards its passengers, allowance must be given to thereliance that should be reposed on the sense of responsibility of all the passengers in regard totheir common safety. It is to be presumed that a passenger will not take with him anythingdangerous to the lives and limbs of his co-passengers, not to speak of his own. Not to be lightlyconsidered must be the right to privacy to which each passenger is entitled. He cannot be

subjected to any unusual search, when he protests the innocuousness of his baggage andnothing appears to indicate the contrary, as in the case at bar. In other words, inquiry may beverbally made as to the nature of a passenger's baggage when such is not outwardlyperceptible, but beyond this, constitutional boundaries are already in danger of beingtransgressed. Calling a policeman to his aid, as suggested by the service manual invoked bythe trial judge, in compelling the passenger to submit to more rigid inspection, after thepassenger had already declared that the box contained mere clothes and other miscellaneous,could not have justified invasion of a constitutionally protected domain. Police officers actingwithout judicial authority secured in the manner provided by law are not beyond the pale of


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constitutional inhibitions designed to protect individual human rights and liberties. Withal, whatmust be importantly considered here is not so much the infringement of the fundamental sacredrights of the particular passenger herein involved, but the constant threat any contrary rulingwould pose on the right of privacy of all passengers of all common carriers, considering howeasily the duty to inspect can be made an excuse for mischief and abuse. Of course, whenthere are sufficient indications that the representations of the passenger regarding the nature of

his baggage may not be true, in the interest of the common safety of all, the assistance of thepolice authorities may be solicited, not necessarily to force the passenger to open his baggage,but to conduct the needed investigation consistent with the rules of propriety and, above all, theconstitutional rights of the passenger. It is in this sense that the mentioned service manualissued by appellant to its conductors must be understood.

Decisions in other jurisdictions cited by appellant in its brief, evidently because of the paucity oflocal precedents squarely in point, emphasize that there is need, as We hold here, for evidenceof circumstances indicating cause or causes for apprehension that the passenger's baggage isdangerous and that it is failure of the common carrier's employee to act in the face of suchevidence that constitutes the cornerstone of the common carrier's liability in cases similar to thepresent one.

The principle that must control the servants of the carrier in a case like the one before us iscorrectly stated in the opinion in the case of Clarke v. Louisville & N.R. Co. 20 Ky L. Rep. 839,49 S.W. 1120. In that case Clarke was a passenger on the defendant's train. Another passengertook a quantity of gasoline into the same coach in which Clarke was riding. It ignited andexploded, by reason of which he was severely injured. The trial court peremptorily instructed the

jury to find for the defendant. In the opinion, affirming the judgment, it is said: "It may be statedbriefly, in assuming the liability of a railroad to its passengers for injury done by anotherpassenger, only where the conduct of this passenger had been such before the injury as toinduce a reasonably prudent and vigilant conductor to believe that there was reasonable groundto apprehend violence and danger to the other passengers, and in that case asserting it to bethe duty of the conductor of the railroad train to use all reasonable means to prevent such injury,

and if he neglects this reasonable duty, and injury is done, that then the company isresponsible; that otherwise the railroad is not responsible."

The opinion quotes with approval from the case of Gulf, C. & S. F. R. Co. vs. Shields, 9 Tex.Civ. App. 652, 29 S. W. 652, in which case the plaintiff was injured by alcohol which had beencarried upon the train by another passenger. In the opinion in that case it is said: "It was but ashort period of time after the alcohol was spilt when it was set on fire and the accident occurred,and it was not shown that appellant's employees knew that the jug contained alcohol. In fact, itis not shown that the conductor or any other employee knew that Harris had a jug with him untilit fell out of the sack, though the conductor had collected ... (his) fare, and doubtless knew thathe had the sack on the seat with him. ... It cannot be successfully denied that Harris had theright as a passenger to carry baggage on the train, and that he had a right to carry it in a sack if

he chose to do so. We think it is equally clear that, in the absence of some intimation orcircumstance indicating that the sack contained something dangerous to other passengers, itwas not the duty of appellant's conductor or any other employee to open the sack and examineits contents." Quinn v. Louisville & N. R. Co. 98 Ky. 231, 32 S. W. 742; Wood v. Louisville & N.R. Co. 101 Ky. 703, 42 S. W. 349; Louisville & N. R. Co. v. Vincent, 29 Ky. L. Rep. 1049, 96 S.W. 898; Louisville & N. R. Co. v. Renfro, 142 Ky. 590, 33 L. R. A. (N. S.) 133, 135 S. W. 266.2(Emphasis supplied)


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Explosive or Dangerous Contents. A carrier is ordinarily not liable for injuries to passengersfrom fires or explosions caused by articles brought into its conveyances by other passengers, inthe absence of any evidence that the carrier, through its employees, was aware of the nature ofthe article or had any reason to anticipate danger therefrom. (Bogard v. Illinois C. R Co. 144 Ky.649, 139 S. W. 855, 36 L. R. A.[N. S.] 337; Clarke v. Louisville & N. R. Co. 101 Ky. 34, 39 S. W.840, 36 L. R. A. 123 [explosion of can of gasoline]; East Indian R. Co. v. Mukerjee [1901] A. C.

[Eng.] 396, 3 B. R. C. 420 P. C. [explosion of fireworks]; Annotation: 37 L. R. A. [N. S.] 725.)3

Appellant further invokes Article 1174 of the Civil Code which relieves all obligors, including, ofcourse, common carriers like appellant, from the consequence of fortuitous events. The court aquo held that "the breach of contract (in this case) was not due to fortuitous event and that,therefore, the defendant is liable in damages." Since We hold that appellant has succeeded inrebutting the presumption of negligence by showing that it has exercised extraordinary diligencefor the safety of its passengers, "according to the circumstances of the (each) case", We deemit unnecessary to rule whether or not there was any fortuitous event in this case.

ACCORDINGLY, the appealed judgment of the trial court is reversed and the case is dismissed,without costs.


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G.R. No. L-22985 Jan uar y 24, 1968

BATANGAS TRANSPORTATION COMPANY, petit ioner,vs.

GREGORIO CAGUIMBAL , PANCRACIO CAGUIMBAL , MARIA MARANAN DE CAGUIMBAL ,BIAN TRANSPORTATION COMPANY and MARCIANO ILAGAN, respo nden ts.

CONCEPCION, C.J.:

Appeal by certiorari from a decision of the Court of Appeals.

The main facts are set forth in said decision from which we quote:

There is no dispute at all that the deceased Pedro Caguimbal, Barrio Lieutenant of BarrioCalansayan, San Jose, Batangas, was a paying passenger of BTCO bus, with plate TPU-507,going south on its regular route from Calamba, Laguna, to Batangas, Batangas, driven byTomas Perez, its regular driver, at about 5:30 o'clock on the early morning of April 25, 1954.The deceased's destination was his residence at Calansayan, San Jose, Batangas. The bus of

the Bian Transportation Company, bearing plate TPU-820, driven by Marciano Ilagan, wascoming from the opposite direction (north-bound). Along the national highway at Barrio Daraza,Tanauan, Batangas, on the date and hour above indicated, a horse-driven rig (calesa) managedby Benito Makahiya, which was then ahead of the Bian bus, was also coming from theopposite direction, meaning proceeding towards the north. As to what transpired thereafter, thelower court chose to give more credence to defendant Batangas Transportation Company'sversion which, in the words of the Court a quo, is as follows: "As the BTCO bus was nearing ahouse, a passenger requested the conductor to stop as he was going to alight, and when heheard the signal of the conductor, the driver Tomas Perez slowed down his bus swerving itfarther to the right in order to stop; at this juncture, a calesa, then driven by Benito Makahiyawas at a distance of several meters facing the BTCO bus coming from the opposite direction;that at the same time the Bian bus was about 100 meters away likewise going northward and

following the direction of the calesa; that upon seeing the Bian bus the driver of the BTCO busdimmed his light as established by Magno Ilaw, the very conductor of the Bian bus at the timeof the accident; that as the calesa and the BTCO bus were passing each other from theopposite directions, the Bian bus following the calesa swerved to its left in an attempt to passbetween the BTCO bus and the calesa; that without diminishing its speed of about seventy (70)kilometers an hour, the Bian bus passed through the space between the BTCO bus and thecalesa hitting first the left side of the BTCO bus with the left front corner of its body and thenbumped and struck the calesa which was completely wrecked; that the driver was seriouslyinjured and the horse was killed; that the second and all other posts supporting the top of the leftside of the BTCO bus were completely smashed and half of the back wall to the left was rippedopen. (Exhibits 1 and 2). The BTCO bus suffered damages for the repair of its damaged portion.

As a consequence of this occurrence, two (2) passengers of BTCO died, namely, PedroCaguimbal and Guillermo Tolentino, apart from others who were injured. The widow andchildren of Caguimbal instituted the present action, which was tried jointly with a similar action ofthe Tolentinos, to recover damages from the Batangas Transportation Company, hereinafterreferred to as BTCO. The latter, in turn, filed a third-party complaint against the BianTransportation Company hereinafter referred to as Bian and its driver, Marciano Ilagan.Subsequently, the Caguimbals amended their complaint, to include therein, as defendants, saidBian and Ilagan.


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After appropriate proceedings, the Court of First Instance of Batangas rendered a decisiondismissing the complaint insofar as the BTCO is concerned, without prejudice to plaintiff's rightto sue Bian which had stopped participating in the proceedings herein, owing apparently, toa case in the Court of First Instance of Laguna for the insolvency of said enterprise andIlagan, and without pronouncement as to costs.

On appeal taken by the Caguimbals, the Court of Appeals reversed said decision and renderedjudgment for them, sentencing the BTCO, Bian and Ilagan to, jointly and severally, pay to theplaintiffs the aggregate sum of P10,500.00 1 and the costs in both instances. Hence, this appealby BTCO, upon the ground that the Court of Appeals erred: 1) in finding said appellant liable fordamages; and 2) in awarding attorney's fees.

In connection with the first assignment of error, we note that the recklessness of defendant was,manifestly, a major factor in the occurrence of the accident which resulted, inter alia, in thedeath of Pedro Caguimbal. Indeed, as driver of the Bian bus, he overtook Benito Makahiya'shorse-driven rig or calesa and passed between the same and the BTCO bus despite the factthat the space available was not big enough therefor, in view of which the Bian bus hit the leftside of the BTCO bus and then the calesa. This notwithstanding, the Court of Appeals rendered

judgment against the BTCO upon the ground that its driver, Tomas Perez, had failed to exercisethe "extraordinary diligence," required in Article 1733 of the new Civil Code, "in the vigilance forthe safety" of his passengers. 2

The record shows that, in order to permit one of them to disembark, Perez drove his BTCO buspartly to the right shoulder of the road and partly on the asphalted portion thereof. Yet, he couldhave and should have seen to it had he exercised "extraordinary diligence" that his buswas completely outside the asphalted portion of the road, and fully within the shoulder thereof,the width of which being more than sufficient to accommodate the bus. He could have andshould have done this, because, when the aforementioned passenger expressed his wish toalight from the bus, Ilagan had seen the aforementioned "calesa", driven by Makahiya, a fewmeters away, coming from the opposite direction, with the Bian bus about 100 meters behind

the rig cruising at a good speed. 3 When Perez slowed down his BTCO bus to permit saidpassenger to disembark, he must have known, therefore, that the Bian bus would overtake thecalesa at about the time when the latter and BTCO bus would probably be on the same line, onopposite sides of the asphalted portions of the road, and that the space between the BTCO busand the "calesa" would not be enough to allow the Bian bus to go through. It is true that thedriver of the Bian bus should have slowed down or stopped, and, hence, was reckless in notdoing so; but, he had no especial obligations toward the passengers of the BTCO unlike Perezwhose duty was to exercise "utmost" or "extraordinary" diligence for their safety. Perez was thusunder obligation to avoid a situation which would be hazardous for his passengers, and, maketheir safety dependent upon the diligence of the Bian driver. Such obligation becomes morepatent when we considered the fact of which the Court may take judicial cognizance thatour motor vehicle drivers, particularly those of public service utilities, have not distinguished

themselves for their concern over the safety, the comfort or the convenience of others. Besides,as correctly stated in the syllabus to Brito Sy vs. Malate Taxicab & Garage, Inc., 4

In an action based on a contract of carriage, the court need not make an express finding of faultor negligence on the part of the carrier in order to hold it responsible to pay the damages soughtfor by the passenger. By the contract of carriage, the carrier assumes the express obligation totransport the passenger to his destination safely and to observe extraordinary diligence with adue regard for all the circumstances, and any injury that might be suffered by the passenger isright away attributable to the fault or negligence of the carrier (Article 1756, new Civil Code).


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This is an exception to the general rule that negligence must be proved, and it is thereforeincumbent upon the carrier to prove that it has exercised extraordinary diligence as prescribedin Articles 1733 and 1755 of the new Civil Code.

In the case at bar, BTCO has not proven the exercise of extraordinary diligence on its part. Forthis reason, the case of Isaac vs. A. L. Ammen Trans. Co., Inc. 5 relied upon by BTCO, is not in

point, for, in said case, the public utility driver had done everything he could to avoid theaccident, and could not have possibly avoided it, for he "swerved the bus to the very extremeright of the road," which the driver, in the present case, had failed to do.

As regards the second assignment of error, appellant argues that the award of attorney's fees isnot authorized by law, because, of the eleven (11) cases specified in Article 1208 of the newCivil Code, only the fifth and the last are relevant to the one under consideration; but the fifthcase requires bad faith, which does not exist in the case at bar. As regards the last case, whichpermits the award, "where the court deems it just and equitable that attorney's fees . . . shouldbe recovered," it is urged that the evidence on record does not show the existence of such justand equitable grounds.

We, however, believe otherwise, for: (1) the accident in question took place on April 25, 1954,and the Caguimbals have been constrained to litigate for over thirteen (13) years to vindicatetheir rights; and (2) it is high time to impress effectively upon public utility operators the natureand extent of their responsibility in respect of the safety of their passengers and their duty toexercise greater care in the selection of drivers and conductor and in supervising theperformance of their duties, in accordance, not only with Article 1733 of the Civil Code of thePhilippines, but, also, with Articles 1755 and 1756 thereof 6 and the spirit of these provisions, asdisclosed by the letter thereof, and elucidated by the Commission that drafted the same. 7

WHEREFORE, the decision appealed from, should be, as it is hereby, affirmed, with the costsof this instance against appellant Batangas Transportation Company.


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[G.R. No. 128607. Janu ary 31, 2000]

ALFREDO MALLARI SR. and ALFREDO MALLARI JR., petit ioners, vs. COURT OFAPPEALS and BULLETIN PUBLISHING CORPORATION, respo nden ts.

D E C I S I O N

BELLOSILLO, J.:

ALFREDO MALLARI SR. and ALFREDO MALLARI JR. in this petition for review on cert

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